Getty Realty Corp. Q2 FY2025 earnings call

• Christopher Constant highlighted strong quarterly financial results, accelerating investment activity, and tenant performance. - Mark Olear discussed the portfolio, noting 1,132 net lease properties, 99.7% occupancy (excluding active redevelopments), and weighted average lease term of 10 years. He also mentioned $95.5 million in year-to-date investments, acquisitions of various property types, redevelopment projects, and asset sales. - Brian Dickman discussed G&A ratio (9.9% for Q2 2025), balance sheet (net debt to EBITDA 5.2x/4.6x including unsettled forward equity, fixed charge coverage 3.9x), liquidity (over $400 million total liquidity at quarter end), and 2025 AFFO guidance.

Getty had a strong second quarter with annualized base rent growing 9.9% to approximately $204 million. AFFO per share was $0.59, a 1.7% increase from the prior year. The in-place portfolio had nearly 100% rent collections, annual rent increases averaging 1.8%, and a trailing 12-month rent coverage of 2.6x. Year-to-date, $95.5 million of investments were closed at an initial cash yield of 8.1%. The portfolio includes 1,132 net lease properties, with occupancy at 99.7% and a weighted average lease term of 10 years. 61% of annualized base rent comes from the top 50 MSAs and 76% from the top 100 MSAs.

Getty is increasing its full year 2025 AFFO per share guidance to a range of $2.40 to $2.41 from the prior range of $2.38 to $2.41. Primary factors impacting the guidance include variability in certain operating expenses, transaction-related costs, and timing of anticipated demolition costs for redevelopment projects.

Statements made during the call are forward-looking and subject to trends, events, and uncertainties that could cause actual results to differ materially from those described. Refer to the company's annual report on Form 10-K and subsequent SEC filings for a detailed discussion of risks.

Q: What do you attribute the accelerating investment activity to?

A: Mark Olear said it's due to more willingness to get back into the transaction market, pricing remaining in line, and the team's relationship building.

Q: Can you talk about overall comfort level on the car wash space?

A: Christopher Constant said there's nothing of note on the watch list, they're comfortable with the Express Car Wash model, and see good opportunities in the sector.

Q: Is there a narrowing of the bid-ask spread and what about cap rates for the pipeline?

A: Christopher Constant echoed Mark's comments about pricing in the high 7s for the pipeline.

Q: Any change in lease structure?

A: Christopher Constant said broadly no change, but there's negotiation by transaction with various enhancements.

Q: How may the back half play out in terms of investment spend?

A: Christopher Constant said more acquisition activity is flowing through, with the pipeline over $90 million and expecting deals to close in 2025.

Q: Any heightened competition in the buyer pool?

A: Christopher Constant said there's always competition, but they find compelling transactions for their portfolio.

Q: What's behind improved rent coverage in car wash?

A: Brian Dickman said it's organic fundamental improvement across the portfolio, not just the Zips resolution.

Q: What's the lag time between identifying a deal and closing?

A: Mark Olear said it can be 60-120 days depending on the deal.

Q: Any new investment opportunities outside existing verticals?

A: Christopher Constant said no current plans to expand beyond primary target sectors, but they're diversifying.

Q: Color on environmental expense accrual?

A: Brian Dickman said it's related to a disclosed litigation case, a positive progression allowing an accrual to be booked.