Getty Realty Corporation

Good morning and welcome to Getty Realty second quarter 2024 earnings call. 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, the company released its financial operating results for the quarter ended June 30, 2024. 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 reflect 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 2024 guidance and may include statements made by management, including those 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, 2023 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. We 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 during 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. 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 2024. 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 summarizing our financial results and year-to-date investment activities, and will provide commentary on the continued resilience of our convenience store and car wash tenants. Mark will then take you through our portfolio, and Brian will further discuss our financial results and guidance. Last night, we reported a strong quarter, which was headlined by a 15% year-over-year increase in annualized base rent, a 3.6% increase year-over-year in our AFFO per share, more than $100 million of year-to-date investments and an increase in our full-year earnings guidance. Our investment activity in the quarter continues to demonstrate the benefits of our differentiated platform, including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors. We completed nearly $62 million of investments in the second quarter across 23 properties that were diversified our four primary convenience and automotive retail asset classes, being convenience stores, express tunnel car washes, auto service centers, and drive-thru quick service restaurants. Consistent with prior years, approximately 90% of our investments year-to-date were direct transactions, and we added three new national names to our growing tenant roster, while also expanding our relationships with six existing tenants. We continue to be well-positioned to create value for shareholders throughout market cycles, both through the strength of our in-place portfolio, which delivers reliable rental income, and our ability to source and close new investment opportunities that further advance our growth and portfolio diversification efforts. To that end, we currently have an investment pipeline of more than 53 million of assets under contract at a blended cap rate approaching the mid-8% area. In addition, thanks to the efforts of our investments team, we continue to underwrite a steady flow of potential acquisition opportunities to add to our pipeline. I'm quite pleased with our recent financial results and investment activity in general and in light of market conditions over the last several quarters. And I want to again emphasize the consistent and thoughtful manner in which we approach our business. Our success is driven by our targeted investment strategy, our deep industry knowledge and relationships, our strict underwriting criteria, and the strength of the Getty team that works tirelessly to manage our in-place portfolio and execute our growth strategy. We also continue to benefit from the strong fundamentals across our target retail sectors and the performance of our institutional tenants who are maintaining healthy profit margins and rent coverage ratios. With regard to the convenience store industry, the National Association of Convenience Stores recently published their State of the Industry Report for 2023, Overall, the report, which compiled survey data for convenience stores across every region of the United States, demonstrated both the stability of the convenience store industry and the increasing importance of inside sales and food service. For 2023, total inside store sales grew more than 8% to a record $328 billion. The standout figure from the report was a more than 10% increase in average monthly gross profit from food service sales. Other key highlights from the report were continued healthy fuel margins, despite pulling back from record high levels in 2022, stable fuel volumes, and slowing expense growth inside the store, which also contributed to the year-over-year increase in overall gross profitability. With respect to the car wash sector, the recent performance of our tenants further demonstrates the resiliency of the ExpressTel car wash business. We've been selective in adding car wash tenants to our portfolio over the last few years and have chosen to work with either top 20 national operators or companies that have a dominant regional market position. Based on the site-level data Getty receives, car wash coverage ratios increased for substantially all of our tenants with sites that have been operating our portfolio for at least one full year. The growth in revenues for the sector continues to be driven by unlimited wash memberships, Before I turn the call over to Mark, I'll close by noting that despite the recent CPI report and subsequent run-up in net-lease REIT share prices, we expect continued challenges in the transaction and capital markets as we move through the remainder of 2024. There is still considerable uncertainty with respect to interest rates, material bid-ask spreads between buyers and sellers that has led to a significant increase in for-sale inventory of net-lease assets, And we're in a geopolitical environment that seems to surprise almost daily. Nevertheless, as I said at the beginning of my remarks, we believe that Getty is well positioned to continue to execute and create value for our shareholders. Our in-place portfolio continues to generate reliable and growing rental income. Our balance sheet is in great shape with leverage in the middle of our target range and ample liquidity. And the more than 100 million of investments closed year to date, plus the 53 million of investments we have under contract, will drive additional earnings growth. Meanwhile, as I've mentioned a number of times, our team here at Getty continues to work hard to source new investment opportunities and actively manage our portfolio and balance sheet. With that, I will turn the call over to Mark to discuss our portfolio and investment activities.