GETTY REALTY CORP /MD/ (GTY)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered solid growth and a guidance raise: Revenues rose to $55.59M, diluted EPS was $0.40, FFO/share $0.66, and AFFO/share $0.62; management increased FY25 AFFO guidance to $2.42–$2.43 from $2.40–$2.41 .
• Results beat S&P Global consensus on revenue and EPS, and exceeded FFO/share consensus; momentum was driven by acquisitions (29 properties) at an 8.0% initial cash yield and lower property operating expenses, with a notable environmental reserve release boosting GAAP earnings *.
• Liquidity and balance sheet remain strong with net debt/EBITDA of 5.1x (4.6x incl. unsettled forward equity), fixed charge coverage 3.8x, and weighted average debt cost 4.5%; no maturities until 2028 .
• Dividend increased 3.2% to $0.485/share (12th consecutive annual increase), providing a supportive shareholder return backdrop alongside accretive growth activity .
• Potential stock catalysts: guidance raise, accelerating investment pipeline ($75M committed; $103.4M invested post-quarter), stabilization in car wash coverage, and continued QSR expansion at attractive cap rates .

What Went Well and What Went Wrong

• What Went Well

  • Robust external growth: $56.3M invested across 29 properties at 8.0% initial cash yield; subsequent $103.4M at 7.8% initial yield, year-to-date $236.8M at 7.9% .
  • Portfolio health: 99.8% occupancy, WALT 9.9 years, trailing 12-month tenant rent coverage at 2.6x; CEO emphasized “reliability of rental income” and “positive momentum” in transactions .
  • GAAP earnings uplift from environmental reserve release (~$4.1M), and lower property operating expenses due to reduced reimbursable real estate taxes and rent expense .

• What Went Wrong

  • Environmental items remain variable; while Q3 saw reserve reductions, management cautioned against undue reliance on period-to-period swings (environmental expenses can be volatile) .
  • General & Administrative expenses increased YoY (employee-related and professional fees), partially offset by scale benefits; ratio improvement remains a multi-period execution focus .
  • Interest income on notes/mortgages declined due to lower balances outstanding; higher interest expense versus prior year reflects the larger debt base despite 4.5% average cost .

Financial Results

• Quarterly performance vs prior periods and estimates

Values with asterisks (*) retrieved from S&P Global.

• Consensus vs actuals (S&P Global)

Values with asterisks (*) retrieved from S&P Global.

• Year-over-year comparison (Q3)

• Revenue components

• KPIs

Guidance Changes

Management notes: guidance excludes prospective acquisitions/dispositions/capital markets (incl. settlement of forward equity) .

Earnings Call Themes & Trends

Management Commentary

• “Getty's third quarter performance reflects the consistent execution of our disciplined investment strategy and the reliability of rental income derived from convenience and automotive retail tenants… increased 2025 earnings guidance… well-positioned to deliver continued growth.” – CEO Christopher J. Constant .
• “Rent coverage… was consistent at 2.6 times… third consecutive quarter of increased rent coverage from our express tunnel car wash assets.” – CEO .
• “We are increasing our full-year 2025 AFFO per share guidance to $2.42–$2.43… primary factors… variability in certain operating expenses and timing of demolition costs for redevelopment.” – CFO Brian Dickman .
• “Board approved an increase of 3.2% in our recurring quarterly dividend to $0.485 per share… 12th straight year we've grown the dividend.” – CEO .

Q&A Highlights

• QSR strategy and consumer health: Management sees QSRs aligned with value/convenience trends; intends to continue diversification in the segment .
• Environmental adjustments: Reserve release reflects risk shifting to tenants at legacy sites; similar to prior periods but smaller magnitude .
• Funding plan: Typical cadence of funding on revolver and settling forward equity; ample capacity; opportunistic terming of revolver via private placements (~5.9% on new 10-year) .
• Travel center underwriting: “Total value” approach considering larger acreage, services breadth, interstate adjacency; selective additions .
• Bad debt: No rent collection issues YTD; minor bad debt assumption (~15 bps) in guidance math .

Estimates Context

• Revenue: Q3 beat — $55.59M actual vs $52.96M consensus; Q2 beat; Q1 in line-to-slight miss; trajectory supported by acquisitions and contractual rent escalators *.
• EPS: Q3 Primary EPS beat — $0.358 actual vs $0.305 consensus; Q2 beat; Q1 miss; GAAP diluted EPS was $0.40 benefiting from environmental reserve release *.
• FFO/share: Q3 beat — $0.66 actual vs $0.591 consensus; underscores durable rental income and scale benefits despite higher G&A *.

Values marked with asterisks (*) retrieved from S&P Global.

Where estimates may adjust:

• Potential upward revisions to FY25 AFFO following guidance raise and post-quarter acquisitions; watch for sell-side models to reflect higher ABR and timing of the $100M Now & Forever transaction .
• Non-recurring environmental reserve release boosted GAAP EPS — consensus revisions should focus on AFFO trajectory rather than GAAP earnings volatility .

Key Takeaways for Investors

• External growth engine is re-accelerating at attractive initial cash yields (high-7% to ~8%), with a robust, relationship-driven sale-leaseback pipeline; expect continued ABR expansion into 2026 .
• Portfolio remains high-quality: near-full occupancy, long WALT, and rent coverage improving — notably in car wash, where stabilization is tracking ahead of underwriting timelines .
• FY25 AFFO guidance raised; narrative shifts toward sustainable AFFO growth rather than GAAP EPS, given environmental volatility; dividend increase supports total return .
• Balance sheet flexibility and funding cadence (revolver + forward equity) reduce execution risk; private placements provide a viable terming option if deal flow accelerates .
• Cap rates stable despite rate moves; disciplined underwriting and unitary master leases mitigate credit risk as Getty diversifies into QSR and travel centers .
• Watch quarterly cadence of forward equity settlements and the timing of committed investments; incremental post-quarter deals should be additive to near-term AFFO .
• Near-term trading: positive bias on guidance raise and beats, with potential follow-through as sell-side AFFO models update; medium-term thesis: durable net-lease cash flows, targeted sector exposures, and accretive growth at conservative leverage .

Footnote: Some margin and estimate values are retrieved from S&P Global and marked with asterisks (*).