GTY - Earnings call transcript Q4 2021

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Operator

Good morning and welcome to the Getty Realty's Earnings Conference Call for the Fourth Quarter of 2021. This call is being recorded. After the presentation, there will be an opportunity to ask questions. 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 non-GAAP financial measures. Please go ahead, Mr. Dicker.

Joshua Dicker

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

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

Christopher Constant

fourth call the quarter you, our Thank full everyone. to XXXX. Welcome Good earnings for morning, and year Josh.

in capital the Joining our and Olear, the Officer. call off Operating our company's Mark lead markets on Dickman, summarize for us today commentary highlight are today's year-ended Chief investment Financial fourth the our I and by providing on Chief call performance XXXX Brian quarter Officer; our year, activities. and will

As are results portfolio you to Mark detail. usual, in the take and prepared through Brian and financial

all year's year's for more XXX% benefited of a convenience than of properties quarter million which and many continued XX delivering that As we further invested I'm XXXX of to our platform, COVID-related our strength year, and, related cases, the last from and growing collected portfolio deferrals. million fourth across than rents over number objectives. portfolio, we set enter all shareholders. the and earnings from of increasing our than to report more scaling of during we We automotive exceeded pleased XXXX, this diversifying retail XXX a and in-place our returns XXX rent goals achieved including strong in to we've

from strong rent escalations of share. increase AFFO, redevelopment our AFFO cash adjusted growth, resulted a decrease Our projects per funds a in our and XX% or contractual rental in completed income, growth contributions X% operations, from in and external X%

reflected asset investment year approach. the classes diversified more for a activity of disciplined maintaining target a while set investment Our

quality Our strategy to automotive real estate the with branded is and and across to regional and partner sectors and national acquire retail high convenience strong growing operators.

Our and was the a as of most drive-thru adverse in-store, service investment restaurant XXXX history spending in auto assets. in carwash, acquired variety the company's quality high we

including as portfolio, Splash United such car We also and Express Wash, introduced high Car Wash, Refuel, and quality Pacific relationships We to new Zips with Tires, wash. tenants expanded WhiteWater GO several Valvoline Flash existing Car Wash. Mavis tenant operators our Market, our Car

redevelopment by pleased as stores. sites sale-leaseback believe existing and of core a it development and complements throughout the the for are Transit funding ongoing initiative. industry Getty our tenants they year and our product program of development, our flexible redevelopment our ground-up or success both allows through We modernization their to acquisitions, Having businesses support offering new grow

on commenced redevelopments one completed with to Since a rent our addition, online we quarter, to solid of we pipeline of and during to convenience for redevelopments, inception program, In the completed maintain come five store we have which X-Eleven new additional total five over the projects locations bringing expect next years. the projects. two XXXX XX

at EBITDA. recast with active fourth more quarter, to the We our shape. XXXX ended revolving net the We under terms with credit were leverage in favorable throughout ATM in Xx October. sheet balance facility ending Our our excellent year

We've want on asset operators. estate occupied new all and quality portfolio. completely to We maturities XXXX. management senior Post remain this on demonstration reiterate our in notes effectively commitment company active debt commitment for June our to unsecured of our executing undrawn. the maturing transaction, XXXX. high I focused ago financing credit our to national facility of As announced days supporting our investments addressed activity initiatives, until retail two is the term long notes acquiring both and refinanced by million issuance investment regional proactively on growth our revolving our and the we and further to real XXX of

continues consumers speed, convenience, the strategy transportation the we quality the automobile more car as and of consumer service focus in before. prioritizing to believe investment United are form on than and washes, ever parts are States, dominant Our are we mobile their stores, auto money their continue where consumers allocate spending and capital. drive-thru Convenience cars, centers, in and to retailers, the on will restaurants, where places cars these service

and company, continue underwrite in driving additional our Our the opportunities portfolio as with a markets as value for as in as investment to and unlocking to metropolitan ever this turn opportunities focused country, of diligently that strong value the team is on With across growth ability well success We our all demonstrates align to source we in over in that our and I'll working position believe are to embedded are call new redevelopments. XXXX source to we selective discuss and shareholder the Mark activities. beyond. investment XXXX our strategies, that, and

Mark Olear

Chris. you, Thank

portfolio As properties, XXXX, our includes net of active five of X,XXX and four end redevelopment sites the properties. lease vacant

weighted years X.X occupancy, remained average redevelopments, Our our active was constant XX.X%. and term lease at excluding overall

tenant U.S., well portfolio X.Xx. states top come covered now DC XX from by trailing the rents, XX-month to and be of of in spans MSAs base Our across the rent our the continue XX% country XX Washington annualized our which ratio coverage plus

XX% approximately opportunities billion categories. the stores with acquire a XX% underwrote the freestanding our remaining focused automotive retail record other real being underwriting estate. and convenience to of retail automotive of X.X Getty on XXXX, represented During Convenience

of In terms totals for acquisition acquired the investment included in very activity and full activities, XXX XXXX aggregate XX million, our a which weighted The years of provided of to funding quarter XX.X the initial totaling properties with million, million. we yield lease XXX term year strong for XX.X had initial properties development cash of we our XX X.X%. and an XX.X bringing and properties average

Group. investment with and during more North for the activity, Flash project XX.X MSA. activity the this new year throughout acquisition Energy ended additional convenience funded which located developments, United a quarter. our the States the of properties tranche, fourth a with million X.X for we sale-leaseback To industry quarter. of the of Refuel were Carolina second We total sector the subsidiary on loans including X.X%. Markets, with occurring we addition, the the investment the on in in the transactions South of include completed million, Charleston, million Highlights MSA, C&G was three gas southeastern Completing X.X sector our with concentration Charlotte, color provide closing tranche our the project Carolina Transit acquired of in development during interest X.X seven million of in in are funding our In second final around which investment at construction our

wash wash car in triple we into payment, acquiring two constructed in markets. funding of including of six terms properties and car quarter, our the the net acquiring and with New completion located Michigan per upon Vermont As entered our conjunction York transactions, property long-term we wash two the completed from a development car In our WhiteWater newly in lease. final the in tunnel Wash, funding million for Express acquired simultaneously Car transactions and X.X express which development Splash sector, are from additional

Tire properties the for aggregate. acquisition City for acquisition X.X a sites in X.X million. million the MSA Chicago In and include million during service the store six for in auto we sector, price the service the Chicago Highlights Mavis acquired properties was purchase Our of quarter. of MSA the automotive the seven in and Greater Kansas X.X

MSA Detroit development X.X We Haven, car quick and located drive-thru of for New million in with advanced restaurant MSA. the wash million for in funding also acquired Splash X.X a new-to-industry one serve Connecticut

include we for from the acquire accrue cash sale-leaseback development to XX.X support average robust and net the convenience Connecticut to construction with a on properties investment and final began with of classes, for As direct will investment this pipeline new-to-industry Global and completion of set fourth initial our Subsequent part quarter MSA transaction, term property two asset the project lease it's of and assets. transactions New during tenants weighted to The quarter funding. a interest the These We for our expect end, was we and and quarter [ph] million. via aggregate Partners $X acquisitions years of XXXX Haven, completed X.X%. our comprised in yield lease diverse growth funding we store initial opportunities. phase was acquisitions properties the sale-leasebacks, our future upon acquired of on

Moving development to platform. our

both and our in completed XXX,XXX we quarter, projects approximately in sites the pipeline. remain which During invested

addition, quarter. convenience to a commenced approximately on projects in XXX,XXX stores We In invested to leased the projects X-Eleven Texas. XX%. two on invested Both of these in during were projects generated rent two and capital X-Eleven new-to-industry development return

company. For X.X multiple over spent million years redevelopment platform of to redevelopment projects. XXX,XXX X million invested an projects five we completed will which of and the The incremental our aggregate rent was completed investment, the and year, across acquired entire total generate

or leases over which to triple includes four additional the to signed seven projects tenants, expects are and subject two have currently projects, three letters of of vacant The several projects we on years. properties one one recaptured yet from leases intent have ahead, the not next Looking commence at rent and a signed which LOI active to current company been property. net

Turning quarter, properties. to for lease realizing our XX.Xmillion proceeds asset two properties management in fourth exited XX sold we activities and the gross

proceeds planned the For gross for sites exited to properties divestiture closing York. the the in tranche in New one year, fourth XX quarter million. sold the the sold of sites end, tenant seven Of quarter we lease remaining to we upstate a XX XX.X sold existing represented Subsequent the XX properties properties. XX.X million of realizing and of

of dispose selectively discuss to to that, have longer their we've and in With are over competitive do to continue not I Brian redevelopment will format that turn financial call potential. the our compelling no properties current determined We results. will

Brian Dickman

Thanks, Mark. everyone. Good morning,

earnings, the was based amortization net was of want AFFO updated we've alongside that note net compensation peers. when I recap of AFFO of done adjust a debt costs. to provide comparability I This of to and our the our and evaluating issuance a comprehensive to review stock-based improve definition Before on for across our results lease definitions Getty's sector update AFFO of lease

$X.XX quarter increase our share this morning of for quarter, a the the earnings provided our quarter Our $X.XX XXXX. $X.XX and X% AFFO definitions. of per focus fourth updated on My of prior versus updated we FFO per the per both fourth was fourth said, share in for the representing will reported night of definition. commentary under XXXX. With year-over-year reported that last results the share release

X% of For share XXXX, was XXXX. year year full AFFO versus increase $X.XX representing FFO share XXXX. per per for $X.XX, the share was year-over-year the reported per $X.XX full a in of

respectively. our representing and Our million total XX.X and fourth the the activity revenues Base rent to redevelopment over of Strong commencements the from million escalators million contribution for recurring XX.X of for year, XX primary X.X%, that and with X.X% for X.X% months the and rent were for XXXX. XXX.X quarter fourth drivers rental the income additional in the were year-over-year last X.X% million increase quarter to increases acquisition completed projects. XXX.X grew leases

of the costs the operating for exit due side, and Environmental both improved redevelopment reductions $XXX,XXX in Property expenses compensation, rent fourth within the and a lower property G&A remediation and the partially quarter year, accruals in number year variable expense program. and redevelopment to lower including year the of expenses. litigation costs. costs cost changes costs lease expense and non-cash which professional declined continue sell are redevelop to fees. of for to as sites result increased other by legal to and non-reimbursable due quarter we as operating the management in employee-related in and properties. offset costs, expenses the decrease Leasing year to non-cash and to redevelopment a On in expenses and severance net decreased primarily Property adjustments, both and both expenses, due primarily expenses, leasing certain the highly our and and for retirement due and were stock-based increased due quarter estimates or legacy a

notes and Turning credit million XXX the XX XXX sheet rate to of including our capital year facility. the outstanding, activities. outstanding $XXX balance of million debt We total long-term on ended fixed revolving million unsecured million with our markets and

net using the revolver, X.X% years. of indebtedness weighted average our definitions Excluding debt and weighted maturity was was was have XX% asset total lease include dividends payable Total borrowing average was on cost the credit updated on profile the Getty's X.X a our comparability to value lease based sector total latter total and X.Xx. of to to alongside to across XX% agreements. reported lease metrics our done now but of standard capitalized debt, credit of definition use net change agreement our These more our been historically review comprehensive the capitalization been indebtedness, this total have the and two of credit That based definition to a metrics was Similar in EBITDA used to our improve debt debt update, was leverage net was AFFO does and peers. not which obligations.

full delayed pro for will XXXX. X.XX% be to Pro notes closing, amounts rate senior private to XXX X.X maturity unsecured be including our a to and our will that of the funded we at January used to will the average debt notes, notes yesterday's mentioned, balance funded that currently and XXX mature closing in average placement bear in weighted due million will mature in X.X%. interest used at our that January of tranche, years weighted seven closed average Chris As yesterday, closing, and Proceeds and in prepay XXXX, on were funding June come to XXXX. investment of And repay the million fixed on used the for XXXX, Proceeds bear be the of all increases the used at will the interest with debt activity. notes in will funded at $XX delayed costs fund XXX million forma borrowing unsecured fund balance notes notes time years million X.XX% at investment rate our funding activity. X.XX% February from of and revolver forma funding, a be of maturity of decrease weighted from outstanding fixed be to the of

at XX we in raising quarter, were per gross program, $XX.XX of ATM fourth of the average price million relatively proceeds share. our to an active Moving

program the raised at from For results capital through credit $XX.XX far XXX,XXX of of to the and approximately the fourth year, million With company of overall decrease its year we and proceeds execute we the the a gross We're was respect end per XX.X share. which to an total sheet XX.X ATM liability, believe and at of the to XXXX, million, with activities position ended our in thus raising environmental plans. price of XXXX. average continue quarter growth in balance our profile our pleased on well the

quarter million, environmental year, approximately spending the X.X and For and net million was X.X remediation respectively.

$X.XX a AFFO our introducing we're $X.XX of per share XXXX Finally, per guidance to range share. at

guidance Specific yet of not York approximately for Our but guidance year includes any recent the AFFO but open on and that of notes transaction factors our offering activity initial date, deployed, I to costs redevelopment have through redeployment questions. otherwise the run demolition potential activities or sale does of remainder cash call assume New the impact acquisitions, been XXXX. that, not anticipated With from proceeds to P&L. dispositions not the markets the include our portfolio, for this disposition will capital that operator projects, property upstate which proceeds, ask of for the $XXX,XXX costs the our

Operator

you. be a question-and-answer session. this Thank conducting time, Instructions]. [Operator we At will

Heffern with question RBC from question. first Our Please with Brad Capital Markets. your is proceed

Brad Heffern

everyone. morning, and walk could current Good expectation acquisition for if 'XX. cap wondering Hi. directional pipeline through you I the rates volumes in a and was

Christopher Constant

comment classes, the to asset we This and laid or we're I Mark where on pipeline. is diversified of in then you as expect an years current strategy, maybe the accelerating more of is and detail. you've diversity deploying can recent seen out maybe within how which And a investment But start Mark, in we're to capital, trends those deploying the Chris. state we think activity more address continue. that pace I'll capital, that want

Mark Olear

Yes.

as last underwriting initial first criteria. few for year, starting the So and time we far pace going coming of And year investment of in last of underwriting. of year coming car out automotive a into three sectors to to all ahead the opportunity we're qualifying in had months to brought to regard ago. we record seeing But to the this balance opportunities the wash starting our geographies, mentioned, of in qualifying as active result criteria with And year, out see verticals. into our you're to opportunities there years this confident estate, tenant out efforts standards year, continue year as so entrée maintain the into are through year creating sheet, much And other of verticals we we the real We by momentum we quality. our operation expect and that to or the deliver our qualities, acquisition two delivery investment those market we're that's as at vertical the were and a as team. possible, of last tenant grow in ago, those feel approximately

don't commitment to on past. to we delivered in the have we've from deviate our that standards So the

Brad Heffern

in stable And Thanks on seeing you're what it. that. your then got Okay, for past pretty has Is And been like sort quarters. have of cap the with you're seeing? acquisition the upward for gone, the rates have consistent the that out where it rates front, then that seems or just any may from pressure number are competition market? on anything seeing be of you you rate cap few seen

Christopher Constant

to or lot second questions costs And not there. answer, we the market is few chasing transactions. cap our see not rates out have the competition. in There's a whether any in thinning do of general. a There's of to seen respond it's really leads that which certainly capital We

take it's We filter capital six, nine net plus just chasing retail to months lease how going in, much expect I given think that assets. but is to eventually

Brad Heffern

Okay. Thank you.

Operator

you. Thank

with Markets. Thomas question KeyBanc Our question. from Todd proceed is Capital next your Please with

Todd Thomas

Hi. Thanks. Good morning.

with side. the guess about and acquisitions thinking sticking I on funding Just

roughly increase redeploy you mentioned. as leverage little proceeds the Where end? are target X.Xx be So And Brian, you from you year the a below to and long-term at at from the fund levels Getty planning leverage leverage to ended current do expect you 'XX investments dispositions?

Brian Dickman

answer Good sheet leverage The there philosophy remains Yes. short balance morning, Todd. is unchanged.

right. capital a you we of we recent liquidity raising. path amount the really the we're go material we But do have mentioned, as to coming of have, as obviously, So, pursue going out through the same year,

so. balances. investment as capital We acquisitions, to to activity So as have appropriate and our we'll the drives we'll to work continue program and needs, cash ATM do obviously revolver the that utilize through it's fund prudent

again, say, be the In the dependent just terms X.Xx our would to year-end leverage, actual still on X.Xx of and really is number activity. I applicable the will range, underlying

Todd Thomas

new appreciate the the in I methodology around change the And methodology, Okay. reporting guidance.

look equity-based For to what through in bit just a like those if the around to little order provide debt I'm comparable a and just to you least or 'XX methodology, guidance, it curious of the maybe amortization here? items, comp as the transition sort you costs, would provide sort bit the of can issuance basis help reporting line new improve comparability on just a of to at us detail guidance

Brian Dickman

In aggregate course. number of it there. Yes, think use that there. would Todd, was I your about I would similar question, And difference XXXX, $X.XX for a a

looking $X.XX basis. be you'd a So at comparable to $X.XX on

Todd Thomas

on the Okay. in just and near picture the maybe of and time, an in if the insights the longer any a here impact around segment curious, you gas then situation shock stay high term, developing question. term given provide just insights period overseas? little maybe fluid a prices And prices if have perhaps gas about, just extended bit that talk potentially I'm for the in might could just a some bigger

Christopher Constant

the average pretty do or place me, to per in historical happening pump. gallon margin right best our from this rapid now we to a we're is profitability from compression leads level. in my But and or fuel seeing is excuse of pretty I'll plus which margin, the positive But strong retail significant minus Getty that unprecedented for is for $X.XX, very what tenants, movements prices, the a answer above although are starting our right wholesale now, my what's time here. typically Street So at that, is which

compression. consumer the across for prices absorbing operator, some think you're up. think that or -- the everything The moved going I board good prices news an rapidly, with I if up is has margin As the see you'd probably been you to expect

lives. our of isn't isolated daily any the gasoline volume. to And seen point this their have this cost in erosions at So tenants not of just

has other I fact, In subsided. think virus it's as way the going the

So at standpoint factors you from starting side thing fuel This of business. place with the multiple the from think would I time, strong a is I very the an but certainly that unprecedented profitability we're play. one leave a from

Todd Thomas

Okay. there's Do added think stations that consumption market, create in you potential and potentially be car were other of or if this of to time, all? changing, transaction could uncertainty anything, behavioral gas there if some of changes, also automotive segments market endure for but for around an either some could in these extended the any sort is hiccups period washes even at transaction the some

Christopher Constant

especially our are don't Gosh, but tenants perspective, this our see in well. away And business. But as on as of get the transaction asset amount in there's market a that. area, of other that from to want a CNG the activity portion all view, our comment I of from my might you healthy. CNG Mark verticals really in pipeline significant certainly across some CNG our transaction is

Mark Olear

any I ability on see don't to the transact. impact

Todd Thomas

Okay, all Thank right. you.

Operator

you. Thank

Golladay Baird. proceed question. Our your next with from Wes Please is question with

Wes Golladay

you Hi. this million year? what expect in quarter? uptick also expense And X Good the for can that about on was an you update comment give morning, this the environmental us G&A you on guys. Can

Brian Dickman

Brian. is Wes. Sure, This Yes.

of terms around think I were In we $XX year million. last G&A,

to stock-based $X you I about like And the $XX that, million, year. good for again apply about kind comp. that's you million. environment will in X%, of feel of X% this If round number get a numbers, or that is typical

was more you it quarter hopefully to And go guidance related settlement But a that. was accrual I you know active on relatively our primarily gives litigation ongoing a accrual environmental, cases. it don't to of if that, that. So and Chris, that around of around want the in litigation any fourth nominal in one some of terms in potential

Christopher Constant

Sorry. ahead, Wes. Go

Wes Golladay

How then tenant? to dispositions, more if assets? to And And of you the the quality could color, it? think the they you give the kind were there of guess wanted sell? it bottom any the is saying tenant to portfolio, buy coming with of to should also I these And more these about bottom some quartile? Okay. decision that on what we the Was drove XX% do at

Christopher Constant

wouldn't I in a one tenant, these the leads put is This all quartile. portfolio a Yes, that properties. to assets

tenant Our was property ultimately, putting he and update debating And how owned the modernize and we most to comfortable a exit ultimately the tenant were if And the the that? felt to decided investment looking our whether that. we We that invest to in in properties stores. negotiation. structure led to

Mark Olear

bottom the on that updating characterize -- needed capital but certainly XX, properties wouldn't I the some about

Wes Golladay

about segment you said you believe this expect I it. you're year? stores is Do C the same rate close Got higher And year. was a have be pipeline any of the the XX/XX to last you that just there where that volume seeing?

Christopher Constant

verticals. and continue pipeline the the across I think all to we'd like all sectors balance grow to

time the themselves the to lumpiness it's different snapshot us. of opportunities in sometimes as think I present

key our opportunities pipeline So can in view of the that good line underwriting we a have us to a really top growing most give is the model.

goal is the the to I sectors So pipeline. grow throughout think all

Wes Golladay

the Got Thanks for it. time.

Operator

Thank you. Instructions]. [Operator

with is Please Thalmann. your question with Ladenburg next question. James Villard Allen from proceed Our

James Allen Villard

guys. Good morning,

Christopher Constant

Good morning.

James Allen Villard

drive-thru as or vertical you one-off the as forward? transaction move deal, you do restaurant Was a another view growth QSR

Christopher Constant

Yes, convenience, it certainly fits automotive, broader with right. our retail,

So to while well they're themes with our as assets we on think spending money out about like property characteristics those their with think buy, our well vehicles. we convenience, the portfolio, fits we in the consumer that fit

our We already. a in number have portfolio

And for in go verticals sector well as as to to expect we this forward. as us. invest continue transaction is we just that So certainly our other another

James Allen Villard

Okay, that's it for me. Thanks for the answer.

Operator

I the call now over We remarks. to will question-and-answer session. the turn of for have the Chris closing reached And end Constant

Christopher Constant

our We our Getty report and getting fourth attending results. when end we thanks on forward everybody Well, back for quarter April first everyone of XXXX appreciate the Great. call in the XXXX. we with interest look quarter at to for

Operator

conference. today's concludes This

your disconnect at may your for you participation. this lines time. You Thank

Getty Realty (GTY) 24 Feb 222021 Q4 Earnings call transcript