Good morning, and welcome to Getty Realty’s Earnings Conference Call for the First Quarter of 2021. [Operator Instructions] After the presentation, there will be an opportunity to ask questions. Prior to starting the call, Joshua Dicker, Executive Vice President, General Counsel and Secretary of the company, will read a safe harbor statement and provide information about non-GAAP financial measures. Please go ahead, Mr. Dicker.

Thank you, operator. 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, 2021. 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 2021 guidance and may also include statements made by management in their remarks and in response to questions, including regarding the company’s response to the COVID-19 pandemic, future company operations and 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 results could differ materially. I refer you to the company’s annual report on Form 10-K for the year ended December 31, 2020, and other filings made with the SEC for a more detailed discussion of the risks and other factors that could cause 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 operation, 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 first quarter of 2021 Earnings Call. With Josh and me on the call today are Mark Olear, our Chief Operating Officer; and Brian Dickman, our Chief Financial Officer. I will begin today’s call by providing an overview of our performance for the first quarter of 2021, touch on our strategic objectives for the remainder of the year, and then I’ll pass the call to Mark and Brian to discuss our portfolio and financial results in more detail. We delivered another quarter of solid results as our net lease portfolio and our tenants' operating businesses continued to display the strength and stability that we saw throughout the prior year. We had no issues with rent collections this quarter, including collecting small amounts of rent, which we agreed to defer in 2020. We view the strength of our collections as a continuation of recent quarter’s performance as our business was quite strong throughout all of last year. The net result of our stable-in-place portfolio and the continued execution of our investment strategies was a 5.4% increase in total revenues, an 8.6% increase in our adjusted funds from operations and a 2.2% increase in our AFFO per share. We also continued to execute on our growth strategy during the first quarter as we invested a total of $30.3 million in a combination of sale-leasebacks and construction funding for new industry locations. Our investment activity for the quarter was again focused on both the convenience store and car wash businesses. In addition, our team continues to source and underwrite numerous opportunities in the convenience and auto-related sectors, and we are encouraged by the number of attractive opportunities we are reviewing in our investment pipelines. As we look ahead, we remain focused on three primary…

Thank you, Chris. As of the end of the quarter, our portfolio includes 949 net lease properties, six active redevelopment sites and five vacant properties. Our weighted average lease term is approximately 9.1 years, and our overall occupancy, excluding active redevelopments, increased to 99.5%. Our portfolio remains spread over 35 states, plus Washington, D.C. And our annualized base rents, 65% of which come from the top 50 MSAs in the U.S., continue to be well covered as our trailing 12-month tenant rent coverage ratio increased 2.7 times. In terms of our investment activities, we had an active start to the year. During the quarter we invested $30.3 million in nine properties. Our completed acquisitions during the first quarter stemmed from acquisition leaseback transactions with three separate tenants operating in the express tunnel car wash business. We acquired one site with Zips Car Wash in the Louisville, Kentucky MSA for $4.8 million; one site with GO Car Wash and a San Antonio MSA for $3.1 million. In addition, we completed our first sale-leaseback with WhiteWater Express, where we acquired four properties in Ohio and Kentucky for an aggregate purchase price of $13.9 million. All the acquired properties are subject to triple net leases with 15-year initial terms. And our aggregate initial cash yield on the six sites acquired was slightly more than 7%. Getty also funded $8.4 million construction loan for three new industry convenience stores with Refuel, a 90 unit c-store operator with locations across the southeastern U.S. As part of this transaction, we will accrue interest on our investment during the construction phase of the project. We expect to acquire the properties via sale-leaseback transaction at the end of the construction period. We ended the quarter with a strong investment pipeline and remain highly committed to continuing to grow…

Thanks, Mark. Good morning, everyone. I’ll start with a recap of earnings. Hopefully, you’ve all had a chance to see yesterday’s release. AFFO, which we believe best reflects the company’s core operating performance was $0.47 per share for the first quarter, representing a year-over-year increase of 2.2%. In addition, FFO was $0.44 per share for the quarter. Our total revenues in the first quarter were $37.3 million, representing a year-over-year increase of 5.4%. Rental income, which excludes tenant reimbursements and interest on notes and mortgages receivables grew 6.7% to $33.5 million. Acquisition activity, rent escalators in our leases and the completion of redevelopment projects all contributed to the growth in our rental income. On the expense side, property costs increased in the quarter, primarily due to increases in reimbursable real estate taxes. Environmental expenses also increased this quarter as a result of non-cash changes in environmental remediation costs and estimates. The portion of environmental expenses, which flowed through to our AFFO were down quarter-over-quarter as a result of lower professional fees and related expenses. As we note each quarter, environmental expenses are subject to a number of estimates and non-cash adjustments and will continue to be highly variable. Finally, G&A expenses increased this quarter as well due to non-recurring retirement costs as well as other employee-related expenses and certain professional fees. As we turn to the balance sheet and our capital markets activities, we ended the quarter with $525 million of debt outstanding, comprised entirely of long-term fixed rate unsecured notes. Our $300 million revolver was completely undrawn at quarter end. Our weighted average borrowing cost was 4.2% and the weighted average maturity of our debt was 7.3 years. In addition, our total debt to total market capitalization was 29%. Our total debt to total asset value was 38%, and…

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

[Operator Instructions] The first question is from Michael Gorman from BTIG. Please go ahead.

Chris, I was wondering if you could talk a little bit about what the environment is like right now on the tenant’s side in terms of consolidation? Are you seeing continued moves toward consolidating the c-store space and how that plays into how your acquisition pipeline looks like or what your acquisition pipeline looks like over the balance of the year?

Well, sure. Maybe I’ll comment on that and then add something as well, which is, I think the convenience store industry will continue to consolidate as it has been over the last several years. The reality is with the c-store evolving and becoming more part merchandise, part quick serve restaurant, part coffee, [indiscernible] the operations are incredibly sophisticated. And when you add loyalty programs and apps on top of that, there are small to midsized operators, right, that probably are not willing to or maybe cannot compete with some of the larger chain stores. So you’re going to continue to see continued consolidation, whether it’s a small player, selling to a regional player or even some of the more national transactions that you’ve seen over the last couple of years. The other thing I would add, Mike, which is probably not related to your question but what we’re also seeing is that there are a number of, call it, medium-to larger-sized chains that are also, quite frankly, building their own locations and growing organically in their target markets or in adjacent markets. And we think that’s also a source of potential transactions for Getty as these operators are looking to source capital, right, to fund organic growth as well as M&A growth.

That’s great. And actually, yes, feeds right into my next question about the construction loans during the quarter. I’m curious if you could spend a little bit more time talking about kind of how you source those, how you underwrote those. And maybe what kind of additional opportunities, as you kind of just mentioned, there are for either funding new development through construction loans or maybe even taking your redevelopment skill set into ground-up development. Can you just kind of lay out the field of opportunity there?

Yes. So I’d dovetail to what I was just saying a moment ago. We’ve done this in a couple of transactions before, right, where we have been effectively a development partner with a tenant where they have identified a site to do their prototype new build program. So in this case, refuel is a large operator across the southern U.S. They’ve got a new store program. And they are looking for capital to help them fund along the way. And then the way our agreements are structured is we anticipate buying the location upon completion. Again, it’s important to Getty right at the end of the day that we become the fee owner of the property. But if there’s a way for us to partner with an operator and help fund their organic growth, we certainly think that’s an opportunity for us in this case, but – and others as well.

Great. And then maybe just last one for me. In your conversations with your tenants, any kind of updated thoughts on the relationship between what’s been going on with convenience store sales, which seem to be pretty strong? And then what’s going on the gas side of things and whether – I think historically it’s been kind of that 50%, maybe 60% range of c-store sales don’t involve a gas transaction. Is that changing at all?

It is gradually increasing, right? So the – we have a stat in our investment materials that says approximately 50% of customer visits are non-gas-related visits. Anecdotally, in conversations with our tenants, we have seen that 50% number growing, right? And it does vary by industry. Certainly, if you’re in an area that’s maybe more suburban or maybe more spread out, right, you’re seeing more visits and sometimes the same customer visiting multiple times per day. And I think it’s a trend that will continue. As convenient store becomes your morning destination, your afternoon destination, in certain cases your main destination for dinner, that’s what our tenants are focused on, is driving customer visits for food and traditional merchandise when – hub when consumers do not need to stop for gas.

The next question is from Todd Thomas from KeyBanc. Please go ahead.

Just first question for Brian. In terms of the guidance, which does not include future investments, you closed $22 million at a slightly more than 7% initial yield. You extended some construction financing. I was just curious what the offset was with the guidance range, the AFFO being firm what the offset was relative to the investments that were completed during the quarter.

Yes. Good morning, Todd. Fair question, as we obviously did have some investment activity in the quarter. It’s really the ATM issuance. And I can’t say that we were active outwardly in the market during the quarter, but there were a couple of opportunities that were brought to us that we felt made sense to transact on. As you weigh the different considerations of issuing equity, we thought that made sense for us, particularly over the long term, acknowledging that it does put a little bit of short-term pressure on the earnings per shares number and AFFO per share. But the short answer to your question was the equity issuance, and we felt that was the right thing to do notwithstanding the impact on the per share numbers.

Okay. And then just back to investments. I was just curious if there’s an update and if you can comment at all regarding the Couche-Tard process, the Circle K portfolio and Getty’s interest in those assets?

Yes. There’s not really any update or any thoughts that I can provide on at this time.

Okay. And what about the disposition outlook? What’s that look like? Should we expect more term – more near-term asset sales? I mean, how should we think about dispositions as we move forward throughout the year?

Yes, sure. If you look at our recent, maybe the past two or three years, we’ve certainly been a seller of, call it, 10 to 15 properties a year. Typically, some of those properties have been some of our vacancies, some of the properties were coming out of leases or lease term was expiring. I think that’s a good run rate for Getty. We don’t see significant disposition activity in the horizon.

The next question is from Nikita Bely of JPMorgan. Please go ahead.

Did you provide yields on these loans that you guys have advanced? These constructions loan. Just curious.

Unfortunately we can’t disclose the exact yield on that. But what I’d say is that the interest rate during the construction period is certainly consistent with where Getty has been investing over the last several years.

So it’s consistent to the cap raise. And then my second question was, what do you think the expected cap rate will be down the line when you eventually do acquire those properties?

Again, I can’t really provide specific numbers, but I would guide you to the range of cap rates we’ve quoted in the past.

Got it. Okay. And on the deal pipeline, I know you talked a little bit about that. In terms of just putting some numbers and brackets around it, you have been a little bit more consistent in the recent quarters with the deal volume. Do you think that $30 million to $40 million, $50 million of deals per quarter is a realistic number that you think you aspire to and over time can put forward that on a consistent basis?

I’m not going to provide a specific number, but what I would say is it’s been one of our goals to become more of a consistent acquirer right into – we’ve had a number of resources in Mark’s group, right, to help with that. And I think our results have shown that we’ve certainly been acquiring at a steady pace over the last several years, and we expect that to continue.

Right. Last question, if you don’t mind. You did some car washes in the quarter. Can you just talk a little bit about how big of an opportunity that is as a percent of your total deal pipeline currently?

Sure. This is Mark. I think it’s growing to the point as we expand our relationships and develop in new opportunities in the space. It’s a highly fragmented industry which is receiving a lot of attention for consolidation right now. And I think it’s – it will grow to be somewhat equal to or near the opportunity set for convenience stores. Right now it’s not quite there, but we’re working on it every day. And right now, we’re still probably heavily – slightly weighted toward convenience stores, but not only in car wash, but in all the other automotive experience retail sectors where we’re working to grow the pie as big as possible for opportunities for acquisitions and investments in all those retail verticals.

This concludes the question-and-answer session. I would like to turn the call back over to Chris Constant for closing remarks.

Great. Thank you, operator. We appreciate everyone joining us this morning for our first quarter call. Thank you for your interest in Getty. And we look forward to getting back on with everybody at the end of the second quarter.

This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.