Getty Realty (NYSE:GTY) Q4 2025 Earnings call February 12, 2026 08:30 AM ET Speaker8Good morning, and welcome to the Getty Realty fourth quarter 2025 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 the non-GAAP financial measures. Please go ahead, Mr. Dicker.Speake ...

Core Insights - Bridger Aerospace Group Holdings, Inc. has completed a sale-leaseback transaction of its headquarters and hangar facilities for approximately $49 million with SR Aviation Infrastructure, enhancing its financial flexibility and supporting fleet expansion [1][7]. Company Overview - Bridger Aerospace is one of the largest aerial firefighting companies in the U.S., providing services to federal and state agencies, including the U.S. Forest Service [6]. - The company is headquartered in Belgrade, Montana, and is committed to supporting local and state communities [2][6]. Transaction Details - The sale-leaseback involves a ten-year lease agreement, allowing Bridger to maintain its operational base for aerial firefighting missions while leveraging real estate value for capital [1][7]. - This transaction is viewed as a pivotal moment for the company, enabling it to prioritize fleet expansion and fulfill new contracts [2][4]. Strategic Goals - Bridger aims to set industry standards for efficiency and safety in aerial firefighting, focusing on acquiring advanced technology and aircraft to support new contracts with various government entities [4]. - The company emphasizes its commitment to financial resilience and community support through strategic partnerships [4]. About SR Aviation Infrastructure - SR Aviation Infrastructure, a subsidiary of SomeraRoad, specializes in acquiring and developing aviation-related real estate, addressing supply-demand imbalances in the sector [5]. - The Bridger Hangar Complex marks SRAI's third acquisition, expanding its portfolio of aviation assets [5].

Financial Data and Key Metrics Changes - In Q3 2025, the company reported an AFFO per share of $0.48, representing a 12% increase compared to Q3 2024 [13] - Total AFFO for the quarter was $96.2 million, up 24% from the same period in 2024 [13] - The company increased its 2025 AFFO per share guidance to a range of $1.87 to $1.89 and established initial 2026 guidance of $1.98 to $2.04, implying a growth rate of 6% to 8% [7][19] Business Line Data and Key Metrics Changes - The company executed $370 million in investments during the quarter, with a weighted average initial cash yield of 8% and a strong average gap yield of 10% [5][11] - Same-store rent growth was reported at 1.6%, an increase from 1.4% in the previous quarter, with overall portfolio rent coverage increasing to 3.6 times [6][9] - The percentage of annual base rent (ABR) under one times rent coverage declined by 120 basis points [9] Market Data and Key Metrics Changes - The company ended the quarter with investments in 2,266 properties leased to over 400 tenants, maintaining a weighted average lease term of approximately 14 years [8] - The company sold seven properties for $11.5 million in net proceeds, executed at a 6.6% weighted average cash yield [10] Company Strategy and Development Direction - The company continues to focus on middle-market sale-leasebacks with growing operators, highlighting a balanced investment sourcing strategy [5] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support growth and tenant relationships [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the investment market and capital markets, noting that the interest rate environment is more stable, contributing to lower cap rates [23][46] - The company anticipates modest cap rate compression in the coming quarters, driven by a stable interest rate environment [7][28] Other Important Information - The company successfully executed a $400 million 10-year unsecured bond offering with a 5.4% coupon, improving its weighted average debt maturity by approximately 18% to 4.5 years [16] - Cash G&A expenses were approximately $6.7 million for the quarter, consistent with the guidance range for the full year [14] Q&A Session Summary Question: Expectations for cap rates going forward - Management indicated that lower cap rates are expected due to a stable interest rate environment and a strong pipeline of sale-leaseback opportunities [23] Question: New industrial assets and future expectations - The company has been investing in industrial outdoor storage sites and expects to continue this trend, focusing on granular, fungible assets [25] Question: Cap rate expectations and guidance - Management confirmed that cap rate assumptions are similar to the previous year, with expectations for a modest downtick [35] Question: Credit loss assumptions for 2026 - Management stated that credit loss assumptions for 2026 are consistent with previous years, based on a deep dive into the portfolio [74] Question: Update on tenant credit watch list - The watch list currently sits at 1.2 times coverage, down 40 basis points quarter over quarter [68] Question: Differences in yields between retail and industrial properties - Management noted that there is no significant differentiation in cap rates across property types, with expectations for compression across the entire opportunity set [85]

Financial Data and Key Metrics Changes - For Q2 2025, total income from real estate exceeded 2024 by over $14 million, driven by cash rent increases of over $22 million from acquisitions and escalations [7] - Full year 2025 AFFO guidance is projected to range from $3.85 to $3.87 per diluted share in OP units [8] - Operating expenses increased by $65.6 million primarily due to a non-cash adjustment in the provision for credit losses [7] Business Line Data and Key Metrics Changes - The growth in cash rent was attributed to several acquisitions, including Valley Chicago Land ($5 million), Tropicana Funding ($1 million), and Kansas City and Shreveport ($8 million) [7] - The combination of non-cash revenue adjustments partially offset the increases, resulting in a collective year-over-year decrease of approximately $8.2 million [7] Market Data and Key Metrics Changes - Rent coverage ratios ranged from 169% to 272% on master leases as of the end of the prior quarter [8] - The company continues to capitalize interest and defer rent during development for financial reporting purposes [7] Company Strategy and Development Direction - The company remains focused on evaluating potential acquisitions on a property-by-property basis to ensure they are accretive to the portfolio [13][19] - Management is in advanced discussions with several tribes regarding potential deals, emphasizing the need for NIGC approval before any funding [43][47] - The company is open to exploring international opportunities but is currently more focused on U.S. and tribal aspects [123] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a strong year in 2025 despite timing misalignments with quarterly calls [6] - The company views the current economic environment as stable, with no delays in rent payments from tenants [36] - Management acknowledged the challenges posed by Valley's credit profile but remains optimistic about the overall portfolio's strength [94] Other Important Information - The company is actively monitoring interest rate swaps and considering additional hedging based on market conditions [56] - Management highlighted the importance of maintaining a strong four-wall coverage for properties, independent of parent guarantees [102] Q&A Session Summary Question: Interest in the leak in call option at the end of next year - Management confirmed ongoing interest and is evaluating the asset's value [12] Question: Risk-reward balance for Bally's projects - Management is assessing the value of the asset and its impact on the portfolio [16] Question: Insights on Casino Queen lease changes - Management clarified that the parent guarantee remains on Bally's Master Lease two, with adjustments made to accommodate Bally's [20] Question: Impact of Intralot transaction on Bally's credit profile - Management sees potential benefits from liquidity infusion and debt paydown [26] Question: Thoughts on the big beautiful bill and implications for REITs - Management indicated minimal impact on GLPI, with a positive outlook on lower corporate tax rates [30] Question: Provision for credit losses in the quarter - Management explained that the provision is based on economic forecasts and not on cash rent delays [34] Question: Progress towards tribal deals - Management is in advanced discussions with tribes, but timing depends on NIGC review [42] Question: Refinancing debt outlook - Management is reviewing options and monitoring market conditions for future refinancing [48] Question: Capital deployment outlook for the second half of the year - Majority of remaining funding is tied to Bally's projects, with confidence in meeting targets [66] Question: Lack of guarantee on Bally's Chicago lease - Management explained the absence of a guarantee is due to the project's placement in an unrestricted group [68] Question: Value of parent guarantees in constrained operator situations - Management emphasized the importance of underwriting properties based on their own merits rather than solely relying on parent guarantees [102]

Financial Data and Key Metrics Changes - The company reported a record year-over-year revenue increase, with total income from real estate exceeding 2024 by over $14 million, driven by cash rent increases of over $22 million from acquisitions and escalations [7][9] - Operating expenses increased by $65.6 million, primarily due to a non-cash adjustment in the provision for credit losses based on a more pessimistic economic forecast [7][9] - Full year 2025 AFFO guidance is projected to range from $3.85 to $3.87 per diluted share [9] Business Line Data and Key Metrics Changes - The growth in cash rent was attributed to several acquisitions, including Valley Chicago Land ($5 million), Tropicana Funding ($1 million), Kansas City and Shreveport ($8 million), Rockford loan ($1 million), strategic acquisition ($1 million), ION loan ($600,000), and escalators and percentage rent adjustments adding $4.9 million [7] Market Data and Key Metrics Changes - Rent coverage ratios ranged from 169% to 272% on master leases as of the end of the prior quarter [10] Company Strategy and Development Direction - The company remains focused on evaluating potential acquisitions and partnerships, particularly with tribal entities, and is in advanced discussions with several tribes [46][47] - The company is committed to maintaining a flat organizational structure, ensuring that all financial decisions involve key team members [62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a strong year in 2025, despite some timing misalignments with quarterly calls [5] - The management team emphasized the importance of underwriting each property on its own merits, regardless of external economic conditions [91] Other Important Information - The company is actively monitoring the impact of economic factors such as tariffs and commercial real estate price index changes on its financial outlook [39][40] - Management indicated that they are not out of the sale-leaseback business and expect to see transactions evolve shortly [99] Q&A Session Summary Question: Interest in the Lincoln call option - Management confirmed ongoing interest in the Lincoln call option and is evaluating the asset's potential value to their portfolio [14][17] Question: Valley's Bronx project commitment - Management discussed the complexities of the Valley's Bronx project and their willingness to engage in discussions regarding financing opportunities [20][21] Question: Impact of Intralot transaction on Bally's credit profile - Management highlighted potential liquidity benefits from the Intralot transaction, which could improve Bally's credit profile and facilitate future financing opportunities [30] Question: Management changes and implications - Management clarified that recent changes in leadership roles do not reflect a shift in strategy or investment approach [61][62] Question: Capital deployment outlook for the second half of the year - Management indicated that the majority of the remaining $338 million to be funded in 2025 is tied to Bally's projects, with confidence in meeting funding timelines [68] Question: Parent guarantee value in constrained operator situations - Management emphasized the importance of property-level underwriting and the value of parent guarantees, while also noting that they do not solely rely on them for financial security [106][108] Question: Opportunities for new tenants in land-based gaming - Management acknowledged a potential pipeline of new tenants but emphasized a cautious approach to underwriting and investment decisions [130]

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.46, representing a 7% increase compared to Q2 2024 [18] - Total AFFO for the quarter was $93 million, up 21% from the same period in 2024 [18] - General and administrative expenses increased to $10.7 million from $8.7 million year-over-year, primarily due to increased compensation expenses [19] - The company declared a cash dividend of $0.30, resulting in an AFFO payout ratio of 65% [19] - Income-producing gross assets reached $6.6 billion at quarter end [20] Business Line Data and Key Metrics Changes - The company invested $334 million in the second quarter at a weighted average cash yield of 7.9% [11] - The investment activity was broad-based across most top industries, with a weighted average initial lease term of 19.5 years and a weighted average annual rent escalation of 2.2% [11] - Same store rent growth was reported at 1.4% with an occupancy rate of 99.6% [14] Market Data and Key Metrics Changes - The company closed $642 million of investments in the first half of the year and increased its full-year investment guidance range to $1 billion to $1.2 billion [8] - The weighted average lease term remained at 14 years, with 4.9% of annual base rent expiring over the next five years [8] Company Strategy and Development Direction - The company focuses on middle market sale leasebacks with growing operators in targeted industries, emphasizing the importance of recurring business with its tenant base [6] - The company expects investment cap rates to trend lower in 2025 due to anticipated competition as capital markets normalize [7] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support external growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, noting strong tenant credit trends and healthy same store rent performance [6] - The company remains optimistic about its investment pipeline and the overall performance of its portfolio [24] - Management indicated that while competition may increase, the company continues to have ample opportunities and a strong capital position [36] Other Important Information - The company sold 23 properties for $46.2 million in net proceeds during the quarter, highlighting the importance of owning liquid properties [16] - The company has a weighted average unit level coverage ratio of 3.4 times, indicating strong profitability and cash flow generation by its tenants [9] Q&A Session Summary Question: What is preventing the company from leaning more into acquisitions? - The company is leaning strongly into acquisitions but maintains conservative guidance due to limited visibility on the pipeline [26][28] Question: Can you provide an update on occupancy and the quantum of assets in the vacancy bucket? - The company has nine properties out of 2,190 that are vacant, with an average property value of $3 million [29][30] Question: What are the expectations for competition impacting cap rates? - The company expects competition to eventually impact the transaction market, but currently has a strong opportunity set [36][37] Question: Can you elaborate on the acquisition of the Whistle car washes portfolio? - The company managed its car wash exposure while acquiring well-established sites with strong lease coverage [54][56] Question: How does the company view the credit side of its portfolio? - The company sees stability in cash flows and no major concerns emerging from its operators [64] Question: What are the characteristics the company looks for in convenience store investments? - The company seeks well-positioned convenience stores with strong inside store sales and stable corporate credit [102][103]

Group 1 - Medical Properties Trust's business model has a critical flaw due to the allocation of capital to weak tenants, resulting in poor earnings quality [1][2] - Cash flow from operations has consistently been lower than recorded Funds from Operations (FFO) and Normalized Funds from Operations (NFFO), indicating liquidity issues [1][2] - The company's aggressive dividend rate is not supported by free cash flow, leading to a heavy reliance on debt for growth [1][2] Group 2 - Between 2018 and 2024, Medical Properties Trust rapidly expanded its asset base, becoming a key funding source for healthcare systems [2] - The business model depends on favorable financial conditions, which have been challenged by the reliance on long-duration sale leasebacks with poor quality lessees [2] - The long lease terms inflated reported FFO and NFFO, masking underlying issues in earnings quality and leading to high financial leverage [2]