Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Getty Realty Corp (GTY, Financial) reported a 13.1% increase in annualized base rent over the prior year.
- The company raised its full-year 2024 AFFO per share guidance, reflecting strong financial performance.
- Getty Realty Corp (GTY) completed significant capital raising activities, including $245 million in common equity and unsecured debt.
- The company has a robust investment pipeline with more than $70 million of assets under contract at a blended cap rate approaching the mid 8% area.
- Getty Realty Corp (GTY) increased its quarterly dividend by 4.4%, marking the 11th consecutive year of dividend growth.
Negative Points
- There is a persistent disconnect between buyers and sellers in the transaction market, affecting cap rates.
- The bid-ask spread remains wide, posing challenges for deal-making in the current economic environment.
- Getty Realty Corp (GTY) faces macroeconomic uncertainties, including potential impacts from the upcoming election.
- The company has to navigate material bid-ask spreads that persist for net lease properties in its sectors.
- Getty Realty Corp (GTY) anticipates variability in operating expenses and deal pursuit costs, which could impact financial performance.
Q & A Highlights
Q: How would you characterize the current transaction market, and have you seen any shifts recently?
A: Christopher Constant, CEO: The market remains tight with a large inventory of assets for sale. There's a disconnect between buyers and sellers regarding cap rates, which we expect to persist into 2025. However, we continue to transact through direct transactions and sale-leasebacks.
Q: Has there been increased competition in the convenience and auto services sectors, and how is it affecting your deals?
A: Christopher Constant, CEO: While there's more interest from investors and other companies, Getty Realty's long-standing relationships and direct transaction approach allow us to continue securing deals. We feel confident in our ability to transact despite increased competition.
Q: Can you provide more details about the sale of properties to Global Partners?
A: Christopher Constant, CEO: The transaction involved 93 properties, with some being legacy sites that Global Partners preferred to own. It was a strategic decision to refine the portfolio, and the outcome was beneficial for both parties.
Q: Are there any concerns about site-level performance, particularly with auto tenants, given the consumer pullback?
A: Christopher Constant, CEO: Overall, rent coverage has been stable at around 2.6 times for several years. While some sectors like car washes are ramping up, we haven't seen anything alarming in terms of performance.
Q: How do you view the bid-ask spread in the market, and do you expect it to improve?
A: Mark Olear, COO: The bid-ask spread remains wide due to macroeconomic factors, but Getty Realty is accustomed to this environment. We continue to source deals that meet our criteria and expect to find opportunities to transact.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
