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Getty Realty Corp. Announces Financial Results For Quarter Ended September 30, 2012

Stocks in this article: GTY

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.

 

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(in thousands, except share data)(unaudited)

                         
           

September 30,

2012

     

December 31,

2011

                     
Assets:                        
 
Real Estate:
Land $320,808 $345,473
Buildings and improvements 224,003   270,381  
544,811 615,854
Less – accumulated depreciation and amortization (114,678)   (137,117)  
Real estate held for use, net 430,133 478,737
Real estate held for sale, net 23,718    
Real estate, net 453,851 478,737
Net investment in direct financing leases 92,110 92,632

Deferred rent receivable (net of allowance of $25,630 as of December 31, 2011)

10,938

8,080
Cash and cash equivalents 16,387 7,698

Notes, mortgages and accounts receivable (net of allowance of $26,004

 

 

at September 30, 2012 and $9,480 as of December 31, 2011)

35,919

36,083

Other assets 30,328   11,859  
Total assets $639,533   $635,089  
                         
Liabilities and Shareholders' Equity:                        
 
Borrowings under credit line $151,700 $147,700
Term loan 22,225 22,810
Environmental remediation costs 52,300 57,700
Dividends payable 4,202
Accounts payable and accrued expenses 38,148   34,710  
Total liabilities 268,575 262,920
Commitments and contingencies
Shareholders' equity:
Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 33,396,310 at September 30, 2012

and 33,394,395 at December 31, 2011

334 334
Paid-in capital 461,234 460,687
Dividends paid in excess of earnings (90,610)   (88,852)  
Total shareholders' equity 370,958   372,169  
Total liabilities and shareholders' equity $639,533   $635,089  
 
 

GETTY REALTY CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited)

 

             
         

Three months ended September 30,

     

Nine months ended September 30,

 
          2012       2011       2012       2011  
                         
Revenues from rental properties $22,386 $24,954 $76,332 $72,917
Interest on notes and mortgage receivable   726     755       2,107       1,901  
Total revenues   23,112     25,709       78,439       74,818  
 
Operating expenses:
Rental property expenses 8,345 2,923 22,044 10,094
Impairment charges 2,000 550 2,979 2,470
Environmental expenses, net 268 1,734 358 3,878
General and administrative expenses 4,963 2,687 26,141 10,308
Allowance for deferred rent receivable 10,974 10,974
Depreciation and amortization expense   3,329     2,714     10,152     6,998  
Total operating expenses   18,905     21,582     61,674     44,722  
Operating income 4,207 4,127 16,765 30,096
 
Other income, net 211 122 503 79
Interest expense   (2,896)     (1,414)     (7,071)     (4,079)  
Earnings from continuing operations 1,522 2,835 10,197 26,096
 
Discontinued operations:
Earnings (loss) from operating activities (5,563) 2,205 (7,370) 5,233
Gains from dispositions of real estate   576     310     3,819     609  
Earnings (loss) from discontinued operations   (4,987)     2,515     (3,551)     5,842  
Net earnings (loss)   $(3,465)     $5,350     $6,646     $31,938  
 
Basic and diluted per common share amounts:
Earnings from continuing operations $ .05 $ .08 $ .31 $ .79
Earnings (loss) from discontinued operations ($ .15) $ .08 ($ .11) $ .18
Net earnings (loss) ($ .10) $ .16 $ .20 $ .96
 
Weighted-average shares outstanding:
Basic 33,396 33,394 33,395 33,097
Stock options       1         1  
Diluted   33,396     33,395     33,395     33,098  
 
 
GETTY REALTY CORP. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS (LOSS) TO
FUNDS FROM OPERATIONS AND
ADJUSTED FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
          Three months ended September 30,      

Nine months ended September 30,

          2012     2011       2012     2011
Net earnings (loss)         $(3,465 )     $5,350       $6,646     $31,938
 
Depreciation and amortization of real estate assets 3,492 2,824 10,966 7,354
Gains from dispositions of real estate (578 ) (310 ) (3,819 ) (629 )
Impairment charges 7,406   587   10,552   3,094  
Funds from operations 6,855 8,451 24,345 41,757
Revenue recognition adjustments (1,459 ) 210 (2,994 ) (794 )
Allowance for deferred rent receivable 11,043 11,043
Acquisition costs       2,034  
Adjusted funds from operations $5,396   $19,704   $21,351   $54,040  
 
Diluted per share amounts:
Earnings (loss) per share ($.10 ) $.16 $.20 $0.96
Funds from operations per share $.21 $.25 $.72 $1.26
Adjusted funds from operations per share $.16 $.59 $.64 $1.62
 
Diluted weighted average shares outstanding 33,396 33,395 33,395 33,098
 

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. In accordance with the National Association of Real Estate Investment Trusts’ modified guidance for reporting FFO, Getty has restated reporting of FFO for all periods presented to exclude non-cash impairment charges. 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), non-cash impairment charges, 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 2011, Getty revised its definition of AFFO to exclude direct expensed costs related to property acquisitions and other unusual or infrequently occurring items.

FFO excludes various items such as gains or losses from property dispositions, depreciation and amortization of real estate assets and non-cash impairment charges. In Getty’s case, however, GAAP net earnings and FFO typically include the impact of the “Revenue Recognition Adjustments” comprised 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 Getty’s recognition of revenues from rental properties, as offset by the impact of related collection reserves. GAAP net earnings and FFO from time to time may also include property acquisition costs or other unusual or infrequently recurring items. Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with Getty’s tenants. In accordance with GAAP, the aggregate minimum rent due over the current term of these leases are recognized on a straight-line (or 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 terms using the effective interest method which produces a constant periodic rate of return on the net investments in the leased properties. Property acquisition costs are expensed, generally in the period when properties are acquired, and are not reflective of normal operations. Other unusual or infrequently occurring items are not reflective of normal operations.

Getty pays particular attention to AFFO, a supplemental non-GAAP performance measure that Getty defines as FFO less Revenue Recognition Adjustments, property acquisition costs and other unusual or infrequently occurring items. 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, net of related collection reserves; (ii) the rental revenue earned from acquired in-place leases; (iii) the impact of rent due from direct financing leases; (iv) Getty’s operating expenses (exclusive of direct expensed operating property acquisition costs); and (v) other unusual or infrequently occurring items. 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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