Pomerantz Law Firm Initiates Class Action Against CTO Realty Growth, Inc. Over Securities Violations

Pomerantz Law Firm Initiates Class Action Against CTO Realty Growth, Inc.

In a significant development for investors, Pomerantz LLP has announced the filing of a class action lawsuit against CTO Realty Growth, Inc. (CTO) and several of its officers. The lawsuit was submitted in the United States District Court for the Middle District of Florida, aiming to address alleged violations of federal securities laws. This action comes as a response to concerns raised by investors about the company's practices between February 18, 2021, and June 24, 2025 – a period that some analysts are now critically labeling as the Class Period.

Background of the Case

The lawsuit targets allegations that CTO Realty Growth misled investors regarding the stability and sustainability of its financial standing. CTO, which operates as a real estate investment trust (REIT), shifted into this structure in February 2021. The company is known for owning a range of retail-based real estate properties across fast-growing markets in the U.S.

The complaint, cataloged under 25-cv-01516, asserts that CTO’s executives misrepresented important details about the company’s dividends and financial health. It suggests that throughout the Class Period, CTO misled its investors about the dependability of its dividends, claiming they were sustainability-oriented when, in fact, they were likely inflated.

As per guidelines from the U.S. Securities and Exchange Commission (SEC), REITs are required to distribute at least 90% of their taxable profits as dividends to shareholders to enjoy corporate tax exemptions. CTO had pitched its REIT operational framework as a vehicle that enables tax-efficient returns to stockholders. Allegations surfaced that CTO relied on questionable practices to mislead investors about its financial viability, resulting in an overstated sense of security about investment in its shares.

Allegations in Detail

The crux of the lawsuit is based on claims that CTO’s actions were misleading and damaging to its investors. Specific allegations include:
1. CTO’s dividends were, contrary to its claims, less sustainable than disclosed.
2. Deceptive practices were deployed to artificially inflate its Adjusted Funds from Operations (AFFO), portraying a misleading profitability picture of its properties.
3. The overall business and financial prospects of CTO were portrayed optimistically, leading to material misrepresentations.

A pivotal report published by Wolfpack Research on June 25, 2025, intensified the scrutiny on CTO. The report drew unfavorable comparisons between CTO and other financially troubled firms, highlighting serious inconsistencies in the reported financial data of CTO—such as underperformance in generating sufficient cash to cover its required dividend payments. The report pointed out that CTO had, since its conversion to a REIT, lacked the necessary cash flow to pay dividends and handle recurring capital expenditures without resorting to shareholder dilution.

Following the release of this contentious report, CTO's stock saw a notable decline, plummeting by approximately 5.42% to end at $17.10 per share. This decline reflected the market's reaction to the grim revelations regarding CTO’s financial operations and dividend sustainability.

Call to Action for Investors

For investors who purchased CTO shares within the defined Class Period and who feel affected by these developments, Pomerantz LLP encourages them to step forward. The law firm is seeking to appoint a Lead Plaintiff who can represent the class in court. Interested parties have until October 7, 2025, to express their interest in leading this important legal challenge. Information regarding the complaint and how to join can be accessed through the firm's official website.

Pomerantz, known for its expertise in securities and antitrust litigation over the past 85 years, has built a reputation for pursuing justice for victims of corporate fraud. Investors are thus being encouraged to take action amid shifting narratives surrounding CTO and its alleged mismanagement.

For further inquiries regarding the class action, potential class members can contact Danielle Peyton through channels provided by Pomerantz LLP, with outreach methods available via email or phone.

Conclusion

This class action marks a pivotal moment in the ongoing scrutiny of CTO Realty Growth, Inc. and raises critical questions about transparency and accountability in financial reporting. Investors finding themselves impacted by the alleged practices of CTO are strongly advised to seek guidance and consider participating in the class action to safeguard their interests.