JERICHO, N.Y. -- Expecting 2017 to be a “building year” for Getty Realty Corp., President and CEO Christopher Constant said the company has “completed the repositioning of former transitional properties” formerly leased to Getty Petroleum Marketing Inc. (GPMI). Getty Realty took back the properties when GPMI filed for bankruptcy in late 2011.
Completing that disposition and leasing activity “has been one of our primary strategic initiatives over the past several years,” Constant said during the company’s fourth-quarter 2016 earnings call. “Going forward, we will no longer characterize properties as transitional. … We are now at the point where our resources can be fully dedicated to growing our portfolio.”
Since acquiring these properties, Getty Realty has “either repositioned or sold hundreds of these transitional assets, finally leaving us at the end of the 2016 with a quality portfolio absent any additional overhang in this difficult chapter in our history.”
GPMI filed for bankruptcy on Dec. 5, 2011, a week after Getty Realty said that it was terminating GPMI's master lease for nonpayment of rent. GPMI leased approximately 800 properties from Getty Realty. In July 2013, GPMI reached a settlement to pay creditors $93 million, $32 million of which was earmarked for Getty Realty.
A publicly traded real-estate investment trust (REIT) specializing in ownership, leasing and financing of convenience-store and gas-station properties, Jericho, N.Y.-based Getty Realty ended 2016 with a portfolio of 829 properties, owning 740 properties and leasing 89 properties from third-party landlords in 23 states and Washington, D.C.
The company reported net earnings for the quarter ended Dec. 31, 2016, of $8.3 million, compared to net earnings of $19.9 million for the same period in 2015. It reported net earnings for 2016 of $38.4 million, compared to net earnings of $37.4 million for 2015.
“Our portfolio of well-located convenience-store and gasoline-station properties helped us drive a strong year of cash flow and [adjusted funds from operations] per share growth that resulted in robust shareholder returns in 2016,” Constant said. “With a stable portfolio, we expect 2017 to be a building year as we turn our focus to executing on value-creating opportunities. Our efforts include harvesting our pipeline of potential acquisitions and redeveloping several of our existing properties.”
The company has 13 redevelopment projects with signed leases or letters of intent, and it continues to evaluate its portfolio for other redevelopment opportunities.
“We remain active in the market for potential acquisitions in our core asset class,” Constant said. “We are seeing a mix of single-unit and portfolio acquisition opportunities in geographic regions which overlap with our existing sites and in several markets where we've been looking to add assets.”
Describing the company’s acquisition volume over the past five to six years as “lumpy,” Constant said, “we've done portfolio deals and then we've done one-off deals. … We think we're going to be able to execute on some of those bulk types of opportunities during the year.”
During the quarter, Getty Realty acquired fee-simple interests in two properties for a combined $5.8 million. During 2016, it acquired fee-simple or leasehold interests in three c-store and gas station properties, and an adjacent parcel of land to an existing property for a redevelopment project, in separate transactions, for a total of $7.7 million.
Also during the quarter, the company sold four properties for a combined $2.2 million. During the year, it sold 14 properties for a total of $5.4 million.
As of Dec. 31, 2016, Getty Realty was actively redeveloping six of its former c-store and gas-station properties for alternative single-tenant net lease retail uses, such as restaurants, bank branches or financial services. The company also signed leases on seven properties that are part of its net lease portfolio.
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