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    Getty Realty Sees 2017 as Building Year

    Company no longer has "transitional properties."

    By Melissa Kress, Convenience Store News

    JERICHO, N.Y. — Getty Realty Corp. has kicked off 2017 with redevelopment and acquisition opportunities on its mind. 

    At the end of 2016, Getty Realty's portfolio consisted of 829 properties — 808 of which are subject to triple net leases, six of which are actively being redeveloped, and 15 are vacant. 

    "I am pleased to report that with the disposition and leasing activity completed during the year, we have essentially completed the repositioning of former transitional properties, which has been one of our primary strategic initiatives over the past several years," President and CEO Christopher Constant stated Thursday during the company's fourth-quarter earnings call. "As such, going forward, we will no longer characterize properties as transitional."

    The term "transitional" applied to properties formerly leased by Getty Realty to Getty Petroleum Marketing Inc. (GPMI). Getty Realty took back the properties when GPMI filed for bankruptcy

    "In the years that followed, we have either repositioned or sold hundreds of these transitional assets, finally leaving us at the end of 2016 with a quality portfolio absent any additional overhang from this difficult chapter in our history," Constant said. "Due to the successful efforts of the entire Getty organization, we are now at the point where our resources can be dedicated to growing our portfolio." 

    For 2017, Getty Realty plans to redevelop several existing properties and build up its portfolio through acquisitions. 

    Currently, the company has 13 redevelopment projects with signed leases and letters of intent (LOIs), and it continues to evaluate its portfolio for additional redevelopment opportunities, according to the chief executive. 

    Getty Realty also remains active in the market seeking potential acquisitions. "In our core asset class, we are seeing a mix of single units and portfolio acquisition opportunities in geographic regions that overlap with our existing sites, and in several markets where we have been looking to add assets," Constant explained.

    Taking all that into consideration, the CEO said: "We view 2017 as a building year for Getty. Absent acquisitions — which we do not include in guidance — our core business is stable and growing."

    Looking further into the future, Constant outlined a couple items that are initially dilutive, but will be critical for the company longer term. 

    • Redevelopment Initiative: Throughout this year, Getty Realty intends to take several existing properties offline to redevelop them. 
    • Capital Structure: The company has taken steps to bolster its capital structure in order to fund its business plan. 

    "Getty has been in the strongest position the company has been in for many years," Constant said. "With a solid portfolio of convenience and gas assets delivering consistent growth, and supported by a very flexible balance sheet, we are well positioned to pursue value-enhancing opportunities. As we move forward, we will look to build upon our stable growth and continue to enhance the quality of our net-leased portfolio."

    FISCAL YEAR 2016 INVESTMENTS 

    During the fourth quarter of 2016, Getty Realty purchased two RaceTrac properties in the Houston area for $5.8 million, according to Mark Olear, executive vice president and chief operating officer. 

    For the full year, the company completed $7.7 million in acquisitions, including one parcel of land adjacent to an existing property for a redevelopment project. 

    "While the acquisition market continues to be very competitive in the convenience and gas sector, we remain disciplined in our underwriting criteria," Olear said. "Our pipeline of actionable opportunities continues to grow and we are in the process of reviewing and pursuing several growth opportunities."

    On that front, Getty Realty acquired three properties subsequent to 2016's year-end for $3.4 million, he noted. 

    For its redevelopment platform, the 13 signed leases and LOIs include six active projects and seven properties that are currently included in Getty Realty's net-lease portfolio.  

    "All these projects are continuing to advance through the redevelopment process. We expect substantially all of these projects will be completed over the next two years," Olear explained. "In total, we invested approximately $1.7 million in redevelopment projects to date, and we expect to have rent commencing at several of these projects in late 2017 and 2018."

    In addition to this redevelopment and acquisition activity, Getty Realty sold four properties in the fourth quarter for $2.2 million. For the full year, it sold 14 properties for $5.4 million. The company also entered into eight leases for convenience and gas properties in 2016.

    Jericho-based Getty Realty a publicly traded real estate investment trust specializing in ownership, leasing and financing of convenience store and gasoline station properties. As of Dec. 31, the company owned 740 properties and leased 89 properties from third-party landlords in 23 states and Washington, D.C.

    By Melissa Kress, Convenience Store News
    • About Melissa Kress Melissa Kress joined EnsembleIQ's Convenience Store News in November 2010. Her primary beats include alcoholic beverages and tobacco. Kress has been a professional journalist since 1995. A graduate of West Virginia University, she began her career in community journalism before moving to business-to-business publishing in 2000, covering commercial real estate.

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