Getty Realty Expands Reach to 30 States
JERICHO, N.Y. — Getty Realty Corp.'s pipeline of investment activity has extended the company's reach to 30 states, most recently entering the southern United States.
Over the past two years, Getty has acquired 144 properties for investment at a cost of approximately $300 million.
Jericho-based Getty Realty is a publicly traded real estate investment trust specializing in the ownership, leasing and financing of convenience store and gasoline station properties.
"Of note, we completed three portfolio transactions over this time and established relationships with new, high-quality, growth-oriented tenants," Getty Realty CEO Christopher Constant said during the company's fourth-quarter and full-year 2018 earnings call, held Feb. 27. "Relationships such as these are one of the keys to our ongoing ability to source accretive growth opportunities."
In 2018, Getty continued to underwrite and acquire new properties, with a total investment of roughly $87 million. During the year, the company acquired 41 convenience and gas locations and other automotive-related sites.
"Our fourth-quarter 2018 results and business activities concluded another strong year for Getty. During the quarter, our portfolio continued to display the strength and stability that we expect from our long-term triple net leases and just as important, we continue to execute on our growth strategies with the acquisition of two properties and the conclusion of three redevelopment projects," Constant said.
Getty's pipeline of potential transactions in 2018 remained consistent with previous years, noted Chief Operating Officer Mark Olear.
"In terms of our investment activities, we had a productive year where we were able to both add high-quality convenience and gas and other auto-related assets to the portfolio, as well as move redevelopment projects back into our net lease portfolio," Olear said.
During the fourth quarter, Getty added two convenience and gas locations for $3.2 million. For the year, it continued to diversify its revenue through relationships with three tenants: Applegreen plc, Circle K Stores Inc. and GPM Investments Inc.
"We displayed high-quality operations and strong credit quality. We also expanded the company's presence in the southern U.S., primarily through our portfolio transaction with GPM, which had one-third of the sites in the Dallas-Fort Worth MSA, and for our second transaction with Applegreen, where all of these sites are located in the Columbia, South Carolina metropolitan market," Olear explained.
In addition to boosting Getty's presence to 30 states, plus Washington, D.C., 60 percent of the company's annualized based rent now comes from the top 25 metropolitan statistical areas nationally.
"Overall, the pipeline of opportunities we are underwriting for convenience and gas and other automotive use sites remains robust," Olear added.
Getty's Redevelopment Pipeline
Along with acquisition deals, Getty's growth agenda includes redevelopment. 2018 saw approximately $9 million in completed projects and sites in progress. In the fourth quarter, the company returned three redevelopment projects back to its net lease portfolio, bringing its total for rent-commenced projects to six in 2018 and nine since the initiative began, Olear reported.
In addition, in terms of redevelopment projects, Getty ended the quarter with 13 signed leases. Of these redevelopment projects, six are on properties not currently included in its net lease portfolio and seven are on properties that are.
"All of these projects are [expected] to advance through the redevelopment process. We expect substantially all these projects will be completed over the next one to three years," Olear explained. "In total, we have invested approximately $2.1 million in these 13 redevelopment projects in our pipeline and we expect to have rent commencements at several sites during 2019."
Getty estimates it will invest a total of $8.2 million in the 13 projects.
The company is also busy selling properties. During 2018, Getty sold 10 sites and realized proceeds of approximately $7.2 million.
"The properties sold were vacant or returned to us by our tenants for the terms of their lease agreements," Olear said. "As we look ahead, we continue to selectively dispose properties where we have made the determination that the properties aren't competitive as a gas/convenience location and do not have redevelopment potential."
Getty ended the year with 918 net lease properties, six active redevelopment sites and nine vacant properties.
"As we close out 2018 and look ahead to 2019, we continue to benefit from the overall health of the convenience and gas sector, and we remain focused on creating shareholder value by executing on each of our stated growth initiatives, including realizing internal growth from our operating assets, enhancing our portfolio to accretive acquisitions and unlocking embedded value through selective redevelopments — all of which we further demonstrated throughout 2018," Constant said.