Getty Realty (US:GTY)2025-02-13 18:51Financial Data and Key Metrics Changes - For Q4 2024, the company reported AFFO per share of $0.60, a 5.3% increase from $0.57 in Q4 2023 [32] - For the full year 2024, AFFO per share was $2.34, representing a 4% increase over $2.25 in 2023 [33] - Annualized base rent (ABR) as of December 31, 2024, was $197.8 million, a 14.5% increase from $172.8 million in 2023 [34] - Total G&A as a percentage of total revenue improved by 40 basis points to 12.4% in 2024 [34] - Net debt-to-EBITDA was 5.2 times, or 4.2 times considering unsettled forward equity [35] Business Line Data and Key Metrics Changes - The company invested $209 million in 78 properties in 2024, with an initial cash yield of 8.3% [22] - In Q4 2024, the company invested $76.4 million across 21 properties with an initial cash yield of 8.9% [21] - The investment activities were diversified, with convenience stores representing 41%, express tunnel car washes 33%, auto service centers 21%, and drive-thru QSRs 5% [23] Market Data and Key Metrics Changes - The company’s portfolio included 1,114 net lease properties with an occupancy rate of 99.7% [19] - 60% of annualized base rent came from the top 50 MSAs, and 76% from the top 100 MSAs [19] - The trailing twelve-month tenant rent coverage ratio was 2.6 times [19] Company Strategy and Development Direction - The company is focused on growth and diversification in the convenience and automotive retail sectors, having expanded its investment focus over the past five years [15] - The diversification strategy has increased total ABR by approximately 70% since 2019, with non-convenience and gas properties now accounting for 28% of total ABR [15] - The company aims to continue executing its growth and diversification plans while creating value for shareholders [17] Management's Comments on Operating Environment and Future Outlook - Management characterized 2024 as a challenging year for the transaction market but expressed confidence in the company’s strategic positioning and capital availability for acquisitions [10][14] - The company anticipates modest cap rate compression from the 8.3% yields achieved in 2024, despite ongoing market headwinds [26] - Management remains optimistic about the convenience and automotive retail sectors, citing strong consumer trends and the essential nature of the services provided by tenants [17] Other Important Information - The company raised $289 million of attractively priced capital in 2024 and has significant liquidity to fund future investments [10][13] - The company signed a contract for a $50 million portfolio transaction in the automotive service sector shortly after releasing earnings [14] - The company is revising its AFFO guidance for 2025 to a range of $2.38 to $2.41 per share due to potential impacts from the Zips Car Wash bankruptcy [44] Q&A Session Summary Question: Can you elaborate on the Zips situation? - Management indicated that 10 of the 12 sites leased to Zips were newly developed and expressed confidence in re-leasing them [51] Question: Are there concerns about other operators? - Management stated they maintain regular communication with tenants and are comfortable with their current car wash roster [56] Question: How will the capital plan work out in 2025? - The company plans to use debt proceeds to pay down the revolver and then utilize equity for acquisitions throughout the year [62] Question: What are the assumptions regarding the seven properties rejected by Zips? - Management expects to recapture a significant majority of the rent from the seven sites, assuming they will be released this year [70] Question: Can you provide details on the recent portfolio transaction? - The recent transaction was a direct sale-leaseback with a relationship developed through standard business processes, and management expects to continue pursuing similar transactions [72] Question: What is the expected mix of sale-leasebacks and development funding in the pipeline? - The pipeline includes both sale-leasebacks and development funding, with a heavier focus on development funding expected in 2025 [80]