- Reports $163 Million of Year-to-Date
Investment Activity -
- Grows Committed Investment Pipeline to
More Than $140 Million -
Getty Realty Corp. (NYSE: GTY) (“Getty” or the “Company”)
announced today its financial and operating results for the quarter
ended June 30, 2023.
Second Quarter 2023
Highlights
- Net earnings: $0.26 per share
- Funds From Operations (“FFO”): $0.52 per share
- Adjusted Funds From Operations (“AFFO”): $0.56 per share
- Invested $50.0 million across 26 properties, plus an additional
$52.5 million across 12 properties subsequent to quarter end
- Committed investment pipeline of more than $140 million for the
development and acquisition of 44 convenience and automotive retail
properties as of July 26, 2023
“Our strong earnings growth thus far in 2023 reflects the value
proposition of the Getty platform, including reliable and growing
rental income from our in-place portfolio, and incremental
contributions from our successful investment strategies,” stated
Christopher J. Constant, Getty’s President & Chief Executive
Officer. “As part of our effort to drive earnings growth, we remain
focused on further scaling and diversifying our portfolio. We have
completed more than $163 million of investments year-to-date,
including the acquisition and development funding of convenience
stores, car washes, auto service centers and quick serve
restaurants. We continue to prioritize our tenant relationships,
industry expertise, and stringent underwriting to selectively add
high-quality convenience and automotive retail real estate to our
portfolio. With strong visibility into our investment pipeline and
ample liquidity from prudent capital markets activity, we are
poised to carry our momentum into the second half of the year.”
Net Earnings, FFO and
AFFO
All per share amounts are presented on a fully diluted per
common share basis, unless stated otherwise. FFO and AFFO are
“Non-GAAP Financial Measures” which are defined and reconciled to
net earnings at the end of this release.
($ in thousands, except per share
amounts)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Net earnings
$
13,524
$
30,680
$
27,606
$
49,429
Net earnings per share
0.26
0.64
0.55
1.03
FFO
$
26,534
$
39,846
$
50,979
$
63,108
FFO per share
0.52
0.83
1.02
1.32
AFFO
$
28,517
$
25,385
$
55,688
$
50,238
AFFO per share
0.56
0.53
1.12
1.05
Select Financial Results
Revenues from Rental Properties
($ in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Rental income (a)
$
39,728
$
36,726
$
78,516
$
72,574
Tenant reimbursement income
3,930
4,088
7,509
7,223
Revenues from rental properties
$
43,658
$
40,814
$
86,025
$
79,797
(a) Rental income includes base rental income, additional rental
income, if any, and certain non-cash revenue recognition
adjustments.
For the three months ended June 30, 2023, base rental income
increased 7.6% to $39.6 million, as compared to $36.8 million for
the same period in 2022. For the six months ended June 30, 2023,
base rental income increased 7.4% to $78.4 million, as compared to
$73.0 million for the same period in 2022.
The growth in base rental income was driven by incremental
revenue from recently acquired properties, contractual rent
increases for in-place leases, and rent commencements from
completed redevelopments, partially offset by property
dispositions.
Interest (Income) on Notes and Mortgages
Receivable
($ in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Interest on notes and mortgages
receivable
$
1,040
$
365
$
1,693
$
702
The increase in interest earned from notes and mortgages
receivable in both periods was driven by an increase in development
funding advances for the construction of new-to-industry
properties.
Property Costs
($ in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Property operating expenses
$
4,706
$
5,111
$
9,228
$
9,406
Leasing and redevelopment expenses
105
213
283
544
Property costs
$
4,811
$
5,324
$
9,511
$
9,950
The decrease in property operating expenses in both periods was
primarily due to lower rent expense. The decrease in leasing and
redevelopment expenses in both periods was primarily due to a
reduction in demolition costs for redevelopment projects.
Other Expenses
($ in thousands)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Environmental expenses
$
343
$
(15,910
)
$
664
$
(16,051
)
General and administrative expenses
5,912
5,260
12,197
10,388
Impairments
2,462
391
2,984
1,429
The change in environmental expenses in both periods was
primarily due to changes in estimates related to unknown
environmental liabilities, partially offset by lower accretion
expense. Specifically, during the three and six months ended June
30, 2022, the Company concluded that there was no material
continued risk of having to satisfy contractual obligations
relating to preexisting unknown environmental contamination at
certain properties. Accordingly, the Company removed $16.8 million
of unknown reserve liabilities which had previously been accrued
for these properties which resulted in a net credit of $16.3
million being recorded to environmental expenses. Environmental
expenses vary from period to period and, accordingly, undue
reliance should not be placed on the magnitude or the direction of
changes in reported environmental expenses for any one period, or a
comparison to prior periods.
The increase in general and administrative expenses in both
periods was primarily due to increased personnel costs, including
$0.8 million of non-recurring retirement expenses, for the six
months ended June 30, 2023.
Impairment charges in both periods included (i) the accumulation
of asset retirement costs at certain properties as a result of
changes in estimated environmental liabilities, which increased the
carrying values of these properties in excess of their fair values
and (ii) reductions in the estimated fair value of certain
properties based on third-party indications of potential selling
prices or internal discounted cash flow analyses.
Portfolio Activities
Acquisitions and Development
Funding
During the three months ended June 30, 2023, the Company
invested $50.0 million across 26 properties, including the
acquisition of fee simple interests in three car wash properties
and one drive thru quick service restaurant for an aggregate of
$17.8 million.
In addition, the Company acquired fee simple interests in three
under construction car wash properties for an aggregate of $6.4
million and committed to provide additional funding during the
construction period to complete these projects.
The Company also advanced incremental development funding in the
amount of $25.7 million, including accrued interest, for the
construction of new-to-industry car wash properties, convenience
stores, and auto service centers. As of June 30, 2023, the Company
had advanced aggregate development funding in the amount of $64.2
million, including accrued interest, for the development of 24
assets that the Company expects to acquire via sale-leaseback
transactions at the end of the respective construction periods.
Subsequent to quarter end, the Company invested an incremental
$52.5 million across 12 properties, bringing year-to-date
investment activity to a total of $163.2 million as of July 26,
2023.
Investment Pipeline
As of July 26, 2023, the Company had a committed investment
pipeline of more than $140.0 million for the development and/or
acquisition of 44 car wash properties, convenience stores, auto
service centers, and quick service restaurants. The Company expects
to fund this investment activity, which includes multiple
transactions with ten different tenants, over the next 9-12 months.
While the Company has fully executed agreements for each
transaction, the timing and amount of each investment is ultimately
dependent on its counterparties and the schedules under which they
are able to complete development projects and certain business
acquisitions for which the Company is providing sale leaseback
financing.
Redevelopments
During the three months ended June 30, 2023, rent commenced on
one redevelopment property, a new-to-industry convenience store
located in the Austin (TX) metropolitan area and leased to
QuickTrip under a long term, triple net lease.
As of June 30, 2023, the Company had four properties under
active redevelopment and others in various stages of feasibility
planning for potential recapture from our net lease portfolio.
Dispositions
The Company did not dispose of any properties during the three
months ended June 30, 2023. During the six months ended June 30,
2023, the Company sold three properties for aggregate gross
proceeds of $2.8 million and recorded a net gain of $0.8 million on
the dispositions.
Balance Sheet and Capital
Markets
As of June 30, 2023, the Company had $675 million of total
outstanding indebtedness consisting entirely of senior unsecured
notes with a weighted average interest rate of 3.9% and a weighted
average maturity of 7.0 years. The Company’s $300 million unsecured
revolving credit facility was undrawn at quarter end and total cash
and equivalents were $8.9 million. The Company has no scheduled
debt maturities until 2025.
Capital Markets
During the three months ended June 30, 2023, the Company settled
1,007,230 shares of common stock subject to outstanding forward
sale agreements under its at-the-market ("ATM") equity program for
net proceeds of approximately $31.2 million.
During the three months ended June 30, 2023, the Company entered
into new forward sale agreements to sell 217,561 shares of common
stock for anticipated gross proceeds of $7.6 million through its
ATM equity program. In addition, 3,450,000 shares of common stock
remain subject to outstanding forward sales agreements in
connection with the Company's follow-on public offering in February
2023.
In aggregate, as of July 26, 2023, the Company had 3,667,561
shares of common stock subject to forward sales which, upon
settlement, are anticipated to raise gross proceeds of
approximately $120.0 million.
2023 Guidance
As a result of year-to-date investment and capital markets
activity, the Company is narrowing its 2023 AFFO guidance to a
range of $2.23 to $2.24 per diluted share from the prior range of
$2.22 to $2.24 per diluted share. The Company’s outlook includes
completed transaction activity as of the date of this release, but
does not include assumptions for prospective acquisitions,
dispositions, or capital markets activities (including the
settlement of outstanding forward sale agreements). The Company’s
outlook also assumes approximately $0.3 million of total demolition
costs for anticipated redevelopment projects with rent
commencements anticipated in 2023, 2024 and 2025.
The guidance is based on current assumptions and is subject to
risks and uncertainties more fully described in this press release
and the Company’s periodic reports filed with the SEC.
Webcast Information
Getty Realty Corp. will host a conference call and webcast on
Thursday, July 27, 2023 at 8:30 a.m. ET. To participate in the
call, please dial 1-877-423-9813, or 1-201-689-8573 for
international participants, ten minutes before the scheduled start.
Participants may also access the call via live webcast by visiting
the investors section of the Company's website at
ir.gettyrealty.com.
If you cannot participate in the live event, a replay will be
available on Thursday, July 27, 2023 beginning at 11:30 a.m. ET
through 11:59 p.m. ET, Thursday, August 3, 2023. To access the
replay, please dial 1-844-512-2921, or 1-412-317-6671 for
international participants, and reference pass code 13739330.
About Getty Realty Corp.
Getty Realty Corp. is a publicly traded, net lease REIT
specializing in the acquisition, financing and development of
convenience, automotive and other single tenant retail real estate.
As of June 30, 2023, the Company’s portfolio included 1,053
freestanding properties located in 39 states across the United
States and Washington, D.C.
Non-GAAP Financial
Measures
In addition to measurements defined by accounting principles
generally accepted in the United States of America (“GAAP”), the
Company also focuses on Funds From Operations (“FFO”) and Adjusted
Funds From Operations (“AFFO”) to measure its performance.
FFO and AFFO are generally considered by analysts and investors
to be appropriate supplemental non-GAAP measures of the performance
of REITs. FFO and AFFO are not in accordance with, or a substitute
for, measures prepared in accordance with GAAP. In addition, FFO
and AFFO are not based on any comprehensive set of accounting rules
or principles. Neither FFO nor AFFO represent cash generated from
operating activities calculated in accordance with GAAP and
therefore these measures should not be considered an alternative
for GAAP net earnings or as a measure of liquidity. These measures
should only be used to evaluate the Company’s performance in
conjunction with corresponding GAAP measures.
FFO is defined by the National Association of Real Estate
Investment Trusts (“NAREIT”) as GAAP net earnings before (i)
depreciation and amortization of real estate assets, (ii) gains or
losses on dispositions of real estate assets, (iii) impairment
charges, and (iv) the cumulative effect of accounting changes.
The Company defines AFFO as FFO excluding (i) certain revenue
recognition adjustments (defined below), (ii) certain environmental
adjustments (defined below), (iii) stock-based compensation, (iv)
amortization of debt issuance costs and (v) other non-cash and/or
unusual items that are not reflective of the Company’s core
operating performance.
Other REITs may use definitions of FFO and/or AFFO that are
different than the Company’s and, accordingly, may not be
comparable.
The Company believes that FFO and AFFO are helpful to analysts
and investors in measuring the Company’s performance because both
FFO and AFFO exclude various items included in GAAP net earnings
that do not relate to, or are not indicative of, the core operating
performance of the Company’s portfolio. Specifically, FFO excludes
items such as depreciation and amortization of real estate assets,
gains or losses on dispositions of real estate assets, and
impairment charges. With respect to AFFO, the Company further
excludes the impact of (i) deferred rental revenue (straight-line
rent), the net amortization of above-market and below-market
leases, adjustments recorded for the recognition of rental income
from direct financing leases, and the amortization of deferred
lease incentives (collectively, “Revenue Recognition Adjustments”),
(ii) environmental accretion expenses, environmental litigation
accruals, insurance reimbursements, legal settlements and
judgments, and changes in environmental remediation estimates
(collectively, “Environmental Adjustments”), (iii) stock-based
compensation expense, (iv) amortization of debt issuance costs and
(v) other items, which may include allowances for credit losses on
notes and mortgages receivable and direct financing leases, losses
on extinguishment of debt, retirement and severance costs, and
other items that do not impact the Company’s recurring cash flow
and which are not indicative of its core operating performance.
The Company pays particular attention to AFFO which it believes
provides the most useful depiction of the core operating
performance of its portfolio. By providing AFFO, the Company
believes it is presenting information that assists analysts and
investors in their assessment of the Company’s core operating
performance, as well as the sustainability of its core operating
performance with the sustainability of the core operating
performance of other real estate companies. For a tabular
reconciliation of FFO and AFFO to GAAP net earnings, see the table
captioned “Reconciliation of Net Earnings to Funds From Operations
and Adjusted Funds From Operations” included herein.
Forward-Looking
Statements
CERTAIN STATEMENTS CONTAINED HEREIN MAY CONSTITUTE
“FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. WHEN THE WORDS
“BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,” “ESTIMATES,”
“ANTICIPATES,” “PREDICTS,” “OUTLOOK” AND SIMILAR EXPRESSIONS ARE
USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT
BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO
MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
THESE FORWARD-LOOKING STATEMENTS. EXAMPLES OF FORWARD-LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THOSE REGARDING THE
COMPANY’S 2023 AFFO PER SHARE GUIDANCE, THOSE MADE BY MR. CONSTANT,
STATEMENTS REGARDING THE RECAPTURE AND TRANSFER OF CERTAIN NET
LEASE RETAIL PROPERTIES, STATEMENTS REGARDING THE ABILITY TO OBTAIN
APPROPRIATE PERMITS AND APPROVALS, AND STATEMENTS REGARDING AFFO AS
A MEASURE BEST REPRESENTING CORE OPERATING PERFORMANCE AND ITS
UTILITY IN COMPARING THE SUSTAINABILITY OF THE COMPANY’S CORE
OPERATING PERFORMANCE WITH THE SUSTAINABILITY OF THE CORE OPERATING
PERFORMANCE OF OTHER REITS.
INFORMATION CONCERNING FACTORS THAT COULD CAUSE THE COMPANY’S
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING
STATEMENTS CAN BE FOUND ELSEWHERE IN THIS PRESS RELEASE, INCLUDING,
WITHOUT LIMITATION, THOSE STATEMENTS IN THE COMPANY’S PERIODIC
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO
THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR
CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS.
GETTY REALTY CORP.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands, except per
share amounts)
June 30, 2023
December 31, 2022
ASSETS
Real estate:
Land
$
821,752
$
802,010
Buildings and improvements
752,046
707,352
Investment in direct financing leases,
net
62,953
66,185
Construction in progress
550
578
Real estate held for use
1,637,301
1,576,125
Less accumulated depreciation and
amortization
(250,693
)
(232,812
)
Real estate held for use, net
1,386,608
1,343,313
Real estate held for sale, net
2,554
3,757
Real estate, net
1,389,162
1,347,070
Notes and mortgages receivable
71,623
34,313
Cash and cash equivalents
8,867
8,713
Restricted cash
1,368
2,536
Deferred rent receivable
52,866
50,391
Accounts receivable
4,343
4,247
Right-of-use assets - operating
15,730
18,193
Right-of-use assets - finance
225
277
Prepaid expenses and other assets, net
92,970
96,555
Total assets
$
1,637,154
$
1,562,295
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Borrowings under credit agreement
$
—
$
70,000
Senior unsecured notes, net
673,281
623,492
Environmental remediation obligations
22,917
23,155
Dividends payable
22,262
20,576
Lease liability - operating
17,307
19,959
Lease liability - finance
728
1,518
Accounts payable and accrued liabilities,
net
40,573
43,745
Total liabilities
777,068
802,445
Commitments and contingencies
—
—
Stockholders’ equity:
Preferred stock, $0.01 par value;
20,000,000 shares authorized; unissued
—
—
Common stock, $0.01 par value; 100,000,000
shares authorized; 50,500,829 and 46,734,790 shares issued and
outstanding, respectively
505
467
Additional paid-in capital
938,163
822,340
Dividends paid in excess of earnings
(78,582
)
(62,957
)
Total stockholders’ equity
860,086
759,850
Total liabilities and stockholders’
equity
$
1,637,154
$
1,562,295
GETTY REALTY CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in thousands, except per
share amounts)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Revenues:
Revenues from rental properties
$
43,658
$
40,814
$
86,025
$
79,797
Interest on notes and mortgages
receivable
1,040
365
1,693
702
Total revenues
44,698
41,179
87,718
80,499
Operating expenses:
Property costs
4,811
5,324
9,511
9,950
Impairments
2,462
391
2,984
1,429
Environmental
343
(15,910
)
664
(16,051
)
General and administrative
5,912
5,260
12,197
10,388
Depreciation and amortization
10,864
9,924
21,292
19,552
Total operating expenses
24,392
4,989
46,648
25,268
Gain on dispositions of real estate
316
1,149
903
7,302
Operating income
20,622
37,339
41,973
62,533
Other income, net
6
248
294
340
Interest expense
(7,104
)
(6,907
)
(14,618
)
(13,444
)
Loss on extinguishment of debt
—
—
(43
)
—
Net earnings
$
13,524
$
30,680
$
27,606
$
49,429
Basic earnings per common share:
Net earnings
$
0.26
$
0.64
$
0.55
$
1.03
Diluted earnings per common share:
Net earnings
$
0.26
$
0.64
$
0.55
$
1.03
Weighted average common shares
outstanding:
Basic
49,615
46,733
48,309
46,727
Diluted
49,989
46,756
48,576
46,746
GETTY REALTY CORP.
RECONCILIATION OF NET EARNINGS
TO
FUNDS FROM OPERATIONS AND
ADJUSTED FUNDS FROM OPERATIONS
(Unaudited)
(in thousands, except per
share amounts)
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
Net earnings
$
13,524
$
30,680
$
27,606
$
49,429
Depreciation and amortization of real
estate assets
10,864
9,924
21,292
19,552
Gains on dispositions of real estate
(316
)
(1,149
)
(903
)
(7,302
)
Impairments
2,462
391
2,984
1,429
Funds from operations (FFO)
26,534
39,846
50,979
63,108
Revenue recognition adjustments
Deferred rental revenue (straight-line
rent)
(1,281
)
(879
)
(2,475
)
(1,583
)
Amortization of above and below market
leases, net
(289
)
(300
)
(537
)
(590
)
Amortization of investments in direct
financing leases
1,497
1,328
2,923
2,598
Amortization of lease incentives
262
300
536
600
Total revenue recognition adjustments
189
449
447
1,025
Environmental Adjustments
Accretion expense
120
377
278
822
Changes in environmental estimates
(20
)
(16,713
)
(78
)
(17,534
)
Insurance reimbursements
—
(44
)
(52
)
(44
)
Total environmental adjustments
100
(16,380
)
148
(16,756
)
Other Adjustments
Stock-based compensation expense
1,445
1,231
2,719
2,316
Amortization of debt issuance costs
249
239
504
468
Loss on extinguishment of debt
—
—
43
—
Retirement and severance costs
—
—
848
77
Total other adjustments
1,694
1,470
4,114
2,861
Adjusted Funds from operations (AFFO)
$
28,517
$
25,385
$
55,688
$
50,238
Basic per share amounts:
Net earnings
$
0.26
$
0.64
$
0.55
$
1.03
FFO (a)
0.52
0.83
1.03
1.32
AFFO (a)
0.56
0.53
1.12
1.05
Diluted per share amounts:
Net earnings
$
0.26
$
0.64
$
0.55
$
1.03
FFO (a)
0.52
0.83
1.02
1.32
AFFO (a)
0.56
0.53
1.12
1.05
Weighted average common shares
outstanding:
Basic
49,615
46,733
48,309
46,727
Diluted
49,989
46,756
48,576
46,746
(1)
Dividends paid and undistributed earnings allocated if any to
unvested restricted stockholders are deducted from FFO and AFFO for
the computation of the per share amounts. The following amounts
were deducted:
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
2023
2022
2023
2022
FFO
$
663
$
930
$
1,308
$
1,474
AFFO
713
593
1,429
1,173
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726618482/en/
Brian Dickman Chief Financial Officer (646) 349-6000
Investor Relations (646) 349-0598 ir@gettyrealty.com
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