GTY - Earnings call transcript Q3 2020

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Operator

Good morning, everyone, and welcome to Getty Realty's Earnings Conference Call for the Third Quarter Of 2020. This call is being recorded. Prior to starting the call, Joshua Dicker, Executive Vice President, General Counsel and Secretary of the company, will read a Safe Harbor statement and provide information about our non-GAAP financial measures. Please go ahead, Mr. Dicker.

Joshua Dicker

Operator. you, Thank to Getty like all joining for I Third thank Quarter for Realty's Earnings us would you Conference Call. company XX, Yesterday quarter the released results financial afternoon for ended September XXXX. its the release The Form section our site Web available the gettyrealty.com. Investor of are at X-K Relations in earnings and not forward Certain looking in are of information historical this course made on and statements. statements call the based may constitute the and based uncertainties are management's the and results cause subject that trends, are current in on statements materially beliefs, These differ and to events, could described from actual to expectations those statements. forward-looking statements our opportunities. questions, future the future financial remarks forward-looking and of and to regarding and company's Examples their made company operations, acquisition to response response include pandemic, including may statements also COVID-XX and include plans in in performance, the guidance, redevelopment management or by company's XXXX the reflect that events currently and to you us, such caution differ We best could statements factors on judgment known results materially. actual based that our or of annual more refer Form XX-K, year subsequent with on to filed I you XXXX, reports other quarterly report the filings December that on cause materially XX, the ended other made today. and for actual our and for detailed could the any differ or the from that results XX-K factors to implied expressed Form made are SEC a the those in discussion statements risks forward-looking company's

turn reconciliation of measures, only Also, that and our call our the definition update place in not date to over Christopher Officer. refer use for from may adjusted this our those as earnings. view let should to undue our Constant, to release The You including net our measures operations, me the Executive of that, of call. made our or With discussion of Chief company statements, non-GAAP the funds of financial AFFO, of a reliance course be forward-looking statements earnings no to reflect hereof. on forward-looking any duty please undertakes which

Christopher Constant

on Josh. welcome quarter Operating Similar the to our for call the you, pandemic, Mark the the today XXXX, XXXX. provide Fielding, and Officer; of morning, will Olear, Chief COVID-XX on Chief we and quarters of Thank our in our Good are everyone, financial context me and our call update our ended to Officer. third business and Danion Josh With ongoing quarterly statements. Financial also provide and prior portfolio in our review an

evidence I of COVID-XX, further and to report our results Regarding our lease that growth pleased of third stability am quarter triple-net rents the are platform.

challenges and strong has time and Getty our our what other company. achieved of a Our portfolio rent working quarter The gas related the company our another is overall many collections, am during estate aspects results produced difficult automotive very proud operating U.S. Getty. stores, year of I team we for stations, to assets real entire retail a as been convenience especially performance, sector. growth and of the continue to hard strong of economy for at

on for of remainder We expect our proud accomplishments continue and are all of year-to-date, our to initiatives the executing XXXX. of

accretive from active benefited we triple-net stability our of results, our the to our acquisition rents Turning and and lease program.

a X% gas located assets carwashes. assets as acquisition our strategy properties and The growth, across of quarter closed million our third result, million, $XXX well share has earnings our increased transactions after key These both $XX.X the just country, AFFO approximately in as a include far X% this convenience high-quality than XX has share. to are As year. the ended. to and markets more numerous including by acquired portfolios quarter of that our rental so Getty by for and success contributor revenues from more third than per $X.XX properties year-to-date to been per

Getty sector, transaction in disruptions real earlier on estate to maintain year. been several the has opportunities caused pandemic COVID-XX underwritten we and the in which across commercial had able While close momentum activity the

a X/XX will with redevelopments. brining we XX inception of convenience completed the as Mark our mention, addition, remodeled completed gas in total redevelopment projects MSA the In number and to location, project for of since Dallas-Fort a our Worth

me Let additional Getty's the performance some share now pandemic. details during on

For of quarter, strong. and other specifically, performance classes portfolio the more automotive our in gas and the the asset third convenience was and general,

short-term and and repaid Our we third collections rent quarter mortgage of and the substantially small have continued mortgage received number the rent in due during to mortgage and which were importantly, payments, we payments. and payments all our be the to Perhaps deferred XX% of to rent collected deferrals a for agreed more improve, of quarter.

quarter, the rate and for of the our collect October, rent to and deferrals the fourth mortgage we due continuing month. this are month remains Looking ahead XX% of were to all today, that currently collections to be substantially as at repaid COVID-related

the tenants and impact regarding strength encouraged remains of COVID-XX economy, by exhibited pandemic. our forward the of the since uncertainty assets broader Although beginning by the we to the are

continuing tenants many the the therefore during quarter. we now volumes and are We properties health activity operations believe performed are tenants safety the continue pandemic challenges, the generally, continue of affect and year-over-year, negatively most to could economy challenges. impact and our decline adjust XX% the Getty's time. of to COVID-XX difficult and environment at to height tenants the U.S. down continue we results. our health vigilant XX% as to to Despite Nationally, compared recover reflect operating their this saw the be pandemic's monitoring remain well have of of on ongoing these will consumer impact second fuel and to The during rent stressed the retail in for tenants collections as financial our severity and

prior of year's slightly credit ahead of balance performance. availability liquidity the our elevated position, in our we highly pandemic, million with on The across million money a of certain fuel remain $XX the are in at revolving some execute of and majority XXXX, used gross point of quarter. basis store to during reporting comparable we cash on capital generally net our believe business profit of already meaning results operators sufficient on on basis. on our national have of are well ended convenience margins gross others hand, touch with periods being remains experiencing increases of fuel sheet that average addition, plan. impact with fuel the has closed on on fund the our cash that from annual In cents-per-gallon the We and access to side quarter To with this acquisitions time tenants the tenants facility, on reporting performed regional, are and year-over-year during business we board $XXX hand The declines more to in a profit. making fourth the have

approved our the that per our to our Turning year I dividend dividend, to $X.XX am an the pleased X.X%, to quarterly of increase performance, increase. share straight dividend. with This given report Board seventh represents

it past this appropriate is a year. ratio as is annual believes payout Board increase and the Our over to maintains tied stable growth the company's

continuing Getty the nature grow believe the sheet our ahead, effectively all our fluid, there believe our environment, businesses, lease we essential and balance uncertain last this over years, are situation for to business. Looking navigate leases, the us we our its be stable to opportunities our Furthermore, while position several will well. of the tenant of continue of strategy remains to and that structure objectives execution net

managing through convenience other in this strategy, committed investment sectors markets assets, metropolitan will our focuses an that which active the our and on shareholders of net projects. redevelopment internet-resistant, confident create are acquisitions, to largely our automotive We portfolio approach continue term. across value country, over remain our selective the targeted to leased long for service-oriented in We and expanding portfolio

in these term. approach driving critical We are objectives additional components our focus on value we of and continue XXXX through ability on to strategic successfully the should confident result our the over shareholder and as to remainder long move This execute in beyond.

executive success. and me let our his Mark, four Danion thank finances his like the for the address Fielding, key to to just company's reasons. going was of plus dedication the transition. over personal announced years. to team call to for the Danion would last Getty's turning part Getty led the leaving Danion our is be team and Getty CFO I recently Before

his expect The is Mark the anticipate CFO well call portfolio search him over we role. will of discuss We transition yearend, turn With that, and to smooth Danion Olear before wish we a that our his endeavors. leave future and and the underway activities. in Getty to investment family I'll and

Mark Olear

Thank you, Chris.

transaction of investment market. our were activities for of the terms the in we In active quarter two first very and third October, weeks

diversity of for Wash. of Car to we quarter, the an a to the quarter, our net million nine back comes term a and from length tunnel which additional million These quarter subject complete of have Antonio XX-year for of it acquisition of A are the end than we are multiple eight during Subsequent the with we size San average average the renewal acquired more located feet. MSA. and portfolio. with an options. Properties yield generate X in XXX within closing a and to of Both acres properties life enhance that range. believe properties $XX.X properties. invested the properties. the we acquisition invested $XX.X cash a unitary Going is cap expect rate of the of transaction subsidiary line invested quality acquisition majority Go our acquisition lease line our acquisition to historic acquired with triple lease base third and The of We million $XX

million. X,XXX term we have the multiple that an the assets six which a we a United with properties life service convenience two five of constructed in was car Zips Ohio. are X.X%. the acquired triple completed excess acquired one operators our acquisition X.X cash locations The with net properties subjected acres and are Additionally, XX-year The with aggregate throughout XX-year Getty's lease lease have located to In feet today's of we the unitary on modern transaction, quarter the Texas. acquired of average wash on full triple base States. stores. properties in initial North and options. leading acquisitions newly size to second $XX.X is leaseback Carolina size of the Wash. the square end, The attributes Southern The a renewal sole sale closed to Getty net the state for store the in quarter average we site sale subject properties an store yield Subsequent convenience all acquired independent reflect of and of Car

Our initial our in is with line historical cap rate acquisition cash yield range.

on categories other two our locations including The service Antonio our Go to growing car centers. sector Car and also and portfolio the remain in the Kansas of lease with net triple well MSA. added as our acquisition XX-year as automotive were highly car auto-related and wash We gas San to City convenience closed committed washes sites We Wash.

are we seeing the COVID-XX our increase marketplace. transaction for to While the overall target continues in conditions the the asset an business in and pandemic market, have classes activity impact transaction stabilized,

stake we of asset its As a high we'll Getty assets. expect committed will and core partnering our strong inquiring active the remain acquiring that and quality principles role result, and acquiring in target underwriting to and with tenants classes. remain

completed the both Moving in which to we our $X.X approximately third redevelopment projects net one invested In portfolios. in for back and quarter, the our quarter, sites platform, to returned redevelopment million we project lease progress. are

portfolio and returned the Specifically a gas released Worth MSA, site convenience to the location. to state-of-the-art in July, a a where we project through was X-XX Dallas-Fort in

in Our to our on expect project return and of total investment million, we a XX%. $X.X this investment is generate

subject on of properties, the have recaptured from leases current yet which leases five signed includes triple quarter been which active projects and redevelopment but currently seven terms we leasing, with ended net the leases, are tenants. which not signed XX to In

suppliers All in continue the due we to of to note process. continuing as I million the distancing $X.X and invested in normal on municipalities impact have redevelopment pandemic, in delays activities, other are contractors, certain to Again, deal regulatory business impediments redevelopment through projects function. and of In of projects with projects our these XX requirements that and our total, experience pipeline. restrictions we to advance social COVID-XX approximately

of Getty to will perspective, excess XXXX. that will in these market where require the we million XX investments generate a we capital funds have QX From today. investment in expect one these invested company expect commencement additional $X.X total rent to and incremental could in the returns have of We by projects acquisition

years, Web of XX%. information pipeline, please detailed XX% to Page to We possibly over of our the of the redevelopment more be current X% site. opportunities and on portfolio refer yields XX investor can greater anticipate with committed between our remain five our which to un-levered than optimizing For redevelopment targeted presentation, our redevelopment portfolio continue program found involving next on and

approximately during the million. property $X.X proceeds third sold non-core the of Turning one to quarter, dispositions, realizing we

We also exited leased landlord. one property, which from a third-party previously we

the a continue not we longer dispose where As that no look we at have location competitive property ahead, C&G we is have potential. and selectively the the does determination made properties redevelopment will to

of the ended seven sites eight result a properties, net vacant activity, XXX and our redevelopment active As properties. we quarter with lease

excluding Our that, lease is approximately weighted occupancy, XX to increased call I'll turn active term the With overall redevelopments, average and to our XX.X%. over years, Danion.

Danion Fielding

Thank you, Mark.

quarter, third excludes increase year's of the also and million, an total to over tenant income, were our grew the prior $XX.X which reimbursements interest X.X% For quarter mortgages and on and notes receivable our revenues $XX.X million. rental X%

redevelopment rental to escalators acquisitions completed from recently rent leases, by in and continues plus driven Our additional be income growth and our rent projects.

increases increase to in a in property reduction expenses third and in and professional During and fees. expenses, both expenses and an offset legal employee-related administrative environmental the quarter benefited due by general other XXXX, costs we've of from

please For specific afternoon's earnings more on to information expense release. refer yesterday movements,

the to or share, per prior quarter. for FFO $XX.X million share per as million, $X.XX year's the $XX.X was for or quarter Our $X.XX compared

AFFO in the was quarter. AFFO up prior $X.XX year. as was and prior Our year's basis, the million for in million a share the $X.XX, compared per our On to quarter $XX.X X%, $XX.X

the XXXX and million $XXX borrowings, million Turning ended total capital balance includes our agreement, we $XXX sheet $XXX long-term credit of quarter and million third markets activities, fixed to the of debt. rate which under with

remains average our million earliest average at our the fixed is cost of maturity Series matures borrowing and X.X maturity Our $XXX being February X.X%, weighted A, is our with weighted XX% debt rate, in which years of debt XXXX. debt

refinancing provide an time. this appropriate We debt are of at update the and upcoming process in maturity, we'll the

facility, net to ratio stood debt debt to At capitalization X.X used to times. our debt As end, our total operations can million was credit at XX% of total today, value term. which un-drawn of near to we medium have on the EBITDA revolving $XXX our fund for be growth capacity or our asset to quarter XX%, over and was

we the capital. quarter our ATM program permanent Additionally, utilized efficiently in raised and

quarter, price profile. our average For have available growth million to $XX per our of the fund at under low to an maintain our we $XX.XX leverage raised We us million which existing program. helped $XX still and share, at-the-market

think and maintaining remain capital ahead capital our to look needs, we As about structure. flexible well-laddered a we and committed

for Our environmental liability ended year. the down million quarter the at $XX million, $X.X

environmental net the million. was quarter, For spending approximately company's $X.X the remediation

XXXX of guidance the withdrew well difficulty] have XXXX I back COVID-XX While restrictions persists with and per range not in pandemic, faired over COVID-XX reimplementation we are call our and our quarter the tenants at the uncertainty conjunction Chris. in turn this with Getty possible so pandemic, shelter-in-place With of first our economy will guidance given uncertainty continued the the far risk the share through [technical to and time. that, reinstating We the to results, businesses. AFFO related

Christopher Constant

the call Thank you, Danion. Operator ask to With the open for that, I'll questions.

Operator

from Capital Markets. Todd And proceed question is at with we your Instructions] [Operator question-and-answer with a Thomas Please be first time Our conducting question. this session. will KeyBanc

Todd Thomas

morning. Hi, thanks. Good

Christopher Constant

morning, Good Todd.

Todd Thomas

morning. Good

it acquisition, was any changes of broadly that's paid the deals that and flow negotiating, new attributable pursuing and sounded in pricing talk to deal Were trending. you third investments can compared for prices you how more just pre-COVID today quarter the of there sort to in like some pricing then and of about so October were terms in pre-COVID. the you that In the were

Christopher Constant

is strong. in cetera. sheets very results sector view and offering really answer performed we're I'll underwriting balance strong; one the both too that has in been rates of were Yes, anything, expectations, our much which cap the well, the remain what's there been et quite If with our change tenant those we're of fairly right, sector statement, a is range what closed hasn't both with

see we change whole So our of cap assets. of don't a lot types the environment for around rate

Todd Thomas

the of acquisition and expect how additional heading and sort pipeline whether Okay, like and really you big XXXX? is pipeline maybe can the can have you you what closings describe year-end, discuss today, by into to looks any

Christopher Constant

provide all both could multi-property I opportunities, say of What the don't have of and to level Yes, and we team series one-off typically said that is underwrite, to we to and forward we the in expectation. Other acquire confident I those execute feel my of pipeline, remarks, in both Automotive strategies, C&G is assets we're continuing on in think that I and as very a of continue to really one sector our classes. asset in going attractive continuing is the

Todd Thomas

on February -- provide balance just sort update the lastly today terms and Okay, sheet, the A the on and just of timing an notes you the expectations of in any you that Series pricing have can

Christopher Constant

remarks, as I'm today. we're, of of to certainly company, level of in middle refinancing upcoming sort maturity, mean to debt that not I a event his pricing Danion coupon again, we the are through the February but for prepared and the pretty of mentioned XX be positive we working expect Yes, a or in again, offer any

Todd Thomas

you. thank Okay,

Operator

And our from next your question. John is Massocca with with Thalmann. proceed Please Ladenburg question

John Massocca

Good morning.

Christopher Constant

John. Hi,

John Massocca

rates as of So, just I lot recent or those, bucket, kind other we spread in it kind is more acquisitions of maybe on how mean is which mean about is that think are rate C-stores significantly traditional on the cap versus each touching other? of the all? quarters again, in at of right of cap kind kind carwashes C-store a top I'm big investment, on carwashes between of if trading inside I thinking, of automotive

Christopher Constant

the one extension is C&G Yes, we is like reasons some of between and Automotive consistent Other other buckets. of and pricing the fairly the automotive

it's small significant a gap. there think variations, I not while So are

John Massocca

the how of did with subsequent I'm missed maybe that deal was I deal sorry, quarter-end, to tenant, then closed and to kind come Okay, team? and that the the

Christopher Constant

the locations they have they're across they United States. Fikes operate CEFCO, brand a tenant the their probably C-E-F-C-O, So the XXX and Southern C-stores under Wholesale, is --

have relationship kind existing an own leaseback their organically, kind and balance been sheet, of We who who next to growing of then team from has they've they've to the time used time been right, operator certainly on balance management reloading there. with redeveloping and an sales been and sheet, their They've the really has -- for tranche. right-size

John Massocca

and shifting potential potentially about New Okay, with how environmental a of kind then uncertain between on settlements obligation this MTBE away little uncertain the the sheet, State excess with dynamic balance environmental August are around thinking gears the Jersey, could impact understood, due future settlement of the more bit, maybe that's obligation obligation related could kind just kind to kind of go contamination of and of obligation, the that of some to just what's certain as settled? and announcement losses

Christopher Constant

Well, are the matters. our on so litigation million $XX which the is balance the remediation that from which sheet, that separate -- environmental obligations, is our

our to and on that company expect get strategy very a we on this issues time, move sheet, some and as settlement fully your that REIT, from I'll been question litigations for a about here. to a litigation Getty to part and our the in the out are So Getty in the it's environmental all hard resolve right. matters out -- deal of as business. long was with operator, company, an the wants stem legacy a our balance ultimately becoming of and filings case to -- and there of settle and working we litigation been are the there disclosure our and out have These there, all answer we on pre reserved when that's time from that get litigation, from a is

John Massocca

flowing for and Okay, is legacy is and I reserved outstanding that litigation, other then speaking broadly kind where of how through? so maybe guess much any

Christopher Constant

at our through right, on Well, flows additional I XX.X. we was but sheet? may I quarter number, what it's sheet, our have and liability exact on accrued the take the P&L, end, think Danion it balance and accruals it's a think balance Was as

Danion Fielding

Yes, it's XX.X, Chris.

Christopher Constant

Okay.

John Massocca

all that's much. for it Okay, very me. Thank you

Christopher Constant

John. Thanks,

Operator

proceed [Operator Instructions] question. with is Please question And our from Bely Nikita next JP with Morgan. your

Nikita Bely

but at happening have been little mentioned, with about store talk collections but pre-COVID Chris, guys. good still do tenants? being Can by bit the morning, a Obviously that? level your rent gas are know levels. fully Can Hi, you profits very that the all to stations I coverage you at a and talk back there? about you you what's the economics good, bit coming not squeezed little back see

Christopher Constant

investor Yes, coverage, published this morning. presentation so our we our

going if regional. side months as but higher coverage volume, tenants business, and challenged of but my margin where rolling what quarter than increase X.X. business on that behind published of The almost the from offset was off historically is off today, of the trailing has many in in quarter. was primary certainly Getty. higher strong driver margin most, on Getty. number remarks, the effect what it the reduction Really XX and the other C-store into is increasing Our markets, the stable of the very operate, fuel actually the relatively it's little was strong, for last that not is, In That middle there where a I actually is the It's gas coverage depending an again environment certain a and of for of bit, for XXXX. a all XXXX, markets, a strong year-over-year, driving in mentioned so, very which up in you it's our of was our part see highly it's a actually tenants

Nikita Bely

the see more on are you the What activity flow? happened you. timing have about XQ, also actually speakers] and between XQ something the and months is there Got last anything flow, is do we're competitors, behind on that to you post good working deal -- nine changed so, it that been six for a side, they [multiple deal This very just while, who or has the and the for

Christopher Constant

questions There are three in there.

some busy COVID. on you deal quarter, of in of assessing year, normally of kind just two a as the a be right, recurring all consistent, had a fourth you'd see market there, and put transactions so number and busy I if to strong, I context our damage to a institutional back of question way of automotive which go and quarter, those investors, off your the is our of that's those constant and but efforts a markets, think market closing as And had of competition, what a I kind we in were pay estate the working end other still out opportunities to last the both things really in the of pre-COVID, the you're hold Getty. is quarter fourth at far more interest acquirer XXXX, in very driving kind goals been the certainly this flow? what's one on. the were was question start first seeing all The we've 'XX, we're seeing Many really the then, think of quarter team think opportunities, first second XXXX in rate Those from of lot is operators and given market, back, be opportunities of came repeaters, competition and the C&G were real we other of environment.

decrease think either don't any in there's pre been post-COVID. competition, I So, or

Nikita Bely

market? different those than not are But pre-COVID, and any in you front, seeing what today, about the the sales distress also any you are today have

Christopher Constant

having I I many word, capital wouldn't minds. to "Distress." certainly I think our what tenant's at of of say the is use the would forefront is access

regional If than have public you access larger operator, operator. if more a a a you're small to you're or certainly capital

have able we're we've closed that our a to to on of our saying monetize of opportunities that's for or year are that, continue, tenants for we probably a right, capital while that think will our and been lot that sheet, other I a trend operators free of and this up business, and think have real that Some balance that. COVID estate we accelerated areas

Nikita Bely

balance longer a off the maybe time, last balance maybe Danion; and deals, think been on there's company bit you, you managed term leverage conservative very in do a do the Danion take Getty bit the well do very little the sheet over you've from sheet to how one on? opportunity has you for more position, Got for now question basis, to see and a

Danion Fielding

will articulating a consistent we very X.X indicated net Nice conservative that question, leverage Nikita. range in manner, our We've times. X.X feel within of that debt and a been to our in we've be

The currently As mechanism us X.X do increase see really we it you as way that capacity for times. know, leverage we're pursue our knew to a as financial don't provides at we growth, engineering purposes. today we to acquisitions

way continue So, a the we in maintain to balance basis. strength on conservative flexibility manage go-forward that to sheet will that and

Nikita Bely

Thank Danion. you,

Operator

And to to Constant no questions, I we further further time have for Mr. closure at would this like any return or remarks.

Christopher Constant

Thank you, you everyone in to our We Thank appreciate I numbers look interest forward of year-end Operator. in in your report Getty. front Bye. in Thank your we the back and February, for interest when everybody getting company. you.

Operator

This now concludes our conference call.

You disconnect at this time. may

Getty Realty (GTY) 22 Oct 202020 Q3 Earnings call transcript