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Getty Realty (GTY)

Participants
Joshua Dicker Executive Vice President, General Counsel and Secretary
Christopher Constant President and Chief Executive Officer
Mark Olear Executive Vice President and Chief Operating Officer
Danion Fielding Chief Financial Officer and Treasurer
Mitch Germain JMP Securities
Anthony Paolone JP Morgan
Call transcript
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Operator

Good morning, everyone. And welcome to the Getty Realty's Earnings Conference Call for the third quarter of 2017. This call is being recorded. Prior to starting the call, Joshua Dicker, Executive Vice President, General Counsel and Secretary of the company will read a Safe Harbor statement to provide information about the non-GAAP financial measures. Please go ahead, Mr. Dicker.

Joshua Dicker

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

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

Christopher Constant

Good performance Josh. providing are Thank an to call XXXX call the our to discuss quarter Chief Officer. you, Operating today's With discuss will of by Officer, strategic morning, begin our to more Olear, and on Mark in Josh our progress, today we'll and will overview third I everyone. then And and and Fielding, detail, of then Danion XXXX. call Mark Financial results. financial our Chief portfolio third the pass our me welcome and Danion the for our quarter call

progress demonstrate terms to both and acquisitions making with core of strategy our the continued performance health quarter lease our along in portfolio, we growth third Our the of redevelopments. executing on net in are

and auto-related quarterly this stable the net year investment a us a our on week expanding execution cash guidance combination decision Our is Getty's increase to by our factor of convenience, gas raise thesis healthy our selected dividend. acquisitions to lease of and allowing for board's major and recurring portfolio supported sectors through consisting growth, projects. redevelopment in was the portfolio, threefold, our is core our

total company. properties taking each for excellent quarter to demonstrated XX $XXX during quarter. our for to transactions the third we million. the an transaction And aspect during the closing Empire into a the of acquisition the strategy, quarter, of performance subsequent the added The of our account closed was investment our Our quarter portfolio, third during

prior As station additional to store our which reach call, are our we properties, Empire with as discussed new expand gas a community on we geographic all and high-quality have earnings XX pleased of are tenant assets. and to

more and both facility also the Pro expect are opportunities capacity July through our properties through offering market which Applegreen XX just with available acquisitions us transaction our under Empire Applegreen million. acquisition were us the have acquired This approximately be Year-to-date, We closed and funds of than times, that now of should the with of further we allows follow-on to Carolina. X.X geographic debt a to raised ATM EBITDA our use presence transactions, debt ratio These and add net capital our growth targeted properties in Metropolitan available present our South after expands program. to themselves. our credit combination for positions XXX forma additional we Columbia, with delighted funded excellent quarter-end. and for $XXX in revolving

for with share strength normalized the XXXX. annual results our The to the for and will our again per was the and account the the of results was quarter On discuss, for per certain our common quarterly to July earnings, which were operating FFO growth per we our acquisitions same XXXX. completion notable offering, our AFFO in year. for prior per for into $X.XX for share full our non-recurring to takes a our Turning compared Danion stock ended the of items, the period $X.XX. After basis, produced net along AFFO significant the AFFO adjusting September AFFO drivers decision primary guidance of raise which as quarter year quarter, share XX, share our

this increase announced $X.XX our year recurring dividend in per share. been approved quarterly more we to to raise Finally, we This XX% our dividend board recurring by increase quarterly our cash that from per XX%. earlier marks week, consecutive a third as $X.XX the share able cash have than annual

turn our remain for discuss the remainder I outlook additional growth shareholder which investment the We drive through beyond. about year-to-date will value as strategies, and and and to XXXX will call our we of believe on excited Olear activities. about over the our to Mark year. are we With portfolio move We executing on our accomplishments that, focused

Mark Olear

transaction, annual $XXX X.X in for Mexico XX-year compare closing, million. of properties expect size Arizona, Thank At $X XXX entered start rental acquisition activities. average of have the the you, Chris. In of XX we of acquisition this approximately XX we of which nine mentioned, properties, the acquired of discussion acquired of with have acquired our store New located of the whole. completed a generate September as initial X,XXX unitary we Year-to-date, lease properties is favorable purchase Empire was transaction, year-to-date with months year XX The I The more acquired industry will approximately highlight size and Georgia, properties collective fourth income return as than to and our cash so which first price Chris an The X. triple-net and to Empire is million. been a Texas. and far have The were in on closed square into million and Colorado, than lot Florida, $XXX quarter. our the third which the the initial acres a Louisiana, investment on quarter X.X%. total both the are of more during feet,

leased properties, inside lease Carolina for outlets convenience the will annual receive with the in of portfolio, for return size of five purchased income $X acres acquired, than more XX properties we lease and $X we a average Subway which of had Applegreen, weighted existing XX favorably of Applegreen XX-year properties acquired or market. the Burger and under gasoline during purchased store; purchase quarter, a initial Of metropolitan term overall King, Burger five cash and weighted and million. After Once many transaction, average properties had million X,XXX years. lot the the remaining which of sites an addition, are a contain industry we X% the our total into South Blimpie initial rental which In the the initial properties, of XX we closed on quarter closing, in third $XX.X XX.X a an in X.X were price for feet. the fee approximately to average station aggregate. with of store are average compare These again, square Kings. stand-alone million and size entered which previously cash ended, Columbia, At we we Greater properties

While underwriting the our to and in continues convenience market criteria. in competitive acquisition gas be the remain disciplined sector, we

in acquisition opportunities pipeline Our process single remain reviewing assets pursuing for of and actionable additional of several both and we strong and portfolios. opportunities are the

one terms the during of quarter, property for capital In we recycling, sold $XXX,XXX.

invested approximately of previously expect quarter. Westchester our our vacant during into Moving In platform, site to XX% in the project redevelopment completed on location a at a York. return July, our second to New We County, GreenDrop investment. generate we a the rent commenced for and $XXX,XXX redevelopment

XX quarter currently in terms In LOIs, projects four to which redevelopment are on of with properties, our which include are signed through projects continuing and advance the ten lease active the projects, net additional process. projects All included these leases redevelopment we portfolio. ended and

all projects commencement we expect $X In over the year-end. redevelopment completed invested these the rent before expect next further million the and projects our of XX We approximately pipeline to in years. in have we substantially be total, two projects will of three to have

returns of market investment will On company the to acquisition these we Getty in these of XX we capital spend incremental projects side, $XX.X and where the total estimate could today. the generate million in that funds require invest will a excess by

can detailed remain in we on updating XX We of and which look presentation, to as please our forward portfolio information everyone be For progress. to our transforming page to investor make found on selective pipeline, more sites website. refer our committed the redevelopment

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

the improved basis to approximately over Danion. average our XX And lease we'll XX weighted including term Our active With that, redevelopments, overall to by XX.X%. is our years. call turn XX occupancy, points

Danion Fielding

Mark. you, Thank

Turning to our financial results.

our were quarter prior quarter, activities. which total Growth year's by was year-to-date the tenant representing from excludes leasing $XX.X income, revenues interest of $XX.X and over and million and revenues respectively., primarily reimbursements third acquisitions and completed X.X% our respectively. driven For million rental expense X.X% increases and properties, the

costs cash primarily slightly of During by the and G&A third expenses, quarter increased expenses, million of which XXXX, our operating property $X.X consist quarter-over-quarter.

last on information specific please night's release. to more expense earnings refer For movement,

or of share, share per $X.XX $XX.X the our quarter benefit we which per for are million not including core FFO items, as net they $X.XX a from highlight was notable operation. Our part

quarter night's year's information items for $XX.X items, notable prior the last the to to release. more please notable removing on quarters, for our After million million was $XX.X quarter. For comparable refer FFO normalized earnings compared as from

AFFO $XX.X share $X.XX. $XX.X for the our normalized quarter items, was notable After quarter the per $XX.X On or for for normalized AFFO was basis, million a to AFFO comparable million compared removing the per was the share. as quarter Our quarter. prior our million $X.XX for year's

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

and X.X years, is Our weighted average maturity of with XX% fixed. debt cost borrowing average being debt X.X% the is our our weighted of

at Our X.X to debt currently capitalization is total net XX% stands times. our debt EBITDA approximately to and

Empire equity amount During follow-on at fund share. and offering a repay underwriting credit the revolving fees net proceeds we proceeds quarter, $XX.XX The the per of used offer $XXX.X drew to the to issued subsequently approximately on transactions. facility under raised revolving X.X of both Applegreen our million. an price facility We our shares after through and million outstanding net offering

used during at of the an addition, million issued average our per capital program $XX.XX $X.X of price we and share. quarter In ATM

Our the million, quarter environmental far at million this so $X.X ended $XX.X year. down liability

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

not notable a discussed are raising guidance business our $X.XX XXXX release $X.XX guidance effect $X.XX per I regular $X.XX stock Finally, XXXX, in X-K nine-month not offering such core of a net XXXX, in capital potential includes are not turn company's range the on the Chris. at With of of common future Empire and to XX, to acquisitions any back call in midpoint the the share. as period per our excludes or transactions, The Applegreen earnings items guidance September activities. does our we ending The recur and the the basis. AFFO benefit of the company's or will share. that July, impact by are the per of Through to closing to of but share resulted markets that, to assume notable AFFO representative company's items likely

Christopher Constant

concludes you. Thank That prepared our remarks.

me let the operator So, open the questions. call ask to for

Operator

with Instructions] will [Operator from And Securities. first Mitch we hear Germain JMP

Mitch Germain

guys. Good morning,

Christopher Constant

morning. Good

Mitch Germain

Applegreen the – transaction? how about about think think we How we should should first, funding

Christopher Constant

raised Empire $XXX our in revolver. responded balance available Applegreen ATM. transaction that we the the balance sheet. the with Well, funds funds million for and equity then And And on had available the the plus under both

Mitch Germain

thinking revolver cleaning And so, offering? let you notes Are balance ask maybe just maybe me with you about differently. a up the

Christopher Constant

facility Our due comes in credit year. next

looking at to looking line involve to available all all could every that's more every of we're we're that take at our options us. could piece funds different So, involve available it so us. and fixed-rate the debt. we'll capital And

Mitch Germain

associated Okay, great. side. of small number not guess, the A on acquisition those? Is the a couple with just included I of there – in Applegreen anything assets, were final

Mark Olear

Yes.

the the part of the from were we the deal. day, you leasehold announcement If take of At leasehold initial end the also interests fell the as transaction, recall four to Applegreen those out going interests of transaction.

were the adjusted was amount adjusted. acquired funding our we number of properties So, and

we simple leasehold and So, acquired fee interest interest. XXX% not differently, said a

Mitch Germain

you the they used other competition or I'm lot A are cleaner as they deal. little – from Are curious, active to of as be? seeing REITs just a

Christopher Constant

I competition from other certainly transaction strategics lot a in one be there's looking we that Every from are think there's the to really that only and look it, sector. and the out we'd still at, REITs community like bidders as like gas convenience sector. at much of other there REIT our and

question. think to answer yes your the short I So, is

Mitch Germain

last me. midpoint, was And guidance you've Okay. $X.XX year-to-date. one Looks like got increased, $X.XX a from

almost So, outs the full implied you've I for and big off the got it tail quarter already quarter. in equity seems quarter the of you've the ins just understand the – and numbers, kind a to but, fourth got so, third the by guess, trying fairly there.

Mark Olear

Yes. right? sort of, $X.XX call, looking our the $X.XX through call at AFFO first items. of looking of $X.XX of notable the we when you're months guidance, can't at forecast out, includes So, kind that The we what items. those And of we We nine we're what really normalized back year.

of explain sort So, what the... maybe that helps

Mitch Germain

normalized, $X.XX And this quarter, past it's right?

Mark Olear

Right, yeah.

Mitch Germain

much the So, you have assuming there in that seems problem equity, a off again, tail fourth of correct? no like already quarter, like, fourth major the quarter, be the into shouldn't

Mark Olear

tail I I at don't – sort look if number you the excluding of off. think see that the don't you I think $X.XX,

Mitch Germain

Great. Thank you, Good guys. quarter.

Christopher Constant

Thank you.

Operator

Anthony [Operator Instructions]. Morgan. Paolone We'll to with JP now move

Anthony Paolone

Thank couple credit of just maybe done, how you Can the the coverage and of large good the a that deals all we've or spend minute and profits as talk and those in such morning. of last worked? metrics you and EBITDAR about stores underwriting volatility

Christopher Constant

Sure.

to So, coverage typical what said on EBITDAR. X we've our deck, that times underwriting for us is X.X

towards I think of range. both the of were that higher end these acquisitions of underwriting sort

I oil of retail still price price of all of around. lot think, the particular and and are with of they gasoline said, the revenue as the the the around, growth moves the being deals, still deal, we margin profile. of the all moves presence stations, margins and Applegreen volatility But the inside gas they stores. store the sell really streams that different the motor store fuels. of in size the And a And of both the take retail know, out but stability convenience the

So, year there last at the the can profile transactions, that profile a don't amount comes looking is see, tremendous on four years to you again, last several either but year, transaction. total margin the stable. see is large of in underwriting movement several over and year component relatively the to a variation the walls of when margin gross you from And inside years the

Anthony Paolone

it. like X.X% pipeline? are your around of couple pipeline, terms that in these deals range. What terms And Okay, cap got of last rates the in were of

Christopher Constant

the sort of the sort we're at. cap we're very high sort to tenant sector rates definitely I continue on total deals throughout depending basis the Yeah. where at think margin seeing XXX profile, the looking of Depending who transactions high to range. on and properties are, that that full that range That's from to range Xs. in mid Xs run a of is the point I think

Anthony Paolone

are – any or are CPI seeing you what typically And there? typical bumps Okay. or what out contractual

Christopher Constant

sort of bumps. typical to annual They're X.X% X%

Anthony Paolone

debt then target have you think the And EBITDA deals? structure. about on further capital kind net just as question a to you Do last of

Christopher Constant

do. We

before I X.X% to in to think we've live the we happy were said that X.X% range.

at account said closer a my that take funding I end remarks, said, the given Applegreen in of the the profile. you think, we lot don't to be the as leverage X.X% range have that conservative that but With after the could a the to I leverage always been year into transaction. from change. to has I And fairly the that expect I just room mentioned, company we grow a still from standpoint,

Anthony Paolone

thank Okay, you.

Christopher Constant

you. Thank

Operator

to further [Operator any turn remarks. this back the no Constant questions. Mr. like over there closing for Instructions]. is I'd And at time, call to

Christopher Constant

you, for Thank the company. results we call and your everyone us speaking morning. to the year our when everyone, interest our in for new we quarter this for in to forward report appreciate year joining XXXX. look We And fourth full

Operator

And this our concludes now call.

now disconnect. You may