Getty Realty Q2 2025 Earnings Report

Getty Realty EPS Results

• Actual EPS: $0.59
• Consensus EPS: $0.60
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: N/A

Getty Realty Revenue Results

• Actual Revenue: $51.31 million
• Expected Revenue: $51.59 million
• Beat/Miss: Missed by -$278.00 thousand
• YoY Revenue Growth: N/A

Getty Realty Announcement Details

• Quarter: Q2 2025
• Date: 7/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 8:30AM ET

Getty Realty (NYSE:GTY) Corp. is a publicly traded, net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate. As of December 31, 2023, the Company's portfolio included 1,093 freestanding properties located in 40 states across the United States and Washington, D.C.

Getty Realty Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Annualized base rent grew 9.9% to $204 million and AFFO per share rose 1.7% to $0.59, supported by near-100% rent collections.
• Positive Sentiment: Year-to-date, Getty closed $95.5 million of investments at an 8.1% initial cash yield and has a $90 million+ pipeline expected to fund at high-7% yields across all target sectors.
• Positive Sentiment: Portfolio health remains robust with 99.7% occupancy, a 10-year weighted average lease term and 2.6x tenant rent coverage; net debt to EBITDA stands at 5.2x with no debt maturities until 2028 and over $400 million of liquidity.
• Positive Sentiment: Full-year 2025 AFFO per share guidance was raised to $2.40–$2.41 from $2.38–$2.41, reflecting strong deal execution and in-place portfolio performance.
• Negative Sentiment: Getty recorded an environmental expense accrual for legacy litigation, signaling ongoing legal costs and potential future cash outlays related to long-running cases.

Presentation

[Operator]

Good morning, and welcome to Getty Realty's Second Quarter twenty twenty five Earnings Call. This call is being recorded. 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.

[Joshua Dicker, EVP, General Counsel & Secretary at Getty Realty]

Thank you, operator. I would like to thank you all for joining us for Getty Realty's second quarter earnings conference call. Yesterday afternoon, the company released its financial and operating results for the quarter ended 06/30/2025. The Form eight ks and earnings release are available in the Investor Relations section of our website at gettyrealty.com. Certain statements made during this call are not based on historical information and may constitute forward looking statements.

[Joshua Dicker, EVP, General Counsel & Secretary at Getty Realty]

These statements reflect 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 2025 guidance and may include statements made by management, including those regarding the company's future operations, future financial performance or investment 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 ks for the year ended 12/31/2024, as well as any subsequent filings 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 today. The company undertakes no duty to update any forward looking statements that may be made during 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 a reconciliation of those measures to net earnings. With that, let me turn the call over to Christopher Constant, our Chief Executive Officer.

[Christopher Constant, President, CEO & Director at Getty Realty]

Thank you, Josh. Good morning, everyone, and welcome to our earnings call for the second quarter of twenty twenty five. Joining us on the call today are Mark O'Lear, our Chief Operating Officer and Brian Dickman, our Chief Financial Officer. I will lead off today's call by highlighting our quarterly financial results, accelerating investment activity and recent tenant performance.

[Christopher Constant, President, CEO & Director at Getty Realty]

Mark will then discuss our portfolio and investment activities, and Brian will provide additional details on our earnings, balance sheet and 2025 AFFO guidance. Yeti had a strong quarter and grew its annualized base rent by 9.9% to approximately $2.00 4,000,000 during the second quarter. And we also produced AFFO per share of $0.59 an increase of 1.7% compared to the prior year. Our consistent financial results continue to be driven by the steady performance of our in place portfolio. With nearly 100% rent collections, annual rent increases averaging 1.8 and stable rent coverage, our in place portfolio provides a base for reliable and growing cash rental income.

[Christopher Constant, President, CEO & Director at Getty Realty]

We further enhanced that income growth with accretive investment activity supported by prudent balance sheet management. Our pace of underwriting and closing transactions showed acceleration as we move through the second quarter. Year to date, we have closed $95,500,000 of investments at an initial cash yield of 8.1%, and operators are taking a noticeably more constructive stance towards moving deals forward. We're also energized by the increasing diversity of opportunities we're seeing and our ability to close transactions across our investable universe. We've deployed meaningful amounts of capital into each of our target property types this year, continue to add new tenants to the portfolio while expanding our geographic footprint.

[Christopher Constant, President, CEO & Director at Getty Realty]

Our acquisitions team is doing an excellent job of identifying transactions that meet our investment criteria with both larger, more established tenants that have broad store networks and emerging high growth tenants that are building platforms across The US. Our 90 plus million investment pipeline and the deals we are currently underwriting both reflect this increased transaction activity and diversity of prospects. Our pipeline includes acquisitions or development funding in all of our target sectors, with the majority allocated to automotive service centers. Importantly, the increase in transaction activity that we saw at the end of the second quarter has continued as we move through the third quarter. Coming back to our in place portfolio and the steady resilient performance we've consistently seen from our tenants, we reported strong trailing twelve months rent coverage of 2.6 times this quarter.

[Christopher Constant, President, CEO & Director at Getty Realty]

Rent coverage improved for nearly all of our convenience store portfolios, driven by healthy fuel margins, stable fuel volumes and expanding profit margins inside the store. Additionally, rent coverage for our car wash portfolio showed noticeable improvement for the second consecutive quarter as new to industry sites continue to mature and operators focused on profitability. As we think about recent performance, the evolution of our platform over the last few years and the opportunities we see ahead, we have more conviction than ever in the sectors in which we invest and in our ability to further scale the company. Our strategy to focus on well located convenience and automotive retail properties is proven. These are largely recession resistant businesses providing nondiscretionary goods and services to mobile consumers that prioritize convenience, speed and service.

[Christopher Constant, President, CEO & Director at Getty Realty]

Our approach to underwriting and structuring investments is effective. We emphasize market and real estate fundamentals and strong lease terms to support our investment decisions and mitigate the credit risks, real or perceived, inherent in a net lease business. And our results are compelling. Our earnings growth, dividend growth and leverage compare favorably to peers, as do our portfolio metrics such as occupancy, remaining lease term, tenant rent coverage and rent collections. Looking ahead, we're going to keep executing on strategy and focus on what we can control.

[Christopher Constant, President, CEO & Director at Getty Realty]

We've demonstrated that we can effectively allocate capital, drive outperformance and create shareholder value. And we are confident the market will recognize our success. With that,

[Christopher Constant, President, CEO & Director at Getty Realty]

I will let Mark discuss our portfolio and investment activities.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

Thank you, Chris. At quarter end, our lease portfolio included $11.32 net leased properties and two active redevelopment sites. Excluding the active redevelopments, occupancy was 99.7% and our weighted average lease term remained at ten years. Our portfolio spans 44 states plus Washington DC with 61% of our annualized base rent coming from the top 50 MSAs and 76% coming from the top 100 MSAs.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

Our rents continue to be well covered with a trailing twelve month tenant rent coverage ratio of 2.6 times. Turning to our investment activities for the quarter, we invested $66,100,000 at an initial cash yield of 8.1%. The weighted average lease term on acquired assets for the quarter was fifteen point nine years. Highlights of this quarter's investments include the acquisitions of nine drive through QSRs for $14,900,000 six automotive service centers for 7,900,000.0 five convenience stores for $33,300,000 and four express tunnel car washes for $5,500,000 net of amounts funded in prior periods. We also advanced incremental development funding in the amount of $4,000,000 for the construction of three auto service centers and one express tunnel car wash.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

These assets are either already owned by the company and are under construction or will be acquired via sale leaseback transaction at the end of the project's respective construction period. Subsequent to quarter end, we invested an additional $18,500,000 bringing our year to date total investments to 95,500,000.0 at an 8.1% initial cash yield. Beyond our disclosed pipeline of more than $90,000,000 of investments under contract, the majority of which we expect to fund over the next six to nine months at average initial cash yields in the high 7% area. We continue to source actionable opportunities that are priced at accretive spreads and will be additive to our portfolio as we look to further scale and diversify our business. Moving on to our redevelopment platform, we advanced several projects this quarter, which are in various stages of the redevelopment process.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

At quarter end, we had four signed leases for new to industry oil change locations of which two are under construction and we have additional projects in various stages in our pipeline. Continuing with our asset management efforts, during the quarter, we sold three properties for $3,200,000 As it relates to the 12 Express Tone Car Wash assets that were previously leased to Zipps Car Wash, we have effectively concluded the repositioning of this portfolio and the results were in line with our previous disclosures. Zips remains our tenant at six properties, and five of the sites are now subject to new leases with two new experienced car wash operators. While both operators are new to Getty's portfolio, each has an existing presence in the market where they acquired assets. And we look forward to developing these relationships moving forward.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

The remaining properties under contract to be sold, which we expect to close by year end. With that, I'll turn the call over to Brian.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Thanks, Mark. Good morning, everyone. Chris went through the earnings highlights in his opening remarks, and a more detailed description of our quarterly results can be found in our earnings release. Our corporate presentation also contains additional information regarding our earnings and dividend per share growth over the last several years. Looking at G and A a little more closely, management focuses on the ratio of G and A, excluding stock based compensation and nonrecurring retirement costs, to cash rental and interest income.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

This ratio was 9.9% for the quarter ended 06/30/2025, and 10.2% for the six months ended 06/30/2025, both of which were essentially flat to the comparable periods in 2024. For the full year 2025, we do expect to see an improvement versus full year 2024. And in general, we remain focused on improving overhead efficiency and expect our relative G and A burden to decrease further as we continue to scale the company. Moving to the balance sheet and liquidity. At quarter end, net debt to EBITDA was 5.2 times or 4.6 times, taking into account unsettled forward equity.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

We continue to target leverage of 4.5 to 5.5 times net debt to EBITDA and are well positioned to maintain those levels going forward. Fixed charge coverage was 3.9 times for the quarter. As of 06/30/2025, the company's weighted average debt maturity was five point one years, and the weighted average cost of our debt was 4.5%. As a result of our debt financings earlier this year, we have no debt maturities until 2028. During the second quarter, we settled approximately 1,200,000.0 shares of common stock subject to forward sales agreements for net proceeds of approximately $32,800,000 At quarter end, we had approximately 3,900,000.0 shares of common stock subject to forward sales agreements, which upon settlement are anticipated to raise gross proceeds of approximately $118,800,000 We continue to be in a strong capital position with more than $400,000,000 of total liquidity at quarter end, including unsettled forward equity, capacity on our revolver and cash on the balance sheet.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Our under contract investment pipeline is fully funded and we have capacity to fund additional investment activity as we move through 2025. With respect to guidance, as a result of our year to date investment activity and the repositioning of the Zips portfolio, we are increasing our full year 2025 AFFO per share guidance to a range of 2.4 to $2.41 from our prior guidance of $2.38 to $2.41 As a reminder, our outlook includes completed transaction activity as of the date of our earnings release, but does not include assumptions for prospective acquisitions, dispositions or capital markets activities, including the settlement of outstanding forward sales agreements. Primary factors impacting our 2025 guidance include variability with respect to certain operating expenses, certain transaction related costs and the timing of anticipated demolition costs for redevelopment projects, which run through property costs on our P and L. With that, I'll ask the operator to open the call for questions.

[Operator]

Thank Our first question is from Brad Heffern with RBC Capital Markets. Please proceed.

[Brad Heffern, Director at RBC Capital Markets]

Hi, morning everyone. You called up the accelerating investment activity in the prepared remarks. What do you attribute that to? Is it just people getting comfortable with the tariffs? Is it seasonality? Or is it something else?

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

Yes, Mark. I think we've definitely seen a more willingness to get back into the transaction market. Those companies that are looking to continue to grow need sources of capital, we're a good option for that. We talked about some pricing which remained kind of in line with the earlier in the year, but our team's been able to source and use its relationship building with our existing tenants or some new tenants spread out the investments across all of our asset classes. And yeah, I think it's just the more willingness for those the market to transact.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

And we've been staying on those relationships through the entire cycle and we're ready to partner with them.

[Brad Heffern, Director at RBC Capital Markets]

Okay, thanks for that. And then now that ZiPS is in the rearview mirror, can you just talk about your overall comfort level on the car wash space? And is there anything of note at this point on the watch list?

[Christopher Constant, President, CEO & Director at Getty Realty]

So I'll start with the back half of that question, which is there's nothing of note on our watch list with respect to our car wash tenants. We said this on prior calls, we continue to be very comfortable with the express ton of car wash as part of our investment thesis, right? It's the mobile consumer. I think the model has proven to be working throughout the last several years. The majority of our tenants, the vast majority of our tenants are large operators with networks that primarily focused either on a region or even national.

[Christopher Constant, President, CEO & Director at Getty Realty]

And we're actually very happy that we've seen probably a slowdown in new store count, right, and more focus on the profitability and letting these newer industry stores mature. So we're comfortable with where we are. We're selectively adding. We see good opportunities in this sector. And again, I think we're very pleased with how we've seen the coverage ramp up for two consecutive quarters for the sector.

[Brad Heffern, Director at RBC Capital Markets]

Okay, thank you.

[Operator]

Our next question is from Mitch Germain with Citizens JMP. Please proceed.

[Mitch Germain, MD - Real Estate Research at JMP Securities LLC]

Thank you. So the more constructive stance, Chris, toward investments or toward deals, guess you said, is that a suggestion that we're seeing a narrowing of that bid ask? Sellers now embracing this higher interest rate kind of pricing paradigm?

[Christopher Constant, President, CEO & Director at Getty Realty]

I think echo what Mark said, which is I think there was a lot of noise just generally in the first quarter of the year. When look at the performance of our tenants, right, there continue to be healthy businesses operating in sectors that have a lot of positive fundamentals and even overall macro themes, right, that they're continuing to benefit from. As these folks look to either grow through M and A or through new store builds, we've been a very consistent capital provider in our target markets. And I think what we're seeing now is folks are kind of returning towards growth And some of our consistent presence and dialogue with repeat business and existing tenants and even new tenants, we're starting to see that flow through various stages in our pipeline.

[Mitch Germain, MD - Real Estate Research at JMP Securities LLC]

And I know you've made some investments, particularly on the acquisition side. Are we seeing the benefits of those investments in the numbers today? Or do you think that that's still really kind of in the future that you'll really begin to see some of those kind of that?

[Christopher Constant, President, CEO & Director at Getty Realty]

No, we've added personnel to look at deals across the four sectors that we invest in. We've invested in technology. I think you're starting to see those pay off. We're hopeful as an organization that our growth will continue to accelerate. And so we believe that the investments are important today and will be even more important as we scale the business going forward.

[Mitch Germain, MD - Real Estate Research at JMP Securities LLC]

Got you. Last one for me. Any change in lease structure in terms of your ability to maybe get higher escalators? Or are you requiring some sort of security just to avoid any credit issues in the future? Anything that has shifted there?

[Christopher Constant, President, CEO & Director at Getty Realty]

So broadly speaking, no change to our lease structure. We continue to prioritize unitary master leases. Escalations generally are hovering in that 2% area today. We're mindful, especially being sale leaseback providers where we're structuring the transaction and negotiating the lease on our form, right? You've got to have an operator that can grow that business in order to support an increasing rent over time.

[Christopher Constant, President, CEO & Director at Getty Realty]

So we're not necessarily trying to push for significantly higher rent bumps there. Security guarantees, all the other attributes of a true triple net lease on our form. Now there's definitely some negotiation by transaction, but we get various enhancements, again, through our business model, consistent with how we've always done it, Mitch, to be honest with you.

[Mitch Germain, MD - Real Estate Research at JMP Securities LLC]

Thank you.

[Operator]

Our next question is from Upparana with KeyBanc Capital Markets. Please proceed.

[Upal Rana, Senior Equity Research Analyst - US REITs at KeyBanc Capital Markets]

Great. Thank you. Chris, you mentioned that you're all set up well for the back half in terms of investment spend. Could you give us a sense of how the back half may play out? Earlier this year, you mentioned most of the investment spend for '25 will mostly be back half weighted. Is that still the case?

[Christopher Constant, President, CEO & Director at Getty Realty]

So we got on the phone last quarter. It actually our slowest closing quarter since the fourth quarter of twenty nineteen. Some of that was because our pipeline at that point in time was a lot of development funding, which has a natural lag. I think what you saw this quarter and even into some of our pipeline deals is that a lot more acquisition activity is flowing through our business, right, whether it's in the pipeline or under contract or now closed. So we're at 95.5 year to date.

[Christopher Constant, President, CEO & Director at Getty Realty]

We've obviously got the pipeline, which is just over 90. A lot of that we think will close in 2025. And quite frankly, the team is out there underwriting deals, we hope to be able to add to that and still get more deals closed as this year goes on that have yet to touch that pipeline number. So I'll just go back to what Mark says. I think people are looking to grow their businesses.

[Christopher Constant, President, CEO & Director at Getty Realty]

We're a consistent capital provider to these sectors. And we're really happy with how we're seeing more activity in all stages of our pipeline across all the sectors that we invest in.

[Upal Rana, Senior Equity Research Analyst - US REITs at KeyBanc Capital Markets]

Okay, great. That was helpful. And then on the cash cap rates, your investment spreads in the quarter, you saw an increase to 8.1%. What was driving that? And should we expect similar cap rates going forward into the back half?

[Christopher Constant, President, CEO & Director at Getty Realty]

Yes, we haven't seen a lot of change. We've said that the market is there in the kind of mid to high 7% s touching 8%. Again, transactions may have been just north of eight, which is what drove the number this quarter. But in Mark's remarks, he said that the $90 plus million in the pipeline is priced in aggregate in the high sevens. Again, for Getty, our view has been that's where the market is for the first half of this year and that's where we'll continue to be as we move through the balance of the year.

[Upal Rana, Senior Equity Research Analyst - US REITs at KeyBanc Capital Markets]

Okay, great. Thank you.

[Operator]

Our next question is from Daniel Buhn with Bank of America. Please proceed.

[Daniel Byun, Equity Research Associate at Bank of America]

Hello. It was mentioned that the bid ask price was or the bid ask spread was tightening, and you're seeing cap rates around the high sevens for the $90,000,000 pipeline. Are you seeing any heightened competition within the buyer pool?

[Christopher Constant, President, CEO & Director at Getty Realty]

Boy, the sectors that we invest in, I think if you look across net lease portfolios, we have a lot of competition in the public markets. There's obviously a big private market as well. We are a primarily direct sale leaseback provider where we're not necessarily always looking at the marketed deals. We're trying to generate business through traditional business development or through repeat business or relationships that we have in the sector. So I think there's always been competition.

[Christopher Constant, President, CEO & Director at Getty Realty]

We think we can find transactions that are compelling for our portfolio that may be less competitive. And again, just to go back to Mark's comments, we've had a view of pricing and I think what we're seeing now is tenants are looking to transact and grow their businesses and that's why you've seen some accelerating activity for us.

[Daniel Byun, Equity Research Associate at Bank of America]

Got it. Thank you. And just to kind of follow-up on the improved rent coverage in the car wash. Is that mainly the ZIPS resolution or is there anything underlying that we should be aware of?

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Hi, Daniel. It's Brian. Actually, ZIPS was not in our numbers last quarter either, given the situation there. So this was really organic fundamental improvement across the portfolio. As Chris mentioned in his remarks, it was the second quarter we've seen this type of improvement.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

I think what we're looking at, there's the magnitude of improvement, sure. But it's really across the portfolio and in each of our leases. And I think that breadth of improvement is what we find encouraging. And then Chris mentioned also that we do have a significant portion of that portfolio that are relative new builds in that stabilization period. Again, just to remind you, we put properties in our data when they've been open for a year, Car washes typically stabilize closer to three years.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

And so you are seeing that ramping of those operations having a positive impact on coverage.

[Daniel Byun, Equity Research Associate at Bank of America]

Got it. Thanks so much.

[Operator]

Our next question is from Wes Golladay with Baird. Please proceed.

[Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co]

Hey. Good morning, guys. If you were to source more traditional acquisitions, what is the lag time typically between identifying the deal for the pipeline and then?

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

When you say traditional, like you're sort of like a net leased existing property or sale leaseback?

[Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co]

An acquisition or sale leaseback versus a development. Just wanna exclude the developments from the conversation.

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

I would say that, from initiation of the first conversation through letter of intent, due diligence, the contract process, that can be anywhere from you know, accelerated sixty day period to one hundred and twenty day period, you know, each deal is slightly different depending sometimes we're subject to the, you know, buyer seller transaction on the business side, but we're, you know, we always keep pace the deal and try and get them done as quickly as possible.

[Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co]

Okay, and when you look at your existing pipeline of the 90,000,000 plus, is there a lot of new relationships in that, in the pipeline?

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

I mean, it's a healthy blend. The team has done a really good job of not only maintaining relationships with our existing tenant roster, and being, you know, selective as they become more select Chris mentioned, you know, there's a return to focus on just any, you know, growing the business, perfecting the business and being more selective on some of the De Novo developments, but also, you know, through our business development, our industry reach, people becoming more and more aware as we get more momentum in the verticals that we're newer to. You know, we like to think that not only geographically, tenant wise, and vertical wise, it's a pretty good blend.

[Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co]

Okay. And last one for me. When you look at the one big beautiful bill, is there anything there that could spur more demand for you?

[Christopher Constant, President, CEO & Director at Getty Realty]

Yeah, I think just looking across at our operators, lower taxes. Our view is that our tenant base generally does not have a large exposure to tariffs, especially some of the automotive service sectors could actually benefit, Plus C store supply chains aren't necessarily tied to some of the countries that are more at risk from a tariff perspective. I think quite frankly, Wes, certainty that our tenants don't have as to the environments they're going be operating in for the next year or two, or I guess for the next several years, that's been very helpful, right, just in terms of knowing the playing field for them and then that they can then think through how they want to continue to operate and grow their businesses.

[Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co]

Okay, thanks for the time guys.

[Operator]

Our next question is from Michael Gorman with BTIG. Please proceed.

[Michael Gorman, Managing Director at BTIG]

Yeah, thanks. Good morning. Just had a question maybe going with the car washes again here. Chris, I'm curious your thoughts. You talked about focusing on profitability, the operators.

[Michael Gorman, Managing Director at BTIG]

Where are we in the competitive cycle with the express tunnel car washes, right? I'm still seeing headlines of new entrants into the industry, but I guess that's just my question. Where are we in the evolution? Are we going to get some consolidation here from existing operators? And how do you think about that as you're constructing the portfolio?

[Christopher Constant, President, CEO & Director at Getty Realty]

Yeah, I you've seen some consolidation, right? Obviously, Whistle bought the driven US platform earlier this year. So that that put Whistle as the number one operator. What I think has been interesting is there's been some acquisitions like Circle K made a significant acquisition is now a big player. Quick WAC was a private equity, but that was a big transaction earlier this year.

[Christopher Constant, President, CEO & Director at Getty Realty]

So I think you've started to see some consolidations, some recaps in the sector. I think like any business, there's always going to be new entrants. What we've done for Getty is really tried to focus on the larger, more established platforms. Right? I think you've got to be a good operator, you've got to know how to manage a network, you've got to have a good handle on your membership or subscription program.

[Christopher Constant, President, CEO & Director at Getty Realty]

So I think, yes, I think new entrants have slowed down. Yes, I think new stores have maybe slowed down. But again, in our view, I'd echo what I said earlier, which is focusing on profitability and perfecting your membership or subscription program and how you're kind of working with the consumer. We don't think that's a bad thing. Right?

[Christopher Constant, President, CEO & Director at Getty Realty]

And I think that's what you're seeing as our coverage has ticked up inside our portfolio.

[Michael Gorman, Managing Director at BTIG]

That's helpful. And I apologize if I missed it, but as you think about the pipeline and the deals that you've done year to date, is there a major stratification or a meaningful stratification in the cap rates between the different verticals that you're looking at or the competition levels that you're seeing in the different property types amongst the QSRs, the auto service, the car wash and the C stores?

[Christopher Constant, President, CEO & Director at Getty Realty]

So there's not a significant stratification on cap rate, right? Again, call it mid sevens through into the low eights, right? So if you call it 50 basis points wide on cap rates across what we've done this year. Competition, Mark, don't think there's that much of a difference in terms of competition by out

[Mark Olear, EVP & Chief Operating Officer at Getty Realty]

Yeah, of the think the competitive landscape has remained generally unchanged recently as Chris said you know the attractiveness of the verticals that we invest in are part of other other parties you know investment programs also and you know it's that's something we've dealt with not only recently, but for years. And you know, it's our job to continue to position ourselves to keep that pipeline filled with accretive deals and consistent with our strategy, our underwriting standards. So, you could view it as competition as a validation of our thesis of how strong we think those asset classes are. We just continue to keep that pipeline fill.

[Michael Gorman, Managing Director at BTIG]

Great. Thank you.

[Operator]

Our next question is from Michael Goldsmith with UBS. Please proceed.

[Michael Goldsmith, US REITs Analyst at UBS Group]

Good morning. Thanks a lot for taking my question. In the press release, Chris, you said that you are identifying new investment opportunities. I just want to clarify. Is that within your existing verticals? Or does that identifying new investment opportunities suggest that you're looking kind of outside of some of the stated verticals that you already have exposure to?

[Christopher Constant, President, CEO & Director at Getty Realty]

No, there's no current plans for us to expand beyond our four primary target sectors. My comments were really that the team's doing a great job of bringing in repeat business, new relationships. We've added more than 40 new tenants to the portfolio over the last several years. So we're really diversifying the business, whether that's by sector, by tenant, geographically. But we think these are large addressable markets, healthy tenants, growing tenants that need capital to execute their business plans.

[Michael Goldsmith, US REITs Analyst at UBS Group]

Got it. Thanks for that. And my follow-up is, there was a large environmental expense accrual taken during the period. I think that's backed out of AFFO. So it doesn't influence guidance, but would influence cash flow.

[Michael Goldsmith, US REITs Analyst at UBS Group]

Can you just provide a little bit of color what's going on there? And just kind of the history of these type of accruals and how we should be thinking about them going forward? Thanks.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Sure, Michael. This is Brian. So that accrual is related to one of the litigation cases that are disclosed in our 10 Q. There's been some lengthy disclosure in our filings for ten, twelve, fifteen years on some of these cases. It goes back to when Getty was an owner operator decades ago.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Most of these have been resolved. The remaining ones, again, are disclosed in our filings. I think our perspective on this is it is a positive that that this case has progressed to the point where we can estimate a potential settlement and sort of put an order of magnitude around that, obviously subject to, know, you all the accounting standards on how to estimate and book these accruals. But again, it's related to one of those cases that are disclosed in the filings. And we think it's a positive that is progressing and allows us to book an accrual to put an order of magnitude around it.

[Michael Goldsmith, US REITs Analyst at UBS Group]

Great. Thanks for that, Brian. Good luck in the back half.

[Brian Dickman, EVP, CFO and Treasurer at Getty Realty]

Thanks, Michael.

[Operator]

There are no further questions at this time. I would like to turn the call back over to Christopher for closing remarks.

[Christopher Constant, President, CEO & Director at Getty Realty]

Thank you, operator. Thank you everyone for joining us this morning. We appreciate your interest in Getty, and we look forward to getting back on with you when we report our third quarter at the October.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Participants

Executives

• Joshua Dicker, EVP, General Counsel & Secretary
• Christopher Constant, President, CEO & Director
• Mark Olear, EVP & Chief Operating Officer
• Brian Dickman, EVP, CFO and Treasurer

Analysts

• Brad Heffern, Director at RBC Capital Markets
• Mitch Germain, MD - Real Estate Research at JMP Securities LLC
• Upal Rana, Senior Equity Research Analyst - US REITs at KeyBanc Capital Markets
• Daniel Byun, Equity Research Associate at Bank of America
• Wesley Golladay, Senior Research Analyst at Robert W. Baird & Co
• Michael Gorman, Managing Director at BTIG
• Michael Goldsmith, US REITs Analyst at UBS Group