Getty Realty Carries Growth Strategy Into 2020
JERICHO, N.Y. — Getty Realty Corp. put an active 2019 in the books, and its current growth pipeline points to another busy year.
"As we close out 2019 and look ahead to 2020, our team is more focused than ever on executing on each of our growth initiatives, including realizing internal growth from our operating assets, enhancing our portfolio through accretive acquisitions, and unlocking embedded value through selective developments," CEO Christopher Constant said during Getty Realty's fourth-quarter 2019 earnings call, held Feb. 27.
"We are confident that our targeted investment strategy, which includes focusing on the largely Internet-resistant, service-oriented convenience and gas and other automotive sectors in metropolitan markets across the country will continue to create value for our shareholders over the long term," he added.
Getty Realty acquired 27 convenience and gas properties and other automotive locations in 2019 for a total investment of nearly $90 million. Looking at the fourth quarter alone, the real estate investment trust (REIT) acquired 13 properties for $43.8 million through a combination of individual and portfolio transactions.
Last year's activity built on the company's multi-year growth strategy. Over the past three years, Getty Realty has acquired 168 properties for an investment of approximately $380 million, the chief executive noted.
"I am particularly proud of the fact that we continue to grow our relationships with established convenience and gas operators," Constant said. "We have been in the convenience and gas business for a very long time and our success proves that maintaining and growing relationships such as these are one of the keys to our ongoing ability to source accretive growth opportunities."
As consolidation in the industry continues and larger retailers keep taking more share from independent operators, Getty Realty anticipates it will continue to partner with chain operators and grow those relationships.
"Over the long term, our goal remains to focus on acquiring high-quality real estate and to partner with tenants who share our commitment to growth and evolution of the convenience and gas and other automotive businesses," Constant said.
During 2019, Getty Realty reviewed approximately $1.5 billion worth of opportunities that met the company's initial screening process, reported Mark Olear, executive vice president and chief operating officer. Convenience and gas opportunities represented 63 percent of the total and other automotive represented 37 percent.
Fourth-quarter deals comprised five c-store/gas properties in individual transactions for $15.7 million, and eight car wash properties for $28.1 million.
For full year 2019, Getty Realty grew its relationships Circle K, Iriving Oil and Kum & Go LC, and entered into new relationships with two of the fastest-growing express car wash operators in the United States, Zips and Go Car Wash.
"Our transaction activity in the quarter and year further expanded our geographic reach and remains centered around major metropolitan markets, including the Los Angeles and Las Vegas MSAs," Olear explained. "...We are now represented in 33 states plus Washington, D.C., and 57 percent of our annualized base rent comes from the top 25 national MSAs."
In 2019, Getty Realty also made progress on its redevelopment program. Rent commenced at four redevelopment projects — a mix of c-store/gas sites and other retail locations. Overall, the company has completed 13 redevelopment projects since launching the program.
"As this platform matures, we expect to have a steady stream of completed projects on an annual basis, while also maintaining a pipeline of additional opportunities which will move through the development progress over time," Constant said.
The company ended the fourth quarter with 14 signed leases or letters of intent — including five active projects, seven signed leases on properties that are currently subject to triple net leases but which have not yet been recaptured from the current tenants, and sign letters of intent on two vacant properties, according to Olear. All of these projects are continuing to advance through the redevelopment process.
"We expect substantially all of these projects will be completed over the next one to three years," the COO said. "In total, we have invested approximately $2.8 million in the 14 redevelopment projects in our pipeline and we expect to have rent commencement at several sites during 2020."
Jericho-based Getty Realty ended 2019 with 931 net-leased properties, five active redevelopment sites, and nine vacant properties.