Getty Realty Corporation

Good morning and welcome to Getty Realty 4th 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 hour 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 fourth quarter and year-end earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter and year-ended December 31, 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 2025 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 410K for the year ended December 31, 2023, as well as any subsequent filings 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. 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 fourth quarter at year-end 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 investment activities, and will provide commentary on how we are effectively executing our growth and diversification strategies in the convenience and automotive retail sectors. the status of our portfolio, and Brian will further discuss our financial results and guidance. In 2024, our consistent and disciplined approach produced another successful year of earnings and portfolio growth, as we again embraced the challenge of scaling our company. I'm especially proud of our performance during a year that I would characterize as challenging with respect to both the transaction market for our property types and the capital market. We invested $209 million in high-quality convenience and automotive retail assets, raised $289 million of attractively priced capital, and continue to advance our portfolio diversification objectives. We expanded our presence in top MSAs around the U.S. and deployed capital across all of our target sectors while continuing to prioritize our direct sale-leaseback business model. Our successful investment activities combined with the stable rents from our in-place portfolio produced strong revenue and earnings growth and a sector-leading dividend increase. Our performance continues to be driven by our fantastic team at Getty. For the year, Getty grew its annualized base rent by 14.5 percent to approximately 198 million and reported AFFO per share of $2.34 which exceeded the high end of our guidance range and represented a 4% increase over the prior year's result. Our financial performance was driven by the strength of our investment activity as we acquired 71 properties and provided development funding for the construction of additional new to industry assets. More than 90% of these investments were direct salees-backed transactions, and our acquisitions team did an excellent job of sourcing transactions with a mixed of large established tenants and emerging high growth tenants who are building strong platforms across the US. We added eight new tenants to the portfolio in 2024 and completed additional transactions with nine existing relationships. Equally important, we were able to drive a creative investment spreads on our investments in 2024 through effective execution in the debt and equity capital markets. Getty was both timely and strategic in locking in $125 million of long-term notes in September 2024 in advance of significant upward moves in treasury yields, addressing our only near-term notes maturity and providing capital to fund future investments. We also raised $32 million under our ATM program in the fourth quarter. When you combine these transactions with our third quarter follow-on equity offerings, Getty is very well capitalized and enters 2025 with significant dry powder for acquisitions. Our capital position supports our investment pipeline, including more than $35 million of assets under contract, plus a growing number of opportunities that are in various stages in the acquisitions process. In fact, last night, after we released earnings, we signed a contract for a more than $50 million portfolio transaction in the automotive service sector. We remain confident that our relationship-based facility-aspect strategy will generate continued opportunities for Getty to acquire assets in our target convenience and automotive retail sectors as we move through 2025. In general, I believe Getty is stronger and better positioned than it's ever been. A main reason for this is the diversification strategy we embarked upon approximately five years ago. By broadening our investment focus to include several sectors within the convenience and automotive retail landscape, we have grown our total ABR by approximately 70% since the end of 2019, while increasing rental income from non-convenience and gas properties to 28% of total ABR from less than 3% before we began executing on the strategy. We've also added 35 tenants to our roster during this timeframe, and expanded into several new geographic markets. I would emphasize that our decision to diversify was not a pivot away from the convenience store sector, which we are still committed to and where we continue to source compelling investment opportunities. Rather, our diversification efforts are driven by our desire to scale our business by acquiring retail real estate with similar property attributes, which are occupied by tenants operating in sectors that share similar growth dynamics and operating fundamentals. The convenience and automotive retail sector is supported by accelerating consumer trends for speed and service, reinforced by the increased count and advanced age and complexity of vehicles on the road, and populated with growth companies that are consolidating fragmented businesses. Tenants operating in the sector generally provide essential goods and services, are largely internet and recession resistant, and have demonstrated consistent performance over the past several years. And the underlying real estate we acquire is typically located in high-density metro areas with excellent access and visibility. We remain positive on the sector, committed to continuing to execute on our growth and diversification plans, and focused on creating value for our shareholders.