Getty Realty Corp

NYSE:GTY

Earnings Call Analysis

Strong Financial Performance and Growth Strategy

In the third quarter of 2024, the company reported a robust performance, highlighted by a 13.1% increase in annualized base rent (ABR) year-over-year, reaching $190 million compared to $168 million in the previous year. The company also achieved an adjusted funds from operations (AFFO) per share of $0.59, representing a growth of 3.5% from the same quarter last year, and a year-to-date increase of 3.6% to $1.74 per share. This consistent growth allows the company to raise its 2024 AFFO guidance to a range of $2.32 to $2.33 per share from the previously expected range of $2.30 to $2.32. The CEO emphasized the successful execution of their strategy in diversifying and managing their portfolio in the convenience and automotive retail sectors.

Strategic Acquisitions and Investment Activity

Year-to-date, the company invested approximately $148 million in new properties, yielding an initial cash yield of 8%. Notably, over 90% of these investments have been direct transactions with tenants, which enables stronger tenant relationships and better site performance underwriting. In Q3 alone, the company acquired 10 express tunnel car washes for $44.9 million, a new convenience store in Austin for $7 million, and an auto service center for $1.7 million, highlighting their dedication to expanding their portfolio across different retail categories.

Lease Extensions and Portfolio Strengthening

The company continued to solidify its leasing arrangements by extending key unitary leases. For instance, it extended a lease with CPD Energy covering 49 properties by over 11 years, and another with Global Partners was amended to increase ABR by $300,000 while reducing the number of properties under the lease. These actions have extended the weighted average lease term to 10.1 years compared to 8.9 years at the end of 2023, providing greater stability to the revenue stream. The firm also reported an impressive occupancy rate of 99.7%, indicating strong demand for its properties.

Capital Management and Liquidity Position

During the quarter, the company successfully raised $245 million through a combination of common equity and unsecured debt. This included a $121 million overnight offering and $125 million in new senior unsecured notes. The proceeds will refinance a $50 million near-term note maturing in February 2025 and support ongoing investment opportunities. As of quarter-end, the company held more than $495 million in available capital, indicating a strong liquidity position to pursue further investments.

Market Trends and Future Outlook

The executive team acknowledged a recent uptick in investor interest within the convenience and automotive retail sectors, characterized by the fundamental need for speed and convenience among consumers. They expect a steady flow of investment opportunities, despite the ongoing challenge of a bid-ask spread persisting in the market. The leadership expressed confidence in their strategy moving forward, seeing it as a prime time to capitalize on growth and diversification opportunities heading into 2025.

Dividend Growth Reinforces Commitment to Shareholders

The company's board approved a 4.4% increase in its quarterly dividend to $0.47 per share, marking the 11th consecutive year of dividend growth. This reflects a commitment to shareholder returns, supported by stable earnings and a healthy payout ratio, which balances between rewarding shareholders and reinvesting in business growth. The management's focus remains on increasing retained cash flow to further future growth opportunities.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to Getty Realty's Third Quarter 2024 Earnings Call. This call is being recorded. After the presentation, there will be an opportunity to ask questions. Prior to the starting of 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, executive]

Thank you, operator. I would like to thank you all for joining us for Getty Realty's Third Quarter Earnings Conference Call. Yesterday afternoon, the company released its financial and operating results for the quarter ended September 30, 2024. The Form 8-K 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. 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 2024 guidance and may also include statements made by management including those regarding the company's future company operations, future financial performance or investment plan 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 year ended December 31, 2023, 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 our reconciliation of those measures to net earnings.



With that, let me turn the call over to Christopher Constant, our Chief Executive Officer.

[Christopher Constant, executive]

Thank you, Josh. Good morning, everyone, and welcome to our earnings call for the third quarter of 2024. Joining us on the call today are Mark Olear, our Chief Operating Officer; and Brian Dickman, our Chief Financial Officer.



I will lead off today's call by summarizing our financial results and quarterly business activities, and we will also provide commentary on our growth and diversification strategies within the convenience and automotive retail sectors. Mark will then take you through our investment and asset management activities, and Brian will further discuss our financial results and guidance.



We had another very productive quarter and continued to demonstrate our ability to execute across all facets of our business. We grew and diversified our portfolio through accretive acquisitions. Our asset management team advanced a number of redevelopment projects and extended two significant unitary leases, and we further solidified our balance sheet and liquidity position through thoughtful capital markets activity. We also raised our full year 2024 earnings guidance, and our Board approved another annual dividend increase, our 11th consecutive year raising the dividend.



Overall, it was a strong performance from all components of the platform, and I'm excited about how the team is working together to execute our strategy. We remain focused on growing, diversifying and actively managing our portfolio of convenience and automotive retail assets. And I believe that this quarter was a great representation of our capabilities.



Last night, we released earnings. Our results were headlined by a 13.1% increase in our annualized base rent over the prior year and reported AFFO per share growth of 3.5% for the quarter and 3.6% year-to-date. And as I mentioned, we were able to raise our full year 2024 AFFO per share guidance going into the end of the year.



Year-to-date, the company has invested approximately $148 million at an 8% initial cash yield. Our investment activity continues to reflect the benefits of our differentiated platform, including our deep network of industry relationships and underwriting expertise within the convenience and automotive retail sectors. Consistent with prior years, more than 90% of our investments in 2024 have been direct with tenants versus acquiring existing leases. We think the direct sale-leaseback model has several benefits, not the least of which is our ability to cultivate tenant relationships and underwrite site level performance, and we expect to maintain this level of direct transaction activity going forward.



We've been able to invest in all four of our primary convenience and automotive retail property types this year, including convenience stores, express tunnel car washes, auto service centers and drive-thru QSRs. And we've added five new tenants to the portfolio while expanding our relationships with nine existing tenants.



Our deal team's efforts have also resulted in a growing investment pipeline. We currently have more than $70 million of assets under contract at a blended cap rate approaching the mid-8% area, and we continue to see a steady flow of opportunities to underwrite and evaluate for potential investment. Our in-place portfolio remains a source of strength for the company. In addition to excellent performance in terms of occupancy, rent collections and rent coverage, we continue to identify additional redevelopment opportunities embedded in the portfolio and are seeing large unitary leased tenants extend their lease terms and further commit to the sites they operate.



With respect to redevelopment, we had our first rent commencement of the year in the third quarter as we completed a new Chipotle restaurant in the Providence, Rhode Island MSA. Interest from automotive service tenants is driving future redevelopment opportunities, including three new signed leases with a large take five oil franchisee this quarter. We anticipate additional demand from this type of use as it fits well with our geographic footprint and the physical characteristics of many of our legacy locations.



During the quarter, we also extended two material unitary leases, representing 11% of our ABR and year-to-date have extended four unitary leases representing more than 13% of our ABR. Both of these have contributed meaningfully to an increase in our weighted average lease term to more than 10 years.



All of this portfolio activity was complemented by a strong quarter of capital raising as we raised more than $245 million of common equity and unsecured debt. In July, we took advantage of our growing investment pipeline and improving investor sentiment to raise $121 million of common equity through an overnight offering. And recently, we agreed to issue to certain investors $125 million of new senior unsecured notes in a private placement transaction. Combined, this capital will fund our investment pipeline, refinance our only near-term notes maturity and provide additional growth capital going into 2025.



Again, I think this was a very productive quarter for Getty, and I'm excited about our platform and how we're executing. Despite lingering uncertainty with respect to the economy and the upcoming election, and material bid-ask spreads that persist for net lease properties in our sectors, we remain well positioned to create value for our shareholders. Our in-place assets continue to generate reliable and growing rental income. Our balance sheet is in great shape with moderate leverage and significant liquidity, and our investment activity is driving additional earnings growth while scaling and diversifying the portfolio.



Based on our recent performance and earnings growth expectations, our Board approved an increase of 4.4% in our recurring quarterly dividend to $0.47 per share. This represents the 11th straight year we have grown the dividend alongside our earnings. Our Board believes this annual increase is appropriate as it maintains a stable payout ratio and continues to increase Getty's retained cash flow to have more investable capital to meet our growth objectives. Before I turn the call over to Mark, I'll close by noting that we've noticed an uptick in the REIT market's enthusiasm for the convenience in automotive retail sectors that we have been investing in for many years.



As we've discussed in the past, these are essential use assets with strong real estate characteristics and an emphasis on speed, convenience and service that resonates with today's consumer, particularly the mobile consumer. These attributes are all elements of our investment thesis, and we believe our focused efforts and industry expertise are key differentiating factors for Getty. We look forward to continuing to engage with the investment community on the merits of our strategy as we further grow and diversify our convenience and automotive retail portfolio.



With that, I will let Mark discuss our portfolio and investment activities.

[Mark Olear, executive]

Thank you, Chris. As of the end of the quarter, our lease portfolio included 1,104 net lease properties and 1 active redevelopment site. Excluding the active redevelopment, occupancy was 99.7%, and our weighted average lease term was 10.1 years. Our portfolio spans 42 states plus Washington, D.C., with 59% of our annualized base rent coming from the top 50 MSAs and 75% coming from the top 100 MSAs. Our rents are well covered with a trailing 12-month rent coverage ratio of 2.6x, which has been consistent over the last 4 to 5 years, demonstrating the resiliency of our tenants' businesses despite the macroeconomic volatility we've experienced over that time frame.



Turning to our investment activities. Getty invested $30.2 million across 16 properties at an initial cash yield of 8% during the third quarter. The weighted average lease term on acquired assets was 18.4 years. Highlights of this quarter's investments include the acquisition of 10 express tunnel car washes located in various markets across the U.S. for $44.9 million, of which $18.4 million was funded in previous quarters; 1 new-to-industry convenience store located in Austin, Texas for $7 million, of which $4.9 million was previously funded and 1 new newly constructed auto service center located in Washington, D.C. MSA for $1.7 million, of which $1.5 million was previously funded. We also advanced incremental development funding in the amount of $1.4 million for the construction of 4 new-to-industry express tunnel car washes and auto service centers. These assets are either already owned by the company or are under construction or will be acquired via sale-leaseback transactions at the end of the project's respective construction periods.



After the quarter end, we invested an additional $15.1 million to acquire 3 convenience stores in the Houston MSA and 1 auto service center in North Carolina. Overall, we remain very active underwriting potential investments in our core convenience and automotive retail sectors and expect to find opportunities to transact while maintaining the discipline we've shown over the last couple of years as the transaction market reset to reflect rising capital costs. Material bid-ask spreads between buyers and sellers persist and sellers now point to the Fed's recent cut and commentary to justify substantial reductions in asking cap rates. Our belief is that pricing will be slower to adjust as there's still a fair amount of uncertainty with respect to the rate environment and cap rates never expand to capture the full increase in capital costs borne by institutional investors.



That said, our investment activity over the last several years demonstrates that Getty can source opportunities in our target sectors at cap rates that reflect our view of current market pricing and allow us to deploy capital accretively. As we leverage our relationship-based strategy and prioritize direct business with new and repeat tenants, we remain confident that we'll be able to maintain this accretive capital deployment as we move through the remainder of the year into 2025.



Moving to our redevelopment platform. We completed one project during the quarter for a new Chipotle Mexican Grill in the Providence Rhode Island Metro area. Our total investment in the project was just more than $2 million, and the property is now subject to a long-term triple net lease with Chipotle. In addition, we signed leases for 3 new redevelopment projects during the quarter and now have a total of 5 signed leases for redevelopment, all for future auto service centers.



Continuing with our asset management efforts, I would like to share additional details about 2 unitary lease extensions we executed this quarter, which represent more than 11% of our total ABR. CPD Energy, our fifth largest tenant, exercised a renewal option on its unitary lease covering 49 properties in the New York and [ Indiscernible ] MSAs. The lease now has more than 11 years of term running through January 2036 and has 2 additional renewal options.



We also negotiated an amendment to one of our unitary leases with Global Partners, our second largest tenant. We extended the current term of the lease by 7 years to August 2034, increased the aggregate ABR due under the lease by $300,000 and reduced the number of properties under the lease from 93 to 70. As part of this transaction, we sold the 23 properties removed from unitary lease to Global for $4.4 million and redeployed these proceeds into new income-producing assets. We think this is a great outcome for Getty, which also resulted in 12 legacy and gas repair sites being removed from the portfolio and ABR from legacy and gas repair sites reduced by $825,000.



As a result of these lease extensions and others that were extended earlier in the year, plus our 2024 acquisition activity, Getty's portfolio weighted average lease term increased to 10.1 years at quarter end as compared to 8.9 years at the end of 2023. With that, I'll turn the call over to Brian.

[Brian Dickman, executive]

Thanks, Mark. Good morning, everyone. Yesterday, we reported AFFO per share of $0.59 for Q3 2024, representing an increase of 3.5% over Q3 2023. For the 9 months ended September 30, AFFO per share was $1.74, up 3.6% as compared to the prior year period. A more detailed description of our quarterly and year-to-date results can be found in last night's earnings release and our corporate presentation contains additional information regarding our earnings and dividend per share growth over the last several years. A couple of other P&L-related items that we focus on are annualized base rent, or ABR, and our G&A expenses. ABR as of September 30, 2024, was $190 million, an increase of 13.1% over the $168 million we reported as of September 30, 2023. While AFFO per share growth remains our primary objective, top line rental growth is a significant part of that and something we've been able to accelerate as we've enhanced our acquisitions platform.

With respect to G&A, we typically look at 2 ratios: total G&A as a percentage of total revenue and G&A, excluding stock-based compensation and nonrecurring retirement and severance costs, which is the G&A that flows through AFFO and which we look at as a percentage of cash rental income and interest income.



For the 9 months ended September 30, 2024, total G&A as a percentage of total revenue was 12.5%, a decrease of 50 basis points from the prior year period, and AFFO G&A as a percentage of cash rental and interest income was 9.8%, a decrease of 60 basis points from the prior year period. We continue to expect G&A dollar amount increases to moderate and G&A ratios to decrease as we scale the company.



Moving to some thoughts on the balance sheet and liquidity. As of September 30, 2024, net debt to EBITDA was 5x or 4.2x, taking into account unsettled forward equity. We continue to target leverage of 4.5x to 5.5x net debt to EBITDA and are well-positioned to maintain those levels. Fixed charge coverage was a healthy 3.8x as of September 30.



As Chris alluded to in his remarks, we had a busy quarter in the capital markets. In July, we took advantage of our growing investment pipeline and improving equity market conditions to complete a 4 million share overnight offering and raised more than $121 million on a forward basis. And towards the end of the quarter, we agreed to issue $125 million of new unsecured notes to certain investors in a private placement transaction.



Proceeds will be used to repay our only near-term notes maturity, which is $50 million that comes due in February 2025 as well as to fund investment activity. We anticipate this transaction will close during the fourth quarter of this year and fund in the first quarter of 2025. The new notes will include a $50 million tranche priced at 5.5% and due in September 2029 and a $75 million tranche priced at 5.7% and due in February 2032.



In addition to addressing our upcoming notes maturity and funding investment activity, this transaction also allows us to get a little more efficient with our debt maturity schedule as both tranches will mature at the same time as other existing notes in 2029 and 2032.



Our revolving credit facility and term loan also mature in 2025, both in October, although both have extension options that can push the maturities to October 2026. We'll work with our bank partners to evaluate options with respect to both of those facilities. And as of today, we don't anticipate any issues recasting the revolver or addressing the term loan upon maturity, whether that's in 2025 or 2026.



Our liquidity position at the end of the third quarter was as strong as it's been since I've been at Getty with more than $495 million of available capital, including $132.5 million of unsettled forward equity, $75 million of net new debt financing and $287.5 million of capacity on our unsecured revolving credit facility.



We have more than sufficient capital to fund the $65 million of investments we have under contract and to fund additional investment activity beyond that. In general, as we think about capital, we're committed to maintaining our investment-grade credit profile, including leverage within our target range and ample liquidity, and we'll evaluate all capital sources to ensure that we meet those objectives as well to ensure that we're funding investment activity in an accretive manner.



And finally, with respect to our earnings guidance, as a result of our year-to-date investment in capital markets activities, we are raising our 2024 AFFO guidance to a range of $2.32 to $2.33 per share from a previous range of $2.30 to $2.32 per share.



As a reminder, our guidance includes only transaction and capital markets activity that has occurred to date and does not otherwise assume any acquisitions, dispositions, or capital markets activities for the remainder of 2024, including the closing of transactions under contract or the settlement of outstanding forward equity.



Primary factors impacting our outlook include variability with respect to certain operating expenses, deal pursuit costs, and the timing of anticipated demolition costs for redevelopment projects, which run through property costs on our P&L.



With that, I will ask the operator to open the call for questions.

[Operator]

[Operator Instructions] The first question is from the line of Joshua Dennerlein with Bank of America.

[Farrell Granath, analyst]

This is Farrell Granath on behalf of Josh. I first just wanted to ask about the transaction market. I know last quarter; you were commenting that it was still very tight and there was a large inventory of assets for sale. Would you still characterize the current market like that? Or have you been seeing a shift currently?

[Christopher Constant, executive]

I'll start and then the guys can fill in some details. But my sense is that with some of the news that's come out that there's certainly a sense from the sellers that cap rates should be declining. Our view all along has really been cap rates should be more inclined with longer-term rates. We really haven't seen too much of a shift there.



So from a pricing standpoint, I think we're aware that the market will move, although we haven't really seen a ton of movement in our pipeline at this point. You can see we've got year-to-date activity at the 8 level. Our pipeline is kind of in that mid-8 level. But looking out, I think certainly, the market will start to move as we get into '25. But again, I think we used the word ‘disconnect' in our script.



I do think there's still a disconnect between buyers and sellers. And obviously, we think we're going to be able to continue to transact the way we have in the past, right, with direct transactions and sale-leasebacks. But certainly, there's a lot of noise in the market around the direction of rates and what that does to cap rates and time will tell how fast those ultimately move.

[Farrell Granath, analyst]

Okay. And I also just wanted to ask about your comment that you made that there's been an increased interest in kind of your area of focus with the convenience and auto services. Are you seeing this become more of a -- or having larger competition for these assets? And is this impacting at all the deals that you're going after or closing?

[Christopher Constant, executive]

Yes. I think the comment was really -- we've been in and around these sectors for a very long time. What we have going for us, right, is these are very large fragmented sectors where there's been not only a lot of new store growth, but also consolidation where we really like to position ourselves as experts in these sectors, and we have seen more interest from investors, from other public companies, right, that are looking at our sectors.



And I think it makes sense. These are healthy sectors. We've seen growth and consolidation, which creates transaction opportunities. I'll come back to just the way Getty invests, right, which is direct with tenants, sale-leaseback transactions, long relationships and a lot of repeat business.



And I think while; sure, there may be more competition or new interest in the sector from other competitors, we feel pretty good about how we've been able to transact and what the pipeline looks like and the opportunities we're underwriting to continue to add to the portfolio.

[Operator]

The next question comes from Mitch Germain with Citizens...

[Mitch Germain, analyst]

Can you provide a little bit more color around the sale of the properties to Global? I mean, were those assets that -- were they older skewing? Do they need some CapEx? Anything specific that stands out versus the ones that remained in your portfolio?

[Christopher Constant, executive]

Yes. I mean I think the Global transaction involved a lot of properties, right, 93 properties were in that lease. So I think you need to maybe look at the sale component of that a little bit differently. There were issues around term, around rents, around which properties we wanted to remain in our portfolio for a while. So again, a lot of negotiation between Getty and Global Partners there. I think it's a good outcome for both parties. Mark made the comment in the script that certain of these assets were legacy sites that maybe didn't have a C-store and were tougher, right, from a long-term perspective, and Global thought they would be better if they owned those properties. So again, Mitch, a lot of moving pieces. I think it's a good outcome for Getty and also for Global, and we're happy to have them commit to these properties longer term, and we're obviously happy to maintain our rent at those sites.

[Mark Olear, executive]

And Mitch, I would just add real quick to highlight the benefits of the unitary leases that we utilize. right? So our tenants have the option upon renewal to renew all or none of the lease, right? So that's sort of the starting point. And as Chris just went through, Global had some thoughts about how they may want to refine that portfolio. So that gave us an opportunity to engage with them, extract some value, if you will, around term and proceeds and some of the other things we went through. But I just want to highlight the benefits of those unitary leases and the position can put Getty in, when tenants are looking to renew.

[Mitch Germain, analyst]

That's helpful. I believe you get probably about 3/4 or so of your leases, you get site level performance. Anything alarming, probably more on your auto tenants with regards to obviously, a little bit of a consumer pullback. Is there anything that stands out? Or is it just kind of operations as normal there?

[Christopher Constant, executive]

Across the portfolio, at the highest level, that coverage has been around that 2.6 level for the better part of 4 or 5 years now. If you break apart the detail, I think certain sectors, especially some of our newer car wash assets that we're seeing ramping performance there, those are actually maybe coverage ratios that are starting to skew to the positive. And then within the C-store sector, that sector is definitely cyclical, right?



Q1 tends to be the slowest quarter for weather in certain parts of our portfolio. So we did see an uptick there, but we've seen that over the last several years, right as people come out of the winter months and get into that spring/summer driving season. So really nothing out of the ordinary from a coverage standpoint from what we get from our tenants this quarter.

[Mitch Germain, analyst]

Great. And last one for me. Pipeline sort of consistent for the year, give or take, up obviously, quarter-over-quarter. But some of the capital raising that you've done seems to really portray a bit of confidence that you guys will, despite the, call it, volatility in the market that you'll be able to source some of these -- some deals coming into 2025. I mean, what gives you confidence that those transactions will be able to transpire that; meet your underwriting criteria?

[Christopher Constant, executive]

Yes. If you go back now several years to when we expanded the strategy beyond just the convenience store, if you look quarter-to-quarter, we've had very steady investment volumes, right? Some quarters, obviously, it spikes up because of the nature of sale leasebacks as opposed to just buying someone else's leases. But given that we've been able to execute for the better part of the last 4 or 5 years, quarter-to-quarter-to-quarter, right, when we see capital that can be raised at prices that we think work for our business, we're certainly going to go out and take that risk off the table and give our deal team some powder to go out and grow the business.

[Operator]

The next question is from Upal Rama with KeyBanc Capital Markets.

[Upal Rana, analyst]

You mentioned the bid-ask spread continues to be widened. And has this improved from earlier this year? And do you think it could improve into 2025? I know you already touched on this a little bit earlier, but I want to get some additional color there.

[Mark Olear, executive]

Yes. This is Mark. I mean there's a lot of macroeconomic factors that the sell side continues to point to, and those have changed as we progress through the year. So the bid-ask spread is still there. But what I'd say is that's not really a new environment for Getty to try and transact and source deals in.



If you look at our pipeline, the churn of the closings versus the growth in the pipeline; the ability to source deals that meet our underwriting criteria, both for market tenant and operational quality, plus support our investment thesis on our spread efforts. Again, the bid-ask spread is still there, but we feel confident we're going to be able to identify opportunities to transact in.

[Upal Rana, analyst]

Okay. Great. And then this quarter did see some slight deceleration in cap rates. And based on your prepared remarks, do you expect to see cap rates move down again in 4Q based on what you've already closed subsequent to quarter close?

[Mark Olear, executive]

Yes. I mean if you look at our pipeline, we call it the mid-8 area, which is actually north of where our year-to-date activity is. So I think where you look out to the closings of those transactions, which should happen over the next 3 to 6 months, you actually may see an increase in that cap rate. But certainly, we're aware that as the transaction market evolves going into '25, whether it's first quarter or midyear, right, that cap rates may eventually come back down a little bit.

[Operator]

[Operator Instructions] The next question is from the line of Wes Golladay with Baird.

[Wesley Golladay, analyst]

I'm just curious if you're looking at any portfolios at the moment or just mainly sale leaseback.

[Christopher Constant, executive]

Well, I mean, I think when we talk sale leaseback, we're talking about portfolios of assets, Wes. So Getty will certainly buy individual sites via sale leaseback. We do have about 10% of our business over the last couple of years, which is actually buying leases, but that's not necessarily our core product. But typically, what we like to do with any of our given tenants is buy a portfolio of properties that we can put into a unitary master lease for all the reasons that Brian articulated earlier in the call. It does have some structural advantages for us.

[Wesley Golladay, analyst]

Okay. And then Arco has been in the news of potentially looking to exit their C-stores. Would you have a preference for an existing tenant to be the buyer? Or would you like to have a new relationship and some diversification?

[Christopher Constant, executive]

Yes. Certainly, we've seen the same headlines, and we feel pretty good about our portfolios of properties that we have leased to Arco. It's a growing and consolidating industry. So we have had certain of our tenants be acquired by other tenants over time, right, which has led to some consolidation in our tenant roster. Really, I'd say at this point in time, I don't want to get too far down the line on that because it's only headlines in the news, but it would depend on who the counterparty is and how we feel about their view of our properties and how strong that company is as a counterparty for Getty.

[Operator]

As there are no further questions, I would now like to hand the conference over to Chris Constant for closing remarks.

[Christopher Constant, executive]

Great. Thank you, operator. I just want to thank everyone for joining us this morning on our third quarter call. We're excited to get back on the phone to everybody in February when we release our Q4 and full year results for the year 2024. So thank you very much.

[Operator]

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