Getty Realty
G E T T Y R E A L T Y C O R P .
A n n u A l R e p o R t
2012 F in A nci A l HigHl igH ts
2 01 2 A n n uA l R e p oRt
(in thousands, except per share amounts)
Total revenues
Earnings from continuing operations(b)
Earnings from discontinued operations
Net earnings
Diluted net earnings per common share
Funds from operations(c)
Diluted funds from operations per common share(c)
Adjusted funds from operations(c)
Diluted adjusted funds from operations per common share(c)
Cash dividends declared per common share
Years ended December 31,
2012
2011(a)
2010
$ 102,168
$ 102,921
$ 78,360
13,808
(1,361)
9,424
3,032
40,867
10,833
12,447
12,456
51,700
0.37
0.37
1.84
33,223
42,050
59,733
0.99
1.26
2.13
28,790
62,679
58,246
0.86
0.375
1.88
1.46
2.08
1.91
(a) Includes (from the respective dates of the acquisition) the effect of the $111.6 million acquisition of 59 Mobil-branded gasoline station and convenience
store properties in a sale/leaseback and loan transaction with CPD NY Energy Corp. which were acquired on January 13, 2011 and the effect of the $87.0
million acquisition of 66 Shell-branded gasoline station and convenience store properties in a sale/leaseback transaction with Nouria Energy Ventures I,
LLC which were acquired on March 31, 2011.
(b) For 2012, includes the effect of a $13.5 million accounts receivable reserve and the effect of a $6.3 million impairment charge, which are included in earnings
from continuing operations primarily related to certain properties previously leased to Getty Petroleum Marketing Inc. under the Master Lease. For 2011,
includes the effect of a $19.3 million non-cash deferred rent receivable reserve, the effect of a $7.6 million accounts receivable reserve, and the effect of
a $15.9 million impairment charge, which are included in earnings from continuing operations primarily related to certain properties previously leased to
Getty Petroleum Marketing Inc. under the Master Lease. (For additional information, see “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations — General — Marketing and the Master Lease” in our accompanying 2012 Annual Report on Form 10-K.)
(c) In addition to measurements defined by accounting principles generally accepted in the United States of America (“GAAP”), our management also focuses
on funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) to measure our performance. FFO is generally considered to be an appro-
priate supplemental non-GAAP measure of the performance of real estate investment trusts (“REITs”). In accordance with the National Association of
Real Estate Investment Trusts’ modified guidance for reporting FFO, we have restated reporting of FFO to exclude non-cash impairment charges. FFO is
defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization of real estate assets, gains or
losses on dispositions of real estate (including such non-FFO items reported in discontinued operations), non-cash impairment charges, extraordinary
items, and cumulative effect of accounting change. Other REITs may use definitions of FFO and/or AFFO that are different than ours and; accordingly, may
not be comparable.
We believe that FFO and AFFO are helpful to investors in measuring our performance because both FFO and AFFO exclude various items included in
GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance. FFO excludes various items such as gains or
losses from property dispositions, depreciation and amortization of real estate assets, and non-cash impairment charges. In our case; however, GAAP net
earnings and FFO typically include the impact of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-
market leases and income recognized from direct financing leases on the recognition of revenue from rental properties (collectively the “Revenue
Recognition Adjustments”), as offset by the impact of related collection reserves. GAAP net earnings and FFO from time to time may also include other
unusual or infrequently occurring items. Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our ten-
ants. In accordance with GAAP, the aggregate minimum rent due over the current term of these leases are recognized on a straight-line (or an average)
basis rather than when the payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-
place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. Income
from direct financing leases is recognized over the lease terms using the effective interest method which produces a constant periodic rate of return on the
net investments in the leased properties.
Management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less Revenue Recognition
Adjustments, allowance for deferred rental revenue, acquisition costs, and other unusual or infrequently occurring items. In management’s view, AFFO
provides a more accurate depiction than FFO of our fundamental operating performance related to: (i) the impact of scheduled rent increases from operat-
ing leases; (ii) the rental revenue from acquired in-place leases; (iii) the impact of rent due from direct financing leases; and (iv) the impact of other unusual
or infrequently occurring items. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and there-
fore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity. (FFO and AFFO are reconciled to net
earnings in “Item 6. Selected Financial Data” in our accompanying 2012 Annual Report on Form 10-K.)
CEO a nd PrE sidEn t’s M EssagE
G e t t y R e a lt y C oRp.
Fellow Shareholders,
As I sat down to write this letter, I took some time to reflect on how just how far our Company
has progressed from the uncertainty we faced during the past 18 months. We made remarkable
progress during 2012 in managing our business through the challenges resulting from the bankruptcy
of our largest tenant (Marketing) at the end of 2011. And while we still have work ahead, we
ended 2012 with our Company already on a path towards resuming growth to drive increased
cash flow.
In 2012 Getty:
• Prevailed against Marketing and repossessed our portfolio of properties from them in an
orderly manner;
• Navigated through a complex set of economic and regulatory issues to preserve underlying
value in our portfolio;
• Refinanced our credit facilities on market terms without additional damage to our portfolio or
equity value at what proved to be a time of significant uncertainty in Marketing’s bankruptcy;
• Materially improved our overall diversification and the credit quality of our tenant base with
newly signed leases;
• Entered into ten new long-term triple net leases covering more than 440 locations previously
leased to Marketing with eight tenants including three NYSE listed companies and three other
proven long-term partners;
• Purchased a ten-year $50 million aggregate environmental insurance policy protecting against
unknown environmental liabilities; and
• Sold 54 properties for $14.4 million.
As difficult as things were in 2011, the circumstances provided a catalyst for change and our Board
and management team seized upon the opportunity to pursue a transformation of our tenant base.
The result of these efforts has made Getty a more diversified, stronger and agile company than
we were previously while preserving meaningful opportunity for upside in our future as we restart
our pursuit of accretive growth to build sustainable value.
Pa g e 1
CEO a nd PrE sidEn t’s M EssagE
2 01 2 a n n ua l R e p oRt
As we moved into 2013 with a lot of the repositioning accomplished, we were able to refinance
our Company’s debt again, but this time from a position of far greater strength. Our renewed
financial stability enabled us to secure, at more favorable terms, a combination of bank and long-
term fixed rate debt.
This recent 2013 refinancing lengthened our maturities, reduced our exposure to variable interest
rates and, most important of all, provided us with more than $100 million of capacity to help pursue
continued growth of the Company.
The benefits of our efforts are beginning to be reflected in our ability to support dividends. In 2012
we paid our shareholders $0.375 per common share during the year. Based on the progress we
have made to date, in the first quarter of 2013 we declared a regular quarterly dividend of $0.20 per
common share representing a 60% increase in the dividend rate over the immediately prior quarter.
In 2013, we are continuing to strengthen our portfolio and improve the quality of our cash flow by
further refining our asset base. Almost all of our new leases have provisions for funding improve-
ments in our properties. Contributions to fund these improvements are made by both Getty and
our new tenants. Most of these improvements will occur during the next five years and will result
in our portfolio being newer, more competitive and having greater underlying value.
In addition, we plan to continue our efforts to reposition our portfolio to maximize its value. To that
end as of this writing we have already sold 50 properties this year, including one terminal, for
$18.3 million in the aggregate. We anticipate that reinvestment of the proceeds from these sales
will yield enhanced returns in the coming years.
Ended 2012 with our
Company already on a path
towards resuming growth to
drive increased cash flow.
Entered into ten new long-term
triple-net leases covering
440 locations.
Pa g e 2
CEO a nd PrE sidEn t’s M EssagE
G e t t y R e a lt y C oRp.
We are also engaged in numerous other activities to drive enhanced value that we believe will
contribute to our performance in the years to come. Beyond just optimizing our existing portfolio,
we are returning our attention toward accretive growth via select acquisitions.
In light of everything we have been through, I think it is useful to take a moment to articulate
some of our most fundamental thoughts as they relate to our growth objectives.
Our mission is to deliver a secure and growing stream of dividends. We also want to provide a
measure of inflation protection by participating in residual rights in real properties.
Our focus is investments in the convenience and gas sector. This sector is highly specialized with
unique risks, but we believe our management team has the expertise to successfully navigate
the sector. The sector possesses certain inherent characteristics that we find attractive including
inelastic demand at the customer level and real property with portfolio qualities and multiple
alternative uses.
We are generally indifferent regarding store format, preferring locations where the delivery of fuel,
whether fossil fuel as it is today or a mix or blend of renewable fuels, natural gas or even electricity
in the future, is an integral part of the business conducted on-site. At the end of the day, we are
agnostic about specific fuels, rather preferring to concentrate on the real estate and focusing on
locations convenient to vital highway and transportation routes that will drive customer visits
to get fuel regardless of the specific fuel option or store format in a location.
Materially improved our overall
diversification and the credit
quality of our tenant base with
newly signed leases.
54 properties
sold in 2012 and
50 to date in 2013.
Pa g e 3
CEO a nd PrE sidEn t’s M EssagE
2 01 2 a n n ua l R e p oRt
this team continues
to work tirelessly to
deliver results.
We are optimistic we can execute
on our business plan to build
steady and rising dividends.
We will also continue to employ leverage on a conservative basis and intend to continue using
modest amounts of leverage to enhance shareholder returns in the future.
We are optimistic we can execute on our business plan to build steady and rising dividends with
enhanced residual values of our properties to build rising shareholder value over time.
I want to close as I always do by thanking my colleagues for their hard work, dedication and good
humor over the past year. This team continues to work tirelessly to deliver results and going forward
is committed to building on the progress that has been made to date. I thank our team for their
efforts and our shareholders for their patience and with that, may 2013 be filled (up) with success.
Sincerely,
David B. Driscoll
Chief Executive Officer and President
Pa g e 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 001-13777
GETTY REALTY CORP.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
125 Jericho Turnpike, Suite 103, Jericho, New York
(Address of principal executive offices)
11-3412575
(I.R.S. employer
identification no.)
11753
(Zip Code)
Registrant’s telephone number, including area code: (516) 478-5400
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS
Common Stock, $0.01 par value
NAME OF EACH EXCHANGE ON WHICH REGISTERED
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes No
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
The aggregate market value of common stock held by non-affiliates (25,649,418 shares of common stock) of the Company was $491,186,000 as
of June 30, 2012.
The registrant had outstanding 33,396,790 shares of common stock as of March 18, 2013.
DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT
Selected Portions of Definitive Proxy Statement for the 2013 Annual Meeting of Stockholders (the “Proxy Statement”),
PART OF FORM 10-K
which will be filed by the registrant on or prior to 120 days following the end of the registrant’s year ended
December 31, 2012 pursuant to Regulation 14A.
III
Item
Description
Cautionary Note Regarding Forward-Looking Statements ..............................................................................
Page
3
TABLE OF CONTENTS
1
1A
1B
2
3
4
5
6
7
7A
8
9
9A
9B
10
11
12
13
14
15
PART I
5
Business ............................................................................................................................................................
Risk Factors .......................................................................................................................................................
8
Unresolved Staff Comments ............................................................................................................................. 18
Properties .......................................................................................................................................................... 18
Legal Proceedings ............................................................................................................................................. 21
Mine Safety Disclosures.................................................................................................................................... 23
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities ........................................................................................................................................................... 24
Selected Financial Data ..................................................................................................................................... 26
Management’s Discussion and Analysis of Financial Condition and Results of Operations ............................ 28
Quantitative and Qualitative Disclosures About Market Risk .......................................................................... 45
Financial Statements and Supplementary Data ................................................................................................. 46
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ............................ 75
Controls and Procedures ................................................................................................................................... 75
Other Information .............................................................................................................................................. 75
PART III
Directors, Executive Officers and Corporate Governance ................................................................................ 76
Executive Compensation ................................................................................................................................... 77
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .......... 77
Certain Relationships and Related Transactions, and Director Independence .................................................. 77
Principal Accountant Fees and Services ........................................................................................................... 77
Exhibits and Financial Statement Schedules ...................................................................................................... 78
Signatures ........................................................................................................................................................... 95
Exhibit Index ...................................................................................................................................................... 96
PART IV
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Annual Report on Form 10-Kmay constitute “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. When we use the words “believes,” “expects,” “plans,”
“projects,” “estimates,” “anticipates,” “predicts” and similar expressions, we intend to identify forward-looking statements.
(All capitalized and undefined terms used in this section shall have the same meanings hereafter defined in this Annual
Report on Form 10-K.)
Examples of forward-looking statements included in this Annual Report on Form 10-K include, but are not limited to,
statements regarding: Marketing and our efforts, expectations, and ability to reposition the properties that were previously
subject to the Master Lease; our expectations that we may receive funds from the liquidation of the Marketing Estate to
satisfy our claims against the Marketing Estate; our expectations that we may collect amounts we advance under the
Litigation Funding Agreement; our beliefs regarding the amount of revenue we expect to realize from our properties; our
expectations regarding incurring costs associated with repositioning of our properties; our expectations regarding incurring
costs associated with the Marketing bankruptcy proceeding and the process of taking control of our properties, including, but
not limited to, the Property Expenditures and the Capital Improvements; our expectations regarding eviction proceedings
initiated to take control of our properties; the impact of the developments related to repositioning of our properties on our
business and ability to pay dividends or our stock price; the reasonableness of and assumptions used regarding our accounting
estimates, judgments, assumptions and beliefs; our exposure and liability due to and our estimates and assumptions regarding
our environmental liabilities and remediation costs including the Marketing Environmental Liabilities and other
environmental remediation costs; our belief that our accruals for environmental and litigation matters were appropriate based
on the information then available; compliance with federal, state and local provisions enacted or adopted pertaining to
environmental matters; the probable outcome of litigation or regulatory actions and their impact on us; our expected
recoveries from underground storage tank funds; our expectations regarding our indemnification obligations and others;
future acquisitions and financing opportunities and their impact on our financial performance; the adequacy of our current
and anticipated cash flows from operations, borrowings under our Credit Agreement and available cash and cash equivalents;
our expectation as to our continued compliance with the financial covenants in our Credit Agreement and Prudential Loan
Agreement; and our ability to maintain our federal tax status as a real estate investment trust.
These forward-looking statements are based on our current beliefs and assumptions and information currently available
to us, and involve known and unknown risks (including the risks described below in “Item 1A. Risk Factors” and in “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” herein, and other risks that we
describe from time to time in this and our other filings with the Securities and Exchange Commission (“SEC”)), uncertainties
and other factors which may cause our actual results, performance and achievements to be materially different from any
future results, performance or achievements expressed or implied by these forward-looking statements.
These risks include, but are not limited to risks associated with: repositioning our properties that were previously
subject to the Master Lease and the adverse impact such repositioning may have on our cash flows and ability to pay
dividends; our estimates and assumptions regarding expenses, claims and accruals relating to pre-petition and post-petition
claims against Marketing, the process of taking control of our properties, including the likelihood of our success in the
eviction proceedings we have commenced, and repositioning such properties; the liquidation of the Marketing Estate and
risks associated with prosecuting the Lukoil Complaint, including our obligations under the Litigation Funding Agreement;
the performance of our tenants of their lease obligations, renewal of existing leases and re-letting or selling our vacant
properties; our ability to obtain favorable terms on any properties that we sell or re-let; the uncertainty of our estimates,
judgments and assumptions associated with our accounting policies and methods; our dependence on external sources of
capital; our business operations generating sufficient cash for distributions or debt service; potential future acquisitions; our
ability to acquire new properties; owning and leasing real estate generally; substantially all of our tenants depending on the
same industry for their revenues; property taxes; costs of completing environmental remediation and of compliance with
environmental legislation and regulations; potential exposure related to pending lawsuits and claims; owning real estate
primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; counterparty risk; expenses not
covered by insurance; the impact of our electing to be treated as a REIT under the federal income tax laws, including
subsequent failure to qualify as a REIT; changes in interest rates and our ability to manage or mitigate this risk effectively;
our dividend policy and ability to pay dividends; dilution as a result of future issuances of equity securities; changes in
market conditions; Maryland law discouraging a third-party takeover; adverse effect of inflation; the loss of a member or
members of our management team; changes in accounting standards that may adversely affect our financial position; and
terrorist attacks and other acts of violence and war.
3
As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly
or annual basis, which could materially and adversely affect our business, financial condition, operating results, ability to pay
dividends or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere
in this Annual Report on Form 10-K and those that are described from time to time in our other filings with the SEC.
You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof.
We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or
circumstances or reflect the occurrence of unanticipated events.
4
Item 1. Business
Company Profile
PART I
Getty Realty Corp., a Maryland corporation, is the leading publicly-traded real estate investment trust (“REIT”) in the
United States specializing in the ownership, leasing and financing of retail motor fuel and convenience store properties and
petroleum distribution terminals. Our properties are located in 21 states across the United States with concentrations in the
Northeast and the Mid-Atlantic regions. Our properties are operated under a variety of brands including Getty, BP, Exxon,
Mobil, Shell, Chevron, Valero and Aloha. We own the Getty® trademark and trade name in connection with our real estate
and the petroleum marketing business in the United States.
We are self-administered and self-managed by our management team, which has extensive experience in owning,
leasing and managing retail motor fuel and convenience store properties. We have invested, and will continue to invest, in
real estate and real estate related investments, such as mortgage loans, when appropriate opportunities arise.
The History of Our Company
Our founders started the business in 1955 with the ownership of one gasoline service station in New York City and
combined real estate ownership, leasing and management with service station operation and petroleum distribution. We held
our initial public offering in 1971 under the name Power Test Corp. We acquired, from Texaco in 1985, the petroleum
distribution and marketing assets of Getty Oil Company in the Northeast United States along with the Getty® name and
trademark in connection with our real estate and the petroleum marketing business in the United States. We became one of
the leading independent owner/operators of petroleum marketing assets in the country, serving retail and wholesale customers
through a distribution and marketing network of Getty® and other branded retail motor fuel and convenience store properties
and petroleum distribution terminals.
Getty Petroleum Marketing, Inc. (“Marketing”) was formed to facilitate the spin-off of our petroleum marketing
business to our shareholders which was completed in 1997. Marketing was acquired by a U.S. subsidiary of OAO Lukoil
(“Lukoil”) in December 2000. In connection with Lukoil’s acquisition of Marketing, we renegotiated our long-term unitary
triple-net lease (the “Master Lease”) with Marketing. On December 5, 2011, Marketing filed for Chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court, Southern District of New York (the “Bankruptcy Court”). Marketing rejected the
Master Lease pursuant to an Order issued by the Bankruptcy Court, effective April 30, 2012 and possession of the then 788
properties subject to the Master Lease was returned to us.
As of December 31, 2012, more than 700 properties that we own or lease were previously leased to Marketing. During
2012, we entered into ten long-term triple-net unitary leases re-letting, in the aggregate, 443 operating properties previously
leased to Marketing. The new leases generally have 15 year initial terms with provisions for renewal terms and annual rent
escalations. We sold 54 properties for $15.4 million in the aggregate during 2012. As of the date of this filing on Form 10-K,
in 2013, we have sold an additional 42 properties for $17.5 million in the aggregate, including one terminal. Certain of the
properties previously leased to Marketing are subject to month-to-month licensing agreements and our temporary fuel supply
agreement (described in more detail below). The balance of the remaining properties previously leased to Marketing are
accounted for as held for sale and are either subject to month-to-month licensing agreements, or are vacant.
Since May 2003, we have acquired approximately 400 properties in various states in transactions valued at
approximately $523 million. These acquisitions include single property transactions and portfolio transactions ranging in size
from 18 properties with an aggregate value of approximately $13 million up to a portfolio comprised of 59 properties with an
aggregate value of approximately $111 million.
Company Operations
As of December 31, 2012, we owned 946 properties and leased 135 properties. Our typical property is used as a retail
motor fuel outlet and convenience store, and is located on between one-half and three quarters of an acre of land in a
metropolitan area. The properties that we have acquired since 2007 are generally located on larger parcels of land. We
believe our network of retail motor fuel and convenience store properties and terminal properties across the Northeast and the
Mid-Atlantic regions of the United States is unique and that comparable networks of properties are not readily available for
purchase or lease from other owners or landlords. Many of our properties are located at highly trafficked urban intersections
or conveniently close to highway entrance or exit ramps.
5
Our business model is to lease our properties on a triple-net basis primarily to petroleum distributors and to a lesser
extent to individual operators. Our tenants operate our properties directly or sublet our properties to operators who operate
their gas stations, convenience stores, automotive repair service facilities or other businesses at our properties. These tenants
are responsible for the operations conducted at these properties. Our triple-net tenants are generally responsible for the
payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties.
In addition, with respect to certain properties that we are repositioning, we have entered into month-to-month license
agreements and interim fuel supply arrangements. We receive monthly occupancy payments directly from the licensee-
operators while we remain responsible for certain costs associated with the properties. These month-to-month license
agreements allow the licensees to occupy and use the properties as gas stations, convenience stores or automotive repair
service facilities, and require the licensee-operators to sell fuel provided exclusively by a third party, with whom we have
contracted for interim fuel supply. Under our agreement with the third party fuel supplier, the third party fuel supplier is
required to pay us a fee based in part on gallons sold and we pay to the third party fuel supplier a monthly administrative
service fee. Our month-to-month license agreements differ from our triple-net lease arrangements in that, among other things,
we are responsible for the payment of certain environmental compliance costs and property operating expenses including
maintenance and real estate taxes. We intend to reposition these properties in order to maximize their value to us taking into
account each property’s intermediate and long-term investment requirements and potential. As a result of this process, we
expect that we may dispose of or lease these remaining properties, either individually or in small portfolios. We also may
make investments in certain of these properties in anticipation of leasing them or by contribution to capital expenditures
required to be made by our tenants. We cannot predict the timing or the terms of any future sales or leases.
Substantially all of our tenants’ financial results depend on the sale of refined petroleum products and rental income
from their subtenants. As a result, our tenants’ financial results are highly dependent on the performance of the petroleum
marketing industry, which is highly competitive and subject to volatility. In those instances where we determine that the best
use for a property is no longer as a gas station, we will seek an alternative tenant or buyer for the property. As of December
31, 2012, approximately 20 of our properties are leased for uses such as quick serve restaurants, automobile sales and other
retail purposes, excluding approximately 40 properties previously subject to the Master Lease with Marketing which are
currently held for sale and which have temporary occupancies. (For additional information regarding our real estate business
and our properties, see “Item 1. Business — Real Estate Business” and “Item 2. Properties”.)
One of our tenants, CPD NY Energy Corp., a subsidiary of Chestnut Petroleum Dist. (together with its affiliates,
“CPD”), represents 18% and 12% of our revenues from rental properties for 2012 and 2011, respectively, and 26% and 12%
of our annualized rental revenues from rental properties for 2012 and 2011, respectively. (For information regarding factors
that could adversely affect us relating to our lessees, see “Part II, Item 1A. Risk Factors.)
The sector of the real estate industry in which we operate is highly competitive. In addition, we expect major real estate
investors with significant capital will continue to compete with us for attractive acquisition opportunities. These competitors
include petroleum manufacturing, distributing and marketing companies, other REITs, public and private investment funds
and other individual and institutional investors. Generally, we seek leases with tenants that have an initial term of 15 years
and include provisions for rental increases during the term of the lease. As of December 31, 2012, our average lease term
including month-to-month license agreements, weighted by the number of underlying properties, was in excess of 9.8 years
excluding renewal options. Retail motor fuel properties are an integral component of the transportation infrastructure.
Stability within the retail motor fuel and convenience store industry is driven by highly inelastic demand for petroleum
products and day-to-day consumer goods and fast foods, which supports our tenants.
We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. A REIT is a
corporation, or a business trust that would otherwise be taxed as a corporation, which meets certain requirements of the
Internal Revenue Code. The Internal Revenue Code permits a qualifying REIT to deduct dividends paid, thereby effectively
eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes.
To meet the applicable requirements of the Internal Revenue Code, a REIT must, among other things, invest substantially all
of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most
of its income from rents from real property or interest on loans secured by mortgages on real property, and distribute to
shareholders annually a substantial portion of its otherwise taxable income. As a REIT, we are required to distribute at least
90% of our taxable income to our shareholders each year and would be subject to corporate level federal income taxes on any
taxable income that is not distributed.
6
Acquisition Strategy and Activity
As part of our overall growth strategy, we regularly review acquisition and financing opportunities to acquire
additional properties, and we expect to continue to pursue acquisitions that we believe will benefit our financial performance.
Our investment strategy is aimed at achieving a high quality real estate portfolio and geographic diversification. We employ
investment personnel to pursue acquisitions that are consistent with this strategy. A key element of our investment strategy is
to acquire properties in strong primary markets that serve high density population centers.
We review such opportunities on an ongoing basis and may have one or more potential acquisitions under
consideration at any point in time, which may be at varying stages of the negotiation and due diligence review process. To
the extent that our current sources of liquidity are not sufficient to fund such acquisitions, we will require other sources of
capital, which may or may not be available on favorable terms or at all.
In 2012, we acquired fee or leasehold title to five gasoline station and convenience store properties in separate
transactions valued at $5.2 million. In 2011, we acquired fee or leasehold title to 125 gasoline station and convenience store
properties in two separate transactions valued at $198.6 million.
Since May 2003, we have acquired approximately 400 properties in various states in transactions valued at
approximately $523 million. These acquisitions include single property transactions and portfolio transactions ranging in size
from 18 properties with an aggregate value of approximately $13 million up to a portfolio comprised of 59 properties with an
aggregate value of approximately $111 million.
Trademarks
We own the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the
United States and we permit certain of our tenants to use the Getty® trademarks at properties that they lease from us.
Regulation
We are subject to numerous existing federal, state and local laws and regulations including matters related to the
protection of the environment such as the remediation of known contamination and the retirement and decommissioning or
removal of long-lived assets including buildings containing hazardous materials, underground storage tanks (“UST” or
“USTs”) and other equipment. Petroleum properties are governed by numerous federal, state and local environmental laws
and regulations. These laws have included: (i) requirements to report to governmental authorities discharges of petroleum
products into the environment and, under certain circumstances, to remediate the soil and/or groundwater contamination
pursuant to governmental order and directive, (ii) requirements to remove and replace USTs that have exceeded
governmental-mandated age limitations, and (iii) the requirement to provide a certificate of financial responsibility with
respect to claims relating to UST failures. Our tenants are directly responsible for compliance with various environmental
laws and regulations as the operators of our properties.
We believe that we are in substantial compliance with federal, state and local provisions enacted or adopted pertaining
to environmental matters. Although we are unable to predict what legislation or regulations may be adopted in the future with
respect to environmental protection and waste disposal, existing legislation and regulations have had no material adverse
effect on our competitive position. (For additional information with respect to pending environmental lawsuits and claims see
“Item 3. Legal Proceedings”.)
Environmental expenses are principally attributable to remediation costs which include installing, operating,
maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting
incurred in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to
these environmental expenses where available. We enter into leases and various other agreements which allocate
responsibility for known and unknown environmental liabilities by establishing the percentage and method of allocating
responsibility between the parties. In accordance with leases with certain tenants, we have agreed to bring the leased
properties with known environmental contamination to within applicable standards, and to either regulatory or contractual
closure (“Closure”) in an efficient and economical manner. Generally, upon achieving Closure at each individual property,
our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the
responsibility of our tenant.
7
Our tenants are directly responsible to pay for (i) remediation of environmental contamination they cause and
compliance with various environmental laws and regulations as the operators of our properties, and (ii) environmental
liabilities allocated to them under the terms of our leases and various other agreements. Generally, the liability for the
retirement and decommissioning or removal of USTs and other equipment is the responsibility of our triple-net tenants. We
are contingently liable for these obligations in the event that our tenants do not satisfy their responsibilities. A liability has
not been accrued for obligations that are the responsibility of our tenants (other than Marketing’s environmental obligations
which we accrued in the fourth quarter of 2011). However, there can be no assurance that our assessments are correct or that
our tenants who have paid their obligations in the past will continue to do so.
For additional information please refer to “Item 1A. Risk Factors” and to “Liquidity and Capital Resources,”
“Environmental Matters”, ”Contractual Obligations” in “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” which appear in Item 7. and note 6 in “Item 8. Financial Statements and Supplementary Data — Notes
to Consolidated Financial Statements.” in this Annual Report on Form 10-K.
Personnel
As of March 18, 2013, we had 37 employees.
Access to our filings with the Securities and Exchange Commission and Corporate Governance Documents
Our website address is www.gettyrealty.com. Our address, phone number and a list of our officers is available on our
website. Our website contains a hyperlink to the EDGAR database of the Securities and Exchange Commission (the “SEC”)
at www.sec.gov where you can access, free-of-charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after such reports are
filed. Our website also contains our business conduct guidelines, corporate governance guidelines and the charters of the
Compensation, Nominating/Corporate Governance and Audit Committees of our Board of Directors. We also will provide
copies of these reports and corporate governance documents free-of-charge upon request, addressed to Getty Realty Corp.,
125 Jericho Turnpike, Suite 103, Jericho, NY 11753, Attn: Investor Relations. Information available on or accessible through
our website shall not be deemed to be a part of this Annual Report on Form 10-K. You may read and copy any materials that
we file with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room
at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room
by calling the Securities and Exchange Commission at 1-800-SEC-0330.
Item 1A. Risk Factors
We are subject to various risks, many of which are beyond our control. As a result of these and other factors, we may
experience material fluctuations in our future operating results on a quarterly or annual basis, which could materially and
adversely affect our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. An
investment in our stock involves various risks, including those mentioned below and elsewhere in this Annual Report on
Form 10-K and those that are described from time to time in our other filings with the SEC.
We are repositioning our properties that were previously leased to Marketing. We expect to incur significant costs
associated with repositioning these properties and we expect to generate less net revenue after leasing or selling these
properties. The incurrence of these costs and receipt of less net revenue may materially negatively impact our cash flow
and ability to pay dividends.
We are in the process of repositioning the properties that were previously leased to Getty Petroleum Marketing Inc.
(“Marketing”) comprising a unitary premises pursuant to a master lease (the “Master Lease”). During 2012, we have entered
into long-term triple-net leases with respect to 443 of these properties. In addition, we have entered into month-to-month
license agreements and interim fuel supply arrangements with respect to our operating properties. The remaining properties
previously leased to Marketing are accounted for as held for sale, and are either subject to month-to-month licensing
agreements or are vacant. Our month-to-month license agreements allow the licensee to occupy and to use the properties for
gas stations, convenience stores, automotive repair service facilities or other businesses. We receive monthly payments from
the licensee-operators while remaining responsible for all operating expenses, including maintenance, repairs, real estate
taxes, insurance and general upkeep (“Property Expenditures”) and environmental costs. Dependent on factors related to each
site, we expect to directly pay for varying types of costs over a period of years for deferred maintenance, required
renovations, replacement of underground storage tanks and related equipment and zoning and permitting costs (“Capital
Improvements”). It is possible we may enter into additional long-term triple-net leases for certain of these properties with
tenants who are actively engaged in the business of retail petroleum marketing.
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We, or our tenants, have commenced eviction proceedings involving approximately 40 properties in various
jurisdictions against Marketing’s former subtenants (or sub-subtenants) who have not vacated our properties and occupy our
properties without rights. We are incurring significant costs, primarily legal expenses, in connection with such proceedings.
We are currently generating less net revenue from the leasing of these properties and we expect that following the
completion of the repositioning process, we will continue to generate less net revenue from these properties than previously
received from Marketing. In addition, dependent on factors related to each site we expect to directly pay for Property
Expenditures during the repositioning process and possibly thereafter and for Capital Improvements over a period of years.
It is possible that issues involved in re-letting or repositioning these properties may require significant management
attention that would otherwise be devoted to our ongoing business. The incurrence of these costs and receipt of less net
revenue from our properties that were subject to the Master Lease may materially negatively impact our cash flow and ability
to pay dividends.
Our future cash flow is dependent on the performance of our tenants of their lease obligations, renewal of existing leases
and either re-letting or selling our vacant properties.
We are subject to risks that financial distress, default or bankruptcy of our tenants may lead to vacancy at our
properties or disruption in rent receipts as a result of partial payment or nonpayment of rent or that expiring leases may not be
renewed. Under unfavorable general economic conditions, there can be no assurance that our tenants’ level of sales and
financial performance generally will not be adversely affected, which in turn, could impact the reliability of our rent receipts.
We are subject to risks that the terms governing renewal or re-letting of our properties (including the cost of required
renovations, replacement of underground storage tanks and related equipment or environmental remediation) may be less
favorable than current lease terms (or prior lease terms in the case of vacant properties). We are also subject to the risk that
we may receive less net proceeds from the properties we sell as compared to their current carrying value or that the value of
our properties may be adversely affected by unfavorable general economic conditions. Unfavorable general economic
conditions may also negatively impact our ability to re-let or sell our properties. Numerous properties compete with our
properties in attracting tenants to lease space. The number of available or competitive properties in a particular area could
have a material adverse effect on our ability to lease or sell our properties and on the rents we are able to charge. In addition
to the risk of disruption in rent receipts, we are subject to the risk of incurring real estate taxes, maintenance, environmental
and other expenses at vacant properties.
The financial distress, default or bankruptcy of our tenants may also lead to protracted and expensive processes for
retaking control of our properties than would otherwise be the case, including, eviction or other legal proceedings related to
or resulting from the tenant’s default. These risks are greater with respect to certain of our tenants who lease multiple
properties from us. If a tenant files for bankruptcy protection it is possible that we would recover substantially less than the
full value of our claims against the tenant. If our tenants do not perform their lease obligations; or we are unable to renew
existing leases and promptly recapture and re-let or sell vacant locations; or if lease terms upon renewal or re-letting are less
favorable than current lease terms; or if the values of properties that we sell are adversely affected by market conditions; or if
we incur significant costs or disruption related to or resulting from tenant financial distress, default or bankruptcy; then our
cash flow could be significantly adversely affected.
We are continuing our efforts to sell certain properties. We cannot predict the terms or timing of any such property
dispositions. If we do not obtain favorable terms on such dispositions, our operations and financial performance maybe
negatively impacted.
We are continuing our efforts to sell properties, including those properties which are accounted for as held for sale.
While we have dedicated considerable effort designed to increase sales activity, we cannot predict if or when property
dispositions will close and whether the terms of any such disposition will be favorable to us. It is likely that we will retain
environmental liabilities that exist with respect to that property or group of properties prior to the date of sale, to the extent
there is no third-party responsible therefor. If we do not obtain favorable terms on such dispositions, our operations and
financial performance will be negatively impacted.
We maintain significant pre-petition and post-petition claims against Marketing. We cannot provide any assurance that
our claims will be accepted or paid
As part of Marketing’s bankruptcy proceeding, we maintain significant pre-petition and post-petition claims against
Marketing. Certain of our claims are considered administrative claims and have priority over other claims. We have agreed to
cap our aggregate priority administrative claims at the amount of $10.5 million, together with interest from May 1, 2012 until
9
paid at the rate provided in the Master Lease. As of the date of this filing on Form 10-K, the outstanding unpaid principal
amount of our Administrative Claim is $7.4 million. We cannot predict how much of these unpaid obligations we will
ultimately collect, if any.
We have agreed to advance funds to the liquidating trustee of the Marketing Estate. We cannot give any assurance that we
will be repaid any amounts of our loans or be reimbursed for our legal fees.
The Bankruptcy Court has appointed a liquidating trustee to oversee the liquidation of the Marketing estate (the
“Marketing Estate”). In December 2011, the Marketing Estate filed a lawsuit against Marketing’s former parent, Lukoil
Americas Corporation, and certain of its affiliates (collectively, “Lukoil”), as well as the former directors and officers of
Marketing (the “Lukoil Complaint”). The Lukoil Complaint asserts, among other claims, that Marketing’s sale of assets to
Lukoil in November 2009 constituted a fraudulent conveyance, and that the assets or their value can be recovered from
Lukoil. In addition, the Lukoil Complaint asserts that the former directors and officers violated their fiduciary duties to
Marketing in approving and effectuating the challenged sale, and are liable for money damages. The Liquidating Trustee is
pursuing these claims for the benefit of the Marketing Estate.
In October 2012, we entered into an agreement with the Marketing Estate to make loans and otherwise fund up to an
aggregate amount of $6.4 million to fund the prosecution of the Lukoil Complaint and certain expenses incurred by the
Marketing Estate (the “Litigation Funding Agreement”). It is possible that we may agree to advance amounts in excess of
$6.4 million. We advanced $1.7 million in the fourth quarter of 2012 and $0.1 million in the first quarter of 2013 to the
Marketing Estate pursuant to the Litigation Funding Agreement. The Litigation Funding Agreement also provides that we are
entitled to be reimbursed for up to $1.3 million of our legal fees in connection with the Litigation Funding Agreement. Based
on the terms of the Litigation Funding Agreement, we have recorded a receivable of $3.0 million as of December 31, 2012,
which includes amounts advanced and amounts due for reimbursable legal fees we incurred in connection with the Litigation
Funding Agreement. Payments that we receive pursuant to the Litigation Funding Agreement will not reduce our
Administrative Claim or our other pre-petition and post-petition claims against Marketing. A portion of the payments we
receive pursuant to the Litigation Funding Agreement may be subject to federal income taxes. We cannot provide any
assurance that we will be repaid any amounts we advance pursuant to the Litigation Funding Agreement or the reimbursable
legal fees we have incurred.
Our accounting policies and methods are fundamental to how we record and report our financial position and results of
operations, and they require management to make estimates, judgments and assumptions about matters that are
inherently uncertain.
Our accounting policies and methods are fundamental to how we record and report our financial position and results of
operations. We have identified several accounting policies as being critical to the presentation of our financial position and
results of operations because they require management to make particularly subjective or complex judgments about matters
that are inherently uncertain and because of the likelihood that materially different amounts would be recorded under
different conditions or using different assumptions. We cannot provide any assurance that we will not make subsequent
significant adjustments to our consolidated financial statements. Estimates, judgments and assumptions underlying our
consolidated financial statements include, but are not limited to, receivables and related reserves, deferred rent receivable,
income under direct financing leases, asset retirement obligations including environmental remediation obligations, real
estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued liabilities, income taxes and
allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed.
If our accounting policies, methods, judgments, assumptions and allocations prove to be incorrect, or if circumstances
change, our business, financial condition, revenues, operating expense, results of operations, liquidity, ability to pay
dividends or stock price may be materially adversely affected.
We are dependent on external sources of capital which may not be available on favorable terms, or at all.
We are dependent on external sources of capital to maintain our status as a REIT and must distribute to our
shareholders each year at least 90% of our net taxable income, excluding any net capital gain. Because of these distribution
requirements, it is not likely that we will be able to fund all future capital needs, including acquisitions, from income from
operations. Therefore, we will have to continue to rely on third-party sources of capital, which may or may not be available
on favorable terms, or at all.
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Our principal sources of liquidity are our cash flows from operations, funds available under our Credit Agreement that
matures in August 2015, and available cash and cash equivalents. On February 25, 2013, we entered into a $175 million
senior secured revolving credit agreement (the “Credit Agreement”) with a group of commercial banks led by JPMorgan
Chase Bank, N.A. (the “Bank Syndicate”), which is scheduled to mature in August 2015 and a $100 million senior secured
long-term loan agreement with the Prudential Insurance Company of America (the “Prudential Loan Agreement”), which
matures in February 2021. On February 25, 2013, we also repaid and terminated our existing credit agreement with a group
of commercial banks led by JPMorgan Chase Bank, N.A. and our term loan agreement with TD Bank. For additional
information, please refer to “Credit Agreement” and “Prudential Loan Agreement” in “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” which appears in this Annual
Report on Form 10-K.
Our ability to meet the financial and other covenants relating to our Credit Agreement and our Prudential Loan
Agreement is dependent on our continued ability to meet certain criteria as further described in note 4 in “Item 8. Financial
Statements and Supplementary Data – Notes to Consolidated Financial Statements” and the performance of our tenants. If we
are not in compliance with one or more of our covenants, which could result in an event of default under our Credit
Agreement or our Prudential Loan Agreement; there can be no assurance that our lenders would waive such non-compliance.
This could have a material adverse affect on our business, financial condition, results of operation, liquidity, ability to pay
dividends or stock price.
As part of our overall growth strategy, we regularly review acquisition and financing opportunities to acquire
additional properties, and we expect to continue to pursue acquisitions that we believe will benefit our financial performance.
To the extent that our current sources of liquidity are not sufficient to fund such acquisitions, we will require other sources of
capital, which may or may not be available on favorable terms or at all.
Our access to third-party sources of capital depends upon a number of factors including general market conditions, the
market’s perception of our growth potential, financial stability, our current and potential future earnings and cash
distributions, covenants and limitations imposed under our Credit Agreement and our Prudential Loan Agreement and the
market price of our common stock.
Our business operations may not generate sufficient cash for distributions or debt service.
There is no assurance that our business will generate sufficient cash flow from operations or that future borrowings will
be available to us in an amount sufficient to enable us to pay dividends on our common stock, to pay our indebtedness, or to
fund our other liquidity needs. We may not be able to repay or refinance existing indebtedness on favorable terms, which
could force us to dispose of properties on disadvantageous terms (which may also result in losses) or accept financing on
unfavorable terms.
We may acquire new properties, and this may create risks.
We may acquire or develop properties when we believe that an acquisition or development matches our business
strategies. These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue
potential. It is possible that the operating performance of these properties may decline after we acquire them, they may not
perform as expected and, if financed using debt or new equity issuances, may result in shareholder dilution. Our acquisition
of properties will expose us to the liabilities of those properties, some of which we may not be aware of at the time of
acquisition. We face competition in pursuing these acquisitions and we may not succeed in leasing acquired properties at
rents sufficient to cover their costs of acquisition and operations. Newly acquired properties may require significant
management attention that would otherwise be devoted to our ongoing business. We may not succeed in consummating
desired acquisitions. Consequences arising from or in connection with any of the foregoing could have a material adverse
effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
While we seek to grow through accretive acquisitions, acquisitions of properties may be dilutive and may not produce the
returns that we expect and we may not be able to successfully integrate acquired properties into our portfolio or manage
our growth effectively, which could have a material adverse effect on our results of operations, financial condition and
growth prospects.
Acquisitions of properties may initially be dilutive to our net income, and such properties may not perform as we
expect or produce the returns that we anticipate (including, without limitation, as a result of tenant bankruptcies, tenant
concessions, our inability to collect rents and higher than anticipated operating expenses). Further, we may not successfully
integrate one or more of these property acquisitions into our existing portfolio without operating disruptions or unanticipated
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costs. Additionally, to the extent we increase the size of our portfolio, we may not be able to adapt our management,
administrative, accounting and operational systems, or hire and retain sufficient operational staff to integrate acquired
properties into our portfolio or manage any future acquisitions of properties without operating disruptions or unanticipated
costs. Moreover, our continued growth will require increased investment in management personnel, professional fees, other
personnel, financial and management systems and controls and facilities, which will result in additional operating expenses.
Under the circumstances described above, our results of operations, financial condition and growth prospects may be
materially and adversely affected.
We are subject to risks inherent in owning and leasing real estate.
We are subject to varying degrees of risk generally related to leasing and owning real estate many of which are beyond
our control. In addition to general risks applicable to us, our risks include, among others:
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our liability as a lessee for long-term lease obligations regardless of our revenues,
deterioration in national, regional and local economic and real estate market conditions,
potential changes in supply of, or demand for, rental properties similar to ours,
competition for tenants and declining rental rates,
difficulty in selling or re-letting properties on favorable terms or at all,
impairments in our ability to collect rent or other payments due to us when they are due,
increases in interest rates and adverse changes in the availability, cost and terms of financing,
uninsured property liability,
the impact of present or future environmental legislation and compliance with environmental laws,
adverse changes in zoning laws and other regulations,
acts of terrorism and war,
acts of God,
the potential risk of functional obsolescence of properties over time,
the need to periodically renovate and repair our properties, and
physical or weather-related damage to our properties.
Each of these factors could cause a material adverse effect on our business, financial condition, results of operations,
liquidity, ability to pay dividends or stock price. In addition, real estate investments are relatively illiquid, which means that
our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited.
Adverse developments in general business, economic, or political conditions could have a material adverse effect on us.
Adverse developments in general business and economic conditions, including through recession, downturn or
otherwise, either in the economy generally or in those regions in which a large portion of our business is conducted, could
have a material adverse effect on us and significantly increase certain of the risks we are subject to. The general economic
conditions in the United States are, and for an extended period of time may be, significantly less favorable than that of prior
years. Among other effects, adverse economic conditions could depress real estate values, impact our ability to re-let or sell
our properties and have an adverse effect on our tenants’ level of sales and financial performance generally. Our revenues are
dependent on the economic success of our tenants and any factors that adversely impact our tenants could also have a
material adverse effect on our business, financial condition and results of operations, liquidity, ability to pay dividends or
stock price.
Substantially all of our tenants depend on the same industry for their revenues.
We derive substantially all of our revenues from leasing, primarily on a triple-net basis, and financing retail motor fuel
and convenience store properties to tenants in the petroleum marketing industry. Accordingly, our revenues are substantially
dependent on the economic success of the petroleum marketing industry, and any factors that adversely affect that industry,
such as disruption in the supply of petroleum or a decrease in the demand for conventional motor fuels due to conservation,
technological advancements in petroleum-fueled motor vehicles, or an increase in the use of alternative fuel vehicles, or
“green technology” could also have a material adverse effect on our business, financial condition and results of operations,
liquidity, ability to pay dividends or stock price. The success of participants in the petroleum marketing industry depends
upon the sale of refined petroleum products at margins in excess of fixed and variable expenses. The petroleum marketing
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industry is highly competitive and volatile. Petroleum products are commodities, the prices of which depend on numerous
factors that affect supply and demand. The prices paid by our tenants and other petroleum marketers for products are affected
by global, national and regional factors. A large, rapid increase in wholesale petroleum prices would adversely affect the
profitability and cash flows of our tenants if the increased cost of petroleum products could not be passed on to their
customers or if automobile consumption of gasoline was to decline significantly. We cannot be certain how these factors will
affect petroleum product prices or supply in the future, or how in particular they will affect our tenants.
Property taxes on our properties may increase without notice.
Each of the properties we own or lease is subject to real property taxes. The leases for certain of the properties that we
lease from third parties obligate us to pay real property taxes with regard to those properties. The real property taxes on our
properties and any other properties that we acquire or lease in the future may increase as property tax rates change and as
those properties are assessed or reassessed by tax authorities. To the extent that our tenants are not responsible for property
taxes pursuant to their contractual arrangements with us or are unable or unwilling to pay such increase in accordance with
their leases, our net operating expenses may increase.
We incur significant operating costs as a result of environmental laws and regulations which costs could significantly rise
and reduce our profitability.
We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the
protection of the environment. Under certain environmental laws, a current or previous owner or operator of real estate may
be liable for contamination resulting from the presence or discharge of hazardous or toxic substances or petroleum products
at, on, or under, such property, and may be required to investigate and clean-up such contamination. Such laws typically
impose liability and clean-up responsibility without regard to whether the owner or operator knew of or caused the presence
of the contaminants, or the timing or cause of the contamination, and the liability under such laws has been interpreted to be
joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. For example,
liability may arise as a result of the historical use of a property or from the migration of contamination from adjacent or
nearby properties. Any such contamination or liability may also reduce the value of the property. In addition, the owner or
operator of a property may be subject to claims by third parties based on injury, damage and/or costs, including investigation
and clean-up costs, resulting from environmental contamination present at or emanating from a property. The properties
owned or controlled by us are leased primarily as retail motor fuel and convenience store properties, and therefore may
contain, or may have contained, USTs for the storage of petroleum products and other hazardous or toxic substances, which
creates a potential for the release of such products or substances. Some of our properties may be subject to regulations
regarding the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous
materials, USTs and other equipment. Some of the properties may be adjacent to or near properties that have contained or
currently contain USTs used to store petroleum products or other hazardous or toxic substances. In addition, certain of the
properties are on, adjacent to, or near properties upon which others have engaged or may in the future engage in activities that
may release petroleum products or other hazardous or toxic substances. There may be other environmental problems
associated with our properties of which we are unaware. These problems may make it more difficult for us to re-let or sell our
properties on favorable terms, or at all.
For additional information with respect to pending environmental lawsuits and claims, and environmental remediation
obligations and estimates see “Item 3. Legal Proceedings”, “Environmental Matters” in “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and note 6 in “Item 8. Financial Statements and
Supplementary Data — Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.
We enter into leases and various other agreements which allocate responsibility for known and unknown environmental
liabilities by establishing the percentage and method of allocating responsibility between the parties. Our tenants are directly
responsible to pay for (i) remediation of environmental contamination they cause and compliance with various environmental
laws and regulations as the operators of our properties, and (ii) environmental liabilities allocated to them under the terms of
our leases and various other agreements. Generally, the liability for the retirement and decommissioning or removal of USTs
and other equipment is the responsibility of our triple-net tenants. We are contingently liable for these obligations in the event
that our tenants do not satisfy their responsibilities. A liability has not been accrued for obligations that are the responsibility
of our tenants (other than amounts accrued for the Marketing Environmental Liabilities accrued in the fourth quarter of
2011). However, there can be no assurance that our assessments are correct or that our tenants who have paid their
obligations in the past will continue to do so.
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We cannot provide any assurance that the programs under which we are reimbursed from state UST remediation funds
will continue to be available to us. Environmental exposures are difficult to assess and estimate for numerous reasons,
including the extent of contamination, alternative treatment methods that may be applied, location of the property which
subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate
contamination. In developing our liability for estimated environmental remediation obligations on a property by property
basis, we consider among other things, enacted laws and regulations, assessments of contamination and surrounding geology,
quality of information available, currently available technologies for treatment, alternative methods of remediation and prior
experience. Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the
remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined
and reasonably estimable. Adjustments to accrued liabilities for environmental remediation obligations will be reflected in
our financial statements as they become probable and a reasonable estimate of fair value can be made.
It is possible that our assumptions regarding the ultimate allocation methods and share of responsibility that we used to
allocate environmental liabilities may change, which may result in adjustments to the amounts recorded for environmental
litigation accruals and environmental remediation liabilities. We will be required to accrue for environmental liabilities that
we believe are allocable to others under various other agreements if we determine that it is probable that the counterparty will
not meet its environmental obligations. We may ultimately be responsible to pay for environmental liabilities as the property
owner if the counterparty fails to pay them.
We cannot predict what environmental legislation or regulations may be enacted in the future, or if or how existing
laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously
been applied. We cannot predict whether state UST fund programs will be administered and funded in the future in a manner
that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at
historical recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of existing laws which may develop in the future,
could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional
expenditures for future remediation.
As a result of the factors discussed above, or others, compliance with environmental laws and regulations could
have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends
or stock price.
We are defending pending lawsuits and claims and are subject to material losses.
We are subject to various lawsuits and claims, including litigation related to environmental matters, such as those
arising from leaking USTs and releases of motor fuel into the environment, and toxic tort claims. The ultimate resolution of
certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the
estimate of such loss. Our ultimate liabilities resulting from such lawsuits and claims, if any, could cause a material adverse
effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. For
additional information with respect to pending environmental lawsuits and claims and environmental remediation obligations
and estimates see “Item 3. Legal Proceedings” and “Environmental Matters” in “Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and notes 3 and 6 in “Item 8. Financial Statements and
Supplementary Data — Notes to Consolidated Financial Statements” in this Annual Report on Form 10-K.
A significant portion of our properties are concentrated in the Northeast and Mid-Atlantic regions of the United States,
and adverse conditions in those regions, in particular, could negatively impact our operations.
A significant portion of the properties we own and lease are located in the Northeast and Mid-Atlantic regions of the
United States. Because of the concentration of our properties in those regions, in the event of adverse economic conditions in
those regions, we would likely experience higher risk of default on payment of rent to us than if our properties were more
geographically diversified. Additionally, the rents on our properties may be subject to a greater risk of default than other
properties in the event of adverse economic, political, or business developments or natural hazards that may affect the
Northeast or Mid-Atlantic United States and the ability of our lessees to make rent payments. This lack of geographical
diversification could have a material adverse effect on our business, financial condition, results of operations, liquidity,
ability to pay dividends or stock price.
14
We are in a competitive business.
The real estate industry is highly competitive. Where we own properties, we compete for tenants with a large number
of real estate property owners and other companies that sublet properties. Our principal means of competition are rents we are
able to charge in relation to the income producing potential of the location. In addition, we expect other major real estate
investors, some with much greater financial resources or more experienced personnel than we have, will compete with us for
attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing
companies, other REITs, public and private investment funds and other individual and institutional investors. This
competition has increased prices for properties we seek to acquire and may impair our ability to make suitable property
acquisitions on favorable terms in the future.
We are exposed to counterparty risk and there can be no assurances that we will effectively manage or mitigate this risk.
We regularly interact with counterparties in various industries. The types of counterparties most common to our
transactions and agreements include, but are not limited to, landlords, tenants, vendors and lenders. Our most significant
counterparties include, but are not limited to the members of the Bank Syndicate related to our Credit Agreement and the
lender that is the counterparty to the Prudential Loan Agreement and one of our tenants from whom we derive a significant
amount of revenue. The default, insolvency or other inability of a significant counterparty to perform its obligations under an
agreement or transaction, including, without limitation, as a result of the rejection of an agreement or transaction in
bankruptcy proceedings, could have a material adverse effect on us. One of our tenants, CPD NY Energy Corp., a subsidiary
of Chestnut Petroleum Dist. (together with its affiliates, “CPD”), represents 18% and 12% of our revenues from rental
properties for 2012 and 2011, respectively, and 26% and 12% of our annualized rental revenues from rental properties for
2012 and 2011, respectively. It is possible that as a result of either acquiring additional properties from CPD or as a result of
disposing some of our existing properties, CPD could account for a greater percentage of our revenues from rental properties.
We may also undertake additional transactions with our other existing tenants which would further concentrate our sources of
revenues. Therefore, the failure of a major tenant is likely to have a material adverse effect on our business, financial
condition, results of operations, liquidity, ability to pay dividends or stock price.
We are subject to losses that may not be covered by insurance.
We, and certain of our tenants, carry insurance against certain risks and in such amounts as we believe are customary
for businesses of our kind. However, as the costs and availability of insurance change, we may decide not to be covered
against certain losses (such as certain environmental liabilities, earthquakes, hurricanes, floods and civil disorder) where, in
the judgment of management, the insurance is not warranted due to cost or availability of coverage or the remoteness of
perceived risk. There is no assurance that these insurance coverages are or will be sufficient to cover actual losses incurred.
The destruction of, or significant damage to, or significant liabilities arising out of conditions at, our properties due to an
uninsured cause would result in an economic loss and could result in us losing both our investment in, and anticipated profits
from, such properties. When a loss is insured, the coverage may be insufficient in amount or duration, or a lessee’s customers
may be lost, such that the lessee cannot resume its business after the loss at prior levels or at all, resulting in reduced rent or a
default under its lease. Any such loss relating to a large number of properties could have a material adverse effect on our
business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
Failure to qualify as a REIT under the federal income tax laws would have adverse consequences to our shareholders.
We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. We cannot; however,
guarantee that we will continue to qualify in the future as a REIT. We cannot give any assurance that new legislation,
regulations, administrative interpretations or court decisions will not significantly change the requirements relating to our
qualification. If we fail to qualify as a REIT, we would not be allowed a deduction for distributions to shareholders in
computing our taxable income and will again be subject to federal income tax at regular corporate rates, we could be subject
to the federal alternative minimum tax, we could be required to pay significant income taxes and we would have less money
available for our operations and distributions to shareholders. This would likely have a significant adverse effect on the value
of our securities. We could also be precluded from treatment as a REIT for four taxable years following the year in which we
lost the qualification, and all distributions to shareholders would be taxable as regular corporate dividends to the extent of our
current and accumulated earnings and profits. Loss of our REIT status could have a material adverse effect on our business,
financial condition, results of operations, liquidity, ability to pay dividends or stock price.
15
We are exposed to interest rate risk and there can be no assurances that we will manage or mitigate this risk effectively.
We are exposed to interest rate risk, primarily as a result of our Credit Agreement. Borrowings under our Credit
Agreement bear interest at a floating rate. Accordingly, an increase in interest rates will increase the amount of interest we
must pay under our Credit Agreement. Our interest rate risk may materially change in the future if we increase our
borrowings under the Credit Agreement, or amend our Credit Agreement or Prudential Loan Agreement, seek other sources
of debt or equity capital or refinance our outstanding debt. A significant increase in interest rates could also make it more
difficult to find alternative financing on desirable terms. (For additional information with respect to interest rate risk, see
“Item 3. Quantitative and Qualitative Disclosures About Market Risks,” as filed with this Annual Report on Form 10-K.)
Future issuances of equity securities could dilute the interest of holders of our equity securities.
Our future growth will depend upon our ability to raise additional capital. If we were to raise additional capital through
the issuance of equity securities, we could dilute the interest of holders of our common stock. The interest of our common
stockholders could also be diluted by the issuance of shares of common stock pursuant to stock incentive plans. Accordingly,
the Board of Directors may authorize the issuance of equity securities that could dilute, or otherwise adversely affect, the
interest of holders of our common stock.
We may change our dividend policy and the dividends we pay may be subject to significant volatility.
The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and
composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on such
factors as the Board of Directors deems relevant. In addition, our Credit Agreement and our Prudential Loan Agreement
prohibit the payments of dividends during certain events of default. During 2011 and 2012, the Board of Directors
significantly reduced, eliminated and then reinstated at a significantly reduced rate, our quarterly dividend. (See the table of
cash dividends declared in 2011 and 2012 in “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchase of Equity Securities” for additional information.) No assurance can be given that our financial
performance in the future will permit our payment of any dividends or that the amount of dividends we pay, if any, will not
fluctuate significantly.
Under the Maryland General Corporation Law, our ability to pay dividends would be restricted if, after payment
of the dividend, (1) we would not be able to pay indebtedness as it becomes due in the usual course of business or
(2) our total assets would be less than the sum of our liabilities plus the amount that would be needed, if we were to be
dissolved, to satisfy the rights of any shareholders with liquidation preferences. There currently are no shareholders
with liquidation preferences.
To qualify for taxation as a REIT, we must, among other requirements such as those related to the composition of our
assets and gross income, distribute annually to our stockholders at least 90% of our taxable income, including taxable income
that is accrued by us without a corresponding receipt of cash. We cannot provide any assurance that our cash flows will
permit us to continue paying cash dividends. The Internal Revenue Service (“IRS”) has allowed the use of a procedure, as a
result of which we could satisfy the REIT income distribution requirement by making a distribution on our common stock
comprised of (i) shares of our common stock having a value of up to 80% of the total distribution and (ii) cash in the
remaining amount of the total distribution, in lieu of paying the distribution entirely in cash. In order to use this procedure,
we would need to seek and obtain a private letter ruling of the IRS to the effect that the procedure is applicable to our
situation. Without obtaining such a private letter ruling, we cannot provide any assurance that we will be able to satisfy our
REIT income distribution requirement by making distributions payable in whole or in part in shares of our common stock. It
is also possible that instead of distributing 100% of our taxable income on an annual basis, we may decide to retain a portion
of our taxable income and to pay taxes on such amounts as permitted by the IRS. In the event that we pay a portion of a
dividend in shares of our common stock, taxable U.S. shareholders would be required to pay tax on the entire amount of the
dividend, including the portion paid in shares of common stock, in which case such shareholders might have to pay the tax
using cash from other sources. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the sales
proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our
common stock at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold
U.S. tax with respect to such dividend, including in respect of all or a portion of such dividend that is payable in stock. In
addition, if a significant number of our shareholders sell shares of our common stock in order to pay taxes owed on
dividends, such sales would put downward pressure on the market price of our common stock.
16
As a result of the factors described herein and elsewhere in this Annual Report on Form 10-K and those that are
described from time to time in our other filings with the SEC., we may experience material fluctuations in future operating
results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, revenues,
operating expenses, results of operations, liquidity, ability to pay dividends or our stock price.
Changes in market conditions could adversely affect the market price of our publicly traded common stock.
As with other publicly traded securities, the market price of our publicly traded common stock depends on various
market conditions, which may change from time-to-time. Among the market conditions that may affect the market price of
our publicly traded common stock are the following:
•
•
•
•
•
•
•
our financial condition and performance and that of our significant tenants,
the market’s perception of our growth potential and potential future earnings,
the reputation of REITs generally and the reputation of REITs with portfolios similar to us,
the attractiveness of the securities of REITs in comparison to securities issued by other entities (including
securities issued by other real estate companies),
an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in
relation to the price paid for publicly traded securities,
the extent of institutional investor interest in us, and
general economic and financial market conditions.
In order to preserve our REIT status, our charter limits the number of shares a person may own, which may discourage a
takeover that could result in a premium price for our common stock or otherwise benefit our stockholders.
Our charter, with certain exceptions, authorizes our Board of Directors to take such actions as are necessary and
desirable to preserve our qualification as a REIT for federal income tax purposes. Unless exempted by our Board of
Directors, no person may actually or constructively own more than 5% (by value or number of shares, whichever is more
restrictive) of the outstanding shares of our common stock or the outstanding shares of any class or series of our preferred
stock, which may inhibit large investors from desiring to purchase our stock. This restriction may have the effect of delaying,
deferring, or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer, or sale of
all or substantially all of our assets) that might provide a premium price for our common stock or otherwise be in the best
interest of our stockholders.
Maryland law may discourage a third-party from acquiring us.
We are subject to the provisions of Maryland Business Combination Act (the “Business Combination Act”) which
prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested
stockholder for 5 (five) years after the most recent date on which the interested stockholder becomes an interested
stockholder. Generally, pursuant to the Business Combination Act, an “interested stockholder” is a person who, together with
affiliates and associates, beneficially owns, directly or indirectly, 10% or more of a Maryland corporation’s voting stock.
These provisions could have the effect of delaying, preventing or deterring a change in control of our company or reducing
the price that certain investors might be willing to pay in the future for shares of our capital stock. Additionally, the Maryland
Control Share Acquisition Act may deny voting rights to shares involved in an acquisition of one-tenth or more of the voting
stock of a Maryland corporation. In our charter and bylaws, we have elected not to have the Maryland Control Share
Acquisition Act apply to any acquisition by any person of shares of stock of our Company. However, in the case of the
control share acquisition statute, our Board of Directors may opt to make this statute applicable to us at any time by
amending our bylaws, and may do so on a retroactive basis. Finally, the “unsolicited takeovers” provisions of the Maryland
General Corporation Law permit our Board of Directors, without stockholder approval and regardless of what is currently
provided in our charter or bylaws, to implement certain provisions that may have the effect of inhibiting a third-party from
making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of our Company
under circumstances that otherwise could provide the holders of our common stocks with the opportunity to realize a
premium over the then current market price or that stockholders may otherwise believe is in their best interests.
17
Inflation may adversely affect our financial condition and results of operations.
Although inflation has not materially impacted our results of operations in the recent past, increased inflation could
have a more pronounced negative impact on any variable rate debt we incur in the future and on our results of operations.
During times when inflation is greater than increases in rent, as provided for in our leases, rent increases may not keep up
with the rate of inflation. Likewise, even though our triple-net leases reduce our exposure to rising property expenses due to
inflation, substantial inflationary pressures and increased costs may have an adverse impact on our tenants if increases in
their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent.
The loss of certain members of our management team could adversely affect our business.
We depend upon the skills and experience of our executive officers. Loss of the services of any of them could have a
material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock
price. Except for the employment agreement with our President and Chief Executive Officer, David B. Driscoll, we do not
have employment agreements with any of our executives.
Amendments to the Accounting Standards Codification made by the Financial Accounting Standards Board (the
“FASB”) or changes in accounting standards issued by other standard-setting bodies may adversely affect our reported
revenues, profitability or financial position.
Our financial statements are subject to the application of GAAP in accordance with the Accounting Standards
Codification, which is periodically amended by the FASB. The application of GAAP is also subject to varying interpretations
over time. Accordingly, we are required to adopt amendments to the Accounting Standards Codification or comply with
revised interpretations that are issued from time-to-time by recognized authoritative bodies, including the FASB and the SEC.
Those changes could adversely affect our reported revenues, profitability or financial position.
Terrorist attacks and other acts of violence or war may affect the market on which our common stock trades, the markets
in which we operate, our operations and our results of operations.
Terrorist attacks or other acts of violence or war could affect our business or the businesses of our tenants. The
consequences of armed conflicts are unpredictable, and we may not be able to foresee events that could have a material
adverse effect on us. More generally, any of these events could cause consumer confidence and spending to decrease or result
in increased volatility in the United States and worldwide financial markets and economy. Terrorist attacks also could be a
factor resulting in, or a continuation of, an economic recession in the United States or abroad. Any of these occurrences could
have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or
stock price.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Nearly all of our properties are leased or sublet to petroleum distributors and retailers engaged in the sale of gasoline
and other motor fuel products, convenience store products and automotive repair services who are responsible for the
operations conducted at these properties and for the payment of taxes, maintenance, repair, insurance and other operating
expenses relating to our properties. In those instances where we determine that the best use for a property is no longer as a
retail motor fuel outlet, we will seek an alternative tenant or buyer for the property. As of December 31, 2012, we lease or
sublet approximately 20 of our properties for uses such as quick serve restaurants, automobile sales and other retail purposes,
excluding approximately 40 properties previously subject to the Master Lease with Marketing which are currently held for
sale and which have temporary occupancies.
18
The following table summarizes the geographic distribution of our properties at December 31, 2012. The table also
identifies the number and location of properties we lease from third-parties. In addition, we lease 5,800 square feet of office
space at 125 Jericho Turnpike, Jericho, New York, which is used for our corporate headquarters, which we believe will
remain suitable and adequate for such purposes for the immediate future.
OWNED BY
GETTY
REALTY
LEASED BY
GETTY
REALTY
TOTAL
PROPERTIES
BY STATE
New York ........................................................................
Massachusetts..................................................................
New Jersey ......................................................................
Connecticut .....................................................................
Pennsylvania ...................................................................
New Hampshire ...............................................................
Maryland .........................................................................
Virginia ...........................................................................
Rhode Island ...................................................................
Texas ...............................................................................
Maine ..............................................................................
Hawaii .............................................................................
California ........................................................................
Delaware .........................................................................
North Carolina .................................................................
Florida .............................................................................
Ohio.................................................................................
Arkansas ..........................................................................
Illinois .............................................................................
North Dakota ...................................................................
Vermont ..........................................................................
Total .........................................................................
296
150
108
86
96
47
42
27
15
17
12
10
8
8
8
6
4
3
1
1
1
946
61
24
16
18
2
5
2
3
2
—
—
—
1
1
—
—
—
—
—
—
—
135
357
174
124
104
98
52
44
30
17
17
12
10
9
9
8
6
4
3
1
1
1
1,081
PERCENT
OF TOTAL
PROPERTIES
33.0%
16.1
11.5
9.6
9.1
4.8
4.1
2.8
1.6
1.6
1.1
0.9
0.8
0.8
0.7
0.5
0.4
0.3
0.1
0.1
0.1
100.0%
(1)
Includes nine terminal properties which are being marketed for sale owned in New York, New Jersey, Connecticut and
Rhode Island.
The properties that we lease from third-parties have a remaining lease term, including renewal option terms, averaging
over 11 years. The following table sets forth information regarding lease expirations, including renewal and extension option
terms, for properties that we lease from third-parties:
CALENDAR YEAR
2013 .............................................................................................................
2014 .............................................................................................................
2015 .............................................................................................................
2016 .............................................................................................................
2017 .............................................................................................................
Subtotal ........................................................................................................
Thereafter .....................................................................................................
Total .............................................................................................................
NUMBER OF
LEASES
EXPIRING
9
3
7
4
6
29
106
135
PERCENT
OF TOTAL
LEASED
PROPERTIES
6.67
2.22
5.19
2.96
4.44
21.48
78.52
100.00 %
PERCENT
OF TOTAL
PROPERTIES
0.83
0.28
0.65
0.37
0.55
2.68
9.81
12.49%
We have rights-of-first refusal to purchase or lease 90 of the properties we lease from third-parties. Approximately
71% of the properties we lease from third-parties are subject to automatic renewal or extension options.
For the year ended December 31, 2012 revenues from rental properties in continuing and discontinued operations included
$104.8 million of rent contractually due or received with respect to 1,128 average rental properties held during the year or an
average annual rent contractually due or received of approximately $93,000 per rental property. For the year ended December 31,
2011 revenues from rental properties in continuing and discontinued operations included $110.4 million of rent contractually due or
received with respect to 1,154 average rental properties held during the year or an average annual rent contractually due or received
of approximately $96,000 per rental property. The net revenue we are realizing from the properties that were previously subject to
the Master Lease is less than the contractual rent we received from Marketing under the Master Lease.
19
Rental unit expirations and the annualized contractual rent as of December 31, 2012 are as follows (in thousands,
except for the number of rental units data):
CALENDAR YEAR
2013 .......................................................................................................
2014 .......................................................................................................
2015 .......................................................................................................
2016 .......................................................................................................
2017 .......................................................................................................
2018 .......................................................................................................
2019 .......................................................................................................
2020 .......................................................................................................
2021 .......................................................................................................
2022 .......................................................................................................
Thereafter ...............................................................................................
Total .......................................................................................................
NUMBER OF
RENTAL
UNITS
EXPIRING (b)
244
29
22
17
35
14
66
39
43
2
576
1,087 $
ANNUALIZED
CONTRACTUAL
RENT(a)
PERCENTAGE
OF TOTAL
ANNUALIZED
RENT
13.7
2.3
0.9
1.7
2.3
2.0
7.0
5.3
4.2
0.2
60.4
100.00%
10,543
1,776
668
1,269
1,742
1,550
5,382
4,076
3,241
147
46,315
76,709
(a) Represents the monthly contractual rent due from tenants under existing leases as of December 31, 2012 multiplied by
12. This amount excludes real estate tax reimbursements which are billed to the tenant when paid.
(b) Rental units include properties subdivided into multiple premises with separate tenants. Rental units also include
individual properties comprising a single “premises” as such term is defined under a unitary master lease related to
such properties. With respect to a unitary master lease that includes properties that we lease from third-parties, the
expiration dates for rental units refers to the dates that the leases with the third-parties expire and upon which date our
tenant must vacate those properties, not the expiration date of the unitary master lease itself.
In the opinion of our management, our owned and leased properties are adequately covered by casualty and liability
insurance. In addition, we generally require our tenants to provide insurance for all properties they lease from us, including
casualty, liability, pollution legal liability, fire and extended coverage in amounts and on other terms satisfactory to us. We
are evaluating potential capital expenditures and funding sources for properties that were previously subject to the Master
Lease and which are not currently subject to long-term leases. We have no current plans to make material improvements to
any of our properties other than the properties previously subject to the Master Lease with Marketing. However, our tenants
frequently make improvements to the properties leased from us at their expense. In certain of our new leases, we have
committed to co-invest as much as $14.1 million in capital improvements in our properties. We are not aware of any material
liens or encumbrances on any of our properties.
During 2012, we sold 54 properties for $15.4 million in the aggregate and as of the date of this filing, in 2013, we have
sold an additional 42 properties for $17.5 million in the aggregate, including one terminal. We are continuing our efforts to
sell approximately 60 properties that have previously had their underground storage tanks removed and eight petroleum
distribution terminals although alternatively we may seek to re-let some of these properties and terminals. With respect to the
terminals we own, it may be costly and time consuming for us or potential tenants or buyers to upgrade the terminal facilities
to competitive standards within the industry, obtain or renew operating permits and attract customers to store their petroleum
products at these locations. With respect to retail properties that are vacant or have had underground storage tanks and related
equipment removed, it may be more difficult or costly to re-let or sell such properties as gas stations because of capital costs
or possible zoning or permitting rights that are required and that may have lapsed during the period since gasoline was last
sold at the property. Conversely, it may be easier to re-let or sell properties where underground storage tanks and related
equipment have been removed if the property will not be used as a retail motor fuel outlet or if environmental contamination
has been or is being remediated. In accordance with Generally Accepted Accounting Principles, substantially all of these
properties have met the criteria to be classified as held for sale.
Since the Master Lease was structured as a “triple-net” lease, Marketing (as the lessee) had the responsibility for the
maintenance, repair, real estate taxes, insurance and general upkeep of these properties (“Property Expenditures”) during the
term of the Master Lease. Marketing failed to meet many of its obligations to undertake the Property Expenditures related to
our properties. In addition to having to incur the costs of the Property Expenditures, Marketing did not pay any additional
Property Expenditures for the period after termination of the Master Lease. We expect to incur significant costs over a period
of years to upgrade the properties to competitive standards within the industry for required renovations, replacement of
underground storage tanks and related equipment or environmental remediation, zoning and permitting (“Capital
20
Improvements”). We anticipate incurring significant Property Expenditures and Capital Improvement costs. It is also possible
that our estimates for environmental remediation and tank removal expenses relating to these properties will be higher than
the Marketing Environmental Liabilities that we have accrued and that issues involved in re-letting or repositioning these
properties may require significant management attention that would otherwise be devoted to our ongoing business.
Item 3. Legal Proceedings
We are engaged in a number of legal proceedings, many of which we consider to be routine and incidental to our business.
The following is a description of material legal proceedings, including those involving private parties and governmental
authorities under federal, state and local laws regulating the discharge of materials into the environment. We are vigorously
defending all of the legal proceedings involving us, including each of the legal proceedings matters listed below.
In 1991, the State of New York commenced an action in the Supreme Court, Albany County, against Kingston Oil
Supply Corp. (our former heating oil subsidiary), Charles Baccaro and Amos Post, Inc. The action seeks recovery for
reimbursement of investigation and remediating costs incurred by the New York Environmental Protection and Spill
Compensation Fund, together with interest and statutory penalties under the New York Navigation Law. We answered the
complaint on behalf of Kingston Oil Supply Corp. and Amos Post Inc. Thereafter, from approximately 1993 to November
2011, the case remained dormant except for a brief period in 2002 when the State of New York indicated an intention to
prosecute the lawsuit. In November 2011, the State of New York recommenced efforts to pursue its claims against us for
reimbursement of costs, interest and statutory penalties under the Navigation Law. We are asserting defenses to liability and
to damages.
In September 2004, the State of New York commenced an action against us, United Gas Corp., Costa Gas Station, Inc.,
The Ingraham Bedell Corporation, Exxon Mobil Corporation, Shell Oil Company, Shell Oil Products Company, Motiva
Enterprises, LLC, and related parties, in New York Supreme Court in Albany County seeking recovery for reimbursement of
investigation and remediation costs claimed to have been incurred by the New York Environmental Protection and Spill
Compensation Fund relating to contamination it alleges emanated from various retail motor fuel properties located in the
same vicinity in Uniondale, N.Y., including a site formerly owned by us and at which a petroleum release and cleanup
occurred. The complaint also seeks future costs for remediation, as well as interest and penalties. We have served an answer
to the complaint denying responsibility. Discovery in this case is ongoing.
In October 2007, we received a demand from the State of New York to pay costs allegedly arising from investigation
and remediation of petroleum spills that occurred at a property formerly owned by us and taken by eminent domain by the
State of New York in 1991. We responded to the State of New York’s demand and denied responsibility for reimbursement
of such costs. In August 2010, the State of New York’s commenced a lawsuit in New York Supreme Court, Albany County
against us, Bryant Taconic Corp. and related parties seeking damages under the New York Navigation Law. We have
interposed an answer asserting numerous affirmative defenses. Discovery in this case is ongoing.
In September 2008, we received a directive and notice of violation from the New Jersey Department of Environmental
Protection (“NJDEP”) calling for a remedial investigation and cleanup, to be conducted by us and Gary and Barbara Galliker,
individually and trading as Millstone Auto Service, Auto Tech, and other named parties, of petroleum-related contamination
found at a retail motor fuel property located in Millstone Township, New Jersey. We did not own or lease this property, but
did supply gas to the operator of this property in 1985 and 1986. We responded to the NJDEP, denying liability. In November
2009, the NJDEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment (the “Order and
Assessment”) to us, Marketing and Gary and Barbara Galliker, individually and trading as Millstone Auto Service. We have
filed a request for a hearing to contest the allegations of the Order and Assessment, but the date of the hearing has not yet
been scheduled.
In November 2009, an action was commenced by the State of New York in the Supreme Court, Albany County,
seeking the recovery of costs incurred in remediating alleged petroleum contamination down gradient of a gasoline station
formerly owned by us, and gasoline stations that were allegedly owned or operated by other named defendants, including
M&A Realty, Inc., Gas Land Petroleum, Inc., and Mid-Valley Oil Company. We answered the complaint, denying liability
and asserting affirmative defenses and cross claims against co-defendants. We have also tendered the matter to M&A Realty
Inc. for defense and indemnification as relates to discharges of petroleum that were reported on or after July 1994 at the site
which is the subject of allegations against us. This site was leased by us to M&A Realty Inc. in 1994 and sold to M&A Realty
Inc. in 2002. M&A Realty Inc. demanded defense and indemnity from us for contamination at this site as of 1994. The State
of New York has also commenced a separate but related action in the Supreme Court, Albany County, against us and M&A
Realty, Inc. seeking recovery of costs for clean-up of petroleum contamination at the site of the gas station which is the
subject of allegations against us and M&A Realty, Inc. in the first action. We answered the complaint, denying liability and
21
asserting affirmative defenses and cross claims against M&A Realty, Inc. We also tendered the matter to M&A Realty, Inc.
for indemnity on the same basis as in the first action, and M&A Realty, Inc. likewise has demanded defense and indemnity
from us on the same basis as it put forth in the first action. Discovery in these cases is ongoing.
MTBE Litigation
During 2010, we were defending 53 lawsuits brought on behalf of private and public water providers and governmental
agencies located in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont,
Virginia, and West Virginia. A majority of these cases were among the more than one hundred cases that were transferred
from various state and federal courts throughout the country and consolidated in the United States District Court for the
Southern District of New York for coordinated Multi-District Litigation (“MDL”) proceedings. The balance of these cases
against us were pending in the Supreme Court of New York, Nassau County. All of the cases against us alleged (and, as
described below with respect to one remaining case, continue to allege) various theories of liability due to contamination of
groundwater with methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) as the basis
for claims seeking compensatory and punitive damages. The cases named us as a defendant along with approximately fifty
petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE, including Irving Oil
Corporation, Mobil Oil Corporation, Sunoco, Inc., Texaco, Inc., Tosco Corporation, Unocal Corporation, Valero Energy
Corporation, Marathon Oil Company, Shell Oil Company, Giant Yorktown, Inc., BP Amoco Chemical Company, Inc.,
Atlantic Richfield Company, Coastal Oil New England, Inc., Chevron Texaco Corporation, Amerada Hess Corp., Chevron
U.S.A., Inc., CITGO Petroleum Corporation, ConocoPhillips Company, Exxon Mobil Corporation, Getty Petroleum
Marketing Inc., and Gulf Oil Limited Partnership. During 2010, we reached agreements to settle two plaintiff classes
covering 52 of the 53 pending cases. A settlement payment of $1.3 million was made during the third quarter of 2010
covering 27 cases and a settlement payment of $0.5 million was made during the first quarter of 2011 covering 25 cases.
Presently we remain a defendant in one MTBE case involving multiple locations throughout the State of New Jersey brought
by various governmental agencies of the State of New Jersey, including the NJDEP. This case is still in discovery stages.
We have provided a litigation reserve as to this remaining MDL case; however, there remains uncertainty as to the
accuracy of the allegations in this MTBE case as they relate to us, our defenses to the claims, and the aggregate possible
amount of damages for which we might be held liable.
Matters related to our Newark, New Jersey Terminal and the Lower Passaic River
In September 2003, we received a directive (the “Directive”) issued by the NJDEP under the New Jersey Spill
Compensation and Control Act. The Directive indicated that we are one of approximately 66 potentially responsible parties
for alleged Natural Resource Damages (“NRD” or “NRDs”) resulting from the discharges of hazardous substances along the
lower Passaic River (the “Lower Passaic River”). Other named recipients of the Directive are 360 North Pastoria
Environmental Corporation, Amerada Hess Corporation, American Modern Metals Corporation, Apollo Development and
Land Corporation, Ashland Inc., AT&T Corporation, Atlantic Richfield Assessment Company, Bayer Corporation, Benjamin
Moore & Company, Bristol Myers-Squibb, Chemical Land Holdings, Inc., Chevron Texaco Corporation, Diamond Alkali
Company, Diamond Shamrock Chemicals Company, Diamond Shamrock Corporation, Dilorenzo Properties Company,
Dilorenzo Properties, L.P., Drum Service of Newark, Inc., E.I. Dupont De Nemours and Company, Eastman Kodak
Company, Elf Sanofi, S.A., Fine Organics Corporation, Franklin-Burlington Plastics, Inc., Franklin Plastics Corporation,
Freedom Chemical Company, H.D. Acquisition Corporation, Hexcel Corporation, Hilton Davis Chemical Company, Kearny
Industrial Associates, L.P., Lucent Technologies, Inc., Marshall Clark Manufacturing Corporation, Maxus Energy
Corporation, Monsanto Company, Motor Carrier Services Corporation, Nappwood Land Corporation, Noveon Hilton Davis
Inc., Occidental Chemical Corporation, Occidental Electro-Chemicals Corporation, Occidental Petroleum Corporation, Oxy-
Diamond Alkali Corporation, Pitt-Consol Chemical Company, Plastics Manufacturing Corporation, PMC Global Inc.,
Propane Power Corporation, Public Service Electric & Gas Company, Public Service Enterprise Group, Inc., Purdue Pharma
Technologies, Inc., RTC Properties, Inc., S&A Realty Corporation, Safety-Kleen Envirosystems Company, Sanofi S.A., SDI
Divestiture Corporation, Sherwin Williams Company, SmithKline Beecham Corporation, Spartech Corporation, Stanley
Works Corporation, Sterling Winthrop, Inc., STWB Inc., Texaco Inc., Texaco Refining and Marketing Inc., Thomasset
Colors, Inc., Tierra Solution, Incorporated, Tierra Solutions, Inc., and Wilson Five Corporation.
The Directive provided, among other things, that the recipients thereof must conduct an assessment of the natural
resources that have been injured by the discharges into the Lower Passaic River and must implement interim compensatory
restoration for the injured natural resources. NJDEP alleges that our liability arises from alleged discharges originating from
our Newark, New Jersey Terminal site. We responded to the Directive by asserting that we were not liable. There has been no
material activity and/or communications by NJDEP with respect to the Directive since early after its issuance.
22
Effective May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative
Settlement Agreement and Order on Consent (“AOC”) with over 70 parties comprising a Cooperating Parties Group (“CPG”)
(many of whom are also named in the Directive) who have collectively agreed to perform a Remedial Investigation and
Feasibility Study (“RI/FS”) for the Lower Passaic River. We are a party to the AOC and are a member of the CPG. The
RI/FS is intended to address the investigation and evaluation of alternative remedial actions with respect to alleged damages
to the Lower Passaic River, and is scheduled to be completed in or about 2015. In connection with the RI/FS work, the CPG
has sampled river sediments at river mile 10.9. Subsequently, all members of the CPG except Occidental Chemical
Corporation (“Occidental”) entered into an Administrative Settlement Agreement and Order on Consent (“10.9 AOC”)
effective June 18, 2012 to perform certain remediation activities, including removal and capping of sediments at the river
mile 10.9 area and certain testing. Similar to the RI/FS work, the CPG entered into an interim allocation for the costs of the
river mile 10.9 work. EPA issued a Unilateral Order to Occidental directing Occidental to participate and contribute to the
cost of the river mile 10.9 work and discussions regarding Occidental’s participation in the river mile 10.9 work are ongoing.
Concurrently, the EPA is preparing a proposed Focused Feasibility Study (“FFS”) that the EPA claims will address sediment
issues in the lower eight miles of the Lower Passaic River. Based on the results of such sampling, the EPA may require
interim remediation activities at river mile 10.9 prior to the completion of the RI/FS, although the scope and allocation of
costs for such activities is not known at this time. The RI/FS and 10.9 AOC do not resolve liability issues for remedial work
or restoration of, or compensation for, natural resource damages to the Lower Passaic River, which are not known at this
time. As to such matters, separate proceedings or activities are currently ongoing.
In a related action, in December 2005, the State of New Jersey through various state agencies brought suit in the
Superior Court of New Jersey, Law Division, against certain parties to the Directive, Occidental Chemical Corporation,
Tierra Solutions, Inc., Maxus Energy Corporation and related entities which the State of New Jersey alleges are responsible
for various categories of past and future damages resulting from discharges of hazardous substances to the Passaic River by a
manufacturing facility located on Lister Avenue in Newark, NJ. In February 2009, certain of these defendants filed third-
party complaints against approximately 300 additional parties, including us and other members of the CPG, seeking
contribution for such parties’ proportionate share of response costs, cleanup and removal costs, and other damages, based on
their relative contribution to pollution of the Passaic River and adjacent bodies of water. We have answered the complaint,
denying responsibility for any discharges of hazardous substances released into the Passaic River. The litigation is still in a
pre-trial stage with a significant amount of discovery remaining, particularly as to third-parties.
We have made a demand upon Chevron/Texaco for indemnity under certain agreements between us and
Chevron/Texaco that allocate environmental liabilities for the Newark Terminal site between the parties. In response,
Chevron/Texaco has asserted that the proceedings and claims are still not yet developed enough to determine the extent to
which indemnities apply. We are engaged in discussions with Chevron/Texaco regarding our demands for indemnification,
and, to facilitate said discussions, in October 2009 entered into a Tolling/Standstill Agreement which tolls all claims by and
among Chevron/Texaco and us that relate to the various Lower Passaic River matters from May 8, 2007, until either party
terminates such Tolling/Standstill Agreement.
Our ultimate liability, if any, in the pending and possible future proceedings pertaining to the Lower Passaic River is
uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.
Item 4. Mine Safety Disclosures
None.
23
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
PART II
Securities
Capital Stock
Our common stock is traded on the New York Stock Exchange (symbol: “GTY”). There were approximately 18,600
beneficial holders of our common stock as of March 18, 2013, of which approximately 1,200 were holders of record. The
price range of our common stock and cash dividends declared with respect to each share of common stock during the years
ended December 31, 2012 and 2011 was as follows:
QUARTER ENDED
March 31, 2011 ....................................................................................................... $
June 30, 2011 ..........................................................................................................
September 30, 2011 ................................................................................................
December 31, 2011 .................................................................................................
March 31, 2012 .......................................................................................................
June 30, 2012 ..........................................................................................................
September 30, 2012 ................................................................................................
December 31, 2012 .................................................................................................
PRICE RANGE
HIGH
LOW
CASH
DIVIDENDS
PER SHARE
31.89 $
26.47
26.33
16.74
18.06
19.41
19.94
18.88
21.01 $
22.75
14.42
12.22
13.62
15.02
17.28
15.65
.4800
.4800
.2500
.2500
—
.1250
.1250
.1250
For a discussion of potential limitations on our ability to pay future dividends see “Item 1A. Risk Factors – We may
change our dividend policy and the dividends we pay may be subject to significant volatility,” and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.
Issuer Purchases of Equity Securities
None.
Sales of Unregistered Securities
None.
24
Comparison of Five-Year Cumulative Return*
Getty Realty Corp.
Standard & Poors 500
Peer Group
$107.31
$100.71
$79.67
$87.48
$75.15
$63.00
$161.18
$108.58
$95.67
$150.34
$130.02
$138.35
$91.67
$93.60
$72.37
Stock Performance Graph
$200.00
$150.00
$100.00
$100.00
$50.00
$0.00
12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012
Getty Realty Corp. ..........................................
Standard & Poors 500 .....................................
Peer Group ......................................................
12/31/2007
100.00
100.00
100.00
12/31/2008
87.48
63.00
75.15
12/31/2009
107.31
79.67
100.71
12/31/2010
150.34
91.67
130.02
12/31/2011
72.37
93.60
138.35
12/31/2012
95.67
108.58
161.18
Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2007 in
Getty Realty Corp. common stock, Standard & Poors 500, and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
We have chosen as our Peer Group the following companies: National Retail Properties, Entertainment Properties
Trust, Realty Income Corp. and Hospitality Properties Trust. We have chosen these companies as our Peer Group because a
substantial segment of each of their businesses is owning and leasing commercial properties. We cannot assure you that our
stock performance will continue in the future with the same or similar trends depicted in the graph above. We do not make or
endorse any predictions as to future stock performance.
This performance graph and related information shall not be deemed filed for the purposes of Section 18 of the
Exchange Act or otherwise subject to the liability of that Section and shall not be deemed to be incorporated by reference into
any filing that we make under the Securities Act or the Exchange Act.
25
Item 6. Selected Financial Data
GETTY REALTY CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(in thousands, except per share amounts and number of properties)
OPERATING DATA:
Total Revenues ............................................................... $ 102,168
Earnings from continuing operations ..............................
Earnings (loss) from discontinued operations.................
Net earnings ....................................................................
Diluted earnings per common share:
13,808(c)
(1,361)
12,447
2012
Earnings from continuing operations ...................
Net earnings .........................................................
Diluted weighted-average common shares outstanding ..
Cash dividends declared per share ..................................
FUNDS FROM OPERATIONS AND ADJUSTED
FUNDS FROM OPERATION (e):
Net earnings ....................................................................
Depreciation and amortization of real estate assets ........
Gains on dispositions of real estate ................................
Impairment charges ........................................................
Funds from operations ....................................................
Revenue Recognition Adjustments .................................
Allowance for deferred rental revenue ...........................
Acquisition costs ............................................................
Adjusted funds from operations ......................................
BALANCE SHEET DATA (AT END OF YEAR):
Real estate before accumulated depreciation and
0.41
0.37
33,395
0.375
12,447
13,700
(6,866)
13,942
33,223
(4,433)
—
—
28,790
amortization ............................................................. $ 562,316
640,581
172,320
372,749
Total assets .....................................................................
Debt ................................................................................
Shareholders’ equity .......................................................
NUMBER OF PROPERTIES:
Owned ............................................................................
Leased .............................................................................
Total properties ...............................................................
FOR THE YEARS ENDED DECEMBER 31,
2009(b)
2011(a)
2010
$ 102,921
$
9,424(d)
3,032
12,456
0.27
0.37
33,172
1.46
12,456
10,336
(968)
20,226
42,050
(1,163)
19,758
2,034
62,679
78,360 $ 74,326 $
40,867
10,833
51,700
33,810
13,239
47,049
1.46
1.84
27,953
1.91
1.37
1.89
24,767
1.89
51,700
9,738
(1,705)
—
59,733
(1,487)
—
—
58,246
47,049
11,027
(5,467)
1,135
53,744
(2,065)
—
—
51,679
2008
70,603
30,993
10,817
41,810
1.25
1.68
24,767
1.87
41,810
11,875
(2,787)
—
50,898
(2,593)
—
—
48,305
$ 615,854
635,089
170,510
372,169
$ 504,587 $ 503,874 $ 473,567
387,813
130,250
205,897
423,178 428,990
64,890 175,570
314,935 207,669
946
135
1,081
996
153
1,149
907
145
1,052
910
161
1,071
878
182
1,060
(a)
(b)
(c)
(d)
(e)
Includes (from the respective dates of the acquisition) the effect of the $111.6 million acquisition of 59 Mobil-branded gasoline station and
convenience store properties in a sale/leaseback and loan transaction with CPD NY Energy Corp. which were acquired on January 13, 2011 and the
effect of the $87.0 million acquisition of 66 Shell-branded gasoline station and convenience store properties in a sale/leaseback transaction with
Nouria Energy Ventures I, LLC which were acquired on March 31, 2011.
Includes (from the date of the acquisition) the effect of the $49.0 million acquisition of the real estate assets and improvements of 36 convenience
store properties from White Oak Petroleum LLC which were acquired on September 25, 2009.
Includes the effect of a $13.5 million accounts receivable reserve and the effect of a $6.3 million impairment charge, which are included in earnings
from continuing operations primarily related to certain properties previously leased to Marketing under the Master Lease. (For additional information
regarding Marketing and the Master Lease, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation –
General – Marketing and the Master Lease”.)
Includes the effect of a $19.3 million non-cash deferred rent receivable reserve, the effect of a $7.6 million accounts receivable reserve, and the effect
of a $15.9 million impairment charge, which are included in earnings from continuing operations primarily related to certain properties previously
leased to Marketing under the Master Lease. (For additional information regarding Marketing and the Master Lease, see “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations –General – Marketing and the Master Lease”.)
In addition to measurements defined by accounting principles generally accepted in the United States of America (“GAAP”), our management also
focuses on funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) to measure our performance. FFO is generally considered
to be an appropriate supplemental non-GAAP measure of the performance of real estate investment trusts (“REITs”). In accordance with the National
Association of Real Estate Investment Trusts’ modified guidance for reporting FFO, we have restated reporting of FFO to exclude non-cash
impairment charges. FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and
amortization of real estate assets, gains or losses on dispositions of real estate (including such non-FFO items reported in discontinued operations),
non-cash impairment charges, extraordinary items, and cumulative effect of accounting change. Other REITs may use definitions of FFO and/or
AFFO that are different than ours and; accordingly, may not be comparable. We believe that FFO and AFFO are helpful to investors in measuring
26
our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, our
fundamental operating performance. FFO excludes various items such as gains or losses from property dispositions, depreciation and amortization of
real estate assets, and non-cash impairment charges. In our case; however, GAAP net earnings and FFO typically include the impact of deferred
rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases and income recognized from direct
financing leases on the recognition of revenue from rental properties (collectively the “Revenue Recognition Adjustments”), as offset by the impact
of related collection reserves. GAAP net earnings and FFO from time to time may also include other unusual or infrequently occurring items.
Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants. In accordance with GAAP, the
aggregate minimum rent due over the current term of these leases are recognized on a straight-line (or an average) basis rather than when the
payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time
properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. Income from direct financing
leases is recognized over the lease terms using the effective interest method which produces a constant periodic rate of return on the net investments
in the leased properties. Management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less
Revenue Recognition Adjustments, allowance for deferred rental revenue, acquisition costs, and other unusual or infrequently occurring items. In
management’s view, AFFO provides a more accurate depiction than FFO of our fundamental operating performance related to: (i) the impact of
scheduled rent increases from operating leases; (ii) the rental revenue from acquired in-place leases; (iii) the impact of rent due from direct financing
leases; and (iv) the impact of other unusual or infrequently occurring items. Neither FFO nor AFFO represent cash generated from operating
activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a
measure of liquidity.
27
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-
Looking Statements”; the sections in Part II entitled “Item 1A. Risk Factors”; the selected financial data in “Item 6. Selected
Financial Data”; and the consolidated financial statements and related notes in “Item 8. Financial Statements and
Supplementary Data”.
GENERAL
Real Estate Investment Trust
We are a real estate investment trust (“REIT”) specializing in the ownership, leasing and financing of gas stations,
convenience stores, automotive repair service facilities and petroleum distribution terminals. As of December 31, 2012, we
owned 946 properties and leased from third parties 135 properties. We elected to be treated as a REIT under the federal
income tax laws beginning January 1, 2001. As a REIT, we are not subject to federal corporate income tax on the taxable
income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other
things, to distribute at least 90% of our ordinary taxable income to our shareholders each year.
Retail Petroleum Marketing Business
Our business model is to lease our properties on a triple-net basis primarily to petroleum distributors and to a lesser
extent to individual operators. Our tenants operate our properties directly or sublet our properties to operators who operate
their gas stations, convenience stores, automotive repair service facilities or other businesses at our properties. These tenants
are responsible for the operations conducted at these properties. Our triple-net tenants are generally responsible for the
payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties. Substantially all
of our tenants’ financial results depend on the sale of refined petroleum products and rental income from their subtenants. As
a result, our tenants’ financial results are highly dependent on the performance of the petroleum marketing industry, which is
highly competitive and subject to volatility. In those instances where we determine that the best use for a property is no
longer as a gas station, we will seek an alternative tenant or buyer for the property. As of December 31, 2012, approximately
20 of our properties are leased for uses such as quick serve restaurants, automobile sales and other retail purposes, excluding
approximately 40 properties previously subject to the Master Lease with Marketing which are currently held for sale and
which have temporary occupancies. (For additional information regarding our real estate business and our properties, see
“Item 1. Business — Real Estate Business” and “Item 2. Properties”.) (For information regarding factors that could adversely
affect us relating to our lessees, see “Part II, Item 1A. Risk Factors.)
Repositioning the Marketing Portfolio
More than 700 of the properties we own or lease as of December 31, 2012 were previously leased to Getty Petroleum
Marketing Inc. (“Marketing”) comprising a unitary premises pursuant to a master lease (the “Master Lease”) and we derived
a majority of our revenues from the leasing of these properties under the Master Lease. On December 5, 2011, Marketing
filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”). Marketing rejected the Master Lease pursuant to an Order issued by the Bankruptcy Court effective
April 30, 2012. Our efforts to reposition the Master Lease portfolio to date have resulted in the following:
Long-Term Triple-Net Leases. During the fourth quarter of 2012, we entered into four triple-net lease
agreements covering 161 operating properties with affiliates of Capital Petroleum Group, Lehigh Gas
Partners, Global Partners and BP North America. The properties subject to the leases are located in New York
City and the surrounding New York and New Jersey metropolitan areas. The leases have 15 year initial terms
with provisions for renewal terms and annual rent escalations.
During 2012, we entered into ten long-term triple-net unitary leases re-letting, in the aggregate, 443 operating
properties previously leased to Marketing. We entered into six of these leases covering 282 properties in the
second quarter of 2012 and four of these leases covering 161 properties in the fourth quarter of 2012. While
we anticipate that we may ultimately enter into additional triple-net leases on smaller portfolios in 2013, we
believe we have now completed all of the significant portfolio leases related to the repositioning of the
portfolio of properties previously leased to Marketing.
28
Remaining Operating Properties. Approximately 155 properties previously leased to Marketing and
operating as gas stations are subject to month-to-month license agreements and interim fuel supply
arrangements. We receive monthly occupancy payments directly from the licensee-operators while we remain
responsible for certain costs associated with the properties. These month-to-month license agreements allow
the licensees to occupy and use the properties as gas stations, convenience stores or automotive repair service
facilities, and require the licensee-operators to sell fuel provided exclusively by Global Partners, with whom
we have contracted for interim fuel supply. Under our agreement with Global, Global is the exclusive supplier
of fuel to these licensee operators and is required to pay us a fee based in part on gallons sold and we pay to
Global a monthly administrative service fee. Our month-to-month license agreements differ from our triple-
net lease arrangements in that, among other things, we are responsible for the payment of certain
environmental compliance costs and property operating expenses including maintenance and real estate taxes.
During the next 12 months, we intend to reposition these properties in order to maximize their value to us
taking into account each property’s intermediate and long-term investment requirements and potential. As a
result of this process, we expect that we may dispose of or lease these remaining properties, either individually
or in small portfolios. We also may make investments in certain of these properties in anticipation of leasing
them or by contribution to capital expenditures required to be made by our tenants. We cannot predict the
timing or the terms of any future sales or leases.
Property Dispositions. For the year ended December 31, 2012 we sold, for $15.4 million in aggregate, 54
properties previously leased to Marketing which had their underground storage tanks removed by Marketing.
As of the date of this Annual Report on Form 10-K, in 2013, we have sold an additional 42 properties for
$17.5 million, including one terminal. We continue a process of selling substantially all of the remaining
approximately 60 properties with underground storage tanks removed and eight terminals we own; however,
the timing of pending transactions may be affected by factors beyond our control and we cannot predict the
timing or terms of any future dispositions or leases. In accordance with GAAP, substantially all of these
properties have met the criteria to be classified as held for sale.
We are generating less net revenue from the leasing of properties that were previously subject to the Master Lease than
the contractual rent historically due from Marketing under the Master Lease. We expect that following the completion of the
repositioning process, we will continue to generate less net revenue from these properties than previously received from
Marketing under the Master Lease.
In 2012, we commenced paying operating expenses such as maintenance, repairs, real estate taxes, insurance and
general upkeep related to these properties (“Property Expenditures”) and certain environmental related liabilities and
expenses which Marketing was responsible to pay for (the “Marketing Environmental Liabilities”). Subject to various site-
specific factors, we expect to continue to pay for varying types of Property Expenditures, and capital improvements,
including replacing underground storage tanks and related equipment or other renovations (“Capital Improvements”), and
Marketing Environmental Liabilities over a period of years relating to the properties previously subject to the Master Lease.
In addition, we increased our number of tenants significantly and are performing property related functions previously
performed by Marketing, both of which have resulted in permanent increases in our annual operating expenses. Costs
involved with re-letting or repositioning properties formerly leased to Marketing and pursuit of our claims in connection with
Marketing’s bankruptcy resulted in temporary increases to our 2012 operating expenses. We incurred significant costs
associated with Marketing’s bankruptcy, including $3.9 million in legal and litigation expenses incurred for the year ended
December 31, 2012, of which $2.6 million is included in general and administrative expense and $1.3 million has been
recorded as a receivable as reimbursable to us pursuant to the Litigation Funding Agreement (defined below). We expect
certain costs, including repositioning costs and legal and litigation costs, to remain elevated in 2013.
We, or our tenants, have commenced eviction proceedings involving approximately 40 of our properties in various
jurisdictions against Marketing’s former subtenants (or sub-subtenants) who have not vacated our properties and most of
whom have not accepted license agreements with us or have not entered into new agreements with our distributor tenants and
therefore occupy our properties without right. We are incurring significant costs, primarily legal expenses, in connection with
such proceedings.
29
Marketing and the Master Lease
As described above, on December 5, 2011, Marketing filed for Chapter 11 bankruptcy protection in the Bankruptcy
Court. On March 7, 2012, we entered into a stipulation with Marketing and with the Official Committee of Unsecured
Creditors in the Bankruptcy proceedings (the “Creditors Committee”), which was approved and made an Order by the
Bankruptcy Court on April 2, 2012 (the “Stipulation”). Pursuant to the terms of the Stipulation, in addition to our other pre-
petition and post-petition claims, we are entitled to recover an administrative claim capped at $10.5 million for the partial
payment of fixed rent and performance of other obligations due from Marketing under the Master Lease from December 5,
2011 until possession of the properties subject to the Master Lease was returned to us effective April 30, 2012 (the
“Administrative Claim”). Our Administrative Claim has priority over the claims of other creditors and certain of our other
claims. As of the date of this filing on Form 10-K, the outstanding unpaid principal amount of our Administrative Claim is
$7.4 million.
The Bankruptcy Court has appointed a liquidating trustee (the “Liquidating Trustee”) to oversee the liquidation of the
Marketing estate (the “Marketing Estate”). The Liquidating Trustee continues to oversee the Marketing Estate and pursue
claims for the benefit of its creditors, including those related to the recovery of various deposits, including surety bonds,
insurance policy claims and claims made to state funded tank reimbursement programs. We received distributions reducing
our Administrative Claim of $1.3 million in the third and fourth quarters of 2012 and $1.7 million in the first quarter of 2013,
from the Marketing Estate. As a result, in 2012, we reversed portions of our bad debt reserve for uncollectible amounts due
from Marketing and reduced bad debt expense included in general and administrative expenses on our consolidated statement
of income. We cannot provide any assurance that we will ultimately collect any additional claims against or unpaid amounts
due from the Marketing Estate pursuant to the Plan of Liquidation, or otherwise.
In December 2011, the Marketing Estate filed a lawsuit against Marketing’s former parent, Lukoil Americas
Corporation, and certain of its affiliates (collectively, “Lukoil”), as well as the former directors and officers of Marketing (the
“Lukoil Complaint”). The Lukoil Complaint asserts, among other claims, that Marketing’s sale of assets to Lukoil in
November 2009 constituted a fraudulent conveyance, and that the assets or their value can be recovered from Lukoil. In
addition, the Lukoil Complaint asserts that the former directors and officers violated their fiduciary duties to Marketing in
approving and effectuating the challenged sale, and are liable for money damages. The Liquidating Trustee is pursuing these
claims for the benefit of the Marketing Estate. It is possible that the Liquidating Trustee will obtain a favorable judgment or
will settle with the defendants, and therefore it is possible that we may ultimately recover a portion of our claims against
Marketing, including our Administrative Claim, which has priority over most other creditors’ claims, and our additional pre-
petition and post-petition claims.
In October 2012, we entered into an agreement with the Marketing Estate to make loans and otherwise fund up to an
aggregate amount of $6.4 million to fund the prosecution of the Lukoil Complaint and certain Liquidating Trustee expenses
incurred in connection with the wind-down of the Marketing Estate (the “Litigation Funding Agreement”). This agreement
provides that we are entitled to receive proceeds, if any, from the successful prosecution of the Lukoil Complaint in an
amount equal to the sum of (i) all funds advanced for wind-down costs and expert witness and consultant fees plus interest
accruing at 15% per annum on such advances made by us; plus (ii) the greater of all funds advanced for legal fees and
expenses relating to the prosecution of the Lukoil Complaint plus interest accruing at 15% per annum on such advances made
by us, or 24% of the gross proceeds from any settlement or favorable judgment obtained by the Liquidating Trustee due to
the Lukoil Complaint. It is possible that we may agree to advance amounts in excess of $6.4 million. We advanced $1.7
million in the fourth quarter of 2012 and $0.1 million in the first quarter of 2013 to the Marketing Estate pursuant to the
Litigation Funding Agreement. The Litigation Funding Agreement also provides that we are entitled to be reimbursed for up
to $1.3 million of our legal fees in connection with the Litigation Funding Agreement. Based on the terms of the agreement,
we have recorded a receivable of $3.0 million as of December 31, 2012, which includes amounts advanced and amounts due
for reimbursable legal fees we incurred in connection with the Lukoil Litigation Agreement. Payments that we receive
pursuant to the Litigation Funding Agreement will not reduce our Administrative Claim or our other pre-petition and post-
petition claims against Marketing. A portion of the payments we receive pursuant to the Litigation Funding Agreement may
be subject to federal income taxes. We cannot provide any assurance that we will be repaid any amounts we advance pursuant
to the Litigation Funding Agreement or the reimbursable legal fees we have incurred.
Under the Master Lease, Marketing was responsible to pay for certain environmental related liabilities and expenses.
As a result of Marketing’s bankruptcy filing, we have accrued for the Marketing Environmental Liabilities and commenced
funding remediation activities during the second quarter of 2012 related to such accruals. We do not expect to be reimbursed
by Marketing for any such remediation activities except as a result of realizing a claim deriving from the Lukoil Complaint.
We expect to continue to incur and fund costs associated with the Marketing bankruptcy proceedings and associated eviction
proceedings as well as costs associated with repositioning properties previously leased to Marketing. We incurred $3.1
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million of lease origination costs in 2012, which deferred expense is recognized on a straight-line basis as a reduction of
revenues from rental properties over the terms of the various leases. We expect to continue to incur operating expenses such
as maintenance, repairs, real estate taxes, insurance and general upkeep related to these properties for vacant properties and
properties subject to our month-to-month license agreements. In certain of our new leases, we have also agreed to co-invest
as much as $14.1 million with our tenants to fund capital improvements including replacing underground storage tanks and
related equipment or renovating some of the properties previously leased to Marketing.
It is possible that our estimates for the Marketing Environmental Liabilities and other expenses relating to the
properties previously leased to Marketing will be higher than the amounts we have accrued and that issues involved in re-
letting or repositioning these properties may require significant management attention that would otherwise be devoted to our
ongoing business. In addition, we increased our number of tenants significantly and are performing property related functions
previously performed by Marketing, both of which have resulted in permanent increases in our annual operating expenses.
The incurrence of these various expenses may materially negatively impact our cash flow and ability to pay dividends.
Our estimates, judgments, assumptions and beliefs regarding Marketing and the Master Lease affect the amounts
reported in our financial statements and are subject to change. Actual results could differ from these estimates, judgments and
assumptions and such differences could be material. If our actual expenditures for the Marketing Environmental Liabilities
are greater than the amounts accrued, if we incur significant costs and operating expenses relating to the properties
comprising the Master Lease portfolio; if the repositioning of the properties comprising the Master Lease portfolio leads to a
protracted and expensive process for taking control and or re-letting our properties; if re-letting the properties comprising the
Master Lease portfolio requires significant management attention that would otherwise be devoted to our ongoing business; if
the Bankruptcy Court takes actions that are detrimental to our interests; if we are unable to re-let or sell the properties
comprising the Master Lease portfolio at all or upon terms that are favorable to us; or if we change our estimates, judgments,
assumptions and beliefs; our business, financial condition, revenues, operating expenses, results of operations, liquidity,
ability to pay dividends and stock price may continue to be materially adversely affected or adversely affected to a greater
extent than we have experienced. (For information regarding factors that could adversely affect us relating to our lessees,
including Marketing, see “Part II, Item 1A. Risk Factors.”)
Asset Impairment
We perform an impairment analysis for the carrying amount of our properties in accordance with GAAP when
indicators of impairment exist. During the years ended December 31, 2012 and 2011, we reduced the carrying amount to fair
value, and recorded in continuing and discontinued operations, non-cash impairment charges aggregating $13.9 million and
$20.2 million, respectively, where the carrying amount of the property exceeded the estimated undiscounted cash flows
expected to be received during the assumed holding period and the estimated net sales value expected to be received at
disposition. The non-cash impairment charges for the year ended December 31, 2012 were attributable to reductions in
estimated selling prices and increases in the carrying value for certain properties in conjunction with recording environmental
remediation obligations and related environmental asset retirement costs. The non-cash impairment charges for the year
ended December 31, 2011 were attributable to recording the Marketing Environmental Liabilities in the fourth quarter of
2011, reductions in real estate valuations and reductions in the assumed holding period used to test for impairment and
reductions in estimated selling prices.
Supplemental Non-GAAP Measures
We manage our business to enhance the value of our real estate portfolio and, as a REIT, place particular emphasis on
minimizing risk and generating cash sufficient to make required distributions to shareholders of at least 90% of our ordinary
taxable income each year. In addition to measurements defined by accounting principles generally accepted in the United
States of America (“GAAP”), our management also focuses on funds from operations available to common shareholders
(“FFO”) and adjusted funds from operations available to common shareholders (“AFFO”) to measure our performance. FFO
is generally considered to be an appropriate supplemental non-GAAP measure of the performance of REITs. In accordance
with the National Association of Real Estate Investment Trusts’ modified guidance for reporting FFO, we have restated
reporting of FFO for all periods presented to exclude non-cash impairment charges. FFO is defined by the National
Association of Real Estate Investment Trusts as net earnings before depreciation and amortization of real estate assets, gains
or losses on dispositions of real estate (including such non-FFO items reported in discontinued operations), non-cash
impairment charges, extraordinary items and cumulative effect of accounting change. Other REITs may use definitions of
FFO and/or AFFO that are different than ours and; accordingly, may not be comparable. Beginning in 2011, we revised our
definition of AFFO to exclude direct expensed costs related to property acquisitions and other unusual or infrequently
occurring items.
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We believe that FFO and AFFO are helpful to investors in measuring our performance because both FFO and AFFO
exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating
performance. FFO excludes various items such as gains or losses from property dispositions and depreciation and
amortization of real estate assets and non-cash impairment charges. In our case; however, GAAP net earnings and FFO
typically include the impact of the “Revenue Recognition Adjustments” comprised of deferred rental revenue (straight-line
rental revenue), the net amortization of above-market and below-market leases and income recognized from direct financing
leases on our recognition of revenues from rental properties, as offset by the impact of related collection reserves. GAAP net
earnings and FFO from time to time may also include property acquisition costs or other unusual or infrequently recurring
items. Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants. In
accordance with GAAP, the aggregate minimum rent due over the current term of these leases are recognized on a straight-
line (or average) basis rather than when payment is contractually due. The present value of the difference between the fair
market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from
rental properties over the remaining lives of the in-place leases. Income from direct financing leases is recognized over the
lease terms using the effective interest method which produces a constant periodic rate of return on the net investments in the
leased properties. Property acquisition costs are expensed, generally in the period when properties are acquired, and are not
reflective of normal operations. Other unusual or infrequently occurring items are not reflective of normal operations.
Management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as
FFO less Revenue Recognition Adjustments, property acquisition costs and other unusual or infrequently occurring items. In
management’s view, AFFO provides a more accurate depiction than FFO of our fundamental operating performance related
to: (i) the impact of scheduled rent increases from operating leases, net of related collection reserves; (ii) the rental revenue
earned from acquired in-place leases; (iii) the impact of rent due from direct financing leases; (iv) our operating expenses
(exclusive of direct expensed operating property acquisition costs); and (v) other unusual or infrequently occurring items.
Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore
these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity. For a
reconciliation of FFO and AFFO, see “Item 6. Selected Financial Data”.
2012, 2011 and 2010 Acquisitions
In 2012, we acquired fee or leasehold title to five gasoline station and convenience store properties in separate
transactions for an aggregate purchase price of $5.2 million.
On January 13, 2011, we acquired fee or leasehold title to 59 Mobil-branded gasoline station and convenience store
properties and also took a security interest in six other Mobil-branded gasoline stations and convenience store properties in a
sale/leaseback and loan transaction with CPD NY Energy Corp. (“CPD NY”), a subsidiary of Chestnut Petroleum Dist. Inc.
Our total investment in the transaction was $111.6 million including acquisition costs, which was financed entirely with
borrowings under our revolving credit facility.
The properties were acquired or financed in a simultaneous transaction among ExxonMobil, CPD NY and us whereby
CPD NY acquired a portfolio of 65 gasoline station and convenience stores from ExxonMobil and simultaneously completed
a sale/leaseback of 59 of the acquired properties and leasehold interests with us. The lease between us, as lessor, and CPD
NY, as lessee, governing the properties is a unitary triple-net lease agreement (the “CPD Lease”), with an initial term of
15 years, and options for up to three successive renewal terms of ten years each. The CPD Lease requires CPD NY to pay a
fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due to third party landlords pursuant to the
terms of third party leases. The Rent is scheduled to increase on the third anniversary of the date of the CPD Lease and on
every third anniversary thereafter. As a triple-net lessee, CPD NY is required to pay all amounts pertaining to the properties
subject to the CPD Lease, including taxes, assessments, licenses and permit fees, charges for public utilities and all
governmental charges. Partial funding to CPD NY for the transaction was also provided by us under a secured, self-
amortizing loan having a 10-year term (the “CPD Loan”).
On March 31, 2011, we acquired fee or leasehold title to 66 Shell-branded gasoline station and convenience store
properties in a sale/leaseback transaction with Nouria Energy Ventures I, LLC (“Nouria”), a subsidiary of Nouria Energy
Group. Our total investment in the transaction was $87.0 million including acquisition costs, which was financed entirely
with borrowings under our revolving credit facility.
The properties were acquired in a simultaneous transaction among Motiva Enterprises LLC (“Shell”), Nouria and us
whereby Nouria acquired a portfolio of 66 gasoline station and convenience stores from Shell and simultaneously completed
a sale/leaseback of the 66 acquired properties and leasehold interests with us. The lease between us, as lessor, and Nouria, as
lessee, governing the properties is a unitary triple-net lease agreement (the “Nouria Lease”), with an initial term of 20 years,
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and options for up to two successive renewal terms of ten years each followed by one final renewal term of five years. The
Nouria Lease requires Nouria to pay a fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due
to third party landlords pursuant to the terms of third party leases. The Rent is scheduled to increase on every annual
anniversary of the date of the Nouria Lease. As a triple-net lessee, Nouria is required to pay all amounts pertaining to the
properties subject to the Nouria Lease, including taxes, assessments, licenses and permit fees, charges for public utilities and
all governmental charges.
In 2010, we purchased three gasoline station and convenience store properties in separate transactions for an aggregate
purchase price of $3.6 million.
RESULTS OF OPERATIONS
Year ended December 31, 2012 compared to year ended December 31, 2011
Revenues from rental properties included in continuing operations decreased by $1.0 million to $99.3 million for the
year ended December 31, 2012, as compared to $100.3 million for the year ended December 31, 2011. Revenues from
rental properties include approximately $73.0 million and $45.5 million for the year ended December 31, 2012 and
December 31, 2011, respectively, in rent contractually due or received from tenants other than Marketing including rent
for May 2012 through December 2012 related to properties repositioned from the Master Lease. Revenues from rental
properties included in continuing operations for the year ended December 31, 2012 include approximately $20.1 million
and, for the year ended December 31, 2011, $52.6 million in rent contractually due or received from Marketing under the
Master Lease (for which bad debt reserves of $11.5 million and $7.3 million were provided and are included in general
and administrative expenses in our consolidated statement of operations for the years ended December 31, 2012 and 2011,
respectively). The decrease in revenues from rental properties for the year ended December 31, 2012 was primarily due to
the fact that we are generating less net revenue from the leasing of properties that were previously subject to the Master
Lease than the contractual rent historically due from Marketing under the Master Lease. The decrease in revenues from
rental properties was partially offset by rental income from properties we acquired from, and leased back to, Nouria
Energy Ventures I, LLC (“Nouria”) in March 2011 and an increase in the real estate taxes we paid and billed to Marketing
through April 30, 2012, the date the Master Lease was rejected, and from other tenants pursuant to triple-net leases
thereafter. As a result of Marketing’s bankruptcy filing, beginning in the first quarter of 2012, we began paying past due
real estate taxes for 2011 and 2012, which taxes Marketing historically paid directly. Revenues from rental properties and
rental property expense included $11.3 million for the year ended December 31, 2012 as compared to $6.6 million for the
year ended December 31, 2011 for real estate taxes paid by us which were due from Marketing through the date the
Master Lease was rejected as well as from other tenants who are contractually obligated to reimburse us for the payment
of real estate taxes pursuant to the terms of triple-net lease agreements. The decrease in rent contractually due or received
from Marketing and other tenants for the year ended December 31, 2012 was also due, to a lesser extent, the effect of
dispositions and lease expirations partially offset by rent escalations.
In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually
due or received during the periods presented. As a result, revenues from rental properties include Revenue Recognition
Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income
on a straight-line basis over the current lease term, net amortization of above-market and below-market leases and
recognition of rental income under direct financing leases using the effective interest rate method which produces a constant
periodic rate of return on the net investments in the leased properties. Rental revenue includes Revenue Recognition
Adjustments which increased rental revenue by $4.4 million for the year ended December 31, 2012 and $2.1 million for the
year ended December 31, 2011.
Interest income from notes and mortgages receivable increased by $0.2 million to $2.9 million for the year ended
December 31, 2012 as compared to $2.7 million the year ended December 31, 2011 due to the issuance of $4.6 million of
mortgage notes in connection with 2012 property dispositions.
Rental property expenses included in continuing operations, which are primarily comprised of rent expense and real
estate and other state and local taxes, were $30.2 million for the year ended December 31, 2012 as compared to $16.0 million
for the year ended December 31, 2011. The increase in rental property expenses is principally due to additional maintenance
expense and real estate tax expenses paid by us and reimbursable by our tenants related to properties and leasehold interests
acquired in 2011 and real estate taxes historically paid by Marketing directly, which taxes we began paying in the first quarter
of 2012. The reimbursement of real estate taxes from our tenants is included in revenues from rental properties in our
consolidated statement of operations. We provide bad debt reserves for the taxes reimbursable from Marketing since do not
expect to receive payment of taxes from the Marketing Estate.
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Non-cash impairment charges of $6.3 million are included in continuing operations for the year ended December 31,
2012 as compared to $15.9 million recorded for the year ended December 31, 2011. Impairment charges are incurred when
the carrying value of a property is reduced to fair value. The non-cash impairment charges for the year ended December 31,
2012 were attributable to reductions in estimated selling prices and increases in the carrying value for certain properties in
conjunction with recording environmental remediation obligations and related environmental asset retirement costs. The non-
cash impairment charges for the year ended December 31, 2011 were attributable to recording the Marketing Environmental
Liabilities in the fourth quarter of 2011, reductions in real estate valuations and reductions in the assumed holding period
used to test for impairment and reductions in estimated selling prices.
Environmental expenses included in continuing operations for the year ended December 31, 2012 decreased by $4.8
million, to $0.8 million, as compared to $5.6 million for the year ended December 31, 2011. The decrease in environmental
expenses for the year ended December 31, 2012 was due to a lower provision for litigation loss reserves and legal fees, which
decreased by $2.6 million for 2012, and a lower provision for estimated environmental remediation obligations, which
decreased by an aggregate $2.6 million to a credit of $0.3 million for the year ended December 31, 2012, as compared to $2.3
million for the year ended December 31, 2011, partially offset by a $0.5 million increase in professional fees. Environmental
expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction
of change in reported environmental expenses for one period as compared to prior periods.
General and administrative expenses included in continuing operations increased by $7.0 million to $29.1 million for
the year ended December 31, 2012 as compared to $22.1 million recorded for the year ended December 31, 2011. The
increase in general and administrative expenses was principally due to an increase of $5.9 million of reserve for bad debts
primarily attributable to nonpayment of rent and real estate taxes due from Marketing that we do not expect to collect, $2.6
million of legal and professional fees incurred related to Marketing’s defaults of its obligations under the Master Lease and
bankruptcy filing, higher employee related expenses recorded in the year ended December 31, 2012, partially offset by a $2.0
million decrease in property acquisition costs.
As a result of Marketing’s material monetary default under the Master Lease and Marketing’s bankruptcy filing, in
2011 we concluded that it was probable that we would not receive the contractual lease payments when due from Marketing
for the entire initial term of the Master Lease. Therefore, during 2011, we increased our reserve by recording additional non-
cash allowances for deferred rent receivable, of which $19.3 million is included in continuing operations. These non-cash
allowances reduced our net earnings and funds from operations for the year ended December 31, 2011, but did not impact our
cash flow from operating activities or adjusted funds from operations since the impact of the straight line method of
accounting is not included in our determination of adjusted funds from operations.
Depreciation and amortization expense included in continuing operations for 2012 was $12.5 million for the year ended
December 31, 2012, as compared to $9.5 million for the year ended December 31, 2011. The increase was primarily due to
depreciation charges related to asset retirement costs and properties acquired, partially offset by the effect of certain assets
becoming fully depreciated, lease terminations and dispositions of real estate.
As a result, total operating expenses decreased by approximately $9.4 million for the year ended December 31, 2012,
as compared to the year ended December 31, 2011.
Other income, net, included in income from continuing operations was $0.6 million for the year ended December 31,
2012, as compared to $0.016 million for the year ended December 31, 2011.
Interest expense was $9.9 million for the year ended December 31, 2012, as compared to $5.1 million for the year
ended December 31, 2011. The increase was due to an increase in the weighted-average interest rate on borrowings
outstanding, loan origination costs incurred in March 2012 amortized over the one year extension of our debt agreements, and
higher average borrowings outstanding for the year ended December31, 2012, as compared to the year ended December 31,
2011, partially offset by the expiration of the Swap Agreement on June 30, 2011.
As a result, earnings from continuing operations were $13.8 million for the year ended December 31, 2012, as
compared to $9.4 million for the year ended December 31, 2011 and net earnings decreased by $0.1 million to $12.4 million
for the year ended December 31, 2012, as compared to $12.5 million for the year ended December 31, 2011.
We report as discontinued operations the results of approximately 111 properties accounted for as held for sale as of
the end of the current period and certain properties disposed of during the periods presented. The operating results and gains
from certain dispositions of real estate sold in 2012 have been classified as discontinued operations. The operating results of
such properties for the years ended December 31, 2011 and 2010 have also been reclassified to discontinued operations to
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conform to the 2012 presentation. Earnings from discontinued operations decreased by $4.4 million to a loss of $1.4 million
for the year ended December 31, 2012, as compared to earnings of $3.0 million for the year ended December 31, 2011. The
decrease was primarily due to lower rental revenue and higher operating costs, including higher impairment charges, partially
offset by higher gains on dispositions of real estate. Gains from dispositions of real estate included in discontinued operations
were $6.8 million for the year ended December 31, 2012 and $0.9 million for the year ended December 31, 2011. For the
year ended December 31, 2012, there were 54 property dispositions. For the year ended December 31, 2011, there were 10
property dispositions. Gains on disposition of real estate and impairment charges vary from period to period and accordingly,
undue reliance should not be placed on the magnitude or the directions of change in reported gains and impairment charges
for one period as compared to prior periods.
For the year ended December 31, 2012, FFO decreased by $8.9 million to $33.2 million, as compared to $42.1 million
for the year ended December 31, 2011, and AFFO decreased by $33.9 million to $28.8 million, as compared to $62.7 million
for the prior year. The decrease in FFO for the year ended December 31, 2012 was primarily due to the changes in net
earnings but exclude a $6.3 million decrease in impairment charges, a $3.4 million increase in depreciation and amortization
expense and a $5.9 million increase in gains on dispositions of real estate. The decrease in AFFO for the year ended
December 31, 2012 also exclude a $19.8 million decrease in the allowance for deferred rental revenue, a $2.0 million
decrease in acquisition costs and a $3.2 million increase in Rental Revenue Adjustments which cause our reported revenues
from rental properties to vary from the amount of rent payments contractually due or received by us during the periods
presented (which are included in net earnings and FFO but are excluded from AFFO).
Diluted earnings per share was $0.37 per share for the years ended December 31, 2012 and 2011. Diluted FFO per
share for the year ended December 31, 2012 was $0.99 per share, as compared to $1.26 per share for the year ended
December 31, 2011. Diluted AFFO per share for the year ended December 31, 2012 was $0.86 per share, as compared to
$1.88 per share for the year ended December 31, 2011.
Year ended December 31, 2011 compared to year ended December 31, 2010
Revenues from rental properties included in continuing operations were $100.3 million for the year ended
December 31, 2011, as compared to $78.2 million for the year ended December 31, 2010. Revenues from rental properties
include approximately $52.6 million and $50.1 million in rent contractually due or received for the years ended
December 31, 2011 and December 31, 2010, respectively, from properties leased to Marketing under the Master Lease and
approximately $45.5 million and $26.4 million for the years ended December 31, 2011 and 2010, respectively, contractually
due or received from other tenants. The increase in rent contractually due or received from other tenants for the year ended
December 31, 2011 was primarily due to rental income from properties we acquired from, and leased back to, CPD NY in
January 2011 and Nouria in March 2011. The increase in the rent contractually due or received from Marketing for the year
ended December 31, 2011 was primarily due to an increase in the real estate taxes we pay (or accrue) and bill to Marketing.
As a result of Marketing’s bankruptcy filing, beginning in the first quarter of 2012, we began paying past due real estate taxes
for 2011 and 2012, which taxes Marketing historically paid directly. Revenues from rental properties and rental property
expense included $6.6 million for the year ended December 31, 2011 as compared to $1.8 million for the year ended
December 31, 2010 for real estate taxes paid (or accrued) by us which were due from Marketing as well as from other tenants
who are contractually obligated to reimburse us for the payment of real estate taxes pursuant to the terms of triple-net lease
agreements. The increase in rent received for the year ended December 31, 2011 was primarily due to rental income from
properties we acquired from, and leased back to, CPD in January 2011 and Nouria in March 2011 and, to a lesser extent, due
to rent escalations, partially offset by the effect of dispositions of real estate and lease expirations.
In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually
due or received during the periods presented. As a result, revenues from rental properties include Revenue Recognition
Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income
on a straight-line basis over the current lease term, net amortization of above-market and below-market leases and
recognition of rental income under direct financing leases using the effective interest rate method which produces a constant
periodic rate of return on the net investments in the leased properties. Rental revenue includes Revenue Recognition
Adjustments which increased rental revenue by $2.1 million for the year ended December 31, 2011 and $1.7 million for the
year ended December 31, 2010.
Interest income from notes and mortgages receivable increased by $2.6 million to $2.7 million for the year ended
December 31, 2011 as compared to $0.1 million for the year ended December 31, 2010 primarily due to the issuance of $30.4
million of notes receivable substantially all in connection with the acquisitions completed in 2011.
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Rental property expenses included in continuing operations, which are primarily comprised of rent expense and real
estate and other state and local taxes, were $16.0 million for the year ended December 31, 2011 as compared to $10.1 million
for the year ended December 31, 2010. The increase in rental property expenses is principally due to additional real estate tax
and rent expenses paid by us and reimbursable by our tenants related to properties and leasehold interests acquired in 2011
and accrued past due real estate taxes historically paid by Marketing directly, which taxes we began paying in the first quarter
of 2012. The reimbursement of such expenses from our tenants is included in revenues from rental properties in our
consolidated statement of operations. We provided a bad debt reserve for the taxes reimbursable from Marketing since do not
expect to receive payment of taxes from the Marketing Estate.
Non-cash impairment charges of $15.9 million are included in continuing operations for the year ended
December 31, 2011 as compared to no impairment charges recorded for the year ended December 31, 2010. The non-cash
impairment charges related to the properties leased to Marketing were primarily attributable to significant increases in the
carrying value for certain of the properties in conjunction with recording the Marketing Environmental Liabilities. In the
fourth quarter of 2011, we accrued $47.9 million as the aggregate Marketing Environmental Liabilities since we could no
longer assume that Marketing will be able to meet its environmental remediation obligations and its obligations to remove
underground storage tanks at the end of their useful life. In accordance with GAAP, we increased the carrying value for
each of the affected properties by the amount of the related estimated environmental obligation which resulted in
simultaneously recording impairment charges in continuing operations and discontinued operations aggregating $17.0
million where the increased carrying value of the property exceeded its estimated fair value. The non-cash impairment
charges recorded earlier in the year resulted from reductions in real estate valuations and the reductions in the assumed
holding period used to test for impairment.
Environmental expenses included in continuing operations for the year ended December 31, 2011 increased by $0.2
million, to $5.6 million, as compared to $5.4 million for the year ended December 31, 2010. The increase in net
environmental expenses for the year ended December 31, 2011 was primarily due to a higher provision for litigation loss
reserves and legal fees which increased by $0.6 million for 2011, partially offset by a lower provision for estimated
environmental remediation obligations which decreased by an aggregate $0.4 million to $2.3 million for the year ended
December 31, 2011, as compared to $2.7 million for the year ended December 31, 2010. Environmental expenses vary from
period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in
reported environmental expenses for one period as compared to prior periods.
General and administrative expenses included in continuing operations were $22.1 million for the year ended
December 31, 2011, as compared to $8.2 million recorded for the year ended December 31, 2010. The increase in general and
administrative expenses was principally due to $7.6 million of reserve for bad debts primarily attributable to nonpayment of
pre-petition rent and real estate taxes due from Marketing that we do not expect to collect, $2.0 million of property
acquisition costs, $1.5 million of legal and professional fees incurred related to Marketing’s defaults of its obligations under
the Master Lease and bankruptcy filing and higher employee related expenses and legal fees recorded in the year ended
December 31, 2011.
As a result of Marketing’s material monetary default under the Master Lease and Marketing’s bankruptcy filing, we
previously concluded that it was probable that we would not receive the contractual lease payments when due from
Marketing for the entire initial term of the Master Lease. Therefore, during 2011, we increased our reserve by recording
additional non-cash allowances for deferred rent receivable of $19.3 million. These non-cash allowances reduced our net
earnings and funds from operations for the year ended December 31, 2011, but did not impact our cash flow from operating
activities or adjusted funds from operations since the impact of the straight line method of accounting is not included in our
determination of adjusted funds from operations.
Depreciation and amortization expense included in continuing operations was $9.5 million for the year ended
December 31, 2011, as compared to $9.0 million for the year ended December 31, 2010. The increase was primarily due to
depreciation charges related to asset retirement costs and properties acquired, partially offset by the effect of certain assets
becoming fully depreciated, lease terminations and dispositions of real estate.
As a result, total operating expenses increased by approximately $55.8 million for the year ended December 31, 2011,
as compared to the year ended December 31, 2010.
Other income, net, included in income from continuing operations was $0.016 million for the year ended December 31,
2011, as compared to $0.2 million for the year ended December 31, 2010.
36
Interest expense was $5.1 million for each of 2011 and 2010. While there was no significant change in interest expense
recorded for the year ended December 31, 2011 as compared to the prior year period, the weighted average interest rate on
borrowings outstanding decreased due to changes in the relative amounts of debt outstanding under our borrowing
agreements and average borrowings outstanding for the year ended December 31, 2011 were higher than average borrowings
outstanding for the year ended December 31, 2010. The average borrowings outstanding in 2011 were impacted by, among
other things, $113.0 million drawn under a revolving credit facility to finance the transaction with CPD NY, $92.1 million
drawn under a revolving credit facility to finance the transaction with Nouria and the repayment of borrowings outstanding
under our revolving credit facility with substantially all of the net proceeds of $92.0 million received in 2011 from a
3.45 million share common stock offering.
As a result, earnings from continuing operations decreased by $31.5 million to $9.4 million for the year ended
December 31, 2011, as compared to $40.9 million for the year ended December 31, 2010 and net earnings decreased by $39.2
million to $12.5 million for the year ended December 31, 2011, as compared to $51.7 million for the year ended
December 31, 2010.
The operating results and gains from certain dispositions of real estate sold in 2012 have been classified as
discontinued operations. The operating results of such properties for the year ended December 31, 2011 and 2010 have also
been reclassified to discontinued operations to conform to the 2012 presentation. Earnings from discontinued operations
decreased by $7.8 million to $3.0 million for the year ended December 31, 2011, as compared to $10.8 million for the year
ended December 31, 2010. The decrease was primarily due to lower earnings from operating activities and lower gains on
dispositions of real estate. Gains from dispositions of real estate included in discontinued operations were $0.9 million for the
year ended December 31, 2011 and $1.7 million for the year ended December 31, 2010. For the year ended December 31,
2011, there were 10 property dispositions. For the year ended December 31, 2010, there were six property dispositions. Other
income, net and gains on disposition of real estate vary from period to period and accordingly, undue reliance should not be
placed on the magnitude or the directions of change in reported gains for one period as compared to prior periods.
For the year ended December 31, 2011, FFO decreased by $17.6 million to $42.1 million, as compared to $59.7 million
for the year ended December 31, 2010, and AFFO increased by $4.5 million to $62.7 million, as compared to $58.2 million
for the prior year. The decrease in FFO for the year ended December 31, 2011 was primarily due to the changes in net
earnings but excludes a $20.2 million increase in impairment charges, a $0.6 million increase in depreciation and
amortization expense and a $0.7 million decrease in gains on dispositions of real estate. The increase in AFFO for the year
ended December 31, 2011 also excludes a $19.8 million increase in the allowance for deferred rental revenue, a $2.0 million
increase in acquisition costs and a $0.3 million decrease in Rental Revenue Adjustments which cause our reported revenues
from rental properties to vary from the amount of rent payments contractually due or received by us during the periods
presented (which are included in net earnings and FFO but are excluded from AFFO).
The calculations of net earnings per share, FFO per share, and AFFO per share for the year ended December 31, 2011
were impacted by an increase in the weighted average number of shares outstanding as a result of the issuance of shares of
common stock in 2010 and 2011. The weighted average number of shares outstanding in our per share calculations increased
by 5.2 million shares, or 18.7%, for the year ended December 31, 2011, as compared to the prior year period. Accordingly,
the percentage or direction of the changes in net earnings, FFO and AFFO discussed above may differ from the changes in
the related per share amounts. Diluted earnings per share was $0.37 per share for the year ended December 31, 2011 as
compared to $1.84 per share for the year ended December 31, 2010. Diluted FFO per share for the year ended December 31,
2011 was $1.26 per share, as compared to $2.13 per share for the year ended December 31, 2010. Diluted AFFO per share for
the year ended December 31, 2011 was $1.88 per share, as compared to $2.08 per share for the year ended December 31,
2010.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are the cash flows from our operations, funds available under our Credit Agreement
that matures in August 2015, described below, and available cash and cash equivalents. Management believes that our
operating cash needs for the next twelve months can be met by cash flows from operations, borrowings under our Credit
Agreement and available cash and cash equivalents. Net cash flow provided by operating activities reported on our
consolidated statement of cash flows for 2012, 2011 and 2010 were $15.9 million, $60.8 million and $57.1 million,
respectively. Our business operations and liquidity is dependent on our ability to generate cash flow from our properties.
37
Debt Refinancing
As of December 31, 2012, we were a party to a $175 million amended and restated senior secured revolving credit
agreement with a group of commercial banks led by JPMorgan Chase Bank, N.A. and a $25 million amended term loan
agreement with TD Bank, both of which were scheduled to mature in March 31, 2013. As of December 31, 2012, borrowings
under the credit agreement were $150.3 million bearing interest at a rate of 3.25% per annum and borrowings under the term
loan agreement were $22.0 million bearing interest at a rate of 3.50% per annum. On February 25, 2013, the borrowings then
outstanding under such credit agreement and term loan agreement were repaid with cash on hand and proceeds of the Credit
Agreement and the Prudential Loan Agreement (both defined below).
Credit Agreement
On February 25, 2013, we entered into a $175 million senior secured revolving credit agreement (the “Credit Agreement”)
with a group of commercial banks led by JPMorgan Chase Bank, N.A. (the “Bank Syndicate”), which is scheduled to mature in
August 2015. Subject to the terms of the Credit Agreement, we have the option to extend the term of the Credit Agreement for
one additional year to August 2016. The Credit Agreement allocates $25 million of the total Bank Syndicate commitment to a
term loan and $150 million to a revolving credit facility. Subject to the terms of the Credit Agreement, we have the option to
increase by $50 million the amount of the revolving credit facility to $200 million. The Credit Agreement permits borrowings at
an interest rate equal to the sum of a base rate plus a margin of 1.50% to 2.00% or a LIBOR rate plus a margin of 2.50% to
3.00% based on our leverage at the end of each quarterly reporting period. The annual commitment fee on the undrawn funds
under the Credit Agreement is 0.30% to 0.40% based our leverage at the end of each quarterly reporting period. The Credit
Agreement does not provide for scheduled reductions in the principal balance prior to its maturity.
The Credit Agreement provides for security in the form of, among other items, mortgage liens on certain of our
properties. The parties to the Credit Agreement and the Prudential Loan Agreement (as defined below) share the security
pursuant to the terms of an inter-creditor agreement. The Credit Agreement contains customary financial covenants such as
loan to value, leverage and coverage ratios and minimum tangible net worth, as well as limitations on restricted payments,
which may limit our ability to incur additional debt or pay dividends. The Credit Agreement contains customary events of
default, including default under the Prudential Loan Agreement, change of control and failure to maintain REIT status. Any
event of default, if not cured or waived, would increase by 200 basis points (2.00%) the interest rate we pay under the Credit
Agreement and prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our
indebtedness under the Credit Agreement and could also give rise to an event of default and could result in the acceleration of
our indebtedness under the Prudential Loan Agreement. We may be prohibited from drawing funds against the revolving
credit facility if there is a material adverse effect on our business, assets, prospects or condition.
Prudential Loan Agreement
On February 25, 2013, we entered into a $100 million senior secured long-term loan agreement with the Prudential
Insurance Company of America (the “Prudential Loan Agreement”), which matures in February 2021. The parties to the
Credit Agreement and the Prudential Loan Agreement share the security described above pursuant to the terms of an inter-
creditor agreement. The Prudential Loan Agreement bears interest at 6.00%. The Prudential Loan Agreement does not
provide for scheduled reductions in the principal balance prior to its maturity. The Prudential Loan Agreement contains
customary financial covenants such as loan to value, leverage and coverage ratios and minimum tangible net worth, as
well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends. The
Prudential Loan Agreement contains customary events of default, including default under the Credit Agreement and
failure to maintain REIT status. Any event of default, if not cured or waived, would increase by 200 basis points (2.00%)
the interest rate we pay under the Prudential Loan Agreement and could result in the acceleration of our indebtedness
under the Prudential Loan Agreement and could also give rise to an event of default and could result in the acceleration of
our indebtedness under our Credit Agreement.
Property Acquisitions and Capital Expenditures
Since we generally lease our properties on a triple-net basis, we have not historically incurred significant capital
expenditures other than those related to acquisitions. As part of our overall business strategy, we regularly review
opportunities to acquire additional properties and we expect to continue to pursue acquisitions that we believe will benefit our
financial performance. Our property acquisitions and capital expenditures for the year ended December 31, 2012, 2011 and
2010 amounted to $4.1 million,$167.5 million and $4.7 million, respectively, substantially all of which was for acquisitions.
We are evaluating potential capital expenditures for properties that were previously subject to the Master Lease with
Marketing and which are not currently subject to long-term leases. We have no current plans to make material improvements
38
to any of our properties other than the properties previously subject to the Master Lease with Marketing. However, our
tenants frequently make improvements to the properties leased from us at their expense. In certain of our new leases, we have
committed to co-invest as much as $14.1 million in capital improvements in our properties. (For additional information
regarding capital expenditures related to the properties subject to the Master Lease, see “Item 2. Properties”). To the extent
that our sources of liquidity are not sufficient to fund acquisitions and capital expenditures, we will require other sources of
capital, which may or may not be available on favorable terms or at all.
Dividends
We elected to be treated as a REIT under the federal income tax laws with the year beginning January 1, 2001. To
qualify for taxation as a REIT, we must, among other requirements such as those related to the composition of our assets and
gross income, distribute annually to our stockholders at least 90% of our taxable income, including taxable income that is
accrued by us without a corresponding receipt of cash. We cannot provide any assurance that our cash flows will permit us to
continue paying cash dividends. The Internal Revenue Service (“IRS”) has allowed the use of a procedure, as a result of
which we could satisfy the REIT income distribution requirement by making a distribution on our common stock comprised
of (i) shares of our common stock having a value of up to 80% of the total distribution and (ii) cash in the remaining amount
of the total distribution, in lieu of paying the distribution entirely in cash. In order to use this procedure, we would need to
seek and obtain a private letter ruling of the IRS to the effect that the procedure is applicable to our situation. Without
obtaining such a private letter ruling, we cannot provide any assurance that we will be able to satisfy our REIT income
distribution requirement by making distributions payable in whole or in part in shares of our common stock. It is also
possible that instead of distributing 100% of our taxable income on an annual basis, we may decide to retain a portion of our
taxable income and to pay taxes on such amounts as permitted by the IRS. Payment of dividends is subject to market
conditions, our financial condition, including but not limited to, our continued compliance with the provisions of the Credit
Agreement and the Prudential Loan Agreement and other factors, and therefore is not assured. In particular, our Credit
Agreement and Prudential Loan Agreement prohibit the payment of dividends during certain events of default. Cash
dividends paid to our shareholders aggregated $8.4 million, $63.4 million and $52.3 million, for the years ended
December 31, 2012, 2011 and 2010, respectively. We reduced our quarterly dividend rate to $0.125 per share in the quarter
ended June 30, 2012. In February 2013, we increased our quarterly dividend rate to $0.20 per share. There can be no
assurance that we will be able to continue to pay cash dividends at the rate of $0.20 per share per quarter in cash or a
combination of cash and our stock, if at all.
CONTRACTUAL OBLIGATIONS
Our significant contractual obligations and commitments as of December 31, 2012 were comprised of borrowings
under an amended credit agreement and an amended term loan agreement, operating lease payments due to landlords,
estimated environmental remediation expenditures, co-investing with our tenants in capital improvements at our properties
and our obligations pursuant to the Litigation Funding Agreement. We repaid our debt outstanding as of December 31, 2012
with borrowings under the Credit Agreement and the Prudential Loan Agreement entered into in February 2013. The
aggregate maturity of the Credit Agreement and the Prudential Loan Agreement, is as follows: 2015 — $71.9 million and
2021 — $100 million.
In addition, as a REIT, we are required to pay dividends equal to at least 90% of our taxable income in order to
continue to qualify as a REIT. Our contractual obligations and commitments as of December 31, 2012 are summarized below
(in thousands):
TOTAL
LESS
THAN-
ONE YEAR
ONE-TO
THREE
YEARS
THREE
TO
FIVE
YEARS
MORE
THAN
FIVE
YEARS
Operating leases .................................................................... $
Borrowings under the prior credit agreement (a) ..................
Borrowings under the prior term loan agreement (a) ............
Estimated environmental remediation expenditures (b) .......
Capital improvements (c) ......................................................
Litigation Funding Agreement ..............................................
Total ...................................................................................... $ 270,701 $
33,398 $
150,290
22,030
46,150
14,080
4,753
7,826 $
150,290
22,030
16,223
—
4,753
201,122 $
12,461 $
—
—
15,790
14,080
—
5,866
—
—
9,045
—
—
42,331 $ 12,337 $ 14,911
7,245 $
—
—
5,092
—
—
(a) Excludes related interest payments. (See “Liquidity and Capital Resources” above and “Item 7A. Quantitative and
Qualitative Disclosures About Market Risk” for additional information.) We repaid our debt outstanding as of
39
December 31, 2012 with cash on hand and proceeds from the Credit Agreement and Prudential Loan Agreement
entered into in February 2013.
(b) Estimated environmental remediation expenditures have been adjusted for inflation and discounted to present value.
(c) The actual timing of co-investing with our tenants in capital improvements is dependent on the timing of such capital
improvement projects and the terms of our leases. We expect that substantially all of such credits will be issued within
five years.
Generally, the leases with our tenants are “triple-net” leases, with the tenant responsible for the operations
conducted at these properties and for the payment of taxes, maintenance, repair, insurance, environmental remediation and
other operating expenses.
We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed
in the notes to our consolidated financial statements. We have no off-balance sheet arrangements as defined in Item
303(a)(4)(ii) of Regulation S-K promulgated by the Exchange Act.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The consolidated financial statements included in this Annual Report on Form 10-K have been prepared in
conformity with accounting principles generally accepted in the United States of America. The preparation of financial
statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect the
amounts reported in its financial statements. Although we have made estimates, judgments and assumptions regarding
future uncertainties relating to the information included in our financial statements, giving due consideration to the
accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions
and such differences could be material.
Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are
not limited to, receivables, deferred rent receivable, income under direct financing leases, environmental remediation
obligations, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued liabilities,
environmental remediation obligations, income taxes and allocation of the purchase price of properties acquired to the assets
acquired and liabilities assumed. The information included in our financial statements that is based on estimates, judgments
and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become
more clearly defined.
Our accounting policies are described in note 1 of Notes to Consolidated Financial Statements in “Item 8. Financial
Statements and Supplementary Data — Notes to Consolidated Financial Statements”. We believe that the more critical of our
accounting policies relate to revenue recognition and deferred rent receivable and related reserves, impairment of long-lived
assets, income taxes, environmental costs, allocation of the purchase price of properties acquired to the assets acquired and
liabilities assumed and litigation as described below:
Revenue recognition — We earn revenue primarily from operating leases with our tenants. We recognize income under
leases with our tenants, on the straight-line method, which effectively recognizes contractual lease payments evenly over the
current term of the leases. The present value of the difference between the fair market rent and the contractual rent for in-
place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of
the in-place leases. A critical assumption in applying the straight-line accounting method is that the tenant will make all
contractual lease payments during the current lease term and that the net deferred rent receivable of $12.4 million recorded as
of December 31, 2012 will be collected when the payment is due, in accordance with the annual rent escalations provided for
in the leases. Historically our tenants, other than Marketing, with leases that are material to our financial results have
generally made rent payments when due. However, we may be required to reverse, or provide reserves for a portion of the
recorded deferred rent receivable if it becomes apparent that the tenant may not make all of its contractual lease payments
when due during the current term of the lease. The straight-line method requires that rental income related to those properties
for which a reserve was specifically provided is effectively recognized in subsequent periods when payment is due under the
contractual payment terms. (See “General — Marketing and the Master Lease” above for additional information.)
Direct financing leases — Income under direct financing leases is included in revenues from rental properties and is
recognized over the lease terms using the effective interest rate method which produces a constant periodic rate of return on
the net investments in the leased properties. Net investment in direct financing leases represents the investments in leased
assets accounted for as direct financing leases. The investments are reduced by the receipt of lease payments, net of interest
income earned and amortized over the life of the leases.
40
Impairment of long-lived assets — Real estate assets represent “long-lived” assets for accounting purposes. We
review the recorded value of long-lived assets for impairment in value whenever any events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. We may become aware of indicators of potentially
impaired assets upon tenant or landlord lease renewals, upon receipt of notices of potential governmental takings and
zoning issues, or upon other events that occur in the normal course of business that would cause us to review the operating
results of the property. We believe our real estate assets are not carried at amounts in excess of their estimated net
realizable fair value amounts.
Income taxes — Our financial results generally do not reflect provisions for current or deferred federal income taxes
since we elected to be treated as a REIT under the federal income tax laws effective January 1, 2001. Our intention is to
operate in a manner that will allow us to continue to be treated as a REIT and, as a result, we do not expect to pay substantial
corporate-level federal income taxes. Many of the REIT requirements; however, are highly technical and complex. If we
were to fail to meet the requirements, we may be subject to federal income tax, excise taxes, penalties and interest or we may
have to pay a deficiency dividend to eliminate any earnings and profits that were not distributed. Certain states do not follow
the federal REIT rules and we have included provisions for these taxes in rental property expenses.
Environmental remediation obligations — We provide for the estimated fair value of future environmental remediation
obligations when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made. (See “—
Environmental Matters” below for additional information). Environmental liabilities net of related recoveries are measured
based on their expected future cash flows which have been adjusted for inflation and discounted to present value. Since
environmental exposures are difficult to assess and estimate and knowledge about these liabilities is not known upon the
occurrence of a single event, but rather is gained over a continuum of events, we believe that it is appropriate that our accrual
estimates are adjusted as the remediation treatment progresses, as circumstances change and as environmental contingencies
become more clearly defined and reasonably estimable. A critical assumption in accruing for these liabilities is that the state
environmental laws and regulations will be administered and enforced in the future in a manner that is consistent with past
practices. Environmental liabilities are estimated net of recoveries of environmental costs from state UST remediation funds,
with respect to past and future spending based on estimated recovery rates developed from our experience with the funds
when such recoveries are considered probable. A critical assumption in accruing for these recoveries is that the state UST
fund programs will be administered and funded in the future in a manner that is consistent with past practices and that future
environmental spending will be eligible for reimbursement at historical rates under these programs. We accrue environmental
liabilities based on our share of responsibility as defined in our lease contracts with our tenants and under various other
agreements with others or if circumstances indicate that the counter-party may not have the financial resources to pay its
share of the costs. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that
we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded
for environmental litigation accruals and environmental remediation liabilities. We may ultimately be responsible to pay for
environmental liabilities as the property owner if our tenants or other counter-parties fail to pay them. In certain
environmental matters the effect on future financial results is not subject to reasonable estimation because considerable
uncertainty exists both in terms of the probability of loss and the estimate of such loss. The ultimate liabilities resulting from
such lawsuits and claims, if any, may be material to our results of operations in the period in which they are recognized.
Litigation — Legal fees related to litigation are expensed as legal services are performed. We provide for litigation
reserves, including certain environmental litigation. (See “— Environmental Matters” below for additional information),
when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. If the estimate of
the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the
minimum of the range is accrued for the liability.
Allocation of the purchase price of properties acquired — Upon acquisition of real estate and leasehold interests, we
estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and
identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place
leases and tenant relationships) and assumed debt. Based on these estimates, we allocate the purchase price to the applicable
assets and liabilities.
ENVIRONMENTAL MATTERS
General
We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the
protection of the environment such as the remediation of known contamination and the retirement and decommissioning or
removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Environmental
41
costs are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning
remediation systems, monitoring contamination and governmental agency reporting incurred in connection with
contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental costs
where available. In July 2012, we purchased for $3.1 million a ten-year pollution legal liability insurance policy covering all
of our properties for pre-existing unknown environmental liabilities and new environmental events. The policy has a $50.0
million aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our intention in
purchasing this policy is to obtain protection predominantly for significant events. No assurances can be given that we will
obtain a net financial benefit from this investment. Historically we did not maintain pollution legal liability insurance to
protect from potential future claims related to known and unknown environmental liabilities.
We enter into leases and various other agreements which allocate responsibility for known and unknown
environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. In
accordance with the leases with certain tenants, we have agreed to bring the leased properties with known environmental
contamination to within applicable standards, and to either regulatory or contractual closure (“Closure”). Generally, upon
achieving Closure at each individual property, our environmental liability under the lease for that property will be satisfied
and future remediation obligations will be the responsibility of our tenant.
Generally, our tenants are directly responsible to pay for: (i) the retirement and decommissioning or removal of USTs
and other equipment, (ii) remediation of environmental contamination they cause and compliance with various environmental
laws and regulations as the operators of our properties, and (iii) environmental liabilities allocated to them under the terms of
our leases and various other agreements. We are contingently liable for these obligations in the event that our tenants do not
satisfy their responsibilities. Under the Master Lease, Marketing was responsible to pay for the retirement and
decommissioning or removal of USTs at the end of their useful life or earlier if circumstances warranted as well as all
environmental liabilities discovered during the term of the Master Lease, including: (i) remediation of environmental
contamination Marketing caused and compliance with various environmental laws and regulations as the operator of our
properties, and (ii) known and unknown environmental liabilities allocated to Marketing under the terms of the Master Lease
and various other agreements with us relating to Marketing’s business and the properties it leased from us (collectively the
“Marketing Environmental Liabilities”). A liability has not been accrued for obligations that are the responsibility of our
tenants (other than the Marketing Environmental Liabilities accrued in the fourth quarter of 2011) based on our tenants’
history of paying such obligations and/or our assessment of their financial ability and intent to pay their share of such costs.
However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the
past will continue to do so.
In the fourth quarter of 2011, since we could no longer assume that Marketing would be able to meet its environmental
remediation obligations at 246 properties and its obligations to remove all underground storage tanks at the end of their
useful life or earlier if circumstances warrant, we accrued $47.9 million as the aggregate Marketing Environmental
Liabilities. In conjunction with recording the Marketing Environmental Liabilities, we increased the carrying value for each
of the properties by the amount of the related estimated environmental obligation and simultaneously recorded impairment
charges aggregating $17.0 million where the accumulation of asset retirement costs increased the carrying value of the
property above its estimated fair value.
As part of certain triple-net leases whose term commenced through December 31, 2012, we transferred title of the
USTs to our tenants and the obligation to pay for the retirement and decommissioning or removal of USTs at the end of their
useful life or earlier if circumstances warranted was fully or partially transferred to our new tenants. Accordingly, during the
year ended December 31, 2012, we removed $11.2 million of asset retirement obligations and $9.8 million of net asset
retirement costs related to USTs from our balance sheet. The net amount of $1.4 million is recorded as deferred rental
revenue and will be recognized as additional revenues from rental properties over the terms of the various leases. (See note 2
for additional information.)
It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to
allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for
environmental litigation accruals and environmental remediation liabilities. We are required to accrue for environmental
liabilities that we believe are allocable to others under various other agreements if we determine that it is probable that the
counterparty will not meet its environmental obligations. The ultimate resolution of these matters could cause a material
adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
42
The estimated future costs for known environmental remediation requirements are accrued when it is probable that a
liability has been incurred and a reasonable estimate of fair value can be made. The accrued liability is the aggregate of the
best estimate of the fair value of cost for each component of the liability net of estimated recoveries from state UST
remediation funds considering estimated recovery rates developed from prior experience with the funds.
Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of
contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local
laws and regulations and their interpretations, as well as the time it takes to remediate contamination. In developing our
liability for estimated environmental remediation obligations on a property by property basis, we consider among other
things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information
available, currently available technologies for treatment, alternative methods of remediation and prior experience.
Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation
treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and
reasonably estimable.
Environmental remediation obligations are initially measured at fair value based on their expected future net cash
flows which have been adjusted for inflation and discounted to present value. As of December31, 2012, 2011 and 2010,
we had accrued $46.2 million, $57.7 million and $10.9 million, respectively, as our best estimate of the fair value of
reasonably estimable environmental remediation obligations net of estimated recoveries and obligations to remove USTs.
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $3.2
million, $0.9 million and $0.8 million of net accretion expense was recorded for the years ended December 31, 2012, 2011
and 2010, respectively, which is included in environmental expenses. In addition, during the year ended December 31,
2012 we recorded credits aggregating $4.2 million to environmental expenses and earnings from discontinued operating
activities where decreases in estimated remediation costs exceeded the depreciated carrying value of previously
capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and provisions
for environmental litigation loss reserves.
During the year ended December 31, 2012 and 2011, we increased the carrying value of certain of our properties by
$5.7 million and $47.9 million, respectively, due to increases in estimated remediation costs. We simultaneously record
impairment charges where the increased carrying value of the property exceeds its estimated fair value. Capitalized asset
retirement costs are being depreciated over the estimated remaining life of the underground storage tank, a ten year period if
the increase in carrying value related to environmental remediation obligations or such shorter period if circumstances
warrant, such as the remaining lease term for properties we lease from others. Depreciation and amortization expense
included in our consolidated statements of operations for the year ended December 31, 2012 and 2011 includes $5.4 million
and $0.9 million, respectively, of depreciation related to capitalized asset retirement costs of $23.5 million and $35.3 million
as of December 31, 2012 and 2011, respectively.
We cannot predict what environmental legislation or regulations may be enacted in the future or how existing laws or
regulations will be administered or interpreted with respect to products or activities to which they have not previously been
applied. We cannot predict if state UST fund programs will be administered and funded in the future in a manner that is
consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at historical
recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of existing laws, which may develop in the future,
could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional
expenditures for future remediation.
In view of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges
in excess of the amount accrued with any certainty; however, we believe it is possible that the fair value of future actual net
expenditures could be substantially higher than amounts currently recorded by us. Adjustments to accrued liabilities for
environmental remediation obligations will be reflected in our financial statements as they become probable and a reasonable
estimate of fair value can be made. Future environmental expenses could cause a material adverse effect on our business,
financial condition, results of operations, liquidity, ability to pay dividends or stock price.
43
Environmental litigation
We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of
December 31, 2012 and December 31, 2011, we had accrued $3.6 million and $4.2 million, respectively, for certain of these
matters which we believe were appropriate based on information then currently available. It is possible that our assumptions
regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may
change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation
accruals. Matters related to the our Newark, New Jersey Terminal and Lower Passaic River and the MTBE multi-district
litigation case, in particular, could cause a material adverse effect on our business, financial condition, results of operations,
liquidity, ability to pay dividends or stock price. (See “Item 3. Legal Proceedings” for additional information with respect to
these and other pending environmental lawsuits and claims.)
Matters related to our Newark, New Jersey Terminal and the Lower Passaic River
In September 2003, we received a directive (the “Directive”) from the State of New Jersey Department of
Environmental Protection (the “NJDEP”) notifying us that we are one of approximately 66 potentially responsible parties for
natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The Directive calls
for an assessment of the natural resources that have been injured by the discharges into the Lower Passaic River and interim
compensatory restoration for the injured natural resources. There has been no material activity with respect to the NJDEP
Directive since early after its issuance. The responsibility for the alleged damages, the aggregate cost to remediate the Lower
Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially
responsible parties have not been determined. Effective May 2007, the United States Environmental Protection Agency
(“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties
comprising a Cooperating Parties Group (“CPG”) (many of whom are also named in the Directive) who have collectively
agreed to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. We are a party to
the AOC and are a member of the CPG. The RI/FS is intended to address the investigation and evaluation of alternative
remedial actions with respect to alleged damages to the Lower Passaic River, and is scheduled to be completed in or about
2015. On June 18, 2012, all members of the CPG except Occidental Chemical Corporation (“Occidental”) entered into an
Administrative Settlement Agreement and Order on Consent (“10.9 AOC”) to perform certain remediation activities,
including removal and capping of sediments at the river mile 10.9 area and certain testing. Similar to the RI/FS work, the
CPG entered into an interim allocation for the costs of the river mile 10.9 work. The EPA issued a Unilateral Order to
Occidental directing Occidental to participate and contribute to the cost of the river mile 10.9 work and discussions regarding
Occidental’s participation in the river mile 10.9 work are ongoing. Concurrently, the EPA is preparing a proposed Focused
Feasibility Study (“FFS”) that the EPA claims will address sediment issues in the lower eight miles of the Lower Passaic
River. The RI/FS and 10.9 AOC do not resolve liability issues for remedial work or restoration of, or compensation for,
natural resource damages to the Lower Passaic River, which are not known at this time.
In a related action, in December 2005, the State of New Jersey through various state agencies brought suit against
certain companies which the State alleges are responsible for various categories of past and future damages resulting from
discharges of hazardous substances to the Passaic River. In February 2009, certain of these defendants filed third party
complaints against approximately 300 additional parties, including us, seeking contribution for such parties’ proportionate
share of response costs, cleanup and other damages, based on their relative contribution to pollution of the Passaic River and
adjacent bodies of water. We believe that ChevronTexaco is contractually obligated to indemnify us, pursuant to an
indemnification agreement, for most if not all of the conditions at the property identified by the NJDEP and the EPA.
Accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time.
MTBE Litigation
During 2011, we were defending against one remaining lawsuit of many brought by or on behalf of private and public
water providers and governmental agencies. These cases alleged (and, as described below with respect to one remaining case,
continue to allege) various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (a fuel
derived from methanol, commonly referred to as “MTBE”) as the basis for claims seeking compensatory and punitive
damages, and name as defendant approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or
gasoline containing MTBE. During 2010, we agreed to, and subsequently paid, $1.7 million to settle two plaintiff classes
covering 52 pending cases. Presently, we remain a defendant in one MTBE case involving multiple locations throughout the
State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP.
44
As of December 31, 2012 and December 31, 2011, we maintained a litigation reserve relating to the remaining MTBE
case in an amount which we believe was appropriate based on information then currently available. However, we are unable
to estimate with certainty our liability for the case involving the State of New Jersey as there remains uncertainty as to the
accuracy of the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification, and the
aggregate possible amount of damages for which we may be held liable.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Prior to April 2006, when we entered into a swap agreement with JPMorgan Chase, N.A. (the “Swap Agreement”), we
had not used derivative financial or commodity instruments for trading, speculative or any other purpose, and had not entered
into any instruments to hedge our exposure to interest rate risk. The Swap Agreement expired on June 30, 2011 and we
currently do not intend to enter into another swap agreement. We do not have any foreign operations, and are therefore not
exposed to foreign currency exchange rate.
Total floating interest rate borrowings outstanding as of December 31, 2012 under the prior credit agreement and the
prior term loan agreement, which were terminated and repaid on February 25, 2013, were $150.3 million and $22.0 million,
respectively, bearing interest at a weighted-average rate of 3.28% per annum. The weighted-average effective rate was based
on (i) $150.3 million of LIBOR rate borrowings outstanding under the prior credit agreement floating at market rates plus a
margin of 3.00%, and (ii) $22.0 million of LIBOR based borrowings outstanding under the prior term loan agreement
floating at market rates (subject to a 30 day LIBOR floor of 0.40%) plus a margin of 3.10%.
We are exposed to interest rate risk, primarily as a result of our $175.0 million senior secured revolving credit
agreement (the “Credit Agreement”) entered into on February 25, 2013 with a group of commercial banks led by JPMorgan
Chase Bank, N.A. (the “Bank Syndicate”), which is scheduled to mature in August 2015. The Credit Agreement allocates
$25.0 million of the total Bank Syndicate commitment to a term loan and $150.0 million to a revolving credit facility. Subject
to the terms of the Credit Agreement, we have the option to increase by $50.0 million the amount of the revolving credit
facility to $200.0 million. The Credit Agreement permits borrowings at an interest rate equal to the sum of a base rate plus a
margin of 1.50% to 2.00% or a LIBOR rate plus a margin of 2.50% to 3.00% based on our leverage at the end of each
quarterly reporting period. We use borrowings under the Credit Agreement to finance acquisitions and for general corporate
purposes. Borrowings outstanding at floating interest rates under the Credit Agreement subsequent to the refinancing were
approximately $72.0 million.
We manage our exposure to interest rate risk by minimizing, to the extent feasible, our overall borrowing and
monitoring available financing alternatives. Our interest rate risk as of December 31, 2012 remained the same as compared to
December 31, 2011. We reduced our interest rate risk on February 25, 2013 by repaying floating interest rate debt with the
proceeds of a $100 million senior secured long-term loan agreement with the Prudential Insurance Company of America (the
“Prudential Loan Agreement”), which matures in February 2021. The Prudential Loan Agreement bears interest at 6.00%.
The Prudential Loan Agreement does not provide for scheduled reductions in the principal balance prior to its maturity. Our
interest rate risk may materially change in the future if we seek other sources of debt or equity capital or refinance our
outstanding debt.
Based on our average outstanding borrowings under the Credit Agreement projected at approximately $72.0 million for
2013, an increase in market interest rates of 0.50% effective February 25, 2013 for 2013 would decrease our 2013 net income
and cash flows by $0.3 million. This amount was determined by calculating the effect of a hypothetical interest rate change
on our borrowings floating at market rates, and assumes that the approximately $72.0 million outstanding borrowings under
the Credit Agreement is indicative of our future average floating interest rate borrowings for 2013 before considering
additional borrowings required for future acquisitions or repayment of outstanding borrowings from proceeds of future equity
offerings. The calculation also assumes that there are no other changes in our financial structure or the terms of our
borrowings. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in
the outstanding amount under our Credit Agreement and with increases or decreases in amounts outstanding under borrowing
agreements entered into with interest rates floating at market rates.
In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash
investments with high-credit-quality institutions. Temporary cash investments, if any, are currently held in an overnight bank
time deposit with JPMorgan Chase Bank, N.A.
45
Item 8. Financial Statements and Supplementary Data
GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010 ...........................
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011
and 2010 ...............................................................................................................................................................
Consolidated Balance Sheets as of December 31, 2012 and 2011 ............................................................................
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010 ..........................
Notes to Consolidated Financial Statements .............................................................................................................
Report of Independent Registered Public Accounting Firm .....................................................................................
(PAGES)
47
48
49
50
51
74
46
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
YEAR ENDED DECEMBER 31,
2011
2012
2010
Revenues:
Revenues from rental properties .................................................................... $
Interest on notes and mortgages receivable ...................................................
Total revenues ............................................................................
99,286 $
2,882
102,168
100,263 $
2,658
102,921
Operating expenses:
Rental property expenses .....................................................................
Impairment charges ..............................................................................
Environmental expenses.......................................................................
General and administrative expenses ...................................................
Allowance for deferred rent receivable ................................................
Depreciation and amortization expense ...............................................
Total operating expenses ............................................................
Operating income ..........................................................................................
Other income, net ..........................................................................................
Interest expense .............................................................................................
Earnings from continuing operations .............................................................
Discontinued operations:
Earnings (loss) from operating activities .............................................
Gains on dispositions of real estate ......................................................
Earnings (loss) from discontinued operations................................................
Net earnings ................................................................................................... $
Basic and diluted earnings per common share:
Earnings from continuing operations ................................................... $
Earnings (loss) from discontinued operations ...................................... $
Net earnings ......................................................................................... $
Weighted average shares outstanding:
Basic .....................................................................................................
Stock options ........................................................................................
Diluted .................................................................................................
30,232
6,328
774
29,116
—
12,541
78,991
23,177
562
(9,931)
13,808
(8,199)
6,838
(1,361)
12,447 $
.41 $
(.04) $
.37 $
33,395
—
33,395
16,023
15,904
5,597
22,065
19,288
9,511
88,388
14,533
16
(5,125)
9,424
2,084
948
3,032
12,456 $
.28 $
.09 $
.37 $
33,171
1
33,172
78,227
133
78,360
10,053
—
5,371
8,178
—
8,997
32,599
45,761
156
(5,050)
40,867
9,128
1,705
10,833
51,700
1.46
.39
1.84
27,950
3
27,953
The accompanying notes are an integral part of these consolidated financial statements.
47
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net earnings ........................................................................................................... $
Other comprehensive gain:
Net unrealized gain on interest rate swap ...............................................................
Comprehensive income .......................................................................................... $
YEAR ENDED DECEMBER 31,
2011
12,456 $
2012
12,447 $
2010
—
12,447 $
1,153
13,609 $
51,700
1,840
53,540
The accompanying notes are an integral part of these consolidated financial statements.
48
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
DECEMBER 31,
2012
2011
ASSETS:
Real Estate:
Land ..................................................................................................................................... $ 318,814 $
208,325
Buildings and improvements ................................................................................................
527,139
(106,931)
420,208
25,340
445,548
91,904
Less — accumulated depreciation and amortization .....................................................................
Real estate held for use, net ..................................................................................................
Real estate held for sale, net .................................................................................................
Real estate, net .....................................................................................................................
Net investment in direct financing leases ......................................................................................
Deferred rent receivable (net of allowance of $0 at December 31, 2012 and $25,630 at
345,473
270,381
615,854
(137,117)
478,737
—
478,737
92,632
December 31, 2011) ..................................................................................................................
Cash and cash equivalents .............................................................................................................
Notes, mortgages and accounts receivable (net of allowance of $25,371 at December 31, 2012
12,448
16,876
8,080
7,698
and $9,480 at December 31, 2011) ...........................................................................................
Prepaid expenses and other assets .................................................................................................
41,865
31,940
Total assets ........................................................................................................................... $ 640,581 $
36,083
11,859
635,089
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Borrowings under credit line ......................................................................................................... $ 150,290 $
22,030
Term loan ......................................................................................................................................
46,150
Environmental remediation obligations .........................................................................................
4,202
Dividends payable .........................................................................................................................
45,160
Accounts payable and accrued liabilities .......................................................................................
267,832
Total liabilities .....................................................................................................................
Commitments and contingencies (notes 2, 3, 5 and 6) ..................................................................
—
Shareholders’ equity:
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued
147,700
22,810
57,700
—
34,710
262,920
—
334
33,396,720 at December 31, 2012 and 33,394,395 at December 31, 2011 .....................
461,426
Paid-in capital ................................................................................................................................
(89,011)
Dividends paid in excess of earnings .............................................................................................
Total shareholders’ equity ....................................................................................................
372,749
Total liabilities and shareholders’ equity ............................................................................. $ 640,581 $
334
460,687
(88,852)
372,169
635,089
The accompanying notes are an integral part of these consolidated financial statements.
49
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings ........................................................................................................................ $ 12,447 $ 12,456 $ 51,700
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
YEAR ENDED DECEMBER 31,
2010
2011
2012
Depreciation and amortization expense ...................................................................
Impairment charges ..................................................................................................
Gains on dispositions of real estate ..........................................................................
Deferred rent receivable, net of allowance ...............................................................
Allowance for deferred rent and accounts receivable ..............................................
Amortization of above-market and below-market leases .........................................
Amortization of credit agreement origination costs .................................................
Accretion expense ....................................................................................................
Stock-based employee compensation expense .........................................................
13,700
13,942
(6,866)
(4,368)
15,903
(285)
3,396
3,174
757
10,336
20,226
(968)
(453)
28,879
(685)
207
899
643
Changes in assets and liabilities:
Accounts receivable, net ..........................................................................................
Prepaid expenses and other assets ............................................................................
Environmental remediation obligations ...................................................................
Accounts payable and accrued liabilities .................................................................
Net cash flow provided by operating activities ...............................................
(15,848)
(8,004)
(9,009)
(3,054)
15,885
(14,890)
151
(1,981)
5,935
60,755
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures ........................................................
Proceeds from dispositions of real estate .................................................................
(Increase) decrease in cash held for property acquisitions .......................................
Amortization of (accretion in) investment in direct financing leases .......................
Issuance of notes, mortgages and other receivables .................................................
Collection of notes and mortgages receivable ..........................................................
Net cash flow provided by (used in) investing activities.................................
(4,148) (167,495)
2,317
9,855
(750)
(1,615)
505
728
(30,400)
(2,972)
1,703
2,679
3,551 (193,144)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreement .........................................................................
Repayments under credit agreement ........................................................................
Repayments under term loan agreement ..................................................................
Payments of capital lease obligations .......................................................................
Payments of cash dividends .....................................................................................
Payments of loan origination costs ..........................................................................
Cash paid in settlement of restricted stock units ......................................................
Security deposits received ........................................................................................
Net proceeds from issuance of common stock .........................................................
Net cash flow provided by (used in) financing activities ................................
9,178
Net increase in cash and cash equivalents ...........................................................................
Cash and cash equivalents at beginning of year ..................................................................
7,698
Cash and cash equivalents at end of year ............................................................................ $ 16,876 $
Supplemental disclosures of cash flow information
Cash paid (refunded) during the period for:
Interest paid .............................................................................................................. $ 6,293 $
810
Income taxes, net .....................................................................................................
4,889
Environmental remediation obligations ...................................................................
Non-cash transactions ..............................................................................................
Issuance of mortgages related to property dispositions ............................................
4,000 247,253
(1,410) (140,853)
(78)0
(59)
(63,436)
(175)
—
29
91,986
(10,258) 133,965
1,576
6,122
7,698 $
(780)
(152)
(8,404)
(4,144)
(18)
650
—
4,568
9,738
—
(1,705)
96
229
(1,260)
304
775
480
(189)
(379)
(2,512)
(213)
57,064
(4,725)
2,858
2,665
(323)
—
158
633
163,500
(273,400)
(780)
—
(52,332)
—
—
182
108,205
(54,625)
3,072
3,050
6,122
5,523 $
267
3,598
4,863
365
4,667
1,068
—
The accompanying notes are an integral part of these consolidated financial statements.
50
GETTY REALTY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-
owned subsidiaries. We are a real estate investment trust (“REIT”) specializing in the ownership, leasing and financing of
retail motor fuel and convenience store properties and petroleum distribution terminals. The accompanying consolidated
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of
America (“GAAP”). We manage and evaluate our operations as a single segment. All significant intercompany accounts and
transactions have been eliminated.
Use of Estimates, Judgments and Assumptions: The financial statements have been prepared in conformity with
GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and
expenses during the period reported. Estimates, judgments and assumptions underlying the accompanying consolidated
financial statements include, but are not limited to, receivables, deferred rent receivable, net investment in direct financing
leases, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets,
litigation, environmental remediation obligations, accrued liabilities, income taxes and the allocation of the purchase price of
properties acquired to the assets acquired and liabilities assumed.
Subsequent events: We evaluated subsequent events and transactions for potential recognition or disclosure in our
consolidated financial statements.
Fair Value Hierarchy: The preparation of financial statements in accordance with GAAP requires management to make
estimates of fair value that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the
date of the financial statements and revenues and expenses during the period reported using a hierarchy (the “Fair Value
Hierarchy”) that prioritizes the inputs to valuation techniques used to measure the fair value. The Fair Value Hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). The levels of the Fair Value Hierarchy are as follows:
“Level 1”-inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the
ability to access at the measurement date; “Level 2”-inputs other than quoted prices that are observable for the asset or
liability either directly or indirectly, including inputs in markets that are not considered to be active; and “Level 3”-inputs that
are unobservable. Certain types of assets and liabilities are recorded at fair value either on a recurring or non-recurring basis.
Assets required or elected to be marked-to-market and reported at fair value every reporting period are valued on a recurring
basis. Other assets not required to be recorded at fair value every period may be recorded at fair value if a specific provision
or other impairment is recorded within the period to mark the carrying value of the asset to market as of the reporting date.
Such assets are valued on a non-recurring basis. We have a receivable that is measured at fair value on a recurring basis using
Level 3-inputs of $2,972,000 as of December 31, 2012. Due to the subjectivity inherent in the internal valuation techniques
used in estimating fair value, the amount ultimately received from this receivable may vary significantly from our estimate.
We have certain real estate assets that are measured at fair value on a non-recurring basis using Level 3-inputs as of
December 31, 2012 and December 31, 2011 of $4,967,000 and $19,214,000, respectively, where impairment charges have
been recorded. Due to the subjectivity inherent in the internal valuation techniques used in estimating fair value, the amounts
realized from the sale of such assets may vary significantly from these estimates.
The following summarizes as of December 31, 2012 our assets and liabilities measured at fair value on a recurring
basis by level within the Fair Value Hierarchy:
(in thousands)
Assets:
Receivable...................................................................... $
Mutual funds .................................................................. $
Liabilities:
Deferred Compensation ................................................. $
Level 1
Level 2
Level 3
Total
—
3,013
3,013
$
$
$
—
—
$
$
2,972 $
$
—
2,972
3,013
—
$
—
$
3,013
51
The following summarizes as of December 31, 2011 our assets and liabilities measured at fair value on a recurring
basis by level within the Fair Value Hierarchy:
(in thousands)
Assets:
Mutual funds .................................................................. $
Liabilities:
Deferred Compensation ................................................. $
Level 1
Level 2
Level 3
Total
2,744 $
—
$
—
$
2,744
2,744
$
—
$
—
$
2,744
Discontinued Operations: We report as discontinued operations approximately 111 properties which meet the criteria
to be accounted for as held for sale in accordance with GAAP as of the end of the current period and certain properties
disposed of during the periods presented. Discontinued operations, including gains and losses, impairment charges and the
operating results for properties disposed of in 2012, 2011 and 2010 and impairment charges and operating results of
properties classified as held for sale, are included in a separate component of income on the consolidated statement of
operations. The operating results and impairment charges of such properties for the years ended 2011 and 2010 have also
been reclassified to discontinued operations to conform to the 2012 presentation. The properties currently being marketed for
sale have a net carrying value aggregating $25,340,000 and are included in real estate held for sale, net in our consolidated
balance sheets. The revenue from rental properties, impairment charges, other operating expenses and gains from dispositions
of real estate related to these properties are as follows:
(in thousands)
Revenues from rental properties ................................................................ $
Impairment charges ...................................................................................
Other operating expenses ...........................................................................
Earnings (loss) from operating activities ...................................................
Gains from dispositions of real estate ........................................................
Earnings (loss) from discontinued operations ............................................ $
Year ended December 31,
2012
2011
2010
5,485 $
(7,614)
(6,070)
(8,199)
6,838
(1,361) $
10,178 $
(4,322)
(3,772)
2,084
948
3,032 $
10,172
—
(1,044)
9,128
1,705
10,833
Real Estate: Real estate assets are stated at cost less accumulated depreciation and amortization. Upon acquisition of
real estate and leasehold interests, we estimate the fair value of acquired tangible assets (consisting of land, buildings and
improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market
and below-market leases, in-place leases and tenant relationships) and assumed debt. Based on these estimates, we record the
applicable assets and liabilities at their fair value. When real estate assets are sold or retired, the cost and related accumulated
depreciation and amortization is eliminated from the respective accounts and any gain or loss is credited or charged to
income. We evaluate real estate sale transactions where we provide seller financing to determine sale and gain recognition in
accordance with GAAP. Expenditures for maintenance and repairs are charged to income when incurred. When accounting
for business combinations, the amounts recorded for the fair value of assets acquired and liabilities assumed for above-market
and below-market leases, leasehold interests as lessee and capital lease obligations are non-cash transactions which do not
appear on the face of the consolidated statements of cash flows. (See note 11 for additional information regarding property
acquisitions.)
Depreciation and Amortization: Depreciation of real estate is computed on the straight-line method based upon the
estimated useful lives of the assets, which generally range from 16 to 25 years for buildings and improvements, or the term of
the lease if shorter. Asset retirement costs are depreciated over the remaining useful lives of underground storage tanks
(“USTs” or “UST”) or 10 years for asset retirement costs related to environmental remediation obligations, which costs are
attributable to the group of assets identified at a property. Leasehold interests, in-place leases and tenant relationships are
amortized over the remaining term of the underlying lease.
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of: Assets are written down to fair value
when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows
estimated to be generated by those assets are less than the carrying amount of those assets. We review and adjust as necessary
our depreciation estimates and method when long-lived assets are tested for recoverability. Assets held for disposal are
written down to fair value less estimated disposition costs.
52
We recorded non-cash impairment charges aggregating $13,942,000 and $20,226,000 for the years ended December 31,
2012 and 2011, respectively, in continuing operations and in discontinued operations. We record non-cash impairment
charges and reduce the carrying amount of properties held for use to fair value where the carrying amount of the property
exceeded the projected undiscounted cash flows expected to be received during the assumed holding period which includes
the estimated sales value expected to be received at disposition. We record non-cash impairment charges and reduce the
carrying amount of properties held for sale to fair value less disposal costs. The non-cash impairment charges recorded during
the year ended December 31, 2012 were attributable to reductions in our estimates of value for properties held for sale and the
accumulation of asset retirement costs as a result of an increase in estimated environmental liabilities which increased the
carrying value of certain properties in excess of their fair value. Impairment charges recorded during the year ended
December 31, 2011 were attributable to reductions in our estimates of value for properties marketed for sale, reductions in the
assumed holding period used to test for impairment and the accumulation of asset retirement costs as a result of an increase in
estimated environmental liabilities which increased the carrying value of certain properties in excess of their fair value. The
estimated fair value of real estate is based on the price that would be received to sell the property in an orderly transaction
between market participants at the measurement date. The internal valuation techniques that we used included discounted
cash flow analysis, an income capitalization approach on prevailing or earnings multiples applied to earnings from the
property, analysis of recent comparable lease and sales transactions, actual leasing or sale negotiations, bona fide purchase
offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as
adjusted for obsolescence. In general, we consider multiple internal valuation techniques when measuring the fair value of a
property, all of which are based on unobservable inputs and assumptions that are classified within Level 3 of the fair value
hierarchy. These unobservable inputs include assumed holding periods ranging up to 15 years, assumed average rent
increases ranging up to 2.0% annually, income capitalized at a rate of 8.0% and cash flows discounted at a rate of 7.0%.
These assessments have a direct impact on our net income because recording an impairment loss results in an immediate
negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on
assumptions regarding future rental rates and operating expenses that could differ materially from actual results in future
periods. Where properties held for use have been identified as having a potential for sale, additional judgments are required
related to the determination as to the appropriate period over which the projected undiscounted cash flows should include the
operating cash flows and the amount included as the estimated residual value. This requires significant judgment. In some
cases, the results of whether impairment is indicated are sensitive to changes in assumptions input into the estimates,
including the holding period until expected sale.
Cash and Cash Equivalents: We consider highly liquid investments purchased with an original maturity of 3 (three)
months or less to be cash equivalents.
Notes and Mortgages Receivable: Notes and mortgages receivables consist of loans originated by us related to seller
financing and funding provided to two tenants in conjunction with properties acquired in 2011. Notes and mortgages
receivable are recorded at stated principal amounts. We evaluate the collectability of both interest and principal on each loan
to determine whether it is impaired. A loan is considered to be impaired when, based upon current information and events, it
is probable that we will be unable to collect all amounts due under the existing contractual terms. When a loan is considered
to be impaired, the amount of loss is calculated by comparing the recorded investment to the fair value determined by
discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the underlying collateral
if the loan is collateralized. Interest income on performing loans is accrued as earned. Interest income on impaired loans is
recognized on a cash basis. We do not provide for an additional allowance for loan losses based on the grouping of loans as
we believe the characteristics of the loans are not sufficiently similar to allow an evaluation of these loans as a group for a
possible loan loss allowance. As such, all of our loans are evaluated individually for impairment purposes.
Deferred Rent Receivable and Revenue Recognition: We earn rental income under operating and direct financing
leases with tenants. Minimum lease payments from operating leases are recognized on a straight-line basis over the term of
the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment
terms is recorded as deferred rent receivable on the consolidated balance sheet. We provide reserves for a portion of the
recorded deferred rent receivable if circumstances indicate that it is not reasonable to assume that the tenant will make all of
its contractual lease payments when due during the current term of the lease. The straight-line method requires that rental
income related to those properties for which a reserve was provided is effectively recognized in subsequent periods when
payment is due under the contractual payment terms. Lease termination fees are recognized as rental income when earned
upon the termination of a tenant’s lease and relinquishment of space in which we have no further obligation to the tenant. The
present value of the difference between the fair market rent and the contractual rent for above-market and below-market
leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-
place leases.
53
Direct Financing Leases: Income under direct financing leases is included in revenues from rental properties and is
recognized over the lease terms using the effective interest rate method which produces a constant periodic rate of return on
the net investments in the leased properties. Net investment in direct financing leases represents the investments in leased
assets accounted for as direct financing leases. The investments in direct financing leases are increased for interest income
earned and amortized over the life of the leases and reduced by the receipt of lease payments.
Environmental Remediation Obligations: The estimated future costs for known environmental remediation
requirements are accrued when it is probable that a liability has been incurred, including legal obligations associated with the
retirement of tangible long-lived assets if the asset retirement obligation results from the normal operation of those assets and
a reasonable estimate of fair value can be made. Environmental remediation obligations are estimated based on the level and
impact of contamination at each property. The accrued liability is the aggregate of the best estimate of the fair value of cost
for each component of the liability. The accrued liability is net of recoveries of environmental costs from state underground
storage tank (“UST” or “USTs”) remediation funds, with respect to both past and future environmental spending based on
estimated recovery rates developed from prior experience with the funds. Net environmental liabilities are currently measured
based on their expected future cash flows which have been adjusted for inflation and discounted to present value. We accrue
for environmental liabilities that we believe are allocable to other potentially responsible parties if it becomes probable that
the other parties will not pay their environmental remediation obligations.
Litigation: Legal fees related to litigation are expensed as legal services are performed. We provide for litigation
reserves, including certain litigation related to environmental matters, when it is probable that a liability has been incurred
and a reasonable estimate of the liability can be made. If the estimate of the liability can only be identified as a range, and no
amount within the range is a better estimate than any other amount, the minimum of the range is accrued for the liability. We
accrue our share of environmental liabilities based on our assumptions of the ultimate allocation method and share that will
be used when determining our share of responsibility.
Income Taxes: We and our subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, we
elected to qualify, and believe we are operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, we
generally will not be subject to federal income tax on qualifying REIT income, provided that distributions to our shareholders
equal at least the amount of our taxable income as defined under the Internal Revenue Code. We accrue for uncertain tax
matters when appropriate. The accrual for uncertain tax positions is adjusted as circumstances change and as the uncertainties
become more clearly defined, such as when audits are settled or exposures expire. Although tax returns for the years 2009,
2010 and 2011, and tax returns which will be filed for the year ended 2012 remain open to examination by federal and state
tax jurisdictions under the respective statute of limitations, we have not currently identified any uncertain tax positions
related to those years and, accordingly, have not accrued for uncertain tax positions as of December 31, 2012 or 2011.
Interest Expense and Interest Rate Swap Agreement: In April 2006 we entered into an interest rate swap agreement
with JPMorgan Chase Bank, N.A. as the counterparty, designated and qualifying as a cash flow hedge, to reduce our variable
interest rate risk by effectively fixing a portion of the interest rate for existing debt and anticipated refinancing transactions.
We have not entered into financial instruments for trading or speculative purposes. The fair value of the interest rate swap
obligation was based upon the estimated amounts we would receive or pay to terminate the contract and was determined
using an interest rate market pricing model. Changes in the fair value of the agreement were included in the consolidated
statements of comprehensive income and would have been recorded in the consolidated statements of operations if the
agreement was not an effective cash flow hedge for accounting purposes.
Earnings per Common Share: Basic earnings per common share gives effect, utilizing the two-class method, to the
potential dilution from the issuance of common shares in settlement of restricted stock units (“RSUs” or “RSU”) which
provide for non-forfeitable dividend equivalents equal to the dividends declared per common share. Basic earnings per
common share is computed by dividing net earnings less dividend equivalents attributable to RSUs by the weighted-average
number of common shares outstanding during the year. Diluted earnings per common share, also gives effect to the potential
dilution from the exercise of stock options utilizing the treasury stock method.
54
(in thousands):
Earnings from continuing operations .................................................................................. $ 13,808 $ 9,424 $ 40,867
2012
2010
Year ended December 31,
2011
Less dividend equivalents attributable to restricted stock units outstanding ...............
(82)
(249)
(228)
Earnings from continuing operations attributable to common shareholders used for
basic earnings per share calculation ................................................................................ 13,726
Earnings (loss) from discontinued operations .....................................................................
Net earnings attributable to common shareholders used for basic earnings per share
(1,361)
9,175
3,032
40,639
10,833
calculation ....................................................................................................................... $ 12,365 $ 12,207 $ 51,472
Weighted-average number of common shares outstanding:
Basic ............................................................................................................................ 33,395
Stock options ............................................................................................................... —
Diluted ......................................................................................................................... 33,395
216
Restricted stock units outstanding at the end of the period .................................................
33,171
1
33,172
171
27,950
3
27,953
123
Stock-Based Compensation: Compensation cost for our stock-based compensation plans using the fair value method
was $757,000, $643,000 and $480,000 for the years ended December 31, 2012, 2011 and 2010, respectively, and is included
in general and administrative expense. The impact of the accounting for stock-based compensation is, and is expected to be,
immaterial to our financial position and results of operations.
Reclassifications: Certain amounts related to discontinued operations for 2011 and 2010 have been reclassified to
conform to the 2012 presentation.
New Accounting Pronouncement: In May 2011, the FASB issued Accounting Standards Update No. 2011-04, "Fair
Value Measurements and Disclosures (Topic 820) - Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRS" ("ASU 2011-04"). ASU 2011-04 clarifies the application of existing fair
value measurement requirements, changes certain principles related to measuring fair value and requires additional
disclosures about fair value measurements. Required disclosures are expanded under the new guidance, especially for fair
value measurements that are categorized within Level 3 of the fair value hierarchy, for which quantitative information about
the unobservable inputs used, and a narrative description of the valuation processes in place and sensitivity of recurring Level
3 measurements to changes in unobservable inputs is required. Entities will also be required to disclose the categorization by
level of the fair value hierarchy for items that are not measured at fair value in the balance sheet but for which the fair value
is required to be disclosed. ASU 2011-04 is effective for interim and annual periods beginning after December 15, 2011, and
is applied prospectively. The adoption of this guidance in 2012 resulted in expanded disclosures on fair value measurements
but did not have an impact to our measurements of fair value.
2. LEASES
Our business model is to lease our properties on a triple-net basis primarily to petroleum distributors and to a lesser
extent to individual operators. Our tenants operate our properties directly or sublet our properties to operators who operate
their gas stations, convenience stores, automotive repair service facilities or other businesses at our properties. These tenants
are responsible for the operations conducted at these properties. Our triple-net tenants are generally responsible for the
payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties. Substantially all
of our tenants’ financial results depend on the sale of refined petroleum products and rental income from their subtenants. As
a result, our tenants’ financial results are highly dependent on the performance of the petroleum marketing industry, which is
highly competitive and subject to volatility. In those instances where we determine that the best use for a property is no
longer as a gas station, we will seek an alternative tenant or buyer for the property. As of December 31, 2012, approximately
20 of our properties are leased for uses such as quick serve restaurants, automobile sales and other retail purposes, excluding
approximately 40 properties previously subject to the Master Lease with Marketing which are currently held for sale and
which have temporary occupancies. Our 1,081 properties are located in 21 states across the United States with concentrations
in the Northeast and Mid-Atlantic regions.
More than 700 of the properties we own or lease as of December 31, 2012 were previously leased to Getty Petroleum
Marketing Inc. (“Marketing”) comprising a unitary premises pursuant to a master lease (the “Master Lease”) and we derived
a majority of our revenues from the leasing of these properties under the Master Lease. On December 5, 2011, Marketing
filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”). Marketing rejected the Master Lease pursuant to an Order issued by the Bankruptcy Court effective
April 30, 2012. In accordance with GAAP, we recognize in revenue from rental properties in our consolidated statement of
55
operations the full contractual rent and real estate obligations due to us by Marketing during the term of the Master Lease and
provide bad debt reserves included in general and administrative expenses and in earnings (loss) from discontinued
operations in our consolidated statement of operations for our estimate of uncollectible amounts due from Marketing. As a
result, we provided net bad debt reserves related to uncollected rent and real estate taxes due from Marketing of $8,802,000
in the fourth quarter of 2011 and $13,980,000 for the year ended December 31, 2012. The reserve provided in the year ended
December 31, 2012 is net of a reduction of $1,348,000 as a result of receiving cash from a partial liquidation of the
Marketing bankruptcy estate. We have provided bad debt reserves aggregating $22,782,000 for all outstanding rent and real
estate tax obligations due from Marketing as of December 31, 2012 substantially all of which remain unpaid as of the filing
of this Annual Report on Form 10-K. (See note 3 for additional information regarding Marketing and the Master Lease.)
As a result of Marketing’s bankruptcy filing and Marketing’s rejection of the Master Lease, we commenced a process to
reposition the portfolio of properties that were subject to the Master Lease after the properties became available to us free of
Marketing’s tenancy. As a result of that process, as of December31, 2012, we have entered into long-term triple-net leases with
petroleum distributors for ten separate property portfolios comprising 443 properties in the aggregate and month-to-month
license agreements with occupants of approximately 155 properties (substantially all of whom were Marketing’s former sub-
tenants) allowing such occupants to continue to occupy and use these properties as gas stations, convenience stores, automotive
repair service facilities or other businesses. The month-to-month license agreements require the operators to sell fuel provided
exclusively by petroleum distributors with whom we have contracted for interim fuel supply and from whom we receive a fee
based on gallons sold. We have also entered into additional month-to-month license agreements at approximately 40 properties
which have had their underground storage tanks removed and are being used for various retail uses other than as a gas station.
These properties are currently marketed for sale. Our month-to-month license agreements differ from our typical triple-net lease
agreements in that we are responsible for the payment of certain environmental costs and property operating expenses including
real estate taxes. Approximately 60 properties previously subject to the Master Lease are currently vacant, the majority of which
have had their underground storage tanks removed and are being marketed for sale.
The long-term triple-net leases with petroleum distributors for ten separate property portfolios comprising 443
properties in the aggregate are unitary triple-net lease agreements generally with an initial term of 15 years, and options for
successive renewal terms of up to 20 years. Rent is scheduled to increase at varying intervals of up to three years on the
anniversary of the commencement date of the leases. The majority of the leases provide for additional rent based on the
volume of petroleum products sold. As triple-net lessees, the tenants are required to pay all amounts pertaining to the
properties subject to the leases, including taxes, assessments, licenses and permit fees, charges for public utilities and all
other governmental charges. In addition, the majority of the leases require the tenants to make capital expenditures at our
properties substantially all of which is related to the replacement of underground storage tanks that are the property our
tenants. In certain of our new leases, we have committed to co-invest up to $14,080,000 with our tenants for a portion of such
capital expenditures, which deferred expense is recognized on a straight-line basis as a reduction of revenues from rental
properties over the terms of the various leases. As part of certain of the triple-net leases we have entered into through
December 31, 2012, we transferred title of the USTs to our tenants and the obligation to pay for the retirement and
decommissioning or removal of USTs at the end of their useful life or earlier if circumstances warranted at the 443 sites was
fully or partially transferred to our new tenants. We remain contingently liable for this obligation in the event that our tenants
do not satisfy their responsibilities. Accordingly, during the year ended December 31, 2012, we removed $11,153,000 of
asset retirement obligations and $9,795,000 of net asset retirement costs related to USTs from our balance sheet. The net
amount of $1,358,000 is recorded as deferred rental revenue and will be recognized on a straight-line basis as additional
revenues from rental properties over the terms of the various leases. We incurred $3,146,000 of lease origination costs in
2012, which deferred expense is recognized on a straight-line basis as a reduction of revenues from rental properties over the
terms of the various leases.
Revenues from rental properties included in continuing operations for the years ended December 31, 2012,2011 and 2010
was $99,286,000, $100,263,000 and $78,227,000, respectively, of which $20,136,000, $52,646,000 and $50,135,000,
respectively, was contractually due or received from Marketing under the Master Lease through its rejection on April 30, 2012
and $72,954,000, $45,515,000 and $26,426,000, respectively, were contractually due or received from other tenants including
rent for May 2012 through December 2012 related to properties repositioned from the Master Lease. Revenues from rental
properties and rental property expenses included in continuing operations included $11,263,000 for the year ended December
31, 2012, $6,639,000 for the year ended December 31, 2011 and $1,849,000, for the year ended December 31, 2010 for real
estate taxes paid by us which were reimbursable by tenants (which includes amounts related to properties previously subject to
the Master Lease discussed in the following paragraph). Revenues from rental properties included in continuing operations for
the year ended December 31, 2012 also include $1,763,000 for amounts realized under interim fuel supply agreements.
56
As a result of Marketing’s bankruptcy filing, beginning in the first quarter of 2012, we began paying past due real estate
taxes for 2011 and 2012, which taxes Marketing historically paid directly. Real estate taxes that we pay and were due from
Marketing through April 30, 2012, the date the Master Lease was rejected, and from certain other tenants who are
contractually obligated to reimburse us for the payment of real estate taxes pursuant to the terms of triple-net lease
agreements are included in revenues from rental properties and in rental property expense in our consolidated statement of
operations. Revenues from rental properties and rental property expense included in continuing operations included
$11,263,000, $6,639,000 and $1,849,000 for the year ended December 31, 2012, 2011 and 2010, respectively, for real estate
taxes paid by us which were due from Marketing and other tenants. Marketing also made additional direct payments for other
operating expenses related to these properties, including environmental remediation obligations other than those liabilities
that were retained by us. Costs paid directly by Marketing under the terms of the Master Lease are not reflected in revenues
from rental properties or rental property expense in our consolidated financial statements. We continue to incur costs
associated with the Marketing bankruptcy and we anticipate paying directly other Property Expenditures (as defined below)
historically paid by Marketing under the terms of the Master Lease for the foreseeable future.
In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually
due or received during the periods presented. As a result, revenues from rental properties include non-cash adjustments
recorded for deferred rental revenue due to the recognition of rental income on a straight-line (or average) basis over the
current lease term, net amortization of above-market and below-market leases and recognition of rental income recorded
under direct financing leases using the effective interest method which produces a constant periodic rate of return on the net
investments in the leased properties (the “Revenue Recognition Adjustments”). Revenue Recognition Adjustments included
in continuing operations increased rental revenue by $4,433,000, $2,102,000 and $1,666,000 for the years ended December
31, 2012, 2011 and 2010, respectively.
We provide reserves for a portion of the recorded deferred rent receivable if circumstances indicate that a tenant will
not make all of its contractual lease payments during the current lease term. Our assessments and assumptions regarding the
recoverability of the deferred rent receivable are reviewed on an ongoing basis and such assessments and assumptions are
subject to change. As of December 31, 2011, the gross deferred rent receivable attributable to the Master Lease of
$25,630,000 was fully reserved. As a result of the developments described above, we previously concluded that it was
probable that we would not receive from Marketing the entire amount of the contractual lease payments owed to us under the
Master Lease. Accordingly, during the third and fourth quarters of 2011, we recorded non-cash allowances for deferred rental
revenue in continuing and discontinued operations aggregating $11,043,000 and $8,715,000, respectively, fully reserving in
the fourth quarter of 2011 for the deferred rent receivable relating to the Master Lease. These non-cash allowances reduced
our net earnings for the applicable periods in 2011, but did not impact our cash flow from operating activities. The gross
deferred rent receivable and the reserve relating to the Master Lease were derecognized in the second quarter of 2012 upon
termination of the Master Lease.
The components of the $91,904,000 net investment in direct financing leases as of December 31, 2012, are minimum
lease payments receivable of $203,869,000 plus unguaranteed estimated residual value of $11,991,000 less unearned income
of $123,956,000.
Future contractual minimum annual rentals receivable from our tenants, which have terms in excess of one year as of
December 31, 2012, are as follows (in thousands):
YEAR ENDING DECEMBER 31,
2013 ..................................................................................................... $
2014 .....................................................................................................
2015 .....................................................................................................
2016 .....................................................................................................
2017 .....................................................................................................
Thereafter .............................................................................................
OPERATING
LEASES
DIRECT
FINANCING
LEASES
67,940 $
61,160
60,572
60,624
59,993
495,195
11,035 $
11,286
11,462
11,640
11,942
146,506
TOTAL(a)
78,975
72,446
72,034
72,264
71,935
641,701
(a)
Includes $89,392,000 of future minimum annual rentals receivable under subleases.
Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to
$7,903,000, $8,009,000 and $7,007,000 for the years ended December 31, 2012, 2011 and 2010, respectively, and is included
in rental property expenses using the straight-line method. Rent received under subleases for the years ended December 31,
2012, 2011 and 2010 was $11,809,000, $13,325,000 and $11,868,000, respectively.
57
We have obligations to lessors under non-cancelable operating leases which have terms in excess of one year,
principally for gasoline stations and convenience stores. The leased properties have a remaining lease term averaging over 10
years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are
as follows: 2013 — $7,826,000, 2014 — $6,830,000, 2015 — $5,631,000, 2016 — $4,474,000, 2017 - $2,771,000 and
$5,866,000 thereafter.
3. COMMITMENTS AND CONTINGENCIES
CREDIT RISK
In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash
investments, if any, with high credit quality institutions. Temporary cash investments, if any, are currently held in an
overnight bank time deposit with JPMorgan Chase Bank, N.A.
MARKETING AND THE MASTER LEASE
On December 5, 2011, Marketing filed for Chapter 11 bankruptcy protection in the Bankruptcy Court. On March 7,
2012, we entered into a stipulation with Marketing and with the Official Committee of Unsecured Creditors in the
Bankruptcy proceedings (the “Creditors Committee”), which was approved and made an Order by the Bankruptcy Court on
April 2, 2012 (the “Stipulation”). Pursuant to the terms of the Stipulation, in addition to our other pre-petition and post-
petition claims, we are entitled to recover an administrative claim capped at $10,500,000 for the partial payment of fixed rent
and performance of other obligations due from Marketing under the Master Lease from December 5, 2011 until possession of
the properties subject to the Master Lease was returned to us effective April 30, 2012 (the “Administrative Claim”). Our
Administrative Claim has priority over the claims of other creditors and certain of our other claims. As of the date of this
filing on Form 10-K, the outstanding unpaid principal amount of our Administrative Claim is $7,443,000.
The Bankruptcy Court has appointed a liquidating trustee (the “Liquidating Trustee”) to oversee the liquidation of the
Marketing estate (the “Marketing Estate”). The Liquidating Trustee continues to oversee the Marketing Estate and pursue
claims for the benefit of its creditors, including those related to the recovery of various deposits, including surety bonds,
insurance policy claims and claims made to state funded tank reimbursement programs. We received distributions reducing
our Administrative Claim of $1,348,000 in the third and fourth quarters of 2012 and $1,709,000 in the first quarter of 2013,
from the Marketing Estate. As a result, in 2012, we reversed portions of our bad debt reserve for uncollectible amounts due
from Marketing and reduced bad debt expense included in general and administrative expenses on our consolidated statement
of income. We cannot provide any assurance that we will ultimately collect any additional claims against or unpaid amounts
due from the Marketing Estate pursuant to the Plan of Liquidation, or otherwise.
In December 2011, the Marketing Estate filed a lawsuit against Marketing’s former parent, Lukoil Americas
Corporation, and certain of its affiliates (collectively, “Lukoil”), as well as the former directors and officers of Marketing (the
“Lukoil Complaint”). The Lukoil Complaint asserts, among other claims, that Marketing’s sale of assets to Lukoil in
November 2009 constituted a fraudulent conveyance, and that the assets or their value can be recovered from Lukoil. In
addition, the Lukoil Complaint asserts that the former directors and officers violated their fiduciary duties to Marketing in
approving and effectuating the challenged sale, and are liable for money damages. The Liquidating Trustee is pursuing these
claims for the benefit of the Marketing Estate. It is possible that the Liquidating Trustee will obtain a favorable judgment or
will settle with the defendants, and therefore it is possible that we may ultimately recover a portion of our claims against
Marketing, including our Administrative Claim, which has priority over most other creditors’ claims, and our additional pre-
petition and post-petition claims.
In October 2012, we entered into an agreement with the Marketing Estate to make loans and otherwise fund up to an
aggregate amount of $6,425,000 to fund the prosecution of the Lukoil Complaint and certain Liquidating Trustee expenses
incurred in connection with the wind-down of the Marketing Estate (the “Litigation Funding Agreement”). This agreement
provides that we are entitled to receive proceeds, if any, from the successful prosecution of the Lukoil Complaint in an
amount equal to the sum of (i) all funds advanced for wind-down costs and expert witness and consultant fees plus interest
accruing at 15% per annum on such advances made by us; plus (ii) the greater of all funds advanced for legal fees and
expenses relating to the prosecution of the Lukoil Complaint plus interest accruing at 15% per annum on such advances
made by us, or 24% of the gross proceeds from any settlement or favorable judgment obtained by the Liquidating Trustee
due to the Lukoil Complaint. We advanced $1,672,000 in the fourth quarter of 2012 and $143,000 in the first quarter of
2013 to the Marketing Estate pursuant to the Litigation Funding Agreement. It is possible that we may agree to advance
amounts in excess of $6,425,000. The Litigation Funding Agreement also provides that we are entitled to be reimbursed
for up to $1,300,000 of our legal fees incurred in connection with the Litigation Funding Agreement. Based on the terms
58
of the Litigation Funding Agreement, we have recorded a receivable of $2,972,000 as of December 31, 2012, which
includes amounts advanced and amounts due for reimbursable legal fees we incurred in connection with the Litigation
Funding Agreement. Payments that we receive pursuant to the Litigation Funding Agreement will not reduce our
Administrative Claim or our other pre-petition and post-petition claims against Marketing. A portion of the payments we
receive pursuant to the Litigation Funding Agreement may be subject to federal income taxes. We cannot provide any
assurance that we will be repaid any amounts we advance pursuant to the Litigation Funding Agreement or the
reimbursable legal fees we have incurred.
We have elected to account for the advances, accrued interest and litigation reimbursements due us pursuant to the
Litigation Funding Agreement on a fair value basis. We used unobservable inputs based on comparable transactions when
determining the fair value of Litigation Funding Agreement. We concluded that the terms of the Litigation Funding
Agreement are within a range of terms representing the market for such arrangements when considering the unique
circumstances particular to the counterparties to such funding agreements. These inputs include the potential outcome of the
litigation related to the Lukoil Complaint including the probability of the Marketing Estate prevailing in its lawsuit and the
potential amount that may be recovered by the Marketing Estate from Lukoil Americas Corporation. We also applied a
discount factor commensurate with the risk that the Marketing Estate may not prevail in its lawsuit. We considered that fair
value is defined as an amount of consideration that would be exchanged between a willing buyer and seller. Accordingly, we
believe that a market participant would likely purchase our rights from us for approximately the amounts currently due us
under the terms of the Litigation Funding Agreement.
Under the Master Lease, Marketing was responsible to pay for certain environmental related liabilities and expenses.
As a result of Marketing’s bankruptcy filing, we have accrued for certain environmental liabilities (the “Marketing
Environmental Liabilities”) and commenced funding remediation activities during the second quarter of 2012 related to such
accruals. We do not expect to be reimbursed by Marketing for any such remediation activities except as a result of realizing a
claim deriving from the Lukoil Complaint. We expect to continue to incur and fund costs associated with the Marketing
bankruptcy proceedings and associated eviction proceedings as well as costs associated with repositioning properties
previously leased to Marketing. We expect to continue to incur operating expenses such as maintenance, repairs, real estate
taxes, insurance and general upkeep related to these properties (“Property Expenditures”) for vacant properties and properties
subject to our month-to-month license agreements. In certain of our new leases, we have also agreed to co-invest with our
tenants to fund capital improvements including replacing underground storage tanks and related equipment or renovating
some of the properties previously leased to Marketing (“Capital Improvements”).
It is possible that our estimates for the Marketing Environmental Liabilities relating to the properties previously leased
to Marketing will be higher than the amounts we have accrued and that issues involved in re-letting or repositioning these
properties may require significant management attention that would otherwise be devoted to our ongoing business. In
addition, we increased our number of tenants significantly and are performing property related functions previously
performed by Marketing, both of which have resulted in permanent increases in our annual operating expenses. The
incurrence of these various expenses may materially negatively impact our cash flow and ability to pay dividends.
Our estimates, judgments, assumptions and beliefs regarding Marketing and the Master Lease affect the amounts
reported in our financial statements and are subject to change. Actual results could differ from these estimates, judgments and
assumptions and such differences could be material. If our actual expenditures for the Marketing Environmental Liabilities
are greater than the amounts accrued, if we incur significant costs and operating expenses relating to the properties
comprising the Master Lease portfolio; if the repositioning of the properties comprising the Master Lease portfolio leads to a
protracted and expensive process for taking control and or re-letting our properties; if re-letting the properties comprising the
Master Lease portfolio requires significant management attention that would otherwise be devoted to our ongoing business; if
the Bankruptcy Court takes actions that are detrimental to our interests; if we are unable to re-let or sell the properties
comprising the Master Lease portfolio at all or upon terms that are favorable to us; or if we change our estimates, judgments,
assumptions and beliefs; our business, financial condition, revenues, operating expenses, results of operations, liquidity,
ability to pay dividends and stock price may continue to be materially adversely affected or adversely affected to a greater
extent than we have experienced. (For information regarding factors that could adversely affect us relating to our lessees,
including Marketing, see “Part II, Item 1A. Risk Factors.”)
59
LEGAL PROCEEDINGS
We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of
December 31, 2012 and December 31, 2011, we had accrued $3,615,000 and $4,242,000, respectively, for certain of these
matters which we believe were appropriate based on information then currently available. We are unable to estimate ranges in
excess of the amount accrued with any certainty for these matters. It is possible that our assumptions regarding the ultimate
allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result
in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation accruals. Matters related to
our Newark, New Jersey Terminal and the Lower Passaic River and the MTBE multi-district litigation case, in particular,
could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay
dividends or stock price.
Matters related to our Newark, New Jersey Terminal and the Lower Passaic River
In September 2003, we received a directive (the “Directive”) from the State of New Jersey Department of
Environmental Protection (the “NJDEP”) notifying us that we are one of approximately 66 potentially responsible parties for
natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The Directive calls
for an assessment of the natural resources that have been injured by the discharges into the Lower Passaic River and interim
compensatory restoration for the injured natural resources. There has been no material activity with respect to the NJDEP
Directive since early after its issuance. The responsibility for the alleged damages, the aggregate cost to remediate the Lower
Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially
responsible parties have not been determined. Effective May 2007, the United States Environmental Protection Agency
(“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties
comprising a Cooperating Parties Group (“CPG”) (many of whom are also named in the Directive) who have collectively
agreed to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. We are a party to
the AOC and are a member of the CPG. The RI/FS is intended to address the investigation and evaluation of alternative
remedial actions with respect to alleged damages to the Lower Passaic River, and is scheduled to be completed in or about
2015. On June 18, 2012, all members of the CPG except Occidental Chemical Corporation (“Occidental”) entered into an
Administrative Settlement Agreement and Order on Consent (“10.9 AOC”) to perform certain remediation activities,
including removal and capping of sediments at the river mile 10.9 area and certain testing. Similar to the RI/FS work, the
CPG entered into an interim allocation for the costs of the river mile 10.9 work. The EPA issued a Unilateral Order to
Occidental directing Occidental to participate and contribute to the cost of the river mile 10.9 work and discussions regarding
Occidental’s participation in the river mile 10.9 work are ongoing. Concurrently, the EPA is preparing a proposed Focused
Feasibility Study (“FFS”) that the EPA claims will address sediment issues in the lower eight miles of the Lower Passaic
River. The RI/FS and 10.9 AOC do not resolve liability issues for remedial work or restoration of, or compensation for,
natural resource damages to the Lower Passaic River, which are not known at this time.
In a related action, in December 2005, the State of New Jersey through various state agencies brought suit against
certain companies which the State alleges are responsible for various categories of past and future damages resulting from
discharges of hazardous substances to the Passaic River. In February 2009, certain of these defendants filed third-party
complaints against approximately 300 additional parties, including us, seeking contribution for such parties’ proportionate
share of response costs, cleanup and other damages, based on their relative contribution to pollution of the Passaic River and
adjacent bodies of water. We believe that ChevronTexaco is contractually obligated to indemnify us, pursuant to an
indemnification agreement, for most if not all of the conditions at the property identified by the NJDEP and the EPA.
Accordingly, our potential range of loss including our ultimate legal and financial liability, if any, cannot be made with any
certainty at this time
MTBE Litigation
We are defending against one remaining lawsuit of many brought by or on behalf of private and public water providers
and governmental agencies. These cases alleged (and, as described below with respect to one remaining case, continue to
allege) various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (a fuel derived from
methanol, commonly referred to as “MTBE”) as the basis for claims seeking compensatory and punitive damages, and name
as defendant approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing
MTBE. During 2010, we agreed to, and subsequently paid, $1,725,000 to settle two plaintiff classes covering 52 pending
cases. Presently, we remain a defendant in one MTBE case involving multiple locations throughout the State of New Jersey
brought by various governmental agencies of the State of New Jersey, including the NJDEP.
60
As of December 31, 2012 and December 31, 2011, we maintained a litigation reserve representing our best estimate of
loss relating to the remaining MTBE case in an amount which we believe was appropriate based on information then
currently available. We are unable to estimate ranges in excess of the amount accrued with any certainty for the case
involving the State of New Jersey as there remains uncertainty as to the accuracy of the allegations in this case as they relate
to us, our defenses to the claims, our rights to indemnification and the aggregate possible amount of damages for which we
may be held liable.
4. CREDIT AGREEMENT AND TERM LOAN AGREEMENT
As of December 31, 2012, we were a party to a $175,000,000 amended and restated senior secured revolving credit
agreement with a group of commercial banks led by JPMorgan Chase Bank, N.A. and a $25,000,000 amended term loan
agreement with TD Bank, both of which were scheduled to mature in March 2013. As of December 31, 2012, borrowings
under the credit agreement were $150,290,000 bearing interest at a rate of 3.25% per annum and borrowings under the term
loan agreement were $22,030,000 bearing interest at a rate of 3.50% per annum. Loan origination costs incurred in March
2012 of $4,144,000 were amortized over the one year extended term of these debt agreements. On February 25, 2013, the
borrowings then outstanding under such credit agreement and term loan agreement were repaid with cash on hand and
proceeds of the Credit Agreement and the Prudential Loan Agreement (both defined below).
On February 25, 2013, we entered into a $175,000,000 senior secured revolving credit agreement (the “Credit
Agreement”) with a group of commercial banks led by JPMorgan Chase Bank, N.A. (the “Bank Syndicate”), which is
scheduled to mature in August 2015. Subject to the terms of the Credit Agreement, we have the option to extend the term of
the Credit Agreement for one additional year to August 2016. The Credit Agreement allocates $25,000,000 of the total Bank
Syndicate commitment to a term loan and $150,000,000 to a revolving credit facility. Subject to the terms of the Credit
Agreement, we have the option to increase by $50,000,000 the amount of the revolving credit facility to $200,000,000. The
Credit Agreement permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 1.50% to 2.00% or a
LIBOR rate plus a margin of 2.50% to 3.00% based on our leverage at the end of each quarterly reporting period. The annual
commitment fee on the undrawn funds under the Credit Agreement is 0.30% to 0.40% based our leverage at the end of each
quarterly reporting period. The Credit Agreement does not provide for scheduled reductions in the principal balance prior to
its maturity.
The Credit Agreement provides for security in the form of, among other items, mortgage liens on certain of our
properties. The parties to the Credit Agreement and the Prudential Loan Agreement (as defined below) share the security
pursuant to the terms of an inter-creditor agreement. The Credit Agreement contains customary financial covenants such as
loan to value, leverage and coverage ratios and minimum tangible net worth, as well as limitations on restricted payments,
which may limit our ability to incur additional debt or pay dividends. The Credit Agreement contains customary events of
default, including default under the Prudential Loan Agreement, change of control and failure to maintain REIT status. Any
event of default, if not cured or waived, would increase by 200 basis points (2.00%) the interest rate we pay under the Credit
Agreement and prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our
indebtedness under the Credit Agreement and could also give rise to an event of default and could result in the acceleration of
our indebtedness under the Prudential Loan Agreement. We may be prohibited from drawing funds against the revolving
credit facility if there is a material adverse effect on our business, assets, prospects or condition.
On February 25, 2013, we entered into a $100,000,000 senior secured long-term loan agreement with the Prudential
Insurance Company of America (the “Prudential Loan Agreement”), which matures in February 2021. The Prudential
Loan Agreement bears interest at 6.00%. The Prudential Loan Agreement does not provide for scheduled reductions in the
principal balance prior to its maturity. The parties to the Credit Agreement and the Prudential Loan Agreement share the
security described above pursuant to the terms of an inter-creditor agreement. The Prudential Loan Agreement contains
customary financial covenants such as loan to value, leverage and coverage ratios and minimum tangible net worth, as
well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends. The
Prudential Loan Agreement contains customary events of default, including default under the Credit Agreement and
failure to maintain REIT status. Any event of default, if not cured or waived, would increase by 200 basis points (2.00%)
the interest rate we pay under the Prudential Loan Agreement and could result in the acceleration of our indebtedness
under the Prudential Loan Agreement and could also give rise to an event of default and could result in the acceleration of
our indebtedness under our Credit Agreement.
We repaid the then outstanding borrowings related to our debt outstanding as of December 31, 2012 partially with cash
on hand and proceeds from the Credit Agreement and the Prudential Loan Agreement entered into in February 2013. The
aggregate maturity of the Credit Agreement and the Prudential Loan Agreement as of February 25, 2013, is as follows: 2015
— $71,900,000 and 2021 - $100,000,000.
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Due to the near-term maturity of our outstanding debt as of December 31, 2012, the carrying value of the borrowings
outstanding as of December 31, 2012 approximated fair value which was determined using a discounted cash flow technique
that incorporates a market interest yield curve based on market data obtained from sources independent of us that are
observable at commonly quoted intervals and are defined by GAAP as Level 2 inputs in the Fair Value Hierarchy with
adjustments for duration, optionality, risk profile and projected average borrowings outstanding or borrowings outstanding,
which are based on unobservable Level 3 inputs. We classified our valuations of the borrowings outstanding under the
amended credit agreement and the amended term loan agreement entirely within Level 3 of the Fair Value Hierarchy.
5. INTEREST RATE SWAP AGREEMENT
We were a party to a $45,000,000 LIBOR based interest rate swap, effective through June 30, 2011 (the “Swap
Agreement”). The Swap Agreement was intended to effectively fix, at 5.44%, the LIBOR component of the interest rate
determined under our LIBOR based loan agreements. We entered into the Swap Agreement with JPMorgan Chase Bank,
N.A., designated and qualifying as a cash flow hedge, to reduce our exposure to the variability in future cash flows
attributable to changes in the LIBOR rate. Our primary objective when undertaking the hedging transaction and derivative
position was to reduce our variable interest rate risk by effectively fixing a portion of the interest rate for existing debt and
anticipated refinancing transactions. We determined that the derivative used in the hedging transaction was highly effective in
offsetting changes in cash flows associated with the hedged item and that no gain or loss was required to be recognized in
earnings during the year ended December 31, 2011 representing the hedge’s ineffectiveness.
The fair values of the Swap Agreement obligation were determined using (i) discounted cash flow analyses on the
expected cash flows of the Swap Agreement, which were based on market data obtained from sources independent of us
consisting of interest rates and yield curves that are observable at commonly quoted intervals and are defined by GAAP as
Level 2 inputs in the Fair Value Hierarchy, and (ii) credit valuation adjustments, which were based on unobservable Level 3
inputs. We classified our valuations of the Swap Agreement entirely within Level 2 of the Fair Value Hierarchy since the
credit valuation adjustments were not significant to the overall valuations of the Swap Agreement.
6. ENVIRONMENTAL OBLIGATIONS
We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the
protection of the environment such as the remediation of known contamination and the retirement and decommissioning or
removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Environmental
costs are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning
remediation systems, monitoring contamination and governmental agency reporting incurred in connection with
contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental costs
where available. In July 2012, we purchased for $3,062,000 a ten-year pollution legal liability insurance policy covering all
of our properties for pre-existing unknown environmental liabilities and new environmental events. The policy has a
$50,000,000 aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our
intention in purchasing this policy is to obtain protection predominantly for significant events. No assurances can be given
that we will obtain a net financial benefit from this investment. Historically we did not maintain pollution legal liability
insurance to protect from potential future claims related to known and unknown environmental liabilities.
We enter into leases and various other agreements which allocate responsibility for known and unknown
environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. In
accordance with the leases with certain tenants, we have agreed to bring the leased properties with known environmental
contamination to within applicable standards, and to either regulatory or contractual closure (“Closure”). Generally, upon
achieving Closure at each individual property, our environmental liability under the lease for that property will be satisfied
and future remediation obligations will be the responsibility of our tenant.
Generally, our tenants are directly responsible to pay for: (i) the retirement and decommissioning or removal of USTs
and other equipment, (ii) remediation of environmental contamination they cause and compliance with various environmental
laws and regulations as the operators of our properties, and (iii) environmental liabilities allocated to them under the terms of
our leases and various other agreements. We are contingently liable for these obligations in the event that our tenants do not
satisfy their responsibilities. Under the Master Lease, Marketing was responsible to pay for the retirement and
decommissioning or removal of USTs at the end of their useful life or earlier if circumstances warranted as well as all
environmental liabilities discovered during the term of the Master Lease, including: (i) remediation of environmental
contamination Marketing caused and compliance with various environmental laws and regulations as the operator of our
properties, and (ii) known and unknown environmental liabilities allocated to Marketing under the terms of the Master Lease
and various other agreements with us relating to Marketing’s business and the properties it leased from us (collectively the
62
“Marketing Environmental Liabilities”). A liability has not been accrued for obligations that are the responsibility of our
tenants (other than the Marketing Environmental Liabilities accrued in the fourth quarter of 2011) based on our tenants’
history of paying such obligations and/or our assessment of their financial ability and intent to pay their share of such costs.
However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the
past will continue to do so.
In the fourth quarter of 2011, since we could no longer assume that Marketing would be able to meet its environmental
remediation obligations at 246 properties and its obligations to remove all underground storage tanks at the end of their
useful life or earlier if circumstances warrant, we accrued $47,874,000 as the aggregate Marketing Environmental Liabilities.
In conjunction with recording the Marketing Environmental Liabilities, we increased the carrying value for each of the
properties by the amount of the related estimated environmental obligation and simultaneously recorded impairment charges
aggregating $17,017,000 where the accumulation of asset retirement costs increased the carrying value of the property above
its estimated fair value.
As part of certain triple-net leases whose term commenced through December 31, 2012, we transferred title of the
USTs to our tenants and the obligation to pay for the retirement and decommissioning or removal of USTs at the end of their
useful life or earlier if circumstances warranted was fully or partially transferred to our new tenants. Accordingly, during the
year ended December 31, 2012, we removed $11,153,000 of asset retirement obligations and $9,795,000 of net asset
retirement costs related to USTs from our balance sheet. The net amount of $1,358,000 is recorded as deferred rental revenue
and will be recognized on a straight-line basis as additional revenues from rental properties over the terms of the various
leases. (See note 2 for additional information.)
It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to
allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for
environmental litigation accruals and environmental remediation liabilities. We are required to accrue for environmental
liabilities that we believe are allocable to others under various other agreements if we determine that it is probable that the
counterparty will not meet its environmental obligations. The ultimate resolution of these matters could cause a material
adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
The estimated future costs for known environmental remediation requirements are accrued when it is probable that a
liability has been incurred and a reasonable estimate of fair value can be made. The accrued liability is the aggregate of the
best estimate of the fair value of cost for each component of the liability net of estimated recoveries from state UST
remediation funds considering estimated recovery rates developed from prior experience with the funds.
Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of
contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local
laws and regulations and their interpretations, as well as the time it takes to remediate contamination. In developing our
liability for estimated environmental remediation obligations on a property by property basis, we consider among other
things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information
available, currently available technologies for treatment, alternative methods of remediation and prior experience.
Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation
treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and
reasonably estimable.
Environmental remediation obligations are initially measured at fair value based on their expected future net cash
flows which have been adjusted for inflation and discounted to present value. As of December 31, 2012, 2011, 2010 and
2009, we had accrued $46,150,000, $57,700,000, $10,908,000 and $12,645,000, respectively, as our best estimate of the fair
value of reasonably estimable environmental remediation obligations net of estimated recoveries and obligations to remove
USTs. Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly,
$3,174,000, $899,000 and $775,000 of net accretion expense was recorded for the years ended December 31, 2012, 2011 and
2010, respectively, which is included in environmental expenses. In addition, during the year ended December 31, 2012 we
recorded credits aggregating $4,154,000 to environmental expenses where decreases in estimated remediation costs exceeded
the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project
management fees, legal fees and provisions for environmental litigation loss reserves.
During the years ended December 31, 2012 and 2011, we increased the carrying value of certain of our properties
by $5,710,000 and $47,874,000, respectively, due to increases in estimated remediation costs. The recognition, and
subsequent changes in estimates, in environmental liabilities and the increase or decrease in carrying value of the
properties are non-cash transactions which do not appear on the face of the consolidated statements of cash flows.
63
Capitalized asset retirement costs are being depreciated over the estimated remaining life of the underground storage tank,
a ten year period if the increase in carrying value related to environmental remediation obligations or such shorter period
if circumstances warrant, such as the remaining lease term for properties we lease from others. Depreciation and
amortization expense included in our consolidated statements of operations for the years ended December 31, 2012 and
2011 include $5,371,000 and $855,000, respectively, of depreciation related to capitalized asset retirement costs of
$23,549,000 and $35,321,000 as of December 31, 2012 and 2011, respectively.
We cannot predict what environmental legislation or regulations may be enacted in the future or how existing laws or
regulations will be administered or interpreted with respect to products or activities to which they have not previously been
applied. We cannot predict if state UST fund programs will be administered and funded in the future in a manner that is
consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at historical
recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous
enforcement policies of the regulatory agencies or stricter interpretation of existing laws, which may develop in the future,
could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional
expenditures for future remediation.
In view of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges
in excess of the amount accrued with any certainty; however, we believe it is possible that the fair value of future actual net
expenditures could be substantially higher than amounts currently recorded by us. Adjustments to accrued liabilities for
environmental remediation obligations will be reflected in our financial statements as they become probable and a reasonable
estimate of fair value can be made. Future environmental expenses could cause a material adverse effect on our business,
financial condition, results of operations, liquidity, ability to pay dividends or stock price.
7. INCOME TAXES
Net cash paid for income taxes for the years ended December 31, 2012, 2011 and 2010 of $810,000, $267,000 and
$365,000, respectively, includes amounts related to state and local income taxes for jurisdictions that do not follow the
federal tax rules, which are provided for in rental property expenses in our consolidated statements of operations.
Earnings and profits (as defined in the Internal Revenue Code) are used to determine the tax attributes of dividends
paid to stockholders and will differ from income reported for financial statement purposes due to the effect of items which
are reported for income tax purposes in years different from that in which they are recorded for financial statement purposes.
Earnings and profits were $7,814,000, $63,472,000 and $50,563,000 for the years ended December 31, 2012, 2011 and 2010,
respectively. The federal tax attributes of the common dividends for the years ended December 31, 2012, 2011 and 2010
were: ordinary income of 10.0%, 98.3% and 97.5%, capital gain distributions of 61.3%, 1.7% and 0.4% and non-taxable
distributions of 28.7%, 0.0% and 2.1%, respectively.
To qualify for taxation as a REIT, we, among other requirements such as those related to the composition of our assets
and gross income, must distribute annually to our stockholders at least 90% of our taxable income, including taxable income
that is accrued by us without a corresponding receipt of cash. We cannot provide any assurance that our cash flows will
permit us to continue paying cash dividends. The Internal Revenue Service (“IRS”) has allowed the use of a procedure, as a
result of which we could satisfy the REIT income distribution requirement by making a distribution on our common stock
comprised of (i) shares of our common stock having a value of up to 80% of the total distribution and (ii) cash in the
remaining amount of the total distribution, in lieu of paying the distribution entirely in cash. In order to use this procedure,
we would need to seek and obtain a private letter ruling of the IRS to the effect that the procedure is applicable to our
situation. Without obtaining such a private letter ruling, we cannot provide any assurance that we will be able to satisfy our
REIT income distribution requirement by making distributions payable in whole or in part in shares of our common stock.
Should the Internal Revenue Service successfully assert that our earnings and profits were greater than the amount
distributed, we may fail to qualify as a REIT; however, we may avoid losing our REIT status by paying a deficiency dividend
to eliminate any remaining earnings and profits. We may have to borrow money or sell assets to pay such a deficiency
dividend. Although tax returns for the years 2009, 2010 and 2011, and tax returns which will be filed for the year ended 2012
remain open to examination by federal and state tax jurisdictions under the respective statute of limitations, we have not
currently identified any uncertain tax positions related to those years and, accordingly, have not accrued for uncertain tax
positions as of December 31, 2012 or 2011. However, uncertain tax matters may have a significant impact on the results of
operations for any single fiscal year or interim period.
64
8. SHAREHOLDERS’ EQUITY
A summary of the changes in shareholders’ equity for the years ended December 31, 2012, 2011 and 2010 is as follows
(in thousands, except per share amounts):
COMMON STOCK
AMOUNT
SHARES
PAID-IN
CAPITAL
248 $ 259,459 $
1
2
5,175
BALANCE, DECEMBER 31, 2009 ............ 24,766 $
Net earnings .................................................
Dividends — $1.91 per share .......................
Stock-based compensation ...........................
Stock options exercised ................................
Proceeds from issuance of common stock....
Net unrealized gain on interest rate swap .....
BALANCE, DECEMBER 31, 2010 ............
Net earnings .................................................
Dividends — $1.46 per share .......................
Stock-based compensation ...........................
Stock options exercised ................................
Proceeds from issuance of common stock....
Net unrealized gain on interest rate swap .....
BALANCE, DECEMBER 31, 2011 ............
Net earnings .................................................
Dividends — $0.375 per share .....................
Stock-based compensation ...........................
BALANCE, DECEMBER 31, 2012 ............
33,397 $
29,944
33,394
3,450
3
DIVIDEND
PAID
IN EXCESS
OF EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
LOSS
TOTAL
(49,045) $
51,700
(54,959)
(52,304)
12,456
(49,004)
(88,852) $
12,447
(12,606)
(89,011) $
(2,993) $207,669
51,700
(54,959)
480
—
108,205
1,840
1,840
(1,153) 314,935
12,456
(49,004)
643
—
91,986
1,153
372,169
12,447
(12,606)
739
— $372,749
1,153
—
480
51
108,154
299
368,093
643
35
91,951
334
460,687
739
334 $ 461,426 $
We are authorized to issue 20,000,000 shares of preferred stock, par value $.01 per share, of which none were issued as
of December 31, 2012, 2011 and 2010.
In the first quarter of 2011, we completed a public stock offering of 3,450,000 shares of our common stock, of which
3,000,000 shares were issued in January 2011 and 450,000 shares, representing the underwriter’s over-allotment, were issued
in February 2011. Substantially all of the aggregate $91,986,000 net proceeds from the issuance of common stock (after
related transaction costs of $267,000) was used to repay a portion of our outstanding indebtedness and the remainder was
used for general corporate purposes.
During the second quarter of 2010, we completed a public stock offering of 5,175,000 shares of our common stock.
The $108,205,000 net proceeds from the issuance of common stock (after related transaction costs of $522,000) was used in
part to repay a portion of our outstanding indebtedness and the remainder was used for general corporate purposes.
9. EMPLOYEE BENEFIT PLANS
The Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the “2004 Plan”) provides for the grant of
restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments and stock awards to all
employees and members of the Board of Directors. The 2004 Plan authorizes us to grant awards with respect to an aggregate
of 1,000,000 shares of common stock through 2014. The aggregate maximum number of shares of common stock that may be
subject to awards granted under the 2004 Plan during any calendar year is 80,000.
We awarded to employees and directors 52,125, 47,625 and 37,600 restricted stock units (“RSUs”) and dividend
equivalents in 2012, 2011 and 2010, respectively. RSUs granted before 2009 provide for settlement upon termination of
employment with the Company or termination of service from the Board of Directors and RSUs granted in 2009 and
thereafter upon the earlier of 10 (ten) years after grant or termination. On the settlement date each vested RSU will have a
value equal to one share of common stock and may be settled, at the sole discretion of the Compensation Committee, in cash
or by the issuance of one share of common stock. The RSUs do not provide voting or other shareholder rights unless and
until the RSU is settled for a share of common stock. The RSUs vest starting one year from the date of grant, on a cumulative
basis at the annual rate of 20% of the total number of RSUs covered by the award. The dividend equivalents represent the
value of the dividends paid per common share multiplied by the number of RSUs covered by the award. For the years ended
December 31, 2012, 2011 and 2010, dividend equivalents aggregating approximately $82,000, $249,000 and $228,000,
respectively, were charged against retained earnings when common stock dividends were declared.
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The following is a schedule of the activity relating to the restricted stock units outstanding:
RSUs OUTSTANDING AT DECEMBER 31, 2009 ............................................
Granted .......................................................................................................
RSUs OUTSTANDING AT DECEMBER 31, 2010 ............................................
Granted .......................................................................................................
RSUs OUTSTANDING AT DECEMBER 31, 2011 ............................................
Granted .......................................................................................................
Settled ........................................................................................................
Cancelled....................................................................................................
RSUs OUTSTANDING AT DECEMBER 31, 2012 ............................................
FAIR VALUE
AMOUNT
AVERAGE
PER RSU
NUMBER OF
RSUs
OUTSTANDING
85,600
37,600 $
864,000 $
22.97
123,200
47,625 $ 1,043,000 $
21.90
170,825
52,125 $
(2,780) $
(3,820) $
864,000 $
70,000 $
88,000 $
16.57
25.31
23.10
216,350
The fair values of the RSUs were determined based on the closing market price of our stock on the date of grant. The
fair value of the grants is recognized as compensation expense ratably over the five-year vesting period of the RSUs.
Compensation expense related to RSUs for the years ended December 31, 2012, 2011 and 2010 was $746,000, $638,000 and
$466,000, respectively, and is included in general and administrative expense in the accompanying consolidated statements
of operations. As of December 31, 2012, there was $1,825,000 of unrecognized compensation cost related to RSUs granted
under the 2004 Plan which cost is expected to be recognized over a weighted average period of approximately 2.6 years. The
aggregate intrinsic value of the 216,350 outstanding RSUs and the 93,225 vested RSUs as of December 31, 2012 was
$3,907,000 and $1,684,000, respectively.
The following is a schedule of the vesting activity relating to the restricted stock units outstanding:
NUMBER
OF RSUs
VESTED
FAIR
VALUE
RSUs VESTED AT DECEMBER 31, 2009 .......................................................................
Vested .......................................................................................................................
RSUs VESTED AT DECEMBER 31, 2010 .......................................................................
Vested .......................................................................................................................
RSUs VESTED AT DECEMBER 31, 2011 .......................................................................
Vested .......................................................................................................................
Settled .......................................................................................................................
RSUs VESTED AT DECEMBER 31, 2012 .......................................................................
$
29,800
15,600
45,400
21,400
66,800
29,205
$
(2,780) $
93,225
$
379,000
505,000
734,000
70,000
We have a retirement and profit sharing plan with deferred 401(k) savings plan provisions (the “Retirement Plan”) for
employees meeting certain service requirements and a supplemental plan for executives (the “Supplemental Plan”). Under the
terms of these plans, the annual discretionary contributions to the plans are determined by the Compensation Committee of
the Board of Directors.
Also, under the Retirement Plan, employees may make voluntary contributions and we have elected to match an amount
equal to fifty percent of such contributions but in no event more than three percent of the employee’s eligible compensation.
Under the Supplemental Plan, a participating executive may receive an amount equal to ten percent of eligible compensation,
reduced by the amount of any contributions allocated to such executive under the Retirement Plan. Contributions, net of
forfeitures, under the retirement plans approximated $270,000, $239,000 and $220,000 for the years ended December 31,
2012, 2011 and 2010, respectively. These amounts are included in general and administrative expense in the accompanying
consolidated statements of operations.
We have a stock option plan (the “Stock Option Plan”). Our authorization to grant options to purchase shares of our
common stock under the Stock Option Plan has expired. During the year ended December 31, 2010, 5,250 options were
exercised with an intrinsic value of $76,000. As of December 31, 2012, there were 5,000 options outstanding which were
exercisable at $27.68 with a remaining contractual life of five years. As of December 31, 2012, the 5,000 options outstanding
had no intrinsic value.
66
10. QUARTERLY FINANCIAL DATA
The following is a summary of the quarterly results of operations for the years ended December 31, 2012 and 2011
(unaudited as to quarterly information) (in thousands, except per share amounts):
MARCH 31,
THREE MONTHS ENDED
SEPTEMBER 30,
JUNE 30,
YEAR ENDED
DECEMBER 31, DECEMBER31,
YEAR ENDED DECEMBER 31, 2012(a)
Revenues from rental properties .................... $
Earnings from continuing operations .............
Net earnings (loss) .........................................
Diluted earnings (loss) per common share:
28,035 $ 25,434 $
2,357
3,626
5,307
6,485
Earnings from continuing operations ......
Net earnings (loss) ..................................
.16
.19
.07
.11
22,324 $
1,782
(3,465)
.05
(.10)
23,493 $
4,362
5,801
.13
.17
99,286
13,808
12,447
.41
.37
YEAR ENDED DECEMBER 31, 2011(b)
Revenues from rental properties .................... $
Earnings (loss) from continuing operations ...
Net earnings (loss) .........................................
Diluted earnings (loss) per common share:
Earnings (loss) from continuing
operations ............................................
Net earnings (loss) ..................................
MARCH 31,
THREE MONTHS ENDED
SEPTEMBER 30,
JUNE 30,
DECEMBER 31,
23,444 $ 24,502 $
10,231 13,016
11,386 15,202
24,724 $
2,635
5,350
YEAR ENDED
DECEMBER31,
100,263
9,424
12,456
27,593 $
(16,458)
(19,482)
.31
.35
.39
.45
.08
.16
(.49)
(.58)
.28
.37
(a)
Includes for the respective periods the effect of:
-
-
An accounts receivable reserve of $13,980,000, related to Marketing, recorded in the year ended December 31,
2012, net of a partial reversal of $1,781,000 recorded in the quarter ended December 31, 2012. (See footnotes 2
and 3 for additional information.)
Impairment charges of $13,942,000 recorded for the year ended December 31, 2012, of which $3,390,000 was
recorded in the quarter ended December 31, 2012. (See footnote 3 for additional information.)
(b)
Includes for the respective periods the effect of:
-
-
-
-
The January 13, 2011 acquisition of gasoline station and convenience store properties in a sale/leaseback and
loan transaction with CPD NY Energy Corp. for $111,621,000 and the March 31, 2011 acquisition of gasoline
station and convenience store properties in a sale/leaseback transaction with Nouria Energy Ventures I, LLC for
$87,047,000. (See footnote 11 for additional information.)
Allowances for deferred rent receivables of $8,715,000 and $11,043,000, related to Marketing, which were
recorded in the quarters ended September 30, 2011 and December 31, 2011, respectively. (See footnotes 2 and 3
for additional information.)
An accounts receivable reserve of $8,802,000, related to Marketing, recorded in the quarter ended December 31,
2011. (See footnotes 2 and 3 for additional information.)
Impairment charges of $20,200,000 recorded for the year ended December 31, 2011, of which $17,132,000 was
recorded in the quarter ended December 31, 2011. (See footnote 3 for additional information.)
67
11. PROPERTY ACQUISITIONS
In 2012, we acquired fee or leasehold title to five gasoline station and convenience store properties in separate
transactions for an aggregate purchase price of $5,159,000.
CPD NY SALE/LEASEBACK
On January 13, 2011, we acquired fee or leasehold title to 59 Mobil-branded gasoline station and convenience store
properties and also took a security interest in six other Mobil-branded gasoline stations and convenience store properties in a
sale/leaseback and loan transaction with CPD NY Energy Corp. (“CPD NY”), a subsidiary of Chestnut Petroleum Dist. Inc.
Our total investment in the transaction was $111,621,000 including acquisition costs, which was financed entirely with
borrowings under our revolving credit facility.
The properties were acquired or financed in a simultaneous transaction among ExxonMobil, CPD NY and us whereby
CPD NY acquired a portfolio of 65 gasoline station and convenience stores from ExxonMobil and simultaneously completed
a sale/leaseback of 59 of the acquired properties and leasehold interests with us. The lease between us, as lessor, and CPD
NY, as lessee, governing the properties is a unitary triple-net lease agreement (the “CPD Lease”), with an initial term of
15 years, and options for up to three successive renewal terms of ten years each. The CPD Lease requires CPD NY to pay a
fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due to third-party landlords pursuant to the
terms of third-party leases. The Rent is scheduled to increase on the third anniversary of the date of the CPD Lease and on
every third anniversary thereafter. As a triple-net lessee, CPD NY is required to pay all amounts pertaining to the properties
subject to the CPD Lease, including taxes, assessments, licenses and permit fees, charges for public utilities and all
governmental charges. Partial funding to CPD NY for the transaction was also provided by us under a secured, self-
amortizing loan having a 10-year term (the “CPD Loan”).
We accounted for this transaction as a business combination. We estimated the fair value of acquired tangible assets
(consisting of land, buildings and equipment) “as if vacant” and intangible assets consisting of above-market and below-
market leases. Based on these estimates, we allocated $60,610,000 of the purchase price to land, net above-market and
below-market leases related to leasehold interests as lessee of $953,000 which is accounted for as a deferred asset, net above-
market and below-market leases related to leasehold interests as lessor of $2,516,000 which is accounted for as a deferred
liability, $38,752,000 allocated to direct financing leases and capital lease assets, and $18,400,000 which is accounted for in
notes, mortgages and accounts receivable, net. In connection with the acquisition of certain leasehold interests, we also
recorded capital lease obligations aggregating $5,768,000. We also incurred transaction costs of $1,190,000 directly related
to the acquisition which is included in general and administrative expenses on the consolidated statement of operations.
NOURIA SALE/LEASEBACK
On March 31, 2011, we acquired fee or leasehold title to 66 Shell-branded gasoline station and convenience store
properties in a sale/leaseback transaction with Nouria Energy Ventures I, LLC (“Nouria”), a subsidiary of Nouria Energy
Group. Our total investment in the transaction was $87,047,000 including acquisition costs, which was financed entirely with
borrowings under our revolving credit facility.
The properties were acquired in a simultaneous transaction among Motiva Enterprises LLC (“Shell”), Nouria and us
whereby Nouria acquired a portfolio of 66 gasoline station and convenience stores from Shell and simultaneously completed
a sale/leaseback of the 66 acquired properties and leasehold interests with us. The lease between us, as lessor, and Nouria, as
lessee, governing the properties is a unitary triple-net lease agreement (the “Nouria Lease”), with an initial term of 20 years,
and options for up to two successive renewal terms of ten years each followed by one final renewal term of five years. The
Nouria Lease requires Nouria to pay a fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due
to third-party landlords pursuant to the terms of third-party leases. The Rent is scheduled to increase on every annual
anniversary of the date of the Nouria Lease. As a triple-net lessee, Nouria is required to pay all amounts pertaining to the
properties subject to the Nouria Lease, including taxes, assessments, licenses and permit fees, charges for public utilities and
all governmental charges.
We accounted for this transaction as a business combination. We estimated the fair value of acquired tangible assets
(consisting of land, buildings and equipment) “as if vacant” and intangible assets consisting of above-market and below-
market leases. Based on these estimates, we allocated $37,875,000 of the purchase price to land, net above-market and
below-market leases relating to leasehold interests as lessee of $3,895,000, which is accounted for as a deferred asset, net
above-market and below-market leases related to leasehold interests as lessor of $3,768,000, which is accounted for as a
deferred liability, $37,315,000 allocated to direct financing leases and capital lease assets and $12,000,000 which is
68
accounted for in notes, mortgages and accounts receivable, net. In connection with the acquisition of certain leasehold
interests, we also recorded capital lease obligations aggregating $1,114,000. We also incurred transaction costs of $844,000
directly related to the acquisition which is included in general and administrative expenses on the consolidated statement of
operations.
In 2010, we purchased fee title to three gasoline and convenience store properties in separate transactions for an
aggregate purchase price of $3,567,000.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial information for the years ended December 31,
2011 and 2010 have been prepared utilizing the historical financial statements of Getty Realty Corp. and the combined effect
of additional revenue and expenses from the properties acquired from both CPD NY and Nouria assuming that the
acquisitions had occurred as of the beginning of the earliest period presented, after giving effect to certain adjustments
including: (a) rental income adjustments resulting from the straight-lining of scheduled rent increases; (b) rental income
adjustments resulting from the recognition of revenue under direct financing leases over the lease term using the effective
interest rate method which produces a constant periodic rate of return on the net investment in the leased properties; (c) rental
income adjustments resulting from the amortization of above-market leases with tenants; and (d) rent expense adjustments
resulting from the amortization of below-market leases with landlords. The following information also gives effect to the
additional interest expense resulting from the assumed increase in borrowings outstanding under its revolving credit facility
to fund the acquisitions and the elimination of acquisition costs. The unaudited pro forma condensed financial information is
not indicative of the results of operations that would have been achieved had the acquisition from CPD NY and Nouria
reflected herein been consummated on the date indicated or that will be achieved in the future.
(in thousands)
Revenues ............................................................................................................................ $
Net earnings ....................................................................................................................... $
Basic and diluted net earnings per common share ............................................................. $
Year Ended December 31,
2010
2011
102,844 $
14,647 $
0.44 $
99,363
69,422
2.48
12. SUPPLEMENTAL CONDENSED COMBINING FINANCIAL INFORMATION
Condensed combining financial information as of December 31, 2011 and for the years ended December 31, 2011 and 2010
has been derived from our books and records and is provided below to illustrate, for informational purposes only, the net
contribution to our financial results that were realized from the Master Lease with Marketing and from properties leased to
other tenants. As a result of the rejection of the Master Lease on April 30, 2012, our financial results are no longer materially
dependent on the performance of Marketing to meet its obligations to us under the Master Lease.
The condensed combining financial information set forth below presents the results of operations, net assets and cash flows
related to Marketing and the Master Lease, our other tenants and our corporate functions necessary to arrive at the
information for us on a combined basis. The assets, liabilities, lease agreements and other leasing operations attributable to
the Master Lease and other tenant leases are not segregated in legal entities. However, we generally maintain our books and
records in site specific detail and have classified the operating results which are clearly applicable to each owned or leased
property as attributable to Marketing or our other tenants or to non-operating corporate functions. The condensed combining
financial information has been prepared by us using certain assumptions, judgments and allocations. In our prior filings, each
of our properties were classified as attributable to Marketing, other tenants or corporate for all periods presented based on the
property’s use as of the latest balance sheet date included in such filing or the property’s use immediately prior to its
disposition or third-party lease expiration.
As a result of the rejection of the Master Lease on April 30, 2012, we have omitted the condensed combining financial
information as of December 31, 2012 and for the year ended December 31, 2012 since our financial results are no longer
materially dependent on the performance of Marketing to meet its obligations to us under the Master Lease. For the historical
condensed combining financial information set forth below, each of the properties were classified based on the property’s use
as of December 31, 2011.
69
Environmental remediation expenses have been attributed to Marketing or other tenants on a site specific basis and
environmental related litigation expenses and professional fees have been attributed to Marketing or other tenants based on
the pro rata share of specifically identifiable environmental expenses for the period from January 1, 2010 through
December 31, 2011.
The heading “Corporate” in the statements below includes assets, liabilities, income and expenses attributed to general
and administrative functions, financing activities and parent or subsidiary level income taxes, capital taxes or franchise
taxes which were not incurred on behalf of our leasing operations and are not reasonably allocable to Marketing or other
tenants. With respect to general and administrative expenses, we have attributed those expenses clearly applicable to
Marketing and other tenants. We considered various methods of allocating to Marketing and other tenants amounts
included under the heading “Corporate” and determined that none of the methods resulted in a reasonable allocation of
such amounts or an allocation of such amounts that more clearly summarizes the net contribution to our financial results
realized from the leasing operations of properties previously leased to Marketing and of properties leased to other tenants.
Moreover, we determined that each of the allocation methods we considered resulted in a presentation of these amounts
that would make it more difficult to understand the clearly identifiable results from our leasing operations attributable to
Marketing and other tenants. We believe that the segregated presentation of assets, liabilities, income and expenses
attributed to general and administrative functions, financing activities and parent or subsidiary level income taxes, capital
taxes or franchise taxes provides the most meaningful presentation of these amounts since changes in these amounts are
not fully correlated to changes in our leasing activities.
While we believe these assumptions, judgments and allocations are reasonable, the condensed combining financial
information is not intended to reflect what the net results would have been had assets, liabilities, lease agreements and other
operations attributable to Marketing or our other tenants been conducted through stand-alone entities during any of the
periods presented.
The condensed combining statement of operations of Getty Realty Corp. for the year ended December 31, 2011 is as
follows (in thousands):
Revenues from rental properties .....................................
Interest on notes and mortgages receivable ....................
Total revenues ..................................................
$
$
52,163
—
52,163
$
48,100
2,489
50,589
$
—
169
169
100,263
2,658
102,921
Getty
Petroleum
Marketing
Other
Tenants
Corporate
Consolidated
Operating expenses:
Rental property expenses .........................................
Impairment charges .................................................
Environmental expenses ..........................................
General and administrative expenses .......................
Allowance for deferred rent receivable ...................
Depreciation and amortization expense ...................
Total operating expenses ..................................
Operating income (loss) ..................................................
Other income, net ............................................................
Interest expense ..............................................................
Earnings (loss) from continuing operations ....................
Discontinued operations:
Income (loss) from operating activities ...................
Gains on dispositions of real estate..........................
Earnings from discontinued operations ..........................
Net earnings (loss) ..........................................................
(8,111)
(14,641)
(5,475)
(8,899)
(19,288)
(4,234)
(60,648)
(8,485)
641
—
(7,844)
2,338
—
2,338
$
(5,506) $
(7,271)
(1,263)
(122)
(1,783)
—
(5,231)
(15,670)
34,919
(621)
—
34,298
(641)
—
—
(11,383)
—
(46)
(12,070)
(11,901)
(4)
(5,125)
(17,030)
(254)
948
694
34,992
$
—
—
—
(17,030) $
(16,023)
(15,904)
(5,597)
(22,065)
(19,288)
(9,511)
(88,388)
14,533
16
(5,125)
9,424
2,084
948
3,032
12,456
70
The condensed combining statement of operations of Getty Realty Corp. for the year ended December 31, 2010 is as
follows (in thousands):
Revenues from rental properties ..........................................
Interest on notes and mortgages receivable .........................
Total revenues .......................................................
$
$
48,755
—
48,755
29,472
—
29,472
$
—
133
133
Getty
Petroleum
Marketing
Other
Tenants
Corporate
$
Consolidated
78,227
133
78,360
Operating expenses:
Rental property expenses ..............................................
Environmental expenses ...............................................
General and administrative expenses ............................
Depreciation and amortization expense ........................
Total operating expenses .......................................
Operating income (loss) .......................................................
Other income, net .................................................................
Interest expense ...................................................................
Earnings (loss) from continuing operations .........................
Discontinued operations:
Loss from operating activities ......................................
Gains (loss) on dispositions of real estate .....................
Earnings (loss) from discontinued operations ......................
Net earnings (loss) ...............................................................
(7,024)
(5,244)
(146)
(3,548)
(15,962)
32,793
(172)
—
32,621
(2,551)
(127)
(135)
(5,412)
(8,225)
21,247
172
—
21,419
(478)
—
(7,897)
(37)
(8,412)
(8,279)
156
(5,050)
(13,173)
9,042
1,857
10,899
43,520
$
86
(152)
(66)
$
21,353
—
—
—
(13,173) $
$
(10,053)
(5,371)
(8,178)
(8,997)
(32,599)
45,761
156
(5,050)
40,867
9,128
1,705
10,833
51,700
The condensed combining balance sheet of Getty Realty Corp. as of December 31, 2011 is as follows (in thousands):
Getty
Petroleum
Marketing
Other
Tenants
Corporate
Consolidated
ASSETS:
Real Estate:
Land ...............................................................................
Buildings and improvements .........................................
$
Less — accumulated depreciation and amortization ............
Real estate held for use, net ...........................................
Net investment in direct financing leases .............................
Deferred rent receivable, net .................................................
Cash and cash equivalents ....................................................
Notes, mortgages and accounts receivable, net .....................
Prepaid expenses and other assets.........................................
Total assets ....................................................................
LIABILITIES:
Borrowings under credit line ................................................
Term loan ..............................................................................
Environmental remediation obligations ................................
Dividends payable ................................................................
Accounts payable and accrued liabilities ..............................
Total liabilities ...............................................................
Net assets (liabilities) ............................................................
$
131,076
170,553
301,629
(107,480)
194,149
—
—
—
5,743
—
199,892
$ 214,397
99,479
313,876
(29,446)
284,430
92,632
8,080
—
28,262
7,611
421,015
— $
349
349
(191)
158
—
—
7,698
2,078
4,248
14,182
—
—
57,368
—
4,002
61,370
138,522
—
—
332
—
19,564
19,896
$ 401,119
147,700
22,810
—
—
11,144
181,654
$ (167,472) $
$
71
345,473
270,381
615,854
(137,117)
478,737
92,632
8,080
7,698
36,083
11,859
635,089
147,700
22,810
57,700
—
34,710
262,920
372,169
The condensed combining statement of cash flows of Getty Realty Corp. for the year ended December 31, 2011 is as
follows (in thousands):
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ......................................................................
Adjustments to reconcile net earnings (loss) to net cash flow
provided by operating activities:
Depreciation and amortization expense ...............................
Impairment charges .............................................................
Gains on dispositions of real estate......................................
Deferred rent receivable, net of allowance ..........................
Allowance for deferred rent and accounts receivable ..........
Amortization of above-market and below-market leases ....
Amortization of credit agreement origination costs .............
Accretion expense ................................................................
Stock-based employee compensation expense ....................
Changes in assets and liabilities:
Accounts receivable, net ......................................................
Prepaid expenses and other assets .......................................
Environmental remediation obligations ...............................
Accounts payable and accrued liabilities .............................
Net cash flow provided by (used in) operating
Getty
Petroleum
Marketing
Other
Tenants
Corporate
Consolidated
$
(5,506) $ 34,992 $
(17,030) $
12,456
5,024
18,676
(641)
1,463
28,879
—
—
879
—
(14,851)
—
(1,304)
3,040
5,266
1,550
(327)
(1,916)
—
(685)
—
20
—
(39)
(68)
(677)
692
46
—
—
—
—
—
207
—
643
—
219
—
2,203
10,336
20,226
(968)
(453)
28,879
(685)
207
899
643
(14,890)
151
(1,981)
5,935
activities ....................................................................
35,659
38,808
(13,712)
60,755
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures ....................
Proceeds from dispositions of real estate .............................
Decrease in cash held for property acquisitions ..................
Amortization of investment in direct financing leases.........
Issuance of notes and mortgages receivable ........................
Collection of notes and mortgages receivable .....................
Net cash flow provided by (used in) investing
—
1,604
—
—
—
—
(167,471)
1,781
—
505
(30,400)
2,415
(24)
(1,068)
(750)
—
—
264
(167,495)
2,317
(750)
505
(30,400)
2,679
activities ....................................................................
1,604
(193,170)
(1,578)
(193,144)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreement .....................................
Repayments under credit agreement ....................................
Repayments under term loan agreement ..............................
Payments on capital lease obligations .................................
Cash dividends paid .............................................................
Payments of loan origination costs ......................................
Security deposits received ...................................................
Net proceeds from issuance of common stock ....................
Cash consolidation- Corporate ............................................
Net cash flow (used in) provided by financing
—
—
—
—
—
—
—
—
(37,263)
—
—
—
(59)
—
—
29
—
154,392
247,253
(140,853)
(780)
—
(63,436)
(175)
—
91,986
(117,129)
activities ....................................................................
Net increase in cash and cash equivalents ..................................
Cash and cash equivalents at beginning of year .........................
Cash and cash equivalents at end of year ....................................
$
(37,263) 154,362
—
—
— $
—
—
— $
16,866
1,576
6,122
7,698 $
247,253
(140,853)
(780)
(59)
(63,436)
(175)
29
91,986
—
133,965
1,576
6,122
7,698
72
The condensed combining statement of cash flows of Getty Realty Corp. for the year ended December 31, 2010 is as
follows (in thousands):
Getty
Petroleum
Marketing
Other
Tenants
Corporate Consolidated
$ 43,520 $ 21,353 $ (13,173) $
51,700
4,229
—
(1,685)
1,580
—
—
—
758
—
(15)
—
(3,062)
42
45,367
5,472
—
(20)
(1,484)
229
(1,260)
—
17
—
(174)
467
550
(455)
24,695
37
—
—
—
—
—
304
—
480
—
(846)
—
200
(12,998)
—
2,623
—
—
—
2,623
(4,629)
235
—
(323)
—
(4,717)
(96)
—
2,665
—
158
2,727
—
—
—
—
—
—
—
—
182
—
(47,990) (20,160)
(47,990) (19,978)
—
—
—
—
— $ — $
$
163,500
(273,400)
(780)
(52,332)
—
108,205
68,150
13,343
3,072
3,050
6,122 $
9,738
—
(1,705)
96
229
(1,260)
304
775
480
(189)
(379)
(2,512)
(213)
57,064
(4,725)
2,858
2,665
(323)
158
633
163,500
(273,400)
(780)
(52,332)
182
108,205
—
(54,625)
3,072
3,050
6,122
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) ......................................................................................
Adjustments to reconcile net earnings (loss) to net cash flow provided by
operating activities:
Depreciation and amortization expense ...............................................
Impairment charges .............................................................................
Gains on dispositions of real estate......................................................
Deferred rent receivable ......................................................................
Allowance for accounts receivable ......................................................
Amortization of above-market and below-market leases ....................
Amortization of credit agreement origination costs .............................
Accretion expense ................................................................................
Stock-based employee compensation expense ....................................
Changes in assets and liabilities:
Accounts receivable, net ......................................................................
Prepaid expenses and other assets .......................................................
Environmental remediation obligations ...............................................
Accounts payable and accrued liabilities .............................................
Net cash flow provided by (used in) operating activities .............
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures ....................................
Proceeds from dispositions of real estate .............................................
Decrease in cash held for property acquisitions ..................................
Amortization of investment in direct financing leases.........................
Collection of mortgages receivable, net ..............................................
Net cash flow provided by (used in) investing activities ..............
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing under credit agreement ......................................................
Repayments under credit agreement ....................................................
Repayments under term loan agreement ..............................................
Cash dividends paid .............................................................................
Security deposits received ...................................................................
Net proceeds from issuance of common stock ....................................
Cash consolidation- Corporate ............................................................
Net cash flow (used in) provided by financing activities .............
Net increase in cash and cash equivalents ..................................................
Cash and cash equivalents at beginning of year .........................................
Cash and cash equivalents at end of year ....................................................
73
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Getty Realty Corp.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations,
comprehensive income and cash flows present fairly, in all material respects, the financial position of Getty Realty Corp. and
its subsidiaries at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2012, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management
is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal
Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial
statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 18, 2013
74
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in
our reports filed or furnished pursuant to the Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by the Exchange Act Rule 13a-15(b), we have carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual
Report on Form 10-K. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of December 31, 2012.
There have been no changes in our internal control over financial reporting during the latest fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in
Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was
effective as of December 31, 2012.
The effectiveness of our internal control over financial reporting as of December 31, 2012, has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in
“Item 8. Financial Statements and Supplementary Data”.
There have been no changes in our internal control over financial reporting during the latest fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
75
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information with respect to compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to
information under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement.
Information with respect to directors, the audit committee and the audit committee financial expert, and procedures by which
shareholders may recommend to nominees to the board of directors in response to this item is incorporated herein by
reference to information under the headings “Election of Directors” and “Directors’ Meetings, Committees and Executive
Officers” in the Proxy Statement. The following table lists our executive officers, their respective ages, and the offices and
positions held.
NAME
David B. Driscoll ...................
Leo Liebowitz ........................
Joshua Dicker .........................
Kevin C. Shea.........................
Thomas J. Stirnweis ...............
Christopher J. Constant ..........
POSITION
AGE
58 President, Chief Executive Officer and Director
85 Director and Chairman of the Board
52 Senior Vice President, General Counsel and Secretary
53 Executive Vice President
54 Vice President and Chief Financial Officer
34 Asst. Vice President, Director of Planning and Treasurer
OFFICER SINCE
2010
1971
2008
2001
2001
2012
Mr. Driscoll was appointed to the position of President of the Company, effective in April 2010. In addition,
Mr. Driscoll was appointed as the Company’s Chief Executive Officer, effective May 2010. Mr. Driscoll is also a Director of
the Company. Mr. Driscoll was a Managing Director at Morgan Joseph and Co. Inc. where he was a founding shareholder.
Prior to his work at Morgan Joseph, Mr. Driscoll was a Managing Director for ING Barings, where he was Global
Coordinator of the real estate practice and prior to ING Barings, Mr. Driscoll was the founder of the real estate group at
Smith Barney, which he ran for more than a decade.
Mr. Liebowitz co-founded the Company in 1955 and served as Chief Executive Officer from 1985 until May 2010. He
was the President of the Company from May 1971 to May 2004. Mr. Liebowitz served as Chairman, Chief Executive Officer
and a director of Marketing from October 1996 until December 2000. He is also a director of the Regional Banking Advisory
Board of J.P. Morgan Chase & Co. Mr. Liebowitz is also Chairman of the Company’s Board of Directors and will retain an
active role in the Company through May 2013 at which time he intends to retire.
Mr. Dicker has served as Senior Vice President, General Counsel and Secretary since 2012. He was Vice President,
General Counsel and Secretary since February 2009. Prior to joining Getty in 2008, he was a partner at the law firm Arent
Fox, LLP, resident in its New York City office, specializing in corporate and transactional matters.
Mr. Shea has been with the Company since 1984 and has served as Executive Vice President since May 2004. He was
Vice President since January 2001 and Director of National Real Estate Development prior thereto.
Mr. Stirnweis has been with the Company or Getty Petroleum Marketing Inc. since 1988 and has served as Vice
President and Chief Financial Officer of the Company since May 2012 and Vice President, Treasurer and Chief Financial
Officer from May 2003 to May 2012. He joined the Company in January 2001 as Corporate Controller and Treasurer. Prior
to joining the Company, Mr. Stirnweis was Manager of Financial Reporting and Analysis of Marketing.
Mr. Constant has served as Assistant Vice President, Director of Planning and Treasurer since May 2012. Prior to
joining the Company in November 2010, Mr. Constant was a Vice President in the corporate finance department of Morgan
Joseph & Co. Inc. Prior to joining Morgan Joseph in 2001, Mr. Constant began his career in the corporate finance department
at ING Barings.
There are no family relationships between any of the Company’s directors or executive officers.
The Getty Realty Corp. Business Conduct Guidelines (“Code of Ethics”), which applies to all employees, including our
chief executive officer and chief financial officer, is available on our website at www.gettyrealty.com.
76
Item 11. Executive Compensation
Information in response to this item is incorporated herein by reference to information under the heading “Executive
Compensation” in the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information in response to this item is incorporated herein by reference to information under the heading “Beneficial
Ownership of Capital Stock” and “Executive Compensation — Compensation Discussion and Analysis — Equity
Compensation — Equity Compensation Plan Information” in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
There were no such relationships or transactions to report for the year ended December 31, 2012.
Information with respect to director independence is incorporated herein by reference to information under the heading
“Directors’ Meetings, Committees and Executive Officers - Independence of Directors” in the Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information in response to this item is incorporated herein by reference to information under the heading “Ratification
of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement.
77
Item 15. Exhibits and Financial Statement Schedules
(a) (1) Financial Statements
PART IV
Information in response to this Item is included in “Item 8. Financial Statements and Supplementary Data”.
(a) (2) Financial Statement Schedules
GETTY REALTY CORP.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Item 15(a)(2)
Report of Independent Registered Public Accounting Firm on Financial Statement Schedules ...............................
Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2012,
2011 and 2010 ......................................................................................................................................................
Schedule III — Real Estate and Accumulated Depreciation and Amortization as of December 31, 2012 ...............
Schedule IV — Mortgage Loans on Real Estate as of December 31, 2012 ..............................................................
PAGES
79
80
81
94
(a) (3) Exhibits
Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 96 of this Annual
Report on Form 10-K.
78
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors of Getty Realty Corp.:
Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting
referred to in our report dated March 18, 2013 appearing in Item 8 of this Annual Report on Form 10-K also included an
audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement
schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 18, 2013
79
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES
for the years ended December 31, 2012, 2011 and 2010
(in thousands)
BALANCE AT
BEGINNING
OF YEAR
ADDITIONS DEDUCTIONS
BALANCE
AT END
OF YEAR
December 31, 2012:
Allowance for deferred rent receivable .................................
Allowance for mortgages and accounts receivable ...............
Allowance for deposits held in escrow .................................
December 31, 2011:
Allowance for deferred rent receivable .................................
Allowance for mortgages and accounts receivable ...............
Allowance for deposits held in escrow .................................
December 31, 2010:
Allowance for deferred rent receivable .................................
Allowance for mortgages and accounts receivable ...............
Allowance for deposits held in escrow .................................
$
$
$
25,630 $
9,480 $
377 $
— $
15,903 $
— $
25,630 $
12 $
377 $
$
$
$
$
$
$
8,170 $
361 $
377 $
9,389 $
135 $
377 $
17,460 $
9,121 $
— $
— $
226 $
— $
— $
2 $
— $
1,219 $
— $
— $
—
25,371
—
25,630
9,480
377
8,170
361
377
80
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION
As of December 31, 2012
(in thousands)
The summarized changes in real estate assets and accumulated depreciation are as follows:
Investment in real estate:
Balance at beginning of year ..............................................................
Acquisitions and capital expenditures .........................................
Impairment ..................................................................................
Sales and condemnations .............................................................
Lease expirations .........................................................................
Balance at end of year .........................................................................
Accumulated depreciation and amortization:
Balance at beginning of year ..............................................................
Depreciation and amortization expense .......................................
Impairment ..................................................................................
Sales and condemnations .............................................................
Lease expirations .........................................................................
Balance at end of year .........................................................................
$
$
$
$
2012
2011
2010
$
$
$
615,854
10,976
(23,354)
(40,381)
(779)
562,316
137,117
13,375
(9,412)
(23,533)
(779)
$
116,768
504,587 $
151,090
(35,246)
(3,219)
(1,358)
615,854 $
144,217 $
10,080
(15,020)
(802)
(1,358)
137,117 $
503,874
3,664
—
(1,819)
(1,132)
504,587
136,669
9,346
—
(666)
(1,132)
144,217
The properties in the table below indicated by an asterisk (*), with an aggregate net book value of approximately
$158,608,000 as of December 31, 2012, are encumbered by mortgages. As of December 31, 2012, these mortgages provided
security for our prior credit agreement and our prior term loan agreement. As of February 25, 2013, these mortgages provide
security for our $175,000,000 senior secured revolving credit agreement (the “Credit Agreement”) with a group of
commercial banks led by JPMorgan Chase Bank, N.A. and our $100,000,000 senior secured long-term loan agreement with
the Prudential Insurance Company of America (the “Prudential Loan Agreement”). The parties to the Credit Agreement and
the Prudential Loan Agreement share the security pursuant to the terms of an inter-creditor agreement. For additional
information, see Note 4 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial
Statements.” No other material mortgages, liens or encumbrances exist on our properties.
81
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
Accumulated
Depreciation
BROOKLYN, NY
REGO PARK, NY
CORONA, NY
OCEANSIDE, NY
BRENTWOOD, NY
BAY SHORE, NY
EAST ISLIP, NY
WHITE PLAINS, NY
WAPPINGERS FALLS, NY
STONY POINT, NY
LAGRANGEVILLE, NY
BRONX, NY
NEW YORK, NY
BROOKLYN, NY
BRONX, NY
BRONX, NY
BRONX, NY
YONKERS, NY
SLEEPY HOLLOW, NY
OLD BRIDGE, NJ
STATEN ISLAND, NY
BRIARCLIFF MANOR, NY
BRONX, NY
NEW YORK, NY
GLENDALE, NY
LONG ISLAND CITY, NY
RIDGE, NY
OLD GREENWICH, CT
NEW CITY, NY
W. HAVERSTRAW, NY
BROOKLYN, NY
RONKONKOMA, NY
BETHPAGE, NY
BALDWIN, NY
ELMONT, NY
CENTRAL ISLIP, NY
BROOKLYN, NY
BAY SHORE, NY
CROMWELL, CT
EAST HARTFORD, CT
MANCHESTER, CT
MERIDEN, CT
NEW MILFORD, CT
NORWALK, CT
SOUTHINGTON, CT
TERRYVILLE, CT
SOUTH HADLEY, MA
WESTFIELD, MA
FREEHOLD, NJ
NORTH PLAINFIELD, NJ
SOUTH AMBOY, NJ
GLEN HEAD, NY
NEW ROCHELLE, NY
NORTH BRANFORD, CT
FRANKLIN SQUARE, NY
BROOKLYN, NY
NEW HAVEN, CT
BRISTOL, CT
BRISTOL, CT
BRISTOL, CT
$
282 $
34
114
40
253
48
89
0
114
59
129
141
126
148
544
70
78
291
281
86
174
652
89
146
124
107
277
0
181
194
75
76
211
102
389
103
116
156
70
208
66
208
114
257
116
182
232
123
494
227
300
234
189
130
153
277
1,413
360
1,594
254
176 $
23
113
33
125
0
87
303
112
56
65
87
78
104
474
30
66
216
130
56
113
502
63
43
86
73
200
620
109
140
45
46
126
62
231
61
75
86
24
84
65
84
0
104
71
74
90
50
403
175
94
103
104
83
137
168
569
0
1,036
150
229 $
281
322
342
49
275
391
570
144
204
131
167
167
239
922
364
525
194
184
203
92
429
193
428
330
193
108
914
131
69
272
209
38
274
120
151
254
124
183
79
200
53
151
157
181
151
39
182
85
353
(31)
193
72
181
141
24
(700)
0
0
0
82
335 $
292
323
349
177
323
393
267
146
207
195
221
215
283
992
404
537
269
335
233
153
579
219
531
368
227
185
294
203
123
302
239
123
314
278
193
295
194
229
203
201
177
265
310
226
259
181
255
176
405
175
324
157
228
157
133
144
360
558
104
511 $
315
436
382
302
323
480
570
258
263
260
308
293
387
1,466
434
603
485
465
289
266
1,081
282
574
454
300
385
914
312
263
347
285
249
376
509
254
370
280
253
287
266
261
265
414
297
333
271
305
579
580
269
427
261
311
294
301
713
360
1,594
254
307
114
276
0
177
323
93
169
146
207
170
198
215
144
791
356
440
247
246
145
153
263
219
474
334
208
154
81
177
96
262
239
123
144
237
193
272
194
229
187
161
165
237
285
205
212
181
169
108
321
0
324
126
88
91
133
0
294
182
34
Date of Initial
Leasehold or
Acquisition
Investment (1)
1967
1974
1965
1970
1968
1969
1972
1972
1971
1971
1972
1972
1972
1972
1970
1972
1972
1972
1969
1972
1976
1976
1976
1976
1976
1976
1977
1969
1978
1978
1978
1978
1978
1978
1978
1978
1980
1981
1982
1982
1982
1982
1982
1982
1982
1982
1982
1982
1978
1978
1978
1982
1982
1982
1978
1978
1985
2004
2004
2004
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
BRISTOL, CT
COBALT, CT
DURHAM, CT
ELLINGTON, CT
ENFIELD, CT
FARMINGTON, CT
HARTFORD, CT
HARTFORD, CT
MERIDEN, CT
MIDDLETOWN, CT
NEW BRITAIN, CT
NEWINGTON, CT
NORTH HAVEN, CT
PLAINVILLE, CT
PLYMOUTH, CT
SOUTH WINDHAM, CT
SOUTH WINDSOR, CT
SUFFIELD, CT
VERNON, CT
WALLINGFORD, CT
WATERBURY, CT
WATERBURY, CT
WATERBURY, CT
WATERTOWN, CT
WETHERSFIELD, CT
WEST HAVEN, CT
WESTBROOK, CT
WILLIMANTIC, CT
WINDSOR LOCKS, CT
WINDSOR LOCKS, CT
SIMSBURY, CT
RIDGEFIELD, CT
BRIDGEPORT, CT
NORWALK, CT
BRIDGEPORT, CT
STAMFORD, CT
BRIDGEPORT, CT
BRIDGEPORT, CT
BRIDGEPORT, CT
BRIDGEPORT, CT
NEW HAVEN, CT
DARIEN, CT
WESTPORT, CT
STAMFORD, CT
STAMFORD, CT
STRATFORD, CT
STRATFORD, CT
CHESHIRE, CT
MILFORD, CT
FAIRFIELD, CT
BROOKFIELD, CT
NORWALK, CT
HARTFORD, CT
RIDGEFIELD, CT
BRIDGEPORT, CT
WILTON, CT
MIDDLETOWN, CT
EAST HARTFORD, CT
WATERTOWN, CT
AVON, CT
WILMINGTON, DE
365
396
994
1,295
260
466
665
571
1,532
1,039
390
954
405
545
931
644
545
237
1,434
551
804
515
468
925
447
1,215
345
717
1,433
1,030
318
535
350
511
313
507
313
378
527
338
538
667
603
603
507
301
285
490
294
430
58
0
233
402
346
519
133
347
352
731
309
237
0
0
842
0
303
432
371
989
675
254
620
252
354
605
598
337
201
0
335
516
335
305
567
0
790
0
466
0
670
176
348
228
332
204
330
204
246
285
220
351
434
393
393
330
196
186
289
191
280
20
402
152
167
230
338
131
301
204
403
201
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1,398
0
603
0
0
0
0
1
0
0
0
0
0
0
1
2
112
56
52
49
16
25
113
(180)
23
176
346
13
61
85
71
15
(6)
44
10
342
641
33
36
12
76
258
14
59
125
68
83
128
396
994
453
260
163
233
200
543
364
137
334
153
191
326
1,444
208
639
1,434
216
288
180
164
358
447
425
345
251
1,433
361
144
299
178
231
158
193
134
245
62
141
363
579
223
271
262
176
114
195
147
160
380
239
114
271
128
257
260
60
207
453
176
365
396
994
1,295
260
466
665
571
1,532
1,039
391
954
405
545
931
2,042
545
840
1,434
551
804
515
469
925
447
1,215
345
717
1,433
1,031
320
647
406
563
362
523
338
491
347
361
714
1,013
616
664
592
372
300
484
338
440
400
641
266
438
358
595
391
361
411
856
377
Accumulated
Depreciation
42
323
812
148
250
53
76
65
182
119
45
109
62
62
106
317
86
368
1,171
88
100
59
54
152
447
139
282
82
1,171
118
6
152
129
147
89
122
90
165
0
94
287
192
138
167
151
133
74
8
102
100
108
73
81
271
128
179
104
30
139
166
132
Date of Initial
Leasehold or
Acquisition
Investment (1)
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
2004
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1988
1985
1985
1985
1985
1987
1991
1992
2002
1985
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
WILMINGTON, DE
CLAYMONT, DE
NEWARK, DE
LEWISTON, ME
BIDDEFORD, ME
SOUTH PORTLAND, ME
AUGUSTA, ME
BELTSVILLE, MD*
BELTSVILLE, MD*
BELTSVILLE, MD*
BELTSVILLE, MD*
BLADENSBURG, MD*
BOWIE, MD*
CAPITOL HEIGHTS, MD*
CLINTON, MD*
COLLEGE PARK, MD*
COLLEGE PARK, MD*
DISTRICT HEIGHTS, MD*
DISTRICT HEIGHTS, MD*
FORESTVILLE, MD*
FORT WASHINGTON, MD*
GREENBELT, MD*
HYATTSVILLE, MD*
HYATTSVILLE, MD*
LANDOVER, MD*
LANDOVER, MD*
LANDOVER HILLS, MD*
LANDOVER HILLS, MD*
LANHAM, MD*
LAUREL, MD*
LAUREL, MD*
LAUREL, MD*
LAUREL, MD*
LAUREL, MD*
LAUREL, MD*
OXON HILL, MD*
RIVERDALE, MD*
RIVERDALE, MD*
SEAT PLEASANT, MD*
SUITLAND, MD*
SUITLAND, MD*
TEMPLE HILLS, MD*
UPPER MARLBORO, MD*
ACCOKEEK, MD*
BALTIMORE, MD
EMMITSBURG, MD
AUBURN, MA*
AUBURN, MA*
AUBURN, MA*
AUBURN, MA*
BEDFORD, MA*
BRADFORD, MA*
BURLINGTON, MA*
BURLINGTON, MA*
CHELMSFORD, MA*
DANVERS, MA*
DRACUT, MA*
GARDNER, MA*
LEOMINSTER, MA*
LYNN, MA*
LYNN, MA*
382
237
406
342
618
181
449
1,130
731
525
1,050
571
1,084
628
651
536
445
479
388
1,039
422
1,153
491
594
753
662
1,358
457
822
2,523
1,415
1,530
1,267
1,210
696
1,256
788
582
468
377
673
331
845
692
429
147
600
625
725
800
1,350
650
600
1,250
715
400
450
550
571
850
400
249
152
239
222
235
111
202
1,130
731
525
1,050
571
1,084
628
651
536
445
479
388
1,039
422
1,153
491
594
753
662
1,358
457
822
2,523
1,415
1,530
1,267
1,210
696
1,256
788
582
468
377
673
331
845
692
309
102
600
625
725
0
1,350
650
600
1,250
0
400
450
550
199
850
400
40
31
(110)
89
8
89
(114)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
163
148
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
84
173
116
57
209
391
159
133
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
283
193
0
0
0
800
0
0
0
0
715
0
0
0
372
0
0
422
268
296
431
626
270
335
1,130
731
525
1,050
571
1,084
628
651
536
445
479
388
1,039
422
1,153
491
594
753
662
1,358
457
822
2,523
1,415
1,530
1,267
1,210
696
1,256
788
582
468
377
673
331
845
692
592
295
600
625
725
800
1,350
650
600
1,250
715
400
450
550
571
850
400
Accumulated
Depreciation
119
84
2
161
391
156
6
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
234
128
0
0
0
116
0
0
0
0
43
0
0
0
5
0
0
Date of Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
1985
1985
1985
1986
1991
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2010
1985
1986
2011
2011
2011
2011
2011
2011
2011
2011
2012
2011
2011
2011
2012
2011
2011
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
MARLBOROUGH, MA*
MELROSE, MA*
METHUEN, MA*
PEABODY, MA*
PEABODY, MA*
REVERE, MA*
SALEM, MA*
SHREWSBURY, MA*
SHREWSBURY, MA*
TEWKSBURY, MA*
WAKEFIELD, MA*
WESTBOROUGH, MA*
WILMINGTON, MA*
WILMINGTON, MA*
WORCESTER, MA*
WORCESTER, MA*
WORCESTER, MA*
WORCESTER, MA*
AGAWAM, MA
WESTFIELD, MA
WEST ROXBURY, MA
MAYNARD, MA
GARDNER, MA
STOUGHTON, MA
ARLINGTON, MA
METHUEN, MA
BELMONT, MA
RANDOLPH, MA
ROCKLAND, MA
WATERTOWN, MA
WEYMOUTH, MA
HINGHAM, MA
ASHLAND, MA
WOBURN, MA
BELMONT, MA
HYDE PARK, MA
EVERETT, MA
NORTH ATTLEBORO, MA
WORCESTER, MA
NEW BEDFORD, MA
WORCESTER, MA
WEBSTER, MA
CLINTON, MA
FOXBOROUGH, MA
CLINTON, MA
HYANNIS, MA
HOLYOKE, MA
NEWTON, MA
FALMOUTH, MA
METHUEN, MA
ROCKLAND, MA
FAIRHAVEN, MA
BELLINGHAM, MA
NEW BEDFORD, MA
SEEKONK, MA
WALPOLE, MA
NORTH ANDOVER, MA
LOWELL, MA
BILLERICA, MA
CHATHAM, MA
LEOMINSTER, MA
550
600
650
650
550
1,300
600
450
400
1,200
900
450
1,300
600
400
300
550
500
210
290
490
735
1,008
775
518
380
301
574
438
358
643
353
607
508
390
499
270
663
498
522
386
1,012
587
427
386
651
232
691
519
490
579
546
734
482
1,073
450
394
361
400
275
185
550
600
650
650
550
1,300
600
450
400
1,200
900
450
1,300
600
400
300
550
500
136
188
319
479
657
505
338
246
144
430
228
321
362
243
395
508
254
322
270
432
322
340
251
659
382
325
251
424
117
450
458
319
377
202
476
293
699
293
256
201
250
175
85
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
63
70
68
7
74
25
28
64
121
130
(129)
126
(184)
28
6
295
29
28
191
17
108
18
35
140
48
16
84
43
38
26
44
16
45
(267)
73
96
21
11
32
84
164
16
115
85
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
137
172
239
263
425
295
208
198
278
274
81
163
97
138
218
295
165
205
191
248
284
200
170
493
253
118
219
270
153
267
105
187
247
77
331
285
395
168
170
244
314
116
215
550
600
650
650
550
1,300
600
450
400
1,200
900
450
1,300
600
400
300
550
500
273
360
558
742
1,082
800
546
444
422
704
309
484
459
381
613
803
419
527
461
680
606
540
421
1,152
635
443
470
694
270
717
563
506
624
279
807
578
1,094
461
426
445
564
291
300
Accumulated
Depreciation
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
108
105
125
160
284
186
135
145
17
169
15
103
3
133
133
183
110
136
133
154
176
127
101
276
170
118
165
178
153
170
105
118
166
1
228
222
244
104
115
244
265
116
174
Date of Initial
Leasehold or
Acquisition
Investment (1)
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1989
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1990
1985
1985
1985
1985
1988
1985
1985
1985
1985
1985
1985
1985
1985
1985
1986
1986
1986
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
LOWELL, MA
METHUEN, MA
ORLEANS, MA
PEABODY, MA
SALEM, MA
WESTFORD, MA
WOBURN, MA
YARMOUTHPORT, MA
AUBURN, MA
BARRE, MA
WORCESTER, MA
BROCKTON, MA
WORCESTER, MA
FITCHBURG, MA
FRANKLIN, MA
WORCESTER, MA
NORTHBOROUGH, MA
WEST BOYLSTON, MA
SOUTH YARMOUTH, MA
STERLING, MA
SUTTON, MA
WORCESTER, MA
UPTON, MA
WESTBOROUGH, MA
HARWICHPORT, MA
WORCESTER, MA
WORCESTER, MA
FITCHBURG, MA
LEICESTER, MA
NORTH GRAFTON, MA
OXFORD, MA
WORCESTER, MA
FITCHBURG, MA
WORCESTER, MA
FRAMINGHAM, MA
JONESBORO, AR
BELLFLOWER, CA
BENICIA, CA
COACHELLA, CA
EL CAJON, CA
FILLMORE, CA
HESPERIA, CA
LA PALMA, CA
POWAY, CA
SAN DIMAS, CA
HALEIWA, HI*
HONOLULU, HI*
HONOLULU, HI*
HONOLULU, HI*
HONOLULU, HI*
KANEOHE, HI*
KANEOHE, HI*
WAIANAE, HI*
WAIANAE, HI*
WAIPAHU, HI*
COTTAGE HILLS, IL
BALTIMORE, MD
BALTIMORE, MD
ELLICOTT CITY, MD
KERNERSVILLE, NC
KERNERSVILLE, NC
375
300
260
400
275
275
350
300
369
536
276
276
168
247
0
343
405
312
276
476
714
276
428
312
383
547
979
390
267
245
294
285
142
271
400
2,985
1,370
2,223
2,235
1,292
1,354
1,643
1,972
1,439
1,941
1,522
1,539
1,769
1,070
9,211
1,978
1,364
1,997
1,520
2,459
249
2,259
802
895
297
449
250
150
185
275
175
175
200
150
240
348
179
179
168
203
165
223
263
203
179
309
464
179
279
203
249
356
636
254
174
159
191
185
93
176
260
330
910
1,058
1,217
780
950
849
1,389
0
749
1,058
1,219
1,192
981
8,194
1,473
822
871
648
945
26
722
0
0
73
338
9
51
23
41
24
28
46
25
111
9
8
194
103
40
271
8
12
29
46
2
132
17
26
21
18
11
7
33
220
35
9
44
219
16
27
0
(1)
1
0
0
0
0
(1)
0
0
0
0
0
0
0
(1)
0
0
0
(1)
0
0
0
0
0
0
86
134
201
98
166
124
128
196
175
240
197
105
291
103
84
106
128
154
138
143
169
382
114
175
130
152
202
350
169
313
121
112
144
268
111
167
2,655
459
1,166
1,018
512
404
794
582
1,439
1,192
464
320
577
89
1,017
504
542
1,126
872
1,513
223
1,537
802
895
224
111
384
351
283
441
299
303
396
325
480
545
284
470
271
287
271
351
417
341
322
478
846
293
454
333
401
558
986
423
487
280
303
329
361
287
427
2,985
1,369
2,224
2,235
1,292
1,354
1,643
1,971
1,439
1,941
1,522
1,539
1,769
1,070
9,211
1,977
1,364
1,997
1,520
2,458
249
2,259
802
895
297
449
Accumulated
Depreciation
134
201
98
166
124
128
196
175
96
79
46
232
48
53
52
54
67
71
84
67
124
55
83
63
70
84
140
85
221
68
49
83
198
53
76
634
142
376
306
140
124
226
176
376
311
176
95
158
41
288
155
173
310
239
398
79
413
231
271
66
60
Date of Initial
Leasehold or
Acquisition
Investment (1)
1986
1986
1986
1986
1986
1986
1986
1986
1991
1991
1992
1991
1991
1991
1988
1991
1993
1991
1991
1991
1993
1991
1991
1991
1991
1991
1991
1992
1991
1991
1993
1991
1992
1991
1991
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
MADISON, NC
NEW BERN, NC
WALKERTOWN, NC
WALNUT COVE, NC
WINSTON SALEM, NC
BELFIELD, ND
ALLENSTOWN, NH
BEDFORD, NH
HOOKSETT, NH
AUSTIN, TX
AUSTIN, TX
AUSTIN, TX
BEDFORD, TX
FT WORTH, TX
HARKER HEIGHTS, TX
HOUSTON, TX
KELLER, TX
LEWISVILLE, TX
MIDLOTHIAN, TX
N RICHLAND HILLS, TX
SAN MARCOS, TX
TEMPLE, TX
THE COLONY, TX
WACO, TX
BROOKLAND, AR
JONESBORO, AR
DERRY, NH
PLAISTOW, NH
SALEM, NH
LONDONDERRY, NH
ROCHESTER, NH
EXETER, NH
CANDIA, NH
EPSOM, NH
SALEM, NH
CONCORD, NH*
CONCORD, NH*
DERRY, NH*
DOVER, NH*
DOVER, NH*
DOVER, NH*
GOFFSTOWN, NH*
HOOKSETT, NH*
KINGSTON, NH*
LONDONDERRY, NH*
MANCHESTER, NH*
NASHUA, NH*
NASHUA, NH*
NASHUA, NH*
NASHUA, NH*
NASHUA, NH*
NORTHWOOD, NH*
PORTSMOUTH, NH*
RAYMOND, NH*
ROCHESTER, NH*
ROCHESTER, NH*
ROCHESTER, NH*
MCAFEE, NJ
HAMBURG, NJ
LIVINGSTON, NJ
TRENTON, NJ
395
350
315
560
434
1,232
1,787
2,301
1,562
2,368
462
3,510
353
2,115
2,052
1,689
2,507
494
429
314
1,954
2,406
4,396
3,884
1,468
869
418
300
743
703
939
113
130
220
450
675
900
950
650
1,200
300
1,737
336
1,500
1,100
550
825
750
1,750
500
550
500
525
550
1,400
1,600
700
671
599
872
374
46
190
315
514
252
382
467
1,271
824
738
274
1,595
113
866
588
224
996
110
72
126
251
1,215
337
894
149
173
158
245
484
458
600
65
80
155
350
675
900
950
650
1,200
300
697
0
1,500
1,100
550
825
750
1,750
500
550
500
525
550
1,400
1,600
700
437
390
568
243
1
62
0
0
0
0
0
0
0
0
0
1
0
0
(1)
0
0
0
0
1
0
(1)
0
0
0
(1)
15
137
20
30
12
224
210
44
47
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
12
194
62
25
87
350
222
0
46
182
850
1,320
1,030
738
1,630
188
1,916
240
1,249
1,463
1,465
1,511
384
357
189
1,703
1,190
4,059
2,990
1,319
695
275
192
279
275
351
272
260
109
147
0
0
0
0
0
0
1,040
336
0
0
0
0
0
0
0
0
0
0
0
0
0
0
246
403
366
156
396
412
315
560
434
1,232
1,787
2,301
1,562
2,368
462
3,511
353
2,115
2,051
1,689
2,507
494
429
315
1,954
2,405
4,396
3,884
1,468
868
433
437
763
733
951
337
340
264
497
675
900
950
650
1,200
300
1,737
336
1,500
1,100
550
825
750
1,750
500
550
500
525
550
1,400
1,600
700
683
793
934
399
Accumulated
Depreciation
109
65
0
26
99
425
394
338
381
430
70
511
96
372
634
367
423
111
122
59
439
341
986
861
282
156
275
154
174
176
215
143
236
107
147
0
0
0
0
0
0
65
57
0
0
0
0
0
0
0
0
0
0
0
0
0
0
151
162
216
90
Date of Initial
Leasehold or
Acquisition
Investment (1)
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2008
2007
2007
2007
2007
2007
2007
2007
2007
1987
1987
1985
1985
1985
1986
1986
1986
1986
2011
2011
2011
2011
2011
2011
2012
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
1985
1985
1985
1985
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
BAYONNE, NJ
CRANFORD, NJ
NUTLEY, NJ
TRENTON, NJ
WALL TOWNSHIP, NJ
UNION, NJ
CRANBURY, NJ
HILLSIDE, NJ
LONG BRANCH, NJ
ELIZABETH, NJ
BELLEVILLE, NJ
PISCATAWAY, NJ
NEPTUNE CITY, NJ
BASKING RIDGE, NJ
DEPTFORD, NJ
CHERRY HILL, NJ
SEWELL, NJ
FLEMINGTON, NJ
TRENTON, NJ
LODI, NJ
EAST ORANGE, NJ
BELMAR, NJ
SPRING LAKE, NJ
HILLTOP, NJ
FRANKLIN TWP., NJ
MIDLAND PARK, NJ
PATERSON, NJ
OCEAN CITY, NJ
HILLSBOROUGH, NJ
PRINCETON, NJ
NEPTUNE, NJ
NEWARK, NJ
OAKHURST, NJ
BELLEVILLE, NJ
PINE HILL, NJ
ATCO, NJ
SOMERVILLE, NJ
CINNAMINSON, NJ
RIDGEFIELD PARK, NJ
BRICK, NJ
LAKE HOPATCONG, NJ
TRENTON, NJ
BERGENFIELD, NJ
SCOTCH PLAINS, NJ
NUTLEY, NJ
PLAINFIELD, NJ
WATCHUNG, NJ
GREEN VILLAGE, NJ
IRVINGTON, NJ
JERSEY CITY, NJ
BLOOMFIELD, NJ
DOVER, NJ
PARLIN, NJ
COLONIA, NJ
NORTH BERGEN, NJ
WAYNE, NJ
HASBROUCK HEIGHTS, NJ
COLONIA, NJ
RIDGEWOOD, NJ
HAWTHORNE, NJ
WAYNE, NJ
342
343
0
466
336
437
607
225
514
406
398
106
270
362
281
358
552
547
685
0
422
566
346
330
683
201
620
844
237
703
456
3,087
226
215
191
153
253
327
274
1,508
1,305
1,303
382
331
434
470
450
278
410
438
442
577
418
253
630
490
640
720
703
245
474
87
222
329
304
121
239
289
150
335
227
259
50
176
200
183
233
356
346
445
232
161
411
225
215
445
150
403
367
100
458
234
1,590
101
149
116
132
201
177
150
1,000
800
1,146
300
215
283
306
226
128
267
218
288
311
203
165
410
319
416
535
458
160
309
(55)
97
658
15
56
(117)
(88)
32
30
141
81
353
0
60
25
82
34
17
46
350
(136)
93
69
59
243
183
42
(297)
192
576
(159)
(237)
503
73
82
118
29
25
64
0
0
0
26
45
58
72
(186)
35
55
62
50
(174)
(138)
11
123
295
324
81
80
52
93
88
200
218
329
177
271
81
230
107
209
320
220
409
94
222
123
207
230
218
286
118
125
248
190
174
481
234
259
180
329
821
63
1,260
628
139
157
139
81
175
188
508
505
157
108
161
209
236
38
185
198
282
204
92
77
99
343
466
548
266
325
137
258
287
440
658
481
392
320
519
257
544
547
479
459
270
422
306
440
586
564
731
350
286
659
415
389
926
384
662
547
429
1,279
297
2,850
729
288
273
271
282
352
338
1,508
1,305
1,303
408
376
492
542
264
313
465
500
492
403
280
264
753
785
964
801
783
297
567
Accumulated
Depreciation
0
109
82
111
271
5
20
107
131
43
145
128
56
139
83
96
138
137
177
1
0
151
113
108
214
75
149
12
126
241
2
0
240
114
138
112
69
175
123
322
364
0
108
89
139
150
1
187
140
21
146
4
3
56
235
162
187
253
187
70
165
Date of Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
1986
1985
1986
1985
1985
1987
1985
1985
1985
1993
1985
1986
1985
1985
1985
1985
1985
1988
1985
1985
1985
1985
1985
1989
1985
1985
1985
1985
1985
1985
1985
1986
1986
1987
1987
1987
1997
2000
2000
2012
1990
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
WASHINGTON TWNSHP, NJ
PARAMUS, NJ
JERSEY CITY, NJ
FORT LEE, NJ
TRENTON, NJ
BEVERLY, NJ
WEST ORANGE, NJ
ROCKVILLE CENTRE, NY
GLENDALE, NY
BELLAIRE, NY
BAYSIDE, NY
YONKERS, NY
DOBBS FERRY, NY
NORTH MERRICK, NY
GREAT NECK, NY
GLEN HEAD, NY
GARDEN CITY, NY
HEWLETT, NY
EAST HILLS, NY
LEVITTOWN, NY
LEVITTOWN, NY
ST. ALBANS, NY
BROOKLYN, NY
BROOKLYN, NY
BAYSIDE, NY
ELMONT, NY
WHITE PLAINS, NY
SCARSDALE, NY
EASTCHESTER, NY
NEW ROCHELLE, NY
BROOKLYN, NY
COMMACK, NY
SAG HARBOR, NY
EAST HAMPTON, NY
MASTIC, NY
BRONX, NY
YONKERS, NY
GLENVILLE, NY
YONKERS, NY
MINEOLA, NY
ALBANY, NY
LONG ISLAND CITY, NY
RENSSELAER, NY
RENSSELAER, NY
PORT JEFFERSON, NY
ROTTERDAM, NY
OSSINING, NY
ELLENVILLE, NY
CHATHAM, NY
SHRUB OAK, NY
BROOKLYN, NY
STATEN ISLAND, NY
STATEN ISLAND, NY
STATEN ISLAND, NY
BRONX, NY
EAST MEADOW, NY
STATEN ISLAND, NY
MASSAPEQUA, NY
TROY, NY
BALDWIN, NY
MIDDLETOWN, NY
912
382
402
1,246
338
470
800
350
369
330
245
153
671
510
500
462
362
490
242
503
546
330
627
477
470
360
259
257
534
338
422
321
704
659
313
390
1,020
344
203
342
405
1,646
1,654
684
387
141
231
233
349
1,061
237
301
358
350
104
383
390
333
225
291
751
594
249
124
811
220
255
521
201
236
215
160
77
434
332
450
301
236
255
242
327
356
215
408
306
306
224
165
123
289
220
275
209
458
428
204
251
665
220
144
222
262
1,072
1,077
287
246
92
117
152
225
691
154
196
230
228
90
325
254
217
147
151
489
64
31
(12)
39
76
(160)
181
66
35
37
225
108
75
117
24
46
14
(87)
38
42
88
127
56
74
289
91
96
171
(154)
83
88
26
35
40
110
54
104
114
82
34
147
260
289
0
62
142
38
95
174
239
21
77
36
44
382
128
89
29
61
47
33
89
382
164
266
474
194
55
460
215
168
152
310
184
312
295
74
207
140
148
38
218
278
242
275
245
453
227
190
305
91
201
235
138
281
271
219
193
459
238
141
154
290
834
866
397
203
191
152
176
298
609
104
182
164
166
396
186
225
145
139
187
295
976
413
390
1,285
414
310
981
416
404
367
470
261
746
627
524
508
376
403
280
545
634
457
683
551
759
451
355
428
380
421
510
347
739
699
423
444
1,124
458
285
376
552
1,906
1,943
684
449
283
269
328
523
1,300
258
378
394
394
486
511
479
362
286
338
784
Accumulated
Depreciation
234
100
7
299
140
0
234
171
116
106
240
115
198
207
74
142
88
4
25
147
162
175
182
174
346
152
127
28
6
125
172
93
182
177
175
134
297
173
120
105
213
603
423
173
147
150
16
124
226
312
71
138
113
117
364
166
170
98
107
119
189
Date of Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1987
1985
1985
1985
1985
1985
1985
1986
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1986
1985
1985
1985
1985
2004
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1986
1985
1985
1985
1986
1985
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
OCEANSIDE, NY
NORTHPORT, NY
BREWSTER, NY*
BRONXVILLE, NY*
CORTLAND MANOR, NY*
DOBBS FERRY, NY*
EASTCHESTER, NY*
ELMSFORD, NY*
GARNERVILLE, NY*
HARTSDALE, NY*
HAWTHORNE, NY*
HOPEWELL JUNCTION, NY*
HYDE PARK, NY*
MAMARONECK, NY*
MIDDLETOWN, NY*
MILLWOOD, NY*
MOUNT KISCO, NY*
MOUNT VERNON, NY*
CHESTER, NY*
NEW PALTZ, NY*
NEW ROCHELLE, NY*
NEW WINDSOR, NY*
NEWBURGH, NY*
NEWBURGH, NY*
PEEKSKILL, NY*
PELHAM, NY*
PORT CHESTER, NY*
PORT CHESTER, NY*
POUGHKEEPSIE, NY*
POUGHKEEPSIE, NY*
POUGHKEEPSIE, NY*
POUGHKEEPSIE, NY*
POUGHKEEPSIE, NY*
POUGHKEEPSIE, NY*
RYE, NY*
SCARSDALE, NY*
SPRING VALLEY, NY*
TARRYTOWN, NY*
THORNWOOD, NY*
TUCHAHOE, NY*
WAPPINGERS FALLS, NY*
WAPPINGERS FALLS, NY*
WARWICK, NY*
WEST NYACK, NY*
YONKERS, NY*
YORKTOWN HEIGHTS, NY*
FISHKILL, NY*
MIDDLETOWN, NY*
NANUET, NY*
WHITE PLAINS, NY*
KATONAH, NY*
BALLSTON, NY
BALLSTON SPA, NY
COLONIE, NY
DELMAR, NY
HALFMOON, NY
HANCOCK, NY
LATHAM, NY
MALTA, NY
MILLERTON, NY
NEW WINDSOR, NY
313
241
789
1,232
1,872
1,345
1,724
1,453
1,508
1,626
2,084
1,163
990
1,429
1,281
1,448
1,907
985
1,158
971
1,887
1,084
527
1,192
2,207
1,035
1,015
941
591
1,020
1,340
1,306
1,355
1,232
872
1,301
749
956
1,389
1,650
452
1,488
1,049
936
1,907
2,365
1,793
719
2,316
1,458
1,084
160
210
245
150
415
100
275
190
175
150
204
157
789
1,232
1,872
1,345
1,724
1,453
1,508
1,626
2,084
1,163
990
1,429
1,281
1,448
1,907
985
1,158
971
1,887
1,084
527
1,192
2,207
1,035
1,015
0
591
1,020
1,340
1,306
1,355
1,232
872
1,301
749
956
0
1,650
0
1,488
1,049
936
1,907
2,365
1,793
719
2,316
1,458
1,084
110
100
120
70
197
50
150
65
100
75
117
33
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
244
148
70
157
(145)
274
182
123
166
137
90
226
117
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
941
0
0
0
0
0
0
0
0
0
0
1,389
0
452
0
0
0
0
0
0
0
0
0
0
294
258
195
237
73
324
307
248
241
212
430
274
789
1,232
1,872
1,345
1,724
1,453
1,508
1,626
2,084
1,163
990
1,429
1,281
1,448
1,907
985
1,158
971
1,887
1,084
527
1,192
2,207
1,035
1,015
941
591
1,020
1,340
1,306
1,355
1,232
872
1,301
749
956
1,389
1,650
452
1,488
1,049
936
1,907
2,365
1,793
719
2,316
1,458
1,084
404
358
315
307
270
374
457
313
341
287
Accumulated
Depreciation
138
83
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
111
0
0
0
0
0
0
0
0
0
0
144
0
81
0
0
0
0
0
0
0
0
0
0
213
237
175
145
0
194
223
220
222
192
Date of Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
2011
1986
1986
1986
1986
1986
1986
1986
1986
1986
1986
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
NISKAYUNA, NY
PLEASANT VALLEY, NY
QUEENSBURY, NY
ROTTERDAM, NY
SCHENECTADY, NY
WARRENSBURG, NY
NEWBURGH, NY
JERICHO, NY
RHINEBECK, NY
PORT EWEN, NY
CATSKILL, NY
HUDSON, NY
BREWSTER, NY
CAIRO, NY
WEST TAGHKANIC, NY
SAYVILLE, NY
WANTAGH, NY
CENTRAL ISLIP, NY
FLUSHING, NY
NORTH LINDENHURST, NY
WYANDANCH, NY
NEW ROCHELLE, NY
FLORAL PARK, NY
RIVERHEAD, NY
BUFFALO, NY
HAMBURG, NY
LACKAWANNA, NY
TONAWANDA, NY
WEST SENECA, NY
ALFRED STATION , NY
AVOCA, NY
BATAVIA, NY
BYRON, NY
CASTILE, NY
CHURCHVILLE, NY
EAST PEMBROKE, NY
FRIENDSHIP, NY
NAPLES , NY
ROCHESTER , NY
PERRY, NY
PRATTSBURG, NY
SAVONA , NY
WARSAW , NY
WELLSVILLE, NY
ROCHESTER, NY
LAKEVILLE, NY
GREIGSVILLE, NY
ROCHESTER, NY
PHILADELPHIA, PA
ALLENTOWN, PA
NORRISTOWN, PA
BRYN MAWR, PA
CONSHOHOCKEN, PA
PHILADELPHIA, PA
HUNTINGDON VALLEY, PA
FEASTERVILLE, PA
PHILADELPHIA, PA
PHILADELPHIA, PA
PHILADELPHIA, PA
PHILADELPHIA, PA
HATBORO, PA
425
398
215
132
225
115
431
0
204
657
405
286
303
192
203
345
641
572
516
295
415
395
617
723
312
294
250
264
257
714
936
684
969
307
1,011
787
393
1,257
559
1,444
553
1,314
990
247
853
1,028
1,018
595
237
358
241
221
261
281
422
510
289
406
418
370
285
275
240
96
0
150
69
150
0
102
162
354
109
143
47
122
300
370
358
320
192
262
252
356
432
151
164
130
211
184
414
635
364
669
132
601
537
43
827
159
1,044
303
964
690
0
303
203
203
305
154
233
157
144
170
183
275
332
188
264
272
241
186
35
158
88
166
340
186
60
370
191
(230)
0
27
75
181
386
27
(1)
18
22
31
(82)
40
93
1
1
0
97
31
56
0
(1)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
25
30
29
51
84
27
37
107
49
133
50
93
189
91
185
316
207
298
415
232
341
370
293
265
51
204
235
326
467
72
270
232
218
134
71
183
354
292
162
130
217
84
129
300
300
320
300
175
410
250
350
430
400
400
250
350
300
247
550
825
815
290
108
155
113
128
175
125
184
285
150
275
196
222
288
460
556
303
298
565
301
491
370
395
427
405
313
378
373
589
372
640
590
538
326
333
435
710
724
313
294
347
295
313
714
935
684
969
307
1,011
787
393
1,257
559
1,444
553
1,314
990
247
853
1,028
1,018
595
262
388
270
272
345
308
459
617
338
539
468
463
474
Accumulated
Depreciation
185
264
32
283
394
39
311
232
48
0
12
3
208
294
173
29
156
125
114
83
5
115
178
168
97
70
84
52
43
82
82
87
82
48
112
68
96
118
109
109
68
96
82
68
150
248
243
64
74
105
70
92
133
86
148
213
109
216
131
165
141
Date of Initial
Leasehold or
Acquisition
Investment (1)
1986
1986
1986
1995
1986
1986
1989
1998
2007
2007
2007
1989
1988
1988
1986
1998
1998
1998
1998
1998
1998
1998
1998
1998
2000
2000
2000
2000
2000
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2006
2008
2008
2008
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
HAVERTOWN, PA
MEDIA, PA
PHILADELPHIA, PA
PHILADELPHIA, PA
ALDAN, PA
BRISTOL, PA
HAVERTOWN, PA
HATBORO, PA
CLIFTON HGTS., PA
ALDAN, PA
SHARON HILL, PA
PHILADELPHIA, PA
MORRISVILLE, PA
PHILADELPHIA, PA
PHOENIXVILLE, PA
POTTSTOWN, PA
QUAKERTOWN, PA
SOUDERTON, PA
LANSDALE, PA
FURLONG, PA
DOYLESTOWN, PA
PENNDEL, PA
NORRISTOWN, PA
TRAPPE, PA
READING, PA
ELKINS PARK, PA
NEW OXFORD, PA
PHILADELPHIA, PA
ALLISON PARK, PA
NEW KENSINGTON
NORTH KINGSTOWN, RI
WARWICK, RI
EAST PROVIDENCE, RI
ASHAWAY, RI
EAST PROVIDENCE, RI
PAWTUCKET, RI
WARWICK, RI
CRANSTON, RI
PAWTUCKET, RI
BARRINGTON, RI
WARWICK, RI
N. PROVIDENCE, RI
EAST PROVIDENCE, RI
POTTSVILLE, PA
LANCASTER, PA
LANCASTER, PA
HAMBURG, PA
READING, PA
EPHRATA, PA
ROBESONIA, PA
KENHORST, PA
LEOLA, PA
RED LION, PA
HARRISBURG, PA
ADAMSTOWN, PA
LANCASTER, PA
NEW HOLLAND, PA
LAURELDALE, PA
REIFFTON, PA
MOHNTON, PA
CRESTLINE, OH
402
326
390
342
281
431
265
289
428
434
411
370
378
303
384
430
379
382
244
175
406
137
175
378
750
275
1,045
1,252
1,500
1,375
212
377
2,297
619
310
213
435
466
207
490
253
542
487
451
209
642
219
183
209
226
143
263
222
399
213
309
313
262
338
317
1,202
254
191
254
222
183
280
173
188
217
283
267
241
246
181
205
280
193
249
244
175
264
90
175
246
0
200
19
814
850
675
89
206
1,496
402
202
119
267
304
154
319
165
353
317
148
78
300
130
104
30
70
65
131
52
199
100
104
143
87
43
66
285
22
108
27
39
36
82
24
103
(117)
17
40
136
37
50
(122)
49
(125)
38
210
151
105
192
128
43
49
14
(227)
0
0
0
84
36
569
0
33
194
25
17
45
85
79
62
12
1
53
18
76
128
87
103
125
102
35
212
168
4
12
16
5
11
0
92
170
243
163
159
134
233
116
204
94
168
184
265
169
172
57
199
61
171
210
151
247
239
128
175
799
89
799
438
650
700
207
207
1,370
217
141
288
193
179
98
256
167
251
182
304
184
360
165
207
266
259
203
234
205
412
281
209
182
191
300
262
917
424
434
417
381
317
513
289
392
311
451
451
506
415
353
262
479
254
420
454
326
511
329
303
421
799
289
818
1,252
1,500
1,375
296
413
2,866
619
343
407
460
483
252
575
332
604
499
452
262
660
295
311
296
329
268
365
257
611
381
313
325
278
343
328
1,202
Accumulated
Depreciation
115
125
108
111
94
173
79
144
6
107
126
213
110
172
3
138
0
116
143
113
123
115
82
122
798
89
708
61
142
83
161
207
966
71
97
261
135
110
71
186
109
175
151
304
158
360
165
179
206
256
176
147
200
281
231
209
182
191
300
262
193
Date of Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1985
1988
1985
1985
1989
1990
1996
2009
2010
2010
1985
1989
1985
2004
1985
1986
1985
1985
1985
1985
1985
1985
1985
1990
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
1989
2008
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
Cost
Capitalized
Subsequent
to Initial
Investment
Gross Amount at Which Carried
at Close of Period
Building and
Improvements
Total
Land
Accumulated
Depreciation
MANSFIELD, OH
MANSFIELD, OH
MONROEVILLE, OH
RICHMOND, VA
CHESAPEAKE, VA
PORTSMOUTH, VA
NORFOLK, VA
ASHLAND, VA
FARMVILLE, VA
FREDERICKSBURG, VA
FREDERICKSBURG, VA
FREDERICKSBURG, VA
FREDERICKSBURG, VA
GLEN ALLEN, VA
GLEN ALLEN, VA
KING GEORGE, VA
KING WILLIAM, VA
MECHANICSVILLE, VA
MECHANICSVILLE, VA
MECHANICSVILLE, VA
MECHANICSVILLE, VA
MECHANICSVILLE, VA
MECHANICSVILLE, VA
MONTPELIER, VA
PETERSBURG, VA
RICHMOND, VA
RUTHER GLEN, VA
SANDSTON, VA
SPOTSYLVANIA, VA
CHESAPEAKE, VA
BENNINGTON, VT
JACKSONVILLE, FL
JACKSONVILLE, FL
JACKSONVILLE, FL
ORLANDO, FL
Miscellaneous
921
1,950
2,580
121
780
562
535
840
1,227
1,279
1,716
1,289
3,623
1,037
1,077
294
1,688
1,125
903
1,476
957
1,677
1,043
2,481
1,441
1,132
466
722
1,290
1,004
309
560
486
545
868
39,552
515,325 $
332
1
700
0
485
0
0
210
398
(163)
222
54
311
6
840
0
622
0
469
0
996
0
798
0
2,828
0
412
0
322
0
294
0
1,068
0
505
0
273
0
876
0
324
0
1,157
0
223
0
1,726
0
816
0
547
0
31
0
102
0
490
0
385
39
181
(24)
296
(1)
388
(1)
256
0
401
(1)
7,236
18,824
46,991 $ 336,223 $
922
590
1,950
1,250
2,580
2,095
331
331
617
219
616
394
541
230
840
0
1,227
605
1,279
810
1,716
720
1,289
491
3,623
795
1,037
625
1,077
755
294
0
1,688
620
1,125
620
903
630
1,476
600
957
633
1,677
520
1,043
820
2,481
755
1,441
625
1,132
585
466
435
722
620
1,290
800
1,043
658
285
104
559
263
485
97
545
289
867
466
27,964
46,788
226,093 $ 562,316 $
117
231
351
311
14
367
230
0
188
251
223
169
246
194
234
0
192
192
195
186
230
161
254
234
194
181
135
192
248
631
21
141
52
155
250
20,854
116,768
$
Date of Initial
Leasehold or
Acquisition
Investment (1)
2008
2009
2009
1990
1990
1990
1990
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
1990
1985
2000
2000
2000
2000
various
(1)
Initial cost of leasehold or acquisition investment to company represents the aggregate of the cost incurred during the
year in which we purchased the property for owned properties or purchased a leasehold interest in leased properties.
Cost capitalized subsequent to initial investment also includes investments made in previously leased properties prior
to their acquisition.
(2) Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets,
which generally range from sixteen to 25 years for buildings and improvements, or the term of the lease if shorter.
Leasehold interests are amortized over the remaining term of the underlying lease.
(3) The aggregate cost for federal income tax purposes was approximately $546,959,000 at December 31, 2012.
93
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE
As of December 31, 2012
(in thousands)
Description
Location(s)
Interest
Rate
Final
Maturity
Date
Periodic
Payment
Terms (a)
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
S. Weymouth, MA
Horsham, PA
Green Island, NY
Uniondale, NY
Concord, NH
Irvington, NJ
Kernersville/Lexington, NC
Wantagh, NY
Fullerton Hts, MD
Ipswich, MA
Springfield, MA
E. Patchogue, NY
Manchester, NH
Union City, NJ
Worcester, MA
Dover, PA
Neffsville, PA
Bronx, NY
Seaford, NY
Spotswood, NJ
Clifton, NJ
9.0% 3/2031
10.0% 7/2024
11.0% 8/2018
10.0% 3/2015
9.5% 8/2028
10.0% 12/2019
8.0% 7/2026
9.0% 5/2032
9.0% 5/2019
9.5% 6/2019
9.0% 7/2019
9.0% 8/2019
9.5% 9/2019
9.0% 9/2019
9.0% 10/2019
9.0% 11/2017
9.0% 12/2017
9.0% 12/2019
9.0% 1/2020
9.0% 1/2020
9.0% 1/2020
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
P & I
Type of
Loan/Borrower
Mortgage Loans:
Borrower A
Borrower B
Borrower C
Borrower D
Borrower E
Borrower F
Borrower G
Borrower H
Borrower I
Borrower J
Borrower K
Borrower L
Borrower M
Borrower N
Borrower O
Borrower P
Borrower Q
Borrower R
Borrower S
Borrower T
Borrower U
Note receivable
Purchase/leaseback Various-NY
9.5% 1/2021
I(b)
Total (c)
(a) P & I = Principal and interest paid monthly.
(b)
I = Interest only paid monthly with annual principal payments due in ten equal installments.
(c) The aggregate cost for federal income tax purposes approximates the amount of principal unpaid.
Prior
Liens
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Amount of
Principal
Unpaid at
Close of Period
$
233
188
205
55
191
239
508
450
212
198
130
199
224
798
324
209
480
240
487
306
284
6,160
16,173
$ 22,333
We review payment status to identify performing versus non-performing loans. Interest income on performing loans is
accrued as earned. A non-performing loan is placed on non-accrual status when it is probable that the borrower may be
unable to meet interest payments as they become due. Generally, loans 90 days or more past due are placed on non-accrual
status unless there is sufficient collateral to assure collectability of principal and interest. Upon the designation of non-accrual
status, all unpaid accrued interest is reserved against through current income. Interest income on non-performing loans is
generally recognized on a cash basis. None of our loans were in default as of December 31, 2012 for nonpayment of interest
only or principal and interest. We have not recognized any impairment charges related to our loans. The summarized changes
in the carrying amount of mortgage loans are as follows:
Balance at January 1, .................................................................................
Additions:
2012
2011
2010
$
18,638 $
1,274 $
1,432
New Mortgage Loans .........................................................................
4,568
19,468
0
Deductions:
Loan repayments.................................................................................
Collection of principal ........................................................................
Balance at December 31, ...........................................................................
(300)
(573)
$
22,333
$
(107 )
(1,997 )
18,638
$
(8)
(150)
1,274
94
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant
has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Getty Realty Corp.
(Registrant)
By:
/s/ THOMAS J. STIRNWEIS
Thomas J. Stirnweis,
Vice President and
Chief Financial Officer
March 18,2013
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K
has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By:
By:
By:
By:
/s/ DAVID B. DRISCOLL
David B. Driscoll
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 18,2013
/s/ LEO LIEBOWITZ
Leo Liebowitz
Director and Chairman of the Board
March 18,2013
/s/ MILTON COOPER
Milton Cooper
Director
March 18,2013
/s/ HOWARD SAFENOWITZ
Howard Safenowitz
Director
March 18,2013
By:
By:
By:
/s/ THOMAS J. STIRNWEIS
Thomas J. Stirnweis
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
March 18,2013
/s/ PHILIP E. COVIELLO
Philip E. Coviello
Director
March 18,2013
/s/ RICHARD E. MONTAG
Richard E. Montag
Director
March 18,2013
95
EXHIBIT INDEX
GETTY REALTY CORP.
Annual Report on Form 10-K
for the year ended December 31, 2012
EXHIBIT
NO.
DESCRIPTION
2.1
3.1
3.2
3.3
3.4
3.5
4.1
10.1*
10.2*
Agreement and Plan of Reorganization and
Merger, dated as of December 16, 1997 (the
“Merger Agreement”) by and among Getty
Realty Corp., Power Test Investors Limited
Partnership and CLS General Partnership Corp.
Filed as Exhibit 2.1 to Company’s Registration Statement
on Form S-4, filed on January 12, 1998 (File No. 333-
44065), included as Appendix A To the Joint Proxy
Statement/Prospectus that is a part thereof, and incorporated
herein by reference.
Articles of Incorporation of Getty Realty
Holding Corp. (“Holdings”), now known as
Getty Realty Corp., filed December 23, 1997.
Filed as Exhibit 3.1 to Company’s Registration Statement
on Form S-4, filed on January 12, 1998 (File No. 333-
Joint
44065),
Proxy/Prospectus that is a part thereof, and incorporated
herein by reference.
included as Appendix D.
the
to
Articles Supplementary to Articles of
Incorporation of Holdings, filed January 21,
1998.
Filed as Exhibit 3.2 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
By-Laws of Getty Realty Corp.
Filed as Exhibit 3.3 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
Articles of Amendment of Holdings, changing its
name to Getty Realty Corp., filed January 30,
1998.
Filed as Exhibit 3.4 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
Amendment to Articles of Incorporation of
Holdings, filed August 1, 2001.
Dividend Reinvestment/Stock Purchase Plan.
Filed as Exhibit 3.5 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
Filed under the heading “Description of Plan” on pages 4
through 17 to Company’s Registration Statement on Form
S-3D, filed on April 22, 2004 (File No. 333-114730) and
incorporated herein by reference.
Retirement and Profit Sharing Plan (restated as
of December 1, 2012).
(a)
1998 Stock Option Plan, effective as of January
30,1998.
Filed as Exhibit 10.1 to Company’s Registration Statement
on Form S-4, filed on January 12, 1998 (File No. 333-
44065), included as Appendix H to the Joint Proxy
Statement/Prospectus that is a part thereof, and incorporated
herein by reference.
Filed as Exhibit 10.5 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
10.3*
Form of Indemnification Agreement between the
Company and its directors.
96
EXHIBIT
NO.
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10**
10.11
10.12
14
21
23
31(i).1
31(i).2
32.1
DESCRIPTION
Amended and Restated Supplemental
Retirement Plan for Executives of the Getty
Realty Corp. and Participating Subsidiaries
(adopted by the Company on December 16, 1997
and amended and restated effective January 1,
2009).
Letter Agreement dated June 12, 2001 by and
between Getty Realty Corp. and Thomas J.
Stirnweis regarding compensation upon change
in control.
2004 Getty Realty Corp. Omnibus Incentive
Compensation Plan.
Filed as Exhibit 10.6 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
Filed as Exhibit 10.7 to Company’s Annual Report on Form
10-K for the year ended December 31, 2008 (File No. 001-
13777) and incorporated herein by reference.
Filed as Exhibit 10.3 to Company’s Annual Report on Form
10-K for the fiscal year ended January 31, 2009 (File No.
001-13777) and incorporated herein by reference.
Form of restricted stock unit grant award under
the 2004 Getty Realty Corp. Omnibus Incentive
Compensation Plan, as amended.
Filed as Exhibit 10.15 to Company’s Annual Report on
Form 10-K for
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
Amendment to the 2004 Getty Realty Corp.
Omnibus Incentive Compensation Plan dated
December 31, 2008.
Filed as Exhibit 10.19 to Company’s Annual Report on
Form 10-K for the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
Amendment dated December 31, 2008 to Letter
Agreement dated June 12, 2001 by and between
Getty Realty Corp. and Thomas J. Stirnweis
regarding compensation upon change of control.
(See Exhibit 10.7).
Filed as Exhibit 10.20 to Company’s Annual Report on
Form 10-K for the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
Unitary Net Lease Agreement between GTY NY
Leasing, Inc. and CPD NY Energy Corp., dated
as of January 13, 2011.
Filed as Exhibit 10.1 to Company’s Quarterly Report on
Form 10-Q filed April, 12, 2011 (File No. 001-13777) and
incorporated herein by reference.
Stipulation and order Deferring Rents Owing to
Getty Properties, Establishing Procedures for the
Administration of the Chapter 11 Cases,
Extending the Time for the Debtors to Assume or
Reject the Master Lease and Other Matters.
Filed as Exhibit 99.2 to Company’s Current Report on Form
8-K filed March 9, 2012 (File No. 001-13777) and
incorporated herein by reference.
Letter Agreement dated October 3, 2012 by and
between Getty Properties Corp. and The Getty
Petroleum Liquidating Trust.
(a)
The Getty Realty Corp. Business Conduct
Guidelines (Code of Ethics).
Filed as Exhibit 10.3 to Company’s Annual Report on Form
10-K for the fiscal year ended January 31, 2009 (File No.
001-13777) and incorporated herein by reference.
Subsidiaries of the Company.
Consent of Independent Registered Public
Accounting Firm.
Rule 13a-14(a) Certification of Chief Financial
Officer.
Rule 13a-14(a) Certification of Chief Executive
Officer.
Section 1350 Certification of Chief Executive
Officer.
(a)
(a)
(b)
(b)
(b)
97
EXHIBIT
NO.
32.2
DESCRIPTION
Section 1350 Certification of Chief Financial
Officer.
101.INS
XBRL Instance Document
101.SCH
101.CAL
XBRL Taxonomy Extension Schema
XBRL Taxonomy Extension Calculation
Linkbase
(b)
(c)
(c)
(c)
101.DEF
XBRL Taxonomy Extension Definition Linkbase (c)
101.LAB
101.PRE
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation
Linkbase
(c)
(c)
(a) Filed herewith
(b) Furnished herewith. These certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C.
Section. 1350, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated
by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
(c) Filed herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a
registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is
deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not
subject to liability under these sections.
* Management contract or compensatory plan or arrangement.
** Confidential treatment has been granted for certain portions of this Exhibit pursuant to Rule 24b-2 under the Exchange
Act, which portions are omitted and filed separately with the SEC.
The exhibits listed in this Exhibit Index which were filed or furnished with our 2012 Annual Report on Form 10-K filed with
the Securities and Exchange Commission are available upon payment of a $25 fee per exhibit, upon request from us, by
writing to Investor Relations addressed to Getty Realty Corp., 125 Jericho Turnpike, Suite 103, Jericho, NY 11753. Our
website address is www.gettyrealty.com. Our website contains a hyperlink to the EDGAR database of the Securities and
Exchange Commission at www.sec.gov where you can access, free-of-charge, each exhibit that was filed or furnished with
our 2012 Annual Report on Form 10-K.
98
EXHIBIT 21. SUBSIDIARIES OF THE COMPANY
SUBSIDIARY
AOC Transport, Inc.
GettyMart, Inc.
Getty HI Indemnity, Inc.
Getty Leasing, Inc.
Getty Properties Corp.
Getty TM Corp.
GTY MA/NH Leasing, Inc.
GTY MD Leasing, Inc.
GTY NY Leasing, Inc.
Leemilt’s Flatbush Avenue, Inc.
Leemilt’s Petroleum, Inc.
Power Test Realty Company Limited Partnership*
Slattery Group, Inc.
STATE OF
INCORPORATION
Delaware
Delaware
New York
Delaware
Delaware
Maryland
Delaware
Delaware
Delaware
New York
New York
New York
New Jersey
* ninety-nine percent owned by the Company, representing the limited partner units, and one percent owned by Getty
Properties Corp., representing the general partner interest
99
EXHIBIT 23. CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Forms S-8 (Nos. 333-115672,
333-45249 and 333-45251), Form S-3 (No. 333-174156) and Form S-3D (No. 333-114730) of Getty Realty Corp. of our
reports dated March 18, 2013 relating to the financial statements and the financial statement schedules and the effectiveness
of internal control over financial reporting, which appear in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 18, 2013
100
EXHIBIT 31(i).1 RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Thomas J. Stirnweis, certify that:
1. I have reviewed this Annual Report on Form 10-K of Getty Realty Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this
report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 18, 2013
By: /s/ THOMAS J. STIRNWEIS
Thomas J. Stirnweis
Vice President and Chief Financial Officer
101
EXHIBIT 31(i).2 RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, David B. Driscoll, certify that:
1. I have reviewed this Annual Report on Form 10-K of Getty Realty Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the
United States of America;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this
report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting,
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 18, 2013
By: /s/ DAVID B. DRISCOLL
David B. Driscoll
President and Chief Executive Officer
102
EXHIBIT 32.1 SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned
officer of Getty Realty Corp. (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2011 (the “Report”)
fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: March 18, 2013
By: /s/ DAVID B. DRISCOLL
David B. Driscoll
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be
retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not
being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by
reference into any filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
103
EXHIBIT 32.2 SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned
officer of Getty Realty Corp. (the “Company”) hereby certifies, to such officer’s knowledge, that:
(i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2011 (the “Report”)
fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Dated: March 18, 2013
By: /s/ THOMAS J. STIRNWEIS
Thomas J. Stirnweis
Vice President and Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be
retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not
being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by
reference into any filing of the Company, whether made before or after the date hereof, regardless of any general
incorporation language in such filing.
104
coRp oR At e D AtA
G e t t y R e A lt y C oRp.
BoARd of diReCtoRs
Milton Cooper
Chairman of the Board of Kimco Realty Corporation
Philip E. Coviello
Retired Partner of Latham & Watkins LLP
CoRpoRAte HeAdquARteRs
Getty Realty Corp.
125 Jericho Turnpike
Jericho, New York 11753
(516) 478-5400
www.gettyrealty.com
David B. Driscoll
Chief Executive Officer and President of Getty Realty Corp.
ABout ouR stoCk
Our Common Stock is listed on the New York Stock
Exchange under the symbol GTY.
Leo Liebowitz
Chairman of the Board of Directors of Getty Realty Corp.
Richard E. Montag
Former Senior Executive of the Richard E. Jacobs Group
Howard Safenowitz
President, Safenowitz Family Corp.
exeCutive offiCeRs
Leo Liebowitz
Chairman of the Board of Directors
David B. Driscoll
Chief Executive Officer and President
Joshua Dicker
Senior Vice President, General Counsel and Secretary
Kevin C. Shea
Executive Vice President
Thomas J. Stirnweis
Vice President and Chief Financial Officer
Christopher J. Constant
Assistant Vice President, Director of Planning and Treasurer
ABout ouR sHAReHoldeRs
As of March 28, 2013, we had 33,396,790 outstanding
shares of Common Stock owned by approximately
18,600 shareholders.
AnnuAl MeetinG
All shareholders are cordially invited to attend our annual
meeting on May 14, 2013 at 3:30 p.m. at the offices of
JPMorgan Chase & Co., located at 270 Park Avenue,
11th Floor, New York, New York. Holders of common stock
of record at the close of business on March 28, 2013, are
entitled to vote at the meeting. A notice of meeting, proxy
statement and proxy were mailed to our shareholders with
this report.
investoR RelAtions infoRMAtion
Shareholders are informed about Company news through
the issuance of press releases. Shareholders inquiries,
comments or suggestions concerning Getty Realty Corp.
are welcome. Investors, brokers, securities analysts and
others desiring financial information should contact Investor
Relations at (516) 478-5400 or by writing to:
Investor Relations
Getty Realty Corp.
125 Jericho Turnpike
Jericho, New York 11753
Our website address is www.gettyrealty.com. Our website
contains a hyperlink to the EDGAR database of the Securities
and Exchange Commission where you can access, without
charge, the reports we file with the Securities and Exchange
Commission as soon as reasonably practicable after such
reports are filed.
tRAnsfeR AGent And dividend
ReinvestMent plAn infoRMAtion
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
(800) 368-5948
www.rtco.com
Annual Report Design by Curran & Connors, Inc. / www.curran-connors.com
Getty Realty
G E T T Y R E A L T Y C O R P .
125 Jericho Turnpike
Suite 103
Jericho, NY 11753
( 516 ) 478 - 5400
GTY