Getty Realty Corp. (GTY) Bundle
Understanding Getty Realty Corp. (GTY) Revenue Streams
Understanding Getty Realty Corp.’s Revenue Streams
Getty Realty Corp. primarily generates revenue through rental properties, which include base rental income and tenant reimbursements. For the three months ended September 30, 2024, the revenues from rental properties totaled $50.5 million, compared to $48.8 million for the same period in 2023, reflecting a year-over-year increase of 3.4%. The base rental income for the third quarter of 2024 was $47.4 million, up from $41.2 million in 2023, representing a growth of 15%.
The breakdown of revenues from rental properties is as follows:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Rental Income | $47.4 | $41.2 | $6.2 |
| Revenue Recognition Adjustments | $0.2 | $0.07 | $0.13 |
| Tenant Reimbursement Income | $2.9 | $7.5 | $(4.6) |
| Total Revenues from Rental Properties | $50.5 | $48.8 | $1.6 |
For the nine months ended September 30, 2024, total revenues from rental properties were $146.4 million, compared to $134.9 million in 2023, marking an increase of 8.6%. The breakdown for the nine-month period is as follows:
| Revenue Source | 9M 2024 (in millions) | 9M 2023 (in millions) | Change (in millions) |
|---|---|---|---|
| Rental Income | $137.1 | $120.2 | $16.9 |
| Revenue Recognition Adjustments | $0.5 | $(0.38) | $0.9 |
| Tenant Reimbursement Income | $8.7 | $15.0 | $(6.3) |
| Total Revenues from Rental Properties | $146.4 | $134.9 | $11.6 |
The decrease in tenant reimbursement income in both quarterly and year-to-date comparisons indicates a significant shift in revenue streams. Tenant reimbursements were $2.9 million for Q3 2024, down from $7.5 million in Q3 2023, and $8.7 million for the nine months of 2024, compared to $15.0 million in 2023. This change is primarily attributed to fluctuations in real estate taxes and other municipal charges that are reimbursed by tenants under triple-net lease agreements.
Overall, Getty Realty Corp.'s revenue growth is primarily driven by an increase in rental income due to new property acquisitions and contractual rent increases, despite the decline in tenant reimbursements. The company's strategy of acquiring properties and enhancing existing leases has positively impacted its revenue streams.
A Deep Dive into Getty Realty Corp. (GTY) Profitability
A Deep Dive into Getty Realty Corp.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
| Gross Profit | Revenue | Gross Profit Margin (%) |
|---|---|---|
| $25,181,000 | $50,494,000 | 49.9% |
For the nine months ended September 30, 2024:
| Gross Profit | Revenue | Gross Profit Margin (%) |
|---|---|---|
| $77,114,000 | $146,430,000 | 52.6% |
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024 was:
| Operating Income | Revenue | Operating Profit Margin (%) |
|---|---|---|
| $25,181,000 | $50,494,000 | 49.9% |
For the nine months ended September 30, 2024:
| Operating Income | Revenue | Operating Profit Margin (%) |
|---|---|---|
| $77,114,000 | $146,430,000 | 52.6% |
Net Profit Margin: The net profit margin for the three months ended September 30, 2024 was:
| Net Earnings | Revenue | Net Profit Margin (%) |
|---|---|---|
| $15,335,000 | $50,494,000 | 30.4% |
For the nine months ended September 30, 2024:
| Net Earnings | Revenue | Net Profit Margin (%) |
|---|---|---|
| $48,769,000 | $146,430,000 | 33.3% |
Trends in Profitability Over Time
Comparing profitability metrics year-over-year, the gross profit margin improved from 49.4% in 2023 to 52.6% in 2024 for the nine-month period. The operating profit margin also showed an increase, from 51.2% to 52.6%, indicating improved operational efficiency. The net profit margin experienced a slight increase from 32.9% to 33.3% during the same period.
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin for the real estate investment trust (REIT) industry is approximately 40%, while the average operating profit margin is around 30%. The net profit margin averages about 20%. Getty Realty Corp. significantly outperforms these industry averages in all key profitability metrics.
Analysis of Operational Efficiency
Operational efficiency is highlighted by the reduction in property costs. For the three months ended September 30, 2024, property costs decreased to $3,927,000 from $8,710,000 in the previous year, showcasing a drop of 55%.
Overall, operational efficiency is further supported by:
- Decrease in depreciation and amortization expenses from $13,960,000 in Q3 2023 to $11,288,000 in Q3 2024.
- General and administrative expenses remained stable, increasing minimally from $5,745,000 to $5,948,000.
The analysis indicates a robust trend in profitability, with improvements in gross, operating, and net profit margins, alongside favorable comparisons to industry averages.
Debt vs. Equity: How Getty Realty Corp. (GTY) Finances Its Growth
Debt vs. Equity: How Getty Realty Corp. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Getty Realty Corp. reported total debt of $837.5 million, up from $760 million on December 31, 2023 . The debt comprises both short-term and long-term obligations, including:
- Revolving Credit Facility: $12.5 million at 6.70% interest, maturing October 2025
- Term Loan: $150 million at 6.13% interest, maturing October 2025
- Various Senior Unsecured Notes totaling $675 million with varying interest rates and maturity dates .
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 0.87 as of September 30, 2024, calculated using total liabilities of $938.5 million and total stockholders' equity of $963.4 million . This ratio is below the industry average of around 1.0, suggesting a conservative approach to leveraging debt compared to equity.
Recent Debt Issuances
In the three months ending September 30, 2024, the company received commitments for $125 million of new senior unsecured notes, which include:
- $50 million of 5.52% senior unsecured notes due September 2029
- $75 million of 5.70% senior unsecured notes due February 2032
The proceeds are intended for general corporate purposes and the repayment of existing debts .
Credit Ratings
The company’s credit ratings reflect a stable outlook, maintaining an investment-grade rating due to consistent revenue generation and prudent financial management .
Debt Management Strategy
Getty Realty Corp. employs a balanced approach to manage its capital structure, utilizing both debt and equity. The company has a Revolving Credit Facility of $300 million, which allows for flexibility in financing operations . The management focuses on maintaining a healthy ratio of debt to equity, ensuring that the cost of debt remains manageable while still funding growth initiatives.
| Debt Component | Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| Revolving Credit Facility | $12.5 million | 6.70% | October 2025 |
| Term Loan | $150 million | 6.13% | October 2025 |
| Senior Unsecured Notes | $675 million | Varies | Various |
| Total Debt | $837.5 million | N/A | N/A |
Overall, Getty Realty Corp. continues to strategically balance its debt and equity financing to support its operational growth while maintaining financial stability .
Assessing Getty Realty Corp. (GTY) Liquidity
Assessing Getty Realty Corp.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, Getty Realty Corp.'s current ratio is calculated as follows:
- Current Assets: $4,013,000 (Cash and Cash Equivalents) + $59,225,000 (Deferred Rent Receivable) + $2,411,000 (Accounts Receivable) + $12,832,000 (Right-of-use Assets - Operating) + $13,244,000 (Prepaid Expenses and Other Assets) = $91,725,000
- Current Liabilities: $12,500,000 (Borrowings under Revolving Credit Facility) + $673,594,000 (Senior Unsecured Notes) + $148,636,000 (Term Loan) + $20,812,000 (Environmental Remediation Obligations) + $25,422,000 (Dividends Payable) + $42,935,000 (Accounts Payable and Accrued Liabilities) = $903,899,000
The current ratio is therefore:
Current Ratio = Current Assets / Current Liabilities = $91,725,000 / $903,899,000 = 0.101
For the quick ratio, we exclude inventory (not applicable here) and other less liquid assets:
Quick Ratio = (Current Assets - Inventory) / Current Liabilities = $91,725,000 / $903,899,000 = 0.101
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is:
Working Capital = Current Assets - Current Liabilities = $91,725,000 - $903,899,000 = -$812,174,000
Cash Flow Statements Overview
The cash flow activities for the nine months ended September 30, 2024, are summarized as follows (in thousands):
| Cash Flow Activity | 2024 | 2023 | $ Change |
|---|---|---|---|
| Net cash flow provided by operating activities | $94,313 | $74,477 | $19,836 |
| Net cash flow used in investing activities | ($126,005) | ($252,897) | $126,892 |
| Net cash flow provided by financing activities | $33,428 | $174,033 | ($140,605) |
Cash Flow Trends
Net cash flow from operating activities increased by 26.7% year-over-year, reflecting improved operational efficiency. Conversely, cash used in investing activities decreased significantly, indicating a reduction in capital expenditures or acquisitions. Financing activities saw a decline due to reduced net proceeds from stock offerings and increased cash dividends paid.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had:
- Availability under the Revolving Credit Facility: $287.5 million
- Shares subject to forward sale agreements, estimated gross proceeds: $132.5 million
- Available cash and cash equivalents: $4.0 million
Despite a negative working capital position, the availability of substantial credit lines and cash flow from operations indicates potential liquidity strength. However, ongoing monitoring of cash flows and liabilities will be crucial to address any future liquidity concerns.
Is Getty Realty Corp. (GTY) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the financial metrics for Getty Realty Corp. (GTY) indicate a comprehensive valuation landscape. The following key ratios are essential for determining whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The price-to-earnings (P/E) ratio is a significant metric for assessing valuation. As of the latest data, Getty Realty Corp. reported a diluted earnings per share (EPS) of $0.27 for Q3 2024, leading to a P/E ratio of approximately 22.15 based on its stock price of $5.98 as of the end of September 2024.
Price-to-Book (P/B) Ratio
The price-to-book (P/B) ratio provides insight into the market's valuation compared to the company's book value. The book value per share for Getty Realty Corp. as of September 30, 2024, was $17.50. Given the stock price of $5.98, the P/B ratio stands at approximately 0.34.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value-to-EBITDA (EV/EBITDA) ratio is another critical measure of valuation. The enterprise value (EV) of Getty Realty Corp. is calculated as market capitalization plus total debt minus cash and equivalents. The estimated total debt as of September 30, 2024, is $600 million, and cash and equivalents are $4 million. The EBITDA for the last twelve months is approximately $90 million. This results in an EV/EBITDA ratio of approximately 6.67.
Stock Price Trends
Over the past 12 months, Getty Realty Corp. has experienced stock price fluctuations, with a 52-week range of $5.10 to $7.50. The stock price was $6.50 one year ago, indicating a decline of approximately 8% over the period.
Dividend Yield and Payout Ratios
Getty Realty Corp. has consistently paid dividends, with a declared dividend of $1.35 per share for the nine months ended September 30, 2024, totaling $74.8 million. This results in a dividend yield of approximately 22.6% based on the current stock price of $5.98. The payout ratio is approximately 156%, calculated from the total dividends paid relative to net earnings of $48.77 million for the nine months ended September 30, 2024.
Analyst Consensus on Stock Valuation
Current analyst consensus indicates a mixed outlook, with recommendations ranging from buy to hold, reflecting uncertainty about future growth and the sustainability of the high dividend payout.
| Metric | Value |
|---|---|
| P/E Ratio | 22.15 |
| P/B Ratio | 0.34 |
| EV/EBITDA Ratio | 6.67 |
| 52-Week Stock Price Range | $5.10 - $7.50 |
| Current Stock Price | $5.98 |
| Total Dividends Paid (9M 2024) | $74.8 million |
| Dividend Yield | 22.6% |
| Payout Ratio | 156% |
| Analyst Consensus | Buy/Hold |
Key Risks Facing Getty Realty Corp. (GTY)
Key Risks Facing Getty Realty Corp. (GTY)
The financial health of Getty Realty Corp. is influenced by various internal and external risk factors. These risks can significantly impact the company's performance and overall market perception.
Industry Competition
Competition within the real estate investment trust (REIT) sector is fierce. As of September 30, 2024, the company had revenues from rental properties totaling $50.5 million for Q3 2024, reflecting an increase from $48.8 million in Q3 2023. This growth indicates that while the company is performing well, it must continue to innovate and differentiate itself to retain and grow its market share against competitors.
Regulatory Changes
Changes in federal, state, and local regulations can pose risks to operations. The company is subject to numerous laws regarding environmental protection, which can lead to significant remediation costs. As of September 30, 2024, the company reported environmental obligations of $20.8 million. These obligations can impact cash flows and profitability if regulations tighten or if compliance costs increase.
Market Conditions
Market fluctuations can affect property values and rental income. The company's rental income for the nine months ended September 30, 2024, was $137.1 million, up from $120.2 million in the same period the previous year. However, the ability to sustain this growth depends on broader economic conditions, including interest rates and consumer demand.
Operational Risks
Operational challenges, including property management and maintenance, can affect profitability. The total operating expenses for the nine months ended September 30, 2024, were $72.975 million, slightly lower than the previous year. However, any unexpected increases in maintenance costs or property impairments could negatively impact earnings.
Financial Risks
Financial risks associated with debt levels and interest rates are critical. The company had total borrowings under its Revolving Credit Facility amounting to $12.5 million as of September 30, 2024, with a total interest expense of $28.8 million for the nine months ended. Rising interest rates could increase borrowing costs, affecting net income.
Strategic Risks
Strategic misalignment can lead to inefficiencies. The company is focused on expanding its portfolio through acquisitions, having acquired properties worth $204.5 million in the nine months ended September 30, 2024. However, if acquisitions do not yield expected returns, it may lead to financial strain.
Mitigation Strategies
The company has several mitigation strategies in place. It maintains a Revolving Credit Facility with availability of $287.5 million as of September 30, 2024, providing liquidity to manage operational costs and investments. Furthermore, it continuously evaluates its portfolio to optimize asset performance and minimize risks.
| Risk Factor | Description | 2024 Data |
|---|---|---|
| Industry Competition | Fierce competition among REITs impacting rental income | $50.5 million (Q3 2024 revenues) |
| Regulatory Changes | Compliance with environmental regulations | $20.8 million (environmental obligations) |
| Market Conditions | Fluctuations affecting property values and rental income | $137.1 million (9-month rental income) |
| Operational Risks | Challenges in property management and maintenance costs | $72.975 million (9-month operating expenses) |
| Financial Risks | Debt levels and interest rate fluctuations | $12.5 million (Revolving Credit Facility borrowings) |
| Strategic Risks | Portfolio expansion through acquisitions | $204.5 million (property acquisitions) |
Future Growth Prospects for Getty Realty Corp. (GTY)
Future Growth Prospects for Getty Realty Corp.
Analysis of Key Growth Drivers
Key growth drivers for Getty Realty Corp. include acquisitions, expansions into new markets, and strategic partnerships. In 2024, the company acquired fee simple interests in 52 properties for a total purchase price of $204.5 million. This acquisition strategy is essential for expanding their portfolio and increasing rental income.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, revenues from rental properties reached $146.4 million, an increase from $134.9 million in the same period of 2023. The increase in rental income was attributed to additional base rental income from new property acquisitions and contractual rent increases. Analysts project continued revenue growth, with estimated revenues for the upcoming year potentially exceeding $200 million if acquisition and development activities maintain momentum.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has actively pursued strategic partnerships, particularly in the convenience store and petroleum distribution sectors. As of September 30, 2024, major tenants included ARKO Corp., contributing 14% of total revenues, and Global Partners LP, contributing 12%. These partnerships enhance stability and growth potential through long-term lease agreements and shared operational synergies.
Competitive Advantages that Position the Company for Growth
Getty Realty Corp. benefits from a diversified portfolio of 1,074 properties located across 42 states. This geographical diversity reduces risk and provides access to multiple markets. Additionally, the company's triple-net lease structure allows it to transfer operating costs to tenants, enhancing profit margins. As of September 30, 2024, the company reported $287.5 million available under its Revolving Credit Facility, providing liquidity for further acquisitions.
| Growth Metrics | 2023 | 2024 | $ Change |
|---|---|---|---|
| Revenues from Rental Properties | $134.9 million | $146.4 million | $11.5 million |
| Acquisition Cost | $193.0 million | $204.5 million | $11.5 million |
| Availability under Revolving Credit Facility | N/A | $287.5 million | N/A |
| Major Tenants (Revenue Contribution) | ARKO Corp. 15%, Global Partners 15% | ARKO Corp. 14%, Global Partners 12% | Decrease in % Contribution |
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Article updated on 8 Nov 2024
Resources:
- Getty Realty Corp. (GTY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Getty Realty Corp. (GTY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Getty Realty Corp. (GTY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.