CTO Realty Growth has paid $103.0 million for a big-box shopping center in Lee’s Summit, Mo., a Kansas City suburb, in what amounts to a bet that the center’s rents are too low rather than that its sales will grow.
The Winter Park, Fla.-based REIT announced the acquisition of Summit Woods Crossing on Oct. 6, describing it as a 545,000-square-foot open-air power center on 57 acres in the Kansas City, Missouri metro area. The price works out to $189 per square foot.
The center is anchored by Lowe’s, Kohl’s, Best Buy, TJ Maxx and Total Wine, with a SuperTarget on site that CTO does not own. CTO said the property is nearly 100% occupied, draws approximately 7.3 million visits a year, and sits in a trade area with a population of 113,000 and an average household income of $123,000 within a five-mile radius.
The thesis is in the pricing
CTO President and Chief Executive John P. Albright put the reasoning plainly. “Summit Woods Crossing is a market-dominant, open-air center that is nearly 100% occupied and strengthens our presence in Kansas City,” he said, adding that “the acquisition reflects what we look for in an investment: a purchase price well below replacement cost, an attractive yield, and in-place rents below market.”
Each of those three claims is the company’s own assessment rather than an independently verified figure, and CTO did not disclose a going-in cap rate for this property or say how the purchase was funded.
What the pricing does establish is that $189 a square foot for a fully leased, anchored center is well short of what it would cost to build one. That gap, plus rents the buyer says sit below market, is the standard mark-to-market case in anchored open-air retail: on this reading the income grows as leases roll, not because the tenant roster expands. It is a different proposition from the rest of the retail landscape, where national chains are still closing locations.
A $439 million year
The deal pushes CTO’s 2026 activity into nine figures several times over. Albright said it “brings our year-to-date investment volume, inclusive of both property and structured investments, to $439 million at a blended initial cash yield of approximately 9.0%, and has helped grow our portfolio 30% this year, from 5.5 million to 7.1 million square feet.”
The roughly 9% blended initial cash yield is the figure worth holding onto. It is a return CTO says it is getting across this year’s deals in a market where borrowing has become markedly more expensive β the 30-year mortgage rate ended September at 7.28%, its highest since November 2023, according to Zillow citing Freddie Mac. Other owners of the same format have been active at these levels: Phillips Edison moved $377.5 million of shopping centers into a joint venture with Northwestern Mutual in a transaction built on where stabilized open-air retail income is valued.
Adding 1.6 million square feet in a single year is a large step for a company CTO’s size, and it changes the portfolio’s geography as much as its scale.
A Midwest purchase from a Sunbelt buyer
CTO describes itself as owning and operating open-air shopping centers “located primarily in the higher growth Southeast and Southwest markets of the United States.” Lee’s Summit, which the company places about 20 miles southeast of Kansas City, is in neither. Albright’s framing β that the center “strengthens our presence in Kansas City” β indicates the company was already there, and the deal deepens a Midwest position rather than opening one.
Kansas City has drawn outside institutional capital on both sides of the market this year. Morgan Stanley bought Ace Hardware’s 1.5 million-square-foot distribution hub in the metro for $158.5 million in August, and the Royals selected builders for a $3 billion ballpark district on the Missouri side in September. On our reading, a 545,000-square-foot power center in a suburb with a $123,000 average household income fits that pattern: buyers are treating the metro as a place to buy income, not to chase appreciation.
CTO also externally manages and holds what it calls a meaningful interest in Alpine Income Property Trust, a publicly traded net lease REIT. The announcement did not address full-year guidance.
