Good day, and welcome to the Getty Realty Corp. First Quarter 2019 Earnings Call. Today's call is being recorded. At this time I would like to turn the conference over to Josh Dicker, SVP, General Counsel and Corporate Secretary. Please go ahead.

Thank you. I would like to thank you all for joining us for Getty Realty's first quarter earnings conference call. Yesterday afternoon, the company released its financial results for the quarter ended March 31, 2019. The Form 8-K and earnings release are available in the Investor Relations section of our website at gettyrealty.com. Certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to trends, events and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Examples of forward-looking statements include our 2019 guidance and may also include statements made by management in their marks and in response to questions, including regarding future company operations, future financial performance and the company's acquisition or redevelopment plans and opportunities. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. I refer you to the company's Annual Report on Form 10-K for the year ended December 31, 2018, for a more detailed discussion of the risks and other factors that could cause the actual results to differ materially from those expressed or implied in any forward-looking statements made today. You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. The company undertakes no duty to update any forward-looking statements that may be made in the course of this call. Also, please refer to our earnings release for a discussion of our use of non-GAAP financial measures, including our definition of adjusted funds from operations, or AFFO, and our reconciliation of those measures to net earnings. With that, let me turn the call over to Christopher Constant our Chief Executive Officer.

Thank you, Josh. Good morning, everyone, and welcome to our call for the first quarter of 2019. With Josh and me on the call today are Mark Olear, our Chief Operating Officer; and Danion Fielding, our Chief Financial Officer. I'll begin today's call by providing an overview of our first quarter 2019 performance, touch on our strategic objectives for the remainder of the year, and then I will pass the call to Mark to discuss our portfolio in more detail and then Danion will discuss our financial results. Our results for the quarter were steady and in line with our expectations. During the quarter our net lease portfolio continued to display the strength and stability that we have consistently demonstrated from our long-term triple net leases. Our total revenue grew by 6% in the quarter, primarily due to income received from properties acquired last year and the completion of several of our redevelopment projects. In addition, our adjusted funds from operations, or AFFO, grew by 4% as our strong top line results were partially offset by the impact of one-time costs associated with certain of our redevelopment projects and non-recurring retirement costs. On per share basis, our AFFO was $0.42, which was comparable to the prior year's quarter. During the quarter, we continue to focus on our growth strategies, including realizing organic growth embedded in our long-term leases, pursuing attractive acquisitions and completing selective redevelopments. We continue to source and underwrite numerous opportunities in the convenience, gas and auto related sectors and are at various stages of the underwriting process for a number of potential transactions. Although, it can be difficult to predict the rate and timing for completing transactions, we are seeing numerous attractive opportunities and we remain confident that we will selectively add properties to our portfolio during 2019. With that said, we remain disciplined and are focused on acquiring highly-quality real estate in either dense and established metropolitan areas or in high-growth markets, as we believe a portfolio of well-located properties will drive additional long-term shareholder value. We also made ongoing progress with respect to our redevelopment strategy. During the quarter, we completed our tenth project, which was a ground lease of a new-to-industry convenience and gas location, which Mark will discuss in more detail. As we look ahead, we remain focused on creating shareholder value by executing on each of our stated growth initiatives. We also plan to maintain our stable and flexible balance sheet. We place a premium on being conservatively leveraged and are committed to having a well-laddered and flexible capital structure as we grow our company. With that, I will turn the call over to Mark Olear to discuss our portfolio and investment activities.

Thank you, Chris. In terms of our investment activities, we had a relatively quiet first quarter. During the quarter, we invested approximately $0.6 million in both our completed redevelopment projects and sites which are in progress. As Chris mentioned, in the quarter, rent commenced on our 10th completed redevelopment project, which was a ground lease to Sheetz, a leading convenience and gas operator in eastern half of the United States. In this project, we invested $0.3 million and generated a net increase in annual rent of $0.2 million. In terms of redevelopment projects, we ended the quarter with 12 sign leases. Of these redevelopment projects, seven are in properties not currently included in our net lease portfolio and five are on properties, which are included in our net lease portfolio. All of these projects are continuing to advance through the redevelopment process. We expect substantially all of these projects will be completed over the next one to three years. In total to-date we have invested approximately $2.2 million in these 12 redevelopment projects and we expect to have rent commencement at several sites during 2019. On the capital spending side we estimate that these 12 projects will require a total investment by Getty of $7.9 million and will generate incremental returns to the company in excess of where we could invest these funds in the acquisition market today. For a more detailed information on the redevelopment pipeline, please refer to page 14 of our investor presentation, which can be found on our website. We remain committed to transforming selective sites in our portfolio and look forward to updating everyone as we make progress. Turning to our acquisition program, the overall volume of opportunities we are underwriting for convenience and gas and other automotive used sites remained strong. During the first quarter of 2019, we continue to source and underwrite a steady pipeline of potential transactions. While we did not close any acquisitions during the first quarter as Chris discussed, we remain confident that we will close on opportunities in 2019 and look forward to updating everyone as we move throughout the year. Turning to dispositions. We did not sell any properties in the quarter, but we did exit one property, which we had previously leased from a third-party landlord. In addition subsequent to the quarter end we sold three vacant properties generating net proceeds of $0.6 million. As a result of all of our activity, we ended the quarter with 913 net leased properties, seven active redevelopment sites, and 12 vacant properties. Our weighted average leased term remained approximately 10 years and our overall occupancy excluding active redevelopments was 98.7%. With that, I turn the call over to Danion.

Thank you, Mark. For the first quarter, our total revenues and rental income, which excludes tenant reimbursement and interest on notes and mortgages receivable grew 6% to $34 million and 4.6% to $29.6 million, respectively. Our top-line growth continues to be driven by rent escalated in our leases plus incremental growth from completed 2018 acquisitions and redevelopment projects. At the beginning of the year, we adopted a new lease accounting standard. This change resulted in an immaterial impact on net earnings, FFO and AFFO. In addition, tenant reimbursements are now included in revenues from rental properties. Also note that we have not adjusted prior period result and certain line items are not directly comparable. For more information on changes in accounting due to the new leasing standard please refer to yesterday's earnings release and our Form 10-Q, which has yet to be filed. During the first quarter, we experienced an increase in property costs associated with our redevelopment initiatives, certain of which are nonrecurring in nature. In addition, our G&A expenses increased primarily due to $0.3 million of one-time employer -- employee retirement cost. For more information on specific expense movements, please refer to yesterday's earnings release. Our FFO for the quarter was $17.8 million or $0.43 per share as compared to $17.8 million or $0.44 per share for the prior year's quarter. Our AFFO for the quarter was $17.5 million or $0.42 per share as compared to $16.8 million or $0.42 per share for the prior year's quarter. Turning to the balance sheet and our capital market activities, we ended the quarter with $415 million of borrowings which includes $90 million under our credit agreement and $325 million of long-term fixed rate debt. Our weighted average borrowing cost is 5.2%, the weighted average and maturity of our debt is…

That concludes our prepared remarks. So let me ask the operator to open the call for questions.

Thank you. [Operator Instructions] We'll take our first question from Mitch Germain with JMP Securities.

Good morning. Chris, when thinking about the acquisition markets obviously no activity in the first quarter. Did the fourth quarter have any – the volatility in the fourth quarter have anything to do with maybe the pipeline? Was it the lower rates causing a little more competition? Was it just maybe a pricing dynamic where you guys have been disciplined? Any sort of trend, so we should be considering from this quarter in terms of how we should think about acquisitions for the full year?

No, I don't think there's any one trend that I would point to Mitch. I think what we're seeing is continued opportunity. The market continues to be competitive. We remain confident that there are opportunities that we will be able to close on. But one thing that, I would point out is that, our large acquisitions have traditionally been lumpy, some of that's due to the timing of industry M&A or just other dynamics within the transaction and I think that's what we're seeing now as some of the timing is difficult to predict.

Does the op unit currency offer some sort of retirement planning currency? Or some of the private owners in this space? Or is that something that you guys haven't really considered much?

We don't have an op structure. So we don't accompany that in our playbook.

So you don't have any of that. Got you. Last one for me. Just trying to understand, the sequential decline in earnings that was just the retirement benefit? Is that the way we should think about it?

Well, we had a long time employee retire and obviously that's the cost that we incurred in the quarter that we highlighted which are truly non-recurring. If you back those costs out our AFFO would have been $0.43. So I think you would see the uptick without that expense.

Got you. And that – was that – that was considered in guidance when you guys issued it? Or was that kind of incremental?

No.

It wasn't. Okay.

It was not.

Thank you.

We'll take our next question from Joshua Dennerlein with Bank of America Merrill Lynch.

Hey, good morning, guys.

Good morning.

On page 14 of your investor presentation the redevelopment project looks like the yield jumped up – the average yield you've been getting jumped up to 14% from 12% last quarter. Is there any – should we just – how should we kind of think about future yields with the last projects? A higher yield in the past.

Sure. I think in general what we've said about the program in total is that we expect several 100 basis points premium over the acquisition market, so I think 10% plus yield. Specifically, as it relates to the project that was completed in the first quarter, there was a relatively modest investment on our part and a significant increase in rent. So, that's why you saw the jump from 12% to 14%.

Okay, okay. And were -- are there any large portfolios in the market or anything that you may have passed up on? Or the past like few months that you didn't like the pricing or maybe the deals weren't something you wanted? Kind of curious out there.

I think -- sure. So, to answer the second part first, I mean there's been nothing that we've really passed on specifically that comes to the top of mind considering the market in the first quarter. The overall I would say that the trend of large consolidation perhaps slow down, but I think that's just a timing thing. And we expect the industry to continue to grow and consolidate and I think it's just purely timing at this point.

Okay, all right. Thank you. Appreciate it.

[Operator Instructions] We'll take our next question from Anthony Paolone with JPMorgan. Please go ahead.

Yes, thanks. Just following up on the pipeline questions. How much of -- or how much did you look at in the first quarter? Just to get a sense as to what you all are seeing in terms of total volume?

How much new is added to the pipeline in the first quarter?

Yes, I mean how much did you underwrite? Just order of magnitude like was it hundreds of millions of dollars or tens or -- and like what's the--

It's Mark Olear. So, I think I would say it's been consistent as far -- it's been steady as far as the opportunities that presented coming out of last year or through last year. I don't think we broke it down on a quarterly basis, but we've seen a steady pace of actionable opportunities that we've applied our underwriting criteria to. And as we stated, we're confident that we'll find something that meets our criteria, but we remain disciplined on what we're seeing so far to-date in the year.

Okay. And how much is -- what does the split look like between sort of the traditional gas stations, huge storage stuff that you currently own versus some of the other automotive concepts that you'll consider at this point?

I would say it's certainly heavily weighted towards our -- the more in profile of gas and convenience portfolios or -- and are one-off deals. We continue to expand our search outside of that until the automotive-related uses. But if you are looking to -- it's definitely weighed towards gas convenience in our reviews.

And do you think that's just because of how you set the brackets around your potential buy box and that it's still largely gas and convenience? Or is that just kind of the industry and deal -- and I guess what I'm getting toward is trying to understand like how big an opportunity set are you opening up for yourselves by looking at some of these other areas. Does that just lead to higher hit rate just more deal volume in the future?

Yes, I think the way towards gas convenience is based mostly on our historical relationships both with our existing tenants that continue to grow new relationships in the gas convenience sector and the relationships in the investment and brokerage community. We are making efforts to grow the opportunity set in other auto-related industries both in the tenant side and the brokerage side. So, we hope that the overall pipeline will continue to grow as we expand the universe of criteria. But right now as we make that transition, it's heavily weighted towards gas convenience because of our historical relationships in that sector.

And then just last question. You mentioned a few vacant properties sold after the quarter. As you look at the portfolio in its total, what sort of magnitude or what you'd probably like to sell over time at this point?

It's not -- there's not a material portfolio of properties for disposition at this point.

We'll take our next question from John Massocca with Ladenburg Thalmann.

Good morning.

Hey John.

With regards to kind of operator M&A has there been any shift in sentiment amongst acquirers with regards to using sale-leaseback fund M&A versus other types of financing? Just guessing that there's been a couple of transactions here early in 2Q but maybe with operators that haven't traditionally been as active on the sale-leaseback front. Has there been a broader shift though in sentiment that you've seen?

Not a broader shift. I mean there are certain large acquirers which is probably what you're referring to. We have traditionally not used sale-leaseback financing. They have access to a broader credit market or equity. Our capital fits very well in consolidation amongst midsized to larger companies that maybe are not public and do not have some of that access to the capital markets. And so I don't really see any change. What I do see happening in the first quarter or year-to-date is the buyers have been some of the largest participants in the industry and that's the way they choose to finance their own balance sheet.

Okay. And then as you mentioned in your prepared remarks you guys have been fairly focused on acquiring assets and I will say more infill locations. Is there anything from kind of credit or lease perspective that would get you comfortable maybe widening your acquisition parameters to transact for something that might be -- you might consider little more rural in terms of a c-store property?

Yes it's a good question. Our strategy -- the history of the company has always been more in the urban and suburban markets particularly on the east coast. We've certainly been acquiring more in the southern area of the U.S. larger stores, larger footprint. So it does tweak the model a little bit. But I think our strategy maintains -- or will be to continue to be in sort of that top 50, top 100 MSAs around the U.S. It's the way we think about real estate the way we think about the industry. I don't think you can expect us to go into a very rural area and make a big splash there.

And then one last kind of detailed question. Could you maybe provide a little more color on the uptick in operating costs? When you say there are onetime costs associated with development is that over the course of those properties being in the development pipeline? Or was there just something 1-timish this quarter specifically?

Yes, there were a few projects that we elected to not pursue for various reasons and those costs were then expensed through the income statement.

When you say not pursue is it stuff that was going to be put into the -- I figured the active projects were just stuff moving from the pipeline into the active projects. And was there something that maybe kind of knocked out the pipeline as well?

Yes. These were projects that were in various stages that probably don't -- weren't in the investor presentation they just step below that where for various reasons whether it'd be on our side or on the counterparty side, we elected to not move forward that means you know.

And what are kind of the long-term plans for those properties. You just operate as it is or?

Well certain of them we continue to believe will be good redevelopments over the long term. But again the accounting rules don't let you just keep the costs on the balance sheet right? But -- and then some of them will continue to be operating gas stations in our net lease portfolio and some of them will go back to the drawing board.

Makes sense. That’s it for me. Thank you very much.

At this time we'd like to turn the call back over to our presenters for any additional or closing remarks.

Excellent. Thank you very much for being on the call today for your interest in the company. And we look forward to updating you on our progress as the year goes on and then we will finish the second quarter ended of June 30.

This concludes today's call. Thank you for your participation. You may now disconnect.