Pomerantz Law Firm Files Class Action Against CTO Realty Growth Over Securities Violations

Class Action Lawsuit Filed Against CTO Realty Growth

Pomerantz LLP has taken significant legal action by filing a class action lawsuit against CTO Realty Growth, Inc. (referred to as "CTO") and specific officers of the company. This lawsuit, lodged in the United States District Court for the Middle District of Florida, focuses on allegations of misleading statements and inadequate disclosures related to the company’s financial status pertaining to its securities. Specifically, the filing pertains to traders and investors who acquired CTO securities between February 18, 2021, and June 24, 2025, encompassing a critical period wherein the company purportedly violated federal securities laws.

The lawsuit emphasizes Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, which claim that certain top executives of CTO made materially false claims regarding the business operations and profitability of the company. Potential lead plaintiffs have until October 7, 2025, to put forth requests to the Court, enforcing the significance of taking timely legal action.

Background on CTO Realty Growth

CTO is categorized as a publicly traded real estate investment trust (REIT) that claims ownership and operation of a variety of high-quality retail properties, primarily situated in growth-centric markets across the United States. As of December 31, 2024, CTO’s portfolio consisted of 23 income properties spanning seven states, with Ashford Lane in Atlanta, Georgia, being a notable asset of their portfolio.

The operational model of REITs involves a mandatory payout of at least 90% of taxable profits as dividends to shareholders annually, allowing them to evade most corporate income taxes. CTO has represented this operational structure as advantageous for stockholders, promising a sustainable dividend. The company hinges its financial performance measurement on Adjusted Funds from Operations (AFFO), a key metric preferred by analysts as it provides a clearer view of a REIT’s cash-generating ability and profitability. However, the allegations raised in the lawsuit question the authenticity and sustainability of CTO's reported AFFO.

Allegations of Misleading Practices

Throughout the Class Period, the lawsuit alleges that CTO and its executives made various misleading statements, greatly affecting investor decisions. Critics argue that the company portrayed the sustainability of its dividends inaccurately, falsely asserting the soundness of its AFFO. Moreover, concerns arose regarding the alleged practices employed to inflate the AFFO figures, particularly related to the Ashford Lane property.

Supporting these claims, a report published by Wolfpack Research on June 25, 2025, drew unfavorable comparisons between CTO and B. Riley, a financial services firm that has faced considerable downturns. According to the report, CTO lacked the necessary cash flow to cover both its recurring capital expenditures (capex) and dividends since its transformation into a REIT in 2021. It further alleged that CTO resorted to methods like share dilution to bridge a significant dividend shortfall over several years.

The report suggests troubling financial forecasts for CTO, highlighting a critical cash shortage of just $8.4 million against upcoming dividends and expenditures. Following these revelations, CTO’s stock price saw a notable decline of 5.42%, indicating a loss of investor confidence stemming from the allegations and negative financial outlook.

Next Steps for Investors

Investors affected by these alleged securities violations are encouraged to act promptly. Pomerantz LLP calls for anyone who acquired CTO securities during the Class Period to reach out for potential inclusion in the class action lawsuit. The expansive legal journey that lies ahead and the significance of this case underline the commitment of Pomerantz LLP in advocating for the rights of investors and holding corporations accountable for discrepancies in financial reporting and managerial conduct.

For more information or to discuss this legal action, individuals are urged to contact Danielle Peyton at Pomerantz LLP via the provided email or toll-free number. Monitoring developments regarding this case will be crucial for stakeholders as it underscores broader implications for investor rights and corporate compliance in the sectors of real estate and securities trading.

This article serves informational purposes and does not constitute legal advice.