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Getty Realty (GTY)

Participants
Josh Dicker SVP, General Counsel and Corporate Secretary
Christopher Constant CEO
Mark Olear COO
Danion Fielding CFO
Nikita Bely JPMorgan
Mitch Germain JMP Securities
John Massocca Ladenburg Thalmann
Brett Reiss Janney
Joshua Dennerlein BASML
Call transcript
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Operator

Greetings, and welcome to Getty Realty Third Quarter Results Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded.

I will now turn the conference over to your host, Mr. President, Vice Executive Dicker, General Counsel. Joshua ahead, go sir. Please

Josh Dicker

financial to Thank Investor section Realty's for all XXXX. gettyrealty.com. I The released third September at and of quarter like are you, would thank available its company our joining the earnings conference Form Yesterday website you for XX, Relations call. the ended operator. quarter afternoon results our us release X-K for Getty the on

historical information Certain management's are materially on could statements. statements differ and from to made not These trends statements. that of the current to actual and events forward-looking beliefs on may call this and those statements in course and are based described forward-looking subject results the cause uncertainties constitute based are expectations in

our such financial and caution statements redevelopment guidance forward-looking and or to plans acquisition Examples to may their and that or include future currently of by that factors made including based in statements us, company's our operations, performance, results include questions company opportunities. and remarks known response in management materially. the actual and We best future differ on also events regarding judgment XXXX you statements could the reflect

cause report annual of the reports risks, year well statements Form as results a made detailed any or forward-looking discussion I filed differ for actual more implied could to to those the expressed today. our with XX and XXXX, refer you factors company's XX-K the periodic December materially for on in ended as the from that SEC other

undertakes course call. be the statements our on date which made update any may of forward-looking view as place in no not reliance to undue reflect should statements, this the duty You hereof. of The company that only forward-looking

AFFO of please financial or including to funds those net measures, definition non-GAAP use discussion release our from earnings of operations our measures a to and reconciliation earnings. adjusted Also our for of of refer our

Christopher Constant, our call over let turn me to Officer. Chief that, With the Executive

Christopher Constant

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

third Let providing investments pass our to our me in the the I’ll sheet discuss remainder performance, of Mark balance and results. strategic and our begin will today’s year. and XXXX discuss And activities portfolio objectives an to quarter Danion finally, overview the by for call our more detail of call financial then

the and line again Our quarter results strong, once were in for our expectations. with

and displays leased our redevelopment our to that invest net net we the stability to selectively demonstrated our pipeline. properties in have and portfolio from strength we ongoing our During leases, quarter, properties consistently the add triple portfolio and continue in long-term

our prior rental rent to growth tenant reimbursements by the Our the total for revenue project. the of third for year's due redevelopment of XX.X XX.X represents income, intimacy million quarter million, our which increases GAAP was acquired grew excludes recognition X.X% from quarter. quarter revenue over and which our and Primarily X% the contract properties completion for adjustments several and and

our also which maintain in $X.XX I a to our per cents, our income mentioned rental attributable but ability which an expectations XX.X moment quarter quarter. year's over FFO structure. and third was revenue in increases continued the the represent which of million, in it's share million, The AFFO performance For business, efficient income was growth reported of core growth prior reflected On of operating cost to with demonstrates XX.X quarter. of an all AFFO million, believe of XX.X net AFFO, a our for line basis, ago, best the and the we the not only

and redevelopment of execute on had both terms as strategy, growth We in acquisition our another quarter our we active platform.

million XX.X and the start During for quarter. quarter, acquire also fourth sites we five had the an to in active have acquired new we properties

these properties As our will well stated as sites and goals convenience are of investment the both other as with discuss quality, high we well automotive automotive assets gas as call detail located acquisitions all gas we convenience include and in what align strong more well to various expanding as criteria the which of Mark sector, properties, and sector. in acquiring segments other the our

acquisition While from the pleased vary am we and volume and the underwriting. can activity currently with volumes very I timing quarter-to-quarter, sourcing are of

number of sectors. gas convenience a other We and are transactions and automotive smaller portfolio related seeing and

with have sectors of Overall, our types types over the we're we in of past and line the transactions opportunities years. the of remain completed quality underwriting within the the assets several

to continue automotive and underwriting sector. gain opportunities also high the sourcing quality momentum We within

will disciplined be growth on and we areas are we high estate quality reviewing in continuously established demonstrated, dense acquiring opportunities focused metropolitan high either markets. and when As had or real

properties As long-term drive well-located we believe will additional of a portfolio shareholder value.

unlock addition pursue our additional value redevelopment on have within distinct to to execute growth we as existing In program. we external the portfolio opportunities a with we acquisitions,

the inception strategy. since total the third to completed projects our the of a XX we During two redevelopment redevelopment complete quarter, bringing of

three we quarter brings the addition, XX. current or which projects leases letters In our signed pipeline to of new of intent on products during

We to sheet. take also strengthen to continue our steps balance

in to note issued of placement company We'll of use our a the all As six floating pay-off average our debt private million, three insurance in XXX more X.X% companies. maturity debt than with notes debt rate and years. weighted we a announced September, insurance extend proceeds the the XX-year

We're credit at is a facility pleased through of draw to to issuance company's Getty revolving our fixed fund deadness XXX this significant that future us our have our also to that first history time upon for marks capacity The very available debt been million all of the as growth. in we rate. milestone the has completely

by funded addition, year-to-date aftermarket quarter our partially equity program. raised In the our we growth and with proceeds during

plan sheet ladder committed flexible permanent having structure. maintain market conditions our to are long-term favorable We to a the Looking conservative and with company will well capital. look balance fund capital continue capital for growth to we ahead, remain to our company's and and

our share share. per dividend to Turning X.X% Board recurring announced a per to as dividend, our quarterly yesterday, from we $X.XX in $X.XX approved our increase cash

Our Board it over and growth as believes payout is prior a company's maintains this tied increase ratio year. stable as the to appropriate the annual

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

stability continue sheet, We health balance to growth Stable of the flexibility. benefit provides from the from cash industry. received our us portfolio and store and net convenience flows lease the conservative [ph] both and which our

our our sectors projects. and acquisitions the portfolios portfolio, redevelopment of, auto in asset by growth management We our gas strategy and selected and related remain focused on [ph] expanding through stable three-pronged consisting lease supported activities convenience,

that to the strategic execute and confident remainder continue to be are in we'll able XXXX We our of successfully objectives beyond. throughout

discuss Olear Mark With turn the that, activities. I our over investment and call portfolio will to to

Mark Olear

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

properties with quarter, the five acquired we million. XX.X During

As triple of the Collision Collision. a and [ph] car X.X we call, to constructed MSA Zips net khaki, million site is newly one facility last Car Caliber year was such XX mentioned as acquired St. subject net million, subject on Minneapolis lease in Paul XX year the in a our a a which was newly to which properties constructed one Center for with X.X acquired lease wash Wash is for with triple

rent location Two during convenience in K final the and New year we site Car approximately in of respectively. gas expect released quarter full from properties is which Care of The these the Circle million Georgia franchising. In Global Partners in million to which properties choir the for additional generate three acquired the aggregate, the and is quarter. team Jiffy are during properties and also Lube X aggregate. Georgia located York, We X.X

Car million. are Arkansas for wash North XX-year facilities car quarter-ended, Additionally, additional closed sites located and the of we two and Both the Carolina, after triple subject net Wash. acquisition in with on lease are facility to properties Zips X.X

Turning to redevelopment our program.

commenced the projects. on quarter, rent During two

was triple in net and industry owned chains England. for the a largest convenience to new gas first independently Big one supermarket ground New lease with The of Y, site a

of investment return, achieved In this XX%. and project, XXX,XXX our total an incremental our approximately we investment was

quarter commenced leased sites rent a was we on second where regional where project automotive this use. Our developer for these ground

investment achieved XX%. Getty program XX.X representing return have redevelopment by we is generated project, XXX,XXX of on our To-date, invested investment XX%. this in completed total we a which projects In investment and million, XX of has on an aggregate incremental return incremental

construction. quarter we quarter, the redevelop with these total, ended during of In intent signed of or new XX projects retail leases letters we when on intent, but projects addition, or uses. three on which currently we leases, the active plan various we from signed alternative or net mixed which the and to In letters which properties commence required to to where our for currently be recaptured will either properties includes approvals eight leases leases, triple or six projects subject receive vacant are

specialty wide a such as as of fast range enhanced casual uses gas convenience includes and parts retail stores station, such retail pipeline serve and quick Our service, restaurant. automotive and

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

years We next projects expect moving XXXX. completed several and projects three year all substantially with before be to run these over one additional will to the commencement

To-date, million and the progress of occurring redevelopment here the for be projects completion projects quarter in XXX,XXX both will third XX.X we in with XX.X and in have we approximately for the XXXX invested anticipate approximately million. XX completed investment total progress currently in

funds we returns excess will acquisition the in to what market if in in these incremental Investment these could redevelopment generate projects invested expect the we company today. of

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

no Finally, we've there did leased one we which previously its during third-party the landlord. quarter, are but property property exit from dispositions

with we As active quarter vacant properties. a our redevelopment sites, six lease portfolio activities, ended the of eight net result properties, XXX

overall Our XX not redevelopments occupancy weighted remain lease our approximately terms XX.X%. are at active years six including our stable and average

call over that, to Danion. With turn I the

Danion Fielding

Mark. you, Thank

and which prior results, XX.X year's over excludes the total third rental our receivables to interest tenant reimbursement and X.X% were million quarter, grew mortgages quarter, in our on increased million. revenues X% income, Turning our to and financial XX.X the

by leases, plus incremental and growth and to continue in driven our escalated completed be from growth projects. redevelopment Our rent income acquisitions rental

property in impacted and efforts, redevelopment additional and and increases professional expected, additional costs, During litigation were fees quarter, with legal which expenses, the accruals. results the company's our environmental associated from as from environmental primarily then by fees third

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

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

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

fixed XX-year the rate markets sheet XXXX during capital to mature Turning mentioned, the at potential Prudential. which we we're activities, issued quarter, note million interest Mass in Mutual. AIG between and bear X.XX% balance Chris our and as split XXX and notes

will floating proceeds to from of use all on borrowings The rate our repay the note companies credit issuance facility. our

As the maturity is weighted XXX X.X%, with debt, being result, XXXX. million with average rate borrowing the years average approximately maturity of debt our fixed fixed weighted we and is is our our X.X a rate ended our XXX% of debt debt costs quarter long-term is earliest

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

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

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

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

we per reaffirm share. to share of AFFO at XXX Finally, guidance range XXX XXXX a our per

to assume our guidance our as well does on redevelopment, markets or acquisition leasing execute expectation disposition our that does although any activities, year-to-date, activity Our activities. we not reflect continue capital will as future and it

redevelopment, that of guidance cost when and to factors impact rent this buying's increase financing expectation for which expectation recapture which not our equity raising remain full-year forego we ultimately pursuing the our completed. impact properties Two, the additional in the expectation quarter capital activities. include Specific will And due will company's redevelopment. third we XXXX could XXXX four, deals we but acquisitions result long-term and dilution one, expenses in of debt our Three, will our active that the associated and XXXX. year in with announced our

call back the I that, turn will Chris. to With

Christopher Constant

And Thank for Thank we that, open up you. the Dan. -- open call will you, with questions. the question

Operator

will time a conducting from first ma'am. question-and-answer Please JPMorgan. [Operator ahead, The question is this At Bely, you. go Nikita Instructions] session. Thank be

Nikita Bely

now what's right all as Who competing mean for the and I the to see biggest you're reeds deals like competitive XXXX the and looking right buyers for private you? landscape now? against folks,

Mark Olear

a the sectors little other or active buyers tend with corporate of with sort portfolio for certainly larger rates are active of always fairly But compete we strategic buyers months. are Well, XX I XX also compete think in. last that over transactions we like we net we feel in bit further number lease especially the to investing a to

Nikita Bely

what's prefer to that range the or sizes point, deals you do smaller ones? for the you On do like overall cannot of kind portfolio more large

Christopher Constant

or addition portfolio to done the as large deals to Well, larger talked five traditionally past the six in about but chunkier over transactions of salaries similar years. we've over completed calls, transactions we’ve last those several at we've types looking by or

sites, We’re and themselves. characters we portfolios of estate like also the do looking the real small and if at acquire individual we location

Nikita Bely

are large cap And Okay. they and on rates different the deals one-offs? on

Danion Fielding

so talked high or for, I moved X.X where is, rates, Yes, profits looking feel again really a of range at. that’s range the for where similar we’re of to types X.XX looking about to about the prior X hasn’t we’re the we’ve range cap

Nikita Bely

and can bit for it, you and Danion, the the of don’t I on credit if transaction Can metrics this such you as maybe the the closed to a coverage? one also if volume general store-level already have portfolio in information talk some on squeeze maybe you about Got look at EBITDA quarter, deals mind. you little

Mark Olear

and automotive, is in the is of and to grow, sector we This Mark gas a opportunities and the the larger sector, opportunities the that certainly Through we’ve the years, place in year, us continue last over momentum in volume looked years. the at Olear. prior with few three consistent we presented convenience quarter to gain other of so seen

question? to last sorry, been part few underwriting exercises, on we’ve similar I'm to much as second and grow expect we’re so three-quarter X, through the first years continue of the that We quarters, part our period. pretty the of phase as the three

Christopher Constant

Coverage?

Danion Fielding

is answer quarter this Yes, the Did quarter X.X. coverage there? here, at prior Nikhil, Danion consistent questions the it’s with your we

Operator

left I'm line. sorry, the it shows that the gentlemen have

Christopher Constant

Okay.

Operator

JMP Securities. ahead, is sir. question next Germain, from The Mitch Please go

Mitch Germain

they good any I Is the structure is like the different transactions, have little way mean for think about a partially Hi, to non-sea it? lease morning. store teams term, the more that the

Christopher Constant

years or we’re XX looking lease with XX day to or typically with until reorginate, five- there renewals. back at Well, ten-year multiple terms, are

really the structuring automotive they of in originating. So, C&G or sort we’re in the other long-term change terms of that the leases yields haven’t, either our big we’re way net

Mitch Germain

to presented the of mean, be Has a that it toward some of lot change to seeing deal the a are pipeline than Great. say pipeline of opportunities safe any And positive level there little Chris, today seems smaller to been. is of the portfolios being that, about more your size softness the transactions. been it’s I and in you talked you?

Christopher Constant

total CNG a up, I yeah, page the it think of right we Right, Mark see by we’re to sum on year. within similar amount the for the company volume think underwritten sector

adding that so several the company difference is we’re we’re we’ve Where not other the underwritten, sort right. for historically. that underwriting asset internally, biggest busier different historically far opening been think has the I us to of automotive, our by classes

remain I are adding opportunities other And execute on. said, to we consistent to the really the of also a automotive matter additional underwrite and there process. it’s like going that sector, just confident we’re to be Mark being think, asset that within able convenience gas volume but But

Mitch Germain

ownership an perspective as as the automotive from those traditional fragmented classes Are other see sea-store? asset you

Mark Olear

yes. Yeah, it’s yes, the Mark, answer is

to and is there highly for battery of small wash also opportunity feel other of a consolidation the -- quick total versus car uses the is is automotive relatively units set going of tire the fragmented, there an With and is the number fragmented and lube and very out we the is forward. aggregators portfolios large percent actually similar

Mitch Germain

can I Right. Last missed think I apologize capital from in I the Danion just quarter one comments for I I get marks publisher raising and your the equity again? that me your apologize. on if

Danion Fielding

was the on ATM it Yes, X.X in Mitch. the quarter, million

Mitch Germain

price? the was average what And

Danion Fielding

XX.XX. was price average The

Mitch Germain

Thank you.

Operator

Massocca Ladenburg Dennerlein, go question go from Joshua is Mr. himself I'm sir. sorry. of Lynch. of taken question Please question Merrill out from the Thalmann. next next has queue. John sir. America The with ahead, from is Dennerlein ahead, The Bank Please

John Massocca

Good morning, everyone.

Christopher Constant

Hi. John.

John Massocca

And know kind of the of philosophy within you kind store be big has other growing so, MSAs. underwriting percentage segment, of been and hold of a as automotive segments. look focus as Typically, investments your largely kind sea your those I properties Does that on infill at and that to seems same kind pipeline. of

Danion Fielding

that in, of to started markets properties country going same to classes had at individual is in real standpoint, Yes. in looking The of is invest located we we're in believe we yes. cases characteristics similar types invest estate within big areas that are answer the corner. From the MSA in on asset to short the many still When the a CNG. picture these but like the in different

and door as many to properties for and driven that convenience so Our convenience by next same you the see and gas traffic would the gas. of is the characteristics demand

historically, feel natural if we've sort extension closely and this So, a very the it aligns underwritten us. to is we of way for

John Massocca

And kind kind opportunities? the ramps is long-term maybe that factors of on But the to do to potentially are obviously, way Okay. is X% there kind the potentially redevelopment within of any those to pipeline accelerating to that of XX%. the what goal and pipeline, then gating execution

Mark Olear

Mark. it's Yes,

-- where process, also, of but most the in process the the timing level order So, redevelopment the properties and zoning, appropriate the through the embedded permitting in to somewhat state these municipal go leases, planning by is of pace entitlement or properties, entire of level of the marketing property governed gain the the existing the and process are permitting.

can much that only we we control much as effort put possible. as them, as that into And as enforce

these pace biggest of of that's commencement. process into back is the So taking right probably and delivering governor timing through on the that those quite horizon that long the

John Massocca

But your and that keeps from just or in permitting to the you terms moving starting of is ramp? really you anything mean, there point the in maybe entitlement project where that getting I immediately X% and, process, trying start to that

obviously, kind is take getting deal and to other over of I of that need -- be redeveloped any, know, done quicker? that kind with the counterparties but side there anything of you the operating property

Mark Olear

property John, negotiation There and are length arm's the right that timing certain issues sure. our by exiting of some the and timing leases, Yes, take paste somewhere that the of existing. the of somewhere I

as much we do would we we it fast So, we pushing hard as can. as and as we're as can, as can

not it's pace we're as think a is we it's So, as we a, pushing think, I can. hard

John Massocca

Again, as in give the right, back, so those largely a back reminder, the kind of expire. you take wonder

Danion Fielding

in late the leases petroleum beyond. worked XXXX of through all leases Getty a are marketing former generally that these on and run based property terms with They're those and

which there's saying, obviously challenges would your Mark year, right. per staggered the accelerating of is point was of are additional project forth today in redevelopment So, one back as X% generate the rights, that take terms to to at

it a we like also right, of the something to can benefit or our on impact property works coverage year, amount So, rest in benefits, to say, tenant our don’t the for redeveloping which side any tenants our impact significant to want business given one for our that.

project kind of XX of a investor have to sudden -- John, pipeline projects, a in going is our exercising which it’s think and our of a delivering one any given Olear adding to staggered steady I you’re point, projects year. to Mark as the of but we’re don’t So, projects see all pace deck leading what’s

John Massocca

running managing CrossAmerica does at Okay. impact one regards previously, agreement Green guys to - the CrossAmerica that that all? you with Apple last of between And very was and quick kind then properties, one,

Danion Fielding

company’s operator skilled I works No, the on want comment highly CrossAmerica leases. strategy outsourcing of to right to any they’re effectively don’t star operations tenants I is everyone's it C other and both but particular think to separate and ours benefit.

John Massocca

the CrossAmerica Okay, is lease of your the ultimate end but credit still? right,

Danion Fielding

Correct, yes.

John Massocca

Thank you Okay, for that’s me. it much. very

Operator

sir. Scott. go Janney a Brett have question from We Reiss, Montgomery ahead, Please

Brett Reiss

gentlemen. Morning

Christopher Constant

Brett. Hi,

Brett Reiss

wheelhouse leases, risk color difference the the just and lube what wash gas of more in Hi, historically that’s been to the in car similarity versus counterparty leasing a us the company? give could station on of little the is you center a and

Christopher Constant

I’ll terms the but want markets and Sure, demand real the maybe well talk we to I in second, properties in the be the traffic a about and for started we think, individual with within located counterparties of the and themselves markets underwriting those again estate, where what’s are sites. in driving right,

terms the and inside site they margins of underwriting change is, in batteries of locations gas four sales, wash in the primary difference the and gas on centers auto and car volumes are car have the individual the lube whereas et tires and themselves different washes walls, and cetera. sea-store But businesses sales convenience has,

credit so, remains to which of Both continuing other as that which steps underwriting, are our of those in-house automotive. one expanded is of the into is process, reasons same. be But we resistant the believe we’ve also the part the

looking We’re credit with and of stronger a similar. From history counterparties, continue grow to to footprint looking right, sheet perspective, and the success operating for balance tenant the industries. we’re the and and consolidate fairly

Brett Reiss

Okay, you. thank

Operator

Lynch. Please We question Bank America Merrill from a Dennerlein, have ahead. of go Joshua

Joshua Dennerlein

What’s guidance the XXXX a seems of one left? with and low light quarter high your like underlying variance range, end

Christopher Constant

Yes, good question.

are there certain which in around think, our P&L bit. do bounce a items little I

related that approvals, business. to which hard etcetera. environmental get And for again as to backed little costs those some us costs of is some the some not when hard in stay going to we’re timing are up, of permits certain the that there, have spend it’s to in and a side, then, AFFO, to development program, of predict our predict our within on We

new the of we again reasons scale So, which have after the leasing renting sort tenants - launches range, from predictable. our those right of and range. wider a is the a are of that fairly Getty few require business core wide expenses general does keep a

Joshua Dennerlein

thank there. Got you. leave I’ll it it,

Operator

would further like remarks. to have Constant Mr. closing At for no we time, to conference questions. this the back turn sir. go reached are Chris Please over there I ahead,

Christopher Constant

results. being to our everybody we quarter on fourth phone to with our and quarter announced the XXXX an on being quarter. We active call to back and Thank look when for forward year you for the everyone fourth third

Operator

you This this and day. concludes participation have disconnect your Thank may today's lines conference and you your time. for at good a