Yahoo Finance Getty Realty Corp (GTY) Q1 2024 Earnings Call Transcript Highlights: Robust Growth and ...
Revenue: $49 million, a 14% increase year-over-year.
Base Rental Income: $43.9 million, up 13.1% from previous year.
Net Income: $0.30 per share.
FFO Per Share: $0.57, increased by 1.8% from $0.56 in Q1 2023.
Total Investment: $41 million across 35 properties in Q1 2024.
Lease Portfolio: 1,103 net lease properties and two active redevelopment sites.
Occupancy Rate: 99.7% excluding active redevelopments.
Weighted Average Lease Term: Increased to 9.2 years.
Committed Investment Pipeline: Over $44 million under contract.
Environmental Remediation Spending: Approximately $1.1 million in Q1 2024.
Total Debt: $800 million with a weighted average interest rate of 3.9%.
Net Debt to EBITDA: 5.1 times.
2024 FFO Guidance: $2.29 to $2.31 per share.
Release Date: April 26, 2024
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 13.1% increase in quarterly base rental income and a 1.8% growth in quarterly FFO per share.
The company successfully invested approximately $41 million across 35 properties in diverse sectors such as convenience stores, car washes, and auto service centers.
Getty Realty Corp (NYSE:GTY) has a committed investment pipeline of over $44 million, fully funded from prior capital markets transactions, poised for future growth.
The company maintains a high occupancy rate of 99.7% and a weighted average lease term of 9.2 years, indicating stable long-term income.
Getty Realty Corp (NYSE:GTY) benefits from a strong tenant base with a trailing 12-month tenant rent coverage ratio of 2.6 times, demonstrating financial health and resilience.
Negative Points
Despite positive growth indicators, the company acknowledges 2024 as a challenging year for acquisitions due to the uncertain interest rate environment.
Bid-ask spreads in transaction markets remain a challenge, potentially affecting deal flow and execution.
General and administrative expenses increased compared to the previous year, primarily due to higher employee-related expenses and professional legal fees.
Environmental expenses, although variable, pose potential unforeseen financial impacts, as evidenced by past fluctuations.
The company faces macroeconomic uncertainties that could impact tenant businesses and, consequently, Getty Realty Corp (NYSE:GTY)'s rental income stability.
Q & A Highlights
Q: Could you comment on the sale leaseback markets and what you're seeing? A: Mark Olear, Chief Operating Officer, noted that opportunities remain active, though at a more moderate pace compared to last year. The focus is on maintaining relationships with long-term partners and aligning underwriting expectations and pricing on growth. There's also interest from new relationships that previously did not consider sale-leaseback as a capital source.
Q: Can you discuss investment pacing for the rest of the year? Do you expect it to be more back half weighted? A: Christopher Constant, CEO, mentioned that with better clarity on the economy, more transaction opportunities are expected towards the latter half of the year.
Q: You mentioned a yield on investments of 7.7% this quarter but indicated pipeline yields around 8%. Does this suggest a shift towards more active capital deployment? A: Christopher Constant explained that the pipeline includes both vintage deals and new opportunities priced around or above 8%. Brian Dickman, CFO, added that achieving spreads around 100 basis points is the target, with current capital deployments matching this goal.
Q: Are there any new tenants or sectors being considered for sale leasebacks that hadn't previously been considered? A: Christopher Constant clarified that while they are not exploring new categories, they are engaging with tenants who previously financed growth through other means and are now considering sale leasebacks.
Q: Can you provide more details on the extension of two unitary leases and their impact on the portfolio? A: Christopher Constant detailed that one lease extended had an initial maturity in 2025, where the tenant sought a longer term to invest in the properties, resulting in additional rent bumps. Another was an early contractual renewal extending the term by 10 years.
Q: Regarding the cap rates and quality of investments, have there been shifts in the types of assets or tenant quality to achieve higher yields? A: Christopher Constant affirmed that the quality of assets and tenants has remained consistent, with investments still focused on convenience stores, car washes, and auto services in attractive markets. The apparent increase in cap rates reflects broader market adjustments rather than a change in asset or tenant quality.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.