GETTY REALTY CORP /MD/ Q4 FY2024 earnings call

• In 2024, Getty grew annualized base rent by 14.5% to ~$198 million and reported AFFO per share of $2.34, exceeding guidance and up 4% from prior year. - Invested $209 million across 78 properties in 2024 at an initial cash yield of 8.3%. - Acquired 71 properties, with over 90% being direct sale-leaseback transactions, and added 8 new tenants. - Raised $289 million of capital, including locking in $125 million of long-term notes and raising $32 million via an ATM program. - Portfolio included 1114 net lease properties, 99.7% occupancy, and weighted average lease term of 10.2 years. - In the fourth quarter, invested $76.4 million across 21 properties, including 14 convenience stores in Houston and Las Vegas, 2 express tunnel car washes, etc.

In 2024, Getty Realty's financial performance was driven by its investment activities. The company invested $209 million across 78 properties. Annualized base rent (ABR) grew by 14.5% to approximately $198 million. In terms of revenue contribution by segment: convenience stores represented 41% of transaction volume, express tunnel car washes were 33%, auto service centers were 21%, and drive-thru quick serve restaurants (QSRs) were 5%. For the fourth quarter, $76.4 million was invested across 21 properties with an initial cash yield of 8.9%.

• Revised 2025 AFFO per share guidance to $2.38 to $2.41 per share from initial $2.40 to $2.42 per share due to Zips Car wash bankruptcy impact. - Has ~$85 million of investments under contract, including a recent $50 million portfolio transaction in the automotive service sector, expected to be invested over 9-12 months with an average initial yield in the high 7% area. - Guidance incorporates assumptions for uncollectible rents, operating expenses, etc.

• Zips Car wash bankruptcy: Getty has 12 sites leased to Zips, with 7 sites potentially rejected. This could lead to downtime, rent adjustments, and impacts AFFO. - Market uncertainties: Continued gap in pricing between buyers and sellers for sale-leaseback transactions, interest rate headwinds, and potential challenges in redevelopment and retenanting of properties.

Q: Mitch Germain asks about Zips sites, including if they were recently developed and retenanting efforts.

A: Christopher Constant responds that the sites were acquired in 2019, 10 of 12 were new to industry, and discussions with other car wash operators are ongoing with expected retenanting.

Q: Farrell Granath asks about the portfolio transaction signed and if larger portfolio transactions are being focused on.

A: Christopher Constant states it's a direct sale-leaseback transaction consistent with strategy and expects more portfolio sale-leaseback transactions.

Q: Wesley Golladay asks about the pipeline mix of sale-leaseback vs development funding.

A: Brian Dickman explains that the 85+ million under contract has a bulk in development funding with a 9-12 month deployment, while shorter durations are more sale-leaseback.

Q: Upal Rana asks about Zips recovery and cap rate assumptions.

A: Brian Dickman states revised guidance captures range of outcomes for Zips recovery, and cap rate moderation is expected but not overly significant given market conditions.

Q: Mitch Germain follows up on Zips, asking about assumptions in the model.

A: Brian Dickman explains that the model factors in range of outcomes including downtime and rent recapture, with guidance capturing that range.