Getty Realty Corp (GTY) Reports Record Investment Activity and Solid Financial Results for Q4 …

• Net Earnings: Reported at $0.30 per share for Q4 and $1.15 for the full year.

• Funds From Operations (FFO): Q4 FFO stood at $0.51 per share, with an annual FFO of $2.06 per share.

• Adjusted Funds From Operations (AFFO): AFFO reached $0.57 per share in Q4 and $2.25 per share for the year.

• Investment Activity: A record $326.3 million invested across 81 properties in 2023.

• Rental Income Growth: Base rental income grew by nearly 10% year-over-year.

• Balance Sheet Strength: Total outstanding indebtedness of $760 million with a strong credit profile.

• 2024 Guidance: AFFO guidance reaffirmed at $2.29 to $2.31 per diluted share.

On February 14, 2024, Getty Realty Corp (NYSE:GTY) released its 8-K filing, detailing its financial and operating results for the fourth quarter and full year ended December 31, 2023. GTY, a leading real estate investment trust in the U.S., specializes in the acquisition, financing, and development of convenience, automotive, and other single-tenant retail real estate. The company’s portfolio includes a variety of properties such as convenience stores, car washes, and automotive service centers, generating the majority of its revenue through rental income.

Financial Performance and Challenges

Despite a challenging market environment, GTY delivered strong financial results in 2023. The company’s net earnings per share for Q4 were $0.30, down from $0.57 in the same period of 2022. For the full year, net earnings per share were $1.15, a decrease from $1.88 in the previous year. This performance reflects the company’s robust execution of its growth strategy, which included a record investment activity of $326.3 million across 81 properties, doubling the prior year’s activity.

FFO for Q4 was $0.51 per share, compared to $0.63 in Q4 2022, while the annual FFO decreased to $2.06 per share from $2.44. AFFO, however, increased to $0.57 per share in Q4 from $0.55, and the annual AFFO rose to $2.25 per share from $2.14. The growth in AFFO per share by more than 5% is particularly significant for a REIT like GTY, as it indicates the company’s ability to generate sustainable cash flows from its operations.

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Financial Achievements and Industry Significance

The increase in base rental income by nearly 10% year-over-year is a testament to GTY’s financial achievements. This growth was driven by incremental revenue from recently acquired properties, contractual rent increases, and rent commencements from completed redevelopments, partially offset by property dispositions. For value investors, the growth in rental income is a critical metric as it reflects the underlying health and performance of the company’s real estate portfolio.

Additionally, the company’s disciplined underwriting standards and strategic investments have positioned it well within the REIT industry. GTY’s ability to source nearly $300 million of new equity and debt capital to fund investments accretively is a strong indicator of its financial prudence and market confidence.

Key Financial Metrics and Importance

Key metrics from GTY’s financial statements include:

• Rental income for Q4 increased to $41.1 million from $37.7 million in the same period of 2022, and for the full year, it rose to $161 million from $147.2 million.

• Interest on notes and mortgages receivable grew significantly due to an increase in development funding advances and rates.

• Property costs for the year increased primarily due to higher reimbursable real estate taxes.

• Environmental expenses varied, with the previous year including credits related to the removal of reserves for unknown environmental remediation obligations.

These metrics are crucial as they provide insights into the company’s revenue streams, cost management, and potential environmental liabilities, which are all important factors for investors considering the sustainability and growth prospects of GTY.

Analysis of Company’s Performance

Christopher J. Constant, Gettys President & CEO, expressed pride in the company’s financial results, highlighting the growth in base rental income and AFFO per share. He emphasized the company’s successful capital deployment and portfolio enhancement, even amidst market challenges. Looking forward to 2024, GTY aims to continue its selective investment strategy and leverage its strong credit profile to deliver sustained earnings and dividend growth to shareholders.

Overall, GTY’s performance in 2023 demonstrates its resilience and strategic focus on growth. The company’s record investment activity, coupled with a solid increase in rental income, positions it well for future success. As GTY reaffirms its AFFO guidance for 2024, investors can anticipate continued stability and potential growth in the company’s financials.

For more detailed information on Getty Realty Corp’s financial results, investors and interested parties are encouraged to review the full 8-K filing.

Explore the complete 8-K earnings release (here) from Getty Realty Corp for further details.

This article first appeared on GuruFocus.