Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen and welcome to Getty Realty’s Earnings Conference Call for the First Quarter 2023. This call is being recorded. After the presentation, there will be an opportunity to ask questions.

Prior to the starting of 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

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

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

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

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

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

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

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

Christopher Constant

Thank you, the welcome quarter and earnings Josh. of call to Good our morning everyone, for first XXXX.

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

I financial results for landscape. investment the the and uncertain will on quarter provide the lead providing positioning commentary company's activities on perspective today's economic by off our given call and first

you As will discuss guidance. and our portfolio usual, Mark then our take will through results further Brian and financial

We are by XXXX outlook. first capital markets X.X% rental the year's past execution the income X.X% increase increase base share in year, our per which to pleased investment was growth AFFO report driving a our and over thoughtful quarter, This and in our a in versus driven including the during the our activity robust increase prior quarter. is first

quarter first Year-to-date, we the more have in wash the I invested would sector. in our that was million activity quarter. of for including than car $XX the $XX.X million, the majority note

continue the geographies we with transactions investment currently retail across attractive across tenants. are to diversification While opportunities providing us broader the with pursue additional convenience along washes landscape, car and most

to identify targeted direct strategy, expertise, that our criteria. capabilities Our a assets success car wash of is in investment and space acquisition which result meet stringent leverages sourcing our underwriting the

our to XX% than next in we a efforts ramp-up and few less of as ago, service transaction our to those core now even to areas. first retail As we our closed as and comprised car reminder, in hope drive-through our four space, auto car continue continue C-store washes more results similar in we see we years than [indiscernible], years wash invest the over

raising be and express expect XX activities, more million convenience we auto including includes continue Equally pipeline investment which months. approximately under in acquisition the contract committed offering proactive car we the our fund to important, service Our next than successful currently February. overnight QSRs, with washes, over automotive stores, our capital and of or to equity for centers, $XXX development

funded forward available $XXX investment unsettled million March equity XXst, fully is pipeline approximately our of for of capital future with as With deals.

Our undrawn, additional revolver and access capital. flexibility to leverage also conservative provide and

is economic in portfolio which strong our headwinds are healthy retailers and coverage and to positioned ahead, throughout look our generating this ratios. and despite and XXXX have to rent persisted the be well that perform have Convenience resistance, year. we e-commerce largely currently proven recession profits As automotive maintaining continued tenants

goods fact, and are expanding their meet demand for focused most tenants on businesses of services. our In to consumer essential

We emphasize real estate our tenant partners sector expertise and tenant of and from opportunity in related Our us transactions, sectors. owning estate growing areas credit. partnering discipline model and and combination operators, a with characteristics, ability and underwrite automotive detailed ways our the high materials and convenience to quality site which to in a nature with each with major across real strategy regional direct evaluates often due of underlying obtain to carefully continues We retail metropolitan benefit the national the that provides diligence level properties. our operations, their

We have couple also continue made getting. last opportunities driving increasing of our years, are team set the from over and to we in an transaction closed ultimately benefit which for investments of deals

us of create of move dedicated our and focused demonstrated our team this our to for we balance on value balance capital XXXX, As additional shareholders. is of maintain and portfolio. progression believe growth the our to will We the the access sheet our diversification allow continued through strength and

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

Mark Olear

Thank you, Chris.

end active XXXX of four As net lease properties our lease quarter, the portfolio and the sites. included redevelopment at of

Excluding redevelopments occupancy was our was term lease XX.X% the active weighted and years. average X.X

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

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

had quarter's first million. car Vegas investment wash for $X.X quarter. car convenience Las the of million US in $XX various our we One we $X.X as for million. activities, located located the the construction properties eight than year acquisition four more Turning in of across strong include for start to a properties under million the this markets $XX.X investments store Highlights for to invested wash

to the these projects. As complete to provide this of period funding part we acquisition, additional agreed construction during

in the also amount properties accrued the new advanced wash development convenience car construction for of We $X.X million, stores. XX interest including and to of industry loans

As our construction sale interest upon back will investments. They're part these project accrue we lease via of of and on funding. acquire final the properties funding the phase transactions, and the completion

properties X.X%, first the XX.X end, development properties U.S. average aggregate for approximately we For years. the the quarter, and additional yield across invested was million five weighted in the various markets of acquisition Subsequent, term investment the was cash $XX.X acquired an the our on for initial activity lease and located quarter PRI

XX $XXX referenced, Looking at initial fund the we of to to transactions the developments the million fund and ahead commitments in yield acquisitions X% next average regarding approximately that throughout expect area. an months Chris these

quarter. of It's slightly capital first noteworthy greater that we for levels, XXXX this the inside where is deployed but than our

Given the opportunities age some asset the our classes. transactions a pipeline, target evaluate of of to in potential of we investment continue underwrite across the variety and

to rates are landscape the market moving access slowly and at economic for the retail tighter and adjust Cap about continues to uneven properties changing to credit. changing, times as

we we that are through we the opportunities the are remainder We believe board are XXXX. of We move as network. our pleased creatively invest vast of through in well majority positioned to sourcing

four active pipeline. in Moving which projects, and to under We recapture stages planning approximately during quarter portfolio. quarter, for others our with the are redevelopment platform in stages in various ended net our properties in our a invested lease $XXX,XXX of redevelopment various potential feasibility we from

several over including next XXXX. in We other and couple of expect years, projects rent to the commence at these

in Turning to our the sold asset two proceeds $X.X exited properties. management first million for quarter, we lease activities gross realizing properties, and three

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

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

Brian Dickman

per AFFO Morning per for net of were representing Mark. we XXXX, $X.XX last an and quarter QX income share, reported per night in the reported share for of Thanks, $X.XX AFFO respectively. share XXXX. QX per increase everyone, X.X% $X.XX $X.XX we

the to were the over base leases year's in the Strong and the increase at drivers total activity adjustments, GAAP X.X% primary first additional excludes reimbursements, tenant were through quarter, completed acquisition over revenue rent recurring million $XX.X any representing quarter last the with which our rent million. prior $XX escalators XX additional Our income, redevelopment increase months for revenues first rental rent of and commencements a projects. X.X% from contribution

coming from in $XXX,XXX side, stock-based retirement expense to $X.X million G&A personnel first The million compensation. including the the costs non-recurring XXXX. of quarter costs was $X.X G&A On the quarter largely in quarter expenses with for balance the of the to in compared first as change non-cash due increased were

line increased by expense. and quarter the for the to real for costs expenses reduced Property reported projects. lower amounts $XXX,XXX, primarily redevelopment by by offset of costs demolition in $XXX,XXX reimbursable taxes, were partially declined driven rent expenses from with first due Leasing operating by XXXX. estate quarter Property first redevelopment

quarter due a $XXX,XXX a environmental due the of quarter changes were partially estimates credit of to as to number non-cash liabilities was Environmental expenses, accretion of compared to by first which are offset primarily The to highly and adjustments expense. in $XXX,XXX lower in variable the estimates XXXX. increase related in

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

XXst approximately XX%, and indebtedness net was asset total X.X was pursuance to of times. was As net total to account $XXX forward value unsettled into March while debt equity Taking debt, agreement times credit X.X our million EBITDA to calculated to was debt as XX%. of capitalization EBITDA the total total

maturing full XXXX. first used under amounts to notes revolving proceeds the our facility. announced quarter, closed unsecured and of million $XXX January, June credit unsecured notes we year, this $XXX million in the previously senior our and $XX to outstanding our repay X.XX% in offering in million maturing of reduce on During at raising We

step was in facility XXXX. and credit our quarter end, Our undrawn near is a maturity

our currently settlement ATM we common shares raise $X.X Moving of to forward approximately program to were to have of for the net $XX.X proceeds of gross total the approximately proceeds million. million upon program, subject quarter, that settled which sale sale $XX ATM one anticipated million under million. are to We stock remaining forward shares subject agreements during agreements

of million shares addition, the gross of million. anticipated connection sales in forward $XXX.X to we public a completed offering February, on stock common total settlement, with agreements. Upon In proceeds $X.XX in raise follow of offering is

for million of are transactions these Proforma As revolver. support fully provide offering company. powder investment our settled activity, also shares equity been $XXX dry the remain committed balance this to growth. through along Chris to funded investment investments, have to which with Returning forward undrawn mentioned, sheets additional our positioned well today, agreements, as expect in the by for capital no from pipeline, our we outstanding continued

in line five is on we to to a lower the with Leverage expect our EBITDA, and net capacity of ample and of expected target to the range remain times under a end current probably maintain half times our four environment, revolving half debt facility. range and in to that credit

we'll to evolves, we sources pipeline funding maintaining our profile. to manner all investment continue are our accretive ensure an that investment transactions capital grade while evaluate in As

ended With was which since of reduction environmental end the quarter XXXX. the million, a we respect $XX $XXX,XXX to liability, of our of

spending over quarter remediation environments in first was the net $XXX,XXX. approximately Our

quarter a as to our investment per Finally, $X.XX. $X.XX range of are with $X.XX outlook, guidance respect range previous XXXX our result in to of first a capital AFFO we of raising share markets $X.XX to to from XXXX our activities, our

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

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

Operator

you, sir. Thank

and question the session. We instructions]. will now conducting [Operator answer be

comes question Bank Joseph Our American. from [indiscernible] first of of

Farrell Grant

plan Grant can of going some forward.? behalf that My investment the XXXX. curious there for is expectation on be that if from was on you for was color would if call, speaking [indiscernible]. I'm Farrell the you needed hold question highlighted the XQ give path this earnings Hi, Joseph that

Brian Dickman

hear A you very low. the I was you can think repeat Can apologies. volume The we the question? now.

Farrell Grant

Yes.

Sorry. Can hear me? you

Brian Dickman

much better, you. thank Yes,

Farrell Grant

Oh, great.

Sorry about that.

still it earnings weighted was For hold the going investment I'm XQ highlighted curious view? that spend back if about that you would in the call, forward, half your XXXX. expectations just be

Brian Dickman

right. that's think Brian. Yeah, is this This, I

If we're have And know, you know, from look may have in XX, the, XX to as funding months which at which transactions it, over acquisitions general nine you origination you you know, a but the months, the sometimes it's, you be consists to capital. to development just our acquisition the, typically which month activity, it as of two timeframe regularly pipeline four and closing. development know, deploying long timing activity, then two you of, to

as as, point in well. at time, this often investment development because So funding, those quarter case pipeline we our which is the sit is any dynamics as in weighted of towards

suggest earlier. So of XX backend we deployment little that that waited do Chris type from that, to schedule the, bit the continue you that -- same continue that articulated month a know,

Operator

Russ question comes Baird from from next The [indiscernible]

Unidentified Analyst

pipeline a raise. of of uncertainty a, the capital Hey a, more good is I it strong view want function Is of on markets? this view morning guys. a in go of or more capital backfill a to the to

Brian Dickman

Brian Russ, it's Hey, again.

a You want beyond know, above, to think I, that. goes all little say it I but I the bit

for and, year, to certainly, de-risk the you when the it you beyond fund across look was full look into disclose, fully as think we the facts that, capital, exists you as the, debt visibility circumstances, and, the when to board equity, then capital just the know, pipeline and the that go the macro over you know, when that economic any but I and at the just our felt put through, cost in have know, prudent look there out the uncertainty you position both capital, environment pipeline sheet you and of equities last at balance to, not at well you thrive just a, pipeline ourselves point, work at contract we set under we sheet balance and through, a hopefully environment. through and, look opportunities of the the your

Unidentified Analyst

if bit then forward stay do much you to potential to months, for Got guess higher a owners too too too is, you floating the the see much be, maybe is rates down, I know, little I, it. next to of cut maybe looking if, And a XX to that? soon over little XX some maybe maybe a go time maybe rate, for be it cut, values opportunistic so leverage, were

Brian Dickman

is the I, a the sale who we're leaseback maybe for lot evaluating think soon too I have don't I, that. are of operators what in explored in it's past I think sector seeing not it. financing

there's generally There's that of operators know, As a maybe percentage maturities. you public rate large floating to out, point private opposed higher debt you given these companies. are to folks as

and should say position original at opportunities sheets you they, to our great capital Getty back to would I we So know, be ready think to the a yes, go attractive raise shape I in way. should balance on question the finance they to take come be your to

Unidentified Analyst

rate what question lower elaborate forward run going Fantastic. in And on a this on lead happened Getty? maybe to can then quarter? one just you the Yeah. Will severance a, the of

Brian Dickman

a those that. thanks retire first those costs. quarter, related to are are the just Yeah, had in Yeah, We, retirement we and director so Wes.

Operator

from [Operator Securities. JMP instructions] The Mitch next question Germain Thank comes you. of

Unidentified Analyst

property Hi, Question for good morning. Jody me. mix. This is on

next So couple we that portion store are now, aiming of this the over a is see mix that so and higher property of course, ideal smaller for now, washes as you there share you the comprises an mentioned, of all car years? pie

Mark Olear

I a think I, that's great question. Yeah,

revenue through is we our our sort there, You c you'd certainly naturally sector the are still the efforts actively history. see of drive and know, our company's all the but and represents sectors. equally the to become more XX% in weighted business retail, service still and expect ramp across obviously We like abr. up C-store auto of as carwash store It investing

washes sea know, pie But continue you future. said invest this the to as the foreseeable through point the and, move the certainly just But what happened the starting as sectors I to would largest the, I, to quarter again, of script, like, classes asset fundamentals given think stores the still my this across will hope I year. I all all car to be of and would be like we just, in evaluating and, know, you for piece be the we're able

Unidentified Analyst

after Right. also is I $XX the and so, first or on so properties? the think that focused acquisition that car wash it's quarter, million happened around

Mark Olear

it's classes. a a, of It's asset different of couple a mixture

Unidentified Analyst

Okay, And perfect. thank for you that.

Just one up. quick follow

the has is So competitive now? looking the like landscape changed? what Like, bidding also pool right

Mark Olear

we over few of there's goods and interest of that the the, essential as, saying last in, The, the, services the as and keep competitive. out it lot a well. asset years. are mean, lot I have classes durable proven there's performing remains The a

Our portfolio performances. have continue very tenants and to targeting strong in our our both and

You in our the the, a of, lot classes. know, in that targeted there's verticals we there's so asset of a in lot activity are are, interest

as moving little different are is it's verticals pricing mentioned, and know, paces. bit You it's, we a as, different moving at

year's you end approximately, at we of the versus you what widening a if favor new experienced or We that across in the just as know, point press of look new you we're year improve you dialogues know, opportunities maybe all upon pricing continue know, announced, know, you we the to, point market we a, whole know, pricing at as maybe basis evaluating. to to, a the in last our you have XX

Operator

Mr. questions our I question Thank you. in end Ladies Christopher call and for Constant remark. and further the the gentlemen, now turn the to have session. queue, answer reached will closing with no we of over

Christopher Constant

forward us quarter We in getting again, with you second And we And Operator. this look interest appreciate thank joining back you on your everyone. realty. all earnings. our for Thank report Great. morning. to We

Operator

you Thank may teleconference. and today's for conclude does that Ladies, sir. your. disconnect much, now your very you you participation, Thank

Getty Realty (GTY) 27 Apr 232023 Q1 Earnings call transcript