Q2 2025 Getty Realty Corp Earnings Call

July 24, 2025

Operator 3: Good morning, welcome to Getty Realty's Q2 2025 earnings call. This call is being recorded. After the presentation, there will be an opportunity to ask questions. Prior to starting the call, Joshua Dicker, Executive Vice President, General Counsel, and Secretary of the company, will read a safe harbor statement and provide information about non-GAAP financial measures. Please go ahead, Mr. Dicker.

Operator: Good morning, welcome to Getty Realty's Q2 2025 Earnings Call. This call is being recorded. After the presentation, there will be an opportunity to ask questions. Prior to starting the call, Joshua Dicker, Executive Vice President, General Counsel, and Secretary of the company, will read a safe harbor statement and provide information about non-GAAP financial measures. Please go ahead, Mr. Dicker.

Joshua Dicker: Thank you, operator. I would like to thank you all for joining us for Getty Realty's Q2 Earnings Conference Call. Yesterday afternoon, the company released its financial and operating results for the quarter ended 30 June 2025. The Form 8-K and earnings release are available in the investor relations section of our website at gettyrealty.com. Certain statements made during 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 statements. Examples of forward-looking statements include our 2025 guidance and may include statements made by management, including those regarding the company's future operations, future financial performance, or investment plans and opportunities.

Good morning and welcome to Getty Realty. Second quarter 2025 earnings call. This call is being recorded after the presentation. There will be an opportunity to ask questions prior to starting the call, Joshua Dicker Executive, Vice President, general counsel and Secretary of the company will read a safe harbor statement and provide information about non-gaap financial measures please. Go ahead Mr. Dicker

Speaker Change: Thank you, operator. I would like to thank you all for joining us. For Getty realities. Second quarter earnings conference call yesterday. Afternoon, the company released its financial and operating results for the quarter ended, June 30 2025,

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, 2024, as well as any subsequent filings with the SEC 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, which reflect our view only as of today. The company undertakes no duty to update any forward-looking statements that may be made during this call.

Speaker Change: The form AK and earnings release are available in the, in the investor relations section of our website at getty.com certain statements made during this call are not based on historical information and may constitute forward-looking statements. These statements reflect Management's, current expectations, and beliefs and our subject to Trends events. And uncertainties that could cause actual results to differ materially from those described in the forward-looking statements examples of forward-looking statements, include our 20225. Guidance in 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 or results could differ materially, I refer you to the company's annual report on form, 10K for the year. Ended December 31st 2024.

Joshua Dicker: 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 a reconciliation of those measures to net earnings. With that, let me turn the call over to Christopher Constant, our Chief Executive Officer.

Christopher Constant: Thank you, Josh. Good morning, everyone. Welcome to our earnings call for Q2 2025. 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 highlighting our quarterly financial results, accelerating investment activity, and recent tenant performance. Mark will then discuss our portfolio and investment activities, and Brian will provide additional details on our earnings, balance sheet in 2025 AFFO guidance. GTY had a strong quarter and grew its annualized base rent by 9.9% to approximately $204 million during Q2. We also produced AFFO per share of $0.59, an increase of 1.7% compared to the prior year. Our consistent financial results continue to be driven by the steady performance of our in-place portfolio.

Speaker Change: Booking statements made today, you should not Place undue Reliance on forward-looking statements which reflect our view only. As of today, 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. Let me turn the call over to Christopher constant, our chief executive officer

Christopher Constant: Thank you, Josh. Good morning everyone and Welcome to our Earnest call for the second quarter of 2025.

Christopher Constant: Joining us on the call. Today are Marco Lear our chief operating officer and Brian Dickman, our Chief Financial Officer

Christopher Constant: I will lead off today's call by highlighting our quarterly Financial results accelerating investment activity and recent tenant performance.

Speaker Change: Mark will then discuss our portfolio and investment activities in Brian will provide additional details on our earnings balance sheet and 2025 afo guidance.

Speaker Change: Jenny had a strong quarter and grew its annualized base rent by 9.9% to approximately 204 million during the second quarter.

Speaker Change: And we also produced afo per share of 59 cents. An increase of 1.7% compared to the prior year.

Christopher Constant: With nearly 100% rent collections, annual rent increases averaging 1.8%, and stable rent coverage, our in-place portfolio provides a base for reliable and growing cash rental income. We further enhance that income growth with creative investment activity supported by prudent balance sheet management. Our pace of underwriting and closing transactions showed acceleration as we moved through Q2. Year to date, we have closed $95.5 million of investments at an initial cash yield of 8.1%, operators are taking a noticeably more constructive stance towards moving deals forward. We're also energized by the increasing diversity of opportunities we're seeing and our ability to close transactions across our investable universe. We've deployed meaningful amounts of capital into each of our target property types this year and continue to add new tenants to the portfolio while expanding our geographic footprint.

Speaker Change: Our consistent Financial results continue to be driven by the steady performance of our Inn Place portfolio.

Speaker Change: With nearly 100% rent collections annual rent increases averaging, 1.8% and stable rent coverage. Our Inn Place portfolio provides a base for Reliable and growing cash rental income.

Speaker Change: We further enhance that income growth with a creative investment activity supported by prudent, balance sheet management.

Speaker Change: Our case of underwriting and closing transactions showed acceleration as we move through the second quarter.

Speaker Change: Year to date. We have closed 95.5 million of Investments at an initial cash. Yield of 8.1% and operators are taking a noticeably more constructive stance towards moving deals forward.

Speaker Change: We're also energized by the increasing diversity of opportunities. We're seeing and our ability to close transactions across our investable universe.

Christopher Constant: Our acquisitions team is doing an excellent job of identifying transactions that meet our investment criteria with both larger, more established tenants that have broad store networks and emerging high growth tenants that are building platforms across the US. Our $90-plus million investment pipeline and the deals we are currently underwriting both reflect this increased transaction activity and diversity of prospects. Our pipeline includes acquisitions or development funding in all of our target sectors, with the majority allocated to automotive service centers. Importantly, the increase in transaction activity that we saw at the end of Q2 has continued as we move through Q3. Coming back to our in-place portfolio and the steady, resilient performance we've consistently seen from our tenants, we reported strong trailing 12 months rent coverage of 2.6 times this quarter.

Speaker Change: We've deployed meaningful amounts of capital into each of our Target property types this year and continue to add new tenants to the porkfolio while expanding our Geographic footprint.

Speaker Change: Our Acquisitions team is doing an excellent job of identifying transactions. That meet our investment criteria with both larger, more established tenants that have broad store networks and emerging high growth, tenants that are building platforms across the US.

Speaker Change: Our 90 plus million investment Pipeline and the deals. We are currently underwriting both reflect this increased transaction activity in diversity of prospects.

Speaker Change: Our pipeline includes Acquisitions or development funding in all of our targets, sectors with the majority allocated to automotive service centers.

Speaker Change: Importantly, the increase in transaction activity that we saw. At the end of the second quarter has continued as we move through the third quarter,

Christopher Constant: Rent coverage improved for nearly all of our convenience store portfolios, driven by healthy fuel margins, stable fuel volumes, and expanding profit margins inside the store. Additionally, rent coverage for our car wash portfolio showed noticeable improvement for the second consecutive quarter as new to industry sites continue to mature and operators focused on profitability. As we think about recent performance, the evolution of our platform over the last few years, and the opportunities we see ahead, we have more conviction than ever in the sectors in which we invest and in our ability to further scale the company. Our strategy to focus on well-located convenience and automotive retail properties is proven. These are largely recession-resistant businesses providing non-discretionary goods and services to mobile consumers that prioritize convenience, speed, and service. Our approach to underwriting and structuring investments is effective.

Speaker Change: Coming back to our Inn Place portfolio and the steady resilient performance. We've consistently seen from our tenants, we reported strong trailing, 12 months, rent, coverage of 2.6 times this quarter.

Speaker Change: Rent coverage, improved for nearly all of our convenience store portfolios driven by healthy.

Speaker Change: Field, margins, stable fuel, volumes and expanding profit. Margins inside the store.

Speaker Change: Additionally, rent coverage for our car wash portfolio, showed noticeable Improvement for the second consecutive quarter as new to Industry sites. Continue to mature and operators focused on profitability.

Speaker Change: As we think about recent performance, the evolution of our platform, over the last few years and the opportunities we see ahead.

Speaker Change: We have more conviction than ever in the sectors in which we invest and in our ability to further scale the company.

Speaker Change: Our strategy to focus on well-located convenience and Automotive. Retail properties is proven

Speaker Change: These are large largely recessive, recession, resistant businesses providing, non-discretionary goods and services to mobile consumers. That prioritize convenience, speed and service.

Christopher Constant: We emphasize market and real estate fundamentals and strong lease terms to support our investment decisions and mitigate the credit risks, real or perceived, inherent in a net lease business. Our results are compelling. Our earnings growth, dividend growth, and leverage compare favorably to peers, as do our portfolio metrics such as occupancy, remaining lease term, tenant rent coverage, and rent collections. Looking ahead, we're gonna keep executing on strategy and focus on what we can control. We've demonstrated that we can effectively allocate capital, drive out performance, and create shareholder value. We are confident the market will recognize our success. With that, I will let Mark discuss our portfolio and investment activities.

Speaker Change: Our approach to underwriting and structuring Investments is effective. We emphasize market and real estate, fundamentals and strong. Lease terms to support our investment decisions and mitigate the credit risks, real or perceived inherent in a net lease business.

Speaker Change: And our results are compelling.

Speaker Change: Our earnings growth, dividend growth and leverage compared favorably to peers.

Speaker Change: Brick coverage and rent collections.

Speaker Change: Looking ahead. We're going to keep executing on strategy and focus on what we can control. We've demonstrated that we can effectively allocate Capital, Drive, outperformance and create shareholder value. We are confident the market will recognize our success.

Mark: With that, I will let Mark discuss our portfolio and investment activities.

Mark Olear: Thank you, Chris. At quarter end, our lease portfolio included 1,132 net lease properties and two active redevelopment sites. Excluding the active redevelopments, occupancy was 99.7%, and our weighted average lease term remained at 10 years. Our portfolio spans 44 states plus Washington, DC, with 61% of our annualized base rent coming from the top 50 MSAs and 76% coming from the top 100 MSAs. Our rents continue to be well covered with a trailing 12-month tenant rent coverage ratio of 2.6 times. Turning to our investment activities for the quarter, we invested $66.1 million at an initial cash yield of 8.1%. The weighted average lease term on acquired assets for the quarter was 15.9 years.

Speaker Change: Thank you, Chris.

Mark: A quarter, end our our lease portfolio included. 1,132 net lease properties. In 2 active Redevelopment sites.

Mark: Excluding the active redevelopments occupancy was 99.7% and our weighted average lease term remained at 10 years.

Mark: Our Port our portfolio, spans 44 States plus Washington DC, with 61% of our annualized base rent.

Mark: Coming from the top 50 msas and 76% coming from the top 100 msas.

Mark: Our rents continue to be well covered with a trailing 12-month tenant rent, coverage ratio of 2.6 times.

Mark: According to our investment activities for the quarter, we invested 66.1 million at an initial cash. Yield of 8.1%, the weighted average, lease term and acquired assets, for the quarter was 15.9 years

Mark Olear: Highlights of this quarter's investments include the acquisitions of 9 drive-through QSRs for $14.9 million, 6 automotive service centers for $7.9 million, 5 convenience stores for $33.3 million, and 4 express tunnel car washes for $5.5 million, net of amounts funded in prior periods. We also advanced incremental development funding in the amount of $4 million for the construction of 3 auto service centers and 1 express tunnel car wash. These assets are either already owned by the company and are under construction or will be acquired via sale-leaseback transaction at the end of the project's respective construction period. Subsequent to quarter end, we invested an additional $18.5 million, bringing our year-to-date total investments to $95.5 million at an 8.1% initial cash yield.

Mark: Highlights of this quarter's Investments include the Acquisitions of 9 drive-through qsrs for 14.9 million.

Mark: 6 automotive service centers for 7.9 million.

Mark: 5 convenience stores for 33.3 million and 4 Express. Tunnel Car Washes, for 5.5 million.

Mark: Net of amounts funded in Prior periods.

Mark: We also Advanced incremental development funding in the amount of 4 million for the construction of 3 auto service centers and 1 expressed Tunnel Car Wash.

Mark: These assets are either already owned by the company and are under construction or will be acquired via sale East back transaction at the end of the Project's respective construction period.

Mark Olear: Beyond our disclosed pipeline of more than $90 million of investments under contract, the majority of which we expect to fund over the next 6 to 9 months at average initial cash yields in the high 7% area, we continue to source actionable opportunities that are priced at accretive spreads and will be additive to our portfolio as we look to further scale and diversify our business. Moving on to our redevelopment platform, we advanced several projects this quarter, which are in various stages of the redevelopment process. At quarter end, we had 4 signed leases for new-to-industry oil change locations, of which 2 are under construction, and we have additional projects in various stages in our pipeline. Continuing with our asset management efforts, during the quarter, we sold 3 properties for $3.2 million.

Mark: Substitute subsequent to quarter end. We invested in additional 18.5 million. Bringing our year to date total Investments to 95.55 million at an 8.1% initial cash. Yield

Mark: Beyond our disclosed pipeline of more than 90 million of Investments, under contract. The majority of which we expect to fund over the next 6, to 9 months, at average initial cashier yields, in the high 7% area, we continue to Source actionable opportunities that are priced at a creative spreads and will be additive to our portfolio as you look to further scale and diversify our business,

Mark: Moving on to our Redevelopment platform, we Advanced several projects this quarter which are in various stages of the Redevelopment process.

Mark: At quarter end, we had 4 sign leases for new to Industry oil change, locations of which 2 are under construction and we have additional projects in various stages in our pipeline.

Mark Olear: As it relates to the 12 express tunnel car wash assets that were previously leased to Zips Car Wash, we have effectively concluded the repositioning of this portfolio, and the results were in line with our previous disclosures. Zips remains our tenant at 6 properties, and 5 of the sites are now subject to new leases with 2 new experienced car wash operators. While both operators are new to Getty's portfolio, each has an existing presence in the market where they acquired assets, and we look forward to developing these relationships moving forward. The remaining property is under contract to be sold, which we expect to close by year-end. With that, I'll turn the call over to Brian.

Mark: Continuing with our asset management efforts during the quarter, we sold 3 properties for 3.2 million.

Mark: As it relates to the 12 Express Tunnel Car Wash assets that were previously to Zips Car Wash. We have effectively concluded the repositioning of this portfolio and the results were in line with our previous disclosures.

Mark: Zips remains are tenant at 6 properties.

Mark: And 5 of the sites, are now subject to new leases with 2 new experienced Car Wash operators.

Mark: While both operators are new to Gettys, portfolio. Each has an existing presence in the market, where they acquired assets,

Mark: And we look forward to developing these relationships moving forward. The remaining properties under contract to be sold which we expect to close by year end.

Brian Dickman: Thanks, Mark. Morning, everyone. Chris went through the earnings highlights in his opening remarks, and a more detailed description of our quarterly results can be found in our earnings release. Our corporate presentation also contains additional information regarding our earnings and dividend per share growth over the last several years. Looking at G&A a little more closely, management focuses on the ratio of G&A, excluding stock-based compensation and non-recurring retirement costs, to cash rental and interest income. This ratio was 9.9% for the Q2 ended 30 June 2025, and 10.2% for the H1 ended 30 June 2025, both of which were essentially flat to the comparable periods in 2024. For the full year 2025, we do expect to see an improvement versus full year 2024.

Brian Dickman: With that, I'll turn the call over to Brian.

Speaker Change: X, mark. Good morning, everyone.

Christopher Constant: Chris went through the earnings highlights and his opening remarks and a more detailed description of our quarterly results can be found in our earnings release.

Christopher Constant: Our corporate presentation also contains additional information regarding our earnings and dividend per share growth over the last several years.

Christopher Constant: Looking at GNA, a little more closely management focuses on the ratio of GNA, excluding stock-based compensation and non-recurring, retirement costs to cash rental and interest income.

Christopher Constant: This ratio was 9.9% for the quarter ended June 30th 2025.

Christopher Constant: And 10.2% for the 6 months, ended June 30th 2025 both of, which were essentially flat to the comparable periods in 2024.

Brian Dickman: In general, we remain focused on improving overhead efficiency and expect our relative G&A burden to decrease further as we continue to scale the company. Moving to the balance sheet and liquidity, at quarter end, net debt to EBITDA was 5.2 times or 4.6 times, taking into account unsettled forward equity. We continue to target leverage of 4.5 to 5.5 times net debt to EBITDA and are well positioned to maintain those levels going forward. Fixed charge coverage was 3.9 times for the quarter. As of 30 June 2025, the company's weighted average debt maturity was 5.1 years, and the weighted average cost of our debt was 4.5%. As a result of our debt financings earlier this year, we have no debt maturities until 2028.

Christopher Constant: for the full year 2025, we do expect to see an improvement versus full year 2024

Christopher Constant: And in general, we remain focused on improving overhead efficiency and expect our relative GNA burdens to decrease further, as we continue to scale the company.

Christopher Constant: Times or 4.6 times taking into account, unsettled forward Equity, we continue to Target leverage of 4 and a half, to 5 and a half times, net debt to Evita and are well positioned to maintain those levels going forward.

Christopher Constant: Fixed charge coverage, was 3.9 times for the quarter.

Christopher Constant: As of June 30th 2025 the company's weighted average debt maturity was 5.1 years and the weighted average cost of our debt was 4.5%.

Brian Dickman: During Q2, we settled approximately 1.2 million shares of common stock subject to forward sales agreements for net proceeds of approximately $32.8 million. At quarter end, we had approximately 3.9 million shares of common stock subject to forward sales agreements, which upon settlement, are anticipated to raise gross proceeds of approximately $118.8 million. We continue to be in a strong capital position with more than $400 million of total liquidity at quarter end, including unsettled forward equity, capacity on our revolver, and cash on the balance sheet. Our under contract investment pipeline is fully funded, and we have capacity to fund additional investment activity as we move through 2025.

Christopher Constant: as a result of our debt financing earlier, this year, we have no debt maturities until 2028

Christopher Constant: during the second quarter, we settled the proximately 1.2 million shares of common stock subject, to forward sales agreements for net, proceeds of approximately 32.8 million

Christopher Constant: At quarter end, we had a proximately 3.9 million shares of common stock subject, to forward sales agreements, which upon settlement are anticipated to raise gross proceeds of approximately 118.8 million.

Christopher Constant: We continue to be in a strong Capital position with more than 400 million dollars of total liquidity. A quarter end, including unsettled forward, Equity capacity, and our revolver and cash on the balance sheet.

Brian Dickman: With respect to guidance, as a result of our year-to-date investment activity and the repositioning of the Zips portfolio, we are increasing our full year 2025 AFFO per share guidance to a range of $2.40 to $2.41 from our prior guidance of $2.38 to $2.41. As a reminder, our outlook includes completed transaction activity as of the date of our earnings release, but does not include assumptions for prospective acquisitions, dispositions, or capital markets activities, including the settlement of outstanding forward sales agreements. Primary factors impacting our 2025 guidance include variability with respect to certain operating expenses, certain transaction-related costs, and the timing of anticipated demolition costs for redevelopment projects, which run through property costs on our P&L. With that, I'll ask the operator to open the call for questions.

Christopher Constant: our under contract investment pipeline is fully funded and we have capacity to fund additional investment activity as we move through 2025,

Christopher Constant: With respect to guidance as a result of our year-to-date investment activity. And the repositioning of the zip portfolio, we are in our full year 2025 afo per share, guidance to arrange of $2.40 to $241 from our prior guidance of 2038 cents to 2041 cents,

Christopher Constant: As a reminder, our Outlook includes completed transaction activity as as of the date of our earnings release, but does not include assumptions for prospective Acquisitions dispositions or Capital markets activities, including the settlement of outstanding forward sales agreements.

Christopher Constant: Primary factors impacting, our 2025 guidance include variability, with respect to certain operating expenses, certain transaction related costs and the timing of anticipated demolition costs for redevelopment projects which run through property costs on our p&l.

Christopher Constant: That I'll ask the operator to open the call for questions.

Operator 3: Thank you. Our first question is from Brad Heffern with RBC Capital Markets. Please proceed.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tower will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. Our first question is from Brad Heffern with RBC Capital Markets. Please proceed.

Speaker Change: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad, a confirmation total indicate. Your line is in the question queue. You may press star 2. If you would like to remove your question from the queue for participant, choosing speaker equipment, may be necessary to pick up your handset before pressing the star Keys 1 moment, while we pull up for questions.

Speaker Change: Our first question is from Brad heffern with RBC Capital markets, please proceed.

Brad Heffern: Hi. Morning, everyone. You called out the accelerating investment activity in the prepared remarks. What do you attribute that to? Is it just people getting comfortable with the tariffs? Is it seasonality, or is it something else?

Speaker Change: Hi morning everyone. Um you called up the accelerating investment activity. In the prepared remarks what do you attribute that to um, is it just people getting comfortable with the tariffs? Is it seasonality? Or is it something else?

Christopher Constant: Yes, Mark, I think, yeah. We've definitely seen more willingness to get back into the transaction market. Those companies that are looking to continue to grow, need sources of capital. We're a good option for that. We talked about some pricing, which remains kind of in line with the earlier in the year. Our team's been able to source and use its relationship building with our existing tenants, source some new tenants, spread out the investments across all of our asset classes. Yeah, I think it's just the more willingness for those, the market to transact, and we've been staying on those relationships through the entire cycle and we're ready to party with them.

Mark Olear: Yes, Mark, I think, yeah. We've definitely seen more willingness to get back into the transaction market. Those companies that are looking to continue to grow, need sources of capital. We're a good option for that. We talked about some pricing, which remains kind of in line with the earlier in the year. Our team's been able to source and use its relationship building with our existing tenants, source some new tenants, spread out the investments across all of our asset classes. Yeah, I think it's just the more willingness for those, the market to transact, and we've been staying on those relationships through the entire cycle and we're ready to party with them.

Speaker Change: Yes, Mark I think uh you have we definitely seen a a more willingness to uh get back into the transaction Market. Um, those companies that are looking to continue to grow, you know, need source to Capital. We're a good option for that. Um, we talked about some pricing which remains kind of uh, in line with the uh, earlier in the year, but our team's been able to, you know, source and

Speaker Change: Uh, use its relationship building with our existing tenants or some new tenants, uh spread out the Investments across all of our asset classes. Um, and uh, yeah, I think it's just the more willingness for, for those, uh, the market to transact. And we've been, you know, staying on those relationships through the entire cycle and and, you know, we're ready to to partner with them.

Brad Heffern: Okay. Thanks for that. Now that Zips is in the rearview mirror, can you just talk about your overall comfort level on the car wash space? Is there anything of note at this point on the watchlist?

Christopher Constant: I'll start with the back half of that question, which is there's nothing of note on our watchlist with respect to our car wash tenants. We said this on prior calls, and we continue to be very comfortable with the express tunnel car wash as part of our investment thesis, right? It's the mobile consumer. I think the model has proven to be working throughout the last several years. The majority of our tenants, or the vast majority of our tenants, are large operators with networks that are primarily focused either on a region or even national. We're actually very happy that we've seen probably a slowdown in new store count, right? More focus on the profitability and letting these newer industry stores mature. We're comfortable with where we are. We're selectively adding, right, if we see good opportunities in the sector.

Speaker Change: Okay, thanks for that. Um and then now that zips is in the rearview mirror. Can you just talk about your overall Comfort level on the car wash space and um is there anything of of note at this point on the watch list?

Speaker Change: So I'll start with the the back half of that question, which is there's nothing of note on our watch list with, with respect to our car wash tenants. Um, we said this on prior calls, you know, we

Speaker Change: Continue to be very comfortable with the express Tunnel Car, Wash, as part of our investment thesis, right the mobile consumer.

Speaker Change: proven to be working um, throughout

Speaker Change: The last several.

Speaker Change: um the majority of our tenants are the vast majority of our tenants are large operators with networks, that are that are primarily focused either on a region or even National um,

Christopher Constant: Again, I think we're very pleased with how we've seen the coverage ramp up for 2 consecutive quarters for the sector.

Speaker Change: And um we're we're actually very happy that we've seen. Probably a a Slowdown in new store count, right? And more focus on the profitability isn't letting these newer Industries stores mature. Um, so we're we're comfortable with where we are. Um, we're selectively adding right if we see good opportunities in the sector. And um, again, I think we we're very pleased with how we've seen the coverage ramp up for 2 consecutive quarters for the sector.

Brad Heffern: Okay. Thank you.

Speaker Change: Okay, thank you.

Operator 3: Our next question is from Mitch Germain with Citizens JMP. Please proceed.

Operator: Our next question is from Mitch Germain with Citizens JMP. Please proceed.

Speaker Change: Our next question is from Mitch, Germaine with citizens JMP. Please proceed.

Mitch Germain: Thank you. The more constructive stance, Chris, toward investments or toward deals, I guess you said, is that a suggestion that we're seeing a narrowing of that bid-ask? Are sellers now embracing this higher interest rate?

Uh, thank you. So, um, the more constructive stance Chris toward, um, Investments or or, or toward deals, I guess, you said

Christopher Constant: Yeah

Mitch Germain: kind of pricing paradigm?

Christopher Constant: I think, yeah, I'll echo what Mark said, which is I think there was a lot of noise just generally in Q1 of the year. When you look at the performance of our tenants, right? There continue to be healthy businesses operating in sectors that have a lot of positive fundamentals and even overall macro themes, right? That they're continuing to benefit from. As these folks look to either grow through M&A or through new store builds, we've been a very consistent capital provider in our target markets. I think what we're seeing now is folks are kind of returning towards growth. Some of our consistent presence and dialogue with repeat business and existing tenants and even new tenants, we're starting to see that flow through various stages in our pipeline.

Speaker Change: Is that a suggestion that we've we're seeing in narrowing? Of that bid ask is are sellers now, embracing this higher interest rate, what kind of pricing paradigm?

Speaker Change: I I think I'll Echo what Mark said, which is, I think there was a lot of noise just generally in the first first quarter of the year. Um, when you, when you look at the performance of our tenants, right? That that continue to be, uh, healthy businesses operating at sectors that have a lot of positive fundamentals. And, and even, um, you know, overall macro themes, right? That that they're continue to benefit from and and, um,

Speaker Change: These folks look to either growth or m&a or through a new store builds. Um, you know, we've been a very consistent uh, Capital provider um, in our Target markets and um, I think what we're seeing now is kind of returning towards growth. Um,

Speaker Change: and some of our consistent presence and dialogue with

Speaker Change: repeat business and existing tenants, and even new tenants. Um, we are starting to see that flow through various stages in our pipeline.

Mitch Germain: I know you've made some investments, particularly on the acquisition side. Are we seeing the benefits of those investments in the numbers today, or do you think that that's still really kind of in the future that you'll really begin to see some of those benefits?

Christopher Constant: Yeah

Mitch Germain: kind of that.

Christopher Constant: No. We've added personnel to look at deals across the four sectors that we invest in. We've invested in technology. I think you're starting to see those pay off. We're hopeful as an organization that our growth will continue to accelerate. We believe that the investments are important today and will be even more important as we scale the business going forward.

And I know you've made some Investments, particularly on the, uh, acquisition side or have. Where are we seeing the benefits of those investments in the numbers today? Or do you think that that's still really kind of in the future that you'll really begin to see some of those, you know, kind of yeah.

Mitch Germain: Gotcha. Last one from me. Any change in lease structure, in terms of your ability to maybe get higher escalators or are you requiring some sort of security just to avoid any credit issues in the future? Anything that has shifted there?

Speaker Change: No, so we we've added Personnel to look at at deals across the 4 sectors that we invest in, we've invested in technology. Um, I think you're starting to see those payoff, you know, we're we're hopeful as an organization that our growth will continue to accelerate. Um, and and so we we believe that um the Investments are important um today and there will be even more important as we scale the business going forward.

Gotcha. Last 1 for me, any change in, uh, lease structure. Um, in terms of, you know the your ability to maybe get higher escalators or um, you know, are you requiring, you know, some sort of security, uh, you know, just to avoid any credit issues in the future, anything that has shifted their

Christopher Constant: Broadly speaking, no change to our lease structure. We continue to prioritize unitary master leases. Escalations generally are hovering in that 2% area today. We're mindful, especially being sale-leaseback providers, where we're structuring the transaction and negotiating the lease on our form, right? That you've got to have an operator that can grow that business in order to support an increasing rent over time. We're not necessarily trying to push for significantly higher rent bumps there. Security guarantees, all the other attributes of a true triple net lease on our form. There's definitely some negotiation by transaction. We get various enhancements, again, through our business model, consistent with how we've always done it, Mitch, to be honest with you.

Speaker Change: Um, so, broadly speaking. No change to our lease structure. We continue to prioritize, you know, unitary Master leases

Mitch Germain: Thank you.

Speaker Change: Um you know escalations generally are are hovering in that 2% area today. Um you know we're we're mindful, especially being sale East back providers where we're structuring the transaction and negotiating the lease on our form right, that you've got to have an operator that can grow that business in order to support an increasing rent over time. So, you know, we're not necessarily trying to push for for significantly higher rent, bumps there, um, you know, security guarantees. Um, all all the other actions of a a true triple net lease on our Forum. Now there's there's definitely some negotiation by transaction but we we get various enhancements. Um, again through through our business model, um, consistent with how we've always done it and that's to be honest with you,

Speaker Change: Thank you.

Operator 3: Our next question is from Upal Rana with KeyBanc Capital Markets. Please proceed.

Operator: Our next question is from Upal Rana with KeyBanc Capital Markets. Please proceed.

Speaker Change: Our next question is from UPA Rana with Key Bank, Capital markets, please proceed.

Upal Rana: Great. Thank you. Chris, you mentioned that you're all set up well for the H2 in terms of investment spend. Could you give us a sense of how the H2 may play out? Earlier this year you mentioned most of the investment spend for 2025 will mostly be H2 weighted. Is that still the case?

Great, thank you. Uh, Chris you mentioned that you're all set up, well, for the back half in terms of investment, spend, you know, could you give us a sense of how, the back app may may play out? You know, earlier this year. You mentioned, most of the Investments. Spend for 25 we'll mostly be back halfway. Is that still the case?

Christopher Constant: We got on the phone last quarter, right, it was actually our slowest closing quarter since Q4 2019. Some of that was because our pipeline at that point in time was a lot of development funding, which has a natural lag. I think what you saw this quarter, and even into some of our pipeline deals, is that

Speaker Change: So you know, we got on the phone last quarter, right? It was it was actually our slowest closing quarter since the fourth quarter of 2019. Um some of that was because our pipeline at that point in time was a lot of development funding which has a natural lag. Um I think what you saw this quarter and even into some of our pipeline deals is that

Christopher Constant: A lot more acquisition activity is flowing through our business, whether it's in the pipeline or under contract or now closed. We're at $95.5 year to date. We've obviously got the pipeline that which is just over $90. A lot of that we think will close in 2025. Quite frankly, the team is out there underwriting deals, and we hope to be able to add to that and still get more deals closed as this year goes on that have yet to touch that pipeline number. I'll just go back to what Mark says. I think people are looking to grow their businesses. We're a consistent capital provider to these sectors, and we're really happy with how we're seeing more activity in all stages of our pipeline across all the sectors that we invest in.

Speaker Change: Um, a lot more acquisition activity is slowing through our business, right? Whether it's in the pipeline or under contract, or now closed. Um, so Brett 95.5 year to date, uh, we've got the pipeline which is just over 90. Um, a lot of that, we think will close in 2025 and quite frankly, the team is out their underwriting deals and we hope to be able to add to that and still get more deals closed. Um, as this year goes on that that have yet to touch that pipeline number. So,

Speaker Change: um I I'll just go back to what Mark says I

Speaker Change: Think people are looking to grow their businesses or a consistent Capital provider to the sectors. Um, and we're really happy with how we're seeing more activity in all stages of our pipeline across, all the sectors that we invest in.

Upal Rana: Okay, great. That was helpful. On the cash cap rates, your investment spreads in the quarter, you saw an increase to 8.1. What was driving that, and should we expect similar cap rates going forward into H2?

Christopher Constant: Yeah, we haven't seen a lot of change. We've said that the market is there in the kind of mid to high sevens touching eight. Again, certain transactions may have been just north of eight, which is what drove the number this quarter. In Mark's remarks, he said that the $90+ million in the pipeline is priced in aggregate in the high sevens. Again, for Getty, our view has been that's where the market is for H1 of this year, and that's where it will continue to be as we move through the balance of the year.

Speaker Change: The cash cap rates, uh, in your investment, Sprints in the quarter, you know, they you saw an increase to 81, you know, what was driving that and and should we expect similar cap rates going forward into into the back half.

Yeah, we don't, we haven't seen a lot of change. We've said that the market is, is there in the in the kind of mid to high 7s touching 8. Again, certain certain transactions, may have been just just north of 8 which which is what drove the number of this quarter. But uh, and marks and marks, you know, he said that the the 90 plus million dollars in the pipeline is, is priced and aggregated in the high sevens. Again, our our that's forgetti. Our view has been, that's where the market is, for the first half of the year, and that's where we'll continue to be as we move through the balance of the year.

Upal Rana: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Operator 3: Our next question is from Daniel Buehn with Bank of America. Please proceed.

Operator: Our next question is from Daniel Buehn with Bank of America. Please proceed.

Speaker Change: Our next question is from Daniel bun with Bank of America. Please proceed.

Daniel Buehn: Hello. It was mentioned that the bid ask spread was tightening and you're seeing cap rates around the high sevens for the $90 million pipeline. Are you seeing any heightened competition within the buyer pool?

Daniel: Hello. Uh, it was mentioned that the big ass price was or the bid ass spread was tightening. And you're seeing cap rates around the high 7th, for the 90 million dollar pipeline, are you seeing any heightened competition within the buyer pool?

Christopher Constant: Boy. The sectors that we invest in, I think if you look across net lease portfolios, we have a lot of competition in the public markets. There is obviously a big private market as well. We are a primarily direct sale-leaseback provider, where we are not necessarily always looking at the marketed deals. We are trying to generate business through traditional business development, through repeat business, or relationships that we have in the sector. I think there has always been competition. We think we can find transactions that are compelling for our portfolio that may be less competitive. Again, just to go back to Mark's comments, we have had a view of pricing, and I think what we are seeing now is tenants are looking to transact and grow their businesses, and that is why you have seen some accelerating activity for us.

Daniel: Boy, um, you know, the sectors that we invest in, I think if you look across and at least, uh, portfolios, we have a lot of competition in the public markets. There's obviously a big private Market as well. Um, you know, we are a primarily direct sales back provider where we're not necessarily always looking at the market of deals. We're trying to achieve

Daniel: Generate business.

Daniel: Through traditional Business Development or through repeat business or relationships that we have in the sector. Um, so I think there's always been competition. We think we can find transactions that are compelling for our portfolio that maybe less competitive. Um, and again, just to go back to to Mark's comments, you know, we we've had a view of pricing and I think what we're seeing now is tenants are looking to transact and grow their businesses and and that's why you've seen some accelerating activity for us.

Daniel Buehn: Got it. Thank you. Just to kind of follow up on the improved rent coverage in the car wash, is that mainly the ZIPS resolution or is there anything underlying that we should be aware of?

Daniel: Got it. Thank you and just kind of follow up on the improved. Uh rent coverage in the car. Wash. Does that mean the Zips resolution or is there anything underlying that we should be aware of?

Brian Dickman: No. Hey, Daniel, it's Brian. Actually, ZIPS was not in our numbers last quarter either, given the situation there. This was really organic, fundamental improvement across the portfolio. As Chris mentioned in his remarks, it was the second quarter we've seen this type of improvement. I think what we're looking at, there's the magnitude of improvement, sure. It's really across the portfolio and in each of our leases, I think that breadth of improvement is what we find encouraging. Chris mentioned also that we do have a significant portion of that portfolio that are relative new builds in that stabilization period. Again, just to remind you, but we put properties in our data when they've been open for 1 year. Car wash is typically stabilized closer to 3 years, you are seeing that ramping of those operations having a positive impact on coverage.

Daniel: No, hey, Daniel. It's Brian actually. Zips was not in our numbers, uh, last quarter, uh, either, um, you know, given the situation there. So, this was really organic fundamental Improvement across the portfolio. It's Chris mentioned in his remarks, it was the second quarter. We've we've seen, uh, this type of improvement. I think what we're looking at. There's, there's the magnitude of improvement. Sure. But it's, it's really across the portfolio and in each of our leases and I think that breadth of improvement is what we find. Uh encouraging. Um, and then Chris mentioned also that we do have an a significant, you know, portion of that portfolio that are relative new builds in that stabilization period again. Just to remind you. But we put properties in our data when they've been open for a year. Uh Car Wash is typically stabilized closer to 3 years and so

Daniel: You are seeing uh that ramping of those operations, having a positive impact on coverage.

Daniel Buehn: Got it. Thank you so much.

Got it. Thank you so much.

Operator 3: Our next question is from Wes Golladay with Baird. Please proceed.

Operator: Our next question is from Wes Golladay with Baird. Please proceed.

Wes Golladay: Hey, good morning, guys. If you were to source more traditional acquisitions, what is the lag time typically between identifying the deal for the pipeline and the next-?

Speaker Change: Our next question is from wescal a day with beard. Please proceed.

Speaker Change: Hey, good morning guys. Um, if you were to Source more traditional Acquisitions, what is the lag time? Typically between identifying, the deal for the pipeline and the

Christopher Constant: When you say traditional, like you're like a net leased existing property or a sale-leaseback?

Operator 1: Acquisition or sale-leaseback versus a development. I just want to exclude the developments from the conversation.

Wes Golladay: Acquisition or sale-leaseback versus a development. I just want to exclude the developments from the conversation.

Speaker Change: when you say traditional like your like a net lease, uh, existing property or a sale is back,

Christopher Constant: Oh, I'm sorry. Yeah.

Operator 1: for this acquisition.

Operator: for this acquisition.

Christopher Constant: Excluding development. I would say that from initiation of the first conversation through letter of intent, due diligence, the contract process, that can be anywhere from accelerated 60-day period to 110, 120-day period. Each deal is slightly different depending. Sometimes we are subject to the buyer-seller transaction on the business side. We always keep pace with the deal and try and get them done as quickly as possible.

Wes Golladay: Okay. When you look at your existing pipeline of the $90 million plus, is there a lot of new relationships in the pipeline?

Speaker Change: And acquisition or or, or sell lease back versus a development. I just want to exclude the developments from the conversation between development. Um I would say that you know from initiation of the first conversation through letter of intent, due diligence. You know the contract process that can be anywhere from you know accelerated 68 period to 100 128 period you know each deal is slightly different depending sometimes. We're subject to the you know, buyer seller transaction in the business side, but we're, you know, we always keep Pace with with the deal and try and get them done as quickly as possible.

Okay. And when you look at your existing pipeline of the 90 million plus, uh, is there a lot of new relationships in that? Then in the pipeline?

Christopher Constant: I mean, it's a healthy blend. Again, the team has done a really good job of not only maintaining relationships with our existing tenant roster, and being selective as they become more select. Chris mentioned there's a return to focus on just growing the business, perfecting the business, and being more selective on some of the de novo developments. Also, through our business development, our industry reach, people becoming more and more aware as we get more momentum in the verticals that we're newer to. We like to think that not only geographically, tenant wise, and vertical wise, it's a pretty good blend.

Speaker Change: Uh, 10 wise and vertical Wise, It's a pretty good blend.

Wes Golladay: Okay. Last one from me. When you look at the One Big Beautiful Bill, is there anything there that could spur more demand for you?

Speaker Change: Okay. And last 1 for me, when you look at the 1 big beautiful bill. Is there anything there? That could spur more demand for you.

Christopher Constant: I think just looking across at our operators, lower taxes. Again, our view is that our tenant base generally does not have a large exposure to tariffs. Especially some of the automotive service sectors could actually benefit. A lot of C-store supply chains aren't necessarily tied to some of the countries that are more at risk from a tariff perspective. I think, quite frankly, less certainty that our tenants now have as to the environments they're going to be operating in for the next year or two, or I guess for the next several years. That's been very helpful, just in terms of knowing the playing field for them, and then that they can then think through how they want to continue to operate and grow their businesses.

Speaker Change: Yeah, man. I think, you know, just to look across at our operators, right? You know, lower lower taxes. Um, again we, you know, our our view is that our tenant base.

Speaker Change: Generally, um, something I have a large exposure to tariffs, um, you know, especially some of the automotive service. Sectors could actually do get better, right? Um, you know, a lot of sea store Supply chains aren't necessarily tied to some of the the, uh, countries that are

Speaker Change: More risk on from a tariff perspective. Um,

Speaker Change: I I think quite frankly, the last West West uh certainty that um our tenants still have as to the environments that are going to be operating in for for the next

Speaker Change: Year, or 2 or I guess for the next several years. Um, that's been very helpful, right? Just in terms of knowing the, the, the playing field for them and then that they can then think through how they want to continue to operate and grow their businesses.

Wes Golladay: Okay. Thanks for the time, guys.

Speaker Change: Okay, thanks for the time, guys.

Operator 3: Our next question is from Michael Gorman with BTIG. Please proceed.

Operator: Our next question is from Michael Gorman with BTIG. Please proceed.

Our next question is from Michael Gorman with btig. Please proceed.

Michael Gorman: Yeah, thanks. Good morning. Just had a question maybe going with the car washes again here. Chris, I'm curious your thoughts. You talked about focusing on profitability, the operators. Where are we in the competitive cycle with the express tunnel car washes, right? I'm still seeing headlines of new entrants into the industry. I guess that's just my question. Where are we in the evolution? Are we going to get some consolidation here from existing operators? How do you think about that as you're constructing the portfolio?

Michael Gorman: Yeah. Thanks, good morning. Um, just had a question maybe going with the car washes again here. Chris, I'm curious your thoughts. You talked about focusing on profitability, The Operators, where, where are we in the competitive cycle with the express Tunnel Car Washes, right? I still seeing headlines of new entrance into the industry. Um, but

Christopher Constant: Yeah. I think you've seen some consolidation, right? Obviously, Whistle bought the Driven US platform earlier this year. That put Whistle as the number 1 operator. What I think has been interesting is there's been some acquisitions, like Circle K made a significant acquisition, is now a big player. Quick Quack Car Wash was a private equity, but that was a big transaction earlier this year. I think you've started to see some consolidation, some recaps in the sector. I think, like any business, there's always going to be new entrants. Again, what we've done for Getty is really tried to focus on the larger, more established platforms, right? I think you've got to be a good operator. You've got to know how to manage a network. You got to have a good handle on your membership or subscription program. I think, yes, I think new entrants have slowed down.

Michael Gorman: I, I guess that's just my question. Where, where are we in the evolution? Are we going to get some consolidation here from existing operators? And how do how do you think about that as you're constructing the portfolio?

Chris: Yeah, man, I think you you've seen some consolidation, right? You know, obviously whistle uh bought the driven us platform or this year. Um so that was that put whistle as the number 1 operator. Um, you know what I think has been interesting is there's been some Acquisitions like Circle K made a significant. Um acquisition is now a big player, a Quick Quack was a private Equity but that was a big transaction earlier this year. So I think you've started to see

Chris: Some consolidation, some, some Recaps, uh, in the sector. Um, you know, I think like any business, uh, there's always going to be new entrance. So again, we what we've done in the for Getty is really tried to focus on the larger, more established platforms, right? I think you've got to be a good operator, you've got to know how to manage a network. You got to have a good handle on your uh, membership or subscription program. Um,

Chris: so, I think

Christopher Constant: Yes, I think new stores have maybe slowed down. Again, in our view, I'd echo what I said earlier, which is focusing on profitability and perfecting your membership or subscription program and how you're kind of working with the consumer. We don't think that's a bad thing, right? I think that's what you're seeing as our coverage has ticked up inside our portfolio.

Chris: Yes, I think new entrance have slowed down. Yes, I think new stores have maybe slowed down but again in our view I'd Echo what I said earlier which is focusing on profitability and perfecting your

Chris: Your membership or subscription program and how you're kind of working with the consumer. We don't think that's a bad thing. Uh, right. And I think that's what you're seeing. As our coverage is ticked up inside our portfolio.

Michael Gorman: That's helpful. I apologize if I missed it, but as you think about the pipeline and the deals that you've done year to date, is there a major stratification or a meaningful stratification in the cap rates between the different verticals that you're looking at or the competition levels that you're seeing in the different property types amongst the QSRs, the auto service, the car wash, and the C stores?

Christopher Constant: There's not a significant stratification on cap rate, right? Again, I'd call it mid sevens through into the low eights. If you call it 50 basis points wide on cap rates across what we've done this year. Competition, Mark. I don't think there's that much of a difference in terms of competition by asset class.

Speaker Change: That that's helpful and I apologize if I missed it. But as you think about the the pipeline and and the deals that you've done year to date, is there a major stratification or a meaningful stratification in the in the cap rates, um, between the different verticals that you're looking at, or the competition levels that you're seeing in the different property types, you know, amongst the qsrs, the auto service, the the car wash and the Sea stores

Speaker Change: Um so there's not a significant stratification on cap rate, right? Um, you know again, I'll call it mid

Speaker Change: Mid mid 77s through into the low 8s, right? So, you know, if you call it 50 basis points, you know, wide on on cap rates across across what we've done this year. Um,

Mark Olear: No. I think the competitive landscape has remained generally unchanged recently. As Chris said, the attractiveness of the verticals that we invest in are part of other parties' investment programs also. That's something we've dealt with, not only recently, but for years. It's our job to continue to position ourselves to keep that pipeline filled with accretive deals and consistent with our strategy, our underwriting standards. You could view it as competition is a validation of our thesis of how strong we think those asset classes are. We just continue to keep that pipeline filled.

Speaker Change: You know, competition. I don't think there's that much of a difference in terms of competition by out of the class, I think so. Yeah. I think the competitive landscape has remained generally on change. Uh, recently, as Chris said, you know, um,

Speaker Change: The the attractiveness of the verticals that we invest in are part of other other parties, uh, you know, investment programs also. And you know, it's it's, that's something we've dealt with, uh, not like recently, but for for years and, you know, it's, it's our job to continue to to position ourselves, uh, to to keep that pipeline filled with, with the creative deals and consistent with our strategy underwriting standards. So,

Speaker Change: you know, it, you could view it as competition as a validation of, of our thesis of how how strong we think those those asset classes are, we just continue to keep that pipeline filled.

Michael Gorman: Great. Thank you.

Speaker Change: Great. Thank you.

Operator 3: Our next question is from Michael Goldsmith with UBS. Please proceed.

Operator: Our next question is from Michael Goldsmith with UBS. Please proceed.

Speaker Change: Our next question is from Michael Goldsmith with UBS, please proceed.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. In the press release, Chris, you said that you were identifying new investment opportunities. I just want to clarify. Is that within your existing verticals, or does that identifying new investment opportunities suggest that you're looking kind of outside of some of the stated verticals that you already have exposure to?

Christopher Constant: No, there's no current plans for us to expand beyond our four primary target sectors. My comments were really that the team's doing a great job of bringing in repeat business, new relationships. We've added more than 40 new tenants to the portfolio over the last several years. We're really diversifying the business, whether that's by sector, by tenant, geographically. We think these are large addressable markets, healthy tenants, growing tenants that need capital to execute their business plans.

Speaker Change: Uh, in the press release you, you said that you were identifying new investment opportunities. I just want to clarify is that within your existing verticals or does that identify, new investment opportunities suggest that you're looking kind of outside of some of the you know the stated uh verticals that that you already have exposure to.

Speaker Change: No, there's there's no current plans for us to expand beyond our 4 primary target sectors. Uh, my comments were really, uh, that the teams did a great job of, you know,

Speaker Change: Bringing in repeat business, new relationships. Uh, you know, we've added more than 40, new tenants to the portfolio over the last several years. So we're we're really

Speaker Change: You know, diversifying the business, whether that's 5 sector by tenant geographically. Um,

Speaker Change: but we think these are large, addressable markets healthy, tenants growing tenants that need Capital to execute their business plans.

Michael Goldsmith: Got it. Thanks for that. My follow-up is, there was a large environmental expense accrual taken during the period. I think that's backed out of AFFO, so doesn't influence guidance, but would influence cash flow. Can you just provide a little bit of color what's going on there and just kind of the history of these type of accruals and how we should be thinking about them going forward? Thanks.

Brian Dickman: Sure, Michael. This is Brian. That accrual is related to one of the litigation cases that are disclosed in our 10-Q. There's been some lengthy disclosure in our filings for 10, 12, 15 years on some of these cases. It goes back to when Getty was an owner/operator decades ago. Most of these have been resolved. The remaining ones, again, are disclosed in our filings. I think our perspective on this is it is a positive that this case has progressed to the point where we can estimate a potential settlement and sort of put an order of magnitude around that. Obviously, subject to all the accounting standards on how to estimate and book these accruals.

Speaker Change: Got it, thanks for that. And, and my follow-up is, there was a large environmental expense approval taken During the period. I think that's backed out of afo, so doesn't influence guidance, but would impo influence, uh, cash flow can can you just provide a little bit? Because our what's going on there? And and, you know, uh, just kind of this history of these type of across and how we should be thinking about them going forward. Thanks.

Speaker Change: Sure, Michael this is Brian asadata crew is related to 1 of the litigation cases that are disclosed in our 10q. Uh, there's been some lengthy disclosure in our filings for

Brian Dickman: Again, it's related to one of those cases that are disclosed in the filings, and we think it's a positive that it's progressing and allows us to book an accrual to put an order of magnitude around it.

Speaker Change: 1012 15 years on some of these cases. Uh, it goes uh, back to when Getty was an owner operator, uh decades ago, uh, most of these have been resolved, the remaining ones again are disclosed in our filings. I think our perspective on this is it is a positive, uh, that that this case, uh, has progressed to the point where we can estimate, uh, a potential settlement and sort of put an order of magnitude around that uh obviously subject to, you know, all the accounting standards on on how to to estimate and book these approvals. But um, again it's related to 1 of those cases that are disclosed in the filings and we think it's a positive uh that is progressing and allows us to book an approval to to put an order of magnitude around it.

Michael Goldsmith: Great. Thanks for that, Brian. Good luck in H2.

Brian Dickman: Great. Thanks for that Brian. Uh, good luck in the back half.

Brian Dickman: Thanks. Thanks, Michael.

Operator 3: There are no further questions at this time. I would like to turn the conference back over to Christopher for closing remarks.

Operator: There are no further questions at this time. I would like to turn the conference back over to Christopher for closing remarks.

Brian Dickman: Thanks, thanks. Bye.

Christopher Constant: Thank you, operator. Thank you, everyone, for joining us this morning. We appreciate your interest in Getty, and we look forward to getting back on with you when we report our Q3 at the end of October.

Brian Dickman: There are no further questions at this time. I would like to turn the conference back over to Christopher for closing remarks.

Brian Dickman: Thank you operator. Uh thank you everyone for joining us this morning. We appreciate your interest in Getty and we look forward to getting back on with you. When we report our third quarter at the end of October

Operator 3: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Brian Dickman: Thank you, this will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

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