Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Getty Realty Corp (NYSE:GTY) reported a 14.5% increase in annualized base rent, reaching approximately $198 million.
• The company exceeded its AFFO per share guidance, reporting $2.34, a 4% increase over the previous year.
• Getty Realty Corp (NYSE:GTY) successfully invested $209 million in high-quality convenience and automotive retail assets.
• The company expanded its presence in top metropolitan statistical areas (MSAs) across the U.S.
• Getty Realty Corp (NYSE:GTY) maintained a strong occupancy rate of 99.7% with a weighted average lease term of 10.2 years.

Negative Points

• The bankruptcy of Zips Car Wash, a tenant representing 1.8% of total ABR, poses a risk to rental income.
• Getty Realty Corp (NYSE:GTY) revised its AFFO guidance downward due to potential rent adjustments and downtime from the Zips situation.
• The company faces challenges in the net lease transaction market due to broader economic concerns and a slowdown in financing opportunities.
• There is a persistent gap in pricing expectations between buyers and sellers, impacting sale leaseback transactions.
• Interest rates are expected to remain high, which could affect future investment opportunities and cap rate compression.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with GTY.

Q: Can you provide more details on the Zips Car Wash situation and the potential impact on Getty Realty? A: Christopher Constand, CEO, explained that Getty acquired the Zips sites in 2019, with most being new to industry locations. Discussions are ongoing with potential new tenants, and while it's too early to determine the exact capital requirements, the properties are expected to be re-leased as express tunnel car washes. The revised guidance reflects a range of potential outcomes, including downtime and rent adjustments.

Q: Are there concerns about other operators in your portfolio following the Zips bankruptcy? A: Christopher Constand, CEO, stated that Getty maintains regular communication with management teams, including Zips, and prioritizes large operators with experience and a strong subscription model. Getty is comfortable with its current car wash roster and will continue to engage with tenants to monitor performance and financial health.

Q: How does Getty plan to utilize its significant liquidity going into 2025? A: Brian Dickman, CFO, explained that Getty aims to keep its acquisition pipeline pre-funded, providing visibility into the cost of capital for the acquisition team. The plan involves using debt proceeds to pay down the revolver and deploying equity throughout the year, maintaining flexibility for future investments.

Q: What assumptions are included in the revised AFFO guidance regarding the Zips properties? A: Brian Dickman, CFO, noted that the guidance assumes the seven Zips sites will be re-leased this year, with a significant majority of rent recaptured. The guidance reflects a range of outcomes, including potential downtime and rent adjustments, and assumes the properties will be re-leased to new operators.

Q: Can you provide more information on the recent portfolio transaction and its significance for Getty's strategy? A: Christopher Constand, CEO, mentioned that the transaction is a direct sale-leaseback with a new tenant, consistent with Getty's strategy. The company aims to continue pursuing similar transactions, which are central to its growth strategy in the convenience and automotive sectors.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.