Why Getty Realty Shares Dropped

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 REIT Getty Realty (NYSE: GTY  ) were sputtering today, falling as much as 11%, after an underwhelming third-quarter earnings report.

So what: Funds from operations, a key industry metric, was just $0.21 a share, down from $0.25 last year, and well below analyst estimates of $0.36 a share. Revenue also fell 10% from the quarter a year ago, as the Master Lease governing certain properties was rejected on April 30. Net income in the quarter, due to a loss from discontinuing operations, was actually negative, at -$3.5 million, or a $0.10 loss per share.

Now what: As if the numbers above weren't troubling enough, Getty's operations are primarily focused in the Northeast and mid-Atlantic and likely took a hit from Hurricane Sandy. The company said:

Getty has not completed its assessment of the impacts of Superstorm Sandy on its business. It is possible that Getty's financial results may be materially adversely affected in the fourth quarter due to the storm.

Stay tuned for more news on that. Considering those issues, and the fact that Getty only pays 2.9% dividend yield, investors can probably find a better play in the REIT space.

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