Getty Realty Makes Progress in Repositioning Efforts
JERICHO, N.Y. -- Getty Realty Corp. made some progress repositioning its marketing portfolio during the third quarter and is steadily moving forward with its plans in the fourth quarter. It comes as the company generated $5.4 million, or 16 cents per share, on revenue of $22.5 million for the quarter.
"The quarter marked steady progress that we are making in the repositioning of [Getty Petroleum Marketing Inc.'s] portfolio," explained CEO David Driscoll in a conference call Friday morning. "The repositioning event this quarter consists mainly of our efforts to re-lease properties to tenants on a triple-net basis and dispose of individual locations that we do not think have good long-term prospects for Getty."
As it ended the third quarter, the company started the fourth quarter with bang by entering into a triple-net lease with an affiliate of Capital Petroleum Group in October. The 24 properties included in the lease are predominately in Brooklyn and Staten Island, N.Y., Driscoll said. The lease has a 15-year initial term with provisions for renewal terms and annual rent escalations.
"We expect this lease to generate approximately $2.3 million of annual GAAP revenue for us," he added about the deal with Capital Petroleum Group, an existing tenant in Getty's portfolio. "When combined with six triple-net leases we signed in May, this lease brings the total number of re-let locations to date to 306."
In addition to the October deal, Getty expects to enter into several additional long-term triple-net leases in the fourth quarter that would cover approximately 150 properties in the New York City metropolitan area and New Jersey, he said. These properties are currently subject to month-to-month license agreements and interim fuel supply arrangements.
Once those deals are sealed, Getty will be left with approximately 300 properties previously leased to GPMI -- including 125 properties that have had their underground storage tanks removed, nine terminals and approximately 165 properties with operating tanks, Driscoll said.
Getty has also made steady progress disposing of 125 de-tanked properties through the quarter, selling 14 locations generating approximately $3.1 million in sale proceeds. "We anticipate the pace of these sales to accelerate in the fourth quarter and during the course of 2013 evidenced by an additional four sales already in the fourth quarter," he explained.
As for third quarter activity, Driscoll said Getty sold 14 properties for $3.1 million. The sites had been leased to GPMI and had their underground storage tanks removed. All total, the company sold 29 properties for $8.1 million through the nine-period ending Sept. 30.
"There is still more to do and while our entire team always wants to have things happen at a faster rate, I am pleased with our accomplishments and the pace of our progress," Driscoll said. "We intend to deliver even greater clarity in our fourth quarter and we believe we will enter 2013 well-positioned to start to positively affect our year-over-year results as we pursue additional growth opportunities."
The Jericho, N.Y.-based company is also dealing with the aftermath of the Superstorm Sandy, which struck the Northeast and Mid-Atlantic regions in late October. Getty Realty's properties are concentrated in those areas. According to Driscoll, the impact of the storm was two-fold: damage to some properties and the gas shortage which followed the storm.
"Sandy really had two impacts on us. One is what I call the casualty, which is there was damage to some of our locations. We have a property in the Rockaways that they tell me is under four feet of sand now. Bu that in the overall scheme of things is, and I don't want to diminish it, but it is not going to harm us in any material way," Driscoll explained. "The larger is … that we have gas shortage here. The whole region has gone to an odd/even days for gas depending on your license plate."
The shortage was caused when terminals had to shut down during the storm and those terminals do not have enough gas, he said. "As a result, gas stations -- generally not just ours -- are not getting enough gas, lines are forming. A load of gas gets dropped off at a gas station, the gas station sells out in two hours and everyone waits for the next load," Driscoll said.
He added that no one has a timeline for when the situation will begin to ease.