CTO Realty Growth Class Action Lawsuit: A Comprehensive Investor Playbook on the Lead Plaintiff Selection Process Under PSLRA [2025]

Allegations in the CTO Realty Growth Class Action Lawsuit

CTO Realty Growth is a publicly traded real estate investment trust (“REIT”) that owns and operates a portfolio of purported high-quality, retail-based properties located primarily in higher growth markets in the United States.

The CTO Realty Growth class action lawsuit alleges that defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that:

1. CTO Realty Growth’s dividends were less sustainable than defendants had led investors to believe;
2. CTO Realty Growth used deceptive and unsustainable practices to artificially inflate its Adjusted Funds from Operations (“AFFO”) and overstate the true profitability of its Ashford Lane property; and
3. Accordingly, CTO Realty Growth’s business and/or financial prospects were overstated.

The CTO Realty Growth class action lawsuit alleges that on June 25, 2025, Wolfpack Research published a report entitled “CTO: The B. Riley of REITs” which cited interviews with former employees and whistleblowers and accused CTO Realty Growth of, among other things, “not generat[ing] enough cash to pay its recurring capex and cover its dividends since converting to a REIT in 2021,”

And instead “rel[ying] on dilution (increasing shares outstanding by 70% since December 2022) to cover a $38 million dividend shortfall from 2021 to 2024,” employing a “manipulative definition of [AFFO] where they exclude recurring capex, unlike all of their self-identified shopping center REIT peers,” and “us[ing] a sham loan to hide the collapse of a top tenant from shareholders at Ashford Lane.”

On this news, the price of CTO Realty Growth stock fell more than 5%, according to the complaint.

The Role of the Lead Plaintiff

In securities class action lawsuits, the lead plaintiff plays a pivotal role in representing the interests of all class members. Under the PSLRA, the lead plaintiff is typically the individual or entity with the largest financial stake in the outcome of the case. This section explores the responsibilities and selection criteria for lead plaintiffs in the context of the CTO Realty Growth lawsuit.

Responsibilities of the Lead Plaintiff

The lead plaintiff has several critical duties, including:

• Selecting Counsel: The lead plaintiff is responsible for choosing a law firm to represent the class. This involves evaluating the firm’s experience in securities litigation and ensuring there are no conflicts of interest.
• Monitoring the Case: The lead plaintiff must stay informed about the progress of the lawsuit, including key filings, court dates, and settlement discussions.
• Participating in Settlement Negotiations: The lead plaintiff plays an active role in negotiating settlements, which can significantly impact the recovery for all class members.

Selection Criteria

The PSLRA outlines specific criteria for selecting the lead plaintiff, which include:

• Financial Interest: The court will appoint the plaintiff with the largest financial interest in the relief sought. This is typically assessed based on total losses incurred during the class period.
• Typicality and Adequacy: The lead plaintiff must also meet the typicality and adequacy requirements of Rule 23. This means their claims should align with those of other class members, and they must be capable of adequately representing the class.

The PSLRA and Its Impact on Securities Litigation

The PSLRA was enacted to address concerns about frivolous lawsuits and to streamline the process of selecting lead plaintiffs. This section examines the key provisions of the PSLRA and how they influence the CTO Realty Growth class action lawsuit.

Key Provisions of the PSLRA

The PSLRA introduced several important reforms, including:

• Lead Plaintiff Provision: This provision allows investors with the largest financial stakes to take the lead in class action lawsuits, ensuring that those most affected by the alleged misconduct are at the forefront of the litigation.
• Heightened Pleading Standards: The PSLRA requires plaintiffs to provide more detailed allegations in their complaints, which helps to filter out baseless claims.
• Automatic Stay of Discovery: The Act imposes a stay on discovery until motions to dismiss are resolved, preventing premature disclosure of sensitive information

Implications for the Lineage Lawsuit

The PSLRA’s provisions are particularly relevant to the CTO Realty Growth class action lawsuit. Investors who suffered significant losses during the IPO period are encouraged to step forward and seek lead plaintiff status. The structured process established by the PSLRA aims to ensure that the most appropriate representatives are chosen to advocate for the interests of the entire class.

The Importance of Institutional Investors

Institutional investors, such as pension funds and mutual funds, often play a crucial role in securities class action lawsuits. Their involvement can enhance the credibility of the case and potentially lead to larger settlements. This section explores the significance of institutional investors in the context of the Lineage lawsuit.

Advantages of Institutional Participation

• Financial Resources: Institutional investors typically have substantial financial resources, allowing them to absorb losses and invest in legal representation.
• Expertise: These investors often have dedicated legal teams and experience in navigating complex litigation, which can be beneficial in managing the case effectively.
• Influence on Settlements: The presence of institutional investors can lead to more favorable settlement terms, as defendants may be more inclined to negotiate with entities that have significant stakes in the outcome.

Challenges Faced by Institutional Investors

Despite their advantages, institutional investors may encounter challenges when seeking lead plaintiff status, including:

• Resource Allocation: Engaging in litigation requires time and resources, which may strain the operations of institutional investors.
• Balancing Interests: Institutional investors must balance their fiduciary duties to beneficiaries with the demands of active participation in litigation.

The Process of Filing for Lead Plaintiff Status

Investors interested in serving as lead plaintiffs in the CTO Realty Growth class action lawsuit must follow a structured process. This section outlines the steps involved in filing for lead plaintiff status.

Initial Steps

1. Assess Financial Losses: Investors should evaluate their financial losses during the class period to determine if they qualify for lead plaintiff status.
2. Gather Documentation: Collect relevant documentation, including purchase records and communications related to the investment in Lineage.

Filing the Motion

• Sworn Certification: Investors must file a sworn certification with the court, detailing their financial interest and commitment to representing the class.
• Notice to Class Members: A notice must be published to inform potential class members about the lawsuit and their right to seek lead plaintiff status.

Deadline for Applications

The deadline for filing a motion to serve as lead plaintiff in the CTO Realty Growth class action lawsuit is October 7, 2025. Investors must act promptly to ensure their voices are heard in the litigation process.

The Impact of the CTO Realty Growth Lawsuit on Investors

The outcome of the CTO Realty Growth class action lawsuit will have significant implications for investors who participated in the IPO. This section examines the potential consequences of the lawsuit for affected shareholders.

Financial Recovery

If the plaintiffs succeed in their claims, investors may be entitled to recover a portion of their losses. The amount recovered will depend on various factors, including the size of the settlement and the number of class members.

Corporate Accountability

The lawsuit also serves as a mechanism for holding Lineage accountable for its alleged misconduct. A successful outcome may prompt the company to implement changes in its operations and governance practices to prevent similar issues in the future.

Conclusion

The CTO Realty Growth class action lawsuit represents a critical juncture for investors who participated in the company’s IPO. Understanding the lead plaintiff selection process under the PSLRA is essential for those seeking to advocate for their rights and recover losses. As the deadline for filing motions approaches, affected investors are encouraged to assess their options and consider stepping forward to serve as lead plaintiffs.

The outcome of this CTO Realty Growth lawsuitcould not only impact individual investors but also shape the future of corporate accountability in the securities market. This article provides a comprehensive overview of the KCTO Realty Growth class action lawsuit and the lead plaintiff selection process, ensuring that readers are well-informed about their rights and options in this significant legal matter.

Frequently Asked Questions About the CTO Realty Growth Lawsuit