Getty Realty delivered a clean beat in the third quarter. AFFO came in at $0.64 per share against a $0.61 consensus, a 4.9% surprise. Revenue of $62.99 million topped the $61.11 million estimate by 3.1% and grew 13.3% year over year. The central tension sits beneath those numbers. Top-line growth is accelerating on a record acquisition year, but per-share earnings growth is decelerating. AFFO rose just 3.2% year over year, down from 5.1% in the second quarter and 6.8% in the first. The quarter shows a company that bought aggressively at the right time and is now confronting a cost of capital that has turned against it.
The quality of the quarter deserves some scrutiny. Base rental income grew 13.8% to $59.3 million, driven by acquisitions and contractual escalators. Annualized base rent growth reached 21%, up from 15% last quarter. But the diluted share count rose roughly 10% year over year to 62.6 million, which absorbed much of that growth. GAAP EPS was flat at $0.40. NAREIT FFO actually fell to $0.61 from $0.66, although the year-ago figure was flattered by a $4.2 million favorable change in environmental estimates. G&A climbed to $8.3 million from $6.4 million, partly on $1.85 million of executive-departure severance that AFFO excludes. Underlying overhead efficiency did improve: management's G&A ratio fell to 8.2% from 9.3% in the second quarter. Credit remains pristine, with occupancy at 99.7%, rent coverage steady at 2.5x, and no realized credit losses.
The call marked a clear shift in tone, from accelerating growth to discipline. Year-to-date investments reached $502.3 million at a 7.2% initial cash yield, nearly double fiscal 2025's roughly $269 million. The centerpiece was the $261 million sale-leaseback of 41 large-format convenience stores with Refuel. That deal makes Refuel a top tenant, but it was priced in May at around 6.8%, before rates jumped. As a result, the third-quarter deployment yield of 6.9% was the lowest of the year, down from 7.4% in the second quarter and 8.0% in the first.
Management repeatedly flagged the rapid rise in interest rates over the past 60 to 90 days as a drag on the transaction market and on investment spreads. The under-contract pipeline shrank to $75 million, down from $95 million in the second quarter and $125 million in the first. Management said it may walk from deals that cannot be repriced. On equity, management said it was 'not enthused' about issuing near $27, which removes a key funding lever.
The balance sheet reflects the strain. Net debt to EBITDA rose to 5.2x, or 5.0x including forward equity, versus 4.3x including forwards at the second quarter. Liquidity slipped to more than $500 million from more than $570 million. Unsettled forward equity dropped to about $52 million from about $190.5 million. The new $200 million term loan at 5.03% repaid revolver borrowings, but it carries a two-year initial maturity and floating-rate exposure. The Refuel spread therefore leans partly on short-dated debt and planned dispositions.
There are offsets. Counterparties are accepting repricing, pushing pipeline cap rates toward 8%. A more programmatic disposition platform could recycle capital from non-core and alternative-use sites. Management cited free cash flow of roughly $40 to $50 million a year. The dividend was raised 3.1% to $0.50, the 13th consecutive annual increase. On the operating side, tenant convenience-store traffic is flattish, and coverage is leaning more on fuel margins, which management put in the low-40s cents per gallon nationally versus 46 cents in the first quarter.
Guidance moved only modestly. Fiscal 2026 AFFO is now expected at $2.53 to $2.54, versus $2.52 to $2.54 previously. That is the fourth consecutive increase, but this time only the low end rose. Management attributed the unchanged top end to higher floating rates, the timing drag from equity raised in the third quarter, and conservatism around dead-deal costs.
The market had already moved ahead of the report. Shares have fallen 22.2% since the open following the July report, from $35.29 to $27.47. They now sit 14.5% below the 200-day moving average of $32.14. Earnings Whispers price and AVWAP trend readings are both negative. Investor sentiment, already slightly negative, edged lower from -0.11 to -0.15, a modest deterioration rather than a capitulation. Bears have legitimate ammunition: a lower share price raises the cost of equity, which slows accretive acquisitions, which in turn caps per-share growth.
The bottom line is that Getty beat estimates, raised the floor of its guidance, and booked a record investment year, yet the quarter's most important signals point to slower per-share growth ahead. A shrinking pipeline, thinner spreads, higher leverage and an unattractive equity currency define the setup. Durable credit quality and rising cap rates on new deals offer a path forward, but 2027 growth now depends more on disciplined capital recycling than on volume.