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Msg  12816 of 12945  at  1/16/2020 10:44:36 AM  by

jrad51


 In response to msg 12815 by  E_K_S
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Re: Our top picks by sector for 2020- put GTY on watch list

Question about GTY. I have owned it off and on for over 20 years and I am really puzzled that the market is accepting such a low yield.

GTY owns gas stations. They have purchased a lot of new ones in recent years (sale/leasebacks) but they still have a lot of the original stations they owned 20 years ago. The 2018 10-K contained 3 pages of discussion of the environmental risks and liabilities related to these stations. A lot of the risk is shifted to the lessees (but GTY still has a bunch of the responsibility) and GTY has all sorts of insurance.

Until GTY started growing in recent years, these exposures were pretty significant. Now, they are a smaller risk to a larger company, but they aren't immaterial.

The expense is growing. In 2018, environmental costs doubled to $ 5 million and this year, they are doubling again, to about $ 10 million. I assume GTY is charging higher rents to cover the costs, so I don't think this is a huge deal. I'm just puzzled that a 4.5% yield adequately compensates for the risk.


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Msg # Subject Author Recs Date Posted
12817 Re: Our top picks by sector for 2020- put GTY on watch list E_K_S 1 1/16/2020 10:55:01 AM






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