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Getty Realty Corp (GTY) Q3 2021 Earnings Call Transcript

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GTY earnings call for the period ending September 30, 2021.

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Getty Realty Corp (GTY 0.48%)
Q3 2021 Earnings Call
Oct 28, 2021, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Getty Realty's Earnings Conference Call for the Third Quarter of 2021. [Operator Instructions] 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.

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Joshua Dicker -- Executive Vice President, General Counsel, and Secretary

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 results for the quarter ended September 30, 2021. The 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 2021 guidance and may also include statements made by management in their remarks and in response to questions, including regarding the company's response to the COVID-19 pandemic, 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 year ended December 31, 2020, and subsequent quarterly reports filed on Form 10-Q and our other filings made 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 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 J. Constant -- President and Chief Executive Officer

Thank you, Josh. Good morning, everyone. Welcome to our earnings call for the third quarter of 2021. With Josh and me 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 providing an overview of our performance for the third quarter of 2021 and highlight the company's investment and capital markets activities. And then I'll pass the call to Mark and Brian to discuss our portfolio and financial results in more detail.

The net result of our well-positioned in-place portfolio and the continued execution of our active and accretive investment program was a 5.8% increase in total revenues, a 13.2% increase in adjusted funds from operations, and a 6.4% increase in AFFO per share. The company benefited from the stability of its portfolio of convenience and automotive retail assets, which continued to perform well, meaning that we had another quarter of full rent collections, including all amounts owed to us as a result of our 2020 COVID-related rent deferments.

The success of our investment strategies year-to-date has been a key contributor to our earnings growth. We invested $61.1 million in 25 properties during the quarter, and another $8.8 million just after quarter-end, bringing our year-to-date total investment activity to more than $144 million. This accelerated pace of investment activity was highlighted by our ability to bring new high-quality tenants into our portfolio, including Flash Market with sites located across the Southeastern U.S. and Splash Carwash, whose footprint spans the Northeast.

We also continue to successfully execute on our multiple investment strategies, which include [Indecipherable] leasebacks, accretive acquisitions of net leased properties, and development funding for new industry assets. In addition, rent commenced on three redevelopment projects during the quarter including our second and third projects, with 7-Eleven for remodeled C&G locations in the Baltimore and Dallas-Fort Worth MSAs, bringing our completed projects to 22 since the inception of our redevelopment program.

We also announced yesterday that we successfully amended and extended our $300 million credit agreement, which now will mature in October 2021. The improved terms of our facility further validate the company's platform and strong performance over the last several years. When combined with our active ATM program, which we've used to raise more than $50 million this year, and our strong balance sheet, we continue to have access to capital and the right credit profile to support our growth objectives.

Given our performance year-to-date, I am pleased that our Board approved an increase of 5.1% in our recurring quarterly dividend to $0.41 per share. This represents the eighth straight year with a dividend increase. Our Board believes this annual increase is appropriate, as it maintains a stable payout ratio and is tied to the company's growth over the past year. Furthermore, we are again pleased that our year-to-date accretive investment activity has positioned the company to raise its 2021 AFFO per share guidance.

I want to reiterate our commitment to effectively executing on both new investment activity and the active asset management of our portfolio. Our teams continue to work diligently to source and underwrite new opportunities to invest across our target asset classes including convenience stores, car washes, automotive-related retail properties in strong metropolitan markets across the country as well as to unlock embedded value through selective redevelopments. We believe our success year-to-date demonstrates our ability to source opportunities that align with our investment strategies, and that will continue to drive additional shareholder value.

With that, I'll turn the call over to Mark to discuss our portfolio and investment activities.

Mark J. Olear -- Executive Vice President and Chief Operating Officer

Thank you, Chris. As of the end of the third quarter, our portfolio includes 1,011 net lease properties, five active redevelopment sites, and five vacant properties. Our weighted average lease term was approximately 8.8 years, and our overall occupancy, excluding active redevelopments, remains constant at 99.5%. Our portfolio spans 36 states across the country plus Washington, D.C., and our annualized base rents, 63% of which come from the top 50 MSAs in the U.S., continue to be well covered by our trailing 12-month tenant rent coverage ratio of 2.6 times.

In terms of our investment activities, we had a highly successful quarter in which we invested $61.1 million in 25 properties. Subsequent to the quarter-end, we acquired two additional properties for $8.8 million, bringing our year-to-date investment activity to $144.5 million across 82 properties. We completed two transactions in the convenience and gas sector during the quarter. The first was a 15 property sale-leaseback with Flash Market, a subsidiary of Transit Energy Group. In this transaction, we invested $35.1 million to acquire the properties, which are located throughout the Southeast United States with a concentration around the Raleigh-Durham, North Carolina MSA. Properties acquired have an average store size of 3,600 square feet and an average property size of 1.7 acres. In addition, 53% of the properties have sub-tenancies with either quick-serve restaurants or auto service operators.

We also completed our first development funding project with Refuel in the Charleston, South Carolina MSA. Our total investment in the project was $4.5 million, including our final investment of $1.1 million during the third quarter. As per the terms of our development funding transactions, we acquired the property upon completion of development in conjunction with our final funding payment and simultaneously entered into a long-term triple net lease.

In the carwash sector, we completed three transactions in the quarter. We acquired two newly constructed properties from WhiteWater Express carwash in Michigan for $7 million. These properties were added to our existing unitary lease with WhiteWater. We also acquired two additional properties for an aggregate purchase price of $8 million, which are leased to Go Car Wash in San Antonio, Texas, and Las Vegas, Nevada MSAs. Additionally, we acquired our first property with Splash car wash, which is located in New Haven, Connecticut MSA. Our purchase price was $4 million for the property.

In the auto service sector, we acquired our first Mavis Tire property. We invested $4.6 million to acquire the properties in the Chicago, Illinois MSA. Getty also advanced $1.2 million of development funding from three new industry convenience stores with Refuel in the Charleston, South Carolina MSA, bringing the total amount funded by Getty for these projects to $8.9 million at quarter-end. As part of this transaction, we will accrue interest on our investment during the construction phase of the project, and we will expect to acquire the properties via sale-leaseback transaction upon completion and final funding. The weighted average initial lease term of our completed transactions for the quarter was 14.6 years, and our aggregate initial cash yield on our third quarter acquisitions was 6.7%.

Subsequent to quarter-end, we acquired two properties in the Boyington, Vermont MSA from Splash Carwash. Purchase price was $8.8 million, and the cap rate was consistent with our year-to-date acquisition activity. We ended the quarter with a strong investment pipeline and remain highly committed to continuing to grow our portfolio of convenience and automotive retail real estate, and we expect to pursue that growth through continued sourcing of direct sale-leaseback, acquisitions of net lease properties, and development funding for new-to-industry assets.

Moving to our redevelopment platform. During the quarter, we invested approximately $331,000 in both completed projects and sites, which remain in our pipeline. In addition, rent commenced on three redevelopment projects during the quarter, including two 7-Eleven convenience stores and one property leased to BJ's Wholesale Club, which is adjacent to one of our newly constructed superstores. In aggregate, we invested $0.5 million in these three projects and generate a return on investment capital of 43%. At quarter-end, we had eight signed leases or letters of intent, which includes five active projects and three projects at properties, which are currently subject to triple net leases and have not yet been recaptured from the current tenants. The company expects rent to commence at two additional development sites during the fourth quarter of 2021.

In total, we have invested approximately $1.9 million in eight redevelopment projects in our pipeline and estimate that these projects will require a total investment by Getty of $7.4 million. We project these redevelopments will generate incremental returns to the company in excess of where we can invest these funds in the acquisition market today. Turning to our asset management activities for the quarter. We sold one property during the quarter, realizing $2.3 million in gross proceeds, and exited five lease properties. We expect the total net impact of these activities will have de minimis impact on our financial results.

As we look ahead, we will continue to selectively dispose the properties that we determine are no longer competitive in their current format or do not have compelling redevelopment potential.

With that, I'll turn the call over to Brian to discuss our financial results.

Brian R. Dickman -- Executive Vice President, Chief Financial Officer, and Treasurer

Thanks, Mark. Good morning, everyone. Let me start with a recap of earnings. AFFO, which we believe best reflects the company's core operating performance, was $0.50 per share for the third quarter, representing a year-over-year increase of 6.4%. FFO was $0.48 per share for the quarter. Our total revenues were $40.1 million, representing a year-over-year increase of 5.8%. Rental income, which excludes tenant reimbursements and interest on notes and mortgages receivables was 7.5% to $34.3 million. Strong acquisition activity over the last 12 months and recurring rent escalators in our leases were the primary drivers of the increase, with additional contribution from rent commencements at completed redevelopment projects.

On the expense side, G&A costs increased in the quarter, primarily due to employee-related expenses, including noncash and stock-based compensation. Property costs decreased marginally due to reductions in real estate tax expense and environmental expenses, which are highly variable due to a number of estimates and non-cash adjustments, increased in the quarter due to certain legal fees and changes in net remediation costs and estimates.

We turn to the balance sheet and our capital markets activities. We ended the quarter with $567.5 million of total debt outstanding, including $525 million of long-term fixed-rate unsecured notes and $42.5 million outstanding on our $300 million revolving credit facility. Our weighted average borrowing cost was 4% and the weighted average maturity of our debt was 6.3 years.

In addition, our total debt to total market capitalization was 29%. Our total debt to total asset value was 37%, and our net debt-to-EBITDA was 5.1 times. Each of these leverage metrics are calculated according to the definitions in our loan agreements. As Chris mentioned, yesterday, we announced the amendment and extension of our $300 million revolving credit facility, which is now set to mature in October 2025, with two 6-month extensions, where we have the option to extend to October 2026.

In addition to extending the term, we were able to reduce the interest rate by 20 to 50 basis points, depending on where we are in the leverage-based pricing grid, and amend certain covenant provisions to align with those generally applicable to investment-grade rated REITs. We also amended each of our outstanding unsecured notes to conform to the new credit facility covenant provisions.

All in all, this is a good transaction for Getty. We reduced our cost of capital, improved some terms, and importantly, demonstrated the continued support of our bank group and unsecured noteholders. With the credit facility extended, our nearest debt maturity is now the $75 million of senior unsecured notes that come due in June of 2023.

Moving to ATM activity. We continue to be selective with our equity issuance during the quarter, raising $19.8 million at an average price of $31.12 per share. Year-to-date, we raised a total of $50.1 million through the ATM. We think about our future capital needs more broadly, we remain committed to maintaining a strong credit profile with meaningful liquidity and access to capital, low-to-moderate leverage, and a well-laddered and flexible balance sheet.

With respect to our environmental liability, we ended the quarter at $47.8 million, which was a decrease of approximately $300,000 from the end of 2020. For the quarter, net environmental remediation spending was approximately $1.3 million. And finally, as a result of our investment in capital markets activities in the first nine months of the year, we are raising our 2021 AFFO per share guidance to a range of $1.93 to $1.94 from our previous range of $1.89 to $1.91.

Our guidance includes transaction activity completed year-to-date but does not otherwise assume potential acquisitions or capital markets activities for the remainder of 2021. Factors which may impact our guidance include variability with respect to certain operating costs and our expectation that we will remain active in pursuing acquisitions and redevelopments, which could result in additional expenses, including certain property demolition costs and transaction costs for deals that are ultimately not completed.

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

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. [Operator Instructions] Our first question comes from the line of Brad Heffern with RBC. Please proceed with your question.

Brad Heffern -- RBC Capital Markets -- Analyst

Hi. Good evening, everyone. Thanks for taking the questions. On the acquisition front, I was just wondering if you could talk through how deal flow looks right now. Obviously, the $61 million number was pretty robust. So do you think that that's a sustainable run rate number? Or how are you viewing that?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

Yes, this is Mark. I can comment on our pipeline, as I mentioned in the comments, is very healthy. We're very happy with where it is, the flow of opportunities we're seeing. And warrant full underwriting is ahead of where it was this time last year. So we continue to grow our opportunity sets and our relationships in all the retail verticals that we've now expanded into. So I would say that we're pretty happy with what we have to look at, and we look forward to reporting on more as we go forward.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay. And then I appreciate the increased disclosure on the escalators. I was curious for the CPI-linked escalators. Do those have caps? And then the escalator guidance ticked up by 10 basis points is part of the reason that CPI linkage? Or any color you can give on that? Thanks.

Brian R. Dickman -- Executive Vice President, Chief Financial Officer, and Treasurer

Yes Brad, it's Brian. The CPI, it's a small number of leases. One of them just happens to be somewhat material dollar amount. So it's not the typical escalator clause we have in the leases, but they do have floors and ceilings, so they're collared, which is pretty typical with when you have that structure.

In terms of the tick-up from the 1.6% to the 1.7%, we did have the Flash Market deal, the transit deal, that has 2% annual escalators. So that's probably the difference there, again, on the round. For the most part, I think what we're seeing in our negotiations and the deals we're closing are they are structured better in line with the majority of our deals, which are annual escalators in 1.5% to 2% at range.

Brad Heffern -- RBC Capital Markets -- Analyst

Okay. Thank you.

Operator

Our next question comes from the line of Lizzy Durkin with Bank of America. Please proceed with your question. Hi. Good morning, everybody. This is Lizzy on for Josh Dennerlein. I'm just curious to see if you guys can comment on any specific opportunities to accelerate redevelopment plans for 2022.

Christopher J. Constant -- President and Chief Executive Officer

So we have a constant effort to deliver with the returns that we've reported, deliver as high-volume and as fast a pace as possible in the redevelopment program. There are certain barriers to growing that materially from where we are today with respect to extracting properties from leases, marketing efforts, the entitlement efforts, are always a challenge. The typical development hurdles that you experienced in getting these projects through permitting and construction. So I think right now, the pace rod is about what we see.

Again, we're in a constant effort by the asset management team to call opportunities out of the portfolio, but there are certain restrictions and obstacles to significant growth on that pace.

Lizzy Durkin -- Bank of America -- Analyst

Okay. And my second question is, how do your see store tenants thinking about electric vehicles and working to capitalize on that trend? I don't know if you guys have any more insight into that. Is that becoming more of a hot topic?

Christopher J. Constant -- President and Chief Executive Officer

Yes, I think it's been a hot topic for several years now with our operators, who are on the ground. There are certain operators that are evaluating adding charging stations, right, at their properties. Now just to caution everyone there's not going to be a charging station at each and every property. There are certain properties that lend themselves more toward longer commutes or longer driving times, where a charging station really fits well. But the goal for our operators, right, is to drive traffic, not only to their locations for fueling or for charging but for convenience store items and food, beverages.

And what you've seen is sort of a concerted effort by tenants, right, with -- we've talked about this in the past, membership programs or loyalty programs, trying to drive traffic to the location, whether, again, it's charging or gas or adding a car wash on-site, but most importantly, the food and the convenience store items within the store. But I think what you can expect in short is that you'll start to see our operators, right, again, where it makes sense for them to add charging station to [Indecipherable] properties.

Lizzy Durkin -- Bank of America -- Analyst

Great. Thank you.

Operator

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi. Thanks. Good morning. Just first question on the investments completed in the quarter. Sorry if I missed this, but can you just discuss the cap rate or the initial yields on those investments? And can you discuss sort of the environment in general around pricing, the competition that you're seeing, and whether you're starting to see any reduction in yields or cap rate compression, as you move forward with future investments?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

So the market has been active in the verticals that we're targeting. Certainly, it's competitive, it's an attractive set of retail operations. The cap rates were compressing kind of coming out of last year and certainly, through this year, we continue to acquire in that range of mid- 6s to seven is the market for the product we're looking at. It's active. We feel we're competitive. I'm not sure what the run rate will be here over the next few quarters of continued compression. But I think we're priced historically on the assets we're buying.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. That's helpful. And then I just wanted to follow up on the rent escalators across the portfolio. So you commented, Brian, on the increase to 1.7% from 1.6%. You talked about the Flash Market deal and some other deals at closing. Will CPI increases -- do you expect CPI increases to have any impact on that 1.7% annual rent escalation in the near term? I mean, do you expect to see that improve as we move into '22 from that current annual rate?

Brian R. Dickman -- Executive Vice President, Chief Financial Officer, and Treasurer

I don't think you'd see anything material there. What -- we use the floor, right, of the collars on the CPIs in our calculation. And it's an every three-year reset. As again, we're talking about in our portfolio, just really a handful of leases. Just one of them happens to be a larger unitary lease. And it's an every three-year reset, and it's got the floor and it's got the ceiling. So no, I don't expect that to have any significant impact on our operations here as we sit here today.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. Got it. And then just in terms of the balance sheet and funding investments, as we move ahead here, you've obviously utilized the ATM a little bit. Leverage ticked up just slightly 5.1 times debt-to-EBITDA from five times last quarter. Can you just remind us what the long-term target leverage level is for the company and sort of where you see that trending in the near term?

Brian R. Dickman -- Executive Vice President, Chief Financial Officer, and Treasurer

Yes. I think we're in a really good position when it comes to capital, just generally speaking. There's significant capacity on the revolver, significant headroom within leverage. We've typically guided in the 4.5 to 5.5 times, allowing for opportunities to maybe tick up a little bit above that into the higher fives, if it was appropriate. So sitting where we are at five times, 5.1, again, significant headroom there. And then capital markets are broadly constructive.

So I think we're in a place where you'll see us execute as we have been. We'll utilize the revolver. We'll utilize the ATM. And if there's an opportunity or a need to look for permanent capital, I think as we sit here today, again, I think we have options and markets are broadly constructive to our asset class and our business.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay. Great. Thank you.

Operator

Our next question comes from the line of John Massocca with Ladenburg Thalmann. Please proceed with your question. Good morning, everyone. So with regards to the Flash Market deal, I guess, maybe you could provide some color on how that would sourced, why they were a seller of the real estate? And was that transaction may be typical of what you're seeing in the pipeline today for C-store deals?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

Yes. So specific to the Flash Market deal, obviously, they're an existing chain. They are in the process of acquiring some regional competitors. And the transaction was really a combination of sale-leasebacks on existing owned sites, but also part of the overall acquisition financing. They get sourced direct for our team here and pretty typical of what we've been able to do, specifically in the CNG space and car wash space and as we expand it to the other asset classes, that [Indecipherable] relationships, what we hope to do as we broaden our investment.

John Massocca -- Ladenburg Thalmann -- Analyst

So it sounds like it was kind of smaller M&A. I mean, is that something you're seeing accelerate or continue as we kind of look forward into 4Q, maybe even 2022?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

Well, I think just the asset classes that we are targeting, CNG, car Wash, auto service, those are asset classes that we've been saying or have been consolidating for a number of years now. And again, this is sort of what we do well, right. It is kind of partner with operators, who are growing, taking market share, right, becoming a dominant presence within their region or even nationally, and establish a long term partnership, and we hope to do more with all these types of tenants over time as they grow their businesses.

John Massocca -- Ladenburg Thalmann -- Analyst

I feel like I remember, maybe this was pre-pandemic. It felt like pricing was getting kind of lofty and maybe slowing down some of that M&A and kind of tenants and potential tenants. Has that been reaccelerating over the last couple of quarters?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

No. I think the pricing, specifically on the very large transactions, right, was where we saw some pretty high multiples. Again, just talking about the operating businesses in the M&A context. Again, our comments on their deals specifically, but are opportunities where we compete, can acquire either direct or in a market or into an adjacent market and do it an attractive price. And you gain scale, specifically in CNG and car wash, right? There are certain synergies that are able to be realized in pretty short order. And that certainly helps from operators pricing on the M&A side.

John Massocca -- Ladenburg Thalmann -- Analyst

Okay. And then bigger picture, as you kind of look back at how the portfolio -- your portfolio has performed. Historically, during periods of kind of rising gas prices, as we kind of see gas prices kind of moving upward, is that going to have any impact, do you think, potentially on tenant credit? Just if there is some kind of pressure on visitation. And I know they can kind of pass a lot of that pricing on to consumers, but historically, has there been any kind of impact on how tenants performed during periods of rising gas prices?

Christopher J. Constant -- President and Chief Executive Officer

Yes. Certainly, rapid movements in wholesale pricing, Brent, has been a historically a declining retail margin environment. We have a slide actually in our investor presentation, which goes through kind of the change in retail margins over the last several years. And I think one thing you're seeing is there has been a steady shift upwards in retail fuel margins over the last several years. And if you think about pricing and demand for fuel, we expect that trend to continue and be stabilized there at a higher level. I'm not trying to call a specific cents per gallon margin, but just at a higher level on a permanent basis. And I think that's going to help our tenants pass along a lot of the higher cost to the consumer.

John Massocca -- Ladenburg Thalmann -- Analyst

Okay. That is it for me. Thank you very much for the questions.

Operator

Our next question comes from the line of Russ Wes Galladay with Robert W. Baird. Please proceed with your question.

Russ Wes Galladay -- Robert W. Baird -- Analyst

Good morning, everyone. Can you talk about how the composition of the pipeline is changing? Is it more driven by new relationships maybe versus a few years ago? And then obviously, making some progress on the car washes, but you did do a tire store deal this quarter. So is that becoming a bigger part of the pipeline as well?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

So yes, if you look back to where we were, a couple of years back, we were kind of a flat foot start in car wash, and we grew that to a material part of our pipeline. The pipeline is still weighted toward gas, convenience operators. That said, it's growing. So both sides of that equation are growing. We started to make similar progress and inroads in the other verticals that we targeted, specifically tire, and lube centers, tire and battery, and all parts of auto service.

So I think we plan or we should expect that we grow all those pieces of the pie at different paces, but grow certainly over the next couple of years. I think that many of our deals to your question on sourcing or composition, it's through the efforts of our investment acquisition team to both grow where it's appropriate, existing relationships with our stronger tenants and also to create new opportunities for not only geographic but tenant and category diversity among the portfolio. And I think we're kind of executing on all fronts there.

Russ Wes Galladay -- Robert W. Baird -- Analyst

And I guess when we look at timing to build these relationships and you actually -- for that to translate into deal volume, is that a multiyear process, where is it a linear growth? Or does it grow exponential, maybe a few years later?

Mark J. Olear -- Executive Vice President and Chief Operating Officer

So let's -- listen, I think we're looking for long-term relationships with strong operators. And as their businesses grow and they look to acquire, everyone's looking for to take the lumpiness out of all their programs. But there are ebbs and flows with all of our tenant relationships and in the pipeline. We just constantly manage those relationships to be ready to be a funding partner when appropriate. Some of these are deals that come up quickly and there's a gap between the next deal. Some are pretty steady state. So the combination of all those relationship management, pipeline management, kind of fuels the program on an ongoing basis.

Russ Wes Galladay -- Robert W. Baird -- Analyst

Okay. And then you did mention selling some non-core assets. But I guess, would you also be open to selling assets opportunistically, looking at the -- I think you delivered 7-Eleven's this quarter, and they have a pretty strong bid in the private market.

Christopher J. Constant -- President and Chief Executive Officer

Typically, we've been, especially with our new developments, by and hold investors. If you look at what we've been selling, right, they've been kind of underperforming assets across the portfolio. But just holistically, can we look at sort of all of our options. But again, I wouldn't guide you toward expecting significant asset sales of what we consider to core holdings.

Russ Wes Galladay -- Robert W. Baird -- Analyst

Okay. Thanks, guys.

Operator

[Operator Instructions] There are no further questions in the queue, I'd like to hand the call back to management for closing remarks.

Christopher J. Constant -- President and Chief Executive Officer

Great. Thank you, operator, and thank you, everyone, for joining us this morning for our third-quarter call. We look forward to getting back on to everyone, I think, in late February when we close out our fourth quarter and fiscal year 2021. And we appreciate your interest in the company.

Operator

[Operator Closing Remarks]

Duration: 37 minutes

Call participants:

Joshua Dicker -- Executive Vice President, General Counsel, and Secretary

Christopher J. Constant -- President and Chief Executive Officer

Mark J. Olear -- Executive Vice President and Chief Operating Officer

Brian R. Dickman -- Executive Vice President, Chief Financial Officer, and Treasurer

Brad Heffern -- RBC Capital Markets -- Analyst

Lizzy Durkin -- Bank of America -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

John Massocca -- Ladenburg Thalmann -- Analyst

Russ Wes Galladay -- Robert W. Baird -- Analyst

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