GTY - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to Getty Realty's Third Quarter 2024 Earnings Call. 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

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

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

Christopher Constant

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

and Brian grew Officer. I our will strategies the quarterly by then another our on quarter very asset investment business. demonstrate portfolio our all through will discuss We to provide of financial guidance. financial us also today and acquisitions. execute will Mark and Olear, automotive Chief our within results our growth our further Mark productive will activities, convenience ability accretive and across Officer; the and to off facets you Brian and and call take diversification Joining today's lead Financial we our sectors. activities, management through Chief and and We results Dickman, diversified are on call had business continued retail Operating and our commentary our summarizing

sheet asset and unitary further activity. Our position projects significant leases, advanced markets redevelopment and a capital and our two of thoughtful team extended solidified management we through balance number liquidity

believe convenience to that assets. our another representation how is our excited a our performance team earnings. approved of we capabilities. platform, the We And strong focused was managing a remain about strategy. XXXX and Overall, it year quarter XXth of night, retail Last full and our year dividend. raised earnings all and components consecutive annual our dividend also raising the increase, and I'm I released guidance, of working We on this together great execute our diversifying actively growing, automotive portfolio Board from the was

Our results I AFFO And able of prior reported per share base the annualized we year yield. were X.X% over growth the our mentioned, share XXXX headlined $XXX to XX.X% and year-to-date. year in into X% and the per as year. initial the X.X% rent increase for a at invested end our has by the of going AFFO company raise million an guidance full Year-to-date, approximately cash quarter were

washes, our automotive underwrite we least the Our several differentiated this been investment XXXX has performance, five site network to the with have our maintain which our primary portfolio QSRs. service added in direct and nine and the activity auto not we've types continues industry convenience of Consistent leases. benefits four of with drive-thru transaction expertise existing tenants and tenants. prior our expanding level been of stores, activity XX% to relationships and relationships think of direct this years, cultivate with forward. car deep and expect tunnel sale-leaseback more to including new of relationships and convenience going invest all our to automotive centers And is retail our investments tenant level the to of benefits, property platform, able acquiring retail including model existing We within year, sectors. direct underwriting in tenants than We've the convenience ability reflect while versus express

contract underwrite continue approaching in than a assets we million team's of We have currently flow growing and blended to opportunities $XX mid-X% a investment evaluate to potential the for more efforts see a have resulted deal area, steady cap Our at and under of investment. also pipeline. rate

in-place remains strength source for Our portfolio of a company. the

further coverage, operate. a redevelopment rent embedded are seeing additional portfolio the extend year and in of rent oil three franchisee of tenants third service collections redevelopment our driving large the Interest legacy including terms it identify as new and geographic the automotive in completed We footprint in Providence, opportunities they tenants large and Rhode our quarter anticipate as In respect future had with we unitary leased a their five Chipotle the commit commencement with quarter. our this lease we type from terms is from locations. opportunities, to in we the take many addition characteristics performance leases and rent fits this to use occupancy, the additional well sites redevelopment, of first excellent physical to signed continue to of demand With restaurant MSA. of Island new

of During XX XX% the representing years. than we weighted material XX% in two unitary our have our contributed these increase term year-to-date average extended more and representing ABR. our leases, have quarter, leases also to extended lease meaningfully unitary ABR to than more four an of Both of

in we common million of common capital than in an by placement bid-ask and capital investment the $XXX we're was improving Combined, to and the portfolio remain we executing. overnight raised more and equity of unsecured spreads shareholders. properties well our to notes will investor election, offering. to activity a excited and net quarter sectors, All how Despite this respect as this lease pipeline, and Again, value of complemented of In our advantage into equity capital only I'm going unsecured issue growth economy July, uncertainty we a quarter growing debt. that and additional we pipeline certain very Getty, our our transaction. for $XXX near-term investors fund positioned senior material strong agreed $XXX create investment lingering provide persist and raising to maturity our recently, this for of for with productive about And private sentiment new think our was raise notes million to through platform refinance million took of XXXX. a I upcoming

growing rental reliable and in-place continue assets income. generate to Our

Our to recurring per driving balance XXth sheet in is scaling share. grown earnings moderate in with activity and straight This of our represents we earnings. leverage growth and earnings the is dividend additional growth dividend while recent expectations, great approved performance liquidity, increase $X.XX quarterly our Board portfolio. diversifying on year significant an alongside have the X.X% and our the investment shape Based our and our

Our more cash Board this stable increase continues to believes capital and flow have objectives. meet retained our a investable maintains is to payout appropriate as it increase annual to Getty's growth ratio

an we for noting years. the REIT in the in been that call we've sectors in I noticed have for Before I'll Mark, many enthusiasm close convenience over retail automotive the to that by investing uptick turn market's

past, that efforts are all attributes assets on industry investment merits the to and engage estate speed, emphasis our strong As expertise on strategy and let Mark automotive discuss our activities. with community characteristics as an our our consumer. our real the will I that, of and We resonates these and and portfolio. are of look Getty. key the diversify differentiating factors we use with focused portfolio With grow service today's and with we've investment thesis, These further are continuing convenience mobile believe essential in retail elements forward for to consumer, convenience and discussed investment the particularly we

Mark Olear

Thank you, Chris.

portfolio the properties X included the X,XXX net lease of quarter, As of end redevelopment lease and site. our active

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

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

of the ratio well time the X our Our despite trailing X.Xx, businesses frame. covered macroeconomic are to XX-month rents been resiliency last that over tenants' which consistent demonstrating with we've over a years, of experienced volatility coverage rent has the X

of million, acquired which $X.X The $X.X this funded Turning in new-to-industry service properties of located term $XX.X U.S. of million across million new weighted million markets assets newly yield to in located auto for car constructed of the cash $X various X previous center quarter. X% across quarters; $X.X our XX XX during $XX.X D.C. was third Getty previously for quarter's investments XX.X store initial which for lease include was convenience invested which MSA Washington, million, of years. was acquisition express of in funded previously an X funded. in million, was located at washes investment and Texas Austin, on Highlights $XX.X tunnel activities. million the the average

periods. reflect between rising the cap in we've as recent sectors substantial reductions to persist point Fed's the active our Carolina. the sellers asking over years and very rates. in car North additional opportunities by already project's automotive justify are maintaining last quarter sale-leaseback the convenience convenience cut the expect million we million remain investments now $XX.X potential retail in Material and the acquired We to the in couple market center core new-to-industry while to be Houston to to either These stores invested will in of respective amount the end acquire under the auto After tunnel assets the we construction or washes end, an or auto X and and via service construction transactions company also X funding development of X advanced bid-ask are express spreads underwriting and reset commentary at of capital transaction costs. the of transact centers. and owned sellers to and shown MSA construction buyers $X.X for service find incremental Overall, discipline

Our fair source over belief can That at to target investors. view our pricing rates will demonstrates years cap increase and reflect to said, capital opportunities to current still several the capture rates a there's respect capital in institutional Getty activity full to amount and in by the is that of environment never us our costs that the our expand investment with allow slower of market be that adjust last borne as rate pricing deploy cap accretively. sectors uncertainty

XXXX. tenants, our be strategy move deployment relationship-based remainder capital to through we able business the direct of repeat accretive with and into we we leverage we'll this remain that and confident maintain as the new As year prioritize

during our Mexican Metro redevelopment the to quarter Chipotle Rhode Island platform. Providence for one area. project Moving in completed a We Grill the new

total net project triple long-term million, $X than the lease now with property and Our more to subject in Chipotle. just is was a investment the

] new for share would to projects X of now our asset lease and the extensions quarter additional X MSAs. we of about running redevelopment, which lease a In option the of quarter, addition, properties years for future and XX% term fifth efforts, signed auto than has York centers. covering we renewal redevelopment on have additional Continuing in through I X its total this has largest details unitary our X January The management all leases service during executed for a total signed with unitary XX represent leases than renewal [ lease like ABR. and more more now options. tenant, exercised New XX our CPD XXXX Indiscernible Energy,

XXXX, extended of Global years leases of amendment increased the an tenant. one Partners, August lease negotiated properties lease unitary $XXX,XXX number due also We XX the our term by aggregate our XX. ABR by largest We with under second the under to current X and the the reduced from the lease to of to

outcome portfolio to Global by also sold new being great is and think gas from repair legacy this we in sites unitary properties Getty, XX transaction, the these $X.X which from from million this lease resulted ABR into reduced assets. for and redeployed a the of proceeds and part removed As for gas sites $XXX,XXX. XX income-producing removed We legacy repair and

of As a as these end year, earlier activity, plus extensions that, increased years extended X.X end at to call over lease and weighted years compared portfolio the the Getty's With average the lease XX.X in turn our others to I'll result quarter of that XXXX were term at XXXX. acquisition Brian. to

Brian Dickman

Thanks, Good QX QX of per XXXX, AFFO increase reported an of everyone. for morning, Mark. X.X% Yesterday, we representing XXXX. over $X.XX share

release the can additional period. earnings several found reported dividend A annualized we up other our more compared rent, contains For AFFO G&A per increase detailed regarding are and share items the was XX, million, of and earnings years. was the A ABR quarterly the $XXX XX.X% XX, XXXX. year-to-date of as couple XX, $XXX be X.X% our results X share we million our per of September that expenses. of months information focus last ended last an over of September XXXX, presentation or $X.XX, over in growth prior our September on description night's as ABR, year corporate to and and base P&L-related as

of ratios: primary to look share able enhanced With While and significant remains growth we've accelerate X which typically objective, cash at and our acquisitions is G&A percentage costs, income. to of as something we've and which line interest rental as per our growth through total we part AFFO that flows we at respect of a platform. G&A, retirement G&A, as AFFO rental compensation top nonrecurring and is a been and the revenue excluding G&A severance that a income stock-based look percentage total and

period, was XX, a cash the a AFFO of interest September percentage of ended decrease period. income XX total decrease and rental a months XX.X%, basis year from basis the year points X and as the revenue points G&A G&A from as of XX a For XXXX, total prior X.X%, was percentage of prior

We continue G&A the as scale dollar amount expect moderate to to G&A ratios company. decrease we increases and to

liquidity. balance and thoughts some the to Moving on sheet

September Xx of net taking debt As was XX, account XXXX, X.Xx, EBITDA or equity. forward to unsettled into

continue charge to We of was X.Xx September a leverage maintain and X.Xx debt are healthy well-positioned to target those levels. net Fixed as to of to coverage EBITDA X.Xx XX.

quarter activity. which and maturity, near-term fund during to comes than and year well investment towards of capital will in fund the repay we the anticipate to million took a million we at due fourth new September this investors X end as a in private placement forward unsecured Proceeds market We is that X.X% As will a XXXX raised first only to quarter the X.X% In advantage Chris $XX XXXX had $XX more million pipeline million February as at our tranche in be and notes markets. growing alluded the issue July, offering the of conditions tranche we busy transaction notes of share million to $XX a XXXX. in $XXX agreed of February to due his equity in investment priced remarks, our The quarter, close and quarter transaction. priced due complete a notes overnight and on a certain and will in new in XXXX. to include $XXX million used basis. And of improving this

XXXX XXXX. get the our more both In and as as notes same notes addressing existing transaction and tranches maturity also time debt will funding allows mature this us addition investment to a other in at efficient upcoming little with activity, to maturity our schedule

Our XXXX, push evaluate have whether loan don't to upon the those revolving recasting work of and today, term options mature term the we partners both as both maturity, XXXX respect although with also with We'll XXXX. any facilities. facility of both in addressing maturities XXXX. in extension or to options October, that anticipate in And or loan revolver October can credit the bank that's issues to our

as it's Our including the $XXX.X forward financing million capacity at facility. available our on since $XX million third credit as the Getty unsettled revolving than debt of end I've position $XXX $XXX.X been capital, was equity, at more with quarter million net and of million strong of unsecured liquidity new been of of

than those to capital manner. to we activity capital of meet all ensure range capital, earnings we're raising share have think We million investment-grade in previous maintaining ensure under with markets finally, to objectives ample we're investment funding fund general, our our In we more sufficient our capital as the activities, to in year-to-date that of a to $XX investment liquidity, committed contract $X.XX activity as fund guidance, XXXX of result an we a our and to we that. leverage that and per our And have $X.XX to to investments $X.XX we'll within range as investment range target evaluate sources guidance credit and beyond profile, $X.XX of including about are to from well share. accretive respect per AFFO additional a

or As for does of any to the activity a capital activities only guidance markets the markets outstanding otherwise and transactions forward that remainder to outlook the reminder, XXXX, costs occurred closing which costs impacting will I for anticipated our ask with pursuit to questions. call certain the variability expenses, property that, operator the for through operating open of P&L. run and costs, redevelopment timing Primary demolition acquisitions, capital projects, our dispositions, date transaction of With respect our assume deal settlement including and or not includes under of has contract equity. include factors the on

Operator

first America. the question Dennerlein of of from Bank [Operator Joshua line Instructions] is The with

Farrell Granath

ask know about behalf current the inventory still Granath characterize I tight commenting you have market. to Or on first you of shift market a just that for seeing quarter; large you sale. it last a transaction very there Farrell the Josh. I been that? was still is were wanted currently? and was of This Would assets like

Christopher Constant

is with that the be can the rates in and some that's start details. from should sense some that I'll certainly that sellers cap the sense fill then out But my a there's guys declining. of news come

with along been seen really more should Our a haven't inclined rates. shift of too We all be there. has view cap rates really longer-term much

we pipeline the although market we're in pricing a that of this point. at haven't standpoint, our aware from So movement move, ton a I really will seen think

we've activity year-to-date X can level. got see the at You

Our in â€˜disconnect' think certainly, out, But we're I there's to pipeline transact able do transactions ultimately continue is we will have we past, get around move way a to as in how to into tell the certainly, time market right, kind a of sale-leasebacks. level. the think I word we disconnect in script. our and start there's think of mid-X between And that obviously, direction we the of used move. buyers that direct be going think will looking again, the 'XX. I does But sellers. and fast and the rates to lot cap But and to rates market the those noise with in what still

Farrell Granath

or you're deals these that going in to and for that of also Okay. your wanted assets? And area there's you or of an competition auto after you a increased Are interest made is the ask having that more with become comment this all And closing? services. impacting convenience this kind at focus larger -- just the seeing been I your of about

Christopher Constant

Yes.

to as I have not investors, in like really been large growth, consolidation companies, where right, us, really at I'll repeat transactions, experts from while; store back these the in the our And the new but with think new be healthy been we a I or pipeline where a think business. may about like from come sectors. These are we portfolio. is sense. right, have interest which and how and more also competition We've very invests, sure, just ourselves around seen -- competitors, and that and going Getty consolidation, continue what to these sale-leaseback more other and sectors. long of interest makes transaction we to from fragmented think are public is right, it looking sectors direct the sectors, seen we've been relationships opportunities the And tenants, position in we lot are pretty way growth only other opportunities. for and to What I of very lot time. sector was we're feel transact able to long which creates to a for underwriting good these add there's the sectors we've looks comment there

Operator

Mitch comes with Germain question next Citizens... The from

Mitch Germain

Do out portfolio? more you were Can mean, a the specific versus sale -- older skewing? those some the CapEx? I that that remained around Anything color to provide they were in little ones properties that bit of your assets need the Global? stands they

Christopher Constant

in Yes. properties, I Global a I XX lot involved think transaction right, mean of lease. that were the properties

So think in around need There sale rents, you remain bit to differently. I for issues that portfolio little to at which were a maybe properties while. wanted component we the a around our term, look of around

a of there. Partners between again, Getty lot and Global So negotiation

I tougher, were made and perspective, owned maybe both from would certain were thought outcome parties. comment didn't the these Global legacy if think a long-term that they they right, a for C-store a those script be have the it's sites good in and assets that of properties. better Mark

of Mitch, a moving again, lot pieces. So

happy a to rent happy maintain good obviously it's Getty and and Global, sites. and for outcome our have longer think to also these at commit them we're I those term, for we're properties to

Mark Olear

that's upon sort And starting went some just And the refine had Chris as Mitch, about none of right? through, to may Global add want the option point. that lease, our have the portfolio. they unitary to how real highlight of tenants leases quick just I right? would we of the renewal that So renew utilize. the all to or thoughts So benefits

and them, and when proceeds of renew. unitary want benefits Getty went the I So engage opportunity with position will, can leases to and extract other that to highlight through. tenants in, an put just some the we the are looking around gave those to some value, But us term things if of you

Mitch Germain

Anything get it get anything That's probably just a Is a little of kind tenants your believe operations as on regards or consumer pullback. is level site auto so helpful. you X/X of stands normal about to out? with alarming, bit performance. of I probably your that there? leases, more you there obviously, Or

Christopher Constant

the portfolio, for coverage highest level, X.X Across years or level at X better now. the been has that around part of the that X

the If especially those that maybe newer you break the parts sector detail, are sector, to definitely skew certain to apart to And starting we're in the some the assets of actually right? certain of for cyclical, that then think our wash weather our quarter car portfolio. positive. I C-store within that ratios sectors, there, tends is slowest be seeing ramping are performance coverage QX

there, an the as season. years, the spring/summer but winter right seen people see months last did we've out that driving come we So get over of into uptick several and that

what from So coverage get from quarter. standpoint ordinary a this tenants our really out the from of we nothing

Mitch Germain

done consistent transactions able confidence gives coming I your volatility meet to that into market deals the you'll you Great. last a transpire me. of be or guys some mean, for obviously, the those of to take, that to call despite raising year, confidence the give But really Pipeline you've will, And that that some one quarter-over-quarter. of portray capital bit sort these -- seems source you for up able underwriting what of that; criteria? in the, be some will it, XXXX.

Christopher Constant

Yes.

and expanded very to someone store, just If when investment execute quarter-to-quarter, volumes, leases. if the several go when part we've convenience that for strategy we're you steady our the prices years to the the our business, nature quarters, the up years, to at deal that of you leasebacks that we to as opposed able and beyond for capital table X go now it given because the give off Some raised powder to right? been some we've and quarter-to-quarter-to-quarter, out grow of right, be But work else's obviously, take we certainly risk buying spikes team or that just go think had the X back out of better going last business. see sale look we can

Operator

KeyBanc is The Rama Capital with Upal from next question Markets.

Upal Rana

be already to improved You bid-ask widened. I has there. mentioned And continues this bit little XXXX? spread touched get but you I earlier into you could improve it this earlier, some on year? And additional the want to this think a know do color from

Mark Olear

I mean those the there's factors Mark. have is the as a and of progress point lot side year. to, macroeconomic that sell to continues This changed we Yes. through

So new the to there. and transact really say is what a Getty not in. spread I'd deals But try source still for bid-ask environment and is that's

transact in. to our is quality, to closings opportunities market and spread churn be thesis identify look of underwriting on pipeline; growth our If Again, bid-ask going at meet source plus you our support but the to pipeline, the our efforts. the investment that versus operational the we're criteria, for spread deals still ability in there, to we the the both able confident tenant feel

Upal Rana

And you to quarter move And already subsequent what see prepared in on expect this closed XQ to remarks, Great. cap rates. again did rates in quarter based then based you've do on Okay. slight your cap deceleration some close? see down

Mark Olear

the our where which I year-to-date look area, we is. our you activity north of mid-X it pipeline, if actually at mean call Yes. is

back rate. that we're that in So to bit. come eventually rates I little market a X think 'XX, right, cap as actually the whether But cap or that where X transaction the which increase into to aware going certainly, months, over may midyear, you an see it's next quarter out first down evolves you of the may look should closings transactions, happen those

Operator

[Operator Instructions] The next question is from the line of Baird. Wes Golladay with

Wesley Golladay

portfolios or just mainly you're sale the I'm at just moment looking any leaseback. if curious at

Christopher Constant

portfolios about leaseback, Well, talking I sale mean, we talk we're I think when assets, of Wes.

not have certainly do that's We couple earlier have some which do our the Brian given what individual will all business us. about master our to with over of leaseback. but reasons we into buy a is does any buying So tenants But typically, call. for sale actually can structural properties lease XX% leases, of the the we a in is of that necessarily It Getty our product. put portfolio years, like sites that core unitary buy articulated for advantages of last via

Wesley Golladay

Okay. for And existing relationship potentially their a then to Arco a and diversification? would like of preference have an C-stores. has Would to have you tenant been in you looking news be the new some the exit buyer? Or to

Christopher Constant

we've headlines, to portfolios It's properties and seen we we growing of good the feel our industry. same that about a leased Certainly, and consolidating pretty have Yes. Arco.

the I'd point have want at this some certain headlines other but which only is tenants to right, about news, in don't be a we down consolidation would time, of So our time, because how counterparty it view Getty. that I company on depend the and over had acquired we strong and too to led by feel has say as counterparty that for roster. on who in tenant how in Really, properties of our line get the is far it's tenants our their

Operator

there over questions, for are conference to would no closing Chris As further the like now to hand I Constant remarks.

Christopher Constant

results you, We're to QX get Thank I quarter for year our thank just in February to excited phone the call. this we for XXXX. us release back third our Great. everybody on operator. everyone on morning to joining year and want full the when

So you much. thank very

Operator

teleconference. today's concludes This you. Thank

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

Getty Realty (GTY) 24 Oct 242024 Q3 Earnings call transcript