Getty Realty (GTY)

Joshua Dicker Executive Vice President, General Counsel and Secretary
Christopher Constant Chief Executive Officer
Mark Olear Chief Operating Officer
Danion Fielding Chief Financial Officer
Mitch Germain JMP Securities
Anthony Paolone JPMorgan
John Deysher Pinnacle Research
Call transcript
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Good day, everyone. And welcome to the Getty Realty's Earnings Conference Call for the Fourth Quarter and Year End 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 and provide information about our non-GAAP financial measures. Please go ahead, Mr. Dicker.

Joshua Dicker

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

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

Christopher Constant

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

the of strong company a fourth results all XXXX. what the year Our activities was business off capped quarter in in for around

station and significantly properties the landscape. and tenants of that that encouraged roaster the and healthiest We in sector are entire grew importantly, convenience during more gasoline of the the of the among remain portfolio are retail our pleased fundamentals year we

and enhancing of executing from our organic on value creating redevelopment, including, operating acquisitions XXXX, stated our XXXX. to to demonstrated utilizing we unlocking which we shareholder value XXXX growth we throughout on believe each out closed accretive initiatives we all our As embedded and our assets, focused by ahead growth portfolio look of selected to remain

our our prior We in terms same of for end year for of accounts success AFFO FFO period $X.XX, our which our per prior and high share growth year. basis, which per with our for end quarterly year's share the guidance capital performance acquisitions of Turning growth the for of results our XXXX, exceeded quarter. the $X.XX, share was on the to executing net The as strength range On $X.XX activities in quarter was per gain the quarter which for we in both year stems per a reported produced of the to during from ahead And our revised earnings XXXX, takes XXXX AFFO the share share. quarter. per compared $X.XX and AFFO into raising and redevelopment.

On location, XXXX, gas to the convenience including transactions. of delivered new-to-industry portfolio in individual front, a a during two invested the acquisitions $XXX to XXX quarter and acquire during rent which redevelopment, the fourth we on commenced quarter. million of combination redevelopments properties in we respect With

to use addition to term come In redevelopment debt hard a XXXX our and growing acquisition create premium transactions, Utilizing placed the measured beyond. We fixed we and projects, online our and of as XXXX equity, of flexibility pipeline in a flexible committed structure rate being ATM look in a to opportunities we are including leveraged of a the long combination that have company. which financial maintaining of program. a debt lateral to completed recently with were to finance are work number capital we and well we expected private our grow growth on placement and a able conservatively to

our of and acquisitions supported portfolio net by combination auto remain on consisting management redevelopment and core asset activities pronged portfolio, growth our two projects. of platform, ahead, expanding in a stable in we gas our related lease convenience, selective focused growth sectors the Looking for

will on We XXXX. are continue we throughout execute able be confident that strategy successfully to to our

look as forward. underwriting We standard will we remain diligent in our

beyond. quality XXXX to to our the and that, of focused we activities. commitments of our evolution these additional we are will Mark and sector. But turn convenience driving we with gas and portfolio to growth value investment continue discuss real high over will through tenants such, With and critical to to the shareholders As Olear call components share I on partnering acquiring move the as be estate

Mark Olear

you, Chris. Thank

acquired potential In those terms as properties we either our as investment convenience operation potential. to in Substantially, which of activities, to had service offerings, uses, properties have stores site’s fee added standalone many or productive earnings gas gas and all very add had we portfolio for and QSR alternative assets full competitive use. a the line including quality and well high with as both year the with

During increased Getty's transaction pipeline potential of XXXX, significantly.

of year, the meet properties which screening process. $X.X our than The underwrote we For more billion year of the which acquisition result was ended XXXX. the for XXX opportunities, initial

acquisition total approximately $XXX volume million. Our was

including and of was Our Applegreen, and lease review portfolio, others diversifying the among added highlights financial weighted average goal return years. Empire K, Lube further strong a of average weighted X.X% tenants few by term XX.X our investment for to exceeded Jiffy quality. Petroleum, our with To operations advancing high Circle we addition the income tenants initial and year, activities, of our rental the quality new six

south and areas geographic the to We several United States. both western added south expansion new our chiefly eastern also into our portfolio,

the now now XX% have activity, top income are Moreover, post MSAs. from national XX of We our coming our XX states. representing XXXX we rental investment

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

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

new We platform. redevelopment our for location a redevelopment during delivered December, leased to Moving In the gas project our and to Pennsylvania. convenience [indiscernible] industry and quarter. rent Central commenced third

Our on an investment more incremental was total basis. XX% on investment than $XXX,XXX generate and we a in the return of project this will

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

three the all projects $X.X pipeline, XX one be In these several expect will we sites at our total, redevelopment commencements expect the we’ve during in complete projects have of next over approximately rent We in million to substantially invested to and years. XXXX.

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

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

result all the nine As activity, properties. eight with vacant active year redevelopment and sites ended net properties, we XXX of our a lease of

remain redevelopment, turn over our is approximately that, term Our occupancy, nine weighted With XX average Danion. at excluding overall the and active our years I XX.X%. call to lease constant

Danion Fielding

Mark. you, Thank

For NY interest on rental quarter, were the of respectively, was and by and driven revenues properties Applegreen from mortgage excludes over total increases million respectively. reimbursements our the and primarily XX.X% and XX.X% receivables the prior representing $XX $XX.X fourth million and quarter year's The revenues growth from tenant which transactions. benefit our

increased of fourth million XXXX, consisting G&A the by During of cash quarter quarter-over-quarter. $X.X our operating costs and property expenses, expenses,

environmental our quarter. increased by in expense In million $X.X addition, the

expense release. For earning to please more on movement, refer afternoon’s specific information this

prior Our share FFO compared was as quarter. per $X.XX to $X.XX share $XX.X million or per quarter $XX.X or for the the million for year’s

to and the to compared these prior million operating million Company quarter that accruals, items; not quarter was indicative $XX.X the in $X.XX AFFO its the the settlements are Company for definition believes fourth the quarter. litigation legal revised environmental core per because for XXXX, its of share beginning as exclude additional judgment, of that performance. insurance or should per year’s or AFFO Our It share be and items noted $XX.X reimbursements three $X.XX of

a of longer no period-to-period. highlight AFFO discussing As comparability from its notable company items when the result, the will

from $XXX.X and year Again, ended representing X.X% were be our this and in result. our the over growth acquisition respectively, revenues year’s activities full to we increases prior rental revenues For and of the impact million properties expect XXXX X.X% the XXXX. $XXX.X from of year this XXXX, felt stems and total million growth

our ended by For operating year expenses million. XXXX, $X.X decreased the cash

for year $XX.X the FFO $XX.X share year. million Our as was compared $X.XX to per $X the prior or share per or for million

the $XX year. $XXX sheet includes share capital long-term per markets million for compared $X.XX the under to or our of per credit We balance $XXX the and and the our or quarter for with of $X.XX share prior $XX.X debt. Turing million barrowings, year AFFO was agreement rate million activities. million million as ended $XXX Our which to fixed

Our balance and sheet positioned. well strong is

barrowing debt cost being and the fixed with years our X.X% maturity of X.X is XX% Our approximately weighted is weighted of average debt our average rate.

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

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

the share. average program offering and of capital, we $XXX.X raised our of $XXX.X year, our at million For $XX.X price per $XX.XX million an per through share million $XX.XX ATM follow-on at through

Our ended quarter liability down $XX.X environmental million the year. for the at $XX million,

mediation and $XX.X and quarter million $X.X Company’s year the million the respectively. For December net spending was approximately XX, ended XXXX, environmental

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

Our guidance assume capital any market or does acquisition activities. not

four, it will Although, one, increase XXXX call over three, activities. from reflect expectation year I will borrowings on recapture Specific expectation of will the cost this capital leasing full in that, transaction; Applegreen for year with raising we that the we execute and and include: our the which our Chris. volume two, impact the back the to our to year associated does our continue factors earnings expectation redevelopment; disposition forego properties Company's when activities. that rent and of will With the impact of XXXX; Empire our that dilution turn redevelopment, our full impact we

Christopher Constant

prepared you. remarks. That concludes Thank our

Let the to questions. me for ask call the operator open


Thank go first Mitch Securities. to from you [Operator JMP Instructions]. Germain We'll

open. is line Your

Mitch Germain

just average think XX. push closely? I two three little you do a the So you it term lease about more is, out there that want recognized maturity little more. your How comfort over do years, a your matching Is to weighted level a

Christopher Constant

floating that's closing floating of schedule We're inside of because fixed. maturity the of percentage the The our debt percentage versus quarter, is certainly the Applegreen elevated the this quarter. and of mindful

leases our as maturing. debt exposure look reduce think with where and to our we're rates certainly our I forward, evaluating closely also extend align balance we additional to to more maturities are sheet transactions

Mitch Germain

year? So should the in we in or... Is offering notes assuming guidance contemplated that be private some

Christopher Constant

few a It's more guidance. right say not different evaluating the contemplated in we're I'd long capital. for alternatives now, term

that So get -- I the one call. this into think on

Mitch Germain

seems factoring And in there? available And up like then you how stands. activity with then a liquidity? I your that where do regards pipeline view is say It bit and the -- today to what's picking

Christopher Constant

and achieve in utilizing further. today, that we and/or our terms to We growth certainly both equity believe, sitting debt capital of the our program and rate need plans, potentially access here have ATM we additional

level times. at a maintained debt forma Empire Applegreen we the pro at On publicly that side, level and deviate X.X think always leverage The philosophy. said of sub-X about has can With operate to from we to basis. been that I conservative year-end, a on don't times Getty were planned And higher we standpoint. that X.X debt-to-EBITDA leverage said, we a from that

On we execute growth for into ATM projects as or have find the acquisitions immediate can -- completing are redevelopment the prices, that capital use the there pipeline opportunities our year. to of believe our that terms from into continue issue program during we portfolio. we side, either where we the believe we XXXX, which we plan to to attractive usage And some from we in look do where of the that and

Mitch Germain

like -- history Mark’s And on is that the I'm with the capture a then consistent environment gotten has a you underwrote guys you or challenging? your year. competitive it bit you had upon about comments, percentage if throughout rate that that guys based sounds more curious is acquisitions XX%

Christopher Constant

years. really is with generally acquiring It's hard plus various or or in portfolio a say number M&A partnering And business. particular stem operator where operating XX% other to industry we're that from an acquisitions minus there who's and our that

historically and that been obviously year-to-year moved competitive. reviewed transactions of historically from and competitive level the are have transactions So we has

more So of we M&A the in M&A lumpiness just industry that been as a and to actually certain we industry I think on the rate as But higher think years apart from the the company, was that recognizing are that has industry. growth question others, in our quite a has been add comment opportunities. frankly the closing lower seeing would I little in given the of your in do

and selective real focus very certain on real be to of markets certain estate. continue We acquiring and have a types

do seeing nothing changed excited but I has more think So we from about. we're perspective, underwriting activity, which are

Mitch Germain

in you guess And MLPs I deals seeing you some are equity? larger, private still pipeline? of a these and seeing lot those these Are

Christopher Constant

the Considering out of across capital markets, the team. some of that's

in equity others. see private I MLP that see the the is think of are has is at that certainly other There and and And capital bit often. the very estate similar that and assets that private competitive quite trying real that sector their continue or little a REITs to market we cost comeback less private REITs than we public ones maybe and to funds the acquire. sector like we're looking are often active through


go We'll Paolone Anthony to JPMorgan. Instructions] [Operator from next

is line open. Your

Anthony Paolone

over billion And you're Mitch. up you looked Just rates with discussion following you've there? about of over the course on Can you of what and some talk cap seeing out I the think XXXX. stuff $X that mentioned of

that things the So buy of like? looks range what box looked also more a talk bit little can you and just that about you at

Mark Olear

that existing for the lease piece we're Tony. acquisitions quoted of That question screening. start assets with our where lease estate single X.X initial from figure includes triple-net everything real tenant Mark first, that that at looking Let's acquiring met of

similar at. at Empire deals But terms in of of we certainly transactions underwriting. that larger order All million, size obviously, Empire there initial transaction. as the up the qualifies in to deal the in M&A has of larger of ton north a our to screening it more terms to the sector portfolio activity certainly deal, net looked So But it. to is extreme so some get a in of was where one-off $XXX in to lease market. we looked way the The other lead

a with as the types we're So of during broad range there’s trying quite that of these opportunities and acquisition transactions as well leaseback different year. M&A sale generate to

Christopher Constant

from either asset the In buyers all XX/XX I terms class markets. is see what of a our amount deals institutional coming looking would continue of significant and/or capital on rates, at to of types cap we say

expect along cap been see I continue And to aggressive. spike be rates while moving the cap rates rates you there’s and a would think in to that. with recent certainly

think borrowing that the there increase a as slide up not in we've cap seen cost. in lag certainly meet I market rates is to

Anthony Paolone

What for… the would be range

Christopher Constant

The given in call Xs, that the expect. through you think in than be to a been market quoted for I X.XX range mean XX/XX the market, seen mid-to-high maybe see I otherwise size past but point, X.XX. I’d would movement more the so do transactions at don't a of up I of credit assets, some tremendous the amount has expect delay I I’ve obviously really of it think yet. The and across think the of there you’ll strength some you’ve the

Anthony Paolone

acquisition solely on it have bit, or out And been or anything a else? C-stores has criteria with focused widened stations your you gas fuel

Christopher Constant

Well, other about, some gas, the King of which five sites acquired those lead the talked of at Burger now history backbone and company. certainly at Applegreen the Jiffy We’ve so and standalone more as restaurants, such the widened the convenience that we auto-related are during look six properties included looked We auto-related year, typically to Mark the are Lube with themes. it portfolio. in that’s the company, deal that’s the

of with we've sector them. and locations So carwash our is that have given little lot net, wider of somewhat we been cast certainly on one a familiar the that that studying carwashes CNG bit a we’re

the So a the stations. but of and certainly of bit gas casting net, core wider being at we're still convenience

Anthony Paolone

give, question. time? a about the debt-to-EBITDA I over discussion, duration net for and when debt the last it, talking mean in Did you're target that actually then company you And missed I

Christopher Constant

under X.X year-end. fully were the pro a forma in to four operating just range. We at on X.X said we’re basis comfortable We

but conservative the lot there's to that's always leverage, a run on something I don't that and has changing. think company room been we anticipate I think the of So


we’ll next go And Deysher John to Pinnacle. from

John Deysher

the I quick statement. income a just have on

The just in exactly I is that embedded other up income what number? curious and number substantially was was

Christopher Constant

That’s a great question.

The year settlements was for was other that in million, reimbursements income number the insurance or from legal we took of a and that money year this $X.X lot judgments. either

you earnings that’s of income big can million where and judgments reconciliation which from you last see $X.XXX of legal was the net If the release earnings biggest there’s our AFFO, the look on at and to geography page swing, settlements the in statement. a

John Deysher

forward? at going stay not probably elevated rates that’s to going So those

Christopher Constant

are Those to are and timing matters those that cases in to hard frequency or that the income to of are that frankly recur individual streams predict are any don't with predictability. due quite and individual expect nature one-off which we or


And we further have no questions.

Mr. So to any I'd turn like to time, at further remarks. call back Constant this the for

Christopher Constant

all you to for our in Thank again look look year-end XXXX us our the We for everyone XXXX. to joining forward a call for and to year speaking first when productive conference quarter we May. forward


today. Thank conclude participation. that And your for does you for call our

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