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
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.
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