GTY
#Thank you.
I would like to thank you all for joining us for Getty Realty's quarterly earnings conference call.
Yesterday afternoon, the Company released its financial results for the quarter ended September 30, 2016.
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 2016 guidance, and may also include statements made by management in their remarks and in response to questions including regarding lease restructurings, 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 fiscal year ended December 31, 2015, as well as our quarterly reports on Form 10-Q and our other 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 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 FFO and AFFO and our reconciliation of those measures to net earnings.
With that, let me turn the call over to <UNK> <UNK>, our Chief Executive Officer.
Thank you, <UNK>.
Now turning to our results.
For the quarter, our total revenues from continuing operations and revenues from rental properties, which exclude tenant reimbursements and interest income, were $28.5 million and $24.3 million, respectively.
Our rental income for the quarter was in line with the same period in 2015.
On the expense front, property costs excluding tenant reimbursements improved by 14% for the quarter to $1.8 million from $2.1 million.
This reduction can be attributed to declines in rent and maintenance expenses.
Our environmental expense decreased by $700,000 for the quarter relative to the same period last year.
The reduction was primarily due to $700,000 of decreases in environmental remediation costs.
It is worth noting that there are several non-cash items flowing through this line which caused the reported amounts to vary from quarter-to-quarter.
For the quarter, G&A was down by $900,000.
The decrease was primarily due to decreases in legal and professional fees and employee-related expenses.
As Chris mentioned earlier, our results for the quarter ended September 30, 2016, were impacted by several notable items which cause our reported amounts to differ from recurring operations.
Results for the quarter ended September 30, 2016 included environmental insurance reimbursements, recoveries of uncollectible accounts and other non-recurring income, which resulted in a net benefit to the Company of $800,000 or $0.02 per share in the aggregate.
Our reported FFO for the quarter was $16.2 million or $0.47 per share as compared to $14.2 million or $0.42 per share for the same period last year.
After taking the notable items into account, our normalized FFO for the quarter was $15.5 million or $0.45 per share, which represents an increase of 7% from the prior quarter.
Our reported AFFO for the quarter was $15.4 million or $0.45 per share as compared to $12.8 million or $0.38 per share for the same period last year.
After taking the notable items into account, our normalized AFFO for the quarter was $14.7 million or $0.43 per share, an increase of 13% from the prior year's quarter.
Turning to the balance sheet, we ended the quarter with $300 million of borrowing, $125 million on our credit agreement and $175 million of long-term fixed rate debt.
Our debt to total capitalization currently stands at approximately 29% and our net debt to EBITDA ratio, as defined in our loan agreements, was four times at quarter-end.
Our weighted average borrowing costs was 4.7% at quarter-end and the weighted average maturity of our debt is approximately 4.1 years, with 58% of our debt being fixed rate.
We also judiciously used our ATM program during the quarter and sold 122,000 shares at an average price of $23.80 per share.
Our environmental liability ended the quarter at $78.5 million, down $5.8 million so far this year.
For the quarter ended September 30, 2016, the Company's net environmental remediation spending was approximately $3.3 million.
It is important to note that the net number on our balance sheet is also impacted by additions to the principal amount of the liability and accretion, since GAAP requires us to book the liability on its present value basis.
Finally, as a result of the notable items I previously discussed and our strong operating performance year-to-date, we are raising our 2016 AFFO per share guidance at the range of $1.55 to $1.60 per share.
Note that our guidance includes the net benefits of $0.04 per share from notable items year-to-date, which we do not expect to reoccur on a regular basis.
Additionally, in the fourth quarter, we anticipate incurring [sudden] one-time maintenance costs at one of our remaining transitional properties and we expect to begin to feel the impact of taking properties [off the line] for redevelopment projects.
While the loss of income from certain properties will be felt in the near term, it would subsequently be highly accretive upon project completion.
Furthermore, the guidance does not assume any acquisition or capital market activities, although it does reflect our expectations that we will continue to execute on our leasing and disposition activities.
That concludes our prepared remarks, so let me ask the operator to open the call for questions.
Thank you.
Well, thank you everybody for joining us for the third quarter.
We look forward to talking to everyone again in 2017 where we will report our results for the fourth quarter and year-end of 2016.
