Getty Realty (GTY) - 2023 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION This section details the company's unaudited consolidated financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements Unaudited Q1 2023 consolidated financial statements show asset growth, liability reduction, and a decline in net earnings Consolidated Balance Sheets The balance sheet reflects an increase in total assets, primarily real estate, and a decrease in total liabilities due to debt repayment Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Real estate, net | $1,378,460 | $1,347,070 | | Cash and cash equivalents | $22,067 | $8,713 | | Total assets | $1,615,124 | $1,562,295 | | Liabilities & Equity | | | | Borrowings under credit agreement | $0 | $70,000 | | Senior unsecured notes, net | $673,218 | $623,492 | | Total liabilities | $778,916 | $802,445 | | Total stockholders' equity | $836,208 | $759,850 | | Total liabilities and stockholders' equity | $1,615,124 | $1,562,295 | Consolidated Statements of Operations The statement of operations reflects increased revenues from rental properties but a decline in net earnings due to reduced property disposition gains Consolidated Statement of Operations Summary (in thousands, except per share amounts) | Account | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenues from rental properties | $42,367 | $38,984 | | Total revenues | $43,020 | $39,321 | | Total operating expenses | $22,256 | $20,279 | | Gain on dispositions of real estate | $587 | $6,153 | | Operating income | $21,351 | $25,195 | | Net earnings | $14,082 | $18,749 | | Diluted earnings per common share | $0.28 | $0.39 | Consolidated Statements of Cash Flows The cash flow statement shows increased operating and financing cash flows, offset by higher cash usage in investing activities Consolidated Statement of Cash Flows Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $22,420 | $20,830 | | Net cash flow used in investing activities | ($49,884) | ($7,916) | | Net cash flow provided by financing activities | $39,730 | $19,316 | | Change in cash, cash equivalents and restricted cash | $12,266 | $32,230 | Notes to Consolidated Financial Statements These notes detail the company's net-lease REIT business, accounting policies, debt, environmental liabilities, and equity activities - Getty Realty operates as a net-lease REIT with a portfolio of 1,047 properties across 39 states, primarily convenience and automotive retail sites[16][17] - The company's top three tenants by revenue in Q1 2023 are ARKO Corp. (16.0%), Global Partners LP (15.0%), and APRO, LLC (10.0%)[58] - In Q1 2023, the company acquired nine properties for an aggregate of $48.1 million, primarily car washes and convenience stores[127] - The company settled 2,714,136 shares under ATM forward sale agreements, generating $83.0 million in net proceeds during Q1 2023[116][195] - As of March 31, 2023, $23.0 million has been accrued for environmental remediation obligations, covering known and estimated future liabilities[100][211] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2023 revenue growth, decreased net earnings, increased AFFO, and strong liquidity supporting its investment strategy - The company's investment strategy focuses on acquiring and developing single-tenant retail properties, with $60.7 million invested across 26 properties in Q1 2023[147][148] FFO and AFFO Reconciliation (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net earnings | $14,082 | $18,749 | | Funds from operations (FFO) | $24,445 | $23,262 | | Adjusted Funds from operations (AFFO) | $27,172 | $24,851 | | Diluted AFFO per share | $0.56 | $0.52 | - Q1 2023 rental income growth was primarily due to additional base rent from 2022 acquisitions, redevelopment rent commencements, and contractual increases[162] - As of March 31, 2023, the company maintained significant liquidity, including $300.0 million available under its Revolving Facility and expected proceeds of approximately $146.9 million from forward stock sales[176] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate exposure from its variable-rate revolving credit facility, with no outstanding borrowings as of March 31, 2023 - The company's primary market risk is interest rate exposure from its $300.0 million SOFR-based variable-rate revolving credit facility[220] - As of March 31, 2023, there were no outstanding borrowings under the variable-rate revolving credit facility[220] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting in Q1 2023 - The CEO and CFO affirmed the effectiveness of the company's disclosure controls and procedures as of March 31, 2023[223] - No material changes occurred to internal control over financial reporting during Q1 2023[224] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, other disclosures, and exhibits filed with the Form 10-Q Item 1. Legal Proceedings No new material legal proceedings or developments in previously disclosed matters have occurred since the 2022 Annual Report on Form 10-K - No new material legal proceedings or developments in previously disclosed matters have occurred since the 2022 Annual Report on Form 10-K[226] Item 1A. Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the company's 2022 Annual Report on Form 10-K[227] Item 5. Other Information No other information is reported under this item for the current period - There is no information to report under this item[228] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, confirmations, amendments, and officer certifications - Exhibits include agreements for the February 2023 ATM Program, follow-on offering, forward sale confirmations, and required CEO/CFO certifications[230][232]