Getty Realty Makes Progress on Its Ongoing Redevelopment Strategy
JERICHO, N.Y. — Despite a relatively quiet first quarter in terms of investments, Getty Realty Corp. continued to make progress on its ongoing redevelopment strategy.
The Jericho-based real estate investment trust, which specializes in the ownership, leasing and financing of convenience store and gasoline station properties, completed its 10th redevelopment project during the quarter — a new-to-industry convenience store and gas station location for Altoona, Pa.-based Sheetz Inc.
Getty Realty ended the quarter with 12 signed leases for redevelopment projects. Of these, seven are properties not currently included in its net lease portfolio and five are properties that are.
"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," Chief Operating Officer Mark Olear reported during the company's first-quarter 2019 earnings call on May 1. "In total to date, we have invested approximately $2.2 million in these 12 redevelopment projects and we expect to have rent commencement at several sites during 2019."
On the capital spending side, Getty estimates that these 12 projects will require a total investment of $7.9 million and will generate incremental returns to the company in excess of where it could invest these funds in the acquisition market today, Olear added.
After an active 2018, in which Getty underwrote and acquired new properties with a total investment of roughly $87 million, the company did not close on any purchase deals in the first quarter of 2019. It did, however, exit one property, which it had previously leased from a third-party landlord. Getty also sold three vacant properties.
The company ended the quarter with 913 net leased properties, seven active redevelopment sites and 12 vacant properties.
"During the first quarter of 2019, we continue to source and underwrite a steady pipeline of potential transactions. While we did not close any acquisitions during the first quarter, we remain confident that we will close on opportunities in 2019," Olear stated.
For the first quarter of 2019, Getty's total revenues and rental income, which excludes tenant reimbursement and interest income, grew 6 percent to $34 million and 4.6 percent to $29.6 million, respectively, according to Danion Fielding, chief financial officer.
"Our top-line growth continues to be driven by rent escalated in our leases, plus incremental growth from completed 2018 acquisitions and redevelopment projects. At the beginning of the year, we adopted a new lease accounting standard. This change resulted in an immaterial impact on net earnings," Fielding explained.
Getty President and CEO Christopher Constant said the company remains focused on growing its national portfolio of convenience stores and gasoline stations in markets that have high barriers to entry in established metropolitan areas, along with targeted high-growth markets.
"We maintain a well-occupied portfolio which generates stable growth, while continuing to analyze our growing acquisition and redevelopment pipeline of opportunities that would be accretive to earnings," said Constant. "With a strong balance sheet and stable cash flows, we will continue to work to deliver additional value to our shareholders."