Getty Realty Corp. Announces Major Common Stock Offering and Forward Sale Agreements

Getty Realty Corp. (“Getty Realty” or the “Company”) has announced a significant capital markets transaction that could have important implications for shareholders and the Company’s future direction. The company is moving forward with a public offering of 4,000,000 shares of its common stock, with an option for underwriters to purchase an additional 600,000 shares, bringing the potential total to 4,600,000 shares.

Key Points of the Offering

• Underwriting and Forward Sale Agreements:
  • J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are acting as joint book-running managers and underwriters for the offering.
  • The structure includes both a traditional underwriting component and “Forward Sale Agreements” with J.P. Morgan and Wells Fargo as “Forward Purchasers” and “Forward Sellers”.
• Public Offering Price: The initial forward price is set at \$32.48 per share, which will be adjusted over time as described in the Forward Sale Agreements.
• Exchange Listing: The shares are to be listed on the New York Stock Exchange (“GTY”).
• Use of Proceeds: Proceeds from the offering, including the net proceeds upon settlement of the Forward Sale Agreements, are expected to be used for general corporate purposes and are specified under the “Use of Proceeds” section of the registration statement and prospectus supplement.
• Forward Sale Agreement Mechanics: The Forward Sale Agreements allow the Company to potentially issue shares at a future date at the forward price, which is subject to adjustment based on overnight bank rates and other specified factors.
• Lock-Up Arrangements: The Company has agreed to a 45-day lock-up period during which it will not issue, sell, or register any additional shares, subject to customary exceptions.
• Potential Dilution: If the Company elects to physically settle the Forward Sale Agreements, it will issue and deliver the relevant number of shares in exchange for cash at the forward price. This could result in dilution to existing shareholders.

Important Information for Shareholders

• Price-Sensitive Implications:
  • The offering is significant in size relative to Getty Realty’s existing share count and may have a dilutive effect on existing shareholders, especially if the Forward Sale Agreements are fully settled with newly issued shares.
  • The forward sale structure gives the Company flexibility to time the actual issuance of shares, which could impact the market depending on when the shares are ultimately delivered.
  • Lock-up arrangements help provide support to the share price in the short term by preventing the Company from issuing more shares for 45 days.
• Regulatory and Legal Compliance:
  • The offering is being conducted pursuant to an automatically effective shelf registration statement on Form S-3, and all legal opinions regarding share issuance and REIT status have been provided by DLA Piper LLP (US).
  • The Company has made customary representations and warranties regarding the completeness and accuracy of its disclosures, financial statements, and compliance with the Securities Act and Exchange Act.
• Forward-Looking Statements:
  • The Company’s filings contain forward-looking statements regarding the expected settlement of the Forward Sale Agreements, use of proceeds, and other matters which are subject to risks and uncertainties.
  • Actual results may differ significantly from current expectations due to market, operational, or regulatory factors outside the Company’s control.

Additional Details of the Transaction

• Underwriter Participation: Both J.P. Morgan and Wells Fargo are each purchasing 2,000,000 shares as underwriters and acting as forward purchasers/sellers for borrowings and settlement.
• Legal and Tax Opinions: The legality of the shares and certain tax matters have been reviewed and confirmed by DLA Piper LLP (US).
• Financial and Corporate Health: The Company’s financial statements have been prepared in accordance with GAAP and fairly present Getty Realty’s financial position. No material adverse change has occurred since the latest financials.
• REIT Status: Getty Realty continues to qualify as a real estate investment trust (REIT) and confirms its tax status and compliance with all related requirements.
• Market Risks and Hedging: The Forward Sale Agreements include provisions for market disruptions, regulatory changes, and stock borrow events that may impact the timing or settlement of the agreements.

Potential Share Price Impact

This transaction is potentially price-moving for several reasons:

• The size of the offering (up to 4,600,000 shares) could be dilutive.
• The forward sale structure provides flexibility in timing but introduces uncertainty about when new shares will hit the market.
• A successful offering and efficient use of proceeds could strengthen Getty Realty’s balance sheet and support growth, but any perceived overhang from future share issuance could pressure the stock price.

Conclusion

Investors should closely monitor the progress of this offering and any subsequent announcements regarding the settlement of the Forward Sale Agreements and use of proceeds. These developments could materially impact Getty Realty’s share price and shareholder value, both in the short and long term.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any security. Investors should conduct their own due diligence and consult their financial advisors before making investment decisions. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those expressed. The information herein is based on filings and documents provided by Getty Realty Corp. as of the date of publication and may not reflect subsequent developments.

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