GETTY REALTY CORP /MD/ (GTY)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered steady operating results: Revenues from rental properties rose 9.5% year over year to $51.7M, AFFO/share increased 3.5% to $0.59, while GAAP diluted EPS was $0.25; management reaffirmed 2025 AFFO guidance of $2.38–$2.41 per share .
• Versus Wall Street, GAAP EPS missed consensus by ~$0.04 ($0.25 vs $0.2867*) and total revenues were essentially in line ($52.33M vs $52.42M*); revenue growth was driven by acquisitions and contractual rent escalators, with lower tenant reimbursement income offsetting some strength .
• Balance sheet risk moderated: no debt maturities until June 2028; revolver upsized to $450M and term loan repaid, leaving >$450M of total liquidity including unsettled forward equity and revolver capacity .
• Capital deployment stayed disciplined: $10.9M invested at a 7.8% initial cash yield in Q1; committed pipeline expanded to >$110M across 29 assets, with ~50% in auto service, funding expected over 9–12 months .
• Stock reaction catalysts: clarity on Zips Car Wash resolution targeted by end of Q2 (70% ABR recovery, <1 quarter downtime, no TIs) and reaffirmed AFFO guidance despite macro volatility, cap rate stability, and secure maturities profile .

What Went Well and What Went Wrong

What Went Well

• AFFO/share growth of 3.5% YoY to $0.59; FFO/share up to $0.56; base rental income up 13% YoY to $49.6M, driven by acquisitions and contractual increases .
• Portfolio resilience and coverage: 99.7% occupancy, WALT ~10 years, tenant rent coverage 2.5x; ABR grew 11.2% YoY to ~$199M .
• Strategic capital position: no debt maturities until June 2028; revolver expanded to $450M; >$150M unsettled forward equity; management emphasized disciplined, accretive financing versus spot cost of capital .
• Management quote: “We started the year with another quarter of steady performance… addressed all of our 2025 debt maturities… and now have no debt maturities until June 2028” .

What Went Wrong

• GAAP EPS down YoY ($0.25 vs $0.30) and total revenues modestly shy of consensus; higher D&A ($16.0M) and interest expense ($11.7M) weighed on GAAP earnings .
• Tenant reimbursement income fell YoY ($1.1M vs $2.8M), reducing revenues from rental properties growth leverage; environmental expense and impairments ticked up .
• Transaction cadence slower versus prior quarters amid macro-volatility; counterparties evaluating timing, creating closing headwinds (though pipeline expanded) .

Financial Results

• Note: Q4 2024 total revenues shown as S&P Global actual (rental + interest) for comparability. Values retrieved from S&P Global.*

Segment/activity mix (selected Q1 items)

KPIs

Consensus vs Actuals

• Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on stability and balance sheet: “We delivered 3.5% AFFO per share growth… addressed all of our 2025 debt maturities… no debt maturities until June 2028… ample liquidity including more than $150 million of unsettled forward equity” .
• CFO on leverage and liquidity: “Net debt to EBITDA was 5.2x or 4.4x including unsettled forward equity; weighted average debt maturity 5.4 years; weighted average cost of debt 4.5%; >$450M total liquidity” .
• CEO on pipeline composition: “More than $110 million… ~50% auto service and the balance across convenience, QSRs and car washes; ~two-thirds development funding” .
• COO on portfolio health: “Occupancy was 99.7%… WALT was 10 years… rent coverage 2.5x” .

Q&A Highlights

• Transaction timing and macro: Deals taking longer given uncertainty and counterparties’ long-term financing decisions; sale-leasebacks involve different decision dynamics than asset sales .
• Cost of capital and spreads: Spot cost low–mid 7%; capital raised/deployed in mid–high 6s; pipeline yields high-7s to ~8% → ~100–120 bps spread .
• Zips cadence: Expect resolution by end of Q2; 6 assets retained by Zips, 5 re-leased to two regional operators, 1 sold; rent adjustments expected across retained sites .
• Tariffs: Too early to gauge impact; tenants’ essential goods and services lessen potential direct effects; monitoring indirect consumer impact .
• QSR appetite: No fixed target; building relationships and diversification; exposure still small (~2% ABR) .

Estimates Context

• Q1 2025 GAAP EPS missed consensus ($0.25 vs $0.2867*) and total revenues were marginally below consensus ($52.33M vs $52.42M*). Q4 2024 exceeded revenue consensus (actual $53.02M* vs $50.09M*), while GAAP EPS was above estimate ($0.39 vs $0.31952*) .
• Reaffirmed FY 2025 AFFO guidance despite Zips resolution variability implies limited estimate revision pressure; areas to monitor include tenant reimbursement trends, interest expense trajectory, and timing of redevelopment demolition costs flowing through property costs .
• Values retrieved from S&P Global.*

Key Takeaways for Investors

• Portfolio durability: 99.7% occupancy, 2.5x rent coverage, and WALT ~10 years underpin earnings stability despite macro and tariff uncertainty .
• Balance sheet risk is low near term: No maturities until June 2028; revolver to 2029/2030; >$450M total liquidity enabling accretive funding of >$110M pipeline .
• Deployment cadence disciplined: Q1 investments at 7.8% yields; pipeline high-7s to ~8% yields with ~100–120 bps spread over deployed capital—supportive for AFFO growth if execution remains on track .
• Temporary earnings drag: Lower tenant reimbursements, higher D&A and interest expense pressured GAAP EPS; watch property costs and environmental expense variability .
• Zips resolution is near-term catalyst: Expected by end of Q2 with ~70% ABR recovery, <1 quarter downtime, and no TIs—reduces uncertainty and should stabilize estimates .
• Dividend continuity: $0.47/share declared for April and July pay dates; sustained payout supports income thesis .
• Trading implications: Modest miss against EPS consensus but reaffirmed AFFO guidance and expanded pipeline may anchor the stock; monitor July update for Zips finalization, Q2 deployment, and any cap rate/cost-of-capital shifts .