Getty Realty Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of gas station property REIT Getty Realty (NYSE: GTY  ) ran out of fuel today as investors knocked shares down as much as 15% in intraday trading after the company reported results for the fourth quarter.

So what: Getty's fourth-quarter bottom line badly missed Wall Street's expectations, as it notched just $0.01 in funds from operations against analysts' average estimate of $0.29. Adjusted funds from operations -- which exclude the hit from a deferred rental revenue writedown -- were better at $0.26, but that highlights a bigger issue. Getty took the writedown because it now expects to get little of the rent due to it from the bankrupt Getty Petroleum Marketing (or "Marketing," as Getty Realty refers to it), and in Getty's earnings press release it discusses the extensive uncertainties associated with its bankrupt partner.

Now what: The one thing that's for sure is that it's going to be a tough slog for Getty. In 2010, Marketing accounted for roughly two-thirds of Getty's revenue. The fact that Marketing is now bankrupt, and possibly on the way to simply surrendering leased properties back to Getty, puts Getty in a tough position. As it presented in its press release, it appears that Getty has some reasonable options moving forward, but for now there's a lot of uncertainty for investors.

And if all of this wasn't enough to rile up shareholders, Getty's lack of visibility also led to this announcement:

The Company's Board of Directors after considering uncertainties around the timing of cash flows in connection with the repositioning of the Marketing portfolio and the potential impact upon the terms of the Company's newly amended credit agreement as well as its desire to maintain financial flexibility has elected to defer consideration of a dividend declaration at this time.

For dividend-focused investors holding Getty, that really hurts.

Want to keep up to date on Getty Realty? Add it to your watchlist.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1822611, ~/Articles/ArticleHandler.aspx, 8/22/2014 9:50:14 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement