Getty Realty Corporation

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

Thank you, Operator. I would like to thank you all for joining us for Getty Realty's second quarter earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter ended June 30, 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 regarding the company's future operations, future financial performance or investment plans and opportunities. We 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 to 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 today. 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 Constance, our Chief Executive Officer.

Thank you, Josh. Good morning, everyone, and welcome to our earnings call for the second quarter of 2023. Joining us on our 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 and provide perspective on the company's year-to-date accomplishments. As usual, Mark will then take you through our portfolio, and Brian will further discuss our financial results and guidance. In the second quarter, we produced healthy AFFO per share growth of 5.7%, quarter performance results in first half 2023 earnings growth of a strong 6.7% over the first half of 2022. This growth was driven by our robust investment activity and thoughtful capital markets execution over the past year, which we are particularly pleased with given the uncertain economic environment in which we've been operating. Year to date, we have invested more than $163 million, including $50 million in the second quarter, and $52.5 million thus far in the third quarter. We were also able to increase our committed investment pipeline net of our aforementioned year-to-date activity to more than $140 million under contract for the development and or acquisition of convenience stores, auto service centers, express tunnel car washes, and QSRs, all of which we expect to fund over the next 9 to 12 months. In addition to driving our earnings growth, these investments reflect our continued emphasis on scaling and diversifying our portfolio. I am particularly proud of our investments this year given the choppy transaction market. The team continues to identify high-quality opportunities to acquire our target asset types in top MSAs around the country, while remaining disciplined and true to our rigorous underwriting standards. With respect to diversification, we've increased the percentage of our ABR from our newer asset classes thus far in 2023, as more than 85% of our investments year-to-date have been directed to non-convenient stores. We have also added eight new tenants to the portfolio this year, all of which are strong operators with plans to grow their businesses. And given our increasing success in finding new investment opportunities through established relationships, we will also see the source additional transactions with these new tenants in 2023 and beyond. When we look at our pipeline, we have a strong alignment of interest with our tenants and like the incremental diversity that they bring to our portfolio. On the capital side, our year-to-date capital markets activity has provided us with attractively priced permanent capital that continues to support accretive investments. We ended the quarter with approximately $120 million of unsettled forward equity, an undrawn revolver, and a conservative leverage profile that provides additional flexibility and access to capital. With regard to the health of the convenience store industry, the National Association of Convenience Stores recently published their State of the Industry Report for 2022. Based on the NAC's annual survey data for convenience stores across every region of the United States, Last year was another record year for inside store sales, with industry-wide sales growing more than 9% and topping $300 billion for the first time. The next survey highlights increases in transaction counts for both gasoline sales and C-store transactions, as well as growth in gross profits for fuel, merchandise, and food service. Food service, in particular, continues to be a key driver of inside sales. On the expense side, community store operators were not immune to significant increases in direct store operating costs, with employee-related expenses and credit card fees both rising substantially. Despite these headwinds, the key takeaways from the report is the resilience of operators in the C-store sector who have invested in branding, technology, and store operations to help overcome these challenges and who continue to drive increased sales and profits. As we move through the balance of 2023, our team remains focused on growing earnings while scaling and diversifying our portfolio. We believe that in this market environment, we benefit from the targeted nature of our investment strategy and the competitive advantages resulting from our sector expertise and the direct relationships we have with operators in our space. Our disciplined approach, which emphasizes owning high-quality real estate in major metro areas and partnering with growing regional and national operators continues to yield attractive acquisition and development funding opportunities. We will continue to carefully underwrite each opportunity's real estate characteristics, site-level operations, and tenant credit. Importantly, our conservatively leveraged balance sheet and demonstrated access to capital should continue to support this investment activity and create additional value for our shareholders. With that, I will turn the call over to Mark to discuss our portfolio and investment activities.