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
Craig Mailman KeyBanc Capital Markets
Mitch Germain JMP Securities
Joshua Dennerlein Bank of America Merrill Lynch
John Massocca Ladenburg Thalmann & Co
Anthony Paolone JP Morgan
Call transcript
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Good day and welcome to the Getty Realty Corporation third quarter 2018 earnings call. Today’s call is being recorded. At this time, I’d like to turn the conference over to Joshua Dicker, EVP, General Counsel and Corporate Secretary. Please go ahead, sir.

Joshua Dicker

Thank you, operator. you conference joining call. thank Realty’s for to quarter third like all us for Getty I’d Yesterday results ended for the the afternoon, company quarter September released XX, its financial XXXX. Investor earnings gettyrealty.com. available X-K website release Form of our and on The the Relations section at are in of this made on not call statements. forward-looking course may and information constitute the statements are based Certain 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

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

Christopher Constant

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

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

ongoing results to performance continued Our redevelopment and of portfolio from lease the acquisition our quarter steady net strategies. third the our the execution benefit as well core of as

and funds result, further our increased in As demonstrating shareholder which pleased a operations adjusted earnings, resulted in all prior quarter. our announced was creating from dividend, recurring year’s as consistent from compared operations to that value. our increase funds the to an also revenues, net this growth commitment yesterday, I’m

$XX.X increased rental our income and the revenue our quarter, properties from For almost third to increased net million XX% to by $XX.X million.

by share million. year’s $XX.X increase increased AFFO importantly, to which XX% prior And more AFFO XX% Our quarter. $X.XX a of reported $X.XX, or the is over we per

X adding continued earlier, during to by all which leased As our of to I tenants. are acquisition execute corporate our the properties high-quality to strategy we on quarter to alluded portfolio, strong

For the year-to-date, XX invested and million in $XX added we've accretively properties acquisitions.

our convenience third state-of-the-art, completed location. which sixth a redevelopment marks this of and the of is project project redevelopment. our completion completed we addition, year new-to-industry The In gas

our tenants unlock by as bringing we returns superior our believe We portfolio new us and continue strategy in to in well-located grow our into value to this existing pipeline corporate allows properties, of portfolio. projects investing while deliver

estate REIT these assets of continue peers sectors. underwriting available and from Overall, both see real the approach opportunities to that the our to As investors. we and said, remain for true the of type competition XXXX, criteria. we we institutional are of transaction we With staying continue to convenience gas underwrite our in end additional opportunities volume and auto-related other strong

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

addition, properties, while of that no redevelopment a and we of and growing our not determination redevelopment does pipeline selectively competitive property are as projects In longer made location we gas disposing a potential. have convenience the is have

a believe increase $X.XX significant yesterday, growth to appropriate, our as our over per given is dividend per quarterly the months. from last share dividend, increase We in Turning to we X% cash this announced annual board current our $X.XX company's the XX approved share.

I like the Realty over Malanoski experience chief officer various our of of financial a Lou a the Colony and Getty years wealth roles to and provide Mary welcome XX Mary In Board our is Street brings board. has of would She independent on addition, of and SXK. to behalf Wall capital Directors, on will to of company. markets currently unique experience perspective Lou in

that forward experience board Lou look to company. Mary we We our our the counsel enhanced to are diversity and benefits to the brings and bring by excited her and strength

for Finally, our the year-to-date and the we outlook about accomplishments year. of are our remainder about excited

of We stable conservative flows industry, sheet. and benefit from cash convenience the continue from received to our balance net portfolio our health the and growth lease store

confident projects start general. Olear our will I you, to portfolio our investment discuss detail our remain I the focused execute projects. investment Mark continue additional to redevelopment lease and and we’ll through the We’re We Olear XXXX will on our beyond. remainder call activities able our Thank acquisitions Chris. throughout portfolio managing our expanding objectives and on activities. that provide With net that, of reviewing successfully be and turn our strategic to portfolio portfolio, select in Mark by to redevelopment and on

complement XXXX activity previously size, and properties as leaseback acquired both building properties full-year the value Columbia, during existing expect acquired the market. with subsidiary $XX.X for Applegreen’s million. $X.XX in Majority of US transaction and size meet is in square to million. opportunity of the and the in market rent acquisition initial this the which to approximately our we seven feet portfolio of During us for to our the with we inherent transaction which Carolina of second six-property quarter, is Applegreen our this Applegreen, see quarter attributable portfolio South The announced We acquisition Columbia them an criteria. average X lot recognize recent Applegreen and acre add-on portfolio in

annualized we and addition, Phoenix, million the one Arizona million. In property expect have $X these revenue $X.X we during Year-to-date, approximately to in from quarter, for acquired acquired properties properties million. of $XX XX approximately we generate for

redevelopment during Turning the rent program, our commenced one project. on to quarter,

have investment our this completed invested an In XX%. in a our of In on aggregate million $X of return on incremental is rebuild funded project, and is we project. convenience station million Worcester, and projects total completed redevelopment investment $X.X investment this we our achieved six XX%. project, in return Mass. the for an aggregate, a gas and approximately Year-to-date, raise with of we For Applegreen incremental third

pipeline, construction. projects Turning active required to included lease include properties our various ended when which our and and which receive portfolio, nine and we from projects quarter are leasing the with redevelopment currently approvals we commence be four will XX active to leases signed removed LOIs, in which net

have as XX enhanced projects the convenience retail includes in investment that and $XX be and range service, a approximately casual such $X we these automotive quickservice restaurant. such total stores completion and million. parts invested million uses wide pipeline stations, and fast gas date, and retail Our as will estimate of anticipated we specialty To for

we status We will to before expect additional with projects all rent to moving commencement substantially next that these X over the of XXXX. close projects completed be years, X out

company a excess projects in could reminder, expect the invested expect of acquisition these to today. redevelopment to funds market we what As we incremental returns if in we the our generate

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

we of our gas end of our four border a second During compared XX.X% based takebacks added vacancy tenants properties occupancy underperforming certain on the part the was consequence planned to negotiations vacant properties sites as list. arrangement. increase our XX% quarter, anticipated at of the quarter was in of with as of an to The

either or We dispose expect these we of will that properties redevelop over time.

As XXX call XX over weighted our lease we with a nine quarter redevelopment Danion. active that, net turn ended and approximately sites and our I the activities, result term to of portfolio properties, the years. With is vacant properties average nine lease

Danion Fielding

Mark. you, Thank

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

During XXXX, the expense the expenses third third general comparable our of quarter property costs, ended to of and results quarter and XXXX. all were administrative the environmental

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

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

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

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

X.X% and is weighted maturity maturity X.X debt our years, the fixed-rate of debt XXXX. until earliest of weighted is and our buying average Our cost not in with debt average our XX% is

total and debt debt is net XX%, XX% Our capitalization value to X.X to our total currently total while at asset times. debt is stands to EBITDA

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

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

environmental the approximately For quarter, $X.X million. remediation company's net is spending the

XXXX to per our range guidance per share a AFFO of from $X.XX $X.XX $X.XX trimming we’re share. share Finally, to to per $X.XX

acquisition Our impact of transaction. the includes and range our markets capital our year-to-date activity guidance

cost when our XXXX; borrowing the that assume execute guidance turn factors impact we With of increase activity. rent As year included, full from raising that, any forego recapture average dilution redevelopment; associated on and of and our from although of a our not year-to-date it impact we expectation our I will does markets year will that portfolio our second acquisitions; in for and disposition to three, full-year XXXX redevelopment future XXXX Chris. expectation of that continue four, weighted the back net our reminder, company’s two, earnings activities, we capital expectation properties reflect call will XXXX lease XXXX the this to one, leasing will our acquisitions our or activity. does the half guidance capital Specific which with our impact and the

Christopher Constant

concludes prepared That you. our remarks. Thank

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


KeyBanc. with Mailman Instructions]. And [Operator our first you. question Craig Thank take we’ll from

Craig Mailman

guys. set good opportunity you strong here. Hey, Chris, mentioned still morning, the pretty is

curious, we’ve rates seen the Just you bit seen in volatility less rates, competing from in margin, or maybe on guys cap a have buyers? with appetite movement little any the even

Christopher Constant

questions premium expectation of is two capital, rate. don't there's what from any I but there. sort is you're see starting the of Well, of reduced been to think do I sources think diminishing. competing appetite It a cap

are time people take transactions starting rising from a kind new of finish. all to So, norm to rate in adjust maybe start to a go to environment. But

So, I completed filter to into that deals. its take time going think to that’s way for

Craig Mailman

kind How on much redevelopments? acquisitions would either of to to incremental guys move you need even threshold reevaluate rates return or need for

Danion Fielding

market. basis pipeline redevelopment several our acquisition over points the Well, is hundred

So, significant you’d there. to I think have see movement

accretively comfortable pretty feel environment. to even in rising we a the with think acquisition we’ll that rate be able market I invest

Craig Mailman

just guys you ATM had bit. a lastly, the And Okay. then,

are performed is of at sources stock different trading today, do to look use given capital the debt has incremental EBITDA. this of you how at times year X.X maybe versus the You and Kind where debt?

Christopher Constant

range. said to X.X of before times times that EBITDA debt operate to X.X we've prefer we in a sort net Well, to

we that. end conservative when certainly company advantage But today. its live we sheet We’re at With that use we a are post-acquisition. been still moment look throughout it’s expect fact a as balance that current capacity and at lever to of debt fund the acquisitions, we our always can don't the entity deals. to history The take highly-levered has the company a said, low and low at of

Craig Mailman

have bring would that guys of to down the I X.X% equity guess lock is X.X% to far you is levering cost but kind how up is what was I below of in bit? you getting at if it versus X.X% too your attractive range, a said

Christopher Constant

give balance to number we factors our specific a have all account don't take I plans Craig. at growth when sheet. We look and you, into our

Craig Mailman

Great. Thanks, guys.


And our Germain take question we Securities. next Mitch from from JMP

Mitch Germain

could that think pressure in competitors there to knowing dynamic you into or flowing work Do you cap pricing the some rates some investment you upward Chris, about, sales a of the your put market. is money a seeing that guess, of are there talked for ton the be I to of still capital reluctance space?

Christopher Constant

don't see one transactions you strategic to is of any be of going or a contact. do and of there I a really buyers. on play see lot those lack we an financial What M&A significant either And, reluctance. obviously, from in with appetite seem doesn’t parties can M&A

short I So, any the the diminished market answer, there's right think Mitch, appetite now. don't in

Mitch Germain

that's And this did you earlier Great, helpful. XX-property acquisition a year.

your it a or sale-leaseback. a maybe to skewed does pipeline You six-property of bit just today, it, looking is you it the did one at other? have both When think of versus

Christopher Constant

we defined can favor last right? that, we the one-off like tenant XX can to we the like real or Portfolio as acquisitions, works. But certainly really said XX year. portfolio look situations where that with be Well, it six-property defined be and did or we a estate the or field as economics at tend

So, runs that and all that program types have small, big at we we’re in a our to assets, sector. Mark able of look

Mitch Germain

Got how do as the considered company bomb, bake much at the realized? dividend for liability that me, could where the into potential cash with environmental factors be flow different of analysis the kind that the looking your of you. And Is you're is heading? when to last you

Christopher Constant

that that our yesterday. of into dividend was all Absolutely. capital, their a raise account The in it And use. done and board uses terms being of environmental takes the decision of sources factors into

Mitch Germain

Congrats. Great.

Christopher Constant

Thank you.


And our of of next Lynch. Dennerlein Joshua take America Bank we’ll question Merrill

Joshua Dennerlein

and just know cap and initial if did the could about any the getting? guys. you that the – annual you're can Hey, that on, on color sale-leaseback I bump rate of kind through you us good rate Applegreen’s some Maybe that morning, portfolio you on maybe provide cap walk came don't rent maybe how

Mark Olear


or closed in XXXX here part they Applegreen deal entrance relationship So, market. the their even US big market to meaningful maybe were we at XXXX the into it the of they And late in the sort major started when of was way, Obviously, looking US of beginning we more into that smaller a come XXXX but in that were a October were the a was of transaction. – way.

a market. helped were together The six fund, I much this their lot think from portfolio sense their to it we in work which side down add-on of side, and were Applegreen, acquisition from made by Columbia. and in on very that in near acquired our of that properties line the remainder

came in the of as We So, return cash that’s And first to effective published we initial year of think range how transaction about to and kind we you $X.XX of what to with the give going-in in be defunded million presentation. line in us. annual our our expect million, kind the lease rent has $XX.XX bumps what our about. we it,

Joshua Dennerlein

it looks you of the towards then, are wrap to Thank or year. pipeline, color it end have timing, up that development going is Is maybe you, by like on like the four to projects that fourth end will rent year? maybe the commence? you Do early quarter of when the And turning the Chris. any Great. have

Christopher Constant

Sitting the today, from XX/XX, end right? here So, it’s they're through of staggered. today

Joshua Dennerlein

you And Is yields are projects the what kind in active Okay. it…? construction? Staggered? getting on of the

Christopher Constant

projects. six completed We’ve

investments we've totaled averaged on additional a that said thus program. our of and or – target return yield in is program-wide entire incremental – we aggregate. XX% the XX-percent-plus What Our for far each along has all

help you think those there. I probably out So, numbers

Joshua Dennerlein

Chris. overall how could the portfolio latest like And thoughts on of redevelopment go the properties I kind many picture, pipeline? your think then, of guess, Awesome. you, in through big Thank the we when what’s

Mark Olear

to We feel use. of that identify And think come five-plus are over use believe and range in and X% new the the can portfolio a approximately XX% confident we I property, access properties. that to of continue next we alternative retail the that tenants an with with gas either up that years projects convenience or pretty who work

Joshua Dennerlein

I’ll the Great, floor. yield thank you.


question Thalmann. And from from our Ladenburg we’ll take next Massocca John

John Massocca

morning. Good

those the on of vacancy? couple assets with a different kind takebacks, So, little one a they can with collection Were underperforming increased the provide or of tenant of were [indiscernible]? color a more you all across

Christopher Constant

upside are where Certain tenants rights And Petroleum the also, bankruptcy, from. leases, exercising which notice, us. those advance or if for out, of right we dispose some particular rights, reinvest of rental of can in our sell of either out leases, Mark acquisition projects probably is those the if to of us And each that so leases select mentioned, we up as our funding properties. property, can to many came either plan a in we the this redevelop, redevelopment Getty of come those one to of our And was properties the give have be Marketing our to pull we that figure. properties. there’s But a those to the expect number coming development lot giving to start tenants Obviously, expect in we with market. can we in had where or back proceeds leases the a in redevelop able properties

John Massocca

was how the term, in givebacks? if much the then, And NOI, any, lost maybe from near

Christopher Constant

De minimis.

John Massocca

percentage rights these right Okay. has kind giveback question the of that. to One on of last portfolio now? it What

Mark Olear

that unitary leases leases, It’s a came and tough in most question leases rights Marketing to these giveback out Getty those of of Petroleum had answer. But the the them.

end additional for the properties back of our window We give to to approaching us. the tenants are

over of months, next of you XX XX not number significant think will I So, a to see properties. handful a but the it’s maybe these

John Massocca

suburban some activity small would transaction? how but like the But smaller as assets has the seems acquisition focus for I to not of of – then, an M&A And know and Okay. market been maybe a smaller operator it rural, your willing to of in has maybe gears switching urban on necessarily go into the product. you be been markets. site, part recent MSA

Christopher Constant

Yeah. at a which certainly a It’s best in that a to out that's maybe markets. urban/suburban would of of it we with when our a portfolio great a do subset fit looked think – strategy, we come But get more our rural up some properties transactions, package of are We question. lot of and core that with I is model. our

to and But customer like capital whether we and population miles retail our we’re able for visits or a some is not. that's – keeping a sort of some stick hub growth, to center it’s sometimes sometimes, university driving And tenants. core would that’s have that do to or generally markets city that's driven or that; creating stable, which state income growing

So, small of it’s say them are in us. to really hard strategies but how that be that to markets go, some have interesting to our would have of the component order core we to outside for

John Massocca

Thank you me. sense. Makes very it much. That’s for


question [Operator Instructions]. Morgan. take we Paolone And from our JP next of Anthony

Anthony Paolone

morning. much good here. And left Not Thanks.

Just on cash now? question think on a right real Do basis stuff definition just because free everybody’s you – dollar Mitch's running here free bit and amount you differs you're after environmental quick and have where on – flow. earlier a a about dividend cash flow

Danion Fielding

able We look tie Tony. Not about can think off of help figure some have going forward. the publishing you. and numbers be head, top I’ll at to of the for of sort together that certainly my kind to

Anthony Paolone

lot have it flow, of like deal a you the on just then, And activity. sounds

What capital. of it properties the are? is to access more could X.X% What factor The kind to robust it activity? it having that keep the a low inhibiting where quarter-to-quarter that have or happen? at You from of Is been little around the yields bit goes just X%. hard perhaps it’s have amount hovering

Christopher Constant

trying to have real and other to real limiting strong set, is geographic I on and that do it’s underlying estate. counter we return, necessarily And it auto convenience estate, it’s factor partner a attractive strong side. of think the think the obviously, it’s real estate. we’re not use or location But, today, opportunity kind the really, what gas use of I necessarily be want not an quality acquire the strong obviously, is, what and,

Anthony Paolone

Okay, it. got

may You this have mentioned earlier.

split activity right what of just now? that gas traditional C-stores, other station, any general like Just related between categories, the look like does automotive

Christopher Constant

I XX-percent-plus station. gas think the portfolio today C-store is probably

there Thank done to say auto it’s Mark. a at other – We’re Loop washes car [ph] at certainly looking meaningful yet. would our higher-end be bit right terms We've the sectors. to guys. with you, that’s in the now, looked little – service. a of But, piece existing We've not that battery, NOI the the Autobody. just

Anthony Paolone

Okay, got Thanks. it.


further There at are time. questions no this

Christopher Constant

you, report We everyone, this the to together when earnings everyone Well, back XXXX. in our morning. getting year-end attending with Great. look thank for we call back


concludes presentation. participation. And today’s We thank for that you your

now may You disconnect.