#USA #New York #Class Action #Pomerantz LLP #CTO Realty Growth

Introduction

On October 3, 2025, Pomerantz LLP announced the initiation of a class action lawsuit against CTO Realty Growth, Inc. (traded as NYSE: CTO) alongside certain of its officers. This legal action arises from allegations of significant violations of federal securities laws that allegedly harmed investors of the company.

The Lawsuit Details

The lawsuit, recently filed in the United States District Court for the Middle District of Florida, is officially docketed under 25-cv-01516. It targets a collective group of individuals and entities who purchased or acquired CTO securities during a specified period—from February 18, 2021, through June 24, 2025. Ultimately, the lawsuit aims to seek reparations for damages incurred due to the defendants' alleged misconduct under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.

Investors who may have been affected by these actions are encouraged to contact the court by October 7, 2025, to apply for the role of Lead Plaintiff in the case. Full access to the complaint can be found on the Pomerantz Law Firm website.

Company Background

CTO Realty Growth, a publicly traded real estate investment trust (REIT), focuses on owning and operating a variety of retail-based properties primarily positioned in growing U.S. markets. The firm transitioned to a REIT structure in February 2021 and currently holds a portfolio of 23 income-generating properties across seven states, highlighted by its retail and dining center, Ashford Lane, located in Atlanta, Georgia.

In accordance with guidelines set forth by the U.S. Securities and Exchange Commission (SEC), REITs are mandated to distribute at least 90% of their taxable income to shareholders in the form of dividends. This distribution strategy, combined with the exemption from most corporate income taxes, is positioned as tax-efficient for stakeholders, with CTO proclaiming an attractive dividend strategy for its investors.

The company's financial performance is reportedly assessed using the Adjusted Funds from Operations (AFFO), a benchmark that aims to measure its financial health while factoring in regular capital expenditures necessary for maintaining property quality. While methodologies can vary, AFFO is favored among analysts as it integrates recurring costs and potential revenue increases, thereby providing a clearer projection of potential dividend capacity to stakeholders.

Allegations Against Defendants

Throughout the class action period, the lawsuit alleges that the defendants made several materially false and deceptive statements concerning the operations, business conditions, and adherence to compliance policies of CTO Realty Growth. Specifically, the complaint points out the following key misrepresentations:

• - Unsustainable Dividends: The defendants allegedly suggested that CTO's dividend payouts were more sustainable than they truly were, misleading investors about the firm’s financial stability.
• - Inflated AFFO Figures: The plaintiff claims that the company engaged in questionable accounting practices to inflate its reported AFFO, leading to an exaggerated perception of profitability specifically concerning the Ashford Lane property.
• - Overstated Financial Health: As a result of the aforementioned discrepancies, it is posited that CTO’s business prospects were unduly inflated, leading to significantly misleading public statements by the defendants.

The whistleblower group, Wolfpack Research, issued a report on June 25, 2025, characterizing CTO's results unfavorably compared to a beleaguered financial services company, B. Riley. Wolfpack’s findings raised red flags regarding the real cash generation capability of CTO, accusing the firm of relying on dilution tactics to navigate a substantial dividend deficit and creative definitions of AFFO that exclude necessary recurring costs, thus skewing performance measures. Further, they alleged that CTO had masked deteriorating tenant conditions at its Ashford Lane property through misleading financial practices.

Stock Market Reaction and Future Outlook

Following these serious allegations detailed in the Wolfpack Report, shares of CTO dropped $0.98 or approximately 5.42% on June 25, closing at $17.10 per share.
This drop in stock value is indicative of the market's response to the reported findings and underlines the challenges CTO may face moving forward as the allegations unfold in court. The implications of this lawsuit could deeply impact the company's operational standing, investor confidence, and prospective financial strategies.

Conclusion

Pomerantz LLP continues to assert its commitment to pursuing justice for investors who may have been affected by CTO Realty Growth’s alleged faulty practices. With a history of impactful class action litigations, the firm is well-positioned to navigate this case. Investors who believe they have grounds to join the lawsuit should remain vigilant and seek appropriate legal counsel to understand their rights and the potential outcomes of this developing situation. For further information or to engage with this case, stakeholders can reach out to Pomerantz LLP directly.