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
Laura Dickson KeyBanc
John Massocca Ladenburg Thalmann
Tony Paolone JPMorgan
Call transcript
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Good morning, everyone and welcome to Getty Realty’s Earnings Conference Call for the Second Quarter of 2018. 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. Mr. Dicker, please go ahead.

Joshua Dicker

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

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

Christopher Constant

on Chief Officer. the Good Chief and of With Olear, Mark call for call me our Josh. Fielding, Josh the today welcome Operating and Financial morning, our XXXX. you, second quarter and are Thank everyone Officer; to our Danion

Let quarter discuss activities me detail finally, will balance our then providing portfolio call call Danion to Mark overview in an investment and sheet performance, I more financial our initiatives second today’s and to and our by pass will begin of results. discuss the XXXX

continued our The second of portfolio. net quarter performance trend our steady from core lease

funds As XXXX from of activities significantly adjusted operations to increased year-to-date. XXXX expected, and due revenues our our in both and the second in completed investment half

$XX.X reported We We and $X.XX, by by more and X.X% second increased properties $X.X XX income and of million the $XX.X of operation quarter. $XX.X on up per both year, from net auto-related quarter’s during million, from quarter, acquisition acquired adjusted which prior funds the prior XX% executed operations over platform million For second we or million, over grew in gas the convenience, than $XX or of funds for than $X.XX million share quarter. quarter. redevelopment our more the

Investments, which announced discuss footprint GPM our Southern U.S. is Mark partnership our now sixth our As and our foreclosure the tenant. in previously transaction more largest will in detail, with expanded

commenced addition in are on to projects XX in projects, to the our redevelopment of of number our which two investor to total Turning completed during our rent our bringing X presentation. program, pipeline quarter projects detailed

volume investors. real competition that the criteria. our and of see to and estate and we assets We auto-related other underwriting of types gas strong available transactions true underwrite both convenience, our remains the additional these we continue are With staying to institutional said, for and REIT to opportunities sectors. from Overall, peers continue

tenants who commitment and and the estate partnering focused evolution with acquiring on sector. to the real and gas of be As such, we continue our convenience growth share to high-quality

where we convenience the potential. and does properties additional pursuing have are is determination longer disclosing as the property that redevelopment and and have In not locations no the we made addition, gas projects redevelopment our competitive selectively

completed the for the During a million private and also a new long we capital company time us. quarter, XX-year MetLife Prudential, $XXX relationship placement partner of with

the of completion fixed highest debt and announced approximately of history the in being this company maturities With debt XX% its until debt the have transaction not level the XXXX. of company do we the rate, any

our our portfolio combination second through will and activities able of portfolio remain our execute our in be convenience, continued we We and expanding selective As of the cash will pronged confident objectives we core core redevelopment of portfolio, auto to flow portfolio three net half gas beyond, sectors conservative move I our in by turn throughout through projects. sheet. from supported successfully growth we on on activities. to our balance We stable stability to growth benefit remainder management asset that consisting continue of remain Olear that, from discuss XXXX. lease the a and the to call XXXX investment and to strategic acquisitions Mark the over our With our focused of lease related platform the net

Mark Olear

Chris. start on projects our provide our portfolios redevelopment I reviewing will detail and you, by in general. additional Thank and investment activities

During properties of million. the our with on investments discussed transaction the call. that quarter, last properties of acquired part we XX our for acquired we $XX.X XX we GPM was

and our XX MSA. properties XX portfolio diversity door the size X,XXX the size of of acres Arkansas, enhanced quality Texas, is average we the which of average approximately lot on properties in an feet. The have Both Oklahoma square being of portfolio. but and acquired one-third Dallas-Fort of properties reminder and Louisiana, a located As Worth the

full initial recognize to expect year million. $X.X approximately rents of We

for million we transactions two addition, individual quarter the in properties during $X.X the in acquired aggregate. In

convenience other Chicago gas a property in Carolina, is store auto site in is the property an parts first market. and North The Greater the

quarter, Turning on commenced rent to our the projects. two redevelopment during program,

incremental XX%. we on triple The first In $XXX,XXX with an return total net publicly investment approximately long-term parts a achieved retailer. of our this AutoZone, lease is traded was a our project investment and

net Our five investments project, lease investment To-date aggregate return have second XX%. long-term this regional credit we rent with was TruMark of on incremental a an Financial, projects incremental In XX%. a achieved and $XXX,XXX invested union. completed of approximately commencement to this return we on triple quarter an our

to pipeline, ended includes we to Turning XX and leases the active LOIs which which when quarter required construction. are leases projects would projects signed we which properties included on approvals triple five our nine that commence be with and removed net redevelopment receive various currently in

pipeline as Our range gas convenience and stations, of parts stores retail serve restaurants. wide such quick and use includes and casual specialty enhanced and fast and service a

continuing the through are advance projects process. our of redevelopment to All

in total through the in will X of The several projects additional $X.X with the incremental the we XXXX. projects over returns today. will moving of by these currently X progress estimate next we have redevelopment occurring with substantially We both years we approximately completed for approximately million anticipated XXXX be the if company could $XX.X invested expect in to million. all excess year completed market to these will in projects acquisition during to funds $X in generate commencement completion projects the these what projects investment in rent be second and XX that we Getty investment progress in redevelopment and quarter million the To-date, invested expect of

portfolio our greater refer projects program possibly the anticipate found to Page Getty’s X% between our website. on optimizing XX remain our yields continued X investor over information redevelopment which and and than committed can our of to XX% portfolio with involving XX%. We presentation opportunities un-levered please redevelopment targeted next detailed to more on For be of years current redevelopment

the two we quarter the $X.X of non-core disposed during million proceeds. Finally, locations for

XXX leased As a vacant redevelopment portfolio our ended sites properties, properties. net the X active with of result activities and quarter X we

Our With lease that, to redevelopments X overall our Danion. I and to XX.X%. average not term years including turn XX the weighted our increased is approximately active occupancy, call

Danion Fielding

Thank you, Mark.

excludes year-to-date. revenues respectively. $XX investment our XXXX, year’s to drivers in were total properties, second million the of grew increase financial XXXX tenant and rent and to XXXX rental results, and income, interest the quarter Turning half quarter the impact XX% of from XX% for to primary expense second million received the reimbursements and our over from revenues $XX.X the which our of activity The prior of

due our which million taxes, property During our tenants. quarter cost primarily estate real increased from reimbursable of the due XXXX, to second are by $X.X

our be compared second addition, increases up litigation in and legal times, fees, $X.X the million environmental of matters. at expense, environmental to as was variable professional due with to which associated In primarily can quarter XXXX

For yesterday more information to afternoon please on refer earnings specific movements, expense release.

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

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

ended quarter million $XXX bear with borrowings first X.XX%. rate quarter Chris of issuance agreement under we notes to floating mentioned, repay potential $XXX the of to credit Turning from between million note fixed We during million long-term evenly proceeds on balance ever XX-year interest includes we company's another the and to million the borrowings, as the fixed split at our $XX used The sheet, MetLife credit issued which debt. rate $XXX rate our facility.

and average XXXX. Credit a our approximately fixed is borrowing XX% with X.X until debt Our average weighted of years, being have of the cost debt facility was not we rate. do weighted refinancing, X.X% maturity debt our maturity

Our debt currently at XX%. capitalization stands to total

was to X.X to value total asset EBITDA is XX% our total debt and Our net debt times.

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

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

net was approximately quarter, remediation For the company’s the spending million. environmental $X

XXXX year-to-date per million and are share placement. share, per $X.XX $X.XX private we reaffirming to our AFFO our guidance activities of the Finally, acquisition $XXX which includes XXXX debt impact of

future from year portfolio year our activities. reminder, back capital earnings average that, will increase markets net with assume it our Chris. lease of and our I four, any forego in acquisition; does, impact cost XXXX company’s one, our call capital although for borrowings our properties three, our and guidance, does two, XXXX full the XXXX impact expectation will guidance that weighted the which of a the will we XXXX expectation associated full the rent raising or dilution we turn With to not at recapture As when from activities, impact of redevelopment; the acquisitions

Christopher Constant

concludes you. our remarks. Thank That prepared

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


from Instructions] first JMP hear Germain We ahead. Please Mitch [Operator with go will Certainly. Securities.

Mitch Germain

a that am is with your any market? comment morning. Good pricing within seeing you that are are Chris, changes I you and underwriting curious the sticking

Christopher Constant

the hold purchase for primarily on long-term. in volume sector. but gas estate in is primarily are going operators not opportunities Not are really, to that strong, be it’s continues that better to want and It some convenience opportunity and related real we of that the necessarily to opinion, the consolidation our

time. of being be terms long really expect real we it think we own that selective So about would how is comment acquiring in for to the on estate very

Mitch Germain

little to maybe regards two, environment take more with then a who how of where fragmented I And decision advantage to is you in current these change is, the it. quicker of for of any the one, in questions the is. And against of deals? terms couple planning there, decisions, then competitive pricing bidding or landscape the to Got some sell number industry a are pricing state making guess

Christopher Constant

first it’s unique, can be overall the other who have industry and your am really and I think there really So for deal situation there sector is sure consulting enhancing terms large the the each of that serial companies the of in store in their acquirers is than or acceleration to are really our an the base. why not out question so there central products seller there store M&A theme that growing I are become is is an unique

The second forgot question… question, second since your I

Mitch Germain

Competitive landscape?

Mark Olear

quite the I is and gas a amount about and auto our we of peers, REIT last capital in has increasing, think the so. peers but there that I other sectors, think think public the active institutional base many of related public real REIT and capital only sector I both significant other see or frankly that your from been for estate also convenience years

Mitch Germain

Okay. Thanks.


you. Thank

We KeyBanc. next to move with Craig Mailman will

Laura Dickson

these to premium estimates, ATM I is that does that saw the here levels pent some wondering makes think equity in deals how Craig. and this more so using everyone, issued are in up? Laura trading you to at with quarter, continuing NAV that help you was the use a like to make at our about I just Hey you ATM Dickson the

Mark Olear

afford conservative million $XX another plus we the to we part forward. we $X to kind the the that so about in have with continuing as certainly during going the we think that grow continue a that profiles we ATM and balance quarter. And ATM forward. from leverage of investments, additional in we maintain what balance talked to Well, thought sheet of be strong have very maintain sheet can redevelopments million could the a will perspective use will to invested opportunity, acquisitions the making come Really, continue

Laura Dickson

then on able just acquisition currently? thank And the acquisition the Okay, following-up pipeline what’s quantify you. you environment, in are to

Christopher Constant

don’t pipeline find but there and we model we and coming what are that portfolio level of year sticking underwriting say be close. again to one-off that would I review can I We up can that is – last in underwrote say this year. that of to volume disclose strong, we that hoping really any that to detail. and say probably are are transactions criteria And the of same we continues that the we type I opportunities on won’t that – of that reviewing would our we track fits and in are terms deals transactions

Laura Dickson

you. Okay, great. Thank


We Instructions] Massocca from ahead. John next go Ladenburg will with hear Please [Operator Thalmann.

John Massocca

morning Good everyone.

Christopher Constant

morning. Good

John Massocca

of I be deal on really front Champlain I involved GPM again, active, recently could to have that assets is you are of or attractive mean potentially the to pretty you? going mean the Oil, has be kind type transaction with those did they acquisition been So a that

Christopher Constant

lease Champlain Champlain as largest largest taken we of of us, are certainly one we Global are tenant. our tenants, is – purchasing all that into each our maybe other GPM. necessarily their have entering to not who underwriting but there split And from with such that ongoing at of have And a it who would with tenants estate the to and tenants of look GPM Global, operations Oil that is at see, dialogues certainly and who a transaction is and sixth deal new it’s now really we our So there our is perspective existing wonderful criteria if take sense. a look tenant the a don’t the makes we Oil work was John real like some have see situation new base our unique properties will

John Massocca

in auto source Understood. completed you for you retailer, acquisition leading parts that acquisition retailer interested of you is program the And way generate kind just development and of the could a the with space kind auto activity? and one granular parts development future with to relationships that did a

Christopher Constant

redevelopment a very of program. and of uses. are well of on properties, properties in from think can We are I benefits one certainly many Yes, that’s that happen the to have located, we which Northeast Mid-Atlantic a seeing are fairly standalone very, corners primarily portfolio lot the dense of retail those all the and markets. And fit

when or those some talked Mark some looking other it sort leading opportunities down further leads start quick-serve acquisition that of have opportunities. redevelopment that line dialogue lot at, attributes of the that perhaps certainly the fits the other retail. of some think or And retailers a help are casual other a perhaps of other and to I fast property restaurants and of kind of the you specialty a about auto sectors,

John Massocca

that really gasoline, are Could some maybe developing silo acquisition parts, auto of primarily in have in that in? of you assets opportunities that aren’t that the you see developments, tenant you been kind

Christopher Constant

us am lease I think that’s From where not acquisition are company, relationships – trying our of too gas our it other we a from the auto-related focused for are. I if sectors. I really and to far to net sense on branch think think the stay I and convenience makes I history that. away that’s really standpoint, sure really

John Massocca

detailed happen it kind And last quarter, the of list this the Understood. York? to New project, that, of kind came Millerton development question, then little Millerton, off what

Christopher Constant

We needed land this some which on level, with the approvals a local a had well-known at of for the Sure, the of We development. lease point. signed use we kind this Yes. retailer. that’s that part project get this is table off

the reevaluating we So this quarters. property find new best for future are Millerton that to will redevelopment projects and adding quarter in and home keep and the we portfolio

John Massocca

very much. Thank you me. for it That’s sense. makes guys It


Tony [Operator Instructions] Paolone We now JPMorgan. will go to with

Tony Paolone

Thanks. Good morning.

comments the XX% high but given the what for remember X% portfolio not why wondering, think then I are curious up mentioned, for pretty returns your was, and over can’t timeline that? you gating redevelopment it I accelerate am was are just factors time I think to what I that in being the the

Christopher Constant

can of types really on are leases triple challenging. of it’s XX-year access have may properties we to negotiate not the lot Tony, be and have to net it’s recapture or a property long-term where tenant those property our subject our with leases to we the negotiations to may

So we on I are are to redevelopment of the leases same so XX% to talked actually to vacant, lease, hold to recapture I able we where currently that kind a we be held based XX% our overall them, also to completing which think have seeing either whether feature negotiated of all right being currently what leases our properties development, properties about is portfolio. a is that but to recapture why while in is have held of are X% have our the formula, not X% you us contractual think

Tony Paolone


I So, see to while it it that’s guess there. will a take what


item future of at and do is no of there the over go the all couple for, are on where just environmental point and mix when which wondering into assets that’s time side, point related to assets time story? costs going bit still over legacy of other is longer kind faded is that in the – other last a something part the on The that’s a this years, those of

Christopher Constant

side on hope day, and or of in acquired end the a not we properties digging of an place, talking properties, our that to Tony, responsibility It our environmental, our these of best our we types or all we company back from to monitoring have to company spend environmental feature the construction dates direct legacy again do environmental reduce time which our and liability, at history it when to significant the believe get calls this have continue but were all Well, this part I sums the the liability properties. vast operator majority other is over think about it’s used vast, to interest which we in it’s related to really where we be with of are of nice to pure of and associated history. our not is to is legacy and

significant experience that We any environmental balance have had it���s our sheet. back not to whether comes liability been

Tony Paolone

of shrink, the made mean progress liability Okay. there the there? properties associated I number is with to continuing be to is

Christopher Constant

Yes. We properties don’t of are our come of environmental open down yes, that disclose the that of to number incidents overall number continues liabilities, quarter-over-quarter. inside but

Tony Paolone

Okay, great. Thank you.

Christopher Constant

welcome. are You


And Mr. call have any Constant time, to the closure I’d we like questions. at remarks. or this back turn further further no to for

Christopher Constant

Well, when being today call the forward our for interest your company everyone the thank everyone look we speaking and for October. you and late in quarter third to to report on we in


our call. concludes now conference This

disconnect You may this time. at