Getty Realty Corp (GTY) 2025 Q4 法說會逐字稿

Good morning and welcome to the Getty Realty's Fourth Quarter'2025 earnings call. This call is being recorded. (Operator Instructions) 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.

Thank you, operator. I would like to thank you all for joining us for Getty Realty's Fourth quarter and year-end earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter and year-ended December 31, 2025. The Form 8k and earnings release are available in the investor relations section of our website at Gettyrealty.com. Certain statements made during this call are not based on historical information and may constitute forward-looking statements.

These statements reflect management's current expectations and beliefs and are subject to trends, events, and uncertainties. That could cause actual results to differ materially from those described in the forward-looking statements. Examples of forward-looking statements include our 2026 guidance, and they include statements made by management, including those regarding the company's future operations, future financial performance, or investment plans and opportunities.

We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events are results. Could differ materially. I refer you to the company's annual report on Form 10k for the year ended December 31, 2024, as well as any subsequent filings made with the SEC for a more detailed discussion of the risks and other factors that could cause actual results to differ materially from those expressed or implied implied in any forward-looking statements made today. You should not place undue reliance on forward-looking statements which reflect ours. Only as of today,

The company undertakes no duty to update any forward-looking statements that may be made during this call. Also, please refer to our earnings release for a discussion of our use of non-GAAP financial measures, including our definition of adjusted funds from operations or AFFO and our reconciliation of those measures to net earnings. With that, let me turn the call over to Christopher Constant, our Chief Executive Officer.

Thank you, Josh. Good morning, everyone, and welcome to our earnings call for the Fourth quarter and year-end 2025.

Joining us on the call today are Mark Olear, our Chief Investment Officer and Chief Operating Officer, Brian Dickman, our Chief Financial Officer, and Robert Ryan, our senior Vice President of acquisitions. As previously announced, RJ will succeed Mark as Chief Investment Officer upon Mark's retirement at the end of this month.

I will lead off today's call by providing highlights of Getty's 2025 financial performance and investment activity.

Mark and RJ will then discuss our portfolio and investments in greater detail, and Brian will provide additional information regarding our earnings, balance sheet, and 2026 AFFO per share guidance.

I am pleased to report that the combination of stable rental income from our in-place portfolio and strong yields from acquisitions produced strong rent and earnings growth for the fourth quarter and full year 2025.

Getty's annualized base rent grew by nearly 12% in 2025, while AFFO per share was up 5% for the fourth quarter and 3.8% for the full year, which was the high end of our increased earnings guidance. Our in-place portfolio continues to provide a solid foundation for our business with essentially full occupancy and rent collections and stable rent coverage.

Our tenants continue to benefit from consumer trends that drive performance at convenience and automotive retail properties, namely, demand for convenience, speed, and do it for me services, and their businesses have proven resilient as they have historically.

Turning to our growth initiatives, for the year, we invested approximately $270 million at an initial cash yield of 7.9%. I would like to highlight a few accomplishments for the year which demonstrate the effective execution of our strategy to incredibly grow and further diversify our portfolio.

First, the $100 million sale lease back we closed in October for a 12-property convenience store portfolio in Houston, Texas. These assets are leased to now and forever, a growing regional convenience store chain with a dominant market position in densely populated Houston submarkets.

Over the last 5 years, we have acquired more than 60 properties generating nearly $25 million of ABR in Texas, which is now our largest state exposure, including more than 25 properties generating over $14 million of ABR in Houston, which is now our second largest market after New York City.

Second, we made a significant commitment to the collision repair sector when we agreed to provide up to $82.5 million of development funding for the construction of 11 new to industry collision centers for a TOP3 operator in the sector. We expect a number of these sites to open in 2026 and look forward to building on our momentum in this sub-sector of automotive services.

We also completed our first travel center investments with existing and new tenants who have expanded their store networks by building or acquiring large format, see stores, and travel centers. We we view investing in travel centers as a natural extension of our buy box, and in 2025, we acquired 4 travel centers for $47.1 million.

Additional 2025 highlights include a record year of investments for drive-through quick service restaurants, where deliberate resource allocation and targeted sourcing efforts resulted in Getty investing nearly $40 million across 28 properties. Representing approximately 15% of our investment activity for the year.

We also continue to allocate capital to dense and growing markets during the year. More than 75% of our 2025 investment activity was in TOP100 markets around the US, and we increased exposure to a number of attractive metro areas including Atlanta, Dallas, Houston, Las Vegas, Memphis, and San Antonio.

We also demonstrated the consistency of our relationship-based sale leaseback acquisition strategy during the year, by directly negotiating transactions with tenants that drive more than 90% of our closed transactions in 2025, which helped us add 13 new tenants to our portfolio during the year.

Finally, our ability to maintain a healthy investment pipeline, which currently consists of approximately $100 million investments under contract, most of which we expect to fund by the end of 2026. Sticking with our pipeline, including opportunities that are in various stages of underwriting and negotiating, our investment team continues to do an excellent job sourcing investment opportunities that fit our well-defined strategy, meet our stringent underwriting criteria, and generate consistent earnings growth.

Our collective ability to execute period after period, regardless of market conditions, is a testament to the platform and culture we've established at Getty.

As we think about 2026 and beyond, we continue to be excited about our strategy, the sectors we invest in, our people, and the platform we've built. We believe we are on a path to accelerate our growth trajectory as we expand our relationships, extend our underwriting to new opportunities, and further refine our processes with the help of data-driven analysis to enhance our investment decisions.

I'd like to close with some comments on our upcoming management transition. As previously announced, Mark O'Leary is retiring at the end of February. During his time at Getty, Mark broadened our investable universe, redefined our underwriting approach, and created a redevelopment program that has seen us complete more than 30 value-added projects.

I want to congratulate Mark on a successful 40-year career. And thank you for being my partner for the past decade plus at Getty. We will miss having him on here on a daily basis.

I'm equally excited to announce that RJ Ryan, our current SVP of acquisitions, will be promoted to the position of Chief Investment Officer. RJ has been with Getty for nearly a decade, has led our acquisitions team since 2018, and is ready to take on additional leadership responsibilities as our CIO.

I hope you all enjoy getting to know RJ better as he plays a more visible role with the investment community. With that, I will turn the call over to Mark.

Thank you, Chris. I appreciate the kind words, and I'd like to thank everyone at Getty. It's been an honour to lead the company's real estate efforts for the past decade. RJ is more than ready for his new role, and I'm confident that Getty will be successful in continuing to execute its growth plans.

Turning back to the business, at year end, our lease portfolio included 1,169 net lease properties and two active redevelopment sites. Excluding the active redevelopments, occupancy was 99.7%, and our weighted average lease term was 9.9 years.

Our portfolio spans 44 states plus Washington DC with 61% of our annualized base rent coming from TOP50 MSAs. And 77% coming from TOP100 MSAs. We have performance insight into approximately 95% of our ABR through site level. Financial reporting or financials derived from public reporting companies.

Our rents for properties where we received site load reporting continue to be well covered with a trailing 12 month rent coverage ratio of 2.5 times. According to our investment activities,

I will let RJ take you through our results.

Thanks, Mark. Good morning, everyone. For the year, we underwrote a record $6.8 billion of potential investments. Consistent with our objective to diversify our portfolio within our target sectors, 54% of our underwriting was focused on non-convenience store properties, including auto service centers, primarily collision centers and oil change locations, drive-through quick service restaurants, and express car washes.

We had a strong fourth quarter in which we invested $135.4 million across 26 properties at initial cash yield of 7.9%. The weighted average lease term on acquired assets for the quarter was 15 years.

Highlights of this quarter's investments include the acquisition of the 12 property, $100 million sale lease back we completed with now and forever in October.

Two additional convenience stores for $18.7 million, which included a travel center and a New York City property that we previously leased. Six auto service centers for %9.9 million, of which $1.4 million was previously funded.

Two express tunnel car wash properties for $10.9 million, of which $7.4 million was previously funded.

We also advanced incremental development funding in the amount of $3.6 million for the construction of new industry collision centers, oil change locations, and quick and drive-through QSRs. These assets are either already owned by the company and are under construction or will be acquired via sale leaseback transactions at the end of the project's respective construction periods.

For the year, Getty invested $268.8 million, which included the acquisition of 73 properties for $278.3 million, of which $23.1 million was previously funded, and incremental development funding of $13.6 million. The weighted average initial yield on our investments was 7.9% for the year, and the weighted average lease term for the acquired assets was 15.8 years.

Subsequent to year end, we invested an additional 8.7 million for the acquisition or development of 4 drive-through QSRs and 4 auto service centers. Beyond our disclosed pipeline of approximately 100 million of investments under contract, the majority of which we expect to fund in 2026 at initial cash yields in the high 7% area.

We continue to source actionable opportunities across our investable universe. These are all properties that will be added to our portfolio and accreted to earnings as we look to further scale and diversify our business.

Thank you, RJ. As my final prepared remarks, I am pleased to say that as a result of our investment activity over the last several years, Getty currently has the most diversified portfolio in terms of tenants, sectors, and geographies in the company's history.

Since the onset of our current investment strategy, which emphasizes both growth and diversification, we have added 49 new tenants to our portfolio and diversified our annual rent streams with nearly 30% of our annual base rent now derived from non-convenience and gas properties. With that, I turned the call over to Brian.

Thanks, Mark. RJ, good morning, everybody. Yesterday, we reported AFFO per share of $0.63 for Q4 2025, an increase of 5% over Q4 of 2024. FFO and net income for the quarter was $0.64 and $0.45 per share, respectively.

For the full year 2025, AFFO per share was $2.43 cents, an increase of 3.8% compared to the full year 2024. FFO and net income for 2025 were $2.34 and $1.35 per share respectively. A more detailed description of our quarterly and annual results can be found in our earnings release, and our corporate profile contains additional information regarding Getty's earnings and dividend per share growth over the last several years.

Starting with some color on G&A expenses, management focuses on the ratio of G&A excluding stock-based compensation and non-recurring retirement costs to cash rental and interest income. That ratio was 9.5% for the full year 2025, a 10-basis point improvement over 2024.

Both the year and fourth quarter included elevated legal and professional fees, both transaction related and other, that we generally consider non-recurrent. Absent those charges, we would have achieved a more significant reduction in this ratio.

In 2026, we expect G&A growth to be less than 2% and for our G&A ratio to fall below 9% as we focus on controlling expenses and continuing to scale the company.

Moving to the balance sheet and liquidity, as of December 31st, net debt to EBITDA was 5.1 times or 4.8 times, including unsettled forward equity, both metrics well within our target leverage range of 4.5times to 5.5 times. Fixed charge coverage for the period was 3.8 times.

During the fourth quarter, as previously announced, we closed on $250 million of new unsecured notes. Those notes funded in January, and we use the proceeds to repay borrowings under our $450 million revolving credit facility.

pro forma for the notes transaction, we have a $1 billion of senior unsecured notes outstanding with a weighted average interest rate of 4.5% and a weighted average maturity of 6.2 years as well as full borrowing capacity under our revolver. We have no debt maturities until 2028.

Turning to equity capital markets during the fourth quarter, we settled approximately 2.1 million shares of common stock for net proceeds of approximately $59.1 million and entered in the new forward sale agreements to sell approximately 400,000 shares for anticipated gross proceeds of approximately $12.7 million.

As of December 30th, we had approximately 2.1 million shares of common stock subject to outstanding forward sale agreements which upon settlement are anticipated to raise gross proceeds of approximately $62.6 million.

We continue to be in a strong capital position and pro forma for the note's transaction have more than $500 million of total liquidity, including unsettled forward equity, availability on our revolver, and cash on the balance sheets. We have sufficient capital to fund our committed investment pipeline plus incremental investment activity as we look forward to 2026.

With respect to guidance, we're reaffirming the AFFO per share range of $2.48 cents to $2.50cents that we introduced earlier this year.

As a reminder, our guidance reflects the current run rate from our in-place portfolio with certain expense and credit loss variability and does not include prospective investment or capital activities. We think this approach remains appropriate for our business but note that historically over the last 5 years we have averaged more than $200 million in annual investments and added approximately 250 basis points of AFFO per share growth beyond the midpoint of our initial guidance range.

Pages 8 and 10 in our corporate profile highlight our earnings results and investment activity over the last several years, and page 22 illustrates the difference between our actual results and our initial guidance since 2021.

We look forward to updating the market on the positive impact that our investment program has on our earnings as we move through the year.

With that, I'll ask the operator to open the call for questions.

(Operator Instructions) Upal Rana, KeyBanc Capital Markets Inc - Analyst

Great, thank you. Could you go into provide a little more detail on the $100 million dollar investment pipeline mentioned in the release, any types of assets or any timing there on funding that you can provide?

Yeah, hey, it's Brian, happy to do so. About 80% of that, if you're looking at property types, about 80% of that is auto service, both collision centers and oil change locations, followed by CNG, drive-throughs and car wash in that order, making up, the remaining 20%.

And then from a transaction type perspective about 80% of that is development funding that's sort of the long end of that deployment range that we put out, and the balance is regularly acquisitions that are more in the, call it 60 days to 90 days type, time frame from a closing perspective.

Okay, great, that was helpful. And, given the improved share pricing and cost of capital relative to last year, do you think you can do more investment volume this year relative to last year?

Well, I'll just say is I think we're off to a great start, right? Obviously it's a couple weeks into the year to have $100 million under contract, it is great for Getty. We're really enthused by the pipeline we have behind that, right? That's in various stages of negotiation underwriting. I think we're already north of 25% of our last year's underwriting volume sitting here today in early February. Certainly the improved cost of capital is helpful, when looking at investments and looking at our available, opportunities in the capital markets. So, I think I would say we're off to a great start. We're optimistic, and I think the team's doing a great job all around and, bringing great opportunities in for us to evaluate, and we look forward to adding a lot of that to our company as we move through the year.

Okay, great. Thank you.

(Operator Instructions) Mitch Germain, Citizens JMP Securities LLC - Analyst

Thank you. Just the cadence of that $100 million, the way to think about it, it's mostly kind of just going to hit on a little bit each quarter. Is that the way to Think about it?

Yeah, hey, Mitch, it's Brian, that's what I was just alluding to again. I think you have, call it, 20% of that is regular acquisitions that you're on average 60 days, so kind of 30, 90 days. That, that's the front end of that deployment range, kind of the 3-month area. Development funding gets deployed over time. We expect the majority of that to be deployed over the next 12 months.

The cadence is really dictated more by the tenants, their development schedules, when they submit for reimbursement, but assume that that gets deployed throughout the year, which gives you a little bit more visibility, but, candidly, we don't always have that until the reimbursement requests are coming in. And then I would just add, and maybe to reiterate or re-emphasize what Chris said, that's simply what we have under contract, right? There's a fairly, sizable pipeline behind that.

As we've seen in past years, there are deals that from a public disclosure standpoint, never make it into our pipeline, so to speak. Now and forever was a great example. When we initially reported, that deal wasn't under contract, and it closed before we reported the next quarter. So, I say that just to highlight again that that's what's under contract today. That's the timing that we're looking at with respect to deployment for the $100 million, but there's quite a bit of deal activity behind that, that's certainly, some of which we would expect to hit this year as well.

Great. And then to that point, obviously Chris mentioned how about 25% of that, I'll call it $7 billion that he underwrote last year has already been kind of under consideration. I'm curious, Chris, what do you think is driving that increased emphasis to potentially sell here?

Yeah, hey, it's Mark. So, like a lot of things right now, the team continues to do a great job sourcing opportunities both with new potential tenants and, managing relationships with our existing, tenant base. We continue to talk about diversity across all of the asset classes that we trade in. So we introduced a bigger buy box a few years ago and we're seeing the momentum in the results of that.

The ability for us to, both transact at the, at the different ranges, of the cap rates that are out there in the market, allows to source opportunities. We're sensing, Christ used the word, an optimistic tone around the market. The buyer pool seems more active, coming out of the year. I'm sorry, the selling pool seems more active coming out of the year. So, it's a combination of a lot of things. So, it's just, you, more of the same around the efforts to develop business, across all our asset classes and across the geographies and with repeat tenants, repeat business with our existing tenants, I should say so.

Great. Last one for me, Arco price and IPO last night, is this, should we think about this as a potential credit enhancing event?

Yeah. So, in conversations with them, and I think they're one of the primary motivations was allowing investors to see both pieces of their business independently, right, the retail assets and the wholesale business, the use of proceeds the state was the pay down debt, so as a landlord, we certainly appreciate that. I do think that's a credit enhancement, gives the folks, more visibility into the various pieces of their business. What I've said before is I'll just say again, Arco's been a tent of ours since for almost 20 years at this point, fantastic operator. He's got a defined strategy that he's working through.

We've got 5 leases with him that we can see site level, information on, and we're comfortable with how all those leases are performing. So, I'm thrilled for ari that he got his deal done, and certainly. But I think from an investment standpoint or if you're focused on maybe the fuel side or on the retail side, it does give you the ability to to see those businesses and how each one operates, independently.

Great, good luck in 26 and Mark wishing you the best.

Thank you.

(Operator Instructions) Jana Galan, Bank of America - Analyst

Thank you. Good morning. Brian, just following up on your comments on the exclusion of perspective investment activity in the initial guide. I wanted to clarify if the current guide includes kind of the $9 million of additional acquisitions subsequent to quarter end and then how much of that $100 million pipeline is in the current initial guidance.

Yeah, it, the $8.7 million is in there, so it's a point in time, run rate, excuse me, usually as the day of the release or the day before. So that's in there, and then by definition or by approach, as it currently stands, none of the $100 million would be in that guidance number.

Thank you. And then maybe for Chris, as you kind of balance portfolio diversification with kind of maintaining your niche and expertise, what do you think now at 30% of ABR from non-convenience and gas is the right balance, or are you looking to increase from there?

Well, what I'd say is, Mark mentioned that now 30% of our rent comes from, non-convenience and gas asset classes, and that's basically over the last 6 years at this point, or 5.5 years.

During that time period we've made significant investments in the CST sector including now and forever, and there were some larger deals that we did in 2024 in the CST sector. So, we still like all the sectors. I think what you're seeing though is on balance the underwriting has gone from maybe $4 billion, almost #7 billion. As we develop relationships in these other verticals which do take some time, right, given how we like to transact with portfolio sale lease backs like you're starting to see the strategy really take off, whether it's the QSR work we did this year.

We've done a lot in the, car wash business, so, we don't have a defined limits or category limits, within those asset classes, but I think you can expect to see the business become more diversified just naturally as we develop relationships, have more resources focused on not only CNG, but some of the other verticals.

So, I think we're really happy with how the businesses expanded and become more diversified and got larger, but there's no hard targets in any asset class to answer your question specifically.

Thank you.

(Operator Instructions) Alex Fagan, Baird - Analyst

Hey, thanks for taking the question. First for me, can you speak about the dip in coverage? Was that just with the redevelopments and new developments coming in, or is there anything else?

Yeah, so about 70% of that of our coverage number that we report is from convenience stores, right, just given the fact that some of our newer activity, right, hasn't made its way into the calculation yet.

The dip was really a rounding, issue right around the 2.5 number, right, to go down from 2.6 to 2.5.

Behind that, what rolled off was the third quarter of 2024, which was a historically high fuel margin quarter for the sea store sector. I think margins within our portfolio were approaching $0.50 a gallon. They're still over $0.40, which is still a fantastic number, but not at that historic level. So that's why you saw that there's nothing behind that. Car washes were stable, or other asset classes were stable. Performance inside of (Inaudible) is still great, but you're just seeing, margins maybe come back off of that historic high which was the quarter that dropped off.

Okay, yeah, that makes sense, and then can you speak maybe on overall tenant health and if you're seeing a broadening of demand for development opportunities either by tenant or category.

I mean, I think generally with a portfolio that's 99.7% occupied or full rank collections, the coverage we just talked about, we feel good about the health of the portfolio. Your second question is around development opportunities, and I think this goes a little bit to the transaction market as well. we've got. Healthy tenants that are operating and growing and consolidating sectors, and as tenants are more willing to transact, one of the avenues for transacting is new store development, and that's why we created the development funding program, that the large deal that's sitting out there in auto service, which is a development funding deal, is a perfect illustration of that.

Right, that's a deal that was done last year and a lot of that funding will be done, excuse me, funded in 2026, and there's others that are like that just at different levels, of volume. So, we're for the sectors we like, for tenants that we like, yet he's happy to perform. So at least backs, we're happy to fund developments, and if there are certain transactions that have a combination of both of those products, that's great for us as well.

Well, thank you. That's it for me.

(Operator Instructions) Michael Goldsmith, UBS AG - Analyst

Yeah, Justin, on for Michael. Thanks for taking the question. Maybe just two quick ones for me. We, we've seen other net lease BRL increase exposure to see stores. Do you expect your cap rates of 7.9% to hold firm? And then secondly, Getty sold 7 properties in 4Q. Can you provide some color as to why these were candidates to be disposed of? Thanks.

Yeah, I, I'll take the first one, which is the competitive landscape, right? And we've been in the sector for a long time in the CS store, the other res that you're referring to that are investing in CStors have either been buying them for a long time, right, and we've been competing against them, and continuing to add attractive properties to our balance sheet. Or they're newer entrants in the sector itself has grown, so I feel very comfortable about the way Getty transacts and our ability to source close investments at the creative spreads for us.

The competition is not a new dynamic in this asset class, whether it's just the way people are referring to see stores or just talking about it on their phone calls. I don't want to comment too much on that. Do you want to take the disposal? So, the disposal, yeah, my broader, I think this.

Yeah, I would just say quickly on the disposal it's rian like I said it was 7 properties, we're always evaluating the portfolio for different opportunities. 3 or 4 of those actually went back to existing tenants. That happens periodically where we'll sell, assets to a tenant. Sometimes it's a CapEx dynamic in terms of who wants to ultimately invest in those properties. In this case, it's a very small portfolio, but it was a very low, like low single-digit cap rate, just the. The way that operator valued the portfolio was, it was opportunistic for us and then the others were just, an asset here and there that for, tactical reasons or otherwise we just thought it made sense to dispose of. So no, I wouldn't say there's any universal trends or anything that drove it, just, an opportunistic deal and a couple of tactical dispositions.

Great, thank you.

Thank you. At this time there are no further questions and queue. I would like to turn the call back to management for closing.

Excellent, thank you operator, and thank you all for joining us for our fourth quarter and year in 2025 call. We look forward to getting back on with everybody in April when we report the first quarter of 2026.

Thank you, ladies and gentlemen. This does concludes today's teleconference. You may disconnect your lines this time.

Thank you for your participation and have a great day.