Getty Realty (US:GTY)2026-02-12 22:01Property Ownership and Investment - As of December 31, 2025, Getty Realty Corp. owned 1,145 properties and leased 29 properties, totaling 1,174 properties across 44 states and Washington, D.C.[29] - During the year ended December 31, 2025, Getty Realty invested approximately $273.0 million in convenience and automotive retail properties, acquiring 28 drive-thru quick service restaurants, 24 convenience stores, 15 automotive service centers, and nine express tunnel car washes[22] - Over the last five years, Getty Realty acquired 338 properties for an aggregate purchase price of approximately $1.1 billion[41] - The company completed 34 redevelopment and revenue-enhancing capital expenditure projects since the inception of its redevelopment program in 2015[43] - The company’s investment strategy includes pursuing sale leaseback transactions and providing forward commitments for new-to-industry construction[196] - The company’s properties are primarily leased to convenience store operators, petroleum distributors, and automotive-related tenants under triple-net leases[193] - The company’s portfolio is focused on well-located, freestanding properties that support automobility and provide convenience to consumers in major markets[197] Financial Performance - Net earnings for 2025 increased to $79,192,000, up from $71,064,000 in 2024, representing a growth of 2.0%[208] - Funds from operations (FFO) rose to $136,171,000 in 2025, compared to $123,976,000 in 2024, marking an increase of 9.2%[208] - Adjusted funds from operations (AFFO) reached $141,439,000 in 2025, up from $130,793,000 in 2024, reflecting an increase of 8.8%[208] - Revenues from rental properties totaled $219,585,000 in 2025, a rise of 10.5% from $198,669,000 in 2024[209] - Rental income increased to $207,300,000 in 2025, compared to $186,124,000 in 2024, showing a growth of 11.4%[210] - Total property costs decreased to $8,745,000 in 2025, down from $14,859,000 in 2024, a reduction of 41.1%[214] - General and administrative expenses increased to $27,268,000 in 2025, up from $25,265,000 in 2024, an increase of 7.9%[209] - Interest expense rose to $46,374,000 in 2025, compared to $39,272,000 in 2024, reflecting an increase of 18.5%[209] Risks and Challenges - The company faces significant risks related to real estate ownership and leasing, including competition, tenant performance, and environmental liabilities[55] - A substantial portion of the company's revenues is derived from tenants in the petroleum marketing industry, making it vulnerable to fluctuations in that sector[66] - The company is exposed to risks from tenants' financial distress, which could lead to vacancies and disruptions in rent receipts[62] - Environmental laws and regulations may impose significant costs and liabilities, adversely affecting profitability and financial condition[68] - The company competes with numerous real estate property owners, which may increase acquisition costs and impact future property purchases[61] - The reliance on un-rated tenants complicates the assessment of their creditworthiness, potentially increasing the risk of defaults[67] - The company may face challenges in renewing leases or re-leasing properties under less favorable terms due to economic conditions[62] - Changes in market conditions could adversely affect the market price of the company's publicly traded common stock[64] - The company is subject to risks associated with interest rate fluctuations, which could impact financing costs and investment strategies[58] - The potential for increased property taxes and environmental compliance costs could further strain the company's financial resources[55] - The company faces risks from inflation, which could negatively impact its variable rate debt and tenants' ability to pay rent if operating expenses exceed revenue increases[87] - Business disruptions from natural or man-made disasters could have serious adverse consequences on future revenue and financial condition[80] Legal and Environmental Matters - The company is subject to various lawsuits related to environmental matters, which could result in material losses and adversely affect its financial condition[78] - Environmental liabilities could cause a material adverse effect on the company's business, financial condition, results of operations, liquidity, ability to pay dividends, or stock price[77] - The company is involved in various legal proceedings related to environmental claims, which may exceed accrued amounts and impact financial conditions[155] - The EPA has designated the Lower Passaic River as a Superfund Site, with an estimated remediation cost of $1.38 billion for the lower 8.3 miles and $441 million for the upper 9 miles[164][163] - In December 2022, the company and 84 other settling parties agreed to pay a collective sum of $150 million to the EPA for remediation costs, which is in line with previously established legal reserves[168] - The allocation process determined that Occidental is responsible for over 99% of the costs related to the OU2 remedy, leading to settlement negotiations among the parties[167] - The company continues to defend against claims in the Occidental Lawsuit, which seeks cost recovery for response costs related to the Lower Passaic River[166] - The Modified Consent Decree, if upheld, will resolve the company's alleged liability for the remediation of the Lower Passaic River, but the outcome of ongoing appeals remains uncertain[172] Shareholder and Capital Management - The company aims to distribute at least 90% of its taxable income to stockholders annually to maintain its REIT status[19] - The company must distribute at least 90% of its net taxable income to maintain its REIT status, which may limit its ability to fund future capital needs solely from operational income[104] - The company relies on external sources of capital, which may not always be available on favorable terms, impacting its ability to execute significant acquisitions[104] - The company has filed a registration statement with the SEC to offer an indefinite amount of equity and debt securities, including common stock under its ATM Program[107] - Future dividend payments are at the discretion of the Board of Directors and may vary significantly, impacting the company's financial performance and stock price[122] - The company may experience material fluctuations in operating results, which could adversely affect its ability to pay dividends[124] - Future equity issuances could dilute existing shareholders' interests and affect earnings per share[125] - Forward sales agreements may result in substantial dilution to earnings per share and cash payment obligations[126] - In the event of bankruptcy, forward sales agreements would terminate, preventing the company from receiving expected proceeds[132] Cybersecurity and Internal Controls - The cybersecurity risk management program is integrated into the overall enterprise risk management program, ensuring comprehensive coverage across various risk areas[139] - The Audit Committee receives detailed quarterly reports on cybersecurity risks and significant incidents, ensuring oversight and timely updates to the Board of Directors[144] - The company has not experienced any cybersecurity incidents to date, but future incidents cannot be predicted, highlighting the importance of the cybersecurity risk management program[142] - The company has engaged external consultants for comprehensive cybersecurity assessments based on recognized frameworks, enhancing its risk management strategies[141] - The company’s internal controls over financial reporting are critical for reliable financial reporting, and any weaknesses could harm its reputation and operating results[96] Ownership Structure and Governance - The company's charter limits individual share ownership to 5.0% and 9.9%, which may deter large investors and affect potential takeover premiums[121] - Maryland law may discourage third-party acquisitions, potentially delaying or deterring changes in control[133]