Getty Realty Corp (GTY) 2008 Q4 法說會逐字稿

Good morning everyone, and welcome to the Getty Realty's conference call for the fourth quarter and year ended December 31, 2008. Today's conference is being recorded.

At this time for opening remarks and introductions, I would like to turn the call over to Mr. Joshua Dicker, Secretary and General Counsel for Getty Realty Corp. Please go ahead, Mr. Dicker.

Thank you. Thank you all for joining us for Getty Realty's conference call. Before we begin I would like to read into the record the Safe Harbor statement.

The statements made during the course of this conference call may include our hopes, intentions, beliefs, expectations, or projections of the future that along with other statements that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. An example of such forward-looking statements would be Management's estimation as to the financial impact or anticipated developments arising from a transaction. It is important to note that the Company's actual results could differ materially from those projected in such forward-looking statements.

Information concerning factors that could cause actual results to differ materially from those forward-looking statements can be found in our annual report on Form 10-K for the fiscal year ended December 31, 2008, our quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2008; June 30, 2008; and September 30, 2008; and in our other filings with the SEC.

You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances, or reflect the occurrence of unanticipated events.

Now I would like to introduce the Officers of the Company who are present during this call and are prepared to answer your questions. Mr. Leo Liebowitz, Chairman and CEO, will comment on our press release that was issued yesterday after the close of business. Also available to answer questions are Thomas Stirnweis, the Company's Vice President, Treasurer, and Chief Financial Officer; and Kevin Shea, Executive Vice President with principal responsibility for real estate acquisitions, assets management, and environmental matters.

I will now turn the call over to Mr. Liebowitz.

Good morning everyone. For those listeners who have not received the press release which went out after the close of business yesterday, February 10, we reported the results of our fourth quarter and our year ended December 31, 2008.

First, many of our shareholders are interested in the discussions held with Marketing since March 2008. Although we continue to remove individual locations from the Master Lease as mutually beneficial opportunities have arisen, there has been no agreement between Marketing and the Company on any principal terms that would be the basis for a definitive Master Lease modification agreement.

We have continued our dialogue with Marketing, providing a possible modification of the above the Master Lease with Marketing since we believe that a deal benefiting both parties is possible. However, we cannot predict if or when a modification of the Master Lease on terms acceptable to our Company and Marketing could be accomplished or what the terms of any such modification agreement may be.

Now getting back to the press release. With regard to the press release, I will mention some of the highlights, and after which we will be happy to answer your questions.

Our net earnings increased by $7.9 million to $41.8 million for the year ended December 31, 2008. This compares with $33.9 million for the 12 months ended December 31, 2007. The increase in net earnings is primarily due to the effect of a noncash $10.5 million reserve recorded in the fourth quarter of 2007 against a deferred rent receivable due from GPMI.

Our financial results for the year ended December 31, 2008 and 2007 also includes the benefit of the $84 million acquisition of convenience stores and gas station properties which was not substantially completed until the end of the first quarter of 2007, which benefit was partially offset by a reduction in gains on dispositions of real estate recorded in 2008 as compared to 2007.

Earnings from continued operations were approximately $9 million for the quarter ended December 31, 2008 as compared to $500,000 loss for the quarter ended December 31, 2007, an increase of $9.5 million. Earnings from continuing operations were $39.2 million for the year ended December 31, 2008 as compared to $28.1 million for the 12 months ended in December 31, 2007, an increase of approximately $11.1 million.

Rent revenues increased by $3.1 million to $81.2 million for the 12 months ended December 31, 2008. The increase in earnings from continued operations and rent income reflects the full effect of rental revenue attributable to the properties acquired at the end of the first quarter of 2007, which was partially upset by additional depreciation and amortization and interest expense.

Earnings from discontinued operations, which consists primarily of gains on dispositions of real estate, decreased by $3.1 million for the 12 months ended December 31, 2008.

Our adjusted funds from operations -- that's AFFO -- for the quarter ended December 31, 2008 was $11.5 million. AFFO increased by $4.5 million to $48.3 million for the year ended December 31, 2008 as compared to the prior year.

Net environmental expense decreased $800,000 for the 12 months ended December 31, 2008 as compared to the prior year.

In conclusion we remain optimistic that our Company will increase shareholder value in these volatile financial times.

With that said, Tom Stirnweis, Kevin Shea, Josh Dicker, and I are ready to answer any of your questions. Please state your name and the company before you ask your questions or questioning.

(Operator Instructions). Joshua Barber, Stifel Nicolaus.

I was wondering -- I know, Leo, you commented on the negotiations with Getty Marketing. Given the fact that oil has come in so dramatically over the last six months and we could presume that Getty Marketing situation is in a lot better condition than it was a year ago when this started, what exactly is the basis for their renegotiation, and why is it not getting closer to being resolved at this point?

Well, they made a strategic decision that they would like to reduce their portfolio, and we don't disagree with them. We are prepared to help them accomplish that, and they certainly are -- and I believe should be -- doing much better now than they were nine months ago when the entire market was having serious problems. But despite that, there's still interest in reducing the size of the portfolio.

Could you give us a little bit more details on the impairments from this quarter? It looks like just something that was bad debt. Is that related to Getty Marketing, or is that a different tenant?

(technical difficulty) sure I understand your question, Josh.

That relates, Joshua -- I think you are referring to money that was held by a 1031 exchange intermediary which unfortunately had some liquidity problems due to having assets there's just no market for. Based on an analysis of what they've reported to us, we believe we have a reserve of about $400,000 against that receivable from the intermediary.

Okay. And could you give us the environmental lifecycle rundown?

Sure. This is Kevin Shea speaking. We have 263 properties with open incidents. We have two of them in pre-delineation, 12 in the assessment phase, four in the remedial action plan implementation phase, 72 in operations and maintenance, and 173 in closure activities.

(Operator Instructions). At this time we have no further questions. I would like to return back to Mr. Liebowitz for any closure or further remarks.

Well, I have no further remarks. I thank you all for joining us. And have a good day.

This now concludes our conference call. You may disconnect at this time.