Getty Realty Corporation

Good morning and welcome to Getty Realty third 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 third quarter earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter ended September 30, 2024. The form 8K and earnings release are available in the investor relations section of our website at gettyrealty.com. Certain statements made during 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 end of December 31, 2023, as well as any subsequent findings 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 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. 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 third 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 quarterly business activities, and will also provide commentary on our growth and diversification strategies within the convenience and automotive retail sectors. Mark will then take you through our investment and asset management activities, and Brian will further discuss our financial results and guidance. We had another very productive quarter and continued to demonstrate our ability to execute across all facets of our business. We grew and diversified our portfolio through accretive acquisitions. Our asset management team advanced a number of redevelopment projects and extended two significant unitary leases. And we further solidified our balance sheet and liquidity position through thoughtful capital markets activity. We also raised our full year 2024 earnings guidance, and our board approved another annual dividend increase, our 11th consecutive year raising the dividend. Overall, it was a strong performance from all components of the platform, and I'm excited about how the team is working together to execute our strategies. We remain focused on growing, diversifying, and actively managing our portfolio of convenience and automotive retail assets, and I believe that this quarter was a great representation of our capabilities. Last night, we released earnings. Our results were headlined by a 13.1% increase in our annualized base rent over the prior year and reported ASFO per share growth of 3.5% for the quarter and 3.6% year-to-date. As I mentioned, we were able to raise our full year 2024 ASFO per share guidance going into the end of the year. Year to date, the company has invested approximately $148 million at an 8% initial cash yield. Our investment activity continues to reflect the benefits of our differentiated platform, including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors. Consistent with prior years, more than 90% of our investments in 2024 have been direct with tenants versus acquiring existing leases. We think the direct sale-leaseback model has several benefits, not the least of which is our ability to cultivate tenant relationships and underwrite site-level performance, and we expect to maintain this level of direct transaction activity going forward. We've been able to invest in all four of our primary convenience and automotive retail property types this year, including convenience stores, express tunnel car washes, auto service centers, and drive-through QSRs. And we've added five new tenants to the portfolio while expanding our relationships with nine existing tenants. Our deal team's efforts have also resulted in a growing investment pipeline. We currently have more than $70 million of assets under contract at a blended cap rate approaching the mid-8% area. and we continue to see a steady flow of opportunities to underwrite and evaluate for potential investment. Our in-place portfolio remains a source of strength for the company. In addition to excellent performance in terms of occupancy, rent collections, and rent coverage, we continue to identify additional redevelopment opportunities embedded in the portfolio and are seeing large unitary lease tenants extend their lease terms and further commit to the sites they operate. With respect to redevelopment, we had our first rent commencement of the year in the third quarter as we completed a new Chipotle restaurant in the Providence, Rhode Island MSA. Interest from automotive service tenants is driving future redevelopment opportunities, including three new signed leases with a large Take 5 oil franchisee this quarter. We anticipate additional demand from this type of use as it fits well with our geographic footprint and the physical characteristics of many of our legacy locations. During the quarter, we also extended two material unitary leases representing 11% of our ABR, and year-to-date have extended four unitary leases representing more than 13% of our ABR. Both of these have contributed meaningfully to an increase in our weighted average lease term to more than 10 years. All of this portfolio activity was complemented by a strong quarter of capital raising as we raised more than $245 million of common equity and unsecured debt. In July, we took advantage of our growing investment pipeline and improving investor sentiment to raise $121 million of common equity through an overnight offer. And recently, we agreed to issue to certain investors $125 million of new senior unsecured notes in a private placement transaction. Combined, this capital will fund our investment pipeline refinance our only near-term notes maturity and provide additional growth capital going into 2025. Again, I think this was a very productive quarter for Getty, and I'm excited about our platform and how we're executing. Despite lingering uncertainty with respect to the economy and the upcoming election and material Bayask spreads that persist for net lease properties in our sectors, we remain well-positioned to create value for our shareholders. Our in-place assets continue to generate reliable and growing rental income. Our balance sheet is in great shape with moderate leverage and significant liquidity, and our investment activity is driving additional earnings growth while scaling and diversifying the portfolio. Based on our recent performance and earnings growth expectations, our board approved an increase of 4.4% in our recurring quarterly dividend to $0.47 per share. This represents the 11th straight year we have grown the dividend alongside our earnings. Our board believes this annual increase is appropriate as it maintains a stable payout ratio and continues to increase Getty's retained cash flow to have more investable capital to meet our growth objectives. Before I turn the call over to Mark, I'll close by noting that we've noticed an uptick in the REIT market's enthusiasm for the convenience and automotive retail sectors that we have been investing in for many years. As we've discussed in the past, these are essential use assets with strong real estate characteristics and an emphasis on speed, convenience, and service that resonates with today's consumer, particularly the mobile consumer. These attributes are all elements of our investment thesis, and we believe our focused efforts and industry expertise are key differentiating factors for getting We look forward to continuing to engage with the investment community on the merits of our strategy as we further grow and diversify our convenience and automotive retail portfolio. With that, I will let Mark discuss our portfolio and investment activities.