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| 8-K - GETTY REALTY CORP. 8-K - GETTY REALTY CORP /MD/ | a6811652.htm |
Exhibit 99.1
RELEASE: IMMEDIATE
GETTY REALTY CORP. ANNOUNCES
PRELIMINARY FINANCIAL RESULTS FOR
THE SECOND QUARTER 2011
JERICHO, NY, July 28, 2011 --- Getty Realty Corp. (NYSE-GTY) (“Getty” or the “Company”) today reported its preliminary financial results for the second quarter 2011. All per share amounts in this press release are presented on a fully diluted per common share basis, unless stated otherwise.
Highlights for the Quarter Ended June 30, 2011 (as compared to the quarter ended June 30, 2010):
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Revenues from rental properties increased $5.4 million (24.9%) to $27.1 million
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Net earnings increased $1.2 million (8.6%) to $15.2 million, or $0.46 per share
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Earnings from continuing operations increased $2.4 million (19.0%) to $15.0 million, or $0.45 per share
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Funds from operations, or FFO, increased $2.2 million (14.7%) to $17.2 million, or $0.51 per share
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Adjusted funds from operations, or AFFO, increased $3.1 million (20.9%) to 17.9 million, or $0.54 per share
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FFO and AFFO are supplemental non-GAAP measures of the performance of real estate investment trusts and are defined and reconciled to net earnings in the financial tables at the end of this release.
Financial Results:
Net Earnings:
Net earnings for the quarter ended June 30, 2011 increased by $1.2 million to $15.2 million, or $0.46 per share, as compared to $14.0 million for the quarter ended June 30, 2010. Net earnings for the six months ended June 30, 2011 increased by $0.7 million to $26.6 million, or $0.80 per share, as compared to $25.9 million for the six months ended June 30, 2010.
The calculation to determine net earnings often includes impairments and/or gains from the sale of investment properties. Impairments and/or gains on property sales can vary substantially from quarter to quarter and can significantly impact net earnings.
Earnings from Continuing Operations:
Earnings from continuing operations for the quarter ended June 30, 2011 increased by $2.4 million to $15.0 million, or $0.45 per share, as compared to $12.6 million for the quarter ended June 30, 2010. Earnings from continuing operations for the six months ended June 30, 2011 increased by $2.1 million to $26.3 million, or $0.79 per share, as compared to $24.2 million for the six months ended June 30, 2010.
The $2.4 million increase in earnings from continuing operations for the quarter ended June 30, 2011, as compared to the prior year period, was primarily due to increased rental income from 125 properties acquired in 2011, partially offset by net higher operating expenses including non-cash impairment charges of $1.5 million.
Earnings from Discontinued Operations:
Earnings from discontinued operations, primarily comprised of gains on dispositions of real estate, were $0.2 million for the quarter ended June 30, 2011, as compared to $1.4 million for the quarter ended June 30, 2010. Earnings from discontinued operations were $0.3 million for the six months ended June 30, 2011, as compared to $1.7 million for the six months ended June 30, 2010.
The $1.2 million decrease in earnings from discontinued operations for the quarter ended June 30, 2011, as compared to the prior year period, was principally due to lower gains on dispositions of real estate.
Supplemental Non-GAAP Measures:
FFO increased by $2.2 million to $17.2 million, or $0.51 per share, for the quarter ended June 30, 2011, and increased by $1.8 million to $30.8 million, or $0.93 per share, for the six months ended June 30, 2011, as compared to $15.0 million, or $0.55 per share, for the quarter ended June 30, 2010 and $29.0 million, or $1.12 per share, for the six months ended June 30, 2010. Per share amount comparisons were adversely affected by a larger number of shares outstanding in the current quarter resulting from the Company’s equity issuances in the past year.
AFFO increased by $3.1 million to $17.9 million, or $0.54 per share, for the quarter ended June 30, 2011, as compared to $14.8 million, or $0.54 per share, for the quarter ended June 30, 2010, and increased by $5.9 million to $34.3 million, or $1.04 per share, for the six months ended June 30, 2011, as compared to $28.4 million, or $1.09 per share, for the six months ended June 30, 2010. Per share amount comparisons were adversely affected by a larger number of shares outstanding in the current quarter resulting from the Company’s equity issuances in the past year.
FFO and AFFO are supplemental non-GAAP measures of the performance of real estate investment trusts and are defined and reconciled to net earnings in the financial tables at the end of this release.
Operating Results:
Revenues from rental properties included in continuing operations increased by $5.4 million to $27.1 million for the quarter ended June 30, 2011, as compared to $21.7 million for the prior year period. Rent received increased by $4.9 million to $26.4 million for the quarter ended June 30, 2011 as compared to the prior year period. The increase in rental income received was primarily due to rental income from investments in 125 properties made in 2011 and, to a lesser extent, due to rent escalations, partially offset by the effect of dispositions of real estate and lease expirations. In accordance with GAAP, revenues from rental properties include non-cash Revenue Recognition Adjustments which cause the Company’s reported revenues from rental properties to vary from the amount of cash rent payments contractually due or received by the Company. Revenue Recognition Adjustments increased revenue from rental properties by $0.8 million and $0.3 million for the quarters ended June 30, 2011 and 2010, respectively. Revenue Recognition Adjustments are recorded to account for recognition of rental income on a straight-line basis over the current lease term, net amortization of above-market and below-market leases and recognition of rental income under direct financing leases. The Company believes AFFO is helpful to investors because, in part, it does not include the Revenue Recognition Adjustments.
Rental property expenses included in continuing operations increased by $1.4 million to $3.7 million for the quarter ended June 30, 2011 as compared to $2.3 million for the prior year period. The increase in rental property expenses as compared to the prior year period was primarily due to rent expense related to leasehold interests acquired in 2011.
During the quarter ended June 30, 2011, the Company recorded impairment charges aggregating $1.5 million resulting from reductions in real estate valuations or reductions in the assumed holding period used to test for impairment.
Subsequent Events:
On July 28, 2011, Getty learned that the arbitration panel that had been convened to hear the dispute between Getty Petroleum Marketing Inc. (“Marketing”), Getty's largest tenant, and Bionol Clearfield LLC (“Bionol”) issued an award in favor of Bionol for approximately $230 million dollars. Marketing has filed a motion to vacate this award and has indicated that it believes that it has a number of meritorious arguments to overturn and mitigate the award.
Getty is not in a position to evaluate the strength of the positions taken by Marketing with respect to its motion to vacate, and Getty cannot predict the actions that may be taken by Marketing or Bionol with respect to the award, or the timing of any such actions, including as to settlement or enforcement. Getty cannot predict how the ultimate resolution of this matter may impact Marketing’s financial performance or its ability to meet its rental, environmental and other obligations.
Conference Call Information:
Getty Realty Corp.’s Second Quarter Earnings Conference Call is scheduled for tomorrow, Friday, July 29, 2011 at 9:00 a.m. Eastern Time. To participate in the conference call, please dial (719) 325-2275 ten minutes before the scheduled start time and reference pass code 6940594. If you cannot participate in the live event, a replay will be available on July 29, 2011 beginning at 12:00 noon Eastern Time through 12:00 midnight Eastern Time, July 31, 2011. To access the replay, please dial (719) 457-0820 and reference pass code 6940594.
About Getty:
Getty Realty Corp. is the leading publicly-traded real estate investment trust in the United States specializing in ownership and leasing of convenience store/gas station properties and petroleum distribution terminals. The Company owns and leases approximately 1,160 properties nationwide.
Forward Looking Statements:
CERTAIN STATEMENTS CONTAINED HEREIN MAY CONSTITUTE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN THE WORDS “BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,” “ESTIMATES” AND SIMILAR EXPRESSIONS ARE USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.
INFORMATION CONCERNING FACTORS THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN THE COMPANY’S PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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GETTY REALTY CORP. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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(in thousands, except share data)
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(unaudited)
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June 30,
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December 31, | |||||||
| 2011 | 2010 | |||||||
| Assets: | ||||||||
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Real Estate:
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Land
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$ | 353,056 | $ | 253,413 | ||||
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Buildings and improvements
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247,777 | 251,174 | ||||||
| 600,833 | 504,587 | |||||||
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Less – accumulated depreciation and amortization
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(147,075 | ) | (144,217 | ) | ||||
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Real estate, net
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453,758 | 360,370 | ||||||
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Net investment in direct financing leases
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85,651 | 20,540 | ||||||
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Deferred rent receivable (net of allowance of $7,212 as of June 30, 2011 and
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27,569 | 27,385 | ||||||
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$8,170 as of December 31, 2010)
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Cash and cash equivalents
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14,941 | 6,122 | ||||||
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Recoveries from state underground storage tank funds, net
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3,906 | 3,966 | ||||||
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Notes, mortgages and accounts receivable, net
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32,064 | 1,796 | ||||||
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Prepaid expenses and other assets
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29,848 | 6,965 | ||||||
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Total assets
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$ | 647,737 | $ | 427,144 | ||||
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Liabilities and Shareholders' Equity:
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Borrowings under credit line
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$ | 150,000 | $ | 41,300 | ||||
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Term loan
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23,200 | 23,590 | ||||||
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Environmental remediation costs
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15,000 | 14,874 | ||||||
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Dividends payable
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16,111 | 14,432 | ||||||
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Accounts payable and accrued expenses
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40,675 | 18,013 | ||||||
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Total liabilities
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244,986 | 112,209 | ||||||
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Commitments and contingencies
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— | — | ||||||
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Shareholders' equity:
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Common stock, par value $.01 per share; authorized
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50,000,000 shares; issued 33,394,175 at June 30, 2011
and 29,944,155 at December 31, 2010
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334 | 299 | ||||||
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Paid-in capital
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460,355 | 368,093 | ||||||
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Dividends paid in excess of earnings
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(57,938 | ) | (52,304 | ) | ||||
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Accumulated other comprehensive loss
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— | (1,153 | ) | |||||
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Total shareholders' equity
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402,751 | 314,935 | ||||||
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Total liabilities and shareholders' equity
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$ | 647,737 | $ | 427,144 | ||||
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GETTY REALTY CORP. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per share amounts)
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(unaudited)
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Three months ended June 30,
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Six months ended June 30,
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2011
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2010
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2011
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2010
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Revenues from rental properties
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$ | 27,126 | $ | 21,734 | $ | 52,151 | $ | 44,173 | ||||||||
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Operating expenses:
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Rental property expenses
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3,709 | 2,314 | 7,192 | 5,527 | ||||||||||||
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Impairment charges
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1,513 | — | 2,507 | — | ||||||||||||
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Environmental expenses, net
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1,326 | 1,332 | 2,453 | 2,884 | ||||||||||||
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General and administrative expenses
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2,736 | 1,820 | 7,621 | 4,158 | ||||||||||||
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Depreciation and amortization expense
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2,204 | 2,405 | 4,528 | 4,794 | ||||||||||||
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Total operating expenses
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11,488 | 7,871 | 24,301 | 17,363 | ||||||||||||
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Operating income
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15,638 | 13,863 | 27,850 | 26,810 | ||||||||||||
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Other income, net
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692 | 53 | 1,103 | 174 | ||||||||||||
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Interest expense
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(1,346 | ) | (1,322 | ) | (2,665 | ) | (2,816 | ) | ||||||||
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Earnings from continuing operations
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14,984 | 12,594 | 26,288 | 24,168 | ||||||||||||
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Discontinued operations:
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Earnings (loss) from operating activities
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(13 | ) | 37 | 1 | 58 | |||||||||||
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Gains from dispositions of real estate
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231 | 1,328 | 299 | 1,638 | ||||||||||||
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Earnings from discontinued operations
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218 | 1,365 | 300 | 1,696 | ||||||||||||
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Net earnings
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$ | 15,202 | $ | 13,959 | $ | 26,588 | $ | 25,864 | ||||||||
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Basic and diluted earnings per common share:
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Earnings from continuing operations
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$ | .45 | $ | .46 | $ | .79 | $ | .93 | ||||||||
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Earnings from discontinued operations
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$ | .01 | $ | .05 | $ | .01 | $ | .07 | ||||||||
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Net earnings
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$ | .46 | $ | .51 | $ | .80 | $ | 1.00 | ||||||||
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Weighted-average shares outstanding:
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Basic
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33,394 | 27,150 | 32,948 | 25,958 | ||||||||||||
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Stock options and restricted stock units
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1 | 2 | 2 | 2 | ||||||||||||
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Diluted
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33,395 | 27,152 | 32,950 | 25,960 | ||||||||||||
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GETTY REALTY CORP. AND SUBSIDIARIES
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RECONCILIATION OF NET EARNINGS TO
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FUNDS FROM OPERATIONS AND
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ADJUSTED FUNDS FROM OPERATIONS
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(in thousands, except per share amounts)
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(unaudited)
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Three months ended June 30,
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Six months ended June 30,
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2011
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2010
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2011
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2010
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Net earnings
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$ | 15,202 | $ | 13,959 | $ | 26,588 | $ | 25,864 | ||||||||
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Depreciation and amortization of real estate assets
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2,205 | 2,409 | 4,530 | 4,804 | ||||||||||||
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Gains from dispositions of real estate
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(251 | ) | (1,328 | ) | (319 | ) | (1,638 | ) | ||||||||
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Funds from operations
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17,156 | 15,040 | 30,799 | 29,030 | ||||||||||||
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Revenue recognition adjustments
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(774 | ) | (275 | ) | (1,004 | ) | (659 | ) | ||||||||
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Impairment charges
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1,513 | — | 2,507 | — | ||||||||||||
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Acquisition costs
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48 | — | 2,034 | — | ||||||||||||
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Adjusted funds from operations
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$ | 17,943 | $ | 14,765 | $ | 34,336 | $ | 28,371 | ||||||||
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Diluted per share amounts:
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Earnings per share
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$ | .46 | $ | .51 | $ | .80 | $ | 1.00 | ||||||||
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Funds from operations per share
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$ | .51 | $ | .55 | $ | .93 | $ | 1.12 | ||||||||
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Adjusted funds from operations per share
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$ | .54 | $ | .54 | $ | 1.04 | $ | 1.09 | ||||||||
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Diluted weighted average shares outstanding
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33,395 | 27,152 | 32,950 | 25,960 | ||||||||||||
In addition to measurements defined by accounting principles generally accepted in the United States of America (“GAAP”), Getty also focuses on funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) to measure its performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of the performance of REITs. FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, (including such non-FFO items reported in discontinued operations), extraordinary items and cumulative effect of accounting change. Other REITs may use definitions of FFO and/or AFFO that are different than Getty’s and, accordingly, may not be comparable. Beginning in the first quarter of 2011, the Company revised its definition of AFFO to exclude direct expensed costs related to acquisitions.
Getty believes that FFO and AFFO are helpful to investors in measuring its performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, Getty’s fundamental operating performance. FFO excludes various items such as gains or losses from property dispositions and depreciation and amortization of real estate assets. In Getty’s case, however, GAAP net earnings and FFO typically include the impact of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases and income recognized from direct financing leases on its recognition of revenues from rental properties (collectively the “Revenue Recognition Adjustments”), as offset by the impact of related collection reserves. GAAP net earnings and FFO from time to time may also include impairment charges, acquisition costs and/or income tax benefits. Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with its tenants. In accordance with GAAP, the aggregate minimum rent due over the current term of these leases are recognized on a straight-line (or an average) basis rather than when payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. Income from direct financing leases is recognized over the lease term using the effective interest method which produces a constant periodic rate of return on the net investment in the leased property. Impairment of long-lived assets represents charges taken to write-down real estate assets to fair value estimated when events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. Acquisition costs are expensed, generally in the period when properties are acquired, and are not reflective of normal operations. In prior periods, income tax benefits have been recognized due to the elimination of, or a net reduction in, amounts accrued for uncertain tax positions related to being taxed as a C-corp., rather than as a REIT, prior to 2001.
Getty pays particular attention to AFFO, a supplemental non-GAAP performance measure that Getty defines as FFO less Revenue Recognition Adjustments, impairment charges and income tax benefit. In Getty’s view, AFFO provides a more accurate depiction than FFO of Getty’s fundamental operating performance related to (i) the impact of scheduled rent increases from operating leases; (ii) rental revenue from acquired in-place leases; (iii) the impact of rent due from direct financing leases, (iv) Getty’s rental operating expenses (exclusive of impairment charges); (v) Getty’s operating expenses (exclusive of acquisition costs); and (vi) Getty’s election to be treated as a REIT under the federal income tax laws beginning in 2001. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity.
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Contact
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Thomas J. Stirnweis
(516) 478-5403
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