GETTY REALTY CORP /MD/ (GTY) stock intrinsic value fair value estimate & owner earnings analysis

Getty Realty owns the land and buildings under roughly 1,200 convenience stores, gas stations, express car washes, auto service centers and drive-thru restaurants in 44 states and Washington D.C., and rents them to operators on long triple-net leases, meaning the tenant pays the property taxes, insurance and upkeep. Leases typically start at 15 or 20 years with renewal options and periodic rent increases; at the end of 2025 the average remaining term was 9.9 years, only three properties were vacant, and about 32% of rent came from Texas and New York. The two largest tenants are subsidiaries of ARKO Corp (12% of 2025 revenue) and Global Partners LP (10%). On September 22, 2026 Getty closed a $260.9 million purchase and leaseback of 41 large-format Refuel convenience stores in South Carolina, North Carolina, Texas and Mississippi on a 20-year lease, paid for with proceeds of already-agreed forward sales of new shares (about 6.6 million shares, $216.9 million, outstanding), borrowing and planned property sales. How we measure what the business earns. We start from cash generated by operations, remove short-term working-capital swings and stock compensation, and subtract the small amount Getty itself spends on capital improvements; money spent buying new properties is treated as growth investment, not a cost of standing still. Rent is counted as cash actually due, not the smoothed accounting figure, and gains on property sales are excluded. We treat Getty's spending to clean up old fuel-tank contamination at legacy sites (about $4.8 to $7.8 million a year recently, far more in 2016-2018) as a real, ongoing cost. On this basis, cash earnings after interest were $2.05 per share in 2023, $2.17 in 2024 and $2.19 in 2025. Because shareholders only own what is left after lenders are paid, we first value the business before interest, then subtract the debt. Adding back the interest Getty actually paid ($29 million in 2023, $38 million in 2024, $43 million in 2025), the business generated $2.64, $2.87 and $2.96 per share in those years. We anchor on the middle of these three years, $2.87 per share: they describe today's portfolio and today's balance sheet, whereas earlier years describe a smaller business carrying less debt per share, and 2020 was distorted by a large one-time payables swing. The first half of 2026 ran at about the same level (operating cash flow per share up about 8% on the prior year). Adding the Refuel rent at the roughly 7.1% initial yield Getty reports for its 2026 purchases and spreading everything over the enlarged share count leaves the starting point at about $2.86 per share. What the business owes. At June 30, 2026 Getty had $1.0 billion of fixed-rate senior notes held by insurers (Prudential, MetLife, New York Life, AIG, MassMutual and others) and $73 million drawn on its $450 million bank line, which matures in January 2029; the Refuel purchase added about $44 million more after the forward share sales, and a new $200 million term loan maturing October 2028 is being put in place. About $525 million of the notes carry coupons of only 3.43% to 3.65% and mature between 2029 and 2033, well below the 5.7-5.8% Getty paid on its most recent notes (the $250 million Series U issued January 2026 at 5.76%, due 2036). We credit that cheap fixed-rate money at about $60 million, so we count the debt at roughly $1.05 billion, or $15.62 per share on about 67.3 million shares once the forward sales settle. Annual interest of about $52 million is covered more than three times by the business's cash flow even in our bear case, and maturities are spread from 2028 to 2036 with no single year dominating, so nothing in the schedule points to refinancing strain. Base case ($35.99). Rent on the existing portfolio rises about 1% a year for ten years through the escalation clauses already written into the leases, net of some friction as leases roll (about 19% of rent expires by the end of 2030, including a 162-property lease group in 2027); after year ten, rent holds flat with no further growth, on the evidence of decades of near-full occupancy at well-located corner and highway-exit sites and of Getty's successful re-letting after its former main tenant went bankrupt in 2011-2012. The business is worth about $51.61 per share ($3.5 billion); it owes $15.62 per share; the shares are worth about $35.99. For comparison with the most recent full year, business cash flow per share grew 3.3% in 2025, while our base case assumes 1% in year one, because we do not count on new acquisitions. Bear case ($26.14). One of the two largest tenants runs into trouble, as Getty's then-largest tenant did in 2011-2012: cash flow falls 8% in the first year and 7% in the second through rent cuts, vacancy and re-leasing costs, then settles 4% below today with no rent growth for the rest of the decade. After year ten, cash flow shrinks 1% a year indefinitely as falling motor-fuel demand, a risk Getty itself names in its filings, erodes the value of gas-station sites. The business is worth about $41.76 per share ($2.8 billion); it owes $15.62; the shares are worth about $26.14. Bull case ($43.52). The level holds at the 2025 and early-2026 run rate of about $2.94 per share after the Refuel deal, and contractual rent increases lift cash flow about 1.5% a year for twenty years before leveling off. The business is worth about $59.14 per share ($4.0 billion); it owes $15.62; the shares are worth about $43.52. What we did not count. Getty has bought properties every year for more than a decade and has more than $125 million of further purchases lined up, but it pays for them mostly by selling new shares and borrowing, so that growth depends on outside capital rather than the business's own cash and is left out of every case; buying at roughly 7% yields against our 6% hurdle adds little per share in any event. The exact size of the rent escalators is not disclosed in the annual report, so the 1% and 1.5% rates are our reading of the straight-line rent accruals and lease terms rather than a stated figure. What changed since our last look. Our earlier estimate ($30.52 / $50.22 / $60.55) valued Getty's cash earnings after interest as if its roughly $1 billion of debt would stay in place on today's terms forever, and it credited mid-single-digit growth from continued property purchases funded with new shares and debt. We now value the business before its lenders and subtract what it owes, and credit only the rent increases already written into leases. Separately, a sign error in our earlier treatment of two working-capital lines had understated recent cash earnings (2025 was shown at $1.80 per share; the correct figure is $2.19), which partly offsets the lower growth. The net effect is a lower range. Margin-of-safety price. This is a steady, contract-backed rent business with moderate borrowing, some tenant concentration and a long-term question mark over fuel demand. The margin-of-safety price is about $25 per share, roughly 30% below our base case and just under the bear case, so that the price sits below the bear-case value if a major tenant stumbles, and the base case implies a strong return from that price if it plays out. Reconciliation note: in 2025, net income plus depreciation and other non-cash items, less capital spending, comes out about 8% above the owner-earnings figure; almost all of the gap is the $7.8 million of cash spent on environmental cleanup, which we deliberately keep as a cost, with about $1.9 million (roughly 1.5%) not traced to a specific line.