Getty Realty (US:GTY)2022-07-29 04:43Financial Data and Key Metrics Changes - Base rental income grew by 8.1% to $36.8 million for Q2 2022, while adjusted funds from operations (AFFO) increased by 8.3%, reaching $0.53 per share, a year-over-year increase of 1.9% from $0.52 per share in Q2 2021 [9][23][24] - Total revenues for Q2 2022 were $41.2 million, reflecting a year-over-year increase of 6.5% [24] - General and administrative costs rose to $5.3 million, an increase of $200,000 compared to Q2 2021 [25] Business Line Data and Key Metrics Changes - The company invested approximately $59 million in the first half of 2022, with over $50 million invested in Q2 alone [10] - The rent coverage ratio increased slightly to 2.7x, indicating strong tenant performance [13][15] Market Data and Key Metrics Changes - The convenience store sector experienced a record year in 2021, with foodservice sales and gross profits growing approximately 18% [12] - Loyalty programs in the convenience store sector have more than doubled to nearly 70% over the last two years, driving customer engagement [12] Company Strategy and Development Direction - The company continues to focus on high-quality real estate and partnerships with growing retail and national operators in the convenience and automotive retail sectors [11] - The investment strategy emphasizes sourcing opportunities in strong metropolitan markets while maintaining a disciplined approach [11][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its investment strategy despite evolving market conditions [11] - The company maintains its 2022 AFFO guidance of $2.10 to $2.12 per share, reflecting completed transaction activity to date [31] Other Important Information - The company ended Q2 2022 with $625 million in total debt, with a weighted average interest rate of 4.1% and no debt maturities until 2025 [27][28] - Environmental liabilities decreased significantly to $29.5 million, down over $18 million from the end of 2021, primarily due to the removal of unknown reserve liabilities [30] Q&A Session Summary Question: What is the expected yield on the $125 million portfolio of development and acquisition properties? - Management indicated that the expected yields are above the 6.6% cap rate on year-to-date investments, with a range from 20 to 100 basis points premium [33][35][36] Question: How is the investment pipeline looking for near-term opportunities? - Management noted a consistent and growing pipeline, with a healthy number of opportunities across various asset classes [40] Question: Can you provide insights on the balance of environmental liabilities? - The balance at June 30 was $29.5 million, with about $10.6 million as known liabilities and the remainder as unknown reserve liabilities, which are expected to decrease further as look-back periods expire [42] Question: Why did the guidance not increase despite recent acquisitions? - Management clarified that the guidance includes completed transactions as of the call date, and the incremental activity did not significantly impact the range [44] Question: What is the split between convenience store and carwash transactions in the $125 million portfolio? - The majority of the $125 million is weighted towards carwash properties, approximately 75% to 80% [59]