CTO Acquires South Texas Retail Asset for $82M

CTO Realty Growth has acquired the 399,000-square-foot Palms Crossing shopping center in McAllen, Texas, for $81.6 million. Simon Property Group was the previous owner, according to Yardi Matrix.

Together with the existing retail space, the deal includes two pad sites on about 6 acres that can be developed in the future. With this acquisition, Texas becomes the company’s third-largest state by annualized cash base rent.

Best Buy, Hobby Lobby, Burlington Coat Factory, Barnes & Noble and Nike anchor the property, reflecting national retail trends favoring necessity-based and experiential tenants. At the time of sale, Palms Crossing was 98 percent leased.

Sitting on 47 acres at 3300 Expressway 83, the shopping center is close to McAllen International Airport and just off Interstate 2. The property is also within 3 miles of another retail center dubbed Sharyland Towne Crossing.

The deal comes at a time of recovering fundamentals for U.S. retail real estate, which closed 2025 on firmer footing, with demand rebounding and supply growing even tighter, JLL reported. Positive net absorption returned in the second half 2025, vacancies remain near historic lows, and new construction is slowing down. 

CTO on the hunt for more retail

CTO funded the transaction with available cash and its revolving credit facility. Later this year, the company expects to sell a different property and use the proceeds to retroactively fund the Palms Crossing acquisition.

The McAllen deal isn’t the first time CTO bought a property and used the proceeds of a sale not long afterwards to pay for it. In December, the company sold The Shops at Legacy North, a 243,000-square-foot mixed-use center in Plano, Texas, for $78 million. Proceeds from the sale financed CTO’s $65.2 million acquisition of Pompano Citi Centre, a 571,000-square-foot retail center in Pompano Beach, Fla.

CTO reported in its fourth quarter earnings call in February that its same-property NOI for shopping centers rose 4.3 percent year-over-year during the fourth quarter. The increase, according to the company, was driven by leasing activity and reduced maintenance costs.