#United States #New York #Class Action #Faruqi & Faruqi #CTO Realty Growth

Investigation of Claims Against CTO Realty Growth

Faruqi & Faruqi, LLP, a prominent national securities law firm, has announced the commencement of an investigation into potential claims on behalf of investors affected by CTO Realty Growth, Inc. The firm is particularly focused on cases where investors suffered losses exceeding $75,000 between February 18, 2021, and June 24, 2025. The deadline for those wishing to seek the role of lead plaintiff in a federal securities class action is set for October 7, 2025.

Background on CTO Realty Growth

CTO Realty Growth operates within the real estate investment trust (REIT) sector, focusing on owning and managing income-producing properties. Recent allegations have emerged suggesting that the company, along with its executives, may have violated federal securities laws by presenting misleading information related to its financial status. Reports indicate that CTO has made claims that were later challenged, asserting that their dividends may not be as sustainable as they led investors to believe.

The accusations intensified following the release of a critical report by Wolfpack Research, which highlighted several concerning practices within the company. This report suggested that CTO has falsely inflated its Adjusted Funds from Operations (AFFO) and misrepresented the profitability of its Ashford Lane property. In particular, it alleged deceptive practices employed to sustain dividends while not generating sufficient cash flow.

Key Findings of the Wolfpack Report

The Wolfpack Report drew comparisons between CTO and B. Riley, a financial services company that faced a severe downturn. It stated that since converting to a REIT in 2021, CTO has struggled to maintain a sustainable cash flow to support its operations. The notable findings included:

• - CTO’s reliance on share dilution, which had increased shares outstanding by 70% since December 2022, to cover significant dividend shortfalls.
• - Allegations of using misleading definitions of AFFO, excluding recurring capital expenditures, to misrepresent financial health.
• - Predictions of imminent further dilution, highlighting a cash reserve of merely $8.4 million while facing quarterly dividends of $14 million and ongoing capital expenditure needs averaging $5.7 million.

In response to the publication of the report, CTO's stock witnessed a decline, falling by $0.98 per share, translating to a 5.42% drop, indicating investor concern regarding the company's current and future financial viability.

Potential Impact on Investors

Investors in CTO Realty Growth should remain vigilant. The court-appointed lead plaintiff plays a crucial role in overseeing litigation on behalf of the impacted class. If you believe you are a qualifying member, due diligence in determining your legal rights is essential.

Faruqi & Faruqi encourages not only affected investors but also whistleblowers and former employees who might have valuable insights into CTO’s operations to reach out. The firm assures that all communications will be handled confidentially to protect the interests of those participating in potential legal actions.

For additional information regarding the class action and exploring your options, investors can connect with Faruqi & Faruqi directly. With a history of recovering substantial amounts for clients, the firm is positioned to provide the necessary support for investigators navigating this complex situation.

Finally, the investigation reinforces the critical role of transparency and responsible communication in the corporate sector, especially concerning the obligations firms owe to their investors. As the investigation unfolds, all stakeholders will be keenly observing the proceedings, anticipating resolutions that not only address damages but also hold entities accountable for their disclosures and business practices.