- Increases 2021 Annual Guidance -
Getty Realty Corp. (NYSE: GTY) (“Getty” or the “Company”)
announced today its financial results for the quarter ended
September 30, 2021.
Third Quarter Highlights
- Net earnings of $0.30 per share
- Funds From Operations (“FFO”) of $0.48 per share
- Adjusted Funds From Operations (“AFFO”) of $0.50 per share
- Invested an aggregate of $61.1 million across 25
properties
“With approximately $145 million of investments completed year
to date, including more than $60 million in the third quarter, we
continue to grow and diversify our portfolio across geographies,
tenants and retail subsectors,” stated Christopher J. Constant,
Getty’s President & Chief Executive Officer. “Our focus on
convenience and automotive retail real estate, occupied by national
and regional tenants operating multi-store platforms, continues to
provide Getty with durable income streams and incremental
investment opportunities. We also continue to execute on our
redevelopment strategy, with rent commencing on three projects
during the quarter, each of which provided attractive incremental
yields. As we look ahead, we maintain a robust investment pipeline,
ample access to capital, and a strong balance sheet that will
continue to support our ongoing growth initiatives.”
Net Earnings
Net earnings for the three months ended September 30, 2021 were
$14.0 million, or $0.30 per share, as compared to net earnings of
$11.9 million, or $0.27 per share, for the same period in 2020. Net
earnings for the nine months ended September 30, 2021 were $44.8
million, or $0.98 per share, as compared to net earnings of $35.6
million, or $0.83 per share, for the same period in 2020.
Funds From Operations (FFO) and
Adjusted Funds From Operations (AFFO)
FFO for the three months ended September 30, 2021 was $22.0
million, or $0.48 per share, as compared to $20.8 million, or $0.48
per share, for the same period in 2020. FFO for the nine months
ended September 30, 2021 was $64.0 million, or $1.41 per share, as
compared to $59.3 million, or $1.39 per share, for the same period
in 2020.
AFFO for the three months ended September 30, 2021 was $22.9
million, or $0.50 per share, as compared to $20.2 million, or $0.47
per share, for the same period in 2020. AFFO for the nine months
ended September 30, 2021 was $66.0 million, or $1.45 per share, as
compared to $58.1 million, or $1.37 per share, for the same period
in 2020.
All per share amounts are presented on a fully diluted per
common share basis, unless stated otherwise. FFO and AFFO are
“Non-GAAP Financial Measures” which are defined and reconciled to
net earnings in the financial tables at the end of this
release.
Results of Operations
Revenues from Rental Properties
For the three months ended September 30, 2021, revenues from
rental properties increased 6.7%, or $2.5 million, to $39.7
million, as compared to $37.2 million for the same period in 2020,
including rental income contractually due from tenants of $34.9
million, as compared to $32.0 million for the same period in
2020.
For the nine months ended September 30, 2021, revenues from
rental properties increased 6.2%, or $6.7 million, to $114.9
million, as compared to $108.2 million for the same period in 2020,
including rental income contractually due from tenants of $102.8
million, as compared to $95.2 million for the same period in
2020.
The growth in revenues from rental properties in both periods
was primarily due to incremental revenue from properties acquired
by the Company over the last twelve months, as well as contractual
rent increases for certain in-place leases.
Tenant reimbursements included in revenues from rental
properties, which consist of real estate taxes and other municipal
charges paid by the Company which are reimbursed by tenants
pursuant to the terms of triple-net lease agreements, were $5.4
million and $5.3 million for the three months ended September 30,
2021 and 2020, respectively, and $13.4 million and $13.3 million
for the nine months ended September 30, 2021 and 2020.
Property Costs
Property costs were $6.5 million for the three months ended
September 30, 2021, as compared to $6.6 million for the same period
in 2020, and $17.4 million for the nine months ended September 30,
2021, as compared to $18.0 million for the same period in 2020.
The decrease in property costs for the three month period was
principally due to reductions in rent expense. The decrease in
property costs for the nine month period was principally due to
reductions in rent expense, non-reimbursable real estate taxes and
professional and maintenance fees related to property
redevelopments, partially offset by an increase in reimbursable
real estate taxes.
Environmental Expenses
Environmental expenses were $0.8 million for the three months
ended September 30, 2021, as compared to less than $0.1 million for
the same period in 2020, and $1.3 million for the nine months ended
September 30, 2021, as compared to $1.1 million for the same period
in 2020.
The change in environmental expenses for the three month period
was principally due to increases in environmental legal fees and
net environmental remediation costs and estimates. The change in
environmental expenses for the nine month period was principally
due to increases in net environmental remediation costs and
estimates, partially offset by a decrease in environmental legal
and professional fees.
Environmental expenses vary from period to period and,
accordingly, undue reliance should not be placed on the magnitude
or the direction of changes in reported environmental expenses for
any one period, or a comparison to prior periods.
General and Administrative
Expenses
General and administrative expenses were $4.7 million for the
three months ended September 30, 2021, as compared to $4.2 million
for the same period in 2020, and $15.3 million for the nine months
ended September 30, 2021, as compared to $12.8 million for the same
period in 2020.
The change in general and administrative expenses for the three
month period was principally due to increases in employee-related
expenses. The change in general and administrative expenses for the
nine month period was principally due to increases in
employee-related expenses and certain corporate expenses, as well
non-recurring retirement costs of $0.7 million.
Impairment Charges
Impairment charges were $1.2 million for the three months ended
September 30, 2021, as compared to $1.3 million for the same period
in 2020, and $2.7 million for the nine months ended September 30,
2021, as compared to $2.9 million for the same period in 2020.
Impairment charges for both the three and nine months ended
September 30, 2021 were primarily attributable to the accumulation
of asset retirement costs at certain properties as a result of
changes in estimated environmental liabilities, which increased the
carrying values of these properties in excess of their fair
values.
Portfolio and Redevelopment
Activities
Acquisitions
The Company invested an aggregate of $61.1 million across 25
properties during the quarter ended September 30, 2021, including
the acquisition of fee simple interests in:
- 16 convenience stores located in the Raleigh (NC), Charleston
(SC) and other metropolitan areas throughout the southeastern
United States for approximately $39.6 million;
- 5 car wash properties located in the Lansing (MI), Las Vegas
(NV), New Haven (CT) and San Antonio (TX) metropolitan areas for
approximately $19.1 million; and
- One tire service center located in the Chicago (IL)
metropolitan area for approximately $4.6 million.
With respect to the acquired convenience stores, the Company had
previously funded a construction loan for the development of one
new-to-industry convenience store in the amount $3.4 million,
including accrued interest, which was repaid as part of the
acquisition.
In addition, the Company advanced construction loans in the
amount of $1.2 million, including accrued interest, for the
development of three new-to-industry convenience stores in the
Charleston (SC) metropolitan area. As of September 30, 2021, the
Company had advanced aggregate construction loans in the amount of
$8.9 million, including accrued interest, for the development of
these properties which the Company expects to acquire via
sale-leaseback transactions at the end of the construction
periods.
Subsequent to quarter end, the Company acquired fee simple
interests in two car wash properties located in the Burlington (VT)
metropolitan area for $8.8 million.
In aggregate, the Company has invested approximately $144.5
million across 82 properties year-to-date through October 27,
2021.
Redevelopments
During the quarter ended September 30, 2021, rent commenced on
three redevelopment properties, including two properties leased to
7-Eleven under long term, triple net leases in the Baltimore (MD)
and Dallas (TX) metropolitan areas, and one property leased to BJ’s
Wholesale Club that is adjacent to a newly constructed BJ’s
location in New Hampshire.
As of September 30, 2021, the Company had five properties under
active redevelopment and others in various stages of feasibility
planning for potential recapture from our net lease portfolio,
including three properties for which we have signed new leases or
letters of intent and which will be transferred to redevelopment
when the appropriate entitlements, permits and approvals have been
secured.
Balance Sheet
As of September 30, 2021, the Company had $567.5 million of
outstanding indebtedness with a weighted average interest rate of
4.0% and a weighted average maturity of 6.3 years. The Company’s
indebtedness consisted of an aggregate principal amount of $525.0
million of senior unsecured notes and $42.5 million outstanding on
the Company’s $300 million unsecured revolving credit facility.
Subsequent to quarter end, the Company announced the amendment
and restatement of its unsecured revolving credit facility. The
transaction extends the maturity from March 2022 to October 2025
(with two, 6-month extension options, subject to certain
conditions), reduces the interest rate by 20 to 50 basis points
(depending on the Company’s consolidated total indebtedness to
total asset value ratio) and amends certain covenant provisions to
adhere to those generally applicable to investment grade rated
REITs.
During the quarter ended September 30, 2021, the Company raised
gross proceeds of $19.8 million through its at-the-market (“ATM”)
equity program. Year-to-date through September 30, 2021, the
Company has raised gross proceeds of $50.1 million through its ATM
program.
Total cash and cash equivalents were $9.0 million as of
September 30, 2021.
2021 Guidance
As a result of the Company’s year-to-date investment and capital
markets activity, the Company is increasing its 2021 AFFO guidance
to a range of $1.93 to $1.94 per diluted share from its prior range
of $1.89 to $1.91 per diluted share. The Company’s outlook includes
completed transaction activity as of the date of this release, but
does not otherwise assume additional acquisition or capital markets
activities for the remainder of 2021. The guidance is based on
current assumptions and is subject to risks and uncertainties more
fully described in this press release and the Company’s periodic
reports filed with the Securities and Exchange Commission.
Webcast Information
Getty Realty Corp. will host a conference call and webcast on
Thursday, October 28, 2021 at 8:30 a.m. EDT. To participate in the
call, please dial 1-877-423-9813, or 1-201-689-8573 for
international participants, ten minutes before the scheduled start.
Participants may also access the call via live webcast by visiting
the investors section of the Company's website at
ir.gettyrealty.com.
If you cannot participate in the live event, a replay will be
available on Thursday, October 28, 2021 beginning at 11:30 a.m. EDT
through 11:59 p.m. EST, Thursday, November 4, 2021. To access the
replay, please dial 1-844-512-2921, or 1-412-317-6671 for
international participants, and reference pass code 13723627.
About Getty Realty Corp.
Getty Realty Corp. is a publicly traded, net lease REIT
specializing in the acquisition, financing and development of
convenience, automotive and other single tenant retail real estate.
As of September 30, 2021, the Company’s portfolio included 1,021
freestanding properties located in 36 states across the United
States and Washington, D.C.
Non-GAAP Financial
Measures
In addition to measurements defined by accounting principles
generally accepted in the United States of America (“GAAP”), the
Company also focuses on Funds From Operations (“FFO”) and Adjusted
Funds From Operations (“AFFO”) to measure its performance. FFO and
AFFO are generally considered by analysts and investors to be
appropriate supplemental non-GAAP measures of the performance of
REITs. FFO and AFFO are not in accordance with, or a substitute
for, measures prepared in accordance with GAAP. In addition, FFO
and AFFO are not based on any comprehensive set of accounting rules
or principles. Neither FFO nor AFFO represent cash generated from
operating activities calculated in accordance with GAAP and
therefore these measures should not be considered an alternative
for GAAP net earnings or as a measure of liquidity. These measures
should only be used to evaluate the Company’s performance in
conjunction with corresponding GAAP measures.
FFO is defined by the National Association of Real Estate
Investment Trusts (“NAREIT”) as GAAP net earnings before
depreciation and amortization of real estate assets, gains or
losses on dispositions of real estate, impairment charges and the
cumulative effect of accounting changes. The Company’s definition
of AFFO is defined as FFO less (i) certain revenue recognition
adjustments (defined below), (ii) non-cash changes in environmental
estimates, (iii) non-cash environmental accretion expense, (iv)
environmental litigation accruals, (v) insurance reimbursements,
(vi) legal settlements and judgments, (vii) acquisition costs
expensed and (viii) other unusual items that are not reflective of
the Company’s core operating performance. Other REITs may use
definitions of FFO and/or AFFO that are different than the
Company’s and, accordingly, may not be comparable.
The Company believes that FFO and AFFO are helpful to analysts
and investors in measuring the Company’s performance because both
FFO and AFFO exclude various items included in GAAP net earnings
that do not relate to, or are not indicative of, the Company’s core
operating performance. Specifically, FFO excludes various items
such as depreciation and amortization of real estate assets, gains
or losses on dispositions of real estate and impairment charges.
However, GAAP net earnings and FFO typically include certain other
items that the Company excludes from AFFO, including the impact of
revenue recognition adjustments comprised of deferred rental
revenue (straight-line rental revenue), the net amortization of
above-market and below-market leases, adjustments recorded for the
recognition of rental income from direct financing leases and the
amortization of deferred lease incentives (collectively, “Revenue
Recognition Adjustments”) that do not impact the Company’s
recurring cash flow and which are not indicative of its core
operating performance. Deferred rental revenue results primarily
from fixed rental increases scheduled under certain leases with the
Company’s tenants. In accordance with GAAP, the aggregate minimum
rent due over the current term of these leases is recognized on a
straight-line basis rather than when payment is contractually due.
The present value of the difference between the fair market rent
and the contractual rent for in-place leases at the time properties
are acquired is amortized into revenue from rental properties over
the remaining lives of the in-place leases. Income from direct
financing leases is recognized over the lease terms using the
effective interest method, which produces a constant periodic rate
of return on the net investments in the leased properties. The
amortization of deferred lease incentives represents the Company’s
funding commitment in certain leases, which deferred expense is
recognized on a straight-line basis as a reduction of rental
revenue. GAAP net earnings and FFO also include non-cash and/or
unusual items such as changes in environmental estimates,
environmental accretion expense, non-cash allowance for credit
losses on notes and mortgages receivable and direct finance leases,
environmental litigation accruals, insurance reimbursements, legal
settlements and judgments, property acquisition costs expensed and
loss on extinguishment of debt that do not impact the Company’s
recurring cash flow and which are not indicative of the Company’s
core operating performance.
The Company pays particular attention to AFFO which the Company
believes provides a more accurate depiction of the Company’s core
operating performance than either GAAP earnings or FFO. By
providing AFFO, the Company believes that it is presenting useful
information that assists analysts and investors to better assess
its core operating performance. Further, the Company believes that
AFFO is useful in comparing the sustainability of its core
operating performance with the sustainability of the core operating
performance of other real estate companies. For a tabular
reconciliation of FFO and AFFO to GAAP net earnings, see the table
captioned “Reconciliation of Net Earnings to Funds From Operations
and Adjusted Funds From Operations” herein included.
Forward-Looking
Statements
CERTAIN STATEMENTS CONTAINED HEREIN MAY CONSTITUTE
“FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. WHEN THE WORDS
“BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,” “ESTIMATES,”
“ANTICIPATES,” “PREDICTS,” “OUTLOOK” AND SIMILAR EXPRESSIONS ARE
USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT
BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO
MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY
FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
THESE FORWARD-LOOKING STATEMENTS. EXAMPLES OF FORWARD-LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THOSE REGARDING THE
COMPANY’S 2021 AFFO PER SHARE GUIDANCE, THOSE MADE BY MR. CONSTANT,
STATEMENTS REGARDING THE RECAPTURE AND TRANSFER OF CERTAIN NET
LEASE RETAIL PROPERTIES, STATEMENTS REGARDING THE ABILITY TO OBTAIN
APPROPRIATE PERMITS AND APPROVALS, AND STATEMENTS REGARDING AFFO AS
A MEASURE BEST REPRESENTING CORE OPERATING PERFORMANCE AND ITS
UTILITY IN COMPARING THE SUSTAINABILITY OF THE COMPANY’S CORE
OPERATING PERFORMANCE WITH THE SUSTAINABILITY OF THE CORE OPERATING
PERFORMANCE OF OTHER REITS.
INFORMATION CONCERNING FACTORS THAT COULD CAUSE THE COMPANY’S
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING
STATEMENTS CAN BE FOUND ELSEWHERE IN THIS PRESS RELEASE, INCLUDING,
WITHOUT LIMITATION, THOSE STATEMENTS IN THE COMPANY’S PERIODIC
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO
THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR
CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS.
GETTY REALTY CORP.
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands, except per
share amounts)
September 30, 2021
December 31, 2020
ASSETS
Real estate:
Land
$
745,930
$
707,613
Buildings and improvements
613,926
537,272
Construction in progress
671
734
1,360,527
1,245,619
Less accumulated depreciation and
amortization
(207,928
)
(186,964
)
Real estate held for use, net
1,152,599
1,058,655
Real estate held for sale, net
111
872
Real estate, net
1,152,710
1,059,527
Investment in direct financing leases,
net
72,823
77,238
Notes and mortgages receivable
18,196
11,280
Cash and cash equivalents
7,280
55,075
Restricted cash
1,764
1,979
Deferred rent receivable
46,313
44,155
Accounts receivable
4,340
3,811
Right-of-use assets - operating
21,769
24,319
Right-of-use assets - finance
405
763
Prepaid expenses and other assets, net
76,607
71,365
Total assets
$
1,402,207
$
1,349,512
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Borrowings under credit agreement
$
42,500
$
25,000
Senior unsecured notes, net
523,946
523,828
Environmental remediation obligations
47,767
48,084
Dividends payable
18,043
17,332
Lease liability - operating
23,467
25,045
Lease liability - finance
2,143
3,541
Accounts payable and accrued
liabilities
42,117
47,081
Total liabilities
699,983
689,911
Commitments and contingencies
—
—
Stockholders’ equity:
Preferred stock, $0.01 par value;
20,000,000 shares authorized; unissued
—
—
Common stock, $0.01 par value; 100,000,000
shares authorized; 45,339,223 and
43,605,759 shares issued and outstanding,
respectively
453
436
Additional paid-in capital
773,904
722,608
Dividends paid in excess of earnings
(72,133
)
(63,443
)
Total stockholders’ equity
702,224
659,601
Total liabilities and stockholders’
equity
$
1,402,207
$
1,349,512
GETTY REALTY CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(in thousands, except per
share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenues:
Revenues from rental properties
$
39,667
$
37,194
$
114,881
$
108,180
Interest on notes and mortgages
receivable
429
709
1,173
2,090
Total revenues
40,096
37,903
116,054
110,270
Operating expenses:
Property costs
6,540
6,640
17,376
17,966
Impairments
1,198
1,325
2,730
2,863
Environmental
757
18
1,347
1,069
General and administrative
4,741
4,154
15,305
12,767
Depreciation and amortization
8,895
7,635
25,980
22,057
Total operating expenses
22,131
19,772
62,738
56,722
Gain on dispositions of real estate
2,072
82
9,550
1,138
Operating income
20,037
18,213
62,866
54,686
Other income, net
154
376
426
932
Interest expense
(6,180
)
(6,705
)
(18,464
)
(20,061
)
Net earnings
$
14,011
$
11,884
$
44,828
$
35,557
Basic earnings per common share:
Net earnings
$
0.30
$
0.27
$
0.98
$
0.83
Diluted earnings per common share:
Net earnings
$
0.30
$
0.27
$
0.98
$
0.83
Weighted average common shares
outstanding:
Basic
44,955
42,226
44,425
41,690
Diluted
45,025
42,254
44,445
41,708
GETTY REALTY CORP.
RECONCILIATION OF NET EARNINGS
TO
FUNDS FROM OPERATIONS
AND
ADJUSTED FUNDS FROM
OPERATIONS
(Unaudited)
(in thousands, except per
share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Net earnings
$
14,011
$
11,884
$
44,828
$
35,557
Depreciation and amortization of real
estate assets
8,895
7,635
25,980
22,057
Gain on dispositions of real estate
(2,072
)
(82
)
(9,550
)
(1,138
)
Impairments
1,198
1,325
2,730
2,863
Funds from operations
22,032
20,762
63,988
59,339
Revenue recognition adjustments
594
151
1,320
306
Changes in environmental estimates
(211
)
(861
)
(1,250
)
(2,089
)
Accretion expense
407
454
1,270
1,375
Environmental litigation accruals
59
85
59
85
Insurance reimbursements
—
—
(38
)
(96
)
Legal settlements and judgments
—
(376
)
(57
)
(800
)
Retirement costs
—
—
662
—
Adjusted funds from operations
$
22,881
$
20,215
$
65,954
$
58,120
Basic per share amounts:
Earnings per share
$
0.30
$
0.27
$
0.98
$
0.83
Funds from operations per share (1)
0.48
0.48
1.41
1.39
Adjusted funds from operations per share
(1)
$
0.50
$
0.47
$
1.45
$
1.37
Diluted per share amounts:
Earnings per share
$
0.30
$
0.27
$
0.98
$
0.83
Funds from operations per share (1)
0.48
0.48
1.41
1.39
Adjusted funds from operations per share
(1)
$
0.50
$
0.47
$
1.45
$
1.37
Weighted average common shares
outstanding:
Basic
44,955
42,226
44,425
41,690
Diluted
45,025
42,254
44,445
41,708
- Dividends paid and undistributed earnings allocated, if any, to
unvested restricted stockholders are deducted from FFO and AFFO for
the computation of the per share amounts. The following amounts
were deducted:
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
FFO
$
444
$
414
$
1,305
$
1,197
AFFO
461
403
1,345
1,173
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211027006088/en/
Brian Dickman Chief Financial Officer (646) 349-6000
Investor Relations (516) 349-0598 ir@gettyrealty.com
Getty Realty (NYSE:GTY)
Historical Stock Chart
From Sep 2024 to Oct 2024
Getty Realty (NYSE:GTY)
Historical Stock Chart
From Oct 2023 to Oct 2024