Q2 2024 Getty Realty Corp Earnings Call

Joshua Dicker: Thank you, operator. I would like to thank you all for joining us for Getty Realty's second quarter earnings conference call. Yesterday, the company released its financial operating results for the quarter ended June 30, 2024. The Form 8K and earnings release are available in the investor relations section of our website at gettyrealty.com.

Unknown Executive: I would like to thank you all for joining us for Getting Realty's second quarter earnings conference call. Yesterday, the company released its financial operating results for the quarter ended June 30, 2024. The four-mate K&R's release are available in the Investor Relations section of our website at GettyRealty.com.

Joshua Dicker: Please go ahead, Mr. Dicker.

Speaker Change: Thank you, operator. I would like to thank you all for joining us for Getty Realty's second quarter earnings conference call.

Speaker Change: Yesterday, the company released its financial operating results for the quarter ended June 30, 2024. The Form 8K and earnings release are available in the Investor Relations section of our website at GettyRealty.com.

Joshua Dicker: Certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements reflect management's current expectations and beliefs and are subject to trends, events, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statement. Examples of forward-looking statements include our 2024 guidance and may include statements made by managers, including those regarding the company's future operations, future financial performance, or investment plans and opportunities.

Unknown Executive: Certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements reflect management's current expectations and beliefs and are subject to trends, events, and uncertainties that could cause actual results to differ materially from those described in the four-level statements. Examples of four-level statements include our 2024 guidance and may include statements made by management, including those regarding the company's future operations, future financial performance, or investment plans and opportunities. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events are results could differ materially.

Speaker Change: Certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements.

Speaker Change: These statements reflect management's current expectations and beliefs and are subject to trends, events, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Speaker Change: Examples of forward-looking statements include our 2024 guidance and may include statements made by management.

Speaker Change: Including those regarding the company's future operations, future financial performance, or investment plans and opportunities.

Joshua Dicker: We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. I refer you to the company's annual report on Form 10-K for the year ended December 31, 2023 for a more detailed discussion of the risks and other factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. You should not place undue reliance on forward-looking statements that reflect our view only as of today.

Speaker Change: We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. I refer you to the company's annual report.

Unknown Executive: I refer you to the company's annual report on Form 10-K for the year end in December 31, 2023. For more detailed discussion of the risks and other factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. You should not place some due reliance on forward-looking statements which reflect our view only as of today. The company undertakes no do need to update any forward looking statements that may be made during this call.

Speaker Change: on Form 10-K for the year ended December 31, 2023 for a more detailed discussion of the risks and other factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.

Joshua Dicker: The company undertakes no duty to update any forward-looking statements that may be made during this call. Also, please refer to our earnings release for a discussion of our use of non-GAAP financial measures, including our definition of adjusted funds from operations or AFFO and our reconciliation of those measures to net earnings. With that, I will turn the call over to Christopher Constant, our Chief Executive Officer.

Speaker Change: You should not place undue reliance on forward-looking statements which reflect our view only as of today.

Speaker Change: The company undertakes no duty to update any forward-looking statements.

Unknown Executive: Also, please refer to our earnings release. For the discussion of our use of non-GAAP financial measures, including our definition of a chest that funds from operations or AFFO, and our reconciliation of those measures to that earnings.

Speaker Change: that may be made during this call. Also, please refer to our earnings release for a discussion of our use of non-GAAP financial measures including our definition of adjusted funds from operations or AFFO and our reconciliation of those measures to net earnings.

Unknown Executive: But that's that they turn the call over to please you for constant our chief executive officer.

Speaker Change: With that, let me turn the call over to Christopher Constant, our Chief Executive Officer.

Christopher J. Constant: Thank you, Josh. Good morning, everyone, and welcome to our earnings call for the second quarter of 2024. Joining us on the call today are Mark Olear, our Chief Operating Officer, and Brian Dickman, our Chief Financial Officer. I will lead off today's call by summarizing our financial results and year-to-date investment activity, and we'll provide commentary on the continued resilience of our convenience store and car wash businesses. Mark will then take you through our portfolio, and Brian will further discuss our financial results and guidance.

Christopher Constant: Thank you, Josh.

Christopher Constant: Good morning, everyone. Good morning to our earnings call for the second quarter of 2024. Joining us on the call today are Marco Leer, our Chief Operating Officer, and Brian Dickman, our Chief Financial Officer. I will lead off today's call by summarizing our financial results and your the date investment activities. And we'll provide commentary on the continued resilience of our convenience store and car wash tenants.

Christopher J. Constant: Thank you Josh. Good morning everyone and welcome to our earnings call for the second quarter of 2024.

Speaker Change: Joining us on the call today are Mark Olear, our Chief Operating Officer, and Brian Dickman, our Chief Financial Officer.

Brian Robert Dickman: I will lead off today's call by summarizing our financial results and year-to-date investment activities and will provide commentary on the continued resilience of our convenience store and car wash tenants.

Christopher Constant: Marco then take you to our portfolio, and Brian will further discuss our financial results and guides. Last night we reported a strong quarter, which was headlined by a 15% year-over-year increase in annualized base rent, a 3.6% increase year-over-year in our AFFV per share. More than 100 billion of year-to-date investments and an increase in our full-year earnings guides. Our investment activity in the quarter continues to demonstrate the benefits of our differentiated platform, including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors. We completed nearly 62 million of investments in the second quarter across 23 properties that were diversified across our form primary convenience and automotive retail aspects.

Speaker Change: Mark will then take you through our portfolio and Brian will further discuss our financial results and guidance.

Christopher J. Constant: Last night, we reported a strong quarter, which was headlined by a 15% year-over-year increase in annualized base rent, a 3.6% increase year-over-year in our AFFO per share, more than $100 million of year-to-date investments, and an increase in our full-year earnings guidance. Our investment activity in the quarter continues to demonstrate the benefits of our differentiated platform, including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors.

Brian Robert Dickman: Last night, we reported a strong quarter, which was headlined by a 15% year-over-year increase in annualized base rent, a 3.6% increase year-over-year in our AFFO per share, and

Speaker Change: More than $100 million of year-to-date investments and an increase in our full-year earnings guidance.

Mark J. Olear: Our investment activity in the quarter continues to demonstrate the benefits of our differentiated platform.

Mark J. Olear: including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors.

Christopher J. Constant: We completed nearly 62 million in investments in the second quarter across 23 properties that were diversified across our four primary convenience and automotive retail asset classes, being convenience stores, express tunnel car washes, auto service centers, and drive-thru quick service restaurants. Consistent with prior years, approximately 90% of our investments year to date were direct transactions.

Speaker Change: We completed nearly $62 million of investments in the second quarter across 23 properties that were diversified.

Christopher Constant: Being convenience stores, express telecar washers, auto-service centers, and drive-through quick service restaurants. Consistent with prior years, approximately 90% of our investments year to date were direct transactions, and we added three new national names to our growing tenor roster, while also expanding our relationships with six existing tenor. We continue to be well-positioned to create value for shareholders throughout market cycles, both through the strength of our in-place portfolio, which delivers reliable rental income, and our ability to source and close new investment opportunities that further advance our growth in portfolio of diversification efforts. To that end, we currently have an investment pipeline of more than 53 million of assets under contract, and a blended cap rate approaching the mid-8% period.

Speaker Change: across our four primary convenience and automotive retail asset classes being convenience stores, express tunnel car washes, auto service centers, and drive-thru quick service restaurants.

Speaker Change: Consistent with prior years, approximately 90% of our investments year-to-date were direct transactions and we added three new national names to our growing tenant roster while also expanding our relationships with six existing tenants.

Christopher J. Constant: And we added three new national names to our growing tenant roster while also expanding our relationships with six existing. We continue to be well positioned to create value for shareholders throughout the market cycle, both through the strength of our in-place portfolio, which delivers reliable rental income, and our ability to source and close new investment opportunities that further advance our growth in portfolio diversification. To that end, we currently have an investment pipeline of more than 53 million assets under contract at a blended cap rate approaching the mid 8%. In addition, thanks to the efforts of our investment team, we continue to underwrite a steady flow of potential acquisition opportunities to add to our. I'm quite pleased with our recent financial results and investment, in general, and in light of market conditions over the last several, And I want to again emphasize the consistent and thoughtful manner.

Speaker Change: We continue to be well positioned to create value for shareholders throughout market cycles.

Speaker Change: Both through the strength of our in-place portfolio, which delivers reliable rental income, and our ability to source and close new investment opportunities that further advance our growth and portfolio diversification efforts.

Speaker Change: To that end, we currently have an investment pipeline of more than $53 million of assets under contract at a blended cap rate approaching the mid-8% area.

Christopher Constant: In addition, thanks to the efforts of our investment team, we continue to underwrite a steady flow of potential acquisition opportunities to add to our pipeline. I'm quite pleased with our recent financial results in investment activity, in general, and in light of market conditions over the last several quarters, and I want to again emphasize the consistent, thoughtful manner in which we approach our business. Our success is driven by our targeted investment strategy, our deep industry knowledge and relationships, our strict underwriting criteria, and the strength of the GAT team that works tirelessly to manage our in-place portfolio and execute our growth strategy.

Speaker Change: In addition, thanks to the efforts of our investments team, we continue to underwrite a steady flow of potential acquisition opportunities to add to our pipeline.

Speaker Change: I'm quite pleased with our recent financial results and investment activity.

Speaker Change: In general, and in light of market conditions over the last several quarters.

Speaker Change: And I want to again emphasize the consistent and thoughtful manner in which we approach our business.

Christopher J. Constant: Our success is driven by our targeted investment strategy, our deep industry knowledge and relationships, our strict underwriting criteria, and the strength of the Getty team that works tirelessly to manage our in-place portfolio and execute our goals. We also continue to benefit from the strong fundamentals across our target retail sectors and the performance of our institutional tenants, which enables us to maintain healthy profit margins and rent coverage rates. With regard to the convenience store industry, the National Association of Convenience Stores recently published their State of the Industry Report for 2020.

Speaker Change: Our success is driven by our targeted investment strategy, our deep industry knowledge and relationships, our strict underwriting criteria, and the strength of the Getty team that works tirelessly to manage our in-place portfolio and execute our growth strategy.

Christopher Constant: We also continue to benefit from the strong fundamentals across our target retail sectors and the performance of our institutional tenants, for maintaining healthy profit margins and rent current ratios.

Speaker Change: We also continue to benefit from the strong fundamentals across our target retail sectors and the performance of our institutional tenants who are maintaining healthy profit margins and rent coverage ratios.

Christopher Constant: With regard to the convenience store industry, the National Association of Convenience Stores recently published their State of the Industry report for 2023. Overall, the report which compiled survey data for convenience stores across every region of the United States demonstrated both the stability of the convenience store industry and the increasing importance of inside sales and food service. For 2020, total inside store sales grew more than 8% to a record 328 billion. The standout figure from the report was a more than 10% increase in average monthly growth profit from food service sales. Other T.I.L.I.T. from the report will continue to healthy fuel margins, the spike pulling back from record high levels in 2022.

Speaker Change: With regard to the convenience store industry, the National Association of Convenience Stores recently published their State of the Industry Report for 2023.

Christopher J. Constant: Overall, the report, which compiles survey data for convenience stores across every region of the United States, demonstrated both the stability of the convenience store industry and the increasing importance of inside sales. For 2023, total inside store sales grew more than 8% to a record $328 billion.

Speaker Change: Overall, the report, which compiled survey data for convenience stores across every region of the United States, demonstrated both the stability of the convenience store industry and the increasing importance of inside sales and food service.

Speaker Change: For 2023, total inside store sales grew more than 8% to a record $328 billion.

Christopher J. Constant: A standout figure from the report was a more than 10% increase in average monthly gross profit from food service. Other key highlights from the report were continued healthy fuel margins, despite pulling back from record high levels in 2022. Stable fuel volumes and slowing expense growth inside the store also contributed to the year-over-year increase in overall gross profit. With respect to the car wash sector, the recent performance of our tenants further demonstrates the resiliency of the express-town car wash. We've been selective in adding car wash tenants to our portfolio over the last few years and have chosen to work with either top 20 national operators or companies that have a dominant retail market.

Speaker Change: The standout figure from the report was a more than 10% increase in average monthly gross profit from food service sales.

Speaker Change: Other key highlights from the report were continued healthy fuel margins despite pulling back from record high levels in 2022.

Christopher Constant: Stable fuel volumes, and slowly expense growth inside the store, also contributed to the year of your increase in overall growth profitability.

Speaker Change: stable fuel volumes, and slowing expense growth inside the store, which also contributed to the year-over-year increase in overall gross profitability.

Christopher Constant: With respect to the car wash sector, the recent performance of our tenants further demonstrates the resiliency of the expense of a car wash business. We've been selective in adding car wash tenants for a portfolio over the last few years and have chosen to work with either top 20 national operators or companies that have a dominant regional market position. Based on the site level data, get a receipt of car wash coverage ratios increased for substantially all of our tenants with sites that have been operating our portfolio for at least one full year. The growth and revenues for the sector continues to be driven by unlimited wash memberships.

Speaker Change: With respect to the car wash sector, the recent performance of our tenants further demonstrates the resiliency of the express tunnel car wash business.

Speaker Change: We've been selective in adding Car Wash tenants to our portfolio over the last few years and have chosen to work with either top 20 national operators or companies that have a dominant regional market position.

Christopher J. Constant: Based on the site-level data Getty receives, car wash coverage ratios increased for substantially all of our tenants with sites that have been operating in our portfolio for at least one full year. The growth and revenues for the sector continue to be driven by unlimited WASH membership.

Speaker Change: Based on the site-level data Getty receives, car wash coverage ratios increased for substantially all of our tenants for sites that have been operating in our portfolio for at least one full year.

Speaker Change: The growth and revenues for the sector continues to be driven by unlimited WASH memberships.

Christopher J. Constant: Before I turn the call over to Mark, I'll close by noting that despite the recent CPI report and subsequent run-up in net lease re-share prices, we expect continued challenges in the transaction and capital markets as we move through the remainder of 2020. There is still considerable uncertainty with respect to interest rates, and material bid-ask spreads between buyers and sellers that have led to a significant increase in for-sale inventory of net leased

Christopher Constant: Before I turn the call over to Mark, I'll close by noting that despite the recent CPI report and subsequent one-up in net least, we'd share price. Big expect continued challenges in the transaction capital markets as we move through the remainder of 2024. There is no considerable uncertainty with respect to interest rates, material badask spreads between buyers and sellers, those led to a significant increase in force sales inventory of net least assets. And we're in a geopolitical environment that seems to surprise almost daily. Nevertheless, as I said at the beginning of my remarks, we believe that Getty is well positioned to continue to execute and create value for our shareholders.

Speaker Change: Before I turn the call over to Mark, I'll close by noting that despite the recent CPI report and subsequent run-up in net lease root share prices,

Mark J. Olear: We expect continued challenges in the transaction and capital markets as we move through the remainder of 2024.

Mark J. Olear: There is still considerable uncertainty with respect to interest rates, material bid-ask spreads between buyers and sellers that has led to a significant increase in for-sale inventory of net leased assets.

Christopher J. Constant: And we're in a geopolitical environment that seems to surprise almost everyone. Nevertheless, as I said at the beginning of my remarks, we believe that Getty is well-positioned to continue to execute and create value for our shareholders. Our in-place portfolio continues to generate reliable and growing rental income. Our balance sheet is in great shape, with leverage in the middle of our target range and ample liquidity. And the more than $100 million of investments close to your date, plus the $53 million of investments we have under contract, will drive additional earnings.

Mark Olear: and we're in a geopolitical environment that seems to surprise almost daily.

Mark Olear: Nevertheless, as I said at the beginning of my remarks, we believe that Getty is well positioned to continue to execute and create value for our shareholders.

Christopher Constant: Our in-place portfolio continues to generate reliable and growing rental income. Our balance, she is in great shape with leverage in the middle of our target range and ample liquidity. And the more than 100 million of investments close your date, plus 53 million of investments we have under contract, will drive additional earnings group. Meanwhile, as I've mentioned a number of times, our team here at Getty continues to work hard to source new investment opportunities and actually manage our portfolio advantage.

Mark Olear: Our in-place portfolio continues to generate reliable and growing rental income, our balance sheet is in great shape with leverage in the middle of our target range and ample liquidity, and the more than $100 million of investments closed year-to-date, plus the $53 million of investments we have under contract, will drive additional earnings growth.

Christopher J. Constant: Meanwhile, as I've mentioned a number of times, our team here at Getty continues to work hard to source new investment opportunities and actively manage our portfolio and balance sheet. With that, I will turn the call over to Mark to discuss our portfolio.

Mark Olear: Meanwhile, as I've mentioned a number of times, our team here at Getty continues to work hard to source new investment opportunities and actively manage our portfolio and balance sheet.

Mark Olear: With that, I'll turn the call over to Mark to discuss our portfolio and investment activities.

Mark Olear: With that, I will turn the call over to Mark to discuss our portfolio and investment activities.

Mark J. Olear: Thank you, Chris. As of the end of the quarter, our lease portfolio included 1,119 net lease properties and two active redevelopment sites. Excluding the active redevelopments, occupancy was at 99.7%, and our weighted average lease term remained at 9.2 years. Our portfolio spans 42 states plus Washington, D.C., with 59% of our annualized base rank coming from the top 50 MSAs. 75% coming from the top 100 of us.

Mark Olear: Thank you, Chris. As to the end of the quarter, our least portfolio included 1.19 net least properties and two active redevelopment sites. Excluding the active redevelopment, occupancy with a 99.7% are weighted average least term remaining at 9.2 years. Our portfolio spans 42 states, push-washings in DC, the 59% of our annualized base rent coming from the top 50 MSAs, and 75% coming from the top 100 MSAs. Our rents are well covered with a trailing 12 month tenant rent coverage ratio of 2.6 times, which is generally being consistent over the last 5 years. Demonstrating the resiliency of our 10s businesses despite macroeconomic volatility, we've experienced in that timeframe.

Speaker Change: Thank you, Chris. As of the end of the quarter, our lease portfolio included 1,119 net lease properties and two active redevelopment sites.

Mark J. Olear: Excluding the active redevelopments, occupancy was at 99.7% and our weighted average lease term remained at 9.2 years.

Mark J. Olear: Our portfolio spans 42 states plus Washington D.C. with 59% of our annualized base rank coming from the top 50 MSAs and 75% coming from the top 100 MSAs.

Mark J. Olear: Our rents are well covered with a trailing 12-month tenant rent coverage ratio of 2.6 times, which has generally been consistent over the last four to five years, demonstrating the resiliency of our tenants' businesses despite macroeconomic volatility we've experienced in that time. Turning to our investment activities, we had another strong quarter. We saw Getty invest $61.7 million across all of our target sectors and attractive MSAs around the country. Highlights of this quarter's investment include the acquisition of nine auto service center properties located primarily in the southeastern U.S., 26 million.

Mark J. Olear: Our rents are well covered with a trailing 12 month tenant rent coverage ratio of 2.6 times.

Mark J. Olear: which has generally been consistent over the last four to five years, demonstrating the resiliency of our tenants' businesses despite macroeconomic volatility.

Mark J. Olear: Seven Express car washes located in various markets in the U.S. for $30.2 million, of which $9.4 million was funded in previous quarters. One drive-through QSR in Missouri for $5.1 million, and one convenience store located in Arkansas for $4.3 million.

Mark Olear: Turning to our investment activities, we had another strong quarter, so getting invests 61.7 million across all of our target sectors and attractive MSAs around the country. Highlights of this quarter's investment include the acquisition of 9 uno-service center properties located primarily in the Southeast and U.S. 26 million. 7 Express Telecar Wash is located in various markets in the U.S. for 3.2 million, which 9.4 million was funded in previous quarters. One drive-through QSR in Missouri for 5.1 million, and one can be stored located in Arkansas for 4.3 million. We also advanced incremental development funding in the amount of 5.5 million, construction of 5 new to industry convenience stores, express telecar wash is in a lot of service centers.

Mark J. Olear: We've experienced in that timeframe

Speaker Change: Turning to our investment activities, we had another strong quarter. We saw Getty invest $61.7 million across all of our target sectors and attractive MSAs around the country.

Speaker Change: Highlights of this quarter's investment include the acquisition of nine auto service center properties located primarily in the southeastern U.S., 26 million.

Speaker Change: 7th Express Tunnel Car Wash is located in various markets in the U.S. for $30.2 million, which $9.4 million was funded in previous quarters.

Speaker Change: One drive-thru QSR in Missouri for $5.1 million, and one convenience store located in Arkansas for $4.3 million.

Mark J. Olear: We also advanced incremental development funding in the amount of $5.5 million for the construction of five new-to-industry convenience stores, express tunnel car washes, and auto services. These assets are either already owned by the company and are under construction or will be acquired via sale-leaseback transactions at the end of the project's respected construction period. For the quarter, the aggregate initial yield on our investment activity was 8.1%, and the weighted average lease term for acquired properties was more than 14.5 years. Subsequent to quarter end, we invested $1.5 million towards the development and or acquisition of several express car washes.

Speaker Change: We also advanced incremental development funding in the amount of $5.5 million for the construction of five new-to-industry convenience stores, express tunnel car washes, and auto service centers.

Mark Olear: These assets are either already owned by the company and are under construction, or will be acquired via sale-leaseback transactions at the end of the projects we expect the construction period. For the quarter, the aggregate initially yield on our investment activity was 8.1%, and the weighted average lease term for acquired properties is more than 14.5 years. Subsequent quarter-end invested 1.5 million towards the development and acquisition of several express telecar wash. The Kinla to Results of our investment activity here today is gross investments of 103.8 million at an initial cash yield of 7.9% spread across our four target industries.

Speaker Change: For the quarter, the aggregate initial yield on our investment activity was 8.1%, and the weighted average lease term for acquired properties was more than 14.5 years.

Speaker Change: Subsequent to quarter end, we invested $1.5 million towards the development and or acquisition of several express parallel car washes.

Mark J. Olear: The cumulative results of our investment activity here to date are gross investments of $103.8 million at an initial cash yield of 7.9% spread across our four target industries. In addition, we currently have more than $53 million of acquisitions and development funding transactions under contract at average yields that are nearly 50 points wider than our year-to-date. We expect the majority of these transactions to close over approximately... Moving to our redevelopment platform. During the quarter, we invested approximately $490,000 in projects which are in various stages in our pipeline.

Speaker Change: The cumulative results of our investment activity year to date is gross investments of $103.8 million at an initial cash yield of 7.9% spread across our four target industries.

Mark Olear: In addition, we currently have more than 53 million in acquisitions and development funding transactions under contract at average yields that are nearly 50 points wider than our year-to-date performance. We expect the majority of these transactions to close over approximately the next six months.

Speaker Change: In addition, we currently have more than $53 million of acquisitions and development funding transactions under contract at average yields that are nearly 50 points wider than our year-to-date performance.

Speaker Change: We expect the majority of these transactions to close over the next six months.

Mark Olear: Moving to our redevelopment platform, during the quarter we invested approximately 490,000 projects which are in various stages in our pipeline. We ended the quarter with three signed leases for redevelopment projects that are seeing renewed interest from retailers to expand whose expansion plans overlap with the footprint in our portfolio. As a result, we are expecting increased leasing activity over the next several quarters that will drive new development projects for the next few years.

Speaker Change: Moving to our redevelopment platform, during the quarter we invested approximately $490,000 in projects which are in various stages in our pipeline.

Mark J. Olear: We ended the quarter with three signed leases for redevelopment projects and are seeing renewed interest from retailers whose expansion plans overlap with the footprint in our portfolio. As a result, we are expecting increased leasing activity over the next several quarters that will drive new development projects for the next few years. Turning to our asset management activities, we did not have any dispositions in the quarter, but we did exit one lease properly. Overall, and notwithstanding the recent equity market activity for net lease REITs, there has not been a lot of change in market sentiment across our asset sets.

Speaker Change: We ended the quarter with three signed leases for redevelopment projects and are seeing renewed interest from retailers whose expansion plans overlap with the footprint in our portfolio.

Speaker Change: As a result, we are expecting increased leasing activity over the next several quarters that will drive new development projects for the next few years.

Mark Olear: Turning to our asset management activities, we do not have any dispositions in the quarter, but did exit one lease property. Overall, and notwithstanding the recent equity market activity, for net lease rates, there has not been a lot of change in market settlement across our asset sectors. Cellar expectations for lower cap rates persist and have resulted in an overall reduction of transaction volumes, increased in inventory of assets for sale. That said, our activity to date demonstrates the Getty camp source opportunities and our target sectors at higher cap rates to reflect our view of current market price.

Speaker Change: Turning to our asset management activities, we did not have any dispositions in the quarter, but did exit one lease property.

Speaker Change: Overall and notwithstanding the recent equity market activity for net lease REITs, there has not been a lot of change in market settlement across our asset sectors.

Mark J. Olear: Seller expectations for lower cap rates persist and have resulted in an overall reduction in transaction volumes and an increase in the inventory of assets for sale. That said, our activity today demonstrates that Getty cannot source opportunities in our target sectors at higher cap rates to reflect our view of current market prices. While we remain disciplined with respect to capital deployment, we continue to benefit from our relationship-based strategy, which prioritizes direct business with new and repeat tenants.

Speaker Change: Seller expectations for lower cap rates persist and have resulted in an overall reduction of transaction volumes and an increase in the inventory of assets for sale.

Speaker Change: That said, our activity to date demonstrates that Getty can't source opportunities in our target sectors at higher cap rates to reflect our view of current market prices.

Mark Olear: While we remain disciplined with respect to capital deployment, we continue to benefit from our relationship-based strategy, which prioritizes direct business with new and repeat tenants. As Chris mentioned, we are underating a variety of potential investment opportunities, and we are confident that we will be able to be able to create a completely deploy capital as we remove moves for your main to the year.

Speaker Change: While we remain disciplined with respect to capital deployment, we continue to benefit from our relationship-based strategy, which prioritizes direct business with new and repeat tenants.

Mark J. Olear: Chris mentioned that we are underwriting a variety of potential investment opportunities, and we are confident that we will be able to accretively deploy capital as we move through the remainder of the year. With that, I will turn the call over to Brian. Thanks, Mark, Morrie, and everyone.

Speaker Change: As Chris mentioned, we are underwriting a variety of potential investment opportunities and we are confident that we will be able to accretively deploy capital as we move through the remainder of the year. With that, I will turn the call over to Brian .

Brian Dickman: With that, I will turn to call over to Brian.

Brian Robert Dickman: Thanks Mark, Morrie, everyone. Let me start with two sort of housekeeping items before we jump in.

Brian Dickman: Thanks, Martin, everyone.

Brian Dickman: Let me start with two sort of housekeeping items before we jump in. First, my remarks this quarter will attempt to focus on information that is incremental to that which is provided in our earnings release. Our releases relatively detailed includes a fair amount of common commentary on our financial results, so we encourage everyone to read through it if you haven't already.

Brian Robert Dickman: Thanks, Mark, Morrie, everyone.

Brian Robert Dickman: First, my remarks this quarter will attempt to focus on information that is incremental to that which is provided in our earnings release. Our release is relatively detailed and includes a fair amount of common commentary on our financial results, so we encourage everyone to read through it.

Speaker Change: Let me start with two sort of housekeeping items before we jump in. First, my remarks this quarter will attempt to focus on information that is incremental to that which is provided in our earnings release. Our release is relatively detailed and includes a fair amount of commentary on our financial results, so we encourage everyone to read through it if you haven't already.

Brian Dickman: And second, last night we posted a refreshed corporate profile to our website. It's not a complete overall, but there is some new material in there, and when they reference it from time to time. So long as everyone wants to be aware of the new presentation. With that, yesterday we reported antifope for share of 58 cents for Q2 2024, representing an increase of 3.6% with a Q2 2023. But the six months period as a Q30 antifope for share was $1.15, up to 0.7% compared to the prior year period. Importantly, we were able to increase our fully year 2020 for a pho guidance to arrange a 230 cents to 232 cents for share, which implies growth at the midpoint of 2.7% over 2023.

Brian Robert Dickman: And second, last night, we posted a refreshed corporate profile on our website. That's not a complete overhaul, but there is some new material in there, and we made references from time to time, so we wanted everyone to be aware of the new presentation. With that, yesterday we reported AFFO per share of 58 cents for Q2 2024, representing an increase of 3.6% over Q2 2021. For the six-month period ended June 30th, AFFO per share was $1.15, up 2.7% compared to the prior year.

Speaker Change: And second, last night we posted a refreshed corporate profile to our website. That's not a complete overhaul, but there is some new material in there, and we may reference it from time to time. So I wanted everyone to be aware of the new presentation.

Speaker Change: With that, yesterday we reported AFFO per share of 58 cents for Q2 2024, representing an increase of 3.6% over Q2 2023.

Speaker Change: For the six-month period ended June 30th, AFFO per share was $1.15, up 2.7% compared to the prior year period.

Brian Robert Dickman: Importantly, we were able to increase our full-year 2024 AFFO guidance to a range of $2.30 to $2.32 per share, which implies growth at the midpoint of 2.7% over 2020. While that implied growth rate is inside of the mid-single-digit growth we've delivered on average over the last several years, the trajectory is encouraging and we think it reflects positively on our business model given the challenging market conditions that have persisted for our sector.

Speaker Change: Importantly, we were able to increase our full year 2024 AFFO guidance to a range of $2.30 to $2.32 per share, which implies growth at the midpoint of 2.7% over 2023.

Brian Dickman: While that implied growth rate is inside of the mid-single-digit growth we have delivered on average over the last several years. The trajectory is encouraging, and we think reflects positively on our business model, given the challenging market conditions that have persisted for our sector. As a reminder, our guidance includes only transaction and capital market activity that has occurred to date and does not otherwise assume any acquisitions, dispositions for capital market activities for the remainder of 2024. Primary factors impacting our outlook include variability with respect to certain operating expenses, deal pursuit costs, and the timing of anticipated demolition costs for redevelopment projects, which runs through property costs on our P&L.

Speaker Change: While that implied growth rate is inside of the mid-single-digit growth we've delivered, on average, over the last several years, the trajectory is encouraging and we think reflects positively on our business model, given the challenging market conditions that have persisted for our sector.

Brian Robert Dickman: As a reminder, our guidance includes only transaction and capital markets activity that has occurred to date and does not otherwise assume any acquisitions, dispositions, or capital markets activities for the remainder of 2024. Primary factors impacting our outlook include variability with respect to certain operating expenses, deal-related costs, and the timing of anticipated demolition costs for redevelopment projects. Run Through Property Costs on our P&L website.

Speaker Change: As a reminder, our guidance includes only transaction and capital markets activity that has occurred to date and does not otherwise assume any acquisitions, dispositions, or capital markets activities for the remainder of 2024.

Speaker Change: Primary factors impacting our outlook include variability with respect to certain operating expenses, deal pursuit costs, and the timing of anticipated demolition costs for redevelopment projects which run through property costs on our P&L.

Brian Dickman: A summary of our earnings and dividend per share growth over the last five years, along with information illustrating the stability and increased diversification within our portfolio over that same time frame, can be found on pages eight and nine of the updated presentation I referenced earlier. A couple of other P&L related items that we focus on, our annualized base rent, or ABR, and our DNA load. ABR is a June 30th, 2024, was $185, and increased a 15.6% over the $160 million reported as a June 30th, 2023. While AFFO per share growth is our primary objective, top line rental growth is a significant part of that, something we've been able to accelerate over the last three years as we've enhanced our acquisitions platform.

Brian Robert Dickman: A summary of our earnings and dividend per share growth over the last five years, along with information illustrating the stability and increased diversification within our portfolio over that same timeframe, can be found on pages eight and nine of the updated presentation I referenced earlier. A couple of other P&L-related items that we focus on are annualized base rent, or ABR, and our G&A loan. ABR as of June 30th, 2024 was $185 million, an increase of 15.6% over the $160 million we reported as of June 30th, 2023.

Speaker Change: A summary of our earnings and dividend per share growth over the last five years, along with information illustrating the stability and increased diversification within our portfolio over that same time frame, can be found on pages 8 and 9 of the updated presentation I referenced earlier.

Speaker Change: A couple of other P&L related items that we focus on are annualized base rent or AVR and our G&A load.

Speaker Change: ABR as of June 30th, 2024 was $185 million, an increase of 15.6% over the $160 million we reported as of June 30th, 2023.

Brian Robert Dickman: While AFFO per share growth is our primary objective, top-line rental growth is a significant part of that, something we've been able to accelerate over the last few years as we've enhanced our acquisitions platform. With respect to G&A, we typically look at two ratios, total G&A as a percentage of total revenue, and G&A excluding stock-based compensation and non-recurring retirement severance costs, which is the G&A that flows through AFFO; we look at that as a percentage of cash rental income and interest. For Q2 2024, total G&A as a percentage of total revenue was 12.4%, down 80 basis And we'd all call AFFO GNA as a percentage of cash rental income and interest income was 9.8% in Q2 2024, down 110 basis points from 10.9% in the prior year period.

Speaker Change: While AFFO per share growth is our primary objective, top-line rental growth is a significant part of that, something we've been able to accelerate over the last few years as we've enhanced our acquisitions platform.

Brian Dickman: With respect to DNA, we typically look at two ratios: total DNA is a percentage of total revenue, and DNA excluding stock base compensation and non-recurring retirement, severance costs, which is the DNA that flows through AFFO. We look at that as a percentage of cash rents and income and interest income. For Q2, 2024, total DNA as a percentage of total revenue is 12.4%, down 80 basis points from 13.2% in Q2, 2023. And what I'll call AFFO DNA as a percentage of cash rental income and interest income was 9.8% in Q2 2024, down 110 basis points from 10.9% in the prior year period.

Speaker Change: With respect to G&A, we typically look at two ratios. Total G&A is a percentage of total revenue, and G&A excluding stock-based compensation and non-recurring retirement severance costs, which is the G&A that flows through AFFO, we look at that as a percentage of cash rental income and interest income.

Speaker Change: For Q2 2024, total G&A as a percentage of total revenue was 12.4%, down 80 basis points from 13.2% in Q2 2023.

Speaker Change: And we'd all call AFFOG&A, as a percentage of cash rental income and interest income, was 9.8% in Q2 2024, down 110 basis points from 10.9% in the prior year period.

Brian Dickman: We continue to anticipate that DNA dollar mod increases growth moderate, and the DNA ratios we just discussed will decrease as we continue to scale the company. Moving to some thoughts on the balance sheet and liquidity, as of June 30th, 2024, net debt to EBITDA was 5.1 times, or 4.9 times taking into account unsettled forward equity. Both metrics are right around the midpoint of our target range of 4.5 to 5.5 times, which is a level that we've been able to maintain for many years now. Fixed charge coverage was a healthy 3.9 tons as of June 30th.

Brian Robert Dickman: We continue to anticipate the G&A dollar amount increases will moderate, and the G&A ratios we just discussed will decrease as we continue to scale the company. Moving to some thoughts on the balance sheet and liquidity, as of June 30, 2024, net debt to EBITDA was 5.1 times, or 4.9 times taking into account unsettled forward equity. Both metrics are right around the midpoint of our target range of four and a half to five and a half times, which is a level that we've been able to maintain for many years. Fixed charge coverage was a healthy 3.9 times.

Speaker Change: We continue to anticipate the G&A dollar amount increases will moderate and the G&A ratios we just discussed will decrease as we continue to scale the company.

Speaker Change: Moving to some thoughts on the balance sheet and liquidity, as of June 30th, 2024, net debt to EBITDA was 5.1 times, or 4.9 times taking into account unsettled forward equity.

Speaker Change: Both metrics are right around the midpoint of our target range of four and a half to five and a half times, which is a level that we've been able to maintain for many years now.

Speaker Change: Fixed charge coverage was a healthy 3.9 times as of June 30th.

Brian Dickman: Looking at access to capital, and as of June 30th, we have more than $315 million of available liquidity, including approximately $36 million of unsuddled forward equity, and more than $280 million of capacity on our own secure and evolving credit facility. Related to our 53 million dollar pipeline of acquisitions under contract, with more than sufficient capital available to fund those transactions. Some thoughts on debt maturities, as we do have a few in 2025, starting with $50 million of unsuttured notes in February. Those notes are currently at 4.75 percent, and given the small notes on the amount, our thinking today is that we'll look to refinance that debt with either five or seven year private placement, and add the amount to other maturities in those out years, or simply utilize the revolver to repay that debt until we're in a position to do a new larger 10 year notes offering.

Brian Robert Dickman: Looking at access to capital, as of June 30, we had more than $315 million of available liquidity, including approximately $36 million of unsettled forward equity, and more than $280 million of capacity on our unsecured revolving credit, relative to our $53 million pipeline of acquisitions under contract with more than sufficient capital available to fund those transactions. Some thoughts on debt maturities, as we do have a few in 2025, starting with $50 million of unsecured notes in February.

Speaker Change: Looking at access to capital and as of June 30th we have more than 315 million dollars of available liquidity including approximately 36 million dollars of unsettled forward equity and more than 280 million dollars of capacity on our unsecured revolving credit facility.

Speaker Change: Relative to our 53 million dollar pipeline of acquisitions under contract with more than sufficient capital available to fund those transactions.

Speaker Change: Some thoughts on debt maturities, as we do have a few in 2025, starting with $50 million of unsecured notes in February .

Brian Robert Dickman: Those notes are currently at 4.75%, and given the small notional amount, our thinking today is that we'll look to refinance that debt with either a five or seven-year private placement and add the amount to other maturities in those out years, or simply utilize the revolver to repay that debt until we're in a position to do a new, larger 10-year notes offering. In any case, we don't see any refinancing risk today, although pricing is likely to be at least a little bit higher than the current coupon. It'll have a nominal impact on earnings due to this small, no-show amount.

Speaker Change: Those notes are currently at 4.75%, and given the small notional amount, our thinking today is that we'll look to refinance that debt with either a five or seven year private placement and add the amount to other maturities in those out years.

Speaker Change: or simply utilize the revolver to repay that debt until we're in a position to do a new larger 10-year notes offering.

Brian Dickman: In any case, we don't see any refinancing risks today, and I'm pressing as likely to be at least a little bit higher than the current coupon. It'll have a nominal impact on earnings due to the small social.

Speaker Change: In any case, we don't see any refinancing risk today, and while pricing is likely to be at least a little bit higher than the current coupon, it'll have a nominal impact on earnings due to this small notional amount.

Brian Dickman: Hello. Our revolving credit facility is in turmoil and also maturing 2025, both in October, although both have extension options that can take the maturities out to October 2026. We'll work with our bank partners and evaluate our options with respect to both of those facilities. We have ample time to do so. And as of today, don't anticipate any issues recast in revolver or address in the turmoil and upon maturity, whether that's in 2025 or 2026. In general, as we think about capital, we're committed to maintaining our target leverage levels and our investment-grade credit profile, and we'll continue to evaluate all capital sources to ensure that we're meeting those objectives, as well as to ensure that we're funding investments in a creative manner.

Brian Robert Dickman: Our revolving credit facility and term loan also mature in 2025, both in October, although both have extension options that can take the maturities out to October 2026. We'll work with our bank partners and evaluate our options with respect to both of those facilities. We have ample time to do so, and as of today, we don't anticipate any issues recasting Revolver or addressing the term loan upon maturity, whether that's in 2025

Speaker Change: Our revolving credit facility and term loan also mature in 2025, both in October , although both have extension options that can take the maturities out to October 2026.

Speaker Change: We'll work with our bank partners and evaluate our options with respect to both of those facilities. We have ample time to do so, and as of today, don't anticipate any issues recasting Revolver or addressing the term loan upon maturity, whether that's in 2025 or 2026.

Brian Robert Dickman: In general, as we think about capital, we're committed to maintaining our target leverage levels and our investment grade credit profile, and we'll continue to evaluate all capital sources to ensure that we're meeting those objectives, as well as to ensure that we're funding investments in an accretive manner. An overview of our capital raising and deployment over the last five years, which we think highlights our capabilities as thoughtful capital allocators, can be found on page 10 of With that, I'll ask the operator to open the call for questions.

Speaker Change: In general, as we think about capital, we're committed to maintaining our target leverage levels and our investment grade credit profile, and we'll continue to evaluate all capital sources to ensure that we're meeting those objectives, as well as to ensure that we're funding investments in an accretive manner.

Brian Dickman: It overview of our capital raising and deployment over the last five years, which we think highlights our capabilities as thoughtful capital allocators, can be found on page 10 of that refresh or for profile.

Speaker Change: An overview of our capital raising and deployment over the last five years, which we think highlights our capabilities as thoughtful capital allocators, can be found on page 10 of that refreshed corporate profile.

Unknown Executive: With that, I'll ask the operator to open the call for questions.

Speaker Change: With that, I'll ask the operator to open the call for questions.

Unknown Executive: Thank you.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll you for questions. Our first question is from the line of Joshua Dennerlein with Bank of America. Please go ahead.

Unknown Executive: Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. Our confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys. Ladies and gentlemen, we will wait for the moment while we pull for questions.

Speaker Change: Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star and two if you'd like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions.

Joshua Dennerlein: Our first question is from the line of Joshua Denalang with Bank of America. Please go ahead.

Speaker Change: Our first question is from the line of Joshua Dennerlein with Bank of America. Please go ahead.

Farrell Granath: Hi, good morning. This is Farrell Granath on behalf of Josh. I just wanted to ask specifically about the pipeline that you were speaking about, that you're seeing around the mid-8 caps. And I was curious, across your investment segments, where are you seeing the best pricing?

Farrell Granath: Hi, good morning. This is Farrell Granath on behalf of Josh. I just wanted to ask specifically about the pipeline that you were speaking about that you're seeing around the mid eight caps. I was curious. Across your investment segments, where are you seeing the best pricing? So the pipeline is very well distributed across our asset classes. We've been able to maintain that pricing in a line hour. Our view of value with those sellers in and around that mid eight range. I would say that if you had to put a range on across our assets, the quick service restaurant continue to be near to the bottom of that range, and the other assets are pretty consistently.

Speaker Change: Hi, good morning. This is Farrell Granath on behalf of Josh.

Farrell Granath: I just wanted to ask specifically about the pipeline that you were speaking about that you're seeing around the mid-eight caps, and I was curious, across your investment segments, where are you seeing the best pricing?

Mark J. Olear: So the pipeline is very well distributed across all our asset classes. You know, we've been able to maintain that pricing and, you know, align our view of value with those sellers in and around that mid-eight range. I would say that if you had to put a range on across our assets, the quick service restaurants continue to be near the bottom of that range, and the other assets are pretty consistently, you know, more consistent across the assets. But the quick service restaurants continue to demand a little higher value within those assets.

Speaker Change: So the pipeline is very well distributed across all our asset classes, you know, we've been able to maintain that pricing and, you know, align our view of value with those sellers.

Speaker Change: I would say that if you had to put a range across our assets,

Speaker Change: The quick service restaurants continue to be near to the bottom of that range, and the other assets are pretty consistently, you know, more consistent across the assets, but the quick service restaurants continue to demand a little higher value within those asset classes.

Farrell Granath: A more consistent across the assets, but the quick service restaurants continue to demand a little higher value with the nodes with the nodes' asset classes.

Farrell Granath: Great. Are you seeing any increased competition across the investment space?

Speaker Change: Great and are you seeing any increased competition, excuse me, increased competition across the investment space?

Farrell Granath: I think the competitive landscape is remain generally the same over the last number of years. You know, it's our repairs; other investors with space.

Mark J. Olear: I think the competitive landscapes will remain generally the same over the last...

Speaker Change: I think the competitive landscape has remained generally the same over the last number of years. You know, it's our re-peers, other investors in the space. Again, our investment team has been challenged with, you know, sourcing opportunities with sellers and sellers that want to repeat business.

Farrell Granath: Again, our investment team has been challenged with, you know, sourcing opportunities with sellers and sellers that want to repeat business that align with our opinion value, and I think our pipeline, our pipeline growth, in addition to the generating a higher pipeline over the previous last quarter's attachment to those efforts. Great, thank you so much.

Speaker Change: that align with our opinion of value, and I think our pipeline growth, in addition to the closings we've announced for the quarter, generating a higher pipeline over what we announced last quarter is a testament to those efforts.

Christopher J. Constant: Great. Thank you so much.

Speaker Change: Great. Thank you so much.

Brad Heffern: Our next question is from the line of Brad Heffern with RBC Capital Markets. Please go ahead.

Bradley Heffern: Our next question is from the line of Brad Heffern, with RBC Capital Markets, Lisa Golladay. Yeah, hey everybody, good morning. Thanks. For deals that you're pricing the day, how do the spreads to the cost of capital compare to what you would consider to be normal and how much does that change just given the rally over the past month?

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Brad Heffern with RBC Capital Markets. Please go ahead.

Brad Heffern: For deals that you're pricing today, how do the spreads to the cost of capital compare to what you would consider to be normal, and how much does that change just given the rally over the past month?

Brad Heffern: Yeah, hey everybody, good morning, thanks. For deals that you're pricing today, how do the spreads to the cost of capital compare to what you would consider to be normal and how much does that change just given the rally over the past month?

Brian Dickman: Yeah, hey Brad, it's Brian, but I'm obviously very fluid on most fronts, and that brought up in the equity prices is very, very fresh. I'd say about two weeks perhaps to the day. I'd say the things that we've closed on are in that 100 basis point area that we've been articulating for the better part of the last several quarters. Some of the assets under contract that are closer to that and mid-Aid area are certainly wide of that, and that's probably how I would sum it up in terms of point and time. Obviously, seeing the run-up in the share price, we would need to see it stabilize at those levels to really change any views that we had in terms of where we're deploying capital.

Brian Robert Dickman: Hey Brett, it's Brian.

Brian Robert Dickman: But it's obviously very fluid on both fronts, and that run-up in equity prices is very, very fresh, I'd say, you know, about two weeks, perhaps, to the day. I would say the things that we've closed on are in that 100-basis point area that we've been articulating for the better part of the last several quarters. Some of the assets under contract that are closer to that mid-8 area are certainly wider of that. And that's probably how I would sum it up in terms of point in time.

Brad Heffern: Hey Brad, it's Brian . My talk is obviously very fluid on both fronts, and that run up in the equity prices is very, very fresh, I'd say, you know, about two weeks, perhaps to the day.

Speaker Change: I'd say the things that we've closed on are in that 100 basis point area that we've been articulating for the better part of the last several quarters. Some of the assets under contract that are closer to that mid-8 area are certainly wide of that.

Brian Robert Dickman: Obviously, seeing the run-up in the share price, we would need to see it stabilized at those levels to really change any views that we have in terms of where we're deploying capital. But could that lead to opportunities to increase a little bit of volume? Perhaps some deals that aren't penciling today may pencil as that cost of capital flows through. Or, I think more than likely, and what you've heard from Chris and Mark, the efforts of the team to really push cap rates, is can we generate some higher investment spreads and drive earnings that way?

Speaker Change: And that's probably how I would sum it up in terms of point in time.

Speaker Change: Seeing the run up in the share price, we would need to see it, you know, stabilize at those levels to really change any views that we had in terms of where we're deploying capital.

Brian Dickman: You know, could that lead the opportunities to increase a little bit of volume, perhaps some deals that are penciling today may pencil as that cost a capital flow through, or, I think more than likely, would you prefer from Chris and Mark, the efforts of the team to really push cap rates, this can we generate some higher investment spreads and drive earnings that way. You know, as a sector, we all typically talk about or certainly get it done as you're being at a hundred to a hundred and fifty basis point range on spread, and we've been operating at the lower end of that range for a while now, and it would be certainly a nice development, more perspective, if we can push up towards the wider end. Specific to your question, I'd say, close deals around that hundred basis point area, deals under contract a little bit wider than that, and we'll see what we can deliver going forward.

Speaker Change: You know, could that lead to opportunities to increase a little bit of volume, perhaps some deals that aren't pencilling today may pencil as that cost of capital flows through? Or I think more than likely, and what you've heard from Chris and Mark, the efforts of the team to really push cap rates, is can we generate some higher investment spreads?

Brian Robert Dickman: As a sector, we typically talk about, or certainly Getty does, being at 100 to 150 basis points on the spread. We've been operating at the lower end of that range for a while now, and it would be a nice development from our perspective if we could push up towards the wider end. But specific to your question, I'd say close deals around that 100 basis point area, deals under contract a little bit wider than that, and we'll see what we can deliver going forward.

Speaker Change: and dry burnings that way.

Speaker Change: You know, as a sector, we all typically talk about, or certainly Getty does, you know, being at 100 to 150 basis point range on spread, and we've been operating at the lower end of that range for a while now, and it would be, you know, certainly a nice development from our perspective if we can push up towards the wider end. But specific to your question, I'd say closed deals around that 100 basis point area, deals under contract a little bit wider than that, and we'll see what we can deliver going forward.

Brian Dickman: Okay, got it, and then on the 8% cap rates, I guess I'm a little surprised that the figures are up so much from the year-to-date figure. Is that some form of seller capitulation, and do you expect that that'll also end up being the peak just given that, you know, expectations for rates to go down have crystallized a little more? Yeah, I think, you know, so eight one for the quarter and seven nine year to date. I think that real driver of that is the first quarter. We had some development funding that were coming to their end, right? And those deals, just because they're typically, they're priced, you know, 12 to 18 months ago, had some different cap rates as opposed to what a sale, these back would be if we had signed it in 2024 or even late 2023. So I think that's what's really driving that.

Brian Robert Dickman: Okay, got it. And then on the 8% cap rates, I guess I'm a little surprised that the figures are up so much from the year-to-date figure. Is that some form of seller capitulation? And do you expect that that'll ultimately end up being the peak just given that, you know, expectations for rates to go down have crystallized a little more? Yeah, I think, you know, so 8-1 for the

Speaker Change: Okay, got it. And then on the 8% cap rates, I guess I'm a little surprised that the figure is up so much from the year to date figure. Is that some form of seller capitulation? And do you expect that that will ultimately end up being the peak, just given that, you know, expectations for rates to go down have crystallized a little more?

Brian Robert Dickman: Yeah, I think, you know, so 8-1 for the quarter and 7-9 year-to-date. I think the real driver of that is that in the first quarter, we had some development funding that was coming to their end, right? And those deals, just because they're typically priced, you know, 12 to 18 months ago, had some different cap rates as opposed to what a sale lease back would be if we had signed it in 2024 or even late 2023. So I think that's what's in the 8% range to 8 plus percent range for the balance.

Speaker Change: Yeah, I think, you know, so 8-1 for the quarter and 7-9 year-to-date, I think the real driver of that is that the first quarter...

Speaker Change: We had some development fundings that were coming to their end.

Speaker Change: Those deals, just because they're typically priced 12 to 18 months ago, had some different cap rates as opposed to what a set lease back would be if we had signed it in 2024 or even late 2023. So I think that's what's really driving that. We've been consistently offering.

Brian Dickman: We've been consistently offering in the 8% range to 8 plus percent range for the balance of the year this year. Okay, and do you expect that to be the peak, or do you think that there's more upside potentially? I think our team has tasked with finding fantastic opportunities and source in them and closing them and cap rates that create that spread of the blind. this reference.

Speaker Change: in the 8% range to 8 plus percent range for the balance of the year this year.

Brian Robert Dickman: Okay, and do you expect that to be the peak? Or do you think that there's more upside potential? I think our team is tasked with

Speaker Change: Okay, and do you expect that to be the peak or do you think that there's more upside potentially?

Brian Robert Dickman: I think our team is tasked with finding fantastic opportunities and sourcing them and closing them at cap rates that create that spread that Brian talked about.

Speaker Change: I think our team is tasked with finding fantastic opportunities and sourcing them and closing them at cap rates that create that spread that Brian just referenced.

Speaker Change: Okay, thank you.

Wesley Keith Golladay: Our next question is from the line of Wes Golladay with Baird.

Wesley Golladay: Our next question is from the line of West Golladay with bed. Please go ahead. Yeah, good morning everyone.

Speaker Change: Thank you. Our next question is from the line of Wes Golladay with Baird. Please go ahead.

Wesley Keith Golladay: Hey, good morning, everyone. Maybe a question for Brian. How are you thinking about the cost of equity versus the cost of debt? Will there be any, I guess, change in funding, more equity, or is it just going to be an even balance? Really consistent, Wes.

Wesley Golladay: Maybe a question for Brian. How are you thinking about the cost of equity versus the cost of debt? Would it be any, I guess, changing funding more equity, or is it going to be an even balance for the deal? Really consistent, West. We have a 65, 35 kind of baseline equity to debt capital funding model, as it were. We historically haven't deviated much from that, and we don't anticipate deviating much from that. You know, every once in a while, you'll see situations like we saw, I guess now 18 months ago, we're at each other and we overact with times that the balance sheet a little bit at that time.

Wesley Keith Golladay: Hey, good morning, everyone. Maybe a question for Brian . How are you thinking about the cost of equity versus the cost of debt? Will there be any, I guess, change in funding, mix more equity, or is it going to be an even balance?

Brian Robert Dickman: We have a 65-35 kind of baseline equity-to-debt capital funding model, as it were. We historically haven't deviated much from that, and we don't anticipate deviating much from that. You know, every once in a while, you'll see situations like we saw, I guess, now 18 months ago, where the cost of equity and debt were sort of on top of each other, and we over-equitized the balance sheet a little bit at that time. So we want to be thoughtful about how we're raising capital and where we're raising it. But from a general philosophy standpoint, I would say nothing has really changed.

Brian Robert Dickman: Really consistent, Wes. We have a 65-35 kind of baseline equity-to-debt capital funding model, as it were.

Brian Robert Dickman: Historically haven't deviated much from that and we don't anticipate deviating much from that, you know, every once in a while You'll see situations like we saw I guess now 18 months ago where the cost of equity and debt we're sort of on top of each other and

Wesley Golladay: So we want to be thoughtful about how we're raising capital and where we're raising it from, a general philosophy standpoint. I would say, you know, nothing has really changed. And, you know, as I said in my remarks, we're going to keep those leverage levels within that range, and we're going to try to execute opportunistically or as needed to maximize the investment spreads. You know, on the other side of the guys are doing in terms of deploying the capital.

Brian Robert Dickman: We over-equitized the balance sheet a little bit at that time, so we want to be thoughtful about how we're raising capital and where we're raising it, but from a general philosophy standpoint, I would say nothing has really changed.

Brian Robert Dickman: Yeah, as I said in my remarks, we're going to keep those leverage levels within that range, and we're going to try to execute opportunistically or as needed to maximize the investment spreads on the other side of what the guys are doing in terms of deploying capital. Okay, and then you mentioned you've been highly targeted in the car wash business, you know, top 20 operators. Can you talk about how you're approaching the QSR?

Brian Robert Dickman: You know, as I said in my remarks, we're going to keep those leverage levels within that range and we're going to try to execute opportunistically or as needed to to maximize the investment spreads on the other side of what the guys are doing in terms of deploying the capital.

Wesley Golladay: Okay, and then you mentioned you've been highly targeted on the car loss, you know, top 20 operators. Can you talk about how you're approaching the QSRs? Yeah, and I think, you know, certain that's our newest sector, Western, and, you know, if you think about how we approach any sector, right, for us it's a building up that knowledge base, you know, the underwriting, getting that database of opportunities to understand the differences between any concepts or regions or size restaurants or multiple draws or lanes or all those, all those different factors. Our success in that space will be driven by how successful we are at creating a relationship; they're getting to direct transactions with either corporate or large franchises that be around the writing criteria.

Speaker Change: Okay, and then you mentioned you've been highly targeted on the car wash, you know, top 20 operators. Can you talk about how you're approaching the QSRs?

Brian Robert Dickman: Yeah, I think that's our newest sector, Wes. And if you think about how we approach any sector, right, for us, it's about building up that knowledge base, you know, underwriting, getting that database of opportunities to really understand the differences between any concepts or regions or size of restaurants or multiple drive-thru lanes or all those different factors. Our success in that space will be driven by how successful we are at creating relationships with either corporate or large franchisees that meet our underwriting criteria. We were somewhat successful this year and really making some inroads there, but it's a process. We started investing in a car wash in 19, and an auto service more than since 2021.

Speaker Change: Yeah, but I think, you know, that's our newest sector question. And, you know, if you think about

Speaker Change: How we approach any sector, right, for us it's about building up that knowledge base, you know, the underwriting, getting that database of opportunities to really understand the differences between any concepts or regions or size of restaurants or multiple drive-thru lanes or all those different factors.

Speaker Change: Our success in that space will be driven by how successful we are at creating relationships and getting to direct transactions.

Speaker Change: with either corporate or large franchisees that meet our underwriting criteria. You know, so again, I think we've...

Wesley Golladay: You know, so I, again, I think we've somewhat successful this year and it kind of really making some inroads there, but it has a process, you know, started investing in a car loss in 19 auto service, more or less than 2021. If you saw, we really started in 23. I would make the argument we're 12-18 months in there or less. I think it's just going to take some time, but the approach for us remains the same. Focusing on sale these facts, supplementing that with some purchases of leases, which has been about the 10% of our business or less, so we'll ask a couple of years, but we really need to be direct in order to build up scale and that sector.

Speaker Change: somewhat successful this year and kind of really making some inroads there but it's a process.

Speaker Change: You know, started investing in a car wash in 19, auto service more or less in 2021. USR, we really started in 23. So I would make the argument we're 12, 18 months in there or less. It's just going to take some time. But the approach for us.

Brian Robert Dickman: USR, we really started in 23. So I would make the argument we're 12, 18 months in there or less. Uh, it's just going to take some time, but the approach for us remains the same, focusing on Sally's back and supplementing that with some purchases of leases, which have been about, you know, 10% of our business or less over the last couple of years, but we really need to be direct in order to build up scale in that sector.

Speaker Change: Transcribed by https://otter.ai

Brian Robert Dickman: And I guess, you know, using the car wash as an example, you built the relationships, and then it really took off over the last few years, became a big part of the pipeline. Do you think these other sectors will be a big part of the pipeline next year? Is there going to be more, you know, really making its way into the pipeline on the acquisitions, maybe a 26 item?

Wesley Golladay: I guess when you're using the car washes in sample, you build through relationships, and then it really took off for you the last few years. You can put big part of the pipeline. Do you think these other sectors will be a big part of the pipeline next year? Is it going to be more, you know, really making this way into the, the, the pipeline on the acquisitions may be a 26 side of the pipeline? I think we want to be balanced across all four, right? At the end of the day, you know, I think what we're seeing in a lot of services, an example, right, is what we're seeing there is a lot of consolidation; this M&A happening in that sector, this new store development happening in that sector, and that creates opportunities for us to invest.

Speaker Change: to build up scale in that sector.

Speaker Change: And I guess, you know, using the car wash as an example, you built the relationships and then it really took off through the last few years, became a big part of the pipeline. Do you think these other sectors will be a big part of the pipeline next year? Is it going to be more, you know, really making its way into the pipeline on the acquisitions, maybe a 26 item?

Brian Robert Dickman: I think we want to be balanced across all four, right, at the end of the day. You know, I think what we're seeing, and I'll use auto service as an example, right, is that what we're seeing there is a lot of consolidation. There's some M&A happening in that sector, there's new store development happening in that sector, and that creates opportunities for us to invest. And I'd say in the QSR space, right, we're talking to a number of folks that are looking at opening new stores, maybe more new store development as opposed to M&A. But again, that new store growth for certain concepts is starting to create opportunities for getting to invest.

Speaker Change: I think we want to be balanced across all four, right, at the end of the day. You know, I think what we're seeing, and I'll use auto service as an example, right, is what we're seeing there is a lot of consolidation.

Speaker Change: There's some M&A happening in that sector, there's new store development happening in that sector, and that creates opportunities for us to invest.

Wesley Golladay: And I'd say in a QSR space, right, we're talking to a number of folks that are looking at opening the stores. Maybe more of these store development is supposed to emanate, but that again, that new store growth for certain concepts is starting to create opportunities for getting to invest.

Speaker Change: And I'd say in the QSR space, right, we're talking to a number of folks that are looking at opening new stores, maybe more new store development as opposed to M&A. But again, that new store growth for certain concepts is starting to create opportunities for Getty to invest.

Akhil Guntupalli: Great, thanks for the time everyone. Thank you. Our next question is from the line of Akhil Guntupalli with JP Morgan, please go ahead. Good morning everyone, I'm Akhil Guntupalli from JP Morgan. Can you comment on how he is during construction R and how do they turn out after they enter into an actual sale lease pack? How does the dynamics play out here? I'm sorry, I couldn't hear you. Can you comment on how he is during construction R and how do they turn out after they enter into an actual sale lease pack? What dynamics play out here?

Unknown Speaker: Great. Thanks for the time, everyone.

Operator: Thank you. Our next question is from the line of Akhil Guntupalli with J.P. Morgan. Please go ahead.

Speaker Change: Great. Thanks for the time, everyone.

Speaker Change: Thank you. Our next question is from the line of Akhil Guntupalli with J.P. Morgan. Please go ahead.

Akhil Guntupalli: Good morning, everyone. I'm Akhil Guntupalli from J.P. Morgan. Can you comment on how yields during construction are and how they turn out after they enter into an actual sale leaseback? How does the dynamics play out here?

Akhil Guntupalli: Good morning everyone, I am Akhil Guntupalli from J.P. Morgan. Can you comment on how yields during construction are and how do they turn out after they enter into an actual sale leaseback? How does the dynamics play out here?

Operator: Sorry, can you repeat that? It broke up a little bit.

Speaker Change: Can you repeat that? Sorry, we broke up a little bit.

Akhil Guntupalli: I'm sorry, but I couldn't hear you.

Operator: Can you repeat that question? It broke up on our end.

Speaker Change: I'm sorry, I couldn't hear you.

Akhil Guntupalli: Can you comment on how yields during construction are and how they turn out after they enter into an actual sale lease back with you guys, and what dynamics play out here?

Speaker Change: Can you repeat that question? It broke up on our end. Yeah, can you comment on how yields during construction are and how do they turn out after they enter into an actual sale lease back with you guys? And what dynamics play out here?

Brian Robert Dickman: Are you asking about the yields on the development projects and how the actual results are comparing to the underwriting?

Akhil Guntupalli: Do you think about the deals on the development projects and how actual results are comparing to the underwriting? We can get a lot of premium deals for development funding; one is because of a former commitment for a future deal, so we had you get a market movement. So there was a premium overage standard sale lease pack that my clothes and they shorter duration of time, and we feel that we should be compensated for the commitment on a gold forward basis. That said, that is a strong program for us. If you listen to our comments about relationship management, repeat business, and growing with active operators, we like to be a reliable source of funding to partner and lock stuff with their growth.

Speaker Change: Did you ask about the yields on the development projects and how actual results are comparing to the underwriting?

Brian Robert Dickman: So we can get a modest premium on yields for development funding. One reason is because of a forward commitment for future deals that we have against market movement. So there's a premium over a standard sale leaseback that might close in a shorter duration of time, and we feel that we should be compensated for that commitment on a go-forward basis. That said, that is a strong program for us.

Speaker Change: Yeah.

Speaker Change: So, we can get a modest premium on yields for development funding. One is because of a forward commitment for future deals that we had against market movement. So, there's a premium over a standard sale leaseback that might close in a shorter duration of time.

Speaker Change: And we feel that we should be compensated for, you know, that commitment on a go-forward basis. That said, that is a strong program for us.

Brian Robert Dickman: If you listen to our comments about relationship management, repeat business, and growing with active operators, we like to be a reliable source of funding to partner in lockstep with their growth while both protecting our interests against the time horizon and the forward commitment with Development Funding. Yeah, I think the part, Akhil, where you were going was on the yields. The way the program is structured, it's not a situation where we have a rent, and we're exposed to cost overruns such that realized yields could be less than underwritten yields.

Speaker Change: If you listen to our comments about relationship management, repeat business, growing with active operators.

Speaker Change: You know, we like to be a reliable source of funding to partner in lockstep with their growth while both protecting, you know, protecting our interests against the, you know, the time horizon and the forward commitment.

Akhil Guntupalli: We're protecting our interests against the time or management of the forward commitment with development funding. The second part of the question was, I think, the way the program is structured. It's not a situation where we have a rent and we're exposed to cost overrun, such that realized yields could be less than underwritten yields. Again, if I think that's what you're asking, you know, we're structured at applying a yield to the final construction cost, right, where we've protected ourselves from cost overrun. And the rent is set at that level. So from a yield perspective, the realized yields are what the undergrant yields were relative to the underlying property performance, the site level performance, and I think we referenced this may be on our last call.

Speaker Change: with Development Funding. I'm sorry, the second part of the question was... Yeah, I think the part, Akhil, where you were going was on the yields. You know, the way the program is structured, it's not a situation where we have a rent and we're exposed to cost overruns such that...

Brian Robert Dickman: Again, if I think that's what you're asking, we're structured to apply a yield to the final construction cost, where we've protected ourselves from cost overruns, and the rent is set at that level. From a yield perspective, the realized yields are what the underwritten yields were relative to the underlying property performance, the site-level performance. And I think we referenced this, maybe, on our last call.

Speaker Change: Realized yields could be less than underwritten yields, again, if I think that's what you're asking. You know, we're structured at applying a yield to the final construction cost.

Speaker Change: right, where we've protected ourselves from cost overruns and the rent is set at that level. So from a yield perspective, the realized yields are what the underwritten yields were relative to the underlying.

Speaker Change: property performance, the site level performance.

Akhil Guntupalli: We have several examples of stores that are exceeding the initial underwriting, and then there's many that are still ramping up. A lot of these stores are very new to the portfolio. We have, believe it or not, fewer that have been operating for the full three-year stabilized period or what was typically considered the stabilization period than those that are inside that timeframe. There's a long way to say we have a lot of ramping stores, and as you would expect, we're seeing some mixed performance there. But the yields that we underwrote are the yields that we're achieving from a rent perspective, and, you know, on balance, I think we're seeing generally good ramp up and some properties in particular exceeding the underwriting projections.

Brian Robert Dickman: We have several examples of stores that are exceeding the initial underwriting, and then there are many that are still ramping up. A lot of these stores are very new to the portfolio. We have, believe it or not, fewer that have been operating for the full three-year stabilized period, or what's typically considered the stabilization period, than those that are inside that time frame. That's a long way of saying we have a lot of accelerating stores, and as you would expect, we're seeing some mixed performance there. But the yields that we underwrote are the yields that we're achieving from a rent perspective, and on balance, I think we're seeing generally good ramp-up, and some properties, in particular, exceeding the underwritten projection.

Speaker Change: And I think we referenced this maybe on our last call.

Speaker Change: We have several examples of stores that are exceeding the initial underwriting, and then there's many that are still ramping up.

Speaker Change: stores are very new to the portfolio we have believe it or not fewer that that have been operating for the full three-year stabilized period or what's typically considered the stabilization period than those that are inside that time frame

Akhil Guntupalli: God, yeah, that was my question. Yeah, thank you. And one last question: does any part of your revenue growth as a function of adverse weather, considering the recent weather?

Akhil Guntupalli: God, yeah, that was my question. Yeah, thank you.

Speaker Change: Yes that was my question. Thank you and one last question.

Akhil Guntupalli: And one last question: does any part of your revenue growth as a function of adverse weather, considering the recent hurricanes in Houston? There's been no impact right now; it's gone on its use, and I think it's all right. Can we have a little bit of a bad connection? I think if you're asking if there was any impact from some of the weather-related incidents, and the answer, there's no. We've had no interruption of any kind of rent, collections, and no knowledge of any property damage or anything to that.

Speaker Change: Any part of that revenue growth a function of adverse weather considering the recent hurricanes in Houston.

Brian Robert Dickman: There has been no impact from anything that was going on in Houston. I think, sorry Akhil, we have a little bit of a bad connection with your phone. I think if you're asking if there was any impact from some of the weather-related incidents, the answer is no. We've had no interruption of any kind of rent collections and no knowledge of any property damage or anything to that effect.

Speaker Change: There has been no impact from anything that's going on in Houston, I think we have a little bit of a bad connection with you I think if you are asking if there was any impact.

Speaker Change: From some of the weather related incidents and the answer there is no. We've had no interruption of any kind of rent collections and no knowledge of any property damage or anything to that effect.

Akhil Guntupalli: God, thank you for taking my questions.

Akhil Guntupalli: God, thank you for taking my questions.

Speaker Change: Got it thank you for taking my questions.

Speaker Change: Thank you.

Michael Patrick Gorman: Thank you. Our next question is from the line of Michael Gorman with BTIG. Please go ahead.

Speaker Change: Thank you our next.

Michael Gorman: Our next question is from the line of Michael Gorman with BTIT. Please go ahead. Yeah, thanks. Good morning, Brian. I'm sorry if I missed it, but did you lay out kind of what the market looks like if you were to go into it today to replace the $50 million in your activities for next year, both if you kind of kept it on the smaller private placement side and went to five to seven, or if you went to a larger 10 year offering.

Speaker Change: Next question is from the line of Michael Gorman with BP. Please.

Speaker Change: Please go ahead.

Michael Patrick Gorman: Yeah, thanks. Good morning, Brian. I'm sorry if I missed it. But did you lay out kind of what the market looks like if you were to go into it today to replace the $50 million in maturities for next year, both if you kind of kept it on the smaller private placement side and went to five to seven, or if you went to a larger 10 year offering?

Michael Patrick Gorman: Yes, Thanks, good morning, Brian I'm, sorry, if I missed it but did you lay out kind of what the market looks like if you were to go into it today to replace the $50 million in maturities for next year. Both if you kind of kept it on the smaller private placement side and went to five to seven or if you went to a larger 10 year offering.

Brian Robert Dickman: No, we didn't get into any kind of pricing there. I would say on the shorter end, we'd have to get some indicatives on that level, you know, around those time frames, those durations, excuse me, you know, 10 year, we're probably in the low sixes at this point, you know, call it, you know, 200 plus or minus over Treasury. So that would give you a 10 year outlook, and you can kind of extrapolate as to what something inside of that may look like.

Brian Dickman: And I know it didn't get any kind of pricing there. I would say on the shorter end, we'd have to get some of the Dickies on that level, you know, around those time frame situations. Excuse me, 10 year we're probably in the low sixes at this point, you know, call it, you know, 200 plus or minus over treasury. So that would give you a 10 year, and you can kind of extrapolate as to what something inside of that may look like.

Speaker Change: No we didn't get into any kind of pricing there I would say on the shorter end, we'd have to get some some indicative is on that level.

Speaker Change: Around those timeframes those durations excuse me 10 year, we're probably in the low sixes at this point.

Speaker Change: Call it.

Speaker Change: 200, plus or minus over treasury, so that that would give you a 10 year and you can kind of extrapolate as to what something inside of that May look like.

Michael Gorman: Great, that's helpful.

Michael Patrick Gorman: Great, that's helpful. And then maybe Chris, on some of the deal flow, what does the profile of the sellers look like in the market here that's north of 8%? And maybe kind of what does the competitive financing market look like for them right now that's driving them into that 8%?

Speaker Change: Great that's helpful and then.

Christopher Constant: And then maybe Chris, on some of the deal flow, what is the profile of the sellers look like in the market here that's north of eight percent and maybe kind of what's there, what's the competitive financing market look like for them right now that's driving them into that eight percent. So it's a mix, right, of like what I said: small M&A, but a lot of new store development might just be what's driving some of that or some simple balance sheet management. You know, I think in general, you know, what we've seen is, you know, in the small M&A it is it's a small operator, you know, it's built up, you know, 5, 10, 15 stores and it's looking to exit.

Chris: Maybe Chris on some of the deal flow what is the profile of the sellers look like.

Chris: In the market here, that's north of 8% and maybe kind of what's there what's the competitive financing market look like for them right now that's driving them into that 8% cap rate range.

Michael Patrick Gorman: So, it's a mix, right, of what I'd say is small M&A but a lot of new store development. Mike, what's driving some of that, or just some simple balance sheet management?

Speaker Change: So it's a mix right.

Speaker Change: I'd say, a small M&A, but a lot of new store development, Mike just whats driving some of that or some simple balance sheet management.

Michael Patrick Gorman: You know, I think in general, what we've seen is, you know, the smaller M&A, it's a small operator, you know, has built up, you know, 5, 10, 15 stores and is looking to exit. And typically, that works with one of our kind of regional, super regional tenants, right? They can do sort of a tuck-in acquisition there. And you know, the competitive market, right, tends to be the bank market, right, in the various forms that that can take, right?

Mike: I think in general what we've seen is the <unk>.

Mike: More M&A.

Speaker Change: A small operator has built up 510 15 stores and is looking to exit.

Christopher Constant: And typically that works with one of our kind of regional super regional tenants, right? They can do sort of a talking acquisition there. And, you know, the competitive market right, hence to be the bank market right in any various form that that can take, right? So if you think about where, you know, floating rich are and what have you, you know, off that kind of mid eight percent number is pretty competitive. So it's a nice, they were a nice spot there in terms of being able to work with some existing tenants help them continue to grow.

Speaker Change: So typically that works with one of our kind of regional Super regional tenants, where they can do sort of a tuck in acquisition there.

Speaker Change: And.

Speaker Change: The competitive market hence.

Speaker Change: Tends to be the bank market right in a various form that that can take rate. So if you think about where flu.

Michael Patrick Gorman: So if you think about where floating rates are and what you have, that kind of mid-8% number, it's pretty competitive. So it's a nice, we're in a nice spot there in terms of being able to work with some existing tenants, help them continue to grow, and provide what we think is competitively priced capital.

Speaker Change: Floating rigs are and what have you.

Speaker Change: That kind of mid 8% number.

Speaker Change: It's pretty competitive.

Speaker Change: It's a nice.

Speaker Change: Yeah, we're in a nice spot there in terms of being able to work with some existing tenants help them continue to grow.

Christopher Constant: I provide with a competitive price capital.

Speaker Change: Provided we think is competitively priced capital.

Michael Patrick Gorman: Got it. That's helpful. Thanks.

Michael Gorman: Got it, that's helpful.

Speaker Change: Got it that's helpful. Thanks, and then maybe just one last one zooming out a little bit.

Michael Gorman: Thanks.

Michael Gorman: And then maybe just one last one, zooming out a little bit and more strategically, when you think about the geographical footprint of the portfolio as you expand more into the other product types. It is the geographical footprint that you're targeting, or as you think about it, the same across all of them, are you. It does what you target for the car wash portfolio look different than the national sea store portfolio footprint and and just how should we think about the weightings geographically amongst the different parts of the portfolio. Yeah, we still lead with real estate, Mike, so, you know, that's going to take a look at, you know, what market is the property of portfolio in?

Michael Patrick Gorman: And then maybe just one last one, zooming out a little bit and more strategically, when you think about the geographical footprint of the portfolio, as you expand more into the other product types, is the geographical footprint that you're targeting, or as you think about it, the same across all of them? Does what you target for the Car Wash portfolio look different than the National Sea Store portfolio footprint? And just how should we think about the weightings geographically amongst the different parts of the portfolio?

Speaker Change: More strategically when you think about the geographical footprint of the portfolio as you expand more into the other product types.

Speaker Change: Is is the geographical footprint that you are targeting or as you think about it the same across all of them are you.

Speaker Change: Does what you target for the car wash portfolio look different than the National C store portfolio footprint and just how should we think about the weightings geographically amongst the different parts of the portfolio.

Michael Patrick Gorman: Yeah, I mean, we still lead with real estate, Mike, so that's going to take a look at what market is the property or portfolio in, is it a top 50 or top 100 MSA, and then where are the properties themselves located within that market. So I don't think there's any difference in the weighting of the portfolio between any of the assets that we're buying. If you look at most of what we've done over the last 5 or 6 years, it has been across the southern half of the country, got some in the Midwest as well, as long as it has strong metrics, good credit on the lease, we're certainly... I'm going to underwrite that if it makes sense to bring it into the portfolio.

Speaker Change: Yes, I mean, we still we still lead with real estate, Mike. So that's going to take a look at.

Speaker Change: What market is the property of our portfolio and is it a top 50 or top 100, MSA and then where are the properties themselves weighted so excuse me located within that market. So I don't think theres any difference in the weighting of the portfolio between any of the assets that we're buying.

Christopher Constant: Is it a top 50 or top 100 MSA, and then where are the properties themselves weighted? So, I'll just keep it located within that market. So, I don't think there's any difference in the weighting of the portfolio between any of the assets that we're buying. You know, if you look at most of what we've done over the last five or six years, it has been across the southern half of the country, but we've done some in the Midwest as well. You know, as long as it's got strong, strong metrics, you know, could credit on the lease.

Speaker Change: If you look at most of what we've done over the last five or six years. It has been across the southern half of the country.

Speaker Change: But.

Speaker Change: Got some in the Midwest as well as long as it's got strong <unk>.

Speaker Change: Strong metrics.

Speaker Change: Credit on the lease we're certainly.

Christopher Constant: You know, we're certainly, you know, going to underwrite that, and it makes sense for it to the portfolio. Yeah, that makes sense.

Speaker Change: Kind of underwrite that and if it makes sense to bring it to the portfolio.

Michael Patrick Gorman: Yeah, that makes sense. I guess I was just thinking about it from the behavioral aspect of like, are you seeing differences in consumer trends with car washes in the southern half of the US versus the Northeast and things like that?

Speaker Change: Yes that makes sense I guess I was just thinking about it from the behavioral aspect of like are you seeing differences in consumer trends with car washes and like the southern half of the U S versus the northeast and things like that.

Christopher Constant: I guess I was just thinking about it from the behavioral aspect of like, are you seeing differences in consumer trends with car washes in like the southern half of the US versus the Northeast and things like that. Yeah, in the end, our car washing in the Northeast. I'm all located at the base of ski mountains and things like that that drive customer visits. So, and maybe across the southern half of the US, it's more of a car wash culture. So, there's definitely drivers for customer visits in different areas of the country, and those may not always be the same.

Michael Patrick Gorman: Yeah, it depends. Our car washes in the Northeast are located at the base of ski mountains and things like that that drive customer visits. And maybe across the southern half of the U.S., it's more of a car wash culture. So there are definitely drivers for customer visits in different areas of the country, and those may not always be the same. But anything we're looking at doing, regardless of where it's in the country, we're underwriting that market, and we're working with the tenant to understand their business model or how they're going to attract memberships or customers at the site. So I think, again, it's not always the same, and certain portfolios maybe look a little bit different than others, but are strong revenue producers across different areas of the country.

Speaker Change: Yes, it depends our car Washington in R&D some are located.

Speaker Change: Base.

Speaker Change: E Mountains.

Speaker Change: Things like that that drive customer visits so.

Speaker Change: And maybe across the southern half of the U S. It's more of a car wash culture. So there is definitely.

Speaker Change: Drivers for customer visits in different areas of the country and those may not always be the same.

Christopher Constant: But anything we're looking at doing, regardless of where it's in the country, we're underwriting that market; we're working with the tenants to understand, you know, their business model or how they're going to attract memberships or customers at the site. So, I think, again, it's not always the same. And, and certain portfolios maybe look a little bit different than others, but strong, strong revenue producers across different areas of the country.

Speaker Change: But anything we're looking at doing regardless of where it is in the country right. We're underwriting that market, we're working with the tenants understand their business model or how theyre going to attract memberships are customers at the site. So I think.

Speaker Change: Again, it's not always the same.

Speaker Change: Certain portfolios, maybe look a little bit different than others, but it's strong.

Speaker Change: Strong revenue producers across.

Speaker Change: Different areas of the country.

Michael Gorman: Great, thanks for the time, guys.

Michael Patrick Gorman: Great. Thanks for the time, guys.

Speaker Change: Great. Thanks for the time guys.

Opal Rana: Thank you. Our next question is from the line of Opal Rana with KeyBank Capital Markets. Please go ahead.

Speaker Change: Thank you.

Upal Rana: Our next question is from the line of Opel Rana with Key Bank Capital Markets. Please go ahead. Hey, good morning. Thanks for taking my question. Most of my questions were answered already, but, you know, Chris, you mentioned that there's still some uncertainty in the transaction market, and there's still a material bit asked for it.

Opel runoff: Next question is from the line of Opel runoff with Keybanc capital markets. Please go ahead.

Opal Rana: Hey, good morning. Thanks for taking my question. Most of my questions were answered already, but Chris, you mentioned that there's still some uncertainty.

Opel runoff: Hey, good morning, Thanks for taking my question.

Opel runoff: Most of my questions were answered already but.

Opel runoff: Chris You mentioned that there is still some uncertainty in the transaction market.

Speaker Change: And there's still a material bid ask spreads could you give a little more color on that regarding your comments.

Christopher Constant: Do you give a little more color on that regarding your comments? Yeah, smart. So, listen to this: there's endless interviews. So, as Chris mentioned, the macroeconomic factors that are political landscapes. So, you know, if a buyer is sitting there with the view of value, that may be, that may be enhanced in their favor because of the conditions in the greater market or the political landscape. And the timing, just not right; we can't do anything to force that transaction or create value in our favor. You know, we have a model where we are confident that we can underwrite the value as we see it.

Opel runoff: Yes.

Mark J. Olear: Yeah, this is Mark, so listen up, you know, there's an endless amount of views on the, as Chris mentioned, the macroeconomic factors, the current political landscape. So, you know, if a buyer is sitting there with the view of value, that may be enhanced in their favor because of the conditions in the greater market or the political landscape or the timing just isn't right. We can't do anything to force that transaction or create value in our favor.

Mark J. Olear: Yes, Mark so listen.

Chris: There is endless.

Speaker Change: Endless amount of use.

Chris: As Chris mentioned, the macroeconomic factors the political landscape so.

Speaker Change: If a buyer is sitting there with the view of value.

Speaker Change: That may be.

Speaker Change: That may be enhanced in their favor because the conditions in the greater market or the political landscape and timing just not right. We can't do anything to <unk> that transaction or create value in our favor.

Mark J. Olear: You know, we have a model where we are confident that we can underwrite the value as we see it. And when and if those things align, that's when we transact, both with, you know, geography, asset classes, types of tenants. So, you know, I think that there are just situations where the bid-ask is just too wide to bridge. But, you know, despite that.

Chris: We have a model where we are confident that we can underwrite the value as we see it.

Brian Dickman: And when and if those things align, that's when we transact both with, you know, talk to about geography, talk to the asset classes, we talk to the types of tenants. So, you know, I think that there are just situations where the bad access is to why the bridge, but, you know, despite that, you know, we like where not only our pipeline is, but the volume of underwriting we're seeing that has not been advanced and exposed pipeline is going to our evaluation process. We're, we're, we're trading indications of inches within gays, sellers that their value align with ours and, you know, we're happy we're going to get good spot.

Chris: And when and if those things aligned that's when we transact both with.

Chris: Talked about geography asset class as we talked about types of tenants.

Chris: So I think that.

Chris: There are situations, where the bid asks too wide to bridge, but.

Chris: Despite that.

Mark J. Olear: We like where not only our pipeline is, but the volume of underwriting we're seeing has not been advanced to the disclosed pipeline. It's going through our evaluation process, where we're trading indications of interest with engaged sellers that their values align with ours, and we're in a good spot. Getty Realty Corp.

Chris: We like where not only our pipeline is but the volume of underwriting we're seeing it has not been.

Speaker Change: <unk> disclosed pipeline is going through our evaluation process.

Speaker Change: We're trading indications of interest with engaged sellers that theyre valuable line with ours.

Chris: Yes.

Chris: Good good spot, where we think we can keep the pipeline.

Brian Dickman: I think we could keep the pipeline going.

Brian Robert Dickman: Well, I would just say this is Brian, you know, maybe summarize it. I think what we're trying to communicate today is really a balanced message. The team here has been doing a wonderful job uncovering great opportunities. As Mark went through and Chris mentioned in his remarks, you know, we see some additional opportunities in the pipeline and things that we're excited about. So we're getting a lot of traction in the market.

Speaker Change: One going.

Brian Dickman: But I would just say this is Brian, maybe summarize. I think what we're trying to communicate today is really a balanced message. The team here has been doing a wonderful job on covering great opportunities. This Mark went through a Christmas and his remarks. We see some additional, additional, those opportunities in the pipeline and things that were excited about. So we're getting a lot of traction in the market. In our view, on the one hand, obviously the stock price movement and the impact my cost of capital is also a positive. So those are the good things, and those are things we're excited about.

Speaker Change: Well I would just say this is Bryan maybe summarize I think what we're trying to communicate today is really a balanced message.

Speaker Change: The team here has been doing a wonderful job uncovering great opportunities as Mark went through it Chris mentioned in his remarks, we see.

Speaker Change: Some additional additional of those opportunities in the pipeline of things that we're excited about.

Brian Robert Dickman: In our view, on the one hand, obviously the stock price movement and the impact on cost of capital is also a positive. So those are the good things and those are things we're excited about and that's what we're moving forward with. On the other hand, you do have the dynamics that Mark just went through and, you know, that's unlikely to change just because there's been a run-up in stock prices for two weeks and so we're just trying to be measured, you know, with our commentary that the net lease market, you know, has undergone a fair amount of dislocation over a, you know, several quarter period here and a lot of that's still going to have to shake out.

Speaker Change #105: So we're getting a lot of traction in the market in our view on the one hand, obviously the stock price movement and the impact on cost of capital is also a positive.

Speaker Change: So those those are the good things and those are things we're excited about and that's what we're moving forward with on the other hand, you do have the dynamics that Marc just went through and that's unlikely to change just because theres been a run up in stock prices for two weeks and so we're just trying to be measured with our commentary that.

Upal Rana: And that's what we're moving forward with. On the other hand, you do have the dynamics that Mark just went through. And that's unlikely to change just because there's been a run-up in stock prices for two weeks. And so we're just trying to be measured with our commentary that the net least market, that has undergone a fair amount of dislocation over a several quarter period here. And a lot of that's still going to have to shake out. Okay, got it. That was all full.

Marc: The net lease market has undergone a fair amount of dislocation over a several quarter period here and a lot of that still still going to have to shake out.

Opal Rana: Okay, got it. That was helpful. And then, you know, there's been a number of tenant credit concerns across the retail space impacting some of your peers. And, you know, I was wondering, are there any tenants that you have concerns with within your

Speaker Change: Okay got it that was helpful. And then you know.

Christopher Constant: And then, you know, there's been a number of 10 of credit concerns across the retail space and back in some of your peers. And I was wondering, are there any tenants that you have concerns with within your portfolio? And maybe give us an update on your existing watch list. And then it's I'll go back to Mark's. This Chris. I'll go back to Mark's section. And our tenant rent coverage has been fairly consistent over the last four or five years at that 2.6 level. You know, we do have an act of dialogue because of our strategy, with respect to asset management and growth of a dialogue with our, our utilitarian least tenant.

Speaker Change #101: Yeah, Theres been a number of tenant credit concerns across the retail space and back into some of your peers and I was wondering are there any tenants that you have concerns with within your portfolio and maybe give us an update on your existing watch list.

Christopher J. Constant: Yeah, I'll go back to Mark's, this is Chris. I'll go back to Mark's section. I mean, our tenant rent coverage has been fairly consistent over the last four or five years at that 2.6 level. You know, we do have an active dialogue because of our strategy with respect to asset management and growth, a dialogue with our unitary lease tenants. So there's no one on a specific watch list today that we're concerned about from a credit perspective. Given that we have more than 1100 properties, there's a constant dialogue with those tenants about individual assets.

Speaker Change: Yes.

Speaker Change: I will go back to Mark This is Chris I'll go back to Mark's section when our tenant rent coverage has been fairly consistent over the last four or five years at the two six level.

Speaker Change #104: We do have an active dialogue because of our strategy.

Speaker Change: With respect to asset management and growth.

Speaker Change: Dialogue with our unitary lease tenants so.

Christopher Constant: So there's no one on a specific watch list today. And we're concerned about from the credit perspective. Given that we have more than 1,100 properties, there's a constant dialogue with those tenants about individual assets. And do we put capital in, do we move them for redevelopment, or some other option during the term of that least? But it's really the way we look at the watch list. It's really almost a site-level basis. And it's been fairly consistent. But credit concerns in the portfolio today, there's just nothing that's not worth it. Okay, God.

Speaker Change: There's no one on a specific watch list today that we're concerned about from a credit perspective.

Speaker Change: Given that we have more than 1100 properties, there's a constant dialogue with those tenants about individual assets.

Speaker Change: Can we put capital in do we move them for redevelopment or some other option during.

Speaker Change: During the term of that lease, but it's really the way we look at the watch list, it's really almost a site level basis, and it's been fairly consistent but credit concerns in the portfolio today, there's nothing that's noteworthy.

Opal Rana: Okay, got it. And what do you normally bake into your guidance in terms of credit?

Speaker Change #110: Okay got it and then what do you normally bake into your guidance in terms of.

Brian Dickman: And what do you normally bake into your guidance in terms of credit loss? Yeah, we use a lot of ten bases flowing assumption for that. And it's actually something we have in the refresh corporate profile I referenced. If you look at page A, you can see over the last five years. Actual, uncollective ran is, is less than that. But, so it's been to minimize, and that's a good thing, of course. But we use a roughly ten base points in our projections. Okay, great.

Speaker Change: Credit loss.

Brian Robert Dickman: Yeah, we use about a 10 basis point assumption for that. And it's actually something we have in the refreshed corporate profile I referenced. If you look at page eight, you can see over the last five years, actual uncollected rent is less than that. But so it's been de minimis. And that's a good thing, of course, but we use roughly 10 basis points in our calculation.

Speaker Change #103: Yes, we use about a 10 basis point assumption for that and it's actually something we have in the refreshed corporate profile I referenced if you look at page page eight you can see over the last five years.

Speaker Change #103: Actual uncollected rent is less than that but it's been de minimis and that's a good thing of course, but we use roughly 10 basis points.

Speaker Change #103: And our projections.

Opal Rana: Okay, great. Thanks for taking my questions.

Speaker Change #100: Okay, great. Thanks for taking my questions.

Upal Rana: Thanks for taking my questions.

Mitchell Bradley Germain: Thank you. Our next question is from the line of Mitch Germain with JMP Securities. Please go ahead.

Speaker Change #100: Thank you.

Speaker Change #106: Next question is from the line of Mitch Germain with JMP Securities. Please go ahead.

Christopher Constant: Hey, thanks. Chris, you mentioned the word balance when you talked about the four asset classes you're investing in. So, you know, is it kind of the long-term view to kind of even everything out over time? Again, I think from a new investment perspective, Mitch, that would be our ultimate goal, right? We're certainly not there. If you look at our underwriting, it's certainly still weighted, probably towards sea store, car wash and all the service would be depending on quarter quarter, you know, second and third, just given the various opportunities that come in, or the resource by us.

Mitchell Bradley Germain: Hey, thanks. Chris, you mentioned the word balance when you talked about the four asset classes you're investing in. So is that kind of the long-term view to kind of even everything out over time?

Mitchell Bradley Germain: Hey, thanks.

Mitchell Bradley Germain: Chris You mentioned the word balanced when you talked about the four asset classes, you're investing in so.

Mitchell Bradley Germain: Is it kind of the long term you to kind of even everything out overtime.

Christopher J. Constant: Yeah, I think from a new investment perspective, Mitch, that would be our ultimate goal, right? We're certainly not there yet.

Speaker Change #109: Yes, I think from a new investment perspective, Mitch that would be our ultimate goal, but we're certainly not there.

Christopher J. Constant: If you look at our underwriting, it's certainly still weighted towards C-Store. Car wash and auto service would be depending on quarter to quarter, you know, second and third, just given the various opportunities that come in or that are sourced by us. So longer term, I think new investments we'd love to see be more balanced, and obviously, there'll be some variability in that year-to-year just given our business model. But with all that said, given that several years ago we were at 99% convenience assets, we will be weighted towards the C-Store for a very long time, but going forward, we're building out the team, building up our capabilities, and new investments should be far

Speaker Change #113: If you look at our underwriting, it's certainly still weighted probably towards C store.

Speaker Change #107: Car wash and auto service would be depending on a quarter to quarter in our second and third just given the various opportunities that come in or that are sourced by us.

Christopher Constant: So, longer term, I think new investments we'd love to see be more balanced, and obviously there'll be some variability in that year, year, just given our business model.

Speaker Change #107: So longer term I think new investments, we'd love to see be more balanced and obviously there'll be some variability in that year to year, just given our business model.

Christopher Constant: With all that said, given that we several years ago, we were at 99% you know, convenience assets, you know, we will be weighted towards the sea store for a very long time. But going forward, we're building up the team, building up our capabilities, that new investments should be far more balanced. Okay, I understand now, and then to that point, you know, we're not seeing a lot of attraction in the sea store investment front. Is it a function of pricing, or are you making it a little bit, is it a little bit intentional that you're not allocating capital to that sector to that.

Speaker Change #107: With all that said given that several years ago, we were at 99%.

Mitchell Bradley Germain: Convenience assets.

Mitchell Bradley Germain: It will be weighted towards the C store for a very long time, but going forward for <unk>.

Mitchell Bradley Germain: Building out the team in building up our capabilities, new investments should be far more balanced.

Mitchell Bradley Germain: Okay, I understand now. And then to that point, you know, we're not seeing a lot of traction on the C-Store investment front. Is it a function of pricing, or are you making it a little bit?

Speaker Change #114: Okay, I understand now and then.

Speaker Change #115: To that point, we're not seeing a lot of traction in the shoe store investment front.

Speaker Change #108: Is it a function of pricing.

Speaker Change #111: Or are you, making it a little bit is it a little bit intentional that youre not allocating capital to that sector today.

Christopher J. Constant: Yeah, it's certainly not intentional, you know, as I said a moment ago, most, probably the majority of our underwriting continues to be the C-source sector. I'll go back to our model. There's a lot that we see in the sector that maybe is a fantastic operation that doesn't fit our real estate underwriting criteria, maybe it's not in the top 50 or top 100 markets, or we pass on a transaction for any other reason.

Christopher Constant: Yeah, it's certainly not intentional, you know. It's a moment ago, most probably the majority of our underwriting continues to be the sea store sector.

Speaker Change #117: Yes, it certainly not intentional.

Speaker Change #108: As I said, a moment ago, most probably the majority of our underwriting continues to be the C store sector.

Christopher Constant: I'll go back to our model, right? There's a lot that we see in the sectors that maybe is a fantastic operation that doesn't fit our real estate underwriting criteria. Maybe it's not in the top 50 or top 100 market. You know, we would pass on a transaction for any other reason. It really, I would read too much into, you know, what closes in any given quarter or even any six-month period. There's a lot out there to work on in all the sectors. And again, we continue to like the sea store and want to grow our sea store portfolio.

Speaker Change #116: I'll go back to our moderator, but.

Speaker Change #108: There's a lot that we see in the sectors that that maybe has a fantastic operation that doesn't fit our real estate underwriting criteria.

Speaker Change #108: Maybe it's not in the top 50 or top 100 markets.

Speaker Change #108: We pass on a transaction for any other reason.

Speaker Change #108: It really I wouldn't read too much into.

Speaker Change #108: What closes in any given quarter or even any six month period. There is a lot out there to work on and all of the sectors.

Speaker Change #108: And again, we continue until like the C store and want to grow our C store portfolio.

Christopher Constant: And that's the plan of drug for them.

Speaker Change #108: And Thats the plan going forward.

Unknown Executive: Thank you.

Speaker Change #112: Thank you.

Speaker Change #112: Thank you.

Unknown Executive: As there are no further questions, I now have the conference over to register for constant for disclosing comments. Thank you, operator, and thank you everyone for joining us for our call today. We look forward to getting back out with anybody in late October when we report our third quarter results, and we appreciate interest to get it. Thank you.

Operator: As there are no further questions, I now turn the conference over to Christopher Constant for his closing comments.

Speaker Change #112: There are no further questions I now hand, the conference over to Christopher constant for his closing comments.

Christopher J. Constant: Thank you, operator. And thank you everyone for joining us on our call today. We look forward to getting back on with anybody in late October when we report our third quarter results, and we appreciate your interest in getting

Christopher J. Constant: Thank you operator, and thank you everyone for joining us for our call today, we look forward to getting back on with anybody in late October when we report our third quarter results and we appreciate your interest in Getty.

Speaker Change #119: Thank you.

Unknown Executive: The conference of Getty and VLT has now concluded. Thank you for your participation. You may now disconnect your lines.

Operator: The conference call with Getty Realty has now concluded. Thank you for your participation. You may now disconnect your line.

Speaker Change #118: The conference of Getty Realty has now concluded. Thank you for your participation you may now disconnect your lines.

Christopher J. Constant: Okay.

Christopher J. Constant: [music].

Christopher J. Constant: Okay.

Christopher J. Constant: [music].

Unknown Executive: Anthony Paolone, Brian Dickman, Thomas, Wesley Golladay, Anthony Paolone, Brian Dickman, Thomas, Anthony Paolone, Brian Dickman, Thomas