Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to Getty Realty’s Earnings Conference Call for the Fourth Quarter 2022. 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

company would Getty thank year-end website year Realty’s call. the afternoon, section I joining all earnings Relations ended operator. results Investor release Yesterday for financial gettyrealty.com. are The at us fourth the and December you, XX, like quarter our Form you to for conference for XXXX. Thank the its X-K and earnings released of quarter in and available

not the are and Certain are historical of in current course based statements results forward-looking are forward-looking statements on trends, uncertainties and call These expectations in actual described cause based the statements. to constitute may events made could subject to and information materially this differ those management’s that and statements. beliefs on from

plans caution the currently or opportunities. best and statements company’s guidance response future and to based on company results remarks differ also you reflect of statements and in by materially. that company’s our the include in financial made us could and Examples redevelopment XXXX regarding that known may future events management including factors such or our statements judgment include their performance acquisition and operations, actual to questions, forward-looking We

could detailed I more the today. discussion refer Form SEC forward-looking of filings actual statements subsequent in expressed any the risks XX, to cause report XXXX, or our results from a XX-K those made annual the year other on you to company’s for and December differ the that implied factors ended made for materially and with

duty update this the made as of may that which statements, on any company only forward-looking not call. in the undertakes view place statements The should You reliance of our forward-looking undue date course to hereof. no be reflect

net operations, our reconciliation non-GAAP to adjusted of those from use Also, for measures please measures discussion updated our of to release financial funds earnings. AFFO, of definition and or including our of a earnings refer our

to over Executive turn With the that, Christopher call Officer. Chief Constant, let me our

Christopher Constant

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

are Operating our Officer. Chief Joining on and the Dickman, call today Chief us Brian Mark Financial our Olear, Officer;

will providing full results I activities ended commentary will you results fourth by company’s both investment quarter financial as year discuss and for and And guidance. portfolio, Brian today’s and further the into the Mark financial will heading the take December usual, lead I on discuss and strong also off call our our through our then XXXX. will XX. position

was but XXXX unique, a for successful Realty. Getty year

the X and exceeded make our further we other grow portfolio. progress range our and which key are to high of Our end guidance to financial diversify continue towards results of our objectives,

the through Beyond markets that being throughout market was as accomplishments, proud capital successful we at rewarded ended Getty particularly quarter. slow was as disciplined pleased volatile team overall year I transaction year am of very we and our active fourth work that with a adapt. a and to the remained patience the That

share increased X.X%, funds and per and respectively. operations year income X.X% quarter, the our X% rental For respectively, or base our grew X.X%, adjusted from and AFFO and

including in For we properties, million the invested more quarter. million $XXX.X year, fourth the $XX in XX than

continued convenience expertise and property tenant, across in retail estate type, leverage geography by diversifying we real as portfolio quality investments on reflect emphasis XXXX high our Our invest our our and automotive in sectors. to

stores, service investments auto car our were including of than centers washes, service types XX% than more convenience express drive-thru restaurants. quick and property other XXXX, In

our programs. including Charlotte, acquisitions San tenant areas, our and expanded Austin, number high roster in a continue and metro Vegas through attractive also redevelopment Antonio, and growth our Las Charleston, to presence We of expand both

we largest refuel with look operators car forward the car C-store wash, business, continue X and and Splash wash we our high and of expand and XXXX. with operator, increased these in growth brands activity to XXXX, best In a in to GO the

completed throughout Bank completing value-added USA tenants year Murphy and and projects by projects in MSAs. as We added redevelopment Dallas-Fort Chase and Worth the also the Boston

about fund $XXX expect of next committed our Equally over while new-to-industry will pipeline the fund are months. properties, million. our of us investment our approximately acquisition As auto proactive car to more maintaining development raising which than the we look XXXX enable profile. activities leverage conservative to XX But convenience capital and we centers, we ahead, important, in excited transactions, accretively these wash stores,

strong asset by our our opportunities target position, team across our continues to financial Supported classes. underwrite

and with retail Our convenience in sectors. major discipline national partnering owning and operators regional estate strategy continues across to high quality growing metro the automotive real emphasize areas and

Our these strategy drive to continue and are points, expertise Getty. transaction which of continue our in deep-industry To invest, we in an relationships investment into our sectors these knowledge we to for of our portfolio. our executing set diversify confident and opportunities our ability on further increasing underwriting grow

their team and balance XXXX, to XXXX. Getty success outstanding believe, their continued dedicated experience solid this are at for Lastly, our efforts want team, and investment our thank differentiated I I for the enthusiasm poised we through sheet start to in strategy.

success providing Our retail financing and XXXX solutions estate the to sectors convenience combined and and investment has with beyond. us well funded automotive positioned real focus this in pipeline, for our on

Mark investment over turn activities. to discuss our I’ll and the that, portfolio With to call

Mark Olear

Thank you, Chris.

portfolio year, As redevelopment of active properties, included of our occupied X the lease net and X,XXX the sites. end

Our to weighted and term average our excluding years lease XX.X%. active increased overall was redevelopment occupancy, X.X

coming XX with MSAs rent XX% MSAs. XX of Our XXX XX% portfolio base plus D.C. states annualized coming from top spans our and from top Washington,

ratio of tenant Our times. rents are well rent the XX-month covered X.X with coverage trailing

in investments invested these transactions in systems increase a our of people our have we as experienced and are on volume we in significant that in XXXX. returns see diversity processes our underwrote starting growth and and to the we We accelerate to potential platform

the other automotive our For property XX% evaluated billion freestanding retail and XX% to remaining with store types. the year, focused approximately $X.X and record underwriting automotive on Convenience we real opportunities represented retail acquire convenience of a being estate. has of convenience

investment million, year full of strong very we we totals In properties properties funding to which quarter activities, XX were our million. our acquired development a provided bringing had totaling and terms $XXX.X for XX in $XX.X

to MSA this MSAs the MSA $X in X stores Charlotte located like quarters’ $XX.X XX for the Las Vegas Vegas in million; and QSR for service X San Austin, located of I primarily include million; in $XX.X million; acquisition located wash centers located MSA drive-thru X the Las in Antonio for auto convenience properties million. car Charlotte $XX.X and for investments

convenience New In and Haven, addition, Richmond and MSAs. MSAs, Raleigh including the in for Charleston in provided accrued properties, wash million, properties Newburgh, $X.X Jacksonville, Austin development we’ve new-to-industry XX interest including stores and approximately of car

sale-leaseback transactions, construction these completion funding. interest As phase funding accrue the will the investments part project our of will on properties final we via during acquire of and upon the and

XX.X For for aggregate average the was acquired weighted fourth properties the lease yield the cash on initial our quarter, and term X.X%, activity investment approximately years. was

the properties years, For acquired cash aggregate we yield year of initial approximately XXXX, initial for ended term with of X.X%. million, $XXX XX.X XX average the and lease weighted

markets and interest advanced new-to-industry year-end, of across $X.X In invested we wash properties in addition, various X.X%. the recurring $XX.X located for car for million we million of the U.S. at X acquisition development construction developments, to Subsequent loans which

next to XX we yield and Chris of we average ahead in acquisitions that approximate million excess months fund XX commitments of and developments in basis regarding initial XXXX. fund an of referenced, to closed Looking XX $XXX between expect throughout these acquisitions points the on the where transactions

We potential continue of underwrite classes. evaluate target to variety asset across our a opportunities investment

economic continues changing adjust landscape and Pricing the markets. for to reflect credit believe retail the market properties is to moving and we tighter

[whole or positioned We through sourcing these are believe [ph], to the are we as pleased we that majority activities we network] accretively we are move of and invest vast XXXX. well

the which $XXX,XXX in pipeline. invested various project, the We is stages of [ph] leased return to in invested on quarter XX%. Worth in Dallas-Fort which Murphy a We MSA, X where Moving new projects rent to project platform, are invested this and on our in redevelopment completed store USA. during capital convenience [$XX,XXX] commenced redevelopment generated we approximately our in

that tenant. the to projects over triple currently in including projects We leases, includes at company are net next been with rent projects these ended of active recaptured current The to and yet subject commence couple leases XXXX. have quarter signed the the X years, X and X not and other properties expects from which and

activities and exited the proceeds Turning in fourth to X we asset quarter, management our sold $XX leased gross million for property. X realizing properties

the properties X year, sold exited realizing proceeds For XX we $XX in and million leased gross properties.

in properties current their recycle have sources We as we allow that we capital. not attractive balance will have part competitive potential, or pursue managing of format dispositions and our are continue no which of capital do us to of compelling to longer determined redevelopment have may believe sheet non-core valuations that

our financial discuss to With turn the over that, call Brian to I results.

Brian Dickman

Good representing we per in X.X% for net $X.XX FFO the of XXXX, increase fourth an QX Thanks, income reported share, and share and AFFO $X.XX per we Mark. $X.XX everyone. Last $X.XX respectively. for night, versus morning, of were XXXX. QX quarter per share reported

of For FFO XXXX $X.XX the $X.XX per for XXXX. an and respectively. and versus share, AFFO share per increase reported $X.XX, income X.X% full was we representing XXXX, in the year were share per net $X.XX

$XX.X GAAP over and and the quarter million and X% any contribution X.X% rental rent, of the income, escalators $XX.X fourth grew respectively. and XX revenue increase million quarter completed in X.X% $XXX.X additional year, with X.X%, excludes and leases activity million last rent the the tenant months and the for fourth Strong representing were adjustments $XXX.X million projects. commencements for at our redevelopment reimbursements, of Our year-over-year which rent acquisition XXXX. total were growth revenues in primary Base additional the drivers recurring to to from

$X.X including we expense to fourth compensation. X.X% only during able million to been relatively X.X% the the and side, expenses, stock-based for costs well year overhead $XX.X XXXX. G&A Increased to the has G&A as driven in by increased employee-related On primarily manage quarter, were million

decreased offset costs fourth we expenses increased with or increases sites which to costs for taxes costs to demolition lease sell through for Property costs and runs charges. and program, for associated legacy was in non-reimbursable by This decrease rent active property due redevelopment other exit increased specifically our our expenses the municipal and other higher costs projects, P&L. to full reimbursable lower redevelop properties. on expense partially quarter, due Property as year continue primarily the in

to to the in a a non-cash million periods related the of primarily declined Environmental due both and liabilities. expenses, year. XXXX and credit for $X.X reduction which to number $XX.X of environmental was for million estimates to quarter estimates a The highly versus adjustments our credit are of due variable unknown

been that Specifically, we unknown accrued $X.X removed for and was million contamination during material previously satisfy year, risk of at of respectively, unknown we obligations And $XX.X pre-existing having properties. and relating no the accordingly, liabilities to these environmental there to concluded properties. quarter continued which certain reserve had million,

to Turning of unsecured a capital X.X the of weighted of primarily sheet of average interest with year rate $XXX maturity balance outstanding, consisting X.X% ended activities, $XXX markets the we debt our of years. with senior million and average weighted total a and million notes

facility We our also under year million had revolving at $XX borrowed end. credit

debt-to-EBITDA was total X.X XX, to year. was total X.X million, value into at $XXX times of total while credit As net was of debt-to-EBITDA times the end net December pursuant account and equity the indebtedness our total XX%, was to to Taking of unsettled calculated forward approximately capitalization debt agreement XX%. asset

million maturing we Pro raising XXXX. transaction, average year, outstanding We interest $XX notes and of rate and million to proceeds end, in use previously we maturity the for offering of million announced on January to average to with had in senior notes at of closed outstanding of approximately maturing of this weighted facility. repay quarter X.X revolving forma June unsecured amounts on X.X% $XXX full in Subsequent X.XX% notes a credit unsecured years. our our unsecured reduce a weighted and this $XXX

entered to our million. into gross will the sell X which shares, agreements proceeds to ATM program, million Moving we of $XX.X quarter, generate sale anticipated during forward

no sale $XXX.X sale the entered been to year, we for have shares anticipated of forward To million. forward For proceeds date, settled. to sell shares agreements agreements subject into gross X.X million

facility. for pipeline, investment our agreements. equity we forward and these committed sale, fully that our want proceeds certain cash credit Returning unsettled transactions emphasize are that to that funded from assets balance through our revolving XXXX and sheet, additional liquidity million on to just contract $XXX are under our beyond have And

line Pro expect in forma remain balance to capital we target capacity continued remain range our to X.X sheet net for in we ample expected to under X.X positioned Leverage support well times activity, expect to growth. revolver. investment maintain is our our this debt-to-EBITDA, to with and of

funding we’re evaluate investment-grade to ensure As continue will while capital that our investment sources our to in an we maintaining transactions pipeline manner, all evolves, profile. accretive

ended was removal million, million year the from at to earlier. reduction $XX.X we of liabilities of which primary end as the reserve $XX.X With unknown The the million of discussed driver a XXXX. of improvement $XX.X the liability, respect our was environmental of

these reserves legacy environmental unknown properties, we during pre-existing reminder, during clean-up a which was were As to discovered to where defined look-back retain periods, related contamination responsibility the expired that XXXX.

that there liabilities, to properties satisfy at accordingly of having no obligations which unknown continued removed concluded these risk reserve had been We and previously accrued. was material the contractual

Our net for $X.X the approximately in was $X.X remediation the approximately environmental it million. spending and full quarter was year fourth million,

this reaffirming are $X.XX of we introduced our XXXX share, we guidance to Lastly, per which earlier AFFO $X.XX year.

year, factors markets Specific activities date, which otherwise but to reminder, the does any with As projects, impact certain P&L. $XXX,XXX acquisitions, demolition costs not include respect of capital to anticipated dispositions, pursue guidance expenses continue remainder costs, our our costs run approximately potential operating for a our redevelopment activity XXXX. AFFO variability and or for deal includes assume of this through transaction outlook and to which

With operator open the the questions. that, ask call to for I’ll

Operator

you. Thank

We We a Instructions] the have ahead. [Operator will Capital Markets. a Please Heffern line with question-and-answer RBC go from Brad session. question of conducting now be first

Brad Heffern

Good morning.

way? consistent the obviously, expanded in in on curious is business really and loan from So funding expect traditional to Or a out. able keep it isn’t at the just like pipeline, you construction level been run if that seems way there last to relatively development the significantly environment I’m here that’s that that then. the availability since the we’re where it year, you’ve

Christopher Constant

at with I going potential the or it We who we what development is of forward to the businesses. a products view tenants Yeah, mix think their expect grow offer along funding. sale-leaseback, looking they partners, X as traditional core call see which are I’ll product company’s how to

that new there, looking growth them works So can to they’re sale-leaseback looking as development, that at help and have facilitate product acquisitions, we for store a well.

it we for X to view really So, investment activity of we that and expect lines as Getty, continue.

Brad Heffern

Brian, a I’m closed the just assume side, the hasn’t And like pipeline, would yet. on just guidance. clarification like things $XXX Got typically under it. then, the development is funded yet, you million haven’t or firmed include but know of on curious been up it Okay. don’t at contract, I for that some least that funding I

all guidance, that curious the So any $XXX like in is I’m of million or it is excluded?

Brian Dickman

Brad. Thanks, Yeah.

the LOI, be So, deals of rest pipeline investment just the is pipeline, We we that clear, under and our when contract. talked have about all to do other shadow under LOI, all put pending activity, that not And guidance, provided we do just so that any with really in contract. guidance be forward. of to consistent historically we’ve the we’ve include under is how

equity. under activity, the any contract of of nor none we forward do So include settlement

over a we’ve to time. pipeline, point time, So really to around very guidance our tried consistent some as of number enhanced be a we’ve as keeping run of the disclosure rate but

Brad Heffern

Brian, would you, you peg the sit you year the you cost see as playing where probably debt for debt, of funding cost out? think, for talk Okay. incremental of we today? I also here And And can how the then, about

Brian Dickman

day. our question. some Yeah, to mid-X% that it’s I’ll other. first, on again, somewhere are costs does good debt the rates relatively where equity a on depends the on last I of where depending peers, day, it Again, Similar area stocks in hit but and the question and trading, are, our minus, or each but it top guess, depend and plus of the

some you of I So again, look at peers. dissimilar think, to that, when not our

perspective. permanent how about in sources, a take and it thinking on additional capacity when utilize do from different We debt. to funding leverage have lock really we sense We’re makes

sit some here equity as we we the leverage today, and forward think, we sources in the point the have have capacity other capital I that under significant of have time I low. agreement, we line But, mentioned,

elsewhere pipeline course, what but would we’re as to we’ll looking today, I look of the source capital of into. evolves, look have as at So investment that’s we really And, those visibility Brad. that the to fund activity

Brad Heffern

you. Thank Okay.

Operator

go Thank with take Josh America. Dennerlein the ahead. Please Bank We’ll line next of from you. the question of

Unidentified Analyst

Grehan] the Dennerlein. the color on quickly timing outstanding. was acquisitions that, of funding of for on point [Farrell you on is shares this provide $XXX Hi, it a think in just I wanted just Josh Can some the [ph] what’s I to million contract? on

Christopher Constant

under it. you make again, have give what $XXX we that by depending on today I’ll predominantly that contract. X is does development hand-in-hand sure perspectives vary I’ll Yeah, the understand quarter, question you on million go is funding that

just as ended, a be more seen as the think of We stated of what months, that the development. expect we bit we’ve deployed XX the cadence would that back the from roughly little nature products, to over of I the next

So I awaiting, a throughout we’ll year. towards back-end that but would funding next lean be

will cetera, utilize as we of balance the to our revolver And capital, sources over leverage, manage fund sheet year we utilization our settling the forward on equity investments. those and et revolver, that

Unidentified Analyst

Thank Great. you.

Operator

take Thank the Please from next with Mitch ahead. Germain of go the you. Securities. We’ll JMP line question

Mitch Germain

Yeah, good morning.

guidance, just is materializes? update quarter to it point to it Brian, So, per on the goal that the year as just

Brian Dickman

Yeah, back I for couple – doing certainly then. I as and as Mitch, think that’s we’ve far been know before what years a

disclosure the environment we we’re have to do though with open activity us, visibility. always improve, worked to But ensure past well articulating yourself in that’s the and such appropriately. our and as investors, we we’re that some I certainly our plans if conversations in even think, We’re in in analysts for can the

sense. We continue that makes to think

the that yeah, should So, expectation. be

Mitch Germain

your But, bought Great. you investment materializing portfolio? Great. how that of trying Are putting strategy you is know was was of QSR. grow And guys? behind any with you that one only that I kind then, part to –

Mark Olear

The resources create that momentum yes. this try in dedicated some done. vertical is asset to Mitch, and some as Yeah, we’ve is answer We’ve Mark. Yes.

a momentum space of where foot kind to that the car back, that start entered to same all wash years are program, we targeting. healthy think and you our we hope assets from a very flat we’ve get If

resources, see gotten development that some momentum we do the shows, management. some attacking to asset verticals all in other hope And, – the relationship classes. the business dedicated we’ve we’re business trade where across balancing asset with So as we out investments we

Mitch Germain

Thank you much. so

Christopher Constant

this Chris. Mitch, Yeah, is

add on. to Just

unit. appeals of investment of a our it’s to I the position on of things that Street, same real the right, one the natural per sort size, same underwriting think us, estate, generally, same extension general

to industry So, I logic classes. in lot call think, asset what automotive of there’s convenience a we broader to extending our

Mitch Germain

you. Thank

Operator

the Fragin] [Operator ahead. We’ll Baird. line take with the next question you. Instructions] Thank from Please of go [Alex [ph]

Unidentified Analyst

Quick Hi. Does question on? G&A debt? bad And for you can me. assume any XXXX guidance your go if or so,

Christopher Constant

and [ph], G&A second part Alex the question, your what? of

Unidentified Analyst

bad And debt.

Brian Dickman

So debt of it’s number. guidance in would small minimis. But bad me, in overall. bad the no there’s say, de G&A a I a debt But excuse amount, the

If et that at general you over pandemic our health I including of minimis. ratios, tenants’ cetera, look during collections time, would coverage and the call de

In G&A terms we there. have running G&A, do absolutely, of through

G&A which stock-based we as We that personnel G&A. call audit team. employ primarily the seeing what compensation inflation, is of AFFO both, to are excludes some it our and also through compensation But it’s look That benefits, level, increases our services in professional invest flow I’ll and legal. reward whether tax people labor as in the retain

that. the bearing are of some we So burden of

through think, stock is performed at And back will months. at do the headline restricted the have stock-based direct material over well simply And, then, priced that’s bit, awards P&L. to little you would out increase stock the XX%, as XX%. last item, look of level, as a when this very up see we from the in number. we for a we last a you that but line the addition, has the compensation, that you’ll result which versus Again, is really in G&A flow because stock I year’s the And a see P&L XX when year,

Unidentified Analyst

of you stock? do would part for more, if cash the I that. G&A guidance what Thank the ask And of can think be one you

Brian Dickman

project Yeah, from which X% million [ph] in million, about at that just or under XXXX. $XX we’re was a is looking what $X up

Unidentified Analyst

you. Thank Okay.

Operator

session. question-and-answer for back closing Thank to over have end you. to I’d you, of the Constant the floor sir. the to Ladies now and Christopher comments. gentlemen, And like reached we turn Over

Christopher Constant

Getty Thank thanks you, late first for forward operator, of quarter your our to quarter and back we report and in everybody getting us April. We look appreciate XXXX for joining our in on everyone with when interest fourth call.

Operator

teleconference. Thank you. gentlemen, Ladies today’s and this concludes

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

Getty Realty (GTY) 23 Feb 232022 Q4 Earnings call transcript