I wrote recently that orange grower Alico (ALCO) looks like a good under-the-radar real estate play, and here's another one -- Getty Realty (GTY), the largest U.S. real estate investment trust that focuses on gas stations and convenience stores.
Getty owns some compelling assets: roughly 850 properties in 23 states and the District of Columbia, with the highest concentration in New York, Massachusetts, Connecticut, New Jersey, New Hampshire, Virginia and Maryland.
The firm leases these properties (along with another 98 that it rents from other land owners) to service stations and the like. Getty also opportunistically buys and sells properties. For instance, it purchased more than 250 parcels over the past five years, but sold 84 locations during 2015 for $25.1 million.
GTY's share price has rebounded in recent years after facing a rocky road in 2011. The company ran into big trouble back then when its largest tenant, Getty Petroleum Marketing, missed a lease payment and ultimately filed for bankruptcy.
This led GTY to slash its quarterly dividend from $0.48 a share to just $0.25, and then to temporarily eliminate the payout altogether. That's never a good thing for a company that investors primarily buy for the dividend, and the stock's price tumbled nearly 60% between late 2010 and early 2011.
But Getty managed to repossess 788 affected properties by May 2011, then resumed paying quarterly dividends that June (albeit just $0.125 per share). And last year, GTY received $18.3 million from the Getty Petroleum Marketing bankruptcy proceeds, closing the books on a sad chapter in the REIT's history.
Still, GTY's price has never fully recovered from the 2011 fiasco. The stock peaked at $32.20 intraday in 2010, but only fetches about $20.50 today. Shares briefly touched the $22 area three years ago, but fell to as low as $15.16 intraday last summer.
However, GTY has rallied back some 33% since then and now trades at or near a three-year high. And while Getty's quarterly dividend is still a far cry from the $0.48 a share it once stood at, it's moving in the right direction and currently totals $0.25 per share. That translates into a solid 4.9% dividend yield.
Where GTY goes from here remains to be seen. But the company has behaved well the past couple of quarters -- exceeding estimates and delivering solid total returns.
