Getty Realty Corporation

Good morning, ladies and gentlemen, and welcome to Getty Realty's earnings conference call for the first quarter 2023. This call is being recorded. After the presentation, it will be an opportunity to ask questions. Prior to the starting of the call, Joshua Dicker, Executive Vice President, General Counsel, and Secretary of the company, will read a safe harbor statement and provide information about the Nodgap financial measures. Please go ahead, Mr. Dickert.

Thank you, Operator. I would like to thank you all for joining us for Getty Realty's first quarter earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter ended March 31, 2023. The form 8K and earnings release are available in the investor relations section of our website at gettyrealty.com. Certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs. and are subject to trends, events, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Examples of forward-looking statements include our 2023 guidance and may also include statements made by management in their remarks and in response to questions, including regarding the company's future company operations, future financial performance, and the company's acquisition or redevelopment plans and opportunities. caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. I refer you to the company's annual report on Form 10-K for the year ended December 31, 2022 and our subsequent filings made with the SEC for a more detailed discussion of the risks and other factors that could cause actual results differ materially from those expressed or implied in any forward-looking statements made today. You should not place undue reliance on forward-looking statements which reflect our view only as of the date hereof. The company undertakes no duty to update any forward-looking statements that may be made in the course of this call. Also, please refer to our earnings release for a discussion of our use of non-GAAP financial measures including our definition of adjusted funds from operations or AFFO and our reconciliation of those measures to net earnings. With that, let me turn the call over to Christopher Constant, our Chief Executive Officer. Thank you, Josh.

Good morning, everyone, and welcome to our earnings call for the first quarter of 2023. Joining us on the call today are Mark O'Lear, our Chief Operating Officer, and Brian Dickman, our Chief Financial Officer. I will lead off today's call by providing commentary on our financial results and investment activities for the first quarter and provide perspective on the company's positioning given the uncertain economic landscape. As usual, Mark will then take you through our portfolio and Brian will further discuss our financial results and guidance. We are pleased to report a 7.2% increase in our base rental income and a 7.7% increase in our AFFO per share the prior year's first quarter. This growth was driven by our robust investment activity and thoughtful capital markets execution over the past year, including during the first quarter, which is driving the increase in our 2023 outlook. Year-to-date, we have invested $73.4 million, including more than $60 million in the first quarter. I would note that the majority of our activity for the quarter was in the car wash sector, While we continue to pursue transactions across the broader convenience retail landscape, car washes are currently providing us with the most attractive investment opportunities, along with additional diversification across geographies and tenants. Our success in the car wash space is a result of our targeted investment strategy, which leverages direct sourcing capabilities and underwriting expertise to identify assets that meet our stringent acquisition criteria. As a reminder, we closed our first Car Wash transaction less than four years ago, and Car Wash is now comprised more than 14% of our ABR, even as we continue to invest in our core C-Store space. We hope to see similar results in auto service and drive-thru retail over the next few years as we continue to ramp up our efforts in those areas. Our committed investment pipeline currently includes more than $105 million under contract for the acquisition and or development of convenience stores, automotive service centers, express car washes, and QSRs, which we expect to fund over the next approximately 12 months. Equally important, we continue to be proactive with our capital raising activities, including our successful overnight equity offering in February. With approximately 145 million of unsettled lower equity as of March 31st, our investment pipeline is fully funded capital available for future deals. Our undrawn revolver and conservative leverage also provide additional flexibility and access to capital. As we look ahead, our portfolio is well positioned to perform despite the economic headwinds that persisted throughout 2022 and which have continued this year. Automotive retailers have proven to be largely recession and e-commerce resistant And our tenants are currently generating strong profits and maintaining healthy rent coverage ratios. In fact, most of our tenants are focused on expanding their businesses to meet consumer demand for essential goods and services. Our discipline strategy continues to emphasize owning high-quality real estate in major metropolitan areas and partnering with growing regional and national operators across the convenience and automotive retail sector. We carefully underwrite each opportunity with a model that evaluates in ways a combination of real estate characteristics, site-level operations, and tenant credit. We benefit from our sector expertise and the direct nature of our transactions, which often provides us with the ability to obtain detailed due diligence materials related to our tenant partners and their underlying properties. We also continue to benefit from investments we have made in our team over the last couple of years, which are driving an increasing set of transaction opportunities and ultimately closed deals for getting. As we move through the balance of 2023, our dedicated team is focused on the continued growth and diversification of our portfolio. We believe the strength of our balance sheet and our demonstrated access to capital will allow us to maintain this progression and create additional value for our shareholders.