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.

Thank you, Chris. At year end, our lease portfolio included 1,114 net lease properties and one active redevelopment site. Excluding the active redevelopment, occupancy was 99.7% and our weighted average lease term was 10.2 years. Our portfolio spans 42 states plus Washington, D.C., with 60% of our annualized base rent coming from the top 50 MSAs and 76% coming from the top 100 MSAs. Our rents continue to be well covered with a trailing 12-month tenant rent coverage ratio of 2.6 times. Turning to our investment activities for the year, we've underwrote $5.5 billion of potential investments. Continuing with the theme of portfolio diversification, 57% of our underwriting was focused on non-convenience and gas property types, including express tunnel car washes, auto service centers, primarily collision centers, oil change and tire locations, and drive-through quick service restaurants. Convenience stores represented the remaining 43% of our underwriting activity. We had a strong fourth quarter in which we invested $76.4 million across 21 properties, at an initial cash yield of 8.9%. The weighted average lease term on acquired assets for the quarter was 15.6 years. Highlights of this quarter's investments include the acquisition of 14 convenience stores located in the Houston and Las Vegas MSAs for $69 million, two express tunnel car wash properties located in South Carolina and Vermont for $10.2 million, of which $9.3 million was previously funded, two auto service properties located in North Carolina, Virginia, for $3.7 million, of which $1.7 million was previously funded, and one drive-through quick-serve restaurant located in Baton Rouge, Louisiana, for $2.6 million. We also advanced incremental development funding in the amount of $1.8 million for the construction of two new-to-industry express tunnel car washes. These assets are either already owned by the company and are under construction or will be acquired via sale-leaseback transactions at the end of the project's respective construction periods. For the year, Getty invested $209 million across 78 properties at an initial cash yield of 8.3%. This year's investment activity can continue to prioritize diversification across our target industry verticals. Convenience stores represented 41% of transaction volume, express tunnel car washes were 33%, auto service centers were 21%, and drive-thru QSRs were 5%, making 2024 the most balanced investment year since the company expanded its convenience automotive retail strategy. After the quarter end, we invested an additional $4 million to acquire a newly constructed express tunnel car wash in New York. As Chris mentioned, we currently have more than $35 million of commitments to fund acquisitions and developments, or more than $85 million, including the contract we signed last night, which we expect to be invested over the next 9 to 12 months at an average initial yield in the high 7% area. Overall, 2024 was a challenging year for the net lease transaction market and our core property types. Broader economic concerns drove slowdown in financing opportunities tied to industry M&A and operators generally slowed the pace of their new store development pipelines. In addition, we did not see a meaningful contraction in the bid-ask spread between buyers and sellers for transaction pricing. To start 2025, there has been a modest increase in transaction activity, but I will caution that while our tenants are generally optimistic about growth, the gap in pricing continues to be a material impediment for sale leaseback transactions. We believe interest rates will be higher for longer and sellers need more time to adjust their expectations. That said, we do expect to see modest cap rate compression from the 8.3% yields we achieved in 2024, which was driven by a couple of larger portfolio transactions with cap rates pushing 9%. Regardless of market headwinds, our job remains to source attractive investment opportunities that fit our portfolio which can be financed accretively. We have invested over $1 billion in the last five years, which we believe demonstrates that Getty can source opportunity in our target sectors across a range of interest rate and macroeconomic environments. As we leverage our relationship-based strategy and prioritize direct business with new and repeat tenants, we remain confident that we will be able to accretively deploy capital again in 2025. Moving to our redevelopment platform, for the year we invested $1.5 million across numerous projects in various stages of construction, development, and permitting. We completed a new Chipotle restaurant in Providence, Rhode Island, MSA. At year end, we had four signed leases for projects, all of which are for new to industry oil change locations. Subsequent to year end, we funded $500,000 toward a tenant's modernization of one of our legacy gas and repair properties, for which we'll receive incremental rent and an extended base term of the five property unitary lease. We have additional projects in various stages in our pipeline and expect to continuously complete projects over the next few years. Continuing with our asset management efforts, the significant increase in our weighted average lease term during the year was due to the extension of four unitary leases representing approximately 25 million of ABR. It's noteworthy that these renewals reduced our 26th and 2027 lease maturities to approximately 8% of total ABR at year end, as compared to 21.5% of total ABR as of December 31st, 2023. For the year end of 2024, we disposed of 31 properties for gross proceeds of approximately $13 million, including 70 properties for excuse me, seven properties for gross proceeds of $7.5 million in the fourth quarter. With that, I'll turn the call over to Brian.

Thank you, Mark. Good morning, everyone. Last night, we reported AFFO per share of $0.60 for Q4 2024, representing an increase of 5.3% over the $0.57 we reported for Q4 2023. AFFO and net income for the quarter were $0.57 and $0.39 per share, respectively. For the full year 2024, AFFO per share was $2.34, representing an increase of 4% over the $2.25 we reported for 2023. FFO and net income for 2024 were $2.21 and $1.25 per share, respectively. A more detailed description of our quarterly and full-year results can be found in last night's earnings release, and our corporate presentation contains additional information regarding our earnings and dividend per share growth over the last several years. Annualized base rent, or ABR, as of December 31st, 2024, was $197.8 million, an increase of 14.5% over the $172.8 million we reported as of December 31st, 2023. For the full year 2024, total G&A as a percentage of total revenue was 12.4%, a 40 basis points improvement over 2023. And G&A excluding stock-based compensation and non-recurring retirement and severance costs as a percentage of cash rental income and interest income was 9.6% in 2024, a 60 basis points improvement over 2023. Management focuses on the second metric given that it adjusts for certain non-cash and non-recurring items over which we have less control in both the numerator and denominator. We continue to anticipate the G&A dollar increases will moderate and G&A ratios will further improve as we continue to scale the company. Moving to an update on the balance sheet and liquidity, as of December 31st, 2024, net debt to EBITDA was 5.2 times or 4.2 times taking into account unsettled forward equity. We continue to target leverage of 4.5 times to 5.5 times net debt to EBITDA and are well positioned to maintain those levels going forward. Fixed charge coverage was a healthy 3.8 times as of December 31st. During the fourth quarter, as previously announced, we closed on $125 million of new unsecured notes. The notes will fund later in February, and proceeds will be used to repay $50 million of notes that mature this month, which is our only near-term notes maturity, as well as to fund investment activity. A few weeks ago, we refinanced our revolving credit facility, which was set to mature in October of this year. As part of that transaction, we upsized the facility from $300 million to $450 million and extended the term to January 2029 or January 2030, including extension options. We used the increased capacity to repay our $150 million term loan, which was also due in October 2025, allowing us to address that maturity in the near term while giving ourselves additional flexibility with respect to the ultimate refinancing of those borrowings. I'd also like to highlight that in addition to continued support of our existing lenders, we're able to bring four new lenders into our bank group, as we continue to cultivate and expand our capital relationships. Pro forma for these debt transactions, the company's weighted average debt maturity was 5.6 years. The weighted average cost of our debt was 4.4%, and we have no debt maturities until June, 2028. We were also active on our ATM program during the fourth quarter through a combination of regular issuance and reverse inquiries. For the quarter, we sold 993,000 shares, all on a forward basis, which will generate gross proceeds of $32.3 million. At year end, we had a total of approximately 5.4 million shares of common stock subject to outstanding forward agreements, which upon settlement are anticipated to raise gross proceeds of approximately $164.8 million. We ended the year in a very strong capital position with the new unsecured notes proceeds and unsettled forward equity we just discussed. along with $17 million of cash and 1031 proceeds and more than $280 million of capacity on our unsecured revolving credit facility. We have more than sufficient capital to fund the now $85 million of investments we have under contract, as well as additional investment activity as we move through 2025. Before I close with commentary on our 2025 AFO Procedure Guidance, I'd like to provide some color on the recent ZIPS car wash bankruptcy that was filed last week. Zips is the fifth largest express tunnel car wash operator in the country, with a total of nearly 300 facilities. Getty has 12 sites leased to Zips, representing approximately $3.6 million of AVR, or 1.8% of our total AVR at year end. Zips was current on their rental obligations through January of this year. As part of their plan for reorganization, Zips has filed a motion to reject a number of leases, including seven of our 12 properties. This motion has yet to be heard, and the outcome for our locations remains open to discussions. We have re-underwritten the sites and had initial conversations with several other car wash operators regarding potential tenancy. At this point, we're operating under the assumption that these seven sites will be returned to us and re-leased to new operators, although, as I said, the outcome of our sites does remain open to discussions with ZIPS. Whether these sites are released to different operators or remain leased to ZIPs, rent adjustments are possible as we work through the process. After considering potential downtime to release the seven ZIP sites, as well as potential rent adjustments, we are revising our AFFO guidance to a range of $2.38 to $2.41 per share from our initial guidance of $2.40 to $2.42 per share. Our initial guidance included a 15 basis points loss factor for uncollectible rents, or approximately $300, and that continues to be incorporated in our revised guidance in addition to our adjustments for ZIPS. This loss factor is not tied to any specific tenant or situation, but is an assumption that we think is prudent to include at the beginning of any year. Our guidance also includes completed transaction activity as of the date of our earnings release, as well as the issuance and simultaneous repayment of the unsecured notes we discussed earlier, but does not include assumptions for any prospective acquisitions, dispositions, or capital markets activities, including the settlement of outstanding court agreements. Primary factors impacting our 2025 guidance include variability with respect to uncollectible rent, certain operating expenses, deal pursuit costs, and the timing of anticipated demolition costs for redevelopment projects that run through property costs on our P&L. With that, I will ask the operator to open the call for questions.

Should we begin the question and answer session?

Yes, please.

Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. The first question comes from Mitch Germain with Citizens GMP. Please go ahead.

Good morning. Thanks for taking my question. I'm just trying to understand the Zips situation a little bit more. Are those sites ones that have been recently developed? I'm just trying to understand the re-tenanting efforts and if it requires any capital on your part.

So, yeah, this is Chris. So we acquired those sites in 2019. I think 10 of the 12 were brand new to industry locations. You know, one of the benefits, I think, of our diversification strategy and our other car wash partners in the portfolio is we've already had discussions, as Brian mentioned, about potentially releasing some of these sites. You know, it's a little too early to tell whether or not they require capital or assets. they do, how much capital. But we've used a range of estimates in our revised guidance figure there, which we think is appropriate at this time. And, you know, I think given the state of those properties and how new they are to the industry, we do expect them to be released and to be operating express tunnel car washes once this is past us.

Great. Thanks for that. And then, you know, obviously, you've got other operators, you know, Zips is obviously looking to reduce their debt load, probably took on an ambitious growth plan. Is there anyone, are you having discussions with your existing operators to gain a sense of their balance sheets, their financial situations? Is there any sort of concern on your part or do you think that this is just a one-off situation here?

Yeah. I mean, I think, let me start with just kind of our general, business strategy, right? But given that we are focused investors in these convenience and automotive sectors, you know, we kind of pride ourselves on having a lot of conversations with management teams, including Zipsys team on a fairly frequent basis. You know, as it relates to the car wash sector, you know, one of the things that we've prioritized is large operators, a lot of experience in terms of managing these businesses and growth, heavy reliance on the subscription model. So, I think we've had a lot of conversations, including with Zips. I don't want to speak to their conversations that Zips had away from Getty, but I think we're comfortable with our current car wash roster. I think we're comfortable with the express tunnel sector, and we'll continue to operate like we always do in terms of speaking to tenants, really diving into their performance on collectively with tenants that we like in the sector.

Great. That's super helpful. I think last one for me, you know, you're going into 2025 with a pretty significant amount of liquidity. I mean, just irrespective of the credit facility capacity, I think it's 300. You've got the term loan of 75. You've got the unsettled equity. You know, maybe Brian, if you could just kind of talk about how you envision the capital plan working out. I mean, are you going to probably try to use the capital related to the debt first and then start to factor in the equity? Maybe just talk about the cadence of how you're looking at funding the acquisitions going forward.

Yeah, happy to, Mitch. You know, look, in general, we're always trying to be thoughtful and right, about how we're raising capital, right, and pair that with the thoughtfulness, you know, Chris just went through about how we're deploying capital. We like to keep the pipeline, you know, relatively pre-funded. We like giving our acquisition team visibility into our cost of capital. That obviously helps them in the deployment of the capital. So I think we've been fairly effective with that over the last several years, and you should continue, you know, to expect similar execution there. As far as the cadence, yeah, I think you hit it. You know, we had Eighty two and a half million drawn on the revolver at the end of the year away from the repayment of the term loan. We have the seventy five million dollars of notes net that'll come available to us those proceeds here at the end of the month. So, yeah. Generally speaking, and all else being constant, I think you can assume we use those debt proceeds to pay down the revolver. And then we have that equity to continue to take down and deploy throughout the year, as well as significant revolver capacity to pair with that.

Great. Thank you for that. Congrats on the year.

Thanks, Benjamin. Thank you. The next question comes from the line of Farrell Granite with Bank of America. Please go ahead.

Hi, good morning. Thank you for taking my question. I just want to also go back to the ZIPs. And in terms of the , I know you were factoring in the 15 basis points of loss factor on addition to the changes made to guidance. And so the assumptions that are within that, are you assuming that the seven properties that were rejected are this worst case scenario, no rent for the rest of the year? I'm just wondering the moving pieces of that guidance.

Yeah, happy to hit that Farrell. So there's obviously a range of outcomes and we don't want to get too specific. These are live discussions. You know, obviously, I think Chris hit it. Our main point is, we feel that the revised guidance appropriately captures those range of outcomes and is the best way to quantify the potential impact for you all. What I would say, though, is within that range of outcomes, we do expect that these sites get released this year and that we recapture a significant majority of the rent. But again, there's a range within that, including the fact that, as I mentioned in my prepared remarks, there are still discussions with ZIPS. But our guidance assumes that they're released, there's a range of downtime, and there's a range of rent recaptures, and that's reflected in the AFFO per share numbers.

Okay, thank you. And we can also get a little bit more color on the portfolio transaction that you mentioned that has already occurred quarter to date. How did that come about? And is that something that you're looking to do more of in the focus of larger portfolio transactions versus the one-off sale leaseback or development funding?

Yeah, I think you're referring to the deal that we signed last night. So let me start by saying You know, it's a direct sale-leaseback transaction with a relationship that we have been developing through just our standard business development process here at Getty. And I think, you know, your question on is this something we expect to continue to do, the answer is absolutely yes, right? This is a direct sale-leaseback transaction that's very consistent with our business strategy. Certainly, it's our first transaction with this tenant on this basis. So, we would certainly like to get this transaction closed with this tenant and then obviously look at do we do repeat business with them or can we do more in these various sectors within the automotive sector? But again, I've just come back to the broader conversation. successful Getty will be.

Great. Thank you so much.

Thank you. The next question comes from Wes Colliday with BED. Please go ahead.

Hey, good morning, everyone. With that pipeline, is it straight sell-lease batch, or would there be any development opportunity with that new tenant?

Yeah, the 85 total is a combination, Wes, of of sale leasebacks and development funding. You know, what's really interesting is if you go back over the last two years, 2023 was a heavy development funding year. And a lot of those deals kind of closed out earlier this year or even late in 23. 2024 was the opposite. It was almost all sale leaseback transactions for Getty. And I think in Mark's commentary, you mentioned, you know, we're seeing renewed interest in M&A, renewed interest in operators looking to grow their new store pipelines. So I think as we roll through 2025, you're definitely going to see more of a mix this year between the sale leaseback business and the development funding product.

And Wes, this is Brian. I would just add, you know, we typically try to provide some sense of timing, you know, for you all around when the pipeline, the capital funding, the pipeline will be deployed. When you're seeing ranges that are, you know, say three to six months, you can anticipate that that's going to be more sale leaseback, more acquisition of existing properties. when you see ranges more in the 9 to 12 months, which is what we put out, and that doesn't change with this contract that was just signed, you can assume that that's going to be more development funding. And so, you know, of the 85-plus million that's now under contract, in this case, and given the commentary that Chris just went through and Mark earlier, the bulk of that is development funding. Probably 80 percent of that is development funding. And again, you can see that in the duration over which we'll deploy the capital.

Okay, that makes sense. And then maybe just go one more for you on Zips, you know, thinking, you know, just doing some high-level math and cap rate assumptions. It looks like you have a basis around $4 million, so a pretty good basis there. And so when you look at your recovery that you're kind of baking in, I mean, what are you thinking from, you know, maybe timing or releasing, and are you pretty confident it will all go to another car wash concept?

Yeah, so, and look, not looking to be, you know, evasive here. Don't want to get too specific on the downtime assumptions or the rent. Again, we have a lot of discussions going on with the current operator and others and just don't want to set any expectations out there. So, you know, as I said on that front, we expect them to be released this year. We're assuming they'll be released this year and that we will recapture a significant majority of the rent. Whether they stay with ZIPS, whether they go to one operator, whether they go to multiple operators, those are all possible outcomes. It doesn't have to be any one of those.

But pretty confident it's going to go to a car wash based on your early discussions at this time?

Yeah, you know, as Chris said, these are, you know, 10 of the 12, including the bulk of which we think will get returned to us, or we're assuming will get returned to us, our new construction, right, roughly five years old. And, you know, given our relationships and the dialogue we've had to date, characterize them as constructive, and we're going to go through the process and Yeah, that's what we're assuming.

Okay. Thanks, everyone.

Thank you. Ladies and gentlemen, a reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Upal Rama with KeyBank Capital Markets. Please go ahead.

Great, thank you. Just a couple on ZIPS. You know, if you were to find a similar operator, you know, how quickly would you be able to turn the space around once you get the lease back to you?

This is Mark. So the units were, they were operating units. As Chris said, they're relatively new. Most of them are somewhere in the five-year-old range. The equipment will do surveys. As Brian said, it's a fluid situation. But they are ready to continue to operate in their current state or just transfer over to an operator and get back in operations pretty quickly.

Okay, great. Thank you. And then on the other five locations that you have with SIPs, do you feel like maybe those could be at risk too, or is it just the seven locations?

So, usually it's Brian, I think we're, we're operating under the assumption, uh, utilizing those facts that are in the public domain. So, you know, we're assuming that those five will remain with list with zips. The seven will get back, you know, the portfolio as a 12. was profitable. When we look at tenant rent coverage, there was a range of individual property coverages within that. And you can draw conclusions in terms of which ones were rejected and which ones weren't. So I think it's safe to assume that those are stronger operating stores. with sufficient headroom around coverage and profitability. So we're assuming the five stay and the seven get released. But having been through some of these situations, as many of us in the room have, not necessarily here at Getty, but elsewhere, there really is a range of outcomes and they're subject to discussions. As I think you know, this is about a week old. So we're utilizing the facts that are available to us to make our assumptions and and share the impact of that with you guys. And we expect to have additional information here in the near term as we all move forward.

Okay, great. And then in your prepared remarks, you guys talked about some moderation on the cap rates from the 8.3%, the experience in 24, given the large transactions that are weighted in there. But given where the 10-year is at today, how much moderation do you think could occur or maybe it's less so than you last thought?

I would just point you to, so last year was the 8.3 that we talked about. If you look at the pipeline, the 85 that we're now up to, I think that's in the upper seven range. So if you want to use that as what's good for a modest amount of compression, we tend to agree with you, given where the tenure is, that there's not too and again we're we're being a direct sale east back player right it's our it's our job to go ahead and underwrite and find opportunities that that fit for our portfolio and that we can price and finance creatively okay great thank you thank you we have a follow-up question from the line of mitch germain with citizens jmp please go ahead thanks um

I just want to circle back to Zipster one more time. I'm just trying to understand, and you might have talked about it, and I do apologize if you did. What are the actual assumptions? You're just assuming a couple months of downtime, and then obviously you get a little bit of an expense pickup since you're not able to recover them. Is that how it's being factored in the model, Brian?

Yeah, and so, and again, I'll emphasize, but we're really not, you know, we don't want to be evasive here, but we have live discussions and we just don't want to put any expectations out in the public domain about what specifically we expect to recover and how long we expect to be down. But, but you can imagine in these situations again, there's a range, right? We could release them earlier and take larger rent haircuts, right? We could have longer periods of downtime in an effort to recapture more rent. Again, as we noted, they could theoretically stay with ZIPS. So, again, we captured that range in our AFFO per share guidance. But mechanically, yes, you're thinking about it the right way. During downtime, we obviously wouldn't receive any rent. We would have to cover carry costs, primarily real estate taxes and any other maintenance to keep the property safe and secure and warm. And then, again, any rent adjustments would become apparent upon releasing, and those carry costs would obviously get picked up by the tenants at that time.

Great, thank you, I appreciate you guys. Thank you. Thank you.

Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Christopher Constance for closing comments.

Thank you, operator, and thank you everyone for joining us this morning for our call. We look forward to continuing to grow at Getty and look forward to getting back on with everybody

Thank you. The conference of Getty Realty has now concluded. Thank you for your participation. You may now disconnect your lines.