2024-05-20 18:53:15 ET
Summary
- Getty Realty's shares have underperformed in the past year, but the company's business remains stable with strong debt coverage and long lease terms.
- The company reported solid Q1 results, with adjusted funds from operations beating expectations and revenue rising by 14%.
- Its lower share price does make accretive deal-making more difficult, but shares seem now positioned to deliver a 10+% return even absent new property acquisitions.
Shares of Getty Realty ( GTY ) have been a meaningful underperformer over the past year. I last covered shares in January , rating them a “buy.” However, since that recommendation, shares have lost 1% while the market has rallied a further 11%. I continue to view Getty’s business as stable, given strong debt coverage and long average lease terms. My primary concern has been on its equity-funded acquisitions. Still, deals have favorable economic terms. Acquisition growth may slow, but I do not view this as a negative necessarily. Assuming interest rates do not rise substantially, I believe shares can outperform. In the meantime, investors collect a secure 6+% yield. With interest rates appearing likely to stay higher for longer, it is critical for real estate and dividend investors to consider the resilience of their investments; in this article, I will show how Getty is still attractive even if financing conditions effectively close capital market access for new deals....
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Getty Realty: Shares Can Be Attractive Even With Slower Investment