Buy – Getty Realty Corp (GTY)

GETTY RLTY CORP (GTY)

Value opportunity. Getty Realty Corp. is the largest gas station-based real estate investment trust (REIT) in the United States They also lease petroleum distribution terminals. The Company’s properties are located in 21 states across the United States with concentrations in the Northeast and the Mid-Atlantic regions. They operate under Getty, BP, Exxon, Mobil, Shell, Chevron, Valero, Fina and Aloha.

The REIT owns the Getty trade name in connection with its real estate and the petroleum marketing business in the United States.

As of December 31, 2011, GTY owned 996 properties and leased 153 properties. In January 2011, it acquired fee or leasehold title to 59 Mobil-branded gasoline stations in a sale/leaseback and loan transaction with CPD NY Energy Corp.

It has also had to reposition its properties leased by Getty Oil, which declared bankruptcy and took 788 stores into that proceeding.

The large drop in income caused a temporary suspension of the dividend, which had been a cushy .48/share last June.   The properties have been repossessed and are now being released. There is interesting potential for dividend growth in this REIT stock as it returns to full health. The short-term yield is 2.63% but it has the potential to return to its 5.8% dividend once the inventory is re-leased.  This is a speculative investment in that one assumes that GTY will be able to re-lease all of the stations that were tied up the bankruptcy proceeding. MODEST BUY/ACCRUE.

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