Fourth Quarter 2023 Highlights
- Net earnings:
$0.30 per share - Funds From Operations (“FFO”):
$0.51 per share - Adjusted Funds From Operations (“AFFO”):
$0.57 per share - Invested
$61.8 million across 38 properties - Completed two redevelopment and revenue-enhancing capex projects
Full Year 2023 Highlights
- Net earnings:
$1.15 per share - FFO:
$2.06 per share - AFFO:
$2.25 per share - Invested a record
$326.3 million across 81 properties - Completed five redevelopment and revenue-enhancing capex projects
“We are extremely proud of our financial results in 2023, which saw us grow base rental income by nearly 10% and AFFO per share by more than 5%, reflecting strong execution of our growth strategy,” stated
Net Earnings, FFO and AFFO
All per share amounts are presented on a fully diluted per common share basis, unless stated otherwise. FFO and AFFO are “Non-GAAP Financial Measures” which are defined and reconciled to net earnings at the end of this release.
($ in thousands) | Three months ended | Twelve months ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net earnings (a) | $ | 16,512 | $ | 27,312 | $ | 60,151 | $ | 90,043 | ||||||||
Net earnings per share (a) | $ | 0.30 | $ | 0.57 | $ | 1.15 | $ | 1.88 | ||||||||
FFO (a) | $ | 27,362 | $ | 30,241 | $ | 106,065 | $ | 117,067 | ||||||||
FFO per share (a) | $ | 0.51 | $ | 0.63 | $ | 2.06 | $ | 2.44 | ||||||||
AFFO | $ | 30,720 | $ | 26,459 | $ | 115,808 | $ | 102,487 | ||||||||
AFFO per share | $ | 0.57 | $ | 0.55 | $ | 2.25 | $ | 2.14 |
(a) Net earnings and FFO for the quarter and year ended
Select Financial Results
Revenues from
($ in thousands) | Three months ended | Twelve months ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Rental income (a) | $ | 41,140 | $ | 37,683 | $ | 160,966 | $ | 147,150 | ||||||||
Tenant reimbursement income | 4,475 | 4,873 | 19,522 | 16,739 | ||||||||||||
Revenues from rental properties | $ | 45,615 | $ | 42,556 | $ | 180,488 | $ | 163,889 |
(a) Rental income includes base rental income, additional rental income, if any, and certain non-cash revenue recognition adjustments.
For the quarter ended
For the year ended
The growth in base rental income was driven by incremental revenue from recently acquired properties, contractual rent increases for in-place leases, and rent commencements from completed redevelopments, partially offset by property dispositions.
Interest (Income) on Notes and Mortgages Receivable
($ in thousands) | Three months ended | Twelve months ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Interest on notes and mortgages receivable | $ | 2,027 | $ | 565 | $ | 5,358 | $ | 1,699 | ||||||||
The growth in interest earned on notes and mortgages receivable was driven by an increase in development funding advances and development funding rates.
Property Costs
($ in thousands) | Three months ended | Twelve months ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Property operating expenses | $ | 5,458 | $ | 5,844 | $ | 23,112 | $ | 20,843 | ||||||||
Leasing and redevelopment expenses | 110 | 40 | 677 | 710 | ||||||||||||
Property costs | $ | 5,568 | $ | 5,884 | $ | 23,789 | $ | 21,553 | ||||||||
The increase in property operating expenses for the year ended
Other Expenses
($ in thousands) | Three months ended | Twelve months ended | ||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Environmental expenses | $ | 284 | $ | (5,484 | ) | $ | 1,261 | $ | (20,902 | ) | ||||||
General and administrative expenses | 5,794 | 5,208 | 23,735 | 20,621 | ||||||||||||
Impairments | 1,273 | 1,318 | 5,243 | 3,545 | ||||||||||||
The change in environmental expenses was primarily due to reductions in estimates related to unknown environmental liabilities. Specifically, during the quarter and year ended
The increase in general and administrative expenses for the year ended
Impairment charges were driven by the accumulation of asset retirement costs at certain properties as a result of changes in estimated environmental liabilities, which increased the carrying values of these properties in excess of their fair values.
Portfolio Activities
Acquisitions and Development Funding
During the quarter ended
- The acquisition of 16 properties for
$31.1 million (net of prior period development funding advances$20.2 million ). Acquired properties included 12 auto service centers, three express tunnel car washes, and one convenience store. - The acquisition of two under construction car wash properties for
$6.2 million and a commitment to provide additional funding during the construction period to complete these projects. - Incremental development funding of
$24.5 million for the construction of 20 new-to-industry express tunnel car washes and auto service centers. As ofDecember 31, 2023 , the Company had advanced aggregate development funding of$105.5 million for the development of properties that are either owned by the Company and under construction by our tenants, or which the Company expects to acquire via sale-leaseback transactions at the end of the respective construction periods.
During the year ended
Subsequent to year end, the Company invested approximately
Investment Pipeline
As of
Redevelopments and Revenue Enhancing Capex
During the year ended
Since 2015, the Company has completed 31 redevelopment and revenue-enhancing capex projects representing
As of
Dispositions
During the year ended
Balance Sheet and Capital Markets
As of
Available cash and equivalents were
During the quarter ended
During the quarter ended
As of
As previously announced, during the quarter ended
The Term Loan is comprised of (i) an initial principal amount of
In connection with the Term Loan, the Company entered into
2024 Guidance
The Company reaffirms its most recent 2024 AFFO guidance of
The guidance is based on current assumptions and is subject to risks and uncertainties more fully described in this press release and the Company’s periodic reports filed with the
Webcast Information
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About
Non-GAAP Financial Measures
In addition to measurements defined by accounting principles generally accepted in
FFO and AFFO are generally considered by analysts and investors to be appropriate supplemental non-GAAP measures of the performance of REITs. FFO and AFFO are not in accordance with, or a substitute for, measures prepared in accordance with GAAP. In addition, FFO and AFFO are not based on any comprehensive set of accounting rules or principles. 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. These measures should only be used to evaluate the Company’s performance in conjunction with corresponding GAAP measures.
FFO is defined by the
The Company defines AFFO as FFO excluding (i) certain revenue recognition adjustments (defined below), (ii) certain environmental adjustments (defined below), (iii) stock-based compensation, (iv) amortization of debt issuance costs and (v) other non-cash and/or unusual items that are not reflective of the Company’s core operating performance.
Other REITs may use definitions of FFO and/or AFFO that are different than the Company’s and, accordingly, may not be comparable.
The Company believes that FFO and AFFO are helpful to analysts and investors in measuring the Company’s performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, the core operating performance of the Company’s portfolio. Specifically, FFO excludes items such as depreciation and amortization of real estate assets, gains or losses on dispositions of real estate assets, and impairment charges. With respect to AFFO, the Company further excludes the impact of (i) deferred rental revenue (straight-line rent), the net amortization of above-market and below-market leases, adjustments recorded for the recognition of rental income from direct financing leases, and the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”), (ii) environmental accretion expenses, environmental litigation accruals, insurance reimbursements, legal settlements and judgments, and changes in environmental remediation estimates (collectively, “Environmental Adjustments”), (iii) stock-based compensation expense, (iv) amortization of debt issuance costs and (v) other items, which may include allowances for credit losses on notes and mortgages receivable and direct financing leases, losses on extinguishment of debt, retirement and severance costs, and other items that do not impact the Company’s recurring cash flow and which are not indicative of its core operating performance.
The Company pays particular attention to AFFO which it believes provides the most useful depiction of the core operating performance of its portfolio. By providing AFFO, the Company believes it is presenting information that assists analysts and investors in their assessment of the Company’s core operating performance, as well as the sustainability of its core operating performance with the sustainability of the core operating performance of other real estate companies. For a tabular reconciliation of FFO and AFFO to GAAP net earnings, see the table captioned “Reconciliation of Net Earnings to Funds From Operations and Adjusted Funds From Operations” included herein.
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,” “anticipates,” “predicts,” “outlook” 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. Examples of forward-looking statements include, but are not limited to, those regarding the company’s 2024 AFFO per share guidance, those made by
Information concerning factors that could cause the company’s actual results to differ materially from these forward-looking statements can be found elsewhere from this press release, including, without limitation, those statements 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.
-more-
CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except per share amounts) | ||||||||
2023 | 2022 | |||||||
ASSETS: | ||||||||
Real Estate: | ||||||||
Land | $ | 867,884 | $ | 802,010 | ||||
Buildings and improvements | 847,339 | 707,352 | ||||||
Investment in direct financing leases, net | 59,964 | 66,185 | ||||||
Construction in progress | 426 | 578 | ||||||
Real estate held for use | 1,775,613 | 1,576,125 | ||||||
Less accumulated depreciation and amortization | (265,593 | ) | (232,812 | ) | ||||
Real estate held for use, net | 1,510,020 | 1,343,313 | ||||||
Lease intangible assets, net | 100,315 | 74,014 | ||||||
Real estate held for sale, net | 2,429 | 3,757 | ||||||
Real estate, net | 1,612,764 | 1,421,084 | ||||||
Notes and mortgages receivable | 112,008 | 34,313 | ||||||
Cash and cash equivalents | 3,307 | 8,713 | ||||||
Restricted cash | 1,979 | 2,536 | ||||||
Deferred rent receivable | 54,424 | 50,391 | ||||||
Accounts receivable | 5,012 | 4,247 | ||||||
Right-of-use assets - operating | 14,571 | 18,193 | ||||||
Right-of-use assets - finance | 174 | 277 | ||||||
Prepaid expenses and other assets | 18,066 | 22,541 | ||||||
Total assets | $ | 1,822,305 | $ | 1,562,295 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||||||||
Borrowings under Revolving Credit Facility | $ | 10,000 | $ | 70,000 | ||||
Senior Unsecured Notes, net | 673,406 | 623,492 | ||||||
Term Loan, net | 72,692 | — | ||||||
Environmental remediation obligations | 22,369 | 23,155 | ||||||
Dividends payable | 24,850 | 20,576 | ||||||
Lease liability - operating | 16,051 | 19,959 | ||||||
Lease liability - finance | 595 | 1,518 | ||||||
Accounts payable and accrued liabilities | 46,790 | 43,745 | ||||||
Total liabilities | 866,753 | 802,445 | ||||||
Commitments and contingencies | — | — | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, | — | — | ||||||
Common stock, | 540 | 467 | ||||||
Accumulated other comprehensive income (loss) | (4,021 | ) | — | |||||
Additional paid-in capital | 1,053,129 | 822,340 | ||||||
Dividends paid in excess of earnings | (94,096 | ) | (62,957 | ) | ||||
Total stockholders’ equity | 955,552 | 759,850 | ||||||
Total liabilities and stockholders’ equity | $ | 1,822,305 | $ | 1,562,295 | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share amounts) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues: | ||||||||||||||||
Revenues from rental properties | $ | 45,615 | $ | 42,556 | $ | 180,488 | $ | 163,889 | ||||||||
Interest on notes and mortgages receivable | 2,027 | 565 | 5,358 | 1,699 | ||||||||||||
Total revenues | 47,642 | 43,121 | 185,846 | 165,588 | ||||||||||||
Operating expenses: | ||||||||||||||||
Property costs | 5,568 | 5,884 | 23,789 | 21,553 | ||||||||||||
Impairments | 1,273 | 1,318 | 5,243 | 3,545 | ||||||||||||
Environmental | 284 | (5,484 | ) | 1,261 | (20,902 | ) | ||||||||||
General and administrative | 5,794 | 5,208 | 23,735 | 20,621 | ||||||||||||
Depreciation and amortization | 12,716 | 10,388 | 45,296 | 39,902 | ||||||||||||
Total operating expenses | 25,635 | 17,314 | 99,324 | 64,719 | ||||||||||||
Gain on dispositions of real estate | 3,139 | 8,777 | 4,625 | 16,423 | ||||||||||||
Operating income | 25,146 | 34,584 | 91,147 | 117,292 | ||||||||||||
Other income, net | 192 | 40 | 574 | 413 | ||||||||||||
Interest expense | (8,826 | ) | (7,312 | ) | (31,527 | ) | (27,662 | ) | ||||||||
Loss on extinguishment of debt | — | — | (43 | ) | — | |||||||||||
Net earnings | $ | 16,512 | $ | 27,312 | $ | 60,151 | $ | 90,043 | ||||||||
Basic earnings per common share: | ||||||||||||||||
Net earnings | $ | 0.30 | $ | 0.57 | $ | 1.16 | $ | 1.88 | ||||||||
Diluted earnings per common share: | ||||||||||||||||
Net earnings | $ | 0.30 | $ | 0.57 | $ | 1.15 | $ | 1.88 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 52,783 | 46,734 | 50,020 | 46,730 | ||||||||||||
Diluted | 52,880 | 46,891 | 50,216 | 46,838 | ||||||||||||
RECONCILIATION OF NET EARNINGS TO FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS (Unaudited) (in thousands, except per share amounts) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net earnings (a) | $ | 16,512 | $ | 27,312 | $ | 60,151 | $ | 90,043 | ||||||||
Depreciation and amortization of real estate assets | 12,716 | 10,388 | 45,296 | 39,902 | ||||||||||||
Gains on dispositions of real estate | (3,139 | ) | (8,777 | ) | (4,625 | ) | (16,423 | ) | ||||||||
Impairments | 1,273 | 1,318 | 5,243 | 3,545 | ||||||||||||
Funds from operations (FFO) (a) | 27,362 | 30,241 | 106,065 | 117,067 | ||||||||||||
Revenue recognition adjustments | ||||||||||||||||
Deferred rental revenue (straight-line rent) | 24 | (1,013 | ) | (4,033 | ) | (3,458 | ) | |||||||||
Amortization of above and below market leases, net | (235 | ) | (293 | ) | (1,057 | ) | (1,184 | ) | ||||||||
Amortization of investments in direct financing leases | 1,560 | 1,429 | 6,004 | 5,392 | ||||||||||||
Amortization of lease incentives | 283 | 295 | 1,098 | 1,198 | ||||||||||||
Total revenue recognition adjustments | 1,632 | 418 | 2,012 | 1,948 | ||||||||||||
Environmental Adjustments | ||||||||||||||||
Accretion expense | 163 | 222 | 585 | 1,259 | ||||||||||||
Changes in environmental estimates | (127 | ) | (5,910 | ) | (302 | ) | (23,837 | ) | ||||||||
Environmental litigation accruals | — | — | — | 279 | ||||||||||||
Insurance reimbursements | — | (41 | ) | (138 | ) | (85 | ) | |||||||||
Total environmental adjustments | 36 | (5,729 | ) | 145 | (22,384 | ) | ||||||||||
Other Adjustments | ||||||||||||||||
Stock-based compensation expense | 1,420 | 1,232 | 5,582 | 4,775 | ||||||||||||
Amortization of debt issuance costs | 459 | 239 | 1,211 | 946 | ||||||||||||
Allowance for credit loss on notes and mortgages receivable and direct financing leases | (189 | ) | 50 | (189 | ) | 50 | ||||||||||
Loss on extinguishment of debt | — | — | 43 | — | ||||||||||||
Retirement and severance costs | — | 8 | 939 | 85 | ||||||||||||
Total other adjustments | 1,690 | 1,529 | 7,586 | 5,856 | ||||||||||||
Adjusted Funds from operations (AFFO) | $ | 30,720 | $ | 26,459 | $ | 115,808 | $ | 102,487 | ||||||||
Basic per share amounts: | ||||||||||||||||
Net earnings | $ | 0.30 | $ | 0.57 | $ | 1.16 | $ | 1.88 | ||||||||
FFO (b) | 0.51 | 0.63 | 2.07 | 2.45 | ||||||||||||
AFFO (b) | 0.57 | 0.55 | 2.26 | 2.14 | ||||||||||||
Diluted per share amounts: | ||||||||||||||||
Net earnings | $ | 0.30 | $ | 0.57 | $ | 1.15 | $ | 1.88 | ||||||||
FFO (b) | 0.51 | 0.63 | 2.06 | 2.44 | ||||||||||||
AFFO (b) | 0.57 | 0.55 | 2.25 | 2.14 | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 52,783 | 46,734 | 50,020 | 46,730 | ||||||||||||
Diluted | 52,880 | 46,891 | 50,216 | 46,838 |
(a) Net earnings and FFO for the three and twelve months ended
(b) Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts. The following amounts were deducted:
Three months ended | Twelve months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
FFO | $ | 642 | $ | 471 | $ | 2,624 | $ | 2,734 | ||||||||
AFFO | 721 | 473 | 2,865 | 2,394 | ||||||||||||
Contacts: | Investor Relations | |
Chief Financial Officer | (646) 349-0598 | |
(646) 349-6000 | ir@gettyrealty.com |
Source:
2024 GlobeNewswire, Inc., source