Getty Realty
Annual Report 2018

Plain-text annual report

G E T T Y R E A L T Y C O R P . 2 0 1 8 A N N U A L R E P O ANNUAL REPORT R T2018 D E AR S HAREH O LD ERS I am proud of the Getty team and what we accomplished in 2018. We achieved another year of strong operational and financial results and, more importantly, we continued to execute on our growth strategies. Drawing on our deep relationships in the convenience and gas sector, we continued to grow and broaden our portfolio, adding 41 high-quality properties in 2018 through a combination of portfolio and individual acquisitions. In addition, we completed six redevelopment projects in 2018, and have several additional projects in various stages of progress which we expect to complete in the coming years. Finally, we further enhanced our already conservative balance sheet as we efficiently issued long-term debt and raised permanent equity capital. Our performance produced growth in earnings for your Company, which led to an increase in our recurring annual dividend and strong returns for our shareholders. As we look ahead to 2019, I am energized by the year we have just concluded and optimistic about our outlook. I believe we have a first-rate team in place to execute on our growth strategy and create value for our shareholders for years to come. Earnings Growth Supported by A Healthy Net Lease Portfolio For the year ended 2018, we grew our net earnings and adjusted funds from operations (AFFO). We produced AFFO of $1.71 per share, which represented an increase of 3% over the prior year’s results, reflecting solid operating results, capital raising activity to fund our growth, and deploying that capital into attractive investments. Our strong financial results benefited from a 13% increase in annual revenues in 2018 and our ability to control our overhead costs, offset by additional borrowing costs and shares outstanding in order to fund our growth. On the asset management front, our portfolio continues to benefit from the health and stability of the convenience and gas sector. Our portfolio of more than 930 properties continues to be 99% occupied. Unlike many traditional retail asset classes, the convenience and gas sector continues to show growth across its key operating metrics. According to the National Association of Convenience Stores (NACS), its membership reported growth in all of its major sales categories over the last year: (i) fuel volumes, +1.9%; (ii) general convenience store merchandise, +1.4%; and (iii) convenience store foodservice, +3.2%. Relationship-Driven Acquisitions The growth of the convenience and gas sector continues to drive a wave of consolidation by several of the largest convenience store operators in the U.S. As a result of our team’s efforts and our extensive relationships in the sector, Getty was afforded numerous opportunities throughout 2018 to acquire convenience store and gasoline stations and other automotive related properties. We remained extremely disciplined in our investment approach, which carefully considers real estate attributes as well as the operational and credit quality of the proposed tenant. We evaluated approxi- mately $1.0 billion of potential transactions during the year and ultimately acquired 41 properties for $78 million. The majority of our acquisition activity in 2018 was attributable to two sale leaseback portfolio transactions with existing tenants, which accounted for 36 properties and $70 million of investment, with the balance attributable to five individual net lease acquisitions, which we acquired for $8 million in aggregate. In April 2018, we closed a transaction with GPM Investments, one of the nation’s largest operators of convenience and gasoline stations, and an existing Getty tenant. We acquired the fee simple interests in 30 high-quality properties for $52 million. This transaction expanded our presence in a number of growing Southern U.S. markets, including Arkansas, Louisiana, Oklahoma and Texas, particularly in the Dallas-Fort Worth MSA. In August 2018, we closed our second transaction with a U.S. subsidiary of Applegreen, plc, a publicly-traded convenience and gas operator with a significant presence in Ireland and the United Kingdom. We acquired fee simple interests in six properties for $17 million in the greater Columbia, South Carolina metropolitan market. This transaction was an add-on to our first portfolio with Applegreen, which was acquired in 2017. We maintain a significant pipeline of opportunities across the convenience and gas and other automotive sectors but will maintain our underwriting discipline as we evaluate future acquisitions. Significant Strides Made in Redeveloping Assets Our redevelopment program took a significant step forward in 2018 with the completion of six projects. In addition, we made progress in terms of leasing relationships with potential national retail tenants. The projects completed in 2018 include new-to- industry convenience and gas, automotive retail, financial services, urgent care and foodservice facilities. New tenants added to our portfolio include AutoZone, Convenient MD and TruMark Financial. We invested a total of $7.8 million in these projects and expect to generate incremental rental income of $0.9 million. In terms of our redevelopment outlook, we have a solid pipeline. We ended the year with 13 signed leases, and we have a number of additional sites which we expect will move into our redevelopment pipeline this year and over the next several years. We continue to believe that between five 2018 and ten percent of our portfolio can be redeveloped for either new convenience and gas use or alternative retail uses. Our redevelopment efforts are an important part of our overall business strategy. By strategically investing in our existing portfolio, we believe we can generate attractive risk-adjusted returns, improve the credit quality of our portfolio and diversify our retail tenant base. Maintaining Our Flexible & Conservative Balance Sheet We prioritize maintaining a conservatively leveraged balance sheet as we grow the Company. Our philosophy was validated by the receipt of the Getty’s inaugural Investment Grade Debt Rating (BBB-) from Fitch Ratings in May 2018. We are gratified that our progress and growth justified the rating from an independent agency. Following our investment grade rating, we refinanced floating rate borrowings in June 2018 with a $100 million, 10-year fixed rate debt placement with Prudential and MetLife. In addition, we further fortified our balance sheet by completing a refinancing of our credit agreement in March 2018. Our revised credit agreement significantly extends all of our near-term debt maturities and provides the Company with additional borrowing capacity and covenant flexibility. Finally, we also partially financed our growth in 2018 through the issuance of $30 million of common equity through the use of our at-the-market (ATM) program. The ATM program continues to be a valuable tool for our Company as it is a cost effective and efficient way to raise equity capital and allows us to match fund our acquisitions and redevelopment projects. Delivering Returns to Shareholders Our 2018 accomplishments resulted in our Board’s decision to increase our dividend by 9% to an annualized rate of $1.40 per share – making 2018 the fourth consecutive year that the Company has rewarded shareholders with a significant increase in its recurring cash dividend rate. The dividend is well covered and its increase stems from the stability of our current portfolio along with our ability to continue to grow our AFFO. Commitment to A Focused Growth Strategy We believe that owning attractive real estate located in both stable and growing metropolitan markets is a critical component to creating value in 2019 and beyond. We have an irreplaceable portfolio which has been assembled and refined over the past 60 years and which creates a solid platform to drive ongoing growth. Looking ahead, we plan to remain focused on executing a highly-targeted strategy to deliver consistent operating performance and enhance long-term shareholder value. First, we will draw upon the stable growth inherent in our core net lease portfolio which is supported by the ongoing health of the convenience and gas sector, the stable performance of our significant tenants, and proactive asset management. Second, we will continue to expand our portfolio through disciplined acquisitions in the convenience and gas and other automotive related sectors, with a focus on growth markets. We continue to dedicate additional Company resources to focus on acquiring high-quality real estate and partnering with tenants who share our commitment to the growth and evolution of the convenience and gas sector. Third, we will continue to pursue redevelopment projects to unlock embedded value in our existing portfolio. As the Company enters the fourth year of its redevelopment strategy, we are experiencing a significant uptick in both completing existing projects and in attracting well known national retail tenants for new projects. Thank You! I am proud of Getty’s accomplishments in 2018 and would like to conclude by personally thanking our management team and employees for all of their hard work during the past year. I would also like to thank our Board and shareholders for their continued support. Best Regards, Christopher J. Constant President and Chief Executive Officer  - F I NAN C IAL H I G H LI G H T S Financial Summary (Years ended December 31) (a) Number of Properties Total Revenues 2015 Quarterly Performance (a) 2015 Quarterly Performance (a) Net Income AFFO (Per Share in parentheses) AFFO (Per Share in parentheses) (Per Share) 25,000 25,000 Funds from Operations 20,000 20,000 (Per Share) 15,000 15,000 18,546 18,546 (0.54) (0.54) Adjusted Funds from Operations 10,000 10,000 12,796 12,796 (0.38) (0.38) 11,038 11,038 (0.33) (0.33) (Per Share) 5,000 5,000 2016 829 2017 907 2018 933 115,271 Dividends Declared Growth (a) Dividends Declared Growth (a) 120,153 136,106 38,411 Regular Special Regular Special 47,186 47,706 1.12 1.26 1.15 1.15 1.1 1.17 22,825 22,825 (0.68) (0.68) 0.96 0.96 0.85 0.85 64,182 1.87 74,555 73,564 2.00 2.0 1.80 57,092 62,032 69,669 1.67 1.03 2014 2014 1.66 1.16 1.71 1.31 2015 2015 Dividends per Share Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2013 2013 2018 Quarterly Performance (a) Dividends Declared Growth (a) 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 0 0 AFFO (Per Share in parentheses) AFFO (Per Share in parentheses) 16,829 16,829 (0.42) (0.42) 17,419 17,419 (0.43) (0.43) 17,867 17,867 (0.44) (0.44) 17,557 17,557 (0.43) (0.43) 1.03 1.03 1.16 1.16 1.31 1.31 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q4 2016 2016 2017 2017 2018 2018 Geographic Diversity (a) See “Item 6. Selected Financial Data”, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” for additional information 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, 2018 OR (cid:4) 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) Two Jericho Plaza, Suite 110, Jericho, New York (Address of principal executive offices) 11-3412575 (I.R.S. employer identification no.) 11753-1681 (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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:4) 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 (cid:4) 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 (cid:4) Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No (cid:4) 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. (cid:4) Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ⌧ (cid:4) Large accelerated filer Non-accelerated filer If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. (cid:4) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes (cid:4) No ⌧ The aggregate market value of common stock held by non-affiliates (32,462,564 shares of common stock) of the Company was $914,470,000 as of June 30, 2018. Accelerated filer Emerging growth company Smaller reporting company (cid:4) (cid:4) (cid:4) The registrant had outstanding 40,866,854 shares of common stock as of February 27, 2019. DOCUMENT Selected Portions of Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders (the “Proxy Statement”), which will be filed by the PART OF FORM 10-K registrant on or prior to 120 days following the end of the registrant’s year ended December 31, 2018, pursuant to Regulation 14A. III DOCUMENTS INCORPORATED BY REFERENCE 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 16 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures PART I PART II Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services PART IV Exhibits and Financial Statement Schedules Form 10-K Summary Exhibit Index Signatures 5 8 19 19 21 25 26 28 30 43 44 72 72 72 73 73 73 73 73 74 74 93 96 Cautionary Note Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K may constitute “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “seeks,” “plans,” “projects,” “estimates,” “anticipates,” “predicts” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and are not historical facts. (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, our network of convenience store and gasoline station properties; substantial compliance of our properties with federal, state and local provisions enacted or adopted pertaining to environmental matters; the effects of recently enacted U.S. federal tax reform and other legislative, regulatory and administrative developments; the impact of existing legislation and regulations on our competitive position; our prospective future environmental liabilities, including those resulting from preexisting unknown environmental contamination; quantifiable trends, which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs; the impact of our redevelopment efforts related to certain of our properties; the amount of revenue we expect to realize from our properties; our belief that our owned and leased properties are adequately covered by casualty and liability insurance; AFFO as a measure that best represents our core operating performance and its utility in comparing the sustainability of our core operating performance with the sustainability of the core operating performance of other REITs; the reasonableness of our estimates, judgments, projections and assumptions used regarding our accounting policies and methods; our critical accounting policies; our exposure and liability due to and our accruals, estimates and assumptions regarding our environmental liabilities and remediation costs; loan loss reserves or allowances; our belief that our accruals for environmental and litigation matters including matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, our MTBE multi-district litigation cases in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, were appropriate based on the information then available; our claims for reimbursement of monies expended in the defense and settlement of certain MTBE cases under pollution insurance policies; compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters; our beliefs about the settlement proposals we receive and the probable outcome of litigation or regulatory actions and their impact on us; our expected recoveries from UST funds; our indemnification obligations and the indemnification obligations of others; our investment strategy and its impact on our financial performance; the adequacy of our current and anticipated cash flows from operations, borrowings under our Restated Credit Agreement and available cash and cash equivalents; our continued compliance with the covenants in our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement; our belief that certain environmental liabilities can be allocated to others under various agreements; our belief that our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts; our beliefs regarding our properties, including their alternative uses and our ability to sell or lease our vacant properties over time; and our ability to maintain our federal tax status as a REIT. These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and are subject to known and unknown risks, uncertainties and other factors and were derived utilizing numerous important assumptions that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors and assumptions involved in the derivation of forward-looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. These factors and assumptions may have an impact on the continued accuracy of any forward-looking statements that we make. Factors which may cause actual results to differ materially from our current expectations include, but are not limited to, the risks described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, as such risk factors may be updated from time to time in our public filings, and risks associated with: complying with environmental laws and regulations and the costs associated with complying with such laws and regulations; substantially all of our tenants depending on the same industry for their revenues; the creditworthiness of our tenants; our tenants’ compliance with their lease obligations; renewal of existing leases and our ability to either re-lease or sell properties; our dependence on external sources of capital; counterparty risks; the uncertainty of our estimates, judgments, projections and assumptions associated with our accounting policies and methods; our ability to successfully manage our investment strategy; potential future acquisitions and redevelopment opportunities; changes in interest rates and our ability to manage or mitigate this risk effectively; owning and leasing real estate; our business operations generating sufficient cash for distributions or debt service; adverse developments in general business, economic or political conditions; adverse effect of inflation; federal tax reform; property taxes; potential exposure related to pending lawsuits and claims; owning real estate primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; competition in our industry; the adequacy of our insurance coverage and that of our tenants; failure to qualify as a REIT; dilution as a result of future issuances of equity securities; our dividend policy, ability to pay dividends and changes to our dividend policy; changes in market conditions; provisions in our corporate charter and by-laws; Maryland law discouraging a third-party takeover; the loss of a member or members of our management team or Board of Directors; changes in accounting standards; future impairment 3 charges; terrorist attacks and other acts of violence and war; our information systems; failure to maintain effective internal controls over financial reporting; and changes in LIBOR reporting practices or the method in which LIBOR is calculated. 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. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events, unless required by law. For any forward-looking statements contained in this Annual Report on Form 10-K or in any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. 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 convenience store and gasoline station properties. Our 933 properties are located in 30 states across the United States and Washington, D.C. Our properties are operated under a variety of nationally recognized brands including, among others, 76, BP, Citgo, Conoco, Exxon, Getty, Gulf, Mobil, Shell, Sunoco and Valero. 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 convenience store and gasoline station properties. We have invested, and will continue to invest, in real estate and real estate related investments when appropriate opportunities arise. Our company is headquartered in Jericho, New York and as of February 27, 2019, we had 29 employees. Company Operations As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. Our typical property is used as a convenience store and gasoline station, and is located on between one-half and one acre of land in a metropolitan area. In addition, many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. We have a national portfolio of properties with a concentration in the Northeast and Mid-Atlantic regions. We believe our network of convenience store and gasoline station 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. Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced. For additional information regarding our environmental obligations, see Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Convenience store and gasoline station properties are an integral component of the transportation infrastructure supported by highly inelastic demand for refined petroleum products, day-to-day consumer goods and convenience foods. Substantially all of our tenants’ financial results depend on the sale of refined petroleum products, convenience store sales or 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. During the terms of our leases, we monitor the credit quality of our triple-net tenants by reviewing their published credit rating, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements, monitoring news reports regarding our tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases. Our Properties Net Lease. As of December 31, 2018, we leased 918 of our properties to tenants under triple-net leases. Our net lease properties include 814 properties leased under 26 separate unitary or master triple-net leases and 104 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years with options for successive renewal terms of up to 20 years and periodic rent escalations. As of December 31, 2018, our contractual rent weighted average lease term, excluding renewal options, was approximately 10 years. Several of our leases provide for additional rent based on the aggregate volume of fuel sold. For the year ended December 31, 2018, additional rent based on the aggregate volume of fuel sold was not material to our financial results. In addition, certain of our leases require the tenants to invest capital in our properties, substantially all of which are related to the replacement of underground storage tanks (“UST” or “USTs”) that are owned by our tenants. As of December 31, 2018, we have a remaining commitment to fund up to $7.6 million in the aggregate with our tenants for our portion of such capital improvements. For additional information regarding our leases, see Note 2 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Redevelopment. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. For additional information regarding our redevelopment properties, see “Redevelopment Strategy and Activity” below. 5 Vacancies. As of December 31, 2018, nine of our properties were vacant. We expect that we will either sell or enter into new leases on these properties over time. Investment Strategy and Activity As part of our overall growth strategy, we regularly review acquisition and financing opportunities to invest in additional convenience store and gasoline station, and other automotive related properties, and we expect to continue to pursue investments that we believe will benefit our financial performance. In addition to sale/leaseback and other real estate acquisitions, our investment activities include purchase money financing with respect to properties we sell, and real property loans relating to our leasehold portfolios. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate. To achieve that goal, we seek to invest in high quality individual properties and real estate portfolios that are in strong primary markets that serve high density population centers. A key element of our investment strategy is to invest in properties that will promote our geographic and tenant diversity. During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. For additional information regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Over the last five years, we have acquired 238 properties, located in various states, for an aggregate purchase price of $536.5 million. These acquisitions included single property transactions and portfolio transactions. Redevelopment Strategy and Activity We believe that certain of our properties are located in geographic areas, which together with other factors, may make them well- suited for a new convenience and gasoline use or for alternative single-tenant net lease retail uses, such as quick service restaurants, automotive parts and service stores, specialty retail stores and bank branch locations. We believe that the redeveloped properties can be leased or sold at higher values than their current use. For the year ended December 31, 2018, rent commenced on six completed redevelopment projects that were placed back into service in our net lease portfolio. Since the inception of our redevelopment program in 2015, we have completed nine redevelopment projects. For the year ended December 31, 2018, we spent $2.7 million of construction-in-progress costs related to our redevelopment activities. During the year ended December 31, 2018, we transferred $2.2 million of construction-in-progress to buildings and improvements on our consolidated balance sheet. In addition, during the year ended December 31, 2018, we spent $4.4 million to reimburse tenants for capital expenditures related to our redevelopment activities. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. In addition, to the six properties currently classified as redevelopment, we are in various stages of feasibility and planning for the recapture of select properties from our net lease portfolio that are suitable for redevelopment to either a new convenience and gasoline use or for alternative single-tenant net lease retail uses. As of December 31, 2018, we have signed leases on seven properties, that are currently part of our net lease portfolio, which will be recaptured and transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured. 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. In 1985, we acquired from Texaco 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. Getty Petroleum Marketing, Inc. (“Marketing”), which was an indirect wholly owned subsidiary of OAO Lukoil (“Lukoil”) from December 2000 until March 2011, was our principal tenant under a long-term unitary triple-net master lease. In December 2011, Marketing filed with the U.S. Bankruptcy Court for Chapter 11 bankruptcy protection. The bankruptcy proceedings resulted in the termination of the master lease effective April 30, 2012, followed by the liquidation of Marketing. As of December 31, 2018, 374 of the properties we own or lease were previously leased to Marketing. 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 6 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 stockholders annually a substantial portion of its taxable income. As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed. Major Tenants As of December 31, 2018, we had three significant tenants by revenue: (cid:129) We leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company. (cid:129) We leased 77 convenience store and gasoline station properties pursuant to three separate unitary leases to Apro, LLC (d/b/a “United Oil”). In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively. (cid:129) We leased 76 convenience store and gasoline station properties pursuant to two separate unitary leases to subsidiaries of Chestnut Petroleum Dist., Inc. (“Chestnut”). In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates. Our major tenants are part of larger corporate organizations and the financial distress of one subsidiary or other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. For information regarding factors that could adversely affect us relating to our leases with these tenants, see “Item 1A. Risk Factors”. Competition The single-tenant net lease retail 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. 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® trademark at properties that they lease from us. Regulation Our properties are subject to numerous 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, USTs and other equipment. These laws include: (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate soil and groundwater contamination, including 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 potential claims relating to UST failures. Our triple-net lease tenants are directly responsible for compliance with environmental laws and regulations with respect to their operations at our properties. We believe that our properties are in substantial compliance with federal, state and local provisions 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, we do not believe that existing legislation and regulations will have a material adverse effect on our competitive position. For additional information regarding pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” in this Form 10-K. For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental 7 contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant. For additional information, see “Item 1A. Risk Factors” and to “Liquidity and Capital Resources,” “Environmental Matters” and “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Additional Information Our website address is www.gettyrealty.com. Information available on our website shall not be deemed to be a part of this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the U.S. Securities and Exchange Commission (“SEC”). Our website also contains our business conduct guidelines (“Code of Ethics”), corporate governance guidelines and the charters of the Audit, Compensation and Nominating/Corporate Governance Committees of our Board of Directors. We intend to make available on our website any future amendments or waivers to our Code of Ethics within four business days after any such amendments or waivers become effective. 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 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 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 first on the party responsible for the contamination, but can also impose liability and clean-up responsibility on the owner and the current operator 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. Liability under such environmental laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility and the financial resources are available to perform the remediation. 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 convenience store and gasoline station 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 are 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-lease or sell our properties on favorable terms, or at all. For additional information regarding 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 Notes 3 and 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. 8 We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. We are contingently liable for these environmental obligations in the event that our tenant or other counterparty does not satisfy them. 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 our leases and other agreements if we determine that it is probable that our tenant or other counterparty will not meet its environmental obligations. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant or other counterparty fails to pay them. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. 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. 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. For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant. We anticipate that a majority of the USTs at properties previously leased to Marketing will be replaced over the next several years because these USTs are either at or near the end of their useful lives. For long-term, triple-net leases covering sites previously leased to Marketing, our tenants are responsible for the cost of removal and replacement of USTs and for remediation of contamination found during such UST removal and replacement, unless such contamination was found during the first 10 years of the lease term and also existed prior to commencement of the lease. In those cases, we are responsible for costs associated with the remediation of such contamination. We have also agreed to be responsible for environmental contamination that existed prior to the sale of certain properties assuming the contamination is discovered (other than as a result of a voluntary site investigation) during the first five years after the sale of the properties. For properties that are vacant, we are responsible for costs associated with UST removals and for the cost of remediation of contamination found during the removal of USTs. In the course of certain UST removals and replacements at properties previously leased to Marketing where we retained continuing responsibility for preexisting environmental obligations, previously unknown environmental contamination was and continues to be discovered. As a result, we have developed a reasonable estimate of fair value for the prospective future environmental liability resulting from preexisting unknown environmental contamination and have accrued for these estimated costs. These estimates are based primarily upon quantifiable trends which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs. Our accrual of the additional liability represents our 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. In arriving at our accrual, we analyzed the ages of USTs at properties where we would be responsible for preexisting contamination found within 10 years after commencement of a lease (for properties subject to long-term triple-net leases) or five years from a sale (for divested properties), and projected a cost to closure for preexisting unknown environmental contamination. We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation, and then discount them to present value. We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59.8 million for our prospective environmental remediation obligations. This accrual consisted of (a) $14.5 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.3 million for future environmental liabilities related to preexisting unknown contamination. 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 and receive regulatory approval. 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 9 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. Our estimates are based upon facts that are known to us at this time and an assessment of the possible ultimate remedial action outcomes. It is possible that our assumptions, which form the basis of our estimates, regarding our ultimate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities. Among the many uncertainties that impact the estimates are our assumptions, the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of contamination, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to additional claims, and possible changes in the environmental rules and regulations, enforcement policies, and reimbursement programs of various states. Additional environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 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. Accordingly, 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. 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 convenience store and gasoline station 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 and battery-operated vehicles, or other “green technologies,” could 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 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 as to how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect our tenants. Because certain of our tenants are not rated and their financial information is not available to you, it may be difficult for our investors to determine their creditworthiness. The majority of our properties are leased to tenants who are not rated by any nationally recognized statistical rating organizations. In addition, our tenants’ financial information is not generally available to our investors. Additionally, many of our tenants are part of larger corporate organizations and we do not receive financial information for the other entities in those organizations. The financial distress of other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. Because of the lack of financial information or credit ratings it is, therefore, difficult for our investors to assess the creditworthiness of our tenants and to determine the ability of our tenants to meet their obligations to us. It is possible that the assumptions and estimates we make after reviewing publicly and privately obtained information about our tenants are not accurate and that we may be required to increase reserves for bad debts, record allowances for deferred rent receivable or record additional expenses if our tenants are unable or unwilling to meet their obligations to us. Our future cash flow is dependent on the performance of our tenants of their lease obligations, renewal of existing leases and either re-leasing or selling our 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 negatively impact our rental revenues. We are subject to risks that the terms governing renewal or re-leasing of our properties (including, compliance with numerous federal, state and local laws and regulations related to the 10 protection of the environment, such as the remediation of contamination and the retirement and decommissioning or removal of long- lived assets, the cost of required renovations, or replacement of USTs and related equipment) may be less favorable than current lease terms. 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-lease 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 (i) our tenants do not perform their lease obligations, (ii) we are unable to renew existing leases and promptly recapture and re-lease or sell our properties, (iii) lease terms upon renewal or re-leasing are less favorable than current or historical lease terms, (iv) the values of properties that we sell are adversely affected by market conditions, or (v) 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 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 stockholders 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. We may need to access the capital markets in order to execute future significant acquisitions. There can be no assurance that sources of capital will be available to us on favorable terms, or at all. Our principal sources of liquidity are the cash flows from our operations, funds available under our $300.0 million senior unsecured credit agreement (as amended, the “Restated Credit Agreement”), with a group of commercial banks led by Bank of America, N.A. (the “Bank Syndicate”), proceeds from the sale of shares of our common stock through offerings, from time to time, under our at- the-market program (“ATM Program”) and available cash and cash equivalents. The Restated Credit Agreement consists of a $250.0 million unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022 and a $50.0 million unsecured term loan (the “Term Loan”), which is scheduled to mature in March 2023. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate. On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100.0 million (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75.0 million (the “Series B Notes”), and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50.0 million (the “Series C Notes”), that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series D Notes” and, together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities. On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity. On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including a rate based on the LIBOR Daily Floating Rate (as defined in the 11 Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility. For additional information, see “Credit Agreement” and “Senior Unsecured Notes” in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as leverage, 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 Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement require a mandatory offer to prepay the Notes and the Series E Notes, respectively, upon a change in control in lieu of a change of control event of default). Our ability to meet the terms of the agreements is dependent upon our continued ability to meet certain criteria, as further described in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K, the performance of our tenants and the other risks described in this section. If we are not in compliance with one or more of our covenants, which could result in an event of default under our Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement or our MetLife Note Purchase Agreement, there can be no assurance that our lenders would waive such non-compliance. This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price. Under our ATM Program, we may issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting as agents. Sales of shares of our common stock under our ATM Program may be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent. Sales of shares of our common stock under our ATM Program, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions and the trading price of our common stock. Our agents are not required to sell any specific number or dollar amount of our common stock, but each agent will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulation to sell shares designated by us in accordance with the terms of the distribution agreement with our agents. The net proceeds we receive will be the gross proceeds received from such sales less the commissions and any other costs we may incur in issuing the shares of our common stock. We may use a portion of the net proceeds from any of such sales to reduce our outstanding indebtedness, including borrowings under our Revolving Facility. The Revolving Credit Facility includes lenders who are affiliates of our agents. As a result, a portion of the net proceeds from any sale of shares of our common stock under our ATM Program that is used to repay amounts outstanding under our Revolving Credit Facility will be received by these affiliates. Because an affiliate may receive a portion of the net proceeds from any of these sales, each of our agents may have an interest in these sales beyond the sales commission it will receive. This could result in a conflict of interest and cause such agents to act in a manner that is not in the best interests of us or our investors in connection with any sale of shares of our common stock under our ATM Program. 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 Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement and our MetLife Note Purchase Agreement and the market price of our common stock. 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. We also enter into agreements to acquire and sell properties which allocate responsibility for certain costs to the counterparty. Our most significant counterparties include, but are not limited to, the members of the Bank Syndicate related to our Restated Credit Agreement, the lender that is the counterparty to the Third Restated Prudential Note Purchase Agreement, the lender that is the counterparty to the MetLife Note Purchase Agreement and our major tenants from whom we derive a significant amount of rental revenue. The default, insolvency or other inability or unwillingness of a significant counterparty to perform its obligations under an agreement, including, without limitation, as a result of the rejection of an agreement in bankruptcy proceedings, is likely to have a material adverse effect on us. As of December 31, 2018, we leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global. In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company. As of December 31, 2018, we leased 77 convenience store and gasoline station properties in three separate unitary leases to United Oil. In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, we leased 76 convenience store and gasoline station properties in two separate unitary leases to subsidiaries of Chestnut. In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates. 12 We may also undertake additional transactions with these or other existing tenants, which would further concentrate our sources of rental revenues. Many of our tenants, including those noted above, are part of larger corporate organizations and the financial distress of one subsidiary or other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. The failure of a major tenant or their default in their rental and other obligations to us is likely to have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 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 and future environmental liabilities for pre-existing unknown environmental contamination), real estate, depreciation and amortization, carrying value of our properties, 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, estimates 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 may not be able to successfully implement our investment strategy. We may not be able to successfully implement our investment strategy. We cannot assure you that our portfolio of properties will expand at all, or if it will expand at any specified rate or to any specified size. As part of our overall growth strategy, we regularly review acquisition, financing and redevelopment opportunities, and we expect to continue to pursue investments that we believe will benefit our financial performance. We cannot assure you that investment opportunities which meet our investment criteria will be available. Pursuing our investment opportunities may result in additional debt or new equity issuances, that may initially be dilutive to our net income, and such investments 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 be able to successfully integrate investments into our existing portfolio without operating disruptions or unanticipated costs. To the extent that our current sources of liquidity are not sufficient to fund such investments, we will require other sources of capital, which may or may not be available on favorable terms or at all. Additionally, to the extent that 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 investments into our portfolio or manage any future investments 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 adversely affected. We may acquire new properties and this may create risks. We may acquire properties when we believe that an acquisition matches our business and investment 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, or that they may not perform as expected. Further, if financed by additional debt or new equity issuances, our acquisition of properties may result in stockholder 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 such acquisitions. We face competition in pursuing these acquisitions and we may not succeed in leasing acquired properties at rents sufficient to cover the costs of their 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. We are pursuing redevelopment opportunities and this creates risks to our Company. We have commenced a program to redevelop certain of our properties, and to recapture select properties from our net lease portfolio in order to redevelop such properties, to either a new convenience and gasoline use or for alternative single-tenant net lease retail uses. The success at each stage of our redevelopment program is dependent on numerous factors and risks, including our ability 13 to identify and extract qualified sites from our portfolio and successfully prepare and market them for alternative uses, and project development issues, including those relating to planning, zoning, licensing, permitting, third party and governmental authorizations, changes in local market conditions, increases in construction costs, the availability and cost of financing, and issues arising from possible discovery of new environmental contamination and the need to conduct environmental remediation. Occupancy rates and rents at any particular redeveloped property may fail to meet our original expectations for reasons beyond our control, including changes in market and economic conditions and the development by competitors of competing properties. We could experience increased and unexpected costs or significant delays or abandonment of some or all of these redevelopment opportunities. For any of the above-described reasons, and others, we may determine to abandon opportunities that we have already begun to explore or with respect to which we have commenced redevelopment efforts and, as a result, we may fail to recover expenses already incurred. We cannot assure you that we will be able to successfully redevelop and lease any of our identified opportunities or that our overall redevelopment program will be successful. 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. 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 Restated Credit Agreement. Borrowings under our Restated 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 Restated Credit Agreement. Our interest rate risk may materially change in the future if we increase our borrowings under the Restated Credit Agreement or amend our Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement or our MetLife Note Purchase Agreement, seek other sources of debt or equity capital or refinance our outstanding indebtedness. 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 7A. Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-K. 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: 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-leasing 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 unforeseen impacts of climate change, compliance with any future laws or regulations designed to prevent or mitigate the impacts of climate change, and any material costs related thereto; 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. Certain significant expenditures generally do not change in response to economic or other conditions, including: (i) debt service, (ii) real estate taxes, (iii) environmental remediation costs and (iv) operating and maintenance costs. The combination of variable revenue and relatively fixed expenditures may result, under certain market conditions, in reduced earnings and could have an adverse effect on our financial condition. Each of the factors listed above 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. 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. 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. Among other effects, adverse economic conditions could depress real estate values, impact our ability to re-lease or sell our properties and have an adverse effect on our tenants’ level of sales and financial performance generally. As our revenues are substantially dependent on the economic success of our tenants, 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. 14 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 our tenants’ ability to pay rent. Recently enacted U.S. federal tax reform legislation could affect REITs generally, our tenants, the markets in which we operate, the price of our common stock and our results of operations, in ways, both positively and negatively, that are difficult to predict. On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Act”) was enacted. The 2017 Act includes significant changes to corporate and individual tax rates and the calculation of taxes. As a REIT, we are generally not required to pay federal taxes otherwise applicable to regular corporations if we distribute all of our income and comply with the various tax rules governing REITs. Stockholders, however, are generally required to pay taxes on REIT dividends. The 2017 Act changes the way in which dividends paid on our stock are taxed by the holder of that stock and could impact the price of our common stock or how stockholders and potential investors view an investment in REITs. In addition, while certain elements of the 2017 Act do not appear to impact us directly as a REIT, they could impact our tenants and the markets in which we operate in ways, both positive and negative, that are difficult to predict. Prospective stockholders are urged to consult with their tax advisors with respect to the 2017 Act and any other regulatory or administrative developments and proposals and the potential effects thereof on an investment in our common stock. 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 unable or unwilling to pay such increase in accordance with their leases, our net operating expenses may increase. 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, contamination of groundwater with methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) 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 the lawsuits and claims we face 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 certain pending lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this 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 and, as of December 31, 2018, 47.5% of our properties are concentrated in three states (New York, Massachusetts and Connecticut). 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, natural disasters or severe weather that may affect the Northeast or Mid-Atlantic regions of the 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. 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, convenience store retailers, 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. 15 We are subject to losses that may not be covered by insurance. We and 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. Furthermore, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. There is no assurance that the existing 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 loss 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 stockholders. Uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period or may cause us to fail to qualify as a REIT. We elected to be treated as a REIT under the federal income tax laws 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. Accordingly, we generally will not be subject to federal income tax on qualifying REIT income, provided that distributions to our stockholders equal at least the amount of our taxable income as defined under the Internal Revenue Code. But, we may have to borrow money or sell assets to satisfy such distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. Many of the REIT requirements 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. We may have to borrow money or sell assets to pay such a deficiency dividend. We cannot 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 stockholders 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 for taxable years beginning before 2018, we could be required to pay significant income taxes and we would have less money available for our operations and distributions to stockholders. 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 stockholders 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. Future issuances of equity securities could dilute the interest of holders of our equity securities. Our future growth depends upon our ability to raise additional capital. If we were to raise additional capital through the issuance of equity securities, such issuance, the receipt of the net proceeds thereof and the use of such proceeds may have a dilutive effect on our expected earnings per share, funds from operations per share and adjusted funds from operations per share. The actual amount of such dilution cannot be determined at this time and will be based on numerous factors. Additionally, we are not restricted from issuing additional shares of our common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities in the future. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after an offering or the perception that such sales could occur. 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 upon such factors as the Board of Directors deems relevant and the dividend paid may vary from expected amounts. Any change in our dividend policy could adversely affect our business and the market price of our common stock. In addition, each of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement prohibit the payments of dividends during certain events of default. 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, (i) we would not be able to pay indebtedness as it becomes due 16 in the usual course of business or (ii) 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 stockholders with liquidation preferences. There currently are no stockholders with liquidation preferences. No assurance can be given that our financial performance in the future will permit our payment of any dividends. Each of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as availability, 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. As a result of the factors described above, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, stock price and ability to pay dividends. 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 (i) own, or be deemed to own by virtue of certain constructive ownership provisions of the Internal Revenue Code, in excess of 5.0% (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of our common stock or (ii) own, or be deemed to own by virtue of certain other constructive ownership provisions of the Internal Revenue Code, in excess of 9.9% (by value or number of shares, whichever is more restrictive) of the outstanding shares of our common stock, which may discourage large investors from purchasing 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 the 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 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 stock with the opportunity to realize a premium over the then current market price or that stockholders may otherwise believe is in their best interests. The loss of certain members of our management team or Board of Directors could adversely affect our business or the market price of our common stock. Our future success and ability to implement our business and investment strategy depends, in part, on our ability to attract and retain key management personnel and directors, and on the continued contributions of such persons, each of whom may be difficult to replace. As a REIT, we employ only 29 employees and have a cost-effective management structure. We do not have any employment agreements with any of our executives. In the event of the loss of key management personnel or directors, or upon unexpected death, 17 disability or retirement, we may not be able to find replacements with comparable skill, ability and industry expertise, which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. Additionally, certain of our directors beneficially own more than 5% of the outstanding shares of our common stock. If any of these directors cease to be a director of the Company and they or their estate sell a significant portion of such holdings into the public market, it could adversely affect the market price of our common stock. 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 consolidated financial statements are subject to the application of Generally Accepted Accounting Principles (“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. Our assets may be subject to impairment charges. We periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on GAAP, and includes a variety of factors such as market conditions, the accumulation of asset retirement costs due to changes in estimates associated with our estimated environmental liabilities, the status of significant leases, the financial condition of major tenants and other assumptions and factors that could affect the cash flow from or fair value of our properties. During the years ended December 31, 2018 and 2017, we incurred $6.2 million and $9.3 million, respectively, of impairment charges. We may be required to take similar impairment charges, which could affect the implementation of our current business strategy and have a material adverse effect on our financial condition and results of operations. 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 which could exacerbate, 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. We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business. We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information of tenants and lease data. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts. Although we have taken steps to protect the security of the data maintained in our information systems, it is possible that our security measures will not be able to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyberattacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could materially and adversely affect us. If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results. Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. As a result of material weaknesses or significant deficiencies that may be identified in our internal control over financial reporting in the future, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require 18 remediation. If we or our independent registered public accounting firm discover any such weaknesses or deficiencies, we will make efforts to further improve our internal control over financial reporting controls. However, there is no assurance that we will be successful. Any failure to maintain effective controls or timely effect any necessary improvement of our internal control over financial reporting controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect the listing of our common stock on the NYSE. Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock. We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is calculated. On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a newly-created index, calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released by the Federal Reserve Bank of New York in April 2018. Whether SOFR will become a widely-accepted benchmark in place of LIBOR, however, remains in question. As such, the future of LIBOR and potential alternatives thereto are uncertain at this time. If LIBOR ceases to exist, we may need to renegotiate our Restated Credit Agreement, which extends beyond 2021, to replace LIBOR with the new standard that is established. The potential effects of the foregoing on our cost of capital cannot yet be determined. Item 1B. Unresolved Staff Comments None. Item 2. Properties Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators, engaged in the sale of refined petroleum products, day-to-day consumer goods and convenience foods, who are responsible for the operations conducted at our properties and for the payment of all 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 its existing use and the property is not subject to a lease, we will either redevelop the property or seek an alternative tenant or buyer for the property. We manage and evaluate our operations as a single segment. We believe that most of our owned and leased properties are adequately covered by casualty and liability insurance. In addition, in almost all cases we require our tenants to provide insurance for properties they lease from us, including casualty, liability, pollution legal liability, fire and extended coverage in amounts and on other terms satisfactory to us. 19 The following table summarizes the geographic distribution of our properties as of December 31, 2018. The table also identifies the number and location of properties we lease from third-parties. In addition, we lease approximately 8,900 square feet of office space at Two Jericho Plaza, 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 Leased by Getty Realty Getty Realty Total Properties by State Percent of Total Properties New York Massachusetts Connecticut New Jersey Texas Virginia New Hampshire South Carolina Maryland Washington State California Pennsylvania Colorado Arizona Oregon Arkansas Hawaii Maine Ohio New Mexico North Carolina Rhode Island Florida Louisiana Oklahoma Georgia Nevada Washington, D.C. Delaware Illinois North Dakota Total 207 100 72 47 49 45 45 45 40 31 29 23 23 23 13 10 10 7 6 5 5 5 4 4 3 2 2 2 — 1 1 859 44 11 9 5 — 1 1 — 2 — — — — — — — — — — — — — — — — — — — 1 — — 74 251 111 81 52 49 46 46 45 42 31 29 23 23 23 13 10 10 7 6 5 5 5 4 4 3 2 2 2 1 1 1 933 26.9% 11.9 8.7 5.6 5.3 4.9 4.9 4.8 4.5 3.3 3.1 2.5 2.5 2.5 1.4 1.1 1.1 0.8 0.6 0.5 0.5 0.5 0.5 0.4 0.3 0.2 0.2 0.2 0.1 0.1 0.1 100% The properties that we lease from third-parties have a remaining lease term, including renewal and extension option terms, averaging approximately nine 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 2019 2020 2021 2022 2023 Subtotal Thereafter Total Number of Leases Expiring Percent of Total Leased Properties Percent of Total Properties 7 6 8 4 2 27 47 74 9.5% 8.1 10.8 5.4 2.7 36.5 63.5 100% 0.8% 0.6 0.9 0.4 0.2 2.9 5.0 7.9% 20 Revenues from rental properties and tenant reimbursements for the year ended December 31, 2018, were $133.0 million with respect to 926 average rental properties held during the year for an average revenue per rental property of approximately $143,600. Revenues from rental properties and tenant reimbursements for the year ended December 31, 2017, were $117.2 million with respect to 857 average rental properties held during the year for an average revenue per rental property of approximately $136,700. Rental property lease expirations and annualized contractual rent as of December 31, 2018, are as follows (in thousands, except for number of properties): CALENDAR YEAR Redevelopment Vacant 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Thereafter Total Number of Rental Properties (a) Annualized Contractual Rent (b) 6 $ 9 34 37 24 36 23 22 13 77 250 44 358 933 $ — — 3,360 4,700 2,458 3,046 3,102 2,576 2,696 12,912 18,437 7,017 56,524 116,828 Percentage of Total Annualized Rent — — 2.9% 4.0 2.1 2.6 2.7 2.2 2.3 11.0 15.8 6.0 48.4 100.0% (a) With respect to a unitary master lease that includes properties that we lease from third-parties, the expiration dates refer 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. (b) Represents the monthly contractual rent due from tenants under existing leases as of December 31, 2018, multiplied by 12. Item 3. Legal Proceedings We are subject to various legal proceedings, many of which we consider to be routine and incidental to our business. Many of these legal proceedings involve claims relating to alleged discharges of petroleum into the environment at current and former gasoline stations. We routinely assess our liabilities and contingencies in connection with these matters based upon the latest available information. 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 hazardous substances into the environment. We are vigorously defending all of the legal proceedings against us, including each of the legal proceedings listed below. As of December 31, 2018 and 2017, we had accrued $12.2 million and $12.3 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available. It is possible that losses related to these legal proceedings could exceed the amounts accrued as of December 31, 2018, and that such additional losses could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. In September 2004, the State of New York commenced an action against us, United Gas Corp., Costa Gas Station, Inc., Vincent Costa, The Ingraham Bedell Corporation, Richard Berger and Exxon Mobil Corporation 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 gasoline station properties located in the same vicinity in Uniondale, New York, 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. In 2007, the State of New York commenced action against Shell Oil Company, Shell Oil Products Company, Motiva Enterprises, LLC, and related parties, in the New York Supreme Court, Albany County seeking basically the same relief sought in the action involving us. We have also filed a third-party complaint against Hess Corporation, Sprague Operating Resources LLC (successor to RAD Energy Corp.), Service Station Installation of NY, Inc., and certain individual defendants based on alleged contribution to the contamination that is the subject of the State’s claims arising from a petroleum discharge at a gasoline station up-gradient from the site formerly owned by us. In 2016, the various actions filed by the State of New York and our third-party actions were consolidated for discovery proceedings and trial. Discovery in this case is in later stages and, as it nears completion, a schedule for trial will be established. We are unable to estimate the range of loss in excess of the amount we have accrued for this lawsuit. It is possible that losses related to this case, in excess of the amounts accrued, as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 21 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 (the “Gallikers”), individually and trading as Millstone Auto Service (“Millstone”), Auto Tech and other named parties, of petroleum-related contamination found at a gasoline station property located in Millstone Township, New Jersey. We did not own or lease this property, but in 1985 we did acquire ownership of certain USTs located at the property. In 1986 we tried to remove these USTs and were refused access by the Gallikers to do so. We believe the USTs were transferred to the Gallikers by operation of law not later than 1987 and responded to the NJDEP’s directive and notice by 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 the Gallikers, individually and trading as Millstone. We filed for, and were granted, a hearing to contest the allegations of the Order and Assessment. In 2014, the NJDEP issued a notice of violation directing the Gallikers and Millstone to register and remove the contents of the USTs at the property. Thereafter, the Gallikers made written demand of us to investigate and remediate all contamination at the property, which we have rejected on the basis that we are not responsible for the alleged contamination. In December 2018, we agreed with the NJDEP upon terms of settlement which require us to conduct a limited remedial investigation and limited remedial work at the property in exchange for NJDEP’s agreement to release us from any future remediation obligations at the property and to withdraw its demand against us for civil penalties and fines. The settlement agreement remains subject to public notice and final NJDEP approval. MTBE Litigation – State of New Jersey We are a party to a case involving a large number of gasoline station sites throughout the State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP. This New Jersey case (the “New Jersey MDL Proceedings”) is 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 New Jersey MDL Proceedings allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. New Jersey is seeking reimbursement of significant clean-up and remediation costs arising out of the alleged release of MTBE containing gasoline in the State of New Jersey and is asserting various natural resource damage claims as well as liability against the owners and operators of gasoline station properties from which the releases occurred. The New Jersey MDL Proceedings name us as a defendant along with approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE, including Atlantic Richfield Company, BP America, Inc., BP Amoco Chemical Company, BP Products North America, Inc., Chevron Corporation, Chevron U.S.A., Inc., Citgo Petroleum Corporation, ConocoPhillips Company, Cumberland Farms, Inc., Duke Energy Merchants, LLC, ExxonMobil Corporation, ExxonMobil Oil Corporation, Getty Petroleum Marketing, Inc., Gulf Oil Limited Partnership, Hess Corporation, Lyondell Chemical Company, Lyondell- Citgo Refining, LP, Lukoil Americas Corporation, Marathon Oil Corporation, Mobil Corporation, Motiva Enterprises, LLC, Shell Oil Company, Shell Oil Products Company LLC, Sunoco, Inc., Unocal Corporation, Valero Energy Corporation, and Valero Refining & Marketing Company. The majority of the named defendants have already settled their case with the State of New Jersey. A portion of the case (“bellwether” trials) has been transferred to the United States District Court for the District of New Jersey for pre-trial proceedings and trial, although a trial date has not yet been set. We continue to engage in settlement negotiations and a dialogue with the plaintiffs’ counsel to educate them on the unique role of the Company and our business as compared to other defendants in the litigation. Although the ultimate outcome of the New Jersey MDL Proceedings cannot be ascertained at this time, we believe that it is probable that this litigation will be resolved in a manner that is unfavorable to us. We are unable to estimate the range of loss in excess of the amount accrued for the New Jersey MDL Proceedings with certainty as we do not believe that plaintiffs’ settlement proposal is realistic and there remains uncertainty as to the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from other parties and the aggregate possible amount of damages for which we may be held liable. It is possible that losses related to the New Jersey MDL Proceedings in excess of the amounts accrued as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. MTBE Litigation – State of Pennsylvania On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania. The named plaintiffs are the State, by and through (then) Pennsylvania Attorney General Kathleen G. Kane (as Trustee of the waters of the State), the Pennsylvania Insurance Department (which governs and administers the Underground Storage Tank Indemnification Fund), the Pennsylvania Department of Environmental Protection (vested with the authority to protect the environment) and the Pennsylvania Underground Storage Tank Indemnification Fund. The complaint names us and more than 50 other defendants, including Exxon Mobil, various BP entities, Chevron, Citgo, Gulf, Lukoil Americas, Getty Petroleum Marketing Inc., Marathon, Hess, Shell Oil, Texaco, Valero, as well as other smaller petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE who are alleged to have distributed, stored and sold MTBE gasoline in Pennsylvania. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of “defendants’ unfair and deceptive trade practices and act in the marketing of MTBE and gasoline containing MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater. The plaintiffs assert causes of action against all 22 defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; public nuisance; negligence; trespass; and violation of consumer protection law. The case was filed in the Court of Common Pleas, Philadelphia County, but was removed by defendants to the United States District Court for the Eastern District of Pennsylvania and then transferred to the United States District Court for the Southern District of New York so that it may be managed as part of the ongoing MTBE MDL. In November 2015, plaintiffs filed a second amended complaint naming additional defendants and adding factual allegations intended to bolster their claims against the defendants. We have joined with other defendants in the filing of a motion to dismiss the claims against us. This motion is pending with the Court. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known. MTBE Litigation – State of Maryland On December 17, 2017, the State of Maryland, by and through the Attorney General on behalf of the Maryland Department of Environment and the Maryland Department of Health (the “State of Maryland”), filed a complaint in the Circuit Court for Baltimore City related to alleged statewide MTBE contamination in Maryland. The complaint was served upon us on January 19, 2018. The complaint names us and more than 60 other defendants, including Exxon Mobil Corporation, APEX Oil Company, Astra Oil Company, Atlantic Richfield Company, various BP, Chevron, Citgo, ConocoPhillips, Hess, Kinder Morgan, Lukoil, Marathon, Shell Oil, Sunoco, Texaco and Valero entities, Cumberland Farms, Duke Energy Merchants, El Paso Merchant Energy-Petroleum Company, Energy Transfer Partners, L.P., Equilon Enterprises, Inc., ETP Holdco Corporation, George E. Warren Corporation, Getty Petroleum Marketing, Inc., Gulf Oil Limited Partnership, Guttman Energy, Inc., Hartree Partners L.P., Holtzman Oil Corporation, Motiva Enterprises LLC, Nustar Terminals Operations Partnership LP, Phillips 66 Company, Premcor, 7-Eleven, Inc., Sheetz, Inc. , Total Petrochemicals & Refining USA, Inc., Transmontaigne Product Services, Inc., Vitol S.A., WAWA, Inc. and Western Refining, Inc. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of the defendants’ unfair and deceptive trade practices in the marketing of MTBE and gasoline containing MTBE. The plaintiffs also seek to recover costs paid or incurred by the State of Maryland to detect, investigate, treat and remediate MTBE from public and private water wells and groundwater, punitive damages and the award of attorneys’ fees and litigation costs. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; strict liability for abnormally dangerous activity; public nuisance; negligence; trespass; and violations of Titles 4, 7 and 9 of the Maryland Environmental Code. On February 14, 2018, defendants removed the case to the United States District Court for the District of Maryland. It is unclear whether the matter will ultimately be removed to the MTBE MDL proceedings or remain in federal court in Maryland. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known. Matters related to our former 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 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 provides, among other things, that the named recipients must conduct an assessment of the natural resources that have been injured by discharges into the Lower Passaic River and must implement interim compensatory restoration for the injured natural resources. The NJDEP alleges that our liability arises from alleged discharges originating from our former Newark, New Jersey 23 Terminal site (which was sold in October 2013). We responded to the Directive by asserting that we are not liable. There has been no material activity and/or communications by the NJDEP with respect to the Directive since early after its issuance. In May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for a 17-mile stretch of the Lower Passaic River in New Jersey. 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. Most of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). The CPG agreed to an interim allocation formula for purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this agreed-upon allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the Lower Passaic River. The CPG submitted to the EPA its draft RI/FS in 2015. The draft RI/FS set forth various alternatives for remediating the entire 17-mile stretch of the Lower Passaic River, and provides that the cost estimate for the preferred remedial action presented therein is in the range of approximately $483 million to $725 million. The EPA has provided comments to the draft RI/FS which led to discussions between the CPG and the EPA regarding an alternative approach to completing the RI/FS, including various adaptive management scenarios focusing on source control interim remedies for the upper 9-miles of the Lower Passaic River. These discussions between the CPG and the EPA are ongoing. In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the Lower Passaic River have proceeded as follows. First, in June 2012, certain members of the CPG 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. The EPA also issued a Unilateral Order to Occidental Chemical Corporation (“Occidental”) directing Occidental to participate and contribute to the cost of the river mile 10.9 work. Concurrent with the CPG’s work on the RI/FS, on April 11, 2014, the EPA issued a draft Focused Feasibility Study (“FFS”) with proposed remedial alternatives to remediate the lower 8-miles of the 17-mile stretch of the Lower Passaic River. The FFS was subject to public comments and objections and, on March 4, 2016, the EPA issued its Record of Decision (“ROD”) for the lower 8-miles selecting a remedy that involves bank-to-bank dredging and installing an engineered cap with an estimated cost of $1.38 billion. On March 31, 2016, we and more than 100 other potentially responsible parties received from the EPA a “Notice of Potential Liability and Commencement of Negotiations for Remedial Design” (“Notice”), which informed the recipients that the EPA intends to seek an Administrative Order on Consent and Settlement Agreement with Occidental for remedial design of the remedy selected in the ROD, after which the EPA plans to begin negotiations with “major” potentially responsible parties for implementation and/or payment of the selected remedy. The Notice also stated that the EPA believes that some of the potentially responsible parties and other parties not yet identified as potentially responsible parties will be eligible for a cash out settlement with the EPA. On October 5, 2016, the EPA announced that it had entered into a settlement agreement with Occidental which requires that Occidental perform the remedial design (which is expected to take four years to complete) for the remedy selected for the lower 8-miles of the Lower Passaic River. On June 16, 2016, Maxus Energy Corporation and Tierra Solutions, Inc., who have contractual liability to Occidental for Occidental’s potential liability related to the Lower Passaic River, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In the Chapter 11 proceedings, YPF SA, Maxus and Tierra’s corporate parent, sought bankruptcy approval of a settlement under which YPF would pay $130 million to the bankruptcy estate in exchange for a release in favor of Maxus, Tierra, YPF and YPF’s affiliates of Maxus and Tierra’s contractual environmental liability to Occidental. We and the CPG filed proofs of claims for costs incurred by the CPG relating to the Lower Passaic River. On April 19, 2017, Maxus, Tierra and certain of its affiliates (collectively, the “Debtors”), together with the Official Committee of Unsecured Creditors, of which the CPG is a member, filed an Amended Chapter 11 Plan of Liquidation (the “Chapter 11 Plan”) in the Chapter 11 proceedings, which has been confirmed by order of the bankruptcy court, having an effective date of July 14, 2017 (the “Effective Date”). The Chapter 11 Plan provides for, among other things, the creation of a Liquidating Trust to liquidate and distribute from available assets certain allowed claims pursuant to the procedures set forth therein. Under the terms of the Chapter 11 Plan, the CPG’s proof of claim, which includes past costs incurred in the performance of the RI/FS and River Mile 10.9 work, is classified as an Allowed Class 4 Claim in the approximate amount of $14.3 million. To the extent that the CPG receives any distributions from the Liquidating Trust with respect to its Allowed Class 4 Claim, we would be entitled to seek reimbursement of our pro-rata share of said distribution for past costs we incurred with respect to performance of the RI/FS and River Mile 10.9 work. The Chapter 11 Plan also provides for a Mutual Contribution Release Agreement under which claims for contribution relating to liabilities associated with the Lower Passaic River and incurred prior to the Effective Date are mutually released by and among the parties identified therein. We are one of 59 parties (the “Released Parties”) that entered into the Mutual Contribution Release Agreement, pursuant to which (i) the Debtors release the Released Parties from any contribution claim they may have, (ii) Occidental releases the Released Parties for the amounts itemized in Occidental’s Class 4 Claim, and (iii) the Released Parties release the Debtors and Occidental for the amounts itemized in the CPG’s Class 4 Claim. The Mutual Contribution Release Agreement does not reduce or affect the CPG’s right to receive distributions from the Liquidating Trust on account of the CPG’s Class 4 Claim or our pro-rata share of any such distributions, nor does it affect our right to assert any future claims against Occidental for costs that we may incur related to the remediation of the Lower Passaic River after the Effective Date. 24 By letter dated March 30, 2017, the EPA advised the recipients of the Notice that it would be entering into cash out settlements with 20 potentially responsible parties to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. The letter also stated that the EPA would begin a process for identifying other potentially responsible parties for negotiation of cash out settlements to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements. In January 2018, the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the identified 20 parties to resolve their respective alleged liability for the ROD work, each for a payment to the EPA in the amount of $280,600. The EPA has also been engaged in discussions, in which we are participating, with the remaining recipients of the Notice regarding a proposed framework for an allocation process that will lead to offers of cash-out settlements to certain additional parties and a consent decree in which parties that are not offered a cash-out settlement will agree to perform the lower 8-mile remedial action. The EPA-commenced allocation process was scheduled to conclude by mid- 2019, but is likely to be extended. On June 30, 2018, Occidental filed a complaint in the United States District Court for the District of New Jersey seeking cost recovery and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) for its alleged expenses with respect to the investigation, design, and anticipated implementation of the remedy for the lower 8-miles of the Passaic River. The complaint lists over 120 defendants, including us, many of which were also named in the NJDEP’s 2003 Directive and the EPA’s 2016 Notice. We do not know whether this new complaint will impact the EPA’s allocation process or the ultimate outcome of the matter. We intend to defend the claims consistent with our defenses in the related proceedings. Many uncertainties remain regarding how the EPA intends to implement the ROD. We anticipate that performance of the EPA’s selected remedy will be subject to future negotiation, potential enforcement proceedings and/or possible litigation. The RI/FS, AOC and 10.9 AOC and Notice do not obligate us to fund or perform remedial action contemplated by either the ROD or RI/FS and do not resolve liability issues for remedial work or the restoration of or compensation for alleged natural resource damages to the Lower Passaic River, which are not known at this time. 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. 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 have engaged in discussions with Chevron/Texaco regarding our demands for indemnification. To facilitate these discussions, in October 2009, the parties 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, until either party terminates such Tolling/Standstill Agreement. Lukoil Americas Case In March 2016, we filed a civil lawsuit in the New York State Supreme Court, New York County, against Lukoil Americas Corporation and certain of its current or former executives, seeking recovery of environmental remediation costs that we either have incurred, or expect to incur, at properties previously leased to Marketing pursuant to a master lease. The lawsuit alleges various theories of liability, including claims based on environmental liability statutes in effect in the states in which the properties are located, as well as a breach of contract claim seeking to pierce Marketing’s corporate veil. In August 2017, the court denied in part and granted in part a motion by Lukoil Americas Corporation to dismiss our claims. In the fall of 2018, we appealed the dismissal of our breach of contract claim, and the defendants have cross-appealed the partial denial of their motion to dismiss. Further trial court litigation is currently stayed pending completion of a court ordered mediation, which began in 2018 and in which the parties continue to participate. This case is still in an early stage of its proceedings and it is not yet possible to predict or estimate the potential outcome of this case. Item 4. Mine Safety Disclosures None. 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Capital Stock Our common stock is traded on the New York Stock Exchange (symbol: GTY). There were approximately 10,895 beneficial holders of our common stock as of December 20, 2018, of which approximately 924 were holders of record. 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. Stock Performance Graph Comparison of Five-Year Cumulative Total Return* Source: SNL Financial Getty Realty Corp. Standard & Poor's 500 Peer Group 12/31/2013 12/31/2014 100.00 100.00 100.00 104.44 113.69 125.75 12/31/2015 12/31/2016 12/31/2017 12/31/2018 207.10 150.33 191.04 182.31 157.22 169.03 105.16 115.26 135.20 163.72 129.05 163.84 Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2013, in Getty Realty Corp. common stock, Standard & Poor’s 500 and Peer Group. * Cumulative total return assumes reinvestment of dividends. 26 We have chosen as our Peer Group the following companies: Agree Realty Corporation, EPR Properties (formerly known as Entertainment Properties Trust), National Retail Properties, Realty Income Corporation, Spirit Realty Capital, Inc. and STORE Capital Corporation. We have chosen these companies as our Peer Group because a substantial segment of each of their businesses is owning and leasing single-tenant net lease retail properties. We cannot assure you that our stock performance will continue in the future with the same or similar trends depicted in the performance graph above. We do not make or endorse any predictions as to future stock performance. The above 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. 27 Item 6. Selected Financial Data GETTY REALTY CORP. AND SUBSIDIARIES SELECTED FINANCIAL DATA (in thousands, except per share amounts and number of properties) 2018 (a) For the Years ended December 31, 2016 2015 (c) 2017 (b) 2014 OPERATING DATA: Total revenues Earnings from continuing operations Earnings (loss) from discontinued operations Net earnings Basic and diluted per share amounts: Earnings from continuing operations Net earnings Basic weighted average common shares outstanding Diluted weighted average common shares outstanding Dividends declared per share (d) FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS (e): Net earnings Depreciation and amortization of real estate assets Gains on dispositions of real estate Impairments Funds from operations Revenue recognition adjustments (Recovery) allowance for deferred rent/mortgage receivables Changes in environmental estimates Accretion expense Environmental litigation accruals Insurance reimbursements Legal settlements and judgments Acquisition costs Adjusted funds from operations BALANCE SHEET DATA (AT END OF YEAR): Real estate before accumulated depreciation and amortization Total assets Total debt Stockholders’ equity NUMBER OF PROPERTIES: Owned Leased Total properties $ $ 136,106 $ 48,410 (704) 47,706 $ 120,153 $ 45,048 2,138 47,186 $ 115,271 $ 39,825 (1,414) 38,411 $ 110,776 $ 39,478 (2,068) 37,410 $ 99,905 19,890 3,528 23,418 1.19 1.17 1.20 1.26 1.16 1.12 1.17 1.11 0.59 0.69 40,171 36,897 33,806 33,420 33,409 40,191 1.31 36,897 1.16 33,806 1.03 33,420 1.15 33,409 0.96 $ $ 47,706 $ 23,636 (3,948) 6,170 73,564 (2,223) — (1,319) 2,409 (45) (2,570) (147) — 69,669 $ $ 47,186 19,089 (1,041) 9,321 74,555 (1,976) — (6,854) 3,448 1,044 (1,804) (6,381) — 62,032 $ $ 38,411 19,170 (6,213) 12,814 64,182 (3,417) — (7,007) 4,107 801 (1,146) (514) 86 57,092 $ $ 37,410 16,974 (2,611) 17,361 69,134 (4,471) (93) (4,639) 4,829 374 — (18,176) 445 47,403 $ 23,418 10,549 (10,218) 21,534 45,283 (5,372) 2,331 (2,756) 3,046 — — — 104 42,636 $ 1,043,106 $ 970,964 $ 1,159,175 1,072,754 379,158 553,695 $ 441,636 581,164 $ $ 782,166 $ 877,306 298,544 430,918 $ 783,233 $ 896,918 317,093 406,561 $ 595,959 686,582 124,425 407,024 859 74 933 828 79 907 740 89 829 753 98 851 757 106 863 (a) (b) Includes (from the date of the acquisition) the effect of the $52.6 million acquisition of 30 properties in the E-Z Mart transaction on April 17, 2018, and the effect of the $17.4 million acquisition of six properties in the Applegreen transaction on August 1, 2018. Includes (from the date of the acquisition) the effect of the $123.1 million acquisition of 49 properties in the Empire transaction on September 6, 2017, and the effect of the $68.7 million acquisition of 38 properties in the Applegreen transaction on October 3, 2017. 28 (c) Includes (from the date of the acquisition) the effect of the $214.5 million acquisition of 77 properties in the United Oil transaction on June 3, 2015. Includes special dividends of $0.22 per share and $0.14 per share for the years ended December 31, 2015, and 2014, respectively. (d) (e) During the fourth quarter of 2017, we revised our definition of AFFO. AFFO for the years ended December 31, 2017, 2016 and 2015, have been restated to conform to our revised definition. For additional information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – General – Supplemental Non-GAAP Measures”. 29 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 I entitled “Item 1A. Risk Factors”; the selected financial data in Part II entitled “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 convenience store and gasoline station properties. As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders. 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 stockholders each year. Our Triple-Net Leases Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced. Substantially all of our tenants’ financial results depend on the sale of refined petroleum products, convenience store sales or 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. During the terms of our leases, we monitor the credit quality of our triple-net tenants by reviewing their published credit rating, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements, monitoring news reports regarding our tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases. For additional information regarding our real estate business, our properties and environmental matters, see “Item 1. Business – Company Operations”, “Item 2. Properties” and “Environmental Matters” below. Our Properties Net Lease. As of December 31, 2018, we leased 918 of our properties to tenants under triple-net leases. Our net lease properties include 814 properties leased under 26 separate unitary or master triple-net leases and 104 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years with options for successive renewal terms of up to 20 years and periodic rent escalations. Several of our leases provide for additional rent based on the aggregate volume of fuel sold. In addition, certain of our leases require the tenants to invest capital in our properties. Redevelopment. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. Vacancies. As of December 31, 2018, nine of our properties were vacant. We expect that we will either sell or enter into new leases on these properties over time. Investment Strategy and Activity As part of our overall growth strategy, we regularly review acquisition and financing opportunities to invest in additional convenience store and gasoline station, and other automotive related, properties, and we expect to continue to pursue investments that we believe will benefit our financial performance. In addition to sale/leaseback and other real estate acquisitions, our investment activities include purchase money financing with respect to properties we sell, and real property loans relating to our leasehold portfolios. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate. To achieve that goal, we seek to invest in high quality individual properties and real estate portfolios that are in strong primary markets that serve high density population centers. A key element of our investment strategy is to invest in properties that will promote our geographic and tenant diversity. During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. Included in these acquisitions was our April 17, 2018, acquisition of fee simple interests in 30 convenience store and gasoline station properties from GPM Investments, LLC (“GPM”). These properties were simultaneously leased to GPM, a leading regional convenience store and gasoline station operator, under a long- 30 term triple-net unitary lease. The properties are located across Arkansas, Louisiana, Oklahoma and Texas. The total purchase price for the transaction was $52.6 million, which was funded with funds available under our Revolving Facility. On August 1, 2018, we acquired fee simple interests in six convenience store and gasoline station properties from a U.S. subsidiary of Applegreen PLC (“Applegreen”), the largest convenience store and gasoline station operator in the Republic of Ireland. These properties were simultaneously leased to a U.S. subsidiary of Applegreen under a long-term triple-net unitary lease. The properties are located within the metropolitan market of Columbia, SC. The total purchase price for the transaction was $17.4 million, which was funded with funds available under our Revolving Facility. In addition to the GPM and Applegreen transactions, in 2018, we acquired fee simple interests in five convenience store and gasoline station, and other automotive related properties in various transactions for an aggregate purchase price of $8.0 million. During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. Included in these acquisitions was our September 6, 2017, acquisition of fee simple interests in 49 convenience store and gasoline station properties from Empire Petroleum Partners LLC (“Empire”). These properties were simultaneously leased to Empire, a leading regional convenience store and gasoline station operator, under a long-term triple-net unitary lease. The properties are located primarily within metropolitan markets in the states of Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Texas. The total purchase price for the transaction was $123.1 million, which was funded with a combination of funds from our Equity Offering and funds available under our Revolving Facility. On October 3, 2017, we acquired fee simple interests in 33 convenience store and gasoline station properties and five stand-alone Burger King quick service restaurants from a U.S. subsidiary of Applegreen. These properties were simultaneously leased to a U.S. subsidiary of Applegreen under a long-term triple-net unitary lease. The properties are located within the metropolitan market of Columbia, SC. The total purchase price for the transaction was $68.7 million, which was funded with a combination of funds from our Equity Offering and funds available under our Revolving Facility. In addition to the Empire and Applegreen transactions, in 2017, we acquired fee simple interests in 16 convenience store and gasoline station, and other automotive properties in various transactions for an aggregate purchase price of $22.2 million. Redevelopment Strategy and Activity We believe that certain of our properties are located in geographic areas which, together with other factors, may make them well- suited for a new convenience and gasoline use or for alternative single-tenant net lease retail uses, such as quick service restaurants, automotive parts and service stores, specialty retail stores and bank branch locations. We believe that the redeveloped properties can be leased or sold at higher values than their current use. For the year ended December 31, 2018, rent commenced on six completed redevelopment projects that were placed back into service in our net lease portfolio. Since the inception of our redevelopment program in 2015, we have completed nine redevelopment projects. For the year ended December 31, 2018, we spent $2.7 million of construction-in-progress costs related to our redevelopment activities. During the year ended December 31, 2018, we transferred $2.2 million of construction-in-progress to buildings and improvements on our consolidated balance sheet. In addition, during the year ended December 31, 2018, we spent $4.4 million to reimburse tenants for capital expenditures related to our redevelopment activities. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. In addition, to the six properties currently classified as redevelopment, we are in various stages of feasibility and planning for the recapture of select properties from our net lease portfolio that are suitable for redevelopment to either a new convenience and gasoline use or for alternative single-tenant net lease retail uses. As of December 31, 2018, we have signed leases on seven properties, that are currently part of our net lease portfolio, which will be recaptured and transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured. Asset Impairment We perform an impairment analysis for the carrying amounts of our properties in accordance with GAAP when indicators of impairment exist. We reduced the carrying amounts to fair value, and recorded in continuing and discontinued operations, impairment charges aggregating $6.2 million and $9.3 million for the years ended December 31, 2018 and 2017, respectively, where the carrying amounts of the properties exceed the estimated undiscounted cash flows expected to be received during the assumed holding period which includes the estimated sales value expected to be received at disposition. The impairment charges were attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties. The evaluation of and estimates of anticipated cash flows used to conduct our impairment analysis are highly subjective and actual results could vary significantly from our estimates. 31 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, to the extent feasible, and generating cash sufficient to make required distributions to stockholders of at least 90% of our ordinary taxable income each year. In addition to measurements defined by GAAP, we also focus on Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) to measure our performance. FFO and AFFO are generally considered by analysts and investors to be appropriate supplemental non-GAAP measures of the performance of REITs. FFO and AFFO are not in accordance with, or a substitute for, measures prepared in accordance with GAAP. In addition, FFO and AFFO are not based on any comprehensive set of accounting rules or principles. 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. These measures should only be used to evaluate our performance in conjunction with corresponding GAAP measures. FFO is defined by the National Association of Real Estate Investment Trusts as GAAP net earnings before depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, impairment charges and cumulative effect of accounting changes. Our definition of AFFO is defined as FFO less (i) Revenue Recognition Adjustments (net of allowances), (ii) changes in environmental estimates, (iii) accretion expense, (iv) environmental litigation accruals, (v) insurance reimbursements, (vi) legal settlements and judgments, (vii) acquisition costs expensed and (viii) other unusual items that are not reflective of our core operating performance. Other REITs may use definitions of FFO and/or AFFO that are different from ours and, accordingly, may not be comparable. Beginning in the fourth quarter of 2017, we revised our definition of AFFO to exclude three additional items – environmental litigation accruals, insurance reimbursements, and legal settlements and judgments – because we believe that these items are not indicative of our core operating performance. While we do not label excluded items as non-recurring, management believes that excluding items from our definition of AFFO that are either non-cash or not reflective of our core operating performance provides analysts and investors the ability to compare our core operating performance between periods. AFFO for the years ended December 31, 2016 and 2015, has been restated to conform to our revised definition. We believe that FFO and AFFO are helpful to analysts and 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 core operating performance. FFO excludes various items such as depreciation and amortization of real estate assets, gains or losses on dispositions of real estate and impairment charges. In our case, however, GAAP net earnings and FFO typically include the impact of revenue recognition adjustments comprised of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases, adjustments recorded for recognition of rental income recognized from direct financing leases on revenues from rental properties and the amortization of deferred lease incentives, as offset by the impact of related collection reserves. 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 is recognized on a straight-line 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 revenues 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. The amortization of deferred lease incentives represents our funding commitment in certain leases, which deferred expense is recognized on a straight-line basis as a reduction of rental revenue. GAAP net earnings and FFO include non- cash changes in environmental estimates and environmental accretion expense, which do not impact our recurring cash flow. GAAP net earnings and FFO also include environmental litigation accruals, insurance reimbursements, and legal settlements and judgments, which items are not indicative of our core operating performance. GAAP net earnings and FFO from time to time may also include property acquisition costs expensed and other unusual items that are not reflective of our core operating performance. Acquisition costs are expensed, generally in the period when properties are acquired and are not reflective of our core operating performance. We pay particular attention to AFFO, as we believe it best represents our core operating performance. In our view, AFFO provides a more accurate depiction than FFO of our core operating performance. By providing AFFO, we believe that we are presenting useful information that assists analysts and investors to better assess our core operating performance. Further, we believe that AFFO is useful in comparing the sustainability of our core operating performance with the sustainability of the core operating performance of other real estate companies. For a reconciliation of FFO and AFFO to GAAP net earnings, see “Item 6. Selected Financial Data”. Results of Operations Year ended December 31, 2018, compared to year ended December 31, 2017 Revenues from rental properties increased by $15.0 million to $116.3 million for the year ended December 31, 2018, as compared to $101.3 million for the year ended December 31, 2017. The increase in revenues from rental properties was primarily due to $13.4 million of revenue from the properties acquired in 2018 and the second half of 2017. Rental income contractually due from our tenants included in revenues from rental properties in continuing operations was $114.1 million for the year ended December 31, 2018, as compared to $99.4 million for the year ended December 31, 2017. Tenant reimbursements, which consist of real estate taxes and other 32 municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements were $16.7 million and $15.8 million for the years ended December 31, 2018 and 2017, respectively. Interest income on notes and mortgages receivable was $3.1 million for the year ended December 31, 2018, as compared to $3.0 million for the year ended December 31, 2017. In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due 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, the net amortization of above-market and below-market leases, 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 and the amortization of deferred lease incentives. Revenues from rental properties includes Revenue Recognition Adjustments which increased rental revenue by $2.2 million for the year ended December 31, 2018, and $2.0 million for the year ended December 31, 2017. Property costs, which are primarily comprised of rent expense, real estate taxes, state and local taxes, municipal charges, professional fees, maintenance expense and reimbursable tenant expenses, were $23.6 million for the year ended December 31, 2018, as compared to $22.3 million for the year ended December 31, 2017. The increase in property costs for the year ended December 31, 2018, was principally due to an increase in real estate taxes and property related professional fees. Impairment charges included in continuing operations were $4.9 million for the year ended December 31, 2018, as compared to $8.3 million for the year ended December 31, 2017. Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges in continuing operations for the years ended December 31, 2018 and 2017, were attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties. Environmental expenses included in continuing operations were $4.7 million for the year ended December 31, 2018, as compared to $3.1 million for the year ended December 31, 2017. The increase in environmental expenses for the year ended December 31, 2018, was principally due to a $0.7 million increase in environmental legal fees and expenses, and a $1.9 million increase in net environmental remediation costs, offset by a $1.1 million decrease in environmental litigation accruals. 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 expense was $14.7 million for the year ended December 31, 2018, as compared to $13.9 million for the year ended December 31, 2017. The increase in general and administrative expense for the year ended December 31, 2018, was principally due to a $0.4 million increase in stock-based compensation, a $0.2 million increase in employee related expenses and a $0.2 million increase in public company expenses. Depreciation and amortization expense was $23.6 million for the year ended December 31, 2018, as compared to $19.1 million for the year ended December 31, 2017. The increase in depreciation and amortization expense was primarily due to depreciation and amortization of properties acquired offset by a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate. Gains on dispositions of real estate were $3.9 million for the year ended December 31, 2018, as compared to $1.0 million for the year ended December 31, 2017. The gains were the result of the sale of nine and 12 properties during each of the years ended December 31, 2018 and 2017, respectively. Other income was $2.7 million for the year ended December 31, 2018, as compared to $8.5 million for the year ended December 31, 2017. For the year ended December 31, 2018, other income was primarily attributable to $2.6 million received from insurance reimbursements. Other income for the year ended December 31, 2017, was primarily attributable to $1.8 million received from insurance reimbursements and $6.4 million received from legal settlements and judgments. Interest expense was $22.3 million for the year ended December 31, 2018, as compared to $17.8 million for the year ended December 31, 2017. The increase was due to higher average borrowings outstanding and an increase in average interest rates on borrowings outstanding for the year ended December 31, 2018, as compared to the year ended December 31, 2017. Loss from discontinued operations was $0.7 million for the year ended December 31, 2018, as compared to earnings of $2.1 million for the year ended December 31, 2017. For the year ended December 31, 2018, environmental credits recorded in discontinued operations were $0.6 million, as compared to $3.2 million for the year ended December 31, 2017. For the year ended December 31, 2018, impairment charges recorded in discontinued operations were $1.3 million, as compared to $1.0 million for the year ended December 31, 2017, and were attributable to the accumulation of asset retirement costs as a result of increases in estimated environmental liabilities which increased the carrying values of discontinued properties above their fair values. Environmental expenses and impairment charges vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of changes for one period, as compared to prior periods. 33 For the year ended December 31, 2018, FFO was $73.6 million, as compared to $74.6 million for the year ended December 31, 2017. For the year ended December 31, 2018, AFFO was $69.7 million, as compared to $62.0 million for the year ended December 31, 2017. FFO for the year ended December 31, 2018, was impacted by changes in net earnings, but excludes a $3.1 million decrease in impairment charges, a $4.5 million increase in depreciation and amortization expense and a $2.9 million decrease in gains on dispositions of real estate. The increase in AFFO for the year ended December 31, 2018, also excludes a $6.3 million decrease in legal settlements and judgments, a $4.5 million increase in environmental estimates and accretion expense, a $0.8 million increase in insurance reimbursements, a $1.1 million decrease in environmental litigation accruals, and a $0.2 million decrease in Revenue Recognition Adjustments. Basic and diluted earnings per share was $1.17 per share for the year ended December 31, 2018, as compared to $1.26 per share for the year ended December 31, 2017. Basic and diluted FFO per share for the year ended December 31, 2018, was $1.81 and $1.80 per share, respectively, as compared to $2.00 per share for the year ended December 31, 2017. Basic and diluted AFFO per share for the year ended December 31, 2018, was $1.71 per share, as compared to $1.66 per share for the year ended December 31, 2017. Year ended December 31, 2017, compared to year ended December 31, 2016 Revenues from rental properties increased by $4.6 million to $101.3 million for the year ended December 31, 2017, as compared to $96.7 million for the year ended December 31, 2016. The increase in revenues from rental properties was primarily due to $3.2 million and $1.4 million of revenue from the properties acquired in the Empire and Applegreen transactions, respectively. Rental income contractually due from our tenants included in revenues from rental properties in continuing operations was $99.4 million for the year ended December 31, 2017, as compared to $93.3 million for the year ended December 31, 2016. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements were $15.8 million and $15.0 million for the years ended December 31, 2017 and 2016, respectively. Interest income on notes and mortgages receivable was $3.0 million for the year ended December 31, 2017, as compared to $3.5 million for the year ended December 31, 2016. In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due 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, the net amortization of above-market and below-market leases, 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 and the amortization of deferred lease incentives. Revenues from rental properties includes Revenue Recognition Adjustments which increased rental revenue by $2.0 million for the year ended December 31, 2017, and $3.4 million for the year ended December 31, 2016. Property costs, which are primarily comprised of rent expense, real estate taxes, state and local taxes, municipal charges, maintenance expense and reimbursable tenant expenses, were $22.3 million for the year ended December 31, 2017, as compared to $23.2 million for the year ended December 31, 2016. The decrease in property costs for the year ended December 31, 2017, was principally due to a decrease in rent, maintenance and state and local taxes. Impairment charges included in continuing operations were $8.3 million for the year ended December 31, 2017, as compared to $8.6 million for the year ended December 31, 2016. Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges in continuing operations for the years ended December 31, 2017 and 2016, were primarily attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, and reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties. Environmental expenses included in continuing operations for the year ended December 31, 2017, were $3.1 million, as compared to $2.7 million for the year ended December 31, 2016. The increase in environmental expenses for the year ended December 31, 2017, was principally due to a $0.8 million increase in environmental litigation accruals and legal fees, partially offset by a $0.4 million decrease in net environmental remediation costs. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of changes in reported environmental expenses for one period, as compared to prior periods. General and administrative expense was $13.9 million for the year ended December 31, 2017, as compared to $14.2 million for the year ended December 31, 2016. The decrease in general and administrative expense for the year ended December 31, 2017, was principally due to a $0.4 million decline in legal and professional fees and a $0.4 million decrease of non-recurring employee related expenses predominantly due to reductions in severance and retirement costs, partially offset by a $0.5 million increase in employee related expenses. Recoveries and allowances for uncollectible accounts included in continuing operations increased by $0.6 million to a $0.2 million allowance for the year ended December 31, 2017, as compared to a recovery of $0.4 million for the year ended December 31, 2016. 34 Depreciation and amortization expense was $19.1 million for the year ended December 31, 2017, as compared to $19.2 million for the year ended December 31, 2016. The decrease was primarily due to a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate offset by depreciation and amortization of properties acquired. Gains on dispositions of real estate were $1.0 million for the year ended December 31, 2017, as compared to $6.4 million for the year ended December 31, 2016. The gains were the result of the sale of 12 properties during each of the years ended December 31, 2017 and 2016, which did not previously meet the criteria to be held for sale. For the year ended December 31, 2016, the gains were primarily the result of the full recognition of the remaining deferred gain of $3.9 million resulting from the repayment of the entire seller financing mortgage by affiliates of Hanuman Business, Inc. (d/b/a “Ramoco”). Other income was $8.5 million for the year ended December 31, 2017, as compared to $2.0 million for the year ended December 31, 2016. For the year ended December 31, 2017, other income was primarily attributable to $1.8 million received from insurance reimbursements and $6.4 million received from legal settlements and judgments. Other income for the year ended December 31, 2016, was primarily attributable to $1.1 million received from insurance reimbursements and $0.5 million received from legal settlements and judgments. Interest expense was $17.8 million for the year ended December 31, 2017, as compared to $16.6 million for the year ended December 31, 2016. The increase for the year ended December 31, 2017, was due to higher average borrowings outstanding and the incurrence of new indebtedness required to fund the Empire and Applegreen transactions. We report as discontinued operations properties which met the criteria to be accounted for as held for sale in accordance with GAAP as of June 30, 2014, and certain properties disposed of during the periods presented that were previously classified as held for sale as of June 30, 2014. Earnings from discontinued operations were $2.1 million for the year ended December 31, 2017, as compared to a loss of $1.4 million for the year ended December 31, 2016. Environmental credits recorded in discontinued operations was $3.2 million for the year ended December 31, 2017, as compared to $3.0 million for the year ended December 31, 2016. There were no dispositions of real estate included in discontinued operations for the year ended December 31, 2017. Loss on dispositions of real estate included in discontinued operations was $0.2 million for the year ended December 31, 2016. For the year ended December 31, 2016, there were two property dispositions recorded in discontinued operations. Impairment charges recorded in discontinued operations during the years ended December 31, 2017 and 2016, of $1.0 million and $4.2 million, respectively, were attributable to the accumulation of asset retirement costs as a result of increases in estimated environmental liabilities which increased the carrying values of certain properties above their fair values. Environmental expenses and impairment charges vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the directions of changes for one period, as compared to prior periods. For the year ended December 31, 2017, FFO increased by $10.4 million to $74.6 million, as compared to $64.2 million for the year ended December 31, 2016, and AFFO increased by $4.9 million to $62.0 million, as compared to $57.1 million for the prior year. The increase in FFO for the year ended December 31, 2017, was due to changes in net earnings but excludes a $3.5 million decrease in impairment charges, a $0.1 million decrease in depreciation and amortization expense and a $5.2 million decrease in gains on dispositions of real estate. The increase in AFFO for the year ended December 31, 2017, also excludes a $5.9 million increase in legal settlements and judgments, a $0.7 million increase in insurance reimbursements, a $0.2 million increase in environmental litigation accruals, a $0.5 million increase in environmental estimates and accretion expense, a $0.1 million decrease in acquisition costs and a $1.4 million decrease in Revenue Recognition Adjustments. Basic and diluted earnings per share was $1.26 per share for the year ended December 31, 2017, as compared to $1.12 per share for the year ended December 31, 2016. Basic and diluted FFO per share for the year ended December 31, 2017, was $2.00 per share, as compared to $1.87 per share for the year ended December 31, 2016. Basic and diluted AFFO per share for the year ended December 31, 2017, was $1.66 per share, as compared to $1.67 per share for the year ended December 31, 2016. Liquidity and Capital Resources Our principal sources of liquidity are the cash flows from our operations, funds available under our Revolving Facility which is scheduled to mature in March 2022, proceeds from the sale of shares of our common stock through offerings, from time to time, under our ATM Program and available cash and cash equivalents. Our business operations and liquidity are dependent on our ability to generate cash flow from our properties. We believe that our operating cash needs for the next twelve months can be met by cash flows from operations, borrowings under our Restated Credit Agreement, proceeds from the sale of shares of our common stock under our ATM Program and available cash and cash equivalents. 35 Our cash flow activities for the years ended December 31, 2018, 2017 and 2016, are summarized as follows (in thousands): Net cash flow provided by operating activities Net cash flow (used in)/provided by investing activities Net cash flow provided by/(used in) financing activities Operating Activities 2018 Year ended December 31, 2017 2016 $ $ 63,346 $ (75,931) 40,514 $ 56,742 $ (206,217) 157,094 $ 36,874 12,980 (41,011) Net cash flow from operating activities increased by $6.6 million for the year ended December 31, 2018, to $63.3 million, as compared to $56.7 million for the year ended December 31, 2017. Net cash provided by operating activities represents cash received primarily from rental and interest income less cash used for property costs, environmental expense, general and administrative expense and interest expense. The change in net cash flow provided by operating activities for the years ended December 31, 2018, 2017 and 2016, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above. Investing Activities Our investing activities are primarily real estate-related transactions. Because we generally lease our properties on a triple-net basis, we have not historically incurred significant capital expenditures other than those related to investments in real estate and our redevelopment activities. Net cash flow used in investing activities decreased by $130.3 million for the year ended December 31, 2018, to a use of $75.9 million, as compared to a use of $206.2 million for the year ended December 31, 2017. The decrease in net cash flow used in investing activities for the year ended December 31, 2018, was primarily due to a decrease of $136.0 million of property acquisitions, partially offset by an increase in capital expenditures of $3.4 million and an increase of $1.4 million in additions to construction in progress. Financing Activities Net cash flow provided by financing activities decreased by $116.6 million for the year ended December 31, 2018, to $40.5 million, as compared to a use of $157.1 million for the year ended December 31, 2017. The decrease in net cash flow from financing activities for the year ended December 31, 2018, was primarily due to a decrease in net proceeds from issuances of common stock of $87.7 million, an increase in dividends paid of $11.2 million, an increase of $3.2 million in debt issuance costs and a decrease in net borrowings of $15.0 million. Credit Agreement On June 2, 2015, we entered into a $225.0 million senior unsecured credit agreement (the “Credit Agreement”) with a group of banks led by Bank of America, N.A. (the “Bank Syndicate”). The Credit Agreement consisted of a $175.0 million unsecured revolving credit facility (the “Revolving Facility”) and a $50.0 million unsecured term loan (the “Term Loan”). On March 23, 2018, we entered in to an amended and restated credit agreement (as amended, as described below, the “Restated Credit Agreement”) amending and restating our Credit Agreement. Pursuant to the Restated Credit Agreement, we (a) increased the borrowing capacity under the Revolving Facility from $175.0 million to $250.0 million, (b) extended the maturity date of the Revolving Facility from June 2018 to March 2022, (c) extended the maturity date of the Term Loan from June 2020 to March 2023 and (d) amended certain financial covenants and provisions. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate. The Restated Credit Agreement incurs interest and fees at various rates based on our total indebtedness to total asset value ratio at the end of each quarterly reporting period. The Revolving Facility permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.50% to 1.30% or a LIBOR rate plus a margin of 1.50% to 2.30%. The annual commitment fee on the undrawn funds under the Revolving Facility is 0.15% to 0.25%. The Term Loan bears interest at a rate equal to the sum of a base rate plus a margin of 0.45% to 1.25% or a LIBOR rate plus a margin of 1.45% to 2.25%. The Term Loan does not provide for scheduled reductions in the principal balance prior to its maturity. On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into (a) an amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates and (b) a note purchase and guarantee agreement with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates; and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including 36 a rate based on the LIBOR Daily Floating Rate (as defined in the Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility. Senior Unsecured Notes On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with Prudential and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100.0 million (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75.0 million (the “Series B Notes”) and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50.0 million (the “Series C Notes”) that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series D Notes” and, together with the Series A Notes, Series B Notes and Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities. On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with MetLife and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity. Debt Maturities The amounts outstanding under our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement, exclusive of extension options, are as follows (in thousands): Unsecured Revolving Credit Facility Unsecured Term Loan Series A Notes Series B Notes Series C Notes Series D Notes Series E Notes Total debt Unamortized debt issuance costs, net Total debt, net Maturity Date March 2022 March 2023 February 2021 June 2023 February 2025 June 2028 June 2028 Interest Rate December 31, 2018 December 31, 2017 3.95% $ 3.96% 6.00% 5.35% 4.75% 5.47% 5.47% $ 70,000 $ 50,000 100,000 75,000 50,000 50,000 50,000 445,000 (3,364) 441,636 $ 105,000 50,000 100,000 75,000 50,000 — — 380,000 (842) 379,158 As of December 31, 2018, we are in compliance with all of the material terms of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement. Equity Offering On July 10, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and KeyBanc Capital Markets Inc., as representatives of the several underwriters (the “Underwriters”), pursuant to which we sold to the Underwriters 4.1 million shares of common stock (the “Equity Offering”). Pursuant to the terms of the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase up to an additional 0.6 million shares of common stock. We received net proceeds from the Equity Offering, including the full exercise by the Underwriters of their option to purchase additional shares, of $104.3 million after deducting the underwriting discount and offering expenses. The net proceeds of the Equity Offering were used to repay amounts outstanding under our Revolving Facility and subsequently were used to fund the Empire and Applegreen transactions. ATM Program In June 2016, we established an at-the-market equity offering program (the “2016 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting as agents. The 2016 ATM Program was terminated in January 2018. In March 2018, we established a new at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting 37 as agents. Sales of the shares of common stock may be made, as needed, from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent. During the years ended December 31, 2018 and 2017, we issued 1.1 million and 0.5 million shares of our common stock, respectively, and received net proceeds of $30.1 million and $13.5 million, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us. Property Acquisitions and Capital Expenditures 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. During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. We accounted for the acquisitions of fee simple interests as asset acquisitions. During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. For additional information regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. We are reviewing select opportunities for capital expenditures, redevelopment and alternative uses for certain of our properties. We are also seeking to recapture select properties from our net lease portfolio to redevelop such properties either for a new convenience and gasoline use or for alternative single-tenant net lease retail uses. For the year ended December 31, 2018, we spent $2.7 million of construction-in-progress costs related to our redevelopment activities. In addition, during the year ended December 31, 2018, we spent $4.4 million to reimburse tenants for capital expenditures related to our redevelopment activities. Because we generally lease our properties on a triple-net basis, we have not historically incurred significant capital expenditures other than those related to acquisitions. However, our tenants frequently make improvements to the properties leased from us at their expense. As of December 31, 2018, we have a remaining commitment to fund up to $7.6 million in the aggregate in capital improvements in certain properties previously leased to Marketing and now subject to unitary triple-net leases with other tenants. 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. 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 Internal Revenue Service. Payment of dividends is subject to market conditions, our financial condition, including but not limited to, our continued compliance with the provisions of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement, the MetLife Note Purchase Agreement and other factors, and therefore is not assured. In particular, the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement prohibit the payment of dividends during certain events of default. Cash dividends paid to our stockholders aggregated $50.5 million, $39.3 million and $36.2 million, for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, during the year ended December 31, 2016, we paid $4.4 million in stock dividends as part of a special dividend. There can be no assurance that we will continue to pay dividends at historical rates. Contractual Obligations Our significant contractual obligations and commitments as of December 31, 2018, were comprised of borrowings under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement, the MetLife Note Purchase Agreement (excluding extension options and unamortized debt issuance costs), operating and capital lease payments due to landlords, estimated environmental remediation expenditures and our funding commitments for capital improvements at certain properties which were previously leased to Marketing. 38 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, 2018, exclusive of extension options and unamortized debt issuance costs, are summarized below (in thousands): Operating and capital leases Credit agreement Senior unsecured notes Interest on debt (a) Estimated environmental remediation expenditures (b) Capital improvements (c) Total Less Than One Year One to Three Years Three to Five Years 6,016 $ — — 22,597 8,509 106 37,228 $ 9,655 $ — 100,000 40,112 18,607 — 168,374 $ 4,787 $ 120,000 75,000 24,441 8,762 315 233,305 $ More Than Five Years 2,754 — 150,000 27,231 23,943 7,200 211,128 Total 23,212 $ 120,000 325,000 114,381 59,821 7,621 650,035 $ $ $ (a) For our Restated Credit Agreement, which bears interest at variable rates, future interest expense was calculated using the cost of borrowing as of December 31, 2018. (b) Estimated environmental remediation expenditures have been adjusted for inflation and discounted to present value. (c) The actual timing of funding of capital improvements is dependent on the timing of such capital improvement projects and the terms of our leases. Our commitments provide us with the option to either reimburse our tenants, or to offset rent when these capital expenditures are made. Generally, leases with our tenants are triple-net leases with the tenant responsible for the operations conducted at our 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 Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements. Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included in our consolidated 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, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. The information included in our consolidated 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 in “Item 8. Financial Statements and Supplementary Data”. The SEC’s Financial Reporting Release (“FRR”) No. 60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies (“FRR 60”), suggests that companies provide additional disclosure on those accounting policies considered most critical. FRR 60 considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgment and estimates on the part of management in its application. We believe that our most critical accounting policies relate to revenue recognition and deferred rent receivable, direct financing leases, impairment of long-lived assets, environmental remediation obligations, litigation, income taxes, and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed 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 balance will be collected when the payment is due, in accordance with the annual rent escalations provided for 39 in the leases. We may be required to reserve, 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. 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. The investments 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. 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. 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 our counterparty 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 counterparties 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 accruals, including certain litigation related to environmental matters (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. Income Taxes Our financial results generally do not reflect provisions for current or deferred federal income taxes because 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 property costs. 40 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 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 are incurred for, among other things, removing USTs, excavation of contaminated soil and water, installing, operating, maintaining and decommissioning remediation systems, monitoring contamination and governmental agency compliance reporting required in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental costs where available. 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 our 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. In July 2012, we purchased a 10-year pollution legal liability insurance policy covering substantially all of our properties at that time for preexisting 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 was to obtain protection predominantly for significant events. No assurances can be given that we will obtain a net financial benefit from this investment. In addition to the environmental insurance policy purchased by the Company, we also took assignment of certain environmental insurance policies, and rights to reimbursement for claims made thereunder, from Marketing, by order of the U.S. Bankruptcy Court during Marketing’s bankruptcy proceedings. Under these assigned polices, we have received and expect to continue to receive reimbursement of certain remediation expenses for covered claims. We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. We are contingently liable for these environmental obligations in the event that our tenant or other counterparty does not satisfy them. 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 our leases and other agreements if we determine that it is probable that our tenant or other counterparty will not meet its environmental obligations. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant or other counterparty fails to pay them. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. 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. 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. For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant. We anticipate that a majority of the USTs at properties previously leased to Marketing will be replaced over the next several years because these USTs are either at or near the end of their useful lives. For long-term, triple-net leases covering sites previously leased to Marketing, our tenants are responsible for the cost of removal and replacement of USTs and for remediation of contamination found during such UST removal and replacement, unless such contamination was found during the first 10 years of the lease term and also existed prior to commencement of the lease. In those cases, we are responsible for costs associated with the remediation of such 41 contamination. We have also agreed to be responsible for environmental contamination that existed prior to the sale of certain properties assuming the contamination is discovered (other than as a result of a voluntary site investigation) during the first five years after the sale of the properties. For properties that are vacant, we are responsible for costs associated with UST removals and for the cost of remediation of contamination found during the removal of USTs. In the course of certain UST removals and replacements at properties previously leased to Marketing where we retained continuing responsibility for preexisting environmental obligations, previously unknown environmental contamination was and continues to be discovered. As a result, we have developed a reasonable estimate of fair value for the prospective future environmental liability resulting from preexisting unknown environmental contamination and have accrued for these estimated costs. These estimates are based primarily upon quantifiable trends which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs. Our accrual of the additional liability represents our 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. In arriving at our accrual, we analyzed the ages of USTs at properties where we would be responsible for preexisting contamination found within 10 years after commencement of a lease (for properties subject to long-term triple-net leases) or five years from a sale (for divested properties), and projected a cost to closure for preexisting unknown environmental contamination. We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation (using a range of 2.0% to 2.75%), and then discount them to present value (using a range of 4.0% to 7.0%). We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59.8 million for our prospective environmental remediation obligations. This accrual consisted of (a) $14.5 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.3 million for future environmental liabilities related to preexisting unknown contamination. As of December 31, 2017, we had accrued a total of $63.6 million for our prospective environmental remediation obligations. This accrual consisted of (a) $18.6 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.0 million for future environmental liabilities related to preexisting unknown contamination. Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $2.4 million, $3.4 million and $4.1 million of net accretion expense was recorded for the years ended December 31, 2018, 2017 and 2016, respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2018, 2017 and 2016, we recorded credits to environmental expenses, included in continuing and discontinued operations, aggregating $1.3 million, $6.9 million and $7.0 million, respectively, 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 environmental litigation accruals. During the years ended December 31, 2018 and 2017, we increased the carrying values of certain of our properties by $5.1 million and $5.5 million, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on the face of the consolidated statements of cash flows. Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is 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 related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, were $4.3 million, $4.3 million and $5.1 million, respectively. Capitalized asset retirement costs were $45.7 million (consisting of $20.4 million of known environmental liabilities and $25.3 million of reserves for future environmental liabilities) as of December 31, 2018 and $45.4 million (consisting of $18.7 million of known environmental liabilities and $26.7 million of reserves for future environmental liabilities) as of December 31, 2017. We recorded impairment charges aggregating $3.9 million and $6.9 million for the years ended December 31, 2018 and 2017, respectively, in continuing and discontinued operations for capitalized asset retirement costs. 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 and receive regulatory approval. 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. Our estimates are based upon facts that are known to us at this time and an assessment of the possible ultimate remedial action outcomes. It is possible that our assumptions, which form the basis of our estimates, regarding our ultimate environmental liabilities 42 may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities. Among the many uncertainties that impact the estimates are our assumptions, the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of contamination, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to additional claims, and possible changes in the environmental rules and regulations, enforcement policies, and reimbursement programs of various states. In light 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 that 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 consolidated financial statements as they become probable and a reasonable estimate of fair value can be made. Additional environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. Environmental Litigation We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of December 31, 2018 and 2017, we had accrued $12.2 million and $12.3 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 our former Newark, New Jersey Terminal and the Lower Passaic River, our MTBE litigations in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, in particular, 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 these and other pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to interest rate risk, primarily as a result of our $300.0 million senior unsecured credit agreement entered into on March 23, 2018, and amended on September 19, 2018 (as amended, the “Restated Credit Agreement”), with a group of commercial banks led by Bank of America, N.A. (the “Bank Syndicate”). The Restated Credit Agreement consists of a $250.0 million unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022 and a $50.0 million unsecured term loan (the “Term Loan”), which is scheduled to mature in March 2023. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate. The Restated Credit Agreement incurs interest and fees at various rates based on our total indebtedness to total asset value ratio at the end of each quarterly reporting period. The Revolving Facility permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.50% to 1.30% or a LIBOR rate plus a margin of 1.50% to 2.30%. The annual commitment fee on the undrawn funds under the Revolving Facility is 0.15% to 0.25%. The Term Loan bears interest at a rate equal to the sum of a base rate plus a margin of 0.45% to 1.25% or a LIBOR rate plus a margin of 1.45% to 2.25%. The Term Loan does not provide for scheduled reductions in the principal balance prior to its maturity. We use borrowings under the Restated Credit Agreement to finance acquisitions and for general corporate purposes. Borrowings outstanding at variable interest rates under the Restated Credit Agreement as of December 31, 2018, were $120.0 million. Based on our outstanding borrowings under the Restated Credit Agreement of $120.0 million for the year ended December 31, 2018, an increase in market interest rates of 1.0% for 2019 would decrease our 2019 net income and cash flows by approximately $1.2 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 $120.0 million outstanding borrowings under the Restated Credit Agreement is indicative of our future average floating interest rate borrowings for 2019 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 Restated 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, 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. and these balances, at times, may exceed federally insurable limits. 43 Item 8. Financial Statements and Supplementary Data GETTY REALTY CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Balance Sheets as of December 31, 2018 and 2017 Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016 Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016 Notes to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Page 45 46 47 49 71 44 GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) ASSETS: Real Estate: Land Buildings and improvements Construction in progress Less accumulated depreciation and amortization Real estate, net Investment in direct financing leases, net Notes and mortgages receivable Cash and cash equivalents Restricted cash Deferred rent receivable Accounts receivable, net of allowance of $2,094 and $1,840, respectively Prepaid expenses and other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY: Borrowings under credit agreement, net Senior unsecured notes, net Environmental remediation obligations Dividends payable Accounts payable and accrued liabilities Total liabilities Commitments and contingencies Stockholders’ equity: $ $ $ Preferred stock, $0.01 par value; 20,000,000 and 10,000,000 shares authorized, respectively; unissued Common stock, $0.01 par value; 100,000,000 and 60,000,000 shares authorized, respectively; 40,854,491 and 39,696,110 shares issued and outstanding, respectively Additional paid-in capital Dividends paid in excess of earnings Total stockholders’ equity Total liabilities and stockholders’ equity $ December 31, 2018 2017 631,185 $ 409,753 2,168 1,043,106 (150,691) 892,415 85,892 33,519 46,892 1,850 37,722 3,008 57,877 1,159,175 $ 117,227 $ 324,409 59,821 14,495 62,059 578,011 — 589,497 379,785 1,682 970,964 (133,353) 837,611 89,587 32,366 19,992 821 33,610 3,712 55,055 1,072,754 154,502 224,656 63,565 12,846 63,490 519,059 — — — 409 638,178 (57,423) 581,164 1,159,175 $ 397 604,872 (51,574) 553,695 1,072,754 The accompanying notes are an integral part of these consolidated financial statements. 45 GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Revenues: Revenues from rental properties Tenant reimbursements Interest on notes and mortgages receivable Total revenues Operating expenses: Property costs Impairments Environmental General and administrative Allowance (recoveries) for uncollectible accounts Depreciation and amortization Total operating expenses 2018 Year ended December 31, 2017 2016 $ 116,328 $ 16,691 3,087 136,106 101,332 $ 15,829 2,992 120,153 23,649 4,902 4,711 14,661 470 23,636 72,029 22,345 8,279 3,098 13,879 205 19,089 66,895 96,711 15,017 3,543 115,271 23,205 8,566 2,654 14,155 (448) 19,170 67,302 Gains on dispositions of real estate 3,948 1,041 6,390 Operating income Other income, net Interest expense Earnings from continuing operations Discontinued operations: Earnings (loss) from operating activities (Loss) gains on dispositions of real estate Earnings (loss) from discontinued operations Net earnings Basic earnings per common share: Earnings from continuing operations Earnings (loss) earnings from discontinued operations Net earnings Diluted earnings per common share: Earnings from continuing operations Earnings (loss) earnings from discontinued operations Net earnings Weighted average common shares outstanding: Basic Diluted 68,025 54,299 54,359 2,730 (22,345) 48,410 (704) — (704) 47,706 $ 1.19 $ (0.02) 1.17 $ 1.19 $ (0.02) 1.17 $ 8,518 (17,769) 45,048 2,138 — 2,138 47,186 $ 1.20 $ 0.06 1.26 $ 1.20 $ 0.06 1.26 $ 2,027 (16,561) 39,825 (1,236) (178) (1,414) 38,411 1.16 (0.04) 1.12 1.16 (0.04) 1.12 40,171 40,191 36,897 36,897 33,806 33,806 $ $ $ $ $ The accompanying notes are an integral part of these consolidated financial statements. 46 GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2018 Year ended December 31, 2017 2016 $ 47,706 $ 47,186 $ 38,411 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash flow provided by operating activities: Depreciation and amortization expense Impairment charges (Gains) loss on dispositions of real estate Continuing operations Discontinued operations Deferred rent receivable Allowance (recoveries) for uncollectible accounts Amortization of above-market and below-market leases Amortization of debt issuance costs Accretion expense Stock-based compensation expense Changes in assets and liabilities: Accounts receivable Prepaid expenses and other assets Environmental remediation obligations Accounts payable and accrued liabilities Net cash flow provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisitions Capital expenditures Addition to construction in progress Proceeds from dispositions of real estate Continuing operations Discontinued operations Deposits 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 (used in) provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit agreements Repayments under credit agreements Proceeds from senior unsecured notes Payments of capital lease obligations Repayment of mortgage payable Payments of cash dividends Payments of debt issuance costs Security deposits received (refunded) Payments in settlement of restricted stock units Proceeds from issuance of common stock, net - equity offering Proceeds from issuance of common stock, net - ATM Net cash flow provided by (used in) financing activities Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of year $ 47 23,636 6,170 (3,948) — (4,112) 470 (808) 871 2,409 1,777 (814) (708) (11,210) 1,907 63,346 (77,972) (3,794) (2,657) 3,303 — (430) 3,015 (530) 3,134 (75,931) 19,089 9,321 (1,041) — (3,644) 205 (522) 771 3,448 1,350 (1,295) 489 (19,798) 1,183 56,742 (214,000) (434) (1,255) 2,739 — 2,346 2,511 — 1,876 (206,217) 95,000 (130,000) 100,000 (468) — (50,503) (3,393) (260) — — 30,138 40,514 27,929 20,813 48,742 $ 135,000 (105,000) 50,000 (342) — (39,299) (157) 247 (1,195) 104,312 13,528 157,094 7,619 13,194 20,813 $ 19,170 12,814 (6,390) 178 (4,516) (448) (569) 851 4,107 1,426 (2,383) 445 (24,640) (1,582) 36,874 (7,688) (298) (406) 3,957 88 (2,206) 2,001 — 17,532 12,980 8,000 (27,000) — (236) (400) (36,231) — 260 (290) — 14,886 (41,011) 8,843 4,351 13,194 Supplemental disclosures of cash flow information Cash paid (refunded) during the period for: Interest Income taxes Environmental remediation obligations Non-cash transactions Dividends declared but not yet paid Issuance of notes and mortgages receivable related to property dispositions 2018 Year ended December 31, 2017 2016 $ 20,790 $ 244 9,891 16,435 $ (195) 12,944 15,707 368 17,633 14,495 12,846 9,742 $ 3,743 $ 1,505 $ 1,814 The accompanying notes are an integral part of these consolidated financial statements. 48 GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 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. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We do not distinguish our principal business or our operations on a geographical basis for purposes of measuring performance. 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 consolidated 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 consolidated 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, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation costs, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. Application of these estimates and assumptions requires exercise of judgment as to future uncertainties and, as a result, actual results could differ materially from these estimates. Reclassifications Certain prior years amounts in the consolidated financial statements have been reclassified to conform to the presentation used in the year ended December 31, 2018. Real Estate Real estate assets are stated at cost less accumulated depreciation and amortization. For acquisitions of real estate which are accounted for as business combinations, 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 estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We expense transaction costs associated with business combinations in the period incurred. Acquisitions of real estate which do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition costs are capitalized and allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. For additional information regarding property acquisitions, see Note 13 – Property Acquisitions. We capitalize direct costs, including costs such as construction costs and professional services, and indirect costs associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use. The capitalization period begins when development activities are underway and ends when it is determined that the asset is substantially complete and ready for its intended use. We evaluate the held for sale classification of our real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. 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. 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 shorter of the remaining useful lives of USTs 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 and in-place leases are amortized over the remaining term of the underlying lease. 49 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. 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. We consider direct financing leases to be past-due or delinquent when a contractually required payment is not remitted in accordance with the provisions of the underlying agreement. We evaluate each account individually and set up an allowance when, based upon current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms, and the amount can be reasonably estimated. We review our direct financing leases at least annually to determine whether there has been an-other-than-temporary decline in the current estimate of residual value of the property. The residual value is our estimate of what we could realize upon the sale of the property at the end of the lease term, based on market information and third-party estimates where available. If this review indicates that a decline in residual value has occurred that is other-than-temporary, we recognize an impairment charge. There were no impairments of any of our direct financing leases during the years ended December 31, 2018 and 2017. When we enter into a contract to sell properties that are recorded as direct financing leases, we evaluate whether we believe that it is probable that the disposition will occur. If we determine that the disposition is probable and therefore the property’s holding period is reduced, we record an allowance for credit losses to reflect the change in the estimate of the undiscounted future rents. Accordingly, the net investment balance is written down to fair value. Notes and Mortgages Receivable Notes and mortgages receivable consists of loans originated by us in conjunction with property dispositions and funding provided to tenants in conjunction with property acquisitions and capital improvements. 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 the 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 that 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. There were no impairments related to our notes and mortgages receivable during the years ended December 31, 2018 and 2017. Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents are held in the custody of financial institutions, and these balances, at times, may exceed federally insurable limits. Restricted Cash Restricted cash consists of cash that is contractually restricted or held in escrow pursuant to various agreements with counterparties. At December 31, 2018 and 2017, restricted cash of $1,850,000 and $821,000, respectively, consisted of security deposits received from our tenants. Revenue Recognition and Deferred Rent Receivable On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“Topic 606”) using the modified retrospective method applying it to any open contracts as of January 1, 2018. The new guidance provides a unified model to determine how revenue is recognized. To determine the proper amount of revenue to be recognized, we perform the following steps: (i) identify the contract with the customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when (or as) a performance obligation is satisfied. Our primary source of revenue consists of revenue from rental properties and tenant reimbursements that is derived from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of December 31, 2018. We concluded that our revenue consists of rental income from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of December 31, 2018. 50 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 our consolidated balance sheets. We reserve 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. We make estimates of the collectability of our accounts receivable related to revenue from rental properties. We analyze accounts receivable and historical bad debt levels, customer creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Additionally, with respect to tenants in bankruptcy, we estimate the expected recovery through bankruptcy claims and increase the allowance for amounts deemed uncollectible. If our assumptions regarding the collectability of accounts receivable prove incorrect, we could experience write-offs of the accounts receivable or deferred rent receivable in excess of our allowance for doubtful accounts. 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 revenues from rental properties over the remaining terms of the in-place leases. Lease termination fees are recognized as other 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 sales of nonfinancial assets, such as real estate, are to be recognized when control of the asset transfers to the buyer, which will occur when the buyer has the ability to direct the use of or obtain substantially all of the remaining benefits from the asset. This generally occurs when the transaction closes and consideration is exchanged for control of the property. Impairment of Long-Lived Assets 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. Assets held for disposal are written down to fair value less estimated disposition costs. We recorded impairment charges aggregating $6,170,000, $9,321,000 and $12,814,000 for the years ended December 31, 2018, 2017 and 2016, respectively, in continuing and discontinued operations. Our estimated fair values, as they relate to property carrying values were primarily based upon (i) estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids, for which we do not have access to the unobservable inputs used to determine these estimated fair values, and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence (this method was used to determine $2,553,000 of the $6,170,000 in impairments recognized during the year ended December 31, 2018) and (ii) discounted cash flow models (this method was used to determine $175,000 of the $6,170,000 in impairments recognized during the year ended December 31, 2018). During the year ended December 31, 2018, we recorded $3,442,000 of the $6,170,000 in impairments recognized due to the accumulation of asset retirement costs as a result of changes in estimates associated with our estimated environmental liabilities which increased the carrying values of certain properties in excess of their fair values. The estimated fair value of real estate is based on the price that would be received from the sale of the property in an orderly transaction between market participants at the measurement date. 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 of 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. Deferred Gain On August 3, 2015, we terminated our unitary triple-net lease with Hanuman Business, Inc. (d/b/a “Ramoco”) and sold to Ramoco affiliates 48 of the 61 properties that had been subject to the lease. The total consideration for the 48 properties we sold to Ramoco affiliates, including a seller financing mortgage of $13,900,000, was $15,000,000. In accordance with ASC 360-20, Property, Plant and Equipment - Real Estate Sales, we evaluated the accounting for the gain on sales of these assets, noting that the buyer’s initial investment did not represent the amount required for recognition of the gain by the full accrual method. Accordingly, we recorded a deferred gain of $3,900,000 related to the Ramoco sale. The deferred gain was recorded in accounts payable and accrued liabilities on our balance sheet at December 31, 2015. On April 28, 2016, Ramoco affiliates repaid the entire seller financing mortgage and, as a result, the deferred gain was recognized in our consolidated statements of operations for the year ended December 31, 2016. 51 Fair Value of Financial Instruments All of our financial instruments are reflected in the accompanying consolidated balance sheets at amounts which, in our estimation based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values, except those separately disclosed in the notes below. The preparation of consolidated 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 consolidated 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. Environmental Remediation Obligations We record the fair value of a liability for an environmental remediation obligation as an asset and liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. Environmental remediation obligations are estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability. The accrued liability is net of estimated recoveries from state UST remediation funds considering 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 accruals, 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 litigation 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 that 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 stockholders 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. Tax returns for the years 2015, 2016 and 2017, and tax returns which will be filed for the year ended 2018, remain open to examination by federal and state tax jurisdictions under the respective statutes of limitations. New Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. Under ASU 2016-02 lessor accounting will remain similar to lessor accounting under previous GAAP, while aligning with the FASB’s new revenue recognition guidance. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give entities another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows entities to not apply the new leases standard in the comparative periods in their financial statements in the year of adoption. In December 2018, the FASB issued ASU 2018-20, which clarifies lessor treatment of sales taxes and other similar taxes collected from lessees, lessor costs paid directly by lessees and recognition of variable payments for contracts with lease and non-lease components. We elected the package of practical expedients and the lease and non-lease component practical expedient. We have elected to apply the transition requirements at the January 1, 2019, effective date 52 rather than at the beginning of the earliest comparative period presented and continue to evaluate the impact of the adoption on our consolidated financial statements. We expect to recognize operating lease liabilities and right of use assets of $22,000,000 to $32,000,000, which will be presented separately on our consolidated financial statements for the quarter ending March 31, 2019. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments. On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”) to amend the accounting for credit losses for certain financial instruments. Under the new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of ASU 2016-13 will have on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to clarify the presentation of cash receipts and payments in specific situations. The amendments in this update were effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Effective January 1, 2018, we adopted ASU 2016-15. The adoption of this guidance did not have an impact on our consolidated financial statements or notes to our consolidated financial statements. On February 22, 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”) to provide guidance for recognizing gains and losses from the transfer of nonfinancial assets and in substance nonfinancial assets in contracts with non-customers, unless other specific guidance applies. ASU 2017-05 requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 was eliminated. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. ASU 2017-05 was effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Effective January 1, 2018, we adopted ASU 2017-05 on a modified retrospective basis. Upon adoption, we apply the guidance to prospective disposals of nonfinancial assets within the scope of Subtopic 610-20. The adoption of this guidance did not have an impact on our consolidated financial statements or notes to our consolidated financial statements. In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to update and simplify disclosure requirements as well as eliminate outdated, superseded and/or redundant requirements with GAAP. The amendments are effective for all SEC filings made on or after November 5, 2018. The amendments removed certain SEC guidance that conflicted with GAAP guidance, under which we previously followed SEC guidance and recorded Gain/(loss) on dispositions of real estate, after Operating income. We have reclassified Gain/(loss) on dispositions of real estate within Operating income, per GAAP for all periods presented. NOTE 2. — LEASES As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. These 933 properties are located in 30 states across the United States and Washington, D.C. Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced. For additional information regarding environmental obligations, see Note 5 – Environmental Obligations. Substantially all of our tenants’ financial results depend on the sale of refined petroleum products, convenience store sales or 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. During the terms of our leases, we monitor the credit quality of our triple-net tenants by reviewing their published credit rating, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements, monitoring news reports regarding our tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases. Revenues from rental properties for the years ended December 31, 2018, 2017 and 2016, were $116,328,000, $101,332,000 and $96,711,000, respectively. Rental income contractually due from our tenants included in revenues from rental properties was $114,105,000, $99,355,000 and $93,294,000 for the years ended December 31, 2018, 2017 and 2016, respectively. In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include non-cash adjustments recorded for deferred rental revenue 53 due to the recognition of rental income on a straight-line basis over the current lease term, the net amortization of above-market and below-market leases, 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 and the amortization of deferred lease incentives (the “Revenue Recognition Adjustments”). Revenue Recognition Adjustments included in revenues from rental properties were $2,223,000, $1,976,000 and $3,417,000 for the years ended December 2018, 2017 and 2016, respectively. We reserve 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. There were no deferred rent receivable reserves at December 31, 2018 and 2017, respectively. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $16,691,000, $15,829,000 and $15,017,000 for the years ended December 31, 2018, 2017 and 2016, respectively. We incurred $579,000, $126,000 and $148,000 of lease origination costs for the years ended December 31, 2018, 2017 and 2016, respectively. This deferred expense is recognized on a straight-line basis as amortization expense in our consolidated statements of operations over the terms of the various leases. The components of the $85,892,000 investment in direct financing leases as of December 31, 2018, are minimum lease payments receivable of $139,276,000 plus unguaranteed estimated residual value of $13,928,000 less unearned income of $67,312,000. The components of the $89,587,000 investment in direct financing leases as of December 31, 2017, are minimum lease payments receivable of $154,441,000 plus unguaranteed estimated residual value of $13,979,000 less unearned income of $78,833,000. Future contractual minimum annual rentals receivable from our tenants, which have terms in excess of one year as of December 31, 2018, are as follows (in thousands): Year Ending December 31, 2019 2020 2021 2022 2023 Thereafter Operating Leases Direct Financing Leases Total $ $ 102,928 $ 102,693 99,593 99,184 99,223 678,106 $ 12,864 $ 13,156 13,339 13,420 13,467 73,030 $ 115,792 115,849 112,932 112,604 112,690 751,136 We have obligations to lessors under non-cancelable operating leases which have terms in excess of one year, principally for convenience store and gasoline station properties. The leased properties have a remaining lease term averaging approximately nine years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows: 2019 – $6,016,000, 2020 – $5,284,000, 2021 – $4,371,000, 2022 – $2,766,000, 2023 – $2,021,000 and $2,754,000 thereafter. Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to $4,660,000, $5,091,000 and $5,376,000 for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in property costs using the straight-line method. Rent received under subleases for the years ended December 31, 2018, 2017 and 2016, was $9,023,000, $9,296,000 and $9,153,000, respectively, and is included in rental revenue discussed above. Major Tenants As of December 31, 2018, we had three significant tenants by revenue: (cid:129) We leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company. (cid:129) We leased 77 convenience store and gasoline station properties pursuant to three separate unitary leases to Apro, LLC (d/b/a “United Oil”). In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively. (cid:129) We leased 76 convenience store and gasoline station properties pursuant to two separate unitary leases to subsidiaries of Chestnut Petroleum Dist., Inc. (“Chestnut”). In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates. 54 Getty Petroleum Marketing Inc. Getty Petroleum Marketing Inc. (“Marketing”) was our largest tenant from 1997 until 2012, leasing substantially all of our properties acquired or leased prior to 1997 under a master lease. Our master lease with Marketing was terminated in April 2012, as a consequence of Marketing’s bankruptcy, at which time we either sold or released these properties. As of December 31, 2018, 374 of the properties we own or lease were previously leased to Marketing, of which 331 properties are subject to long-term triple-net leases with petroleum distributors in 14 separate property portfolios and 30 properties are leased as single unit triple-net leases. The leases covering properties previously leased to Marketing 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 during both the initial and renewal terms of our leases. Several of the leases provide for additional rent based on the aggregate volume of fuel sold. In addition, the majority of the leases require the tenants to invest capital in our properties, substantially all of which are related to the replacement of USTs that are owned by our tenants. As of December 31, 2018, we have a remaining commitment to fund up to $7,621,000 in the aggregate with our tenants for our portion of such capital improvements. Our commitment provides us with the option to either reimburse our tenants or to offset rent when these capital expenditures are made. This deferred expense is recognized on a straight-line basis as a reduction of rental revenue in our consolidated statements of operations over the life of the various leases. As part of the triple-net leases for properties previously leased to Marketing, 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 lives, or earlier if circumstances warranted, 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, through December 31, 2018, we removed $13,813,000 of asset retirement obligations and $10,808,000 of net asset retirement costs related to USTs from our balance sheet. The cumulative change of $1,754,000 (net of accumulated amortization of $1,251,000) 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. NOTE 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. and these balances, at times, may exceed federally insurable limits. Legal Proceedings We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of December 31, 2018 and 2017, we had accrued $12,231,000 and $12,311,000, respectively, for certain of these matters which we believe were appropriate based on information then currently available. We have recorded credits aggregating $45,000 for the year ended December 31, 2018, and provisions aggregating $1,044,000, for environmental litigation accruals for the year ended December 31, 2017, for certain of these matters. 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 former Newark, New Jersey Terminal and the Lower Passaic River, our methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) litigations in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. During the years ended December 31, 2018 and 2017, we received $147,000 and $6,381,000, respectively, for former legal litigation settlements. Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River In September 2003, we received a directive (the “Directive”) issued by the New Jersey Department of Environmental Protection (“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 resulting from the discharges of hazardous substances along the Lower Passaic River (the “Lower Passaic River”). The Directive provides, among other things, that the named recipients must conduct an assessment of the natural resources that have been injured by discharges into the Lower Passaic River and must implement interim compensatory restoration for the injured natural resources. The NJDEP alleges that our liability arises from alleged discharges originating from our former Newark, New Jersey Terminal site (which was sold in October 2013). We responded to the Directive by asserting that we are not liable. There has been no material activity and/or communications by the NJDEP with respect to the Directive since early after its issuance. In May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for a 17-mile 55 stretch of the Lower Passaic River in New Jersey. 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. Most of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). The CPG agreed to an interim allocation formula for purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this agreed-upon allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the Lower Passaic River. The CPG submitted to the EPA its draft RI/FS in 2015. The draft RI/FS set forth various alternatives for remediating the entire 17-mile stretch of the Lower Passaic River, and provides that the cost estimate for the preferred remedial action presented therein is in the range of approximately $483,000,000 to $725,000,000. The EPA has provided comments to the draft RI/FS, which led to discussions between the CPG and the EPA regarding an alternative approach to completing the RI/FS, including various adaptive management scenarios focusing on source control interim remedies for the upper 9-miles of the Lower Passaic River. These discussions between the CPG and the EPA are ongoing. In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the Lower Passaic River have proceeded as follows. First, in June 2012, certain members of the CPG 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. The EPA also issued a Unilateral Order to Occidental Chemical Corporation (“Occidental”) directing Occidental to participate and contribute to the cost of the river mile 10.9 work. Concurrent with the CPG’s work on the RI/FS, on April 11, 2014, the EPA issued a draft Focused Feasibility Study (“FFS”) with proposed remedial alternatives to remediate the lower 8-miles of the 17-mile stretch of the Lower Passaic River. The FFS was subject to public comments and objections, and on March 4, 2016, the EPA issued its Record of Decision (“ROD”) for the lower 8-miles selecting a remedy that involves bank-to-bank dredging and installing an engineered cap with an estimated cost of $1,380,000,000. On March 31, 2016, we and more than 100 other potentially responsible parties received from the EPA a “Notice of Potential Liability and Commencement of Negotiations for Remedial Design” (“Notice”), which informed the recipients that the EPA intends to seek an Administrative Order on Consent and Settlement Agreement with Occidental for remedial design of the remedy selected in the ROD, after which the EPA plans to begin negotiations with “major” potentially responsible parties for implementation and/or payment of the selected remedy. The Notice also stated that the EPA believes that some of the potentially responsible parties and other parties not yet identified as potentially responsible parties will be eligible for a cash out settlement with the EPA. On October 5, 2016, the EPA announced that it had entered into a settlement agreement with Occidental which requires that Occidental perform the remedial design (which is expected to take four years to complete) for the remedy selected for the lower 8-miles of the Lower Passaic River. On June 16, 2016, Maxus Energy Corporation and Tierra Solutions, Inc., who have contractual liability to Occidental for Occidental’s potential liability related to the Lower Passaic River, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In the Chapter 11 proceedings, YPF SA, Maxus and Tierra’s corporate parent, sought bankruptcy approval of a settlement under which YPF would pay $130,000,000 to the bankruptcy estate in exchange for a release in favor of Maxus, Tierra, YPF and YPF’s affiliates of Maxus and Tierra’s contractual environmental liability to Occidental. We and the CPG filed proofs of claims for costs incurred by the CPG relating to the Lower Passaic River. On April 19, 2017, Maxus, Tierra and certain of its affiliates (collectively, the “Debtors”), together with the Official Committee of Unsecured Creditors, of which the CPG is a member, filed an Amended Chapter 11 Plan of Liquidation (the “Chapter 11 Plan”) in the Chapter 11 proceedings, which has been confirmed by order of the bankruptcy court, having an effective date of July 14, 2017 (the “Effective Date”). The Chapter 11 Plan provides for, among other things, the creation of a Liquidating Trust to liquidate and distribute from available assets certain allowed claims pursuant to the procedures set forth therein. Under the terms of the Chapter 11 Plan, the CPG’s proof of claim, which includes past costs incurred in the performance of the RI/FS and River Mile 10.9 work, is classified as an Allowed Class 4 Claim in the approximate amount of $14,300,000. To the extent that the CPG receives any distributions from the Liquidating Trust with respect to its Allowed Class 4 Claim, we would be entitled to seek reimbursement of our pro-rata share of said distribution for past costs we incurred with respect to performance of the RI/FS and River Mile 10.9 work. The Chapter 11 Plan also provides for a Mutual Contribution Release Agreement under which claims for contribution relating to liabilities associated with the Lower Passaic River and incurred prior to the Effective Date are mutually released by and among the parties identified therein. We are one of 59 parties (the “Released Parties”) that entered into the Mutual Contribution Release Agreement, pursuant to which (i) the Debtors release the Released Parties from any contribution claim they may have, (ii) Occidental releases the Released Parties for the amounts itemized in Occidental’s Class 4 Claim, and (iii) the Released Parties release the Debtors and Occidental for the amounts itemized in the CPG’s Class 4 Claim. The Mutual Contribution Release Agreement does not reduce or affect the CPG’s right to receive distributions from the Liquidating Trust on account of the CPG’s Class 4 Claim or our pro-rata share of any such distributions, nor does it affect our right to assert any future claims against Occidental for costs that we may incur related to the remediation of the Lower Passaic River after the Effective Date. By letter dated March 30, 2017, the EPA advised the recipients of the Notice that it would be entering into cash out settlements with 20 potentially responsible parties to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. The letter also stated that the EPA would begin a process for identifying other potentially responsible parties for negotiation of cash out settlements to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements. In January 2018, the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the identified 20 parties to resolve their respective alleged liability for 56 the ROD work, each for a payment to the EPA in the amount of $280,600. The EPA has also been engaged in discussions, in which we are participating, with the remaining recipients of the Notice regarding a proposed framework for an allocation process that will lead to offers of cash-out settlements to certain additional parties and a consent decree in which parties that are not offered a cash-out settlement will agree to perform the lower 8-mile remedial action. The EPA-commenced allocation process was scheduled to conclude by mid- 2019, but is likely to be extended. On June 30, 2018, Occidental filed a complaint in the United States District Court for the District of New Jersey seeking cost recovery and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) for its alleged expenses with respect to the investigation, design, and anticipated implementation of the remedy for the lower 8-miles of the Passaic River. The complaint lists over 120 defendants, including us, many of which were also named in the NJDEP’s 2003 Directive and the EPA’s 2016 Notice. We do not know whether this new complaint will impact the EPA’s allocation process or the ultimate outcome of the matter. We intend to defend the claims consistent with our defenses in the related proceedings. Many uncertainties remain regarding how the EPA intends to implement the ROD. We anticipate that performance of the EPA’s selected remedy will be subject to future negotiations, potential enforcement proceedings and/or possible litigation. The RI/FS, AOC, 10.9 AOC and Notice do not obligate us to fund or perform remedial action contemplated by either the ROD or RI/FS and do not resolve liability issues for remedial work or the restoration of or compensation for alleged natural resource damages to the Lower Passaic River, which are not known at this time. 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. MTBE Litigation – State of New Jersey We are defending against a lawsuit brought by various governmental agencies of the State of New Jersey, including the NJDEP alleging various theories of liability due to contamination of groundwater with MTBE involving multiple locations throughout the State of New Jersey (the “New Jersey MDL Proceedings”). The complaint names as defendants approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The State of New Jersey is seeking reimbursement of significant clean-up and remediation costs arising out of the alleged release of MTBE containing gasoline in the State of New Jersey and is asserting various natural resource damage claims as well as liability against the owners and operators of gasoline station properties from which the releases occurred. The majority of the named defendants have already settled their cases with the State of New Jersey. A portion of the case (“bellwether” trials) has been transferred to the United States District Court for the District of New Jersey for pre- trial proceedings and trial, although a trial date has not yet been set. We continue to engage in settlement negotiations and a dialogue with the plaintiffs’ counsel to educate them on the unique role of the Company and our business as compared to other defendants in the litigation. Although the ultimate outcome of the New Jersey MDL Proceedings cannot be ascertained at this time, we believe that it is probable that this litigation will be resolved in a manner that is unfavorable to us. We are unable to estimate the range of loss in excess of the amount accrued with certainty for the New Jersey MDL Proceedings as we do not believe that plaintiffs’ settlement proposal is realistic and there remains uncertainty as to the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from other parties and the aggregate possible amount of damages for which we may be held liable. It is possible that losses related to the New Jersey MDL Proceedings in excess of the amounts accrued as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. MTBE Litigation – State of Pennsylvania On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania. The complaint names us and more than 50 other defendants, including petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of “defendants’ unfair and deceptive trade practices and acts in the marketing of MTBE and gasoline containing MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; public nuisance; negligence; trespass; and violation of consumer protection law. The case was filed in the Court of Common Pleas, Philadelphia County, but was removed by defendants to the United States District Court for the Eastern District of Pennsylvania and then transferred to the United States District Court for the Southern District of New York so that it may be managed as part of the ongoing MTBE MDL proceedings. In November 2015, plaintiffs filed a second amended complaint naming additional defendants and adding factual allegations intended to bolster their claims against the defendants. We have joined with other defendants in the filing of a motion to dismiss the claims against us. This motion is pending with the Court. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known. 57 MTBE Litigation – State of Maryland On December 17, 2017, the State of Maryland, by and through the Attorney General on behalf of the Maryland Department of Environment and the Maryland Department of Health (the “State of Maryland”), filed a complaint in the Circuit Court for Baltimore City related to alleged statewide MTBE contamination in Maryland. The complaint was served upon us on January 19, 2018. The complaint names us and more than 60 other defendants, including petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of the defendants’ unfair and deceptive trade practices in the marketing of MTBE and gasoline containing MTBE. The plaintiffs also seek to recover costs paid or incurred by the State of Maryland to detect, investigate, treat and remediate MTBE from public and private water wells and groundwater, punitive damages and the award of attorneys’ fees and litigation costs. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; strict liability for abnormally dangerous activity; public nuisance; negligence; trespass; and violations of Titles 4, 7 and 9 of the Maryland Environmental Code. On February 14, 2018, defendants removed the case to the United States District Court for the District of Maryland. It is unclear whether the matter will ultimately be removed to the MTBE MDL proceedings or remain in federal court in Maryland. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known. Uniondale, New York Litigation In September 2004, the State of New York commenced an action against us, United Gas Corp., Costa Gas Station, Inc., Vincent Costa, The Ingraham Bedell Corporation, Richard Berger and Exxon Mobil Corporation 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 gasoline station properties located in the same vicinity in Uniondale, New York, 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. In 2007, the State of New York commenced action against Shell Oil Company, Shell Oil Products Company, Motiva Enterprises, LLC, and related parties, in the New York Supreme Court, Albany County seeking basically the same relief sought in the action involving us. We have also filed a third-party complaint against Hess Corporation, Sprague Operating Resources LLC (successor to RAD Energy Corp.), Service Station Installation of NY, Inc., and certain individual defendants based on alleged contribution to the contamination that is the subject of the State’s claims arising from a petroleum discharge at a gasoline station up-gradient from the site formerly owned by us. In 2016, the various actions filed by the State of New York and our third-party actions were consolidated for discovery proceedings and trial. Discovery in this case is in later stages and, as it nears completion, a schedule for trial will be established. We are unable to estimate the range of loss in excess of the amount we have accrued for this lawsuit. It is possible that losses related to this case, in excess of the amounts accrued, as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. NOTE 4. — DEBT The amounts outstanding under our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement (as defined below) are as follows (in thousands): Unsecured Revolving Credit Facility Unsecured Term Loan Series A Notes Series B Notes Series C Notes Series D Notes Series E Notes Total debt Unamortized debt issuance costs, net Total debt, net Credit Agreement Maturity Date March 2022 March 2023 February 2021 June 2023 February 2025 June 2028 June 2028 Interest Rate December 31, 2018 December 31, 2017 105,000 50,000 100,000 75,000 50,000 — — 380,000 (842) 379,158 70,000 $ 50,000 100,000 75,000 50,000 50,000 50,000 445,000 (3,364) 441,636 $ 3.95% $ 3.96% 6.00% 5.35% 4.75% 5.47% 5.47% $ On June 2, 2015, we entered into a $225,000,000 senior unsecured credit agreement (the “Credit Agreement”) with a group of banks led by Bank of America, N.A. (the “Bank Syndicate”). The Credit Agreement consisted of a $175,000,000 unsecured revolving credit facility (the “Revolving Facility”) and a $50,000,000 unsecured term loan (the “Term Loan”). 58 On March 23, 2018, we entered into an amended and restated credit agreement (as amended, as described below, the “Restated Credit Agreement”) amending and restating our Credit Agreement. Pursuant to the Restated Credit Agreement, we (a) increased the borrowing capacity under the Revolving Facility from $175,000,000 to $250,000,000, (b) extended the maturity date of the Revolving Facility from June 2018 to March 2022, (c) extended the maturity date of the Term Loan from June 2020 to March 2023 and (d) amended certain financial covenants and provisions. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300,000,000 in the amount of the Revolving Facility and/or the Term Loan to $600,000,000 in the aggregate. The Restated Credit Agreement incurs interest and fees at various rates based on our total indebtedness to total asset value ratio at the end of each quarterly reporting period. The Revolving Facility permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.50% to 1.30% or a LIBOR rate plus a margin of 1.50% to 2.30%. The annual commitment fee on the undrawn funds under the Revolving Facility is 0.15% to 0.25%. The Term Loan bears interest at a rate equal to the sum of a base rate plus a margin of 0.45% to 1.25% or a LIBOR rate plus a margin of 1.45% to 2.25%. The Term Loan does not provide for scheduled reductions in the principal balance prior to its maturity. On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into (a) an amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates and (b) a note purchase and guarantee agreement with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates; and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including a rate based on the LIBOR Daily Floating Rate (as defined in the Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility. Senior Unsecured Notes On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with Prudential and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100,000,000 (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75,000,000 (the “Series B Notes”) and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50,000,000 (the “Series C Notes”) that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50,000,000 (the “Series D Notes” and, together with the Series A Notes, Series B Notes and Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities. On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with MetLife and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50,000,000 (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity. Covenants The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as leverage, 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 Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement require a mandatory offer to prepay the notes upon a change in control in lieu of a change of control event of default). Any event of default, if not cured or waived in a timely manner, would increase by 200 basis points (2.00%) the interest rate we pay under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement, and could result in the acceleration of our indebtedness under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement. We may be prohibited from drawing funds under the Revolving Facility if there is any event or condition that constitutes an event of default under the Restated Credit Agreement or that, with the giving of any notice, the passage of time, or both, would be an event of default under the Restated Credit Agreement. 59 As of December 31, 2018, we are in compliance with all of the material terms of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement, including the various financial covenants described herein. Debt Maturities As of December 31, 2018, scheduled debt maturities, including balloon payments, are as follows (in thousands): 2019 2020 2021 2022 (1) 2023 Thereafter Total Revolving Facility Term Loan Senior Unsecured Notes $ $ — $ — — 70,000 — — 70,000 $ — $ — — — 50,000 — 50,000 $ — $ — 100,000 — 75,000 150,000 325,000 $ Total - — 100,000 70,000 125,000 150,000 445,000 (1) The Revolving Facility matures in March 2022. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to extend the term of the Revolving Facility for one additional year to March 2023. NOTE 5. — ENVIRONMENTAL OBLIGATIONS We are subject to numerous 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 are incurred for, among other things, removing USTs, excavation of contaminated soil and water, installing, operating, maintaining and decommissioning remediation systems, monitoring contamination and governmental agency compliance reporting required in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental costs where available. 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 our 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. In July 2012, we purchased a 10-year pollution legal liability insurance policy covering substantially all of our properties at that time for preexisting 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 was to obtain protection predominantly for significant events. No assurances can be given that we will obtain a net financial benefit from this investment. In addition to the environmental insurance policy purchased by the Company, we also took assignment of certain environmental insurance policies, and rights to reimbursement for claims made thereunder, from Marketing, by order of the U.S. Bankruptcy Court during Marketing’s bankruptcy proceedings. Under these assigned polices, we have received and expect to continue to receive reimbursement of certain remediation expenses for covered claims. We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. We are contingently liable for these environmental obligations in the event that our tenant or other counterparty does not satisfy them. 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 our leases and other agreements if we determine that it is probable that our tenant or other counterparty will not meet its environmental obligations. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant or other counterparty fails to pay them. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. 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. 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. For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed 60 prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant. We anticipate that a majority of the USTs at properties previously leased to Marketing will be replaced over the next several years because these USTs are either at or near the end of their useful lives. For long-term, triple-net leases covering sites previously leased to Marketing, our tenants are responsible for the cost of removal and replacement of USTs and for remediation of contamination found during such UST removal and replacement, unless such contamination was found during the first 10 years of the lease term and also existed prior to commencement of the lease. In those cases, we are responsible for costs associated with the remediation of such contamination. We have also agreed to be responsible for environmental contamination that existed prior to the sale of certain properties assuming the contamination is discovered (other than as a result of a voluntary site investigation) during the first five years after the sale of the properties. For properties that are vacant, we are responsible for costs associated with UST removals and for the cost of remediation of contamination found during the removal of USTs. In the course of certain UST removals and replacements at properties previously leased to Marketing where we retained continuing responsibility for preexisting environmental obligations, previously unknown environmental contamination was and continues to be discovered. As a result, we have developed a reasonable estimate of fair value for the prospective future environmental liability resulting from preexisting unknown environmental contamination and have accrued for these estimated costs. These estimates are based primarily upon quantifiable trends which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs. Our accrual of the additional liability represents our 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. In arriving at our accrual, we analyzed the ages of USTs at properties where we would be responsible for preexisting contamination found within 10 years after commencement of a lease (for properties subject to long-term triple-net leases) or five years from a sale (for divested properties), and projected a cost to closure for preexisting unknown environmental contamination. We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation (using a range of 2.0% to 2.75%), and then discount them to present value (using a range of 4.0% to 7.0%). We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59,821,000 for our prospective environmental remediation obligations. This accrual consisted of (a) $14,477,000, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45,344,000 for future environmental liabilities related to preexisting unknown contamination. As of December 31, 2017, we had accrued a total of $63,565,000 for our prospective environmental remediation obligations. This accrual consisted of (a) $18,537,000, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45,028,000 for future environmental liabilities related to preexisting unknown contamination. Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $2,409,000, $3,448,000 and $4,107,000 of net accretion expense was recorded for the years ended December 31, 2018, 2017 and 2016, respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2018, 2017 and 2016, we recorded credits to environmental expenses, included in continuing and discontinued operations, aggregating $1,319,000, $6,854,000 and $7,007,000, respectively, 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 environmental litigation accruals. During the years ended December 31, 2018 and 2017, we increased the carrying values of certain of our properties by $5,111,000 and $5,477,000, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on the face of the consolidated statements of cash flows. Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is 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 related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, were $4,255,000, $4,347,000 and $5,126,000, respectively. Capitalized asset retirement costs were $45,659,000 (consisting of $20,348,000 of known environmental liabilities and $25,311,000 of reserves for future environmental liabilities) as of December 31, 2018, and $45,380,000 (consisting of $18,692,000 of known environmental liabilities and $26,688,000 of reserves for future environmental liabilities) as of 61 December 31, 2017, respectively. We recorded impairment charges aggregating $3,850,000 and $6,932,000 for the years ended December 31, 2018 and 2017, respectively, in continuing and discontinued operations for capitalized asset retirement costs. 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 and receive regulatory approval. 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. Our estimates are based upon facts that are known to us at this time and an assessment of the possible ultimate remedial action outcomes. It is possible that our assumptions, which form the basis of our estimates, regarding our ultimate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities. Among the many uncertainties that impact the estimates are our assumptions, the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of contamination, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to additional claims, and possible changes in the environmental rules and regulations, enforcement policies, and reimbursement programs of various states. In light 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 that 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 consolidated financial statements as they become probable and a reasonable estimate of fair value can be made. Additional environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. NOTE 6. — INCOME TAXES Net cash paid (refunded) for income taxes for the years ended December 31, 2018, 2017 and 2016, of $244,000, $(195,000) and $368,000, 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 property costs 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 consolidated financial statements 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 consolidated financial statements purposes. The federal tax attributes of the common dividends for the years ended December 31, 2018, 2017 and 2016, were: ordinary income of 89.2%, 100.0% and 61.6%, capital gain distributions of 10.8%, 0.0% and 34.4% and non-taxable distributions of 0.0%, 0.0% and 4.0%, 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. 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 2015, 2016 and 2017, and tax returns which will be filed for the year ended 2018, 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, 2018 or 2017. However, uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period. 62 NOTE 7. — STOCKHOLDERS’ EQUITY A summary of the changes in stockholders’ equity for the years ended December 31, 2018, 2017 and 2016, is as follows (in thousands except per share amounts): BALANCE, DECEMBER 31, 2015 Net earnings Dividends declared — $1.03 per share Shares issued pursuant to ATM Program, net Shares issued pursuant to stock dividends Shares issued pursuant to dividend reinvestment Stock-based compensation and settlements BALANCE, DECEMBER 31, 2016 Net earnings Dividends declared — $1.16 per share Shares issued pursuant to Equity Offering, net Shares issued pursuant to ATM Program, net Shares issued pursuant to dividend reinvestment Stock-based compensation and settlements BALANCE, DECEMBER 31, 2017 Net earnings Dividends declared — $1.31 per share Shares issued pursuant to ATM Program, net Shares issued pursuant to dividend reinvestment Stock-based compensation and settlements BALANCE, DECEMBER 31, 2018 Common Stock Shares Amount 33,422 $ 334 $ Dividends Paid in Excess of Earnings Additional Paid-in Capital 464,338 $ 653 256 43 19 34,393 $ 4,715 513 48 27 39,696 $ 1,106 52 1 40,855 $ 7 3 — — 344 $ 14,879 4,409 897 1,136 485,659 $ 47 5 1 — 397 $ 104,265 13,523 1,270 155 604,872 $ 11 1 — 409 $ 30,127 1,402 1,777 638,178 $ (58,111) $ 38,411 (35,385) — (55,085) $ 47,186 (43,675) — — — — (51,574) $ 47,706 (53,555) — — — (57,423) $ Total 406,561 38,411 (35,385) 14,886 4,412 897 1,136 430,918 47,186 (43,675) 104,312 13,528 1,271 155 553,695 47,706 (53,555) 30,138 1,403 1,777 581,164 On March 1, 2018, and October 23, 2018, our Board of Directors granted 121,650 and 3,000 of restricted stock units (“RSU” or “RSUs”), respectively, under our Amended and Restated 2004 Omnibus Incentive Compensation Plan. On March 1, 2017, our Board of Directors granted 94,250 of restricted stock units under our Amended and Restated 2004 Omnibus Incentive Compensation Plan. On October 24, 2017, our Board of Directors approved Articles Supplementary to our Articles of Incorporation, as amended, to reclassify 10,000,000 authorized shares of preferred stock, par value $.01 per share, into the same number of authorized but unissued shares of common stock, par value $.01 per share, subject to further classification or reclassification and issuance by our Board of Directors. The Articles Supplementary were filed with the Maryland State Department of Assessments and Taxation on October 25, 2017, and became effective on that date. On May 8, 2018, our stockholders approved an amendment to our Articles of Incorporation to increase the aggregate number of shares of stock of all classes which we have the authority to issue from 70,000,000 shares to 120,000,000 shares, by increasing (i) the aggregate number of shares of common stock which we have the authority to issue from 60,000,000 to 100,000,000 shares, and (ii) the aggregate number of shares of preferred stock which we have the authority to issue from 10,000,000 to 20,000,000 shares. Equity Offering On July 10, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and KeyBanc Capital Markets Inc., as representatives of the several underwriters (the “Underwriters”), pursuant to which we sold to the Underwriters 4,100,000 shares of common stock (the “Equity Offering”). Pursuant to the terms of the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase up to an additional 615,000 shares of common stock. We received net proceeds from the Equity Offering, including the full exercise by the Underwriters of their option to purchase additional shares, of $104,312,000 after deducting the underwriting discount and offering expenses. The net proceeds of the Equity Offering were used to repay amounts outstanding under our Revolving Facility and subsequently were used to fund the Empire and Applegreen transactions. 63 ATM Program In June 2016, we established an at-the-market equity offering program (the “2016 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $125,000,000 through a consortium of banks acting as agents. The 2016 ATM Program was terminated in January 2018. In March 2018, we established a new at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $125,000,000 through a consortium of banks acting as agents. Sales of the shares of common stock may be made, as needed, from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent. During the years ended December 31, 2018 and 2017, we issued 1,106,000 and 513,000 shares of common stock, respectively, and received net proceeds of $30,138,000 and $13,528,000, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us. Dividends For the year ended December 31, 2018, we paid dividends of $50,503,000 or $1.28 per share. For the year ended December 31, 2017, we paid dividends of $39,299,000 or $1.12 per share. Dividend Reinvestment Plan Our dividend reinvestment plan provides our common stockholders with a convenient and economical method of acquiring additional shares of common stock by reinvesting all or a portion of their dividend distributions. During the years ended December 31, 2018 and 2017, we issued 51,920 and 47,922 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $1,403,000 and $1,271,000, respectively. Stock-Based Compensation Compensation cost for our stock-based compensation plans using the fair value method was $1,777,000, $1,350,000 and $1,426,000 for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in general and administrative expense in our consolidated statements of operations. NOTE 8. — EMPLOYEE BENEFIT PLANS The Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the “2004 Plan”) provided for the grant of restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents, stock payments and stock awards to all employees and members of the Board of Directors. In May 2014, an Amended and Restated 2004 Omnibus Incentive Compensation Plan (the “Restated Plan”) was approved at our annual meeting of stockholders. The Restated Plan maintained the 2004 Plan’s authorization to grant awards with respect to an aggregate of 1,000,000 shares of common stock, extended the term to May 2019 and increased the aggregate maximum number of shares of common stock that may be subject to awards granted during any calendar year to 100,000. In May 2017, the Second Amended and Restated 2004 Omnibus Incentive Compensation Plan (the “Second Restated Plan”) was approved at our annual meeting of stockholders, in order to, among other things, (i) increase by 500,000 to a total of 1,500,000 the aggregate number of shares that the Company may issue under awards granted pursuant to the Second Restated Plan; (ii) increase from 100,000 to 200,000 the maximum number of shares that may be subject to awards made in a calendar year to all participants under the Second Restated Plan; and (iii) extended the term of the Second Restated Plan to May 2022. RSUs awarded under the Second Restated Plan vest on a cumulative basis ratably over a five-year period with the first 20% vesting occurring on the first anniversary of the date of the grant. In April 2012, the Compensation Committee of the Board of Directors adopted, for 2012 only, a performance-based incentive compensation feature to our compensation program for named executive officers (“NEOs”) and other executives. Under the 2012 performance-based incentive compensation program, the RSUs that were granted, were granted on terms substantially consistent with the 2004 Plan, except for the relative vesting schedules. RSUs granted under the 2012 performance-based incentive compensation program vest on a cumulative basis, with the first 20% vesting occurring on May 1, 2013, and an additional 20% vesting on each May 1 thereafter, through May 1, 2017. In February 2013, the Compensation Committee granted a total of 35,000 RSUs to NEOs and other executives under the 2012 performance-based incentive compensation program. All such RSU grants include related dividend equivalents. We awarded to employees and directors 124,650, 94,250 and 86,600 RSUs and dividend equivalents in 2018, 2017 and 2016, respectively. RSUs granted before 2009 provide for settlement upon termination of employment with the Company or termination of service from the Board of Directors. RSUs granted in 2009 and thereafter provide for settlement upon the earlier of 10 years after grant or termination of employment with the Company. On the settlement date each vested RSU will have a value equal to one share of 64 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 stockholder 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, 2018, 2017 and 2016, dividend equivalents aggregating approximately $749,000, $542,000 and $445,000, respectively, were charged against retained earnings when common stock dividends were declared. The following is a schedule of the activity relating to RSUs outstanding: RSUs OUTSTANDING AT DECEMBER 31, 2015 Granted Settled Cancelled RSUs OUTSTANDING AT DECEMBER 31, 2016 Granted Settled Cancelled RSUs OUTSTANDING AT DECEMBER 31, 2017 Granted Settled Cancelled RSUs OUTSTANDING AT DECEMBER 31, 2018 Number of RSUs Outstanding Fair Value Amount Average Per RSU 400,375 86,600 $ (34,650) (22,550) $ 429,775 94,250 $ (51,770) (23,330) $ 448,925 124,650 $ — — $ 573,575 1,593,400 $ 635,800 415,400 $ 2,484,400 $ 1,306,300 587,100 $ 3,106,400 $ — — $ 18.40 18.35 18.42 26.36 25.23 25.17 24.92 — — 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, 2018, 2017 and 2016, was $1,752,000, $1,328,000 and $1,418,000, respectively, and is included in general and administrative expense in our consolidated statements of operations. As of December 31, 2018, there was $5,121,000 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 three years. The aggregate intrinsic value of the 573,575 outstanding RSUs and the 289,020 vested RSUs as of December 31, 2018, was $16,869,000 and $8,500,000, respectively. The following is a schedule of the vesting activity relating to RSUs outstanding: RSUs VESTED AT DECEMBER 31, 2015 Vested Settled RSUs VESTED AT DECEMBER 31, 2016 Vested Settled RSUs VESTED AT DECEMBER 31, 2017 Vested Settled RSUs VESTED AT DECEMBER 31, 2018 Number of RSUs Vested Fair Value 202,344 54,125 $ (34,650) $ 221,819 55,336 $ (51,770) $ 225,385 63,635 $ — $ 289,020 1,379,600 635,800 1,502,900 1,306,300 1,871,500 — 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 10 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 $295,000, $282,000 and $268,000 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in general and administrative expense in our consolidated statements of operations. During the year ended December 31, 65 2017 and 2016, we distributed $278,000 and $469,000, respectively from the Supplemental Plan to former officers of the Company. There were no distributions from the Supplemental Plan for the year ended December 31, 2018. NOTE 9. — EARNINGS PER COMMON SHARE Basic and diluted earnings per common share gives effect, utilizing the two-class method, to the potential dilution from the issuance of shares of our common stock in settlement of RSUs which provide for non-forfeitable dividend equivalents equal to the dividends declared per common share. Basic and diluted 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. There were no options outstanding as of December 31, 2018 and 2017. There were 5,000 stock options excluded from the earnings per share calculations below as they were anti-dilutive as of December 31, 2016. The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (in thousands except per share data): (in thousands): Earnings from continuing operations Less dividend equivalents attributable to RSUs outstanding Earnings from continuing operations attributable to common stockholders Earnings (loss) from discontinued operations Less dividend equivalents attributable to RSUs outstanding Earnings (loss) from discontinued operations attributable to common stockholders Net earnings attributable to common stockholders used for basic and diluted earnings per share calculation Weighted average common shares outstanding: Basic Incremental shares from stock-based compensation Diluted Basic earnings per common share Diluted earnings per common share NOTE 10. — FAIR VALUE MEASUREMENTS Debt Instruments $ 2018 Year ended December 31, 2017 2016 48,410 $ (751) 47,659 (704) — 45,048 $ (567) 44,481 2,138 — 39,825 (482) 39,343 (1,414) — (704) 2,138 (1,414) $ 46,955 $ 46,619 $ 37,929 40,171 20 40,191 1.17 $ 1.17 $ 36,897 — 36,897 1.26 $ 1.26 $ 33,806 — 33,806 1.12 1.12 $ $ As of December 31, 2018 and 2017, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value. As of December 31, 2018 and 2017, the fair value of the borrowings under senior unsecured notes was $335,600,000 and $233,500,000, respectively. The fair value of the borrowings outstanding as of December 31, 2018 and 2017, was determined using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, risk profile and borrowings outstanding, which are based on unobservable inputs within Level 3 of the Fair Value Hierarchy. Supplemental Retirement Plan We have mutual fund assets that are measured at fair value on a recurring basis using Level 1 inputs. We have a Supplemental Retirement Plan for executives. The amounts held in trust under the Supplemental Retirement Plan using Level 2 inputs may be used to satisfy claims of general creditors in the event of our or any of our subsidiaries’ bankruptcy. We have liability to the executives participating in the Supplemental Retirement Plan for the participant account balances equal to the aggregate of the amount invested at the executives’ direction and the income earned in such mutual funds. 66 The following summarizes as of December 31, 2018, 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 $ $ 534 $ — $ — $ — $ 534 $ — $ 534 534 The following summarizes as of December 31, 2017, 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 Real Estate Assets Level 1 Level 2 Level 3 Total $ $ 451 $ — $ — $ — $ 451 $ — $ 451 451 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, 2018 and 2017, of $3,096,000 and $2,785,000, 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. NOTE 11. — DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE We report as discontinued operations properties which met the criteria to be accounted for as held for sale in accordance with GAAP as of June 30, 2014, and certain properties disposed of during the periods presented that were previously classified as held for sale as of June 30, 2014. All results of these discontinued operations are included in a separate component of income on the consolidated statements of operations under the caption discontinued operations. During the year ended December 31, 2018, we sold nine properties, in separate transactions that did not meet the criteria to be classified as discontinued operations, which resulted in an aggregate gain of $3,888,000, included in gain on dispositions of real estate, on our consolidated statements of operations. We also received funds from property condemnations resulting in a gain of $60,000, included in gain on dispositions of real estate, on our consolidated statements of operations. During the year ended December 31, 2017, we sold 12 properties and a portion of one property, in separate transactions that did not meet the criteria to be classified as discontinued operations, which resulted in an aggregate gain of $1,025,000, included in gain on dispositions of real estate, on our consolidated statements of operations. We also received funds from property condemnations resulting in a gain of $16,000, included in gain on dispositions of real estate, on our consolidated statements of operations. As of December 31, 2018 and 2017, there were no properties that met criteria to be classified as held for sale. Activity from discontinued operations was as follows (in thousands): Total revenues Impairments Changes in environmental estimates Other operating income Earnings (loss) from operating activities (Loss) gains from dispositions of real estate Earnings (loss) from discontinued operations 2018 Year ended December 31, 2017 2016 — $ (1,268) 564 — (704) — (704) $ — $ (1,042) 3,169 11 2,138 — 2,138 $ — (4,248) 3,010 2 (1,236) (178) (1,414) $ $ 67 NOTE 12. — QUARTERLY FINANCIAL DATA The following is a summary of the quarterly results of operations for the years ended December 31, 2018 and 2017 (unaudited as to quarterly information) (in thousands, except per share amounts): Three Months Ended Year Ended December 31, 2018 Revenues from rental properties Earnings from continuing operations Net earnings Diluted earnings per common share: Earnings from continuing operations Net earnings Year Ended December 31, 2017 Revenues from rental properties Earnings from continuing operations Net earnings Diluted earnings per common share: Earnings from continuing operations Net earnings NOTE 13. — PROPERTY ACQUISITIONS 2018 March 31, $ 28,284 $ 10,162 10,032 $ June 30, September 30, December 31, 29,570 $ 11,017 10,944 $ 29,452 13,408 13,190 29,022 $ 13,823 13,540 $ 0.25 $ 0.25 $ 0.34 $ 0.33 $ 0.27 $ 0.27 $ 0.33 0.32 March 31, $ 23,897 $ 7,716 9,704 $ June 30, September 30, December 31, 24,913 $ 9,460 9,340 $ 28,158 13,321 13,036 24,364 $ 14,551 15,106 $ 0.22 $ 0.28 $ 0.41 $ 0.43 $ 0.24 $ 0.24 $ 0.33 0.33 $ $ $ $ $ $ During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $77,972,000. On April 17, 2018, we acquired fee simple interests in 30 convenience store and gasoline station properties for $52,592,000 and entered into a unitary lease with GPM Investments, LLC (“GPM”) at the closing of the transaction. We funded the GPM transaction through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires GPM to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are located primarily within metropolitan markets in the states of Arkansas, Louisiana, Oklahoma and Texas. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $31,633,000 of the purchase price to land, $17,489,000 to buildings and improvements, $4,047,000 to in-place leases, and $577,000 to below-market leases, which is accounted for as a deferred liability. On August 1, 2018, we acquired fee simple interests in six convenience store and gasoline station properties for $17,412,000 and entered into a unitary lease with a U.S. subsidiary of Applegreen PLC (“Applegreen”) at the closing of the transaction. We funded the Applegreen transaction through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Applegreen to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are all located within the metropolitan market of Columbia, SC. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $8,930,000 of the purchase price to land, $6,773,000 to buildings and improvements, $1,371,000 to in-place leases, $773,000 to above-market leases and $435,000 to below-market leases, which is accounted for as a deferred liability. In addition, during the year ended December 31, 2018, we also acquired fee simple interests in five convenience store and gasoline station, and other automotive related properties, in separate transactions, for an aggregate purchase price of $7,968,000. We accounted for these acquisitions as asset acquisitions. We estimated the fair value of acquired tangible assets for each of these acquisitions (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $4,929,000 of the purchase price to land, $2,753,000 to buildings and improvements and $286,000 to in-place leases. 2017 During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214,000,000. 68 On September 6, 2017, we acquired fee simple interests in 49 convenience store and gasoline station properties for $123,126,000 and entered into a unitary lease with Empire Petroleum Partners, LLC (“Empire”) at the closing of the transaction. We funded the Empire transaction through a combination of funds from our Equity Offering and funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Empire to pay a fixed annual rent plus all amounts pertaining to the properties including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are located primarily within metropolitan markets in the states of Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Texas. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $75,674,000 of the purchase price to land, $38,205,000 to buildings and improvements, $189,000 to above-market leases and $9,058,000 to in-place leases. On October 3, 2017, we acquired fee simple interests in 33 convenience store and gasoline station properties and five stand-alone Burger King quick service restaurants for $68,710,000 and entered into a unitary lease with a U.S. subsidiary of Applegreen at the closing of the transaction. We funded the Applegreen transaction through a combination of funds from our Equity Offering and funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Applegreen to pay a fixed annual rent plus all amounts pertaining to the properties including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase on the fifth anniversary of the commencement of the lease and annually thereafter. The properties are all located within the metropolitan market of Columbia, SC. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $36,874,000 of the purchase price to land, $27,431,000 to buildings and improvements, $961,000 to above-market leases, $1,104,000 to below-market leases, which is accounted for as a deferred liability, and $4,548,000 to in-place leases. In addition, during the year ended December 31, 2017, we acquired fee simple interests in 16 convenience store and gasoline station, and other automotive related properties, in separate transactions, for an aggregate purchase price of $22,164,000. We accounted for these acquisitions as asset acquisitions. We estimated the fair value of acquired tangible assets for each of these acquisitions (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $5,800,000 of the purchase price to land, $14,424,000 to buildings and improvements, $1,028,000 to below-market leases, which is accounted for as a deferred liability, and $2,969,000 to in-place leases. We evaluated each of the acquisitions and determined that substantially all the fair value related to each acquisition is concentrated in a similar identifiable operating property. Accordingly, these transactions did not meet the definition of a business and consequently were accounted for as asset acquisitions. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets acquired on a relative fair value basis. NOTE 14. — ACQUIRED INTANGIBLE ASSETS Acquired above-market (when we are a lessor) and below-market leases (when we are a lessee) are included in prepaid expenses and other assets and had a balance of $3,500,000 and $3,189,000 (net of accumulated amortization of $5,160,000 and $4,698,000, respectively) at December 31, 2018 and 2017, respectively. Acquired above-market (when we are lessee) and below-market (when we are lessor) leases are included in accounts payable and accrued liabilities and had a balance of $21,514,000 and $22,714,000 (net of accumulated amortization of $17,790,000 and $15,578,000, respectively) at December 31, 2018 and 2017, respectively. When we are a lessor, above-market and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental revenue over the remaining term of the associated lease in place at the time of purchase. When we are a lessee, above-market and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental expense over the remaining term of the associated lease in place at the time of purchase. Rental income included amortization from acquired leases of $2,067,000, $1,791,000 and $1,833,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Rent expense included amortization from acquired leases of $317,000, $320,000 and $333,000 for the years ended December 31, 2018, 2017 and 2016, respectively. In-place leases are included in prepaid expenses and other assets and had a balance of $38,542,000 and $35,704,000 (net of accumulated amortization of $9,908,000 and $7,043,000, respectively) at December 31, 2018 and 2017, respectively. The value associated with in-place leases and lease origination costs are amortized into depreciation and amortization expense over the remaining life of the lease. Depreciation and amortization expense included amortization from in-place leases of $2,866,000, $1,855,000 and $1,395,000 for the years ended December 31, 2018, 2017 and 2016, respectively. 69 The amortization for acquired intangible assets during the next five years and thereafter, assuming no early lease terminations, is as follows: As Lessor: Year ending December 31, 2019 2020 2021 2022 2023 Thereafter As Lessee: Year ending December 31, 2019 2020 2021 2022 2023 Thereafter Above-Market Leases Below-Market Leases In-Place Leases $ $ 158,000 $ 152,000 144,000 135,000 135,000 1,330,000 2,054,000 $ 2,142,000 $ 1,736,000 1,562,000 1,484,000 1,393,000 13,197,000 21,514,000 $ 2,994,000 2,973,000 2,954,000 2,942,000 2,940,000 23,739,000 38,542,000 Below-Market Leases 312,000 222,000 157,000 127,000 126,000 502,000 1,446,000 $ $ NOTE 15. — SUBSEQUENT EVENTS In preparing our consolidated financial statements, we have evaluated events and transactions occurring after December 31, 2018, for recognition or disclosure purposes. Based on this evaluation there were no significant subsequent events from December 31, 2018, through the date the financial statements were issued. 70 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Getty Realty Corp. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the consolidated financial statements, including the related notes, as listed in the accompanying index, and the financial statement schedules listed in the index appearing under Item 15(a)(2), of Getty Realty Corp. and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 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, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated 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 the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. 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. Definition and Limitations of Internal Control over Financial Reporting 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 February 27, 2019 We have served as the Company’s auditor since at least 1975. We have not been able to determine the specific year we began serving as auditor of the Company. 71 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 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 Rules 13a-15(b) and 13d-15(b) of the Exchange Act, 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 (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of December 31, 2018, at the reasonable assurance level. 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 (2013) 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, 2018. The effectiveness of our internal control over financial reporting as of December 31, 2018, 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”. Item 9B. Other Information On February 26, 2019, our Board of Directors amended Article II, Section 2 of our Bylaws to provide that annual meetings of our stockholders shall be held on such date and at such time annually as shall be set by the Board of Directors. The foregoing description of the amendment to our Bylaws is only a summary and is qualified in its entirety by reference to the full text of the amendment, a copy of which is attached hereto as Exhibit 3.7. 72 Item 10. Directors, Executive Officers and Corporate Governance PART III 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 stockholders may recommend 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 Christopher J. Constant Mark J. Olear Joshua Dicker Danion Fielding Age 40 54 58 47 Position President, Chief Executive Officer and Director Executive Vice President and Chief Operating Officer Executive Vice President, General Counsel and Secretary Vice President, Chief Financial Officer and Treasurer Officer Since 2012 2014 2008 2016 Mr. Constant has served as President, Chief Executive Officer and Director since January 2016. Mr. Constant joined the Company in November 2010 as Director of Planning and Corporate Development and was later promoted to Treasurer in May 2012, Vice President in May 2013 and Chief Financial Officer in December 2013. Prior to joining the Company, Mr. Constant was a Vice President in the corporate finance department at Morgan Joseph & Co. Inc. and began his career in the corporate finance department at ING Barings. Mr. Olear has served as Executive Vice President since May 2014 and Chief Operating Officer since May 2015 (Chief Investment Officer since May 2014). Prior to joining the Company, Mr. Olear held various positions in real estate with TD Bank, Home Depot, Toys “R” Us and A&P. Mr. Dicker has served as Executive Vice President, General Counsel and Secretary since May 2017. He was Senior Vice President, General Counsel and Secretary since 2012. He was Vice President, General Counsel and Secretary since February 2009. Prior to joining the Company 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. Fielding joined the Company in February 2016 as Vice President, Chief Financial Officer and Treasurer. Prior to joining the Company, Mr. Fielding held various positions in real estate and investment banking with Wilbraham Capital, Moinian Group, Nationwide Health Properties, J.P. Morgan, PricewaterhouseCoopers and Daiwa Securities. 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. 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, 2018. 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. 73 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” of this Annual Report on Form 10-K. (a) (2) Financial Statement Schedules The following Financial Statement Schedules are included beginning on page 75 of this Annual Report on Form 10-K. Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2018, 2017 and 2016 Schedule III — Real Estate and Accumulated Depreciation and Amortization as of December 31, 2018 Schedule IV — Mortgage Loans on Real Estate as of December 31, 2018 (a) (3) Exhibits Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 93 of this Annual Report on Form 10-K. Item 16. Form 10-K Summary None. 74 GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES for the years ended December 31, 2018, 2017 and 2016 (in thousands) December 31, 2018: Allowance for deferred rent receivable Allowance for accounts receivable December 31, 2017: Allowance for deferred rent receivable Allowance for accounts receivable December 31, 2016: Allowance for deferred rent receivable Allowance for accounts receivable Balance at Beginning of Year $ $ $ $ $ $ — $ 1,840 $ — $ 2,006 $ — $ 2,634 $ Additions Deductions Balance at End of Year — $ 480 $ — $ 420 $ — $ 855 $ — $ 226 $ — $ 586 $ — $ 1,483 $ — 2,094 — 1,840 — 2,006 75 GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION As of December 31, 2018 (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 Impairments Sales and condemnations Lease expirations/settlements Balance at end of year Accumulated depreciation and amortization: Balance at beginning of year Depreciation and amortization Impairments Sales and condemnations Lease expirations/settlements Balance at end of year 2018 2017 2016 $ 970,964 $ 84,069 (7,950) (3,091) (886) $ 1,043,106 $ $ $ 133,353 $ 20,549 (1,780) (530) (901) 150,691 $ 782,166 $ 205,598 (10,623) (4,520) (1,657) 970,964 $ 120,576 $ 17,018 (1,301) (1,229) (1,711) 133,353 $ 783,233 19,097 (13,590) (6,379) (195) 782,166 107,370 16,629 (776) (2,559) (88) 120,576 76 Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost Bluff, AR Brookland, AR Fayetteville, AR Fayetteville, AR Hope, AR Jonesboro, AR Jonesboro, AR Little Rock, AR Rogers, AR Texarkana, AR Cochise, AZ Cochise, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Maricopa, AZ Phoenix, AZ Pima, AZ Pima, AZ Pima, AZ Pima, AZ Pima, AZ Pinal, AZ Bellflower, CA Benicia, CA Chula Vista, CA Coachella, CA Cotati, CA Fillmore, CA Grass Valley, CA Hesperia, CA Hesperia, CA Indio, CA Indio, CA La Palma, CA La Puenta, CA Lakeside, CA Los Angeles, CA $ 2,985 $ 1,468 2,266 2,867 1,472 868 2,985 978 927 1,592 1,765 4,440 1,331 1,448 1,503 1,602 1,722 1,838 2,177 2,185 2,415 2,868 3,112 3,169 3,204 3,928 1,943 1,261 1,301 1,303 2,085 3,652 4,022 1,369 2,224 2,385 2,235 6,072 1,354 1,485 1,643 2,055 1,250 2,727 1,971 7,615 3,715 6,612 819 $ 1,319 629 896 473 695 2,655 443 394 534 1,496 2,591 339 465 664 806 544 577 645 573 1,982 1,613 1,519 1,164 1,365 1,594 632 597 744 713 598 728 1,473 459 1,166 1,496 1,018 2,064 404 632 794 1,563 948 1,241 582 1,210 1,020 1,606 - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,166 $ 149 1,637 1,971 999 173 330 535 533 1,058 269 1,849 992 983 839 796 1,178 1,261 1,532 1,612 433 1,255 1,593 2,005 1,839 2,334 1,311 664 557 590 1,487 2,924 2,549 910 1,058 889 1,217 4,008 950 853 849 492 302 1,486 1,389 6,405 2,695 5,006 77 Accumulated Depreciation 30 615 23 33 18 338 1285 19 17 21 133 182 30 40 55 68 45 50 53 48 140 128 118 87 106 116 18 49 60 58 52 59 119 271 714 299 589 407 238 128 440 375 201 276 339 282 226 371 2,985 $ 1,468 2,266 2,867 1,472 868 2,985 978 927 1,592 1,765 4,440 1,331 1,448 1,503 1,602 1,722 1,838 2,177 2,185 2,415 2,868 3,112 3,169 3,204 3,928 1,943 1,261 1,301 1,303 2,085 3,652 4,022 1,369 2,224 2,385 2,235 6,072 1,354 1,485 1,643 2,055 1,250 2,727 1,971 7,615 3,715 6,612 Date of Initial Leasehold or Acquisition Investment (1) 2018 2007 2018 2018 2018 2007 2007 2018 2018 2018 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2017 2017 2017 2017 2017 2017 2007 2007 2014 2007 2015 2007 2015 2007 2015 2015 2015 2007 2015 2015 2015 Oakland, CA Ontario, CA Phelan, CA Riverside, CA Riverside, CA Sacramento, CA Sacramento, CA Sacramento, CA San Dimas, CA San Jose, CA San Leandro, CA Shingle Springs, CA Stockton, CA Stockton, CA Adams, CO Arapahoe, CO Arapahoe, CO Boulder, CO Broomfield, CO Castle Rock, CO El Paso, CO El Paso, CO El Paso, CO Golden, CO Greenwood Village, CO Highlands Ranch, CO Jefferson, CO Lakewood, CO Littleton, CO Lone Tree, CO Longmont, CO Louisville, CO Morrison, CO Superior, CO Thornton, CO Westminster, CO Wheat Ridge, CO Avon, CT Bridgeport, CT Bridgeport, CT Bridgeport, CT Bridgeport, CT Bristol, CT Brookfield, CT Darien, CT Durham, CT East Hartford, CT Ellington, CT Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 5,434 6,613 4,611 2,130 2,737 3,193 4,247 5,942 1,941 5,412 5,978 4,751 1,187 3,001 2,157 2,495 2,874 3,900 2,380 5,269 1,382 3,274 3,828 4,641 4,077 4,356 1,785 2,349 4,139 6,612 3,619 6,605 5,081 3,748 5,003 1,457 6,151 731 59 313 350 377 1,594 58 667 994 208 1,295 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 50 380 298 330 391 - 432 285 - 224 - 4,123 4,523 3,276 1,619 1,216 2,207 2,604 4,233 749 4,219 5,078 3,489 627 1,460 1,579 2,207 2,284 2,875 1,496 3,269 756 2,865 2,798 3,247 2,889 2,921 1,388 1,541 2,272 5,125 2,315 5,228 3,018 2,477 2,722 752 4,201 403 24 204 228 246 1,036 20 434 - 54 842 78 1,311 2,090 1,335 511 1,521 986 1,643 1,709 1,192 1,193 900 1,262 560 1,541 578 288 590 1,025 884 2,000 626 409 1,030 1,394 1,188 1,435 397 808 1,867 1,487 1,304 1,377 2,063 1,271 2,281 705 1,950 378 415 407 452 522 558 470 518 994 378 453 5,434 6,613 4,611 2,130 2,737 3,193 4,247 5,942 1,941 5,412 5,978 4,751 1,187 3,001 2,157 2,495 2,874 3,900 2,380 5,269 1,382 3,274 3,828 4,641 4,077 4,356 1,785 2,349 4,139 6,612 3,619 6,605 5,081 3,748 5,003 1,457 6,151 781 439 611 680 768 1,594 490 952 994 432 1,295 Date of Initial Leasehold or Acquisition Investment (1) 2015 2015 2015 2015 2014 2015 2015 2015 2007 2015 2015 2015 2015 2015 2017 2017 2017 2015 2017 2015 2017 2017 2017 2015 2015 2015 2017 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2002 1982 1985 1985 1985 2004 1985 1985 2004 1982 2004 Accumulated Depreciation 298 483 315 144 333 232 343 381 617 297 220 290 132 327 50 29 49 214 67 446 49 36 94 302 246 318 36 170 413 344 302 313 472 281 505 152 445 279 251 225 268 326 316 305 424 994 262 257 Farmington, CT Franklin, CT Hamden, CT Hartford, CT Manchester, CT Meriden, CT Meriden, CT Middletown, CT New Haven, CT New Haven, CT New Haven, CT Newington, CT North Haven, CT North Haven, CT, CT Norwalk, CT Norwalk, CT Norwich, CT Old Greenwich, CT Plymouth, CT Ridgefield, CT South Windham, CT South Windsor, CT Stamford, CT Stamford, CT Stamford, CT Suffield, CT Vernon, CT Wallingford, CT Waterbury, CT Waterbury, CT Waterbury, CT Watertown, CT Watertown, CT West Haven, CT West Haven, CT Westport, CT Wethersfield, CT Willimantic, CT Wilton, CT Windsor Locks, CT Windsor Locks, CT Washington, DC Washington, DC Nassau, FL Nassau, FL Nassau, FL Orlando, FL Houston, GA Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 466 51 645 665 110 208 1,532 133 217 539 1,413 954 90 405 511 - 107 - 931 402 644 545 507 604 507 237 1,434 551 469 515 804 352 925 185 1,215 604 447 717 519 1,031 1,434 848 941 1,963 2,137 2,894 867 1,724 - 447 - - 323 341 - 735 297 219 (323) - 669 - 46 941 323 1,219 - 304 1,398 - 16 98 453 603 - - - - - 59 - 322 - 12 - - 214 - 1,400 - - - - - 34 - 303 20 527 432 50 84 989 131 141 351 569 620 365 252 332 402 44 620 605 167 598 337 330 393 330 201 - 335 305 335 516 204 567 74 790 393 - 466 338 670 1,055 418 664 570 382 2,056 401 1,312 79 163 478 118 233 383 465 543 737 373 407 521 334 394 153 225 539 386 599 326 539 1,444 208 193 309 630 639 1,434 216 164 180 288 207 358 433 425 223 447 251 395 361 1,779 430 277 1,393 1,755 838 500 412 466 498 645 665 433 549 1,532 868 514 758 1,090 954 759 405 557 941 430 1,219 931 706 2,042 545 523 702 960 840 1,434 551 469 515 804 411 925 507 1,215 616 447 717 733 1,031 2,834 848 941 1,963 2,137 2,894 901 1,724 Date of Initial Leasehold or Acquisition Investment (1) 2004 1982 2018 2004 1987 1982 2004 1987 1985 1985 1985 2004 1982 2004 1985 1988 1982 1969 2004 1985 2004 2004 1985 1985 1985 2004 2004 2004 2004 2004 2004 1992 2004 1982 2004 1985 2004 2004 1985 2004 2004 2013 2013 2017 2017 2017 2000 2017 Accumulated Depreciation 92 312 1 132 206 289 312 349 196 333 208 189 192 95 195 270 226 277 185 378 664 130 164 233 357 505 1,434 138 93 102 167 168 225 269 241 189 447 142 295 204 1,484 121 90 102 129 71 378 37 Richmond, GA Haleiwa, HI Honolulu, HI Honolulu, HI Honolulu, HI Honolulu, HI Kaneohe, HI Kaneohe, HI Waianae, HI Waianae, HI Waipahu, HI Prospect Heights, IL Bossier, LA Lake Charles, LA Lake Charles, LA Sulphur, LA Arlington, MA Auburn, MA Auburn, MA Auburn, MA Auburn, MA Auburn, MA Auburn, MA Barre, MA Bedford, MA Bellingham, MA Belmont, MA Bradford, MA Burlington, MA Burlington, MA Chelmsford, MA Dracut, MA Falmouth, MA Fitchburg, MA Foxborough, MA Framingham, MA Gardner, MA Gardner, MA Gardners, MA Hingham, MA Hyde Park, MA Leominster, MA Littleton, MA Lowell, MA Lowell, MA Lynn, MA Lynn, MA Marlborough, MA Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 3,150 1,522 1,071 1,539 1,769 9,211 1,364 1,977 1,520 1,997 2,458 1,547 2,181 1,069 1,468 777 519 - 600 625 370 725 800 536 1,350 734 390 650 600 1,250 715 450 414 390 427 400 550 1,009 787 353 500 571 1,357 361 - 400 850 550 - - 30 - - - - 165 - - - - - - - - 27 535 - - 305 - - 12 - 73 29 - - - - - 2,320 33 98 23 - 327 - 111 168 - - 90 631 - - - 286 1,058 981 1,219 1,192 8,194 822 1,473 648 871 945 698 1,333 620 1,002 375 338 388 600 625 240 725 - 348 1,350 476 254 650 600 1,250 - 450 458 254 325 260 550 657 638 243 322 199 759 201 429 400 850 550 80 2,864 464 120 320 577 1,017 542 669 872 1,126 1,513 849 848 449 466 402 208 147 - - 435 - 800 200 - 331 165 - - - 715 - 2,276 169 200 163 - 679 149 221 346 372 598 250 202 - - - 3,150 1,522 1,101 1,539 1,769 9,211 1,364 2,142 1,520 1,997 2,458 1,547 2,181 1,069 1,468 777 546 535 600 625 675 725 800 548 1,350 807 419 650 600 1,250 715 450 2,734 423 525 423 550 1,336 787 464 668 571 1,357 451 631 400 850 550 Date of Initial Leasehold or Acquisition Investment (1) 2017 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2018 2017 2018 2018 2018 1985 1996 2011 2011 1991 2011 2011 1991 2011 1985 1985 2011 2011 2011 2012 2011 1988 1992 1990 1991 2011 1985 2014 1989 1985 2012 2017 1985 1996 2011 2011 2011 Accumulated Depreciation 236 325 82 184 310 562 329 360 469 609 789 28 71 18 17 18 178 51 - - 245 - 605 127 - 289 143 - - - 325 - 64 118 151 111 - 494 42 169 235 131 45 247 69 - - - Maynard, MA Melrose, MA Methuen, MA Methuen, MA Methuen, MA Methuen, MA Newton, MA Peabody, MA Peabody, MA Peabody, MA Randolph, MA Revere, MA Rockland, MA Salem, MA Seekonk, MA Shrewsbury, MA Shrewsbury, MA Sterling, MA Sutton, MA Tewksbury, MA Tewksbury, MA Upton, MA Wakefield, MA Walpole, MA Watertown, MA Webster, MA West Roxbury, MA Westborough, MA Wilmington, MA Wilmington, MA Woburn, MA Woburn, MA Worcester, MA Worcester, MA Worcester, MA Worcester, MA Worcester, MA Worcester, MA Worchester, MA Accokeek, MD Baltimore, MD Baltimore, MD Beltsville, MD Beltsville, MD Beltsville, MD Beltsville, MD Bladensburg, MD Bowie, MD Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 736 600 300 380 490 650 691 400 550 650 573 1,300 579 600 1,073 400 450 476 714 125 1,200 429 900 450 358 1,012 490 450 600 1,300 350 508 400 500 550 548 498 978 196 692 802 2,259 525 731 1,050 1,130 571 1,084 98 - 134 64 98 - 98 18 - - 238 - 45 - (373) - - 2 57 545 - 114 - 92 209 711 105 - - - 64 394 - - - 10 383 8 812 - - - - - - - - - 479 600 150 246 319 650 450 252 550 650 430 1,300 377 600 576 400 450 309 464 75 1,200 279 900 293 321 659 319 450 600 1,300 200 508 400 500 550 356 322 636 - 692 - 722 525 731 1,050 1,130 571 1,084 81 355 - 284 198 269 - 339 166 - - 381 - 247 - 124 - - 169 307 595 - 264 - 249 246 1,064 276 - - - 214 394 - - - 202 559 350 1,008 - 802 1,537 - - - - - - 834 600 434 444 588 650 789 418 550 650 811 1,300 624 600 700 400 450 478 771 670 1,200 543 900 542 567 1,723 595 450 600 1,300 414 902 400 500 550 558 881 986 1,008 692 802 2,259 525 731 1,050 1,130 571 1,084 Date of Initial Leasehold or Acquisition Investment (1) 1985 2011 1986 1985 1985 2011 1985 1986 2011 2011 1985 2011 1985 2011 1985 2011 2011 1991 1993 1986 2011 1991 2011 1985 1985 1985 1985 2011 2011 2011 1986 1985 2011 2011 2011 1991 1985 1991 2017 2010 2007 2007 2009 2009 2009 2009 2009 2009 Accumulated Depreciation 258 - 234 176 192 - 300 166 - - 267 - 214 - 59 - - 107 214 267 - 154 - 174 171 622 212 - - - 204 292 - - - 130 329 222 29 - 473 814 - - - - - - Capitol Heights, MD Clinton, MD College Park, MD College Park, MD District Heights, MD Ellicott City, 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 Seat Pleasant, MD Suitland, MD Upper Marlboro, MD Biddeford, ME Lewiston, ME Davidson, NC Fayetteville, NC Kernersville, NC New Bern, NC Belfield, ND Allenstown, NH Concord, NH Concord, NH Derry, NH Derry, NH Dover, NH Dover, NH Goffstown, NH Hooksett, NH Kingston, NH Londonderry, NH Londonderry, NH Manchester, NH Nashua, NH Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 628 651 445 536 479 895 1,039 422 1,153 491 594 662 753 457 1,358 822 696 1,210 1,267 1,415 1,530 2,523 1,256 582 468 673 845 618 342 1,776 986 449 350 1,232 1,787 675 900 418 950 650 1,200 1,737 1,562 1,500 703 1,100 550 500 - - - - - - - - - - - - - - - - - - - - - - - - - - - 8 188 - - - 83 - - - - 17 - - - - - - 30 - - - 628 651 445 536 479 - 1,039 422 1,153 491 594 662 753 457 1,358 822 696 1,210 1,267 1,415 1,530 2,523 1,256 582 468 673 845 235 222 301 509 338 190 382 467 675 900 158 950 650 1,200 697 824 1,500 458 1,100 550 500 82 - - - - - 895 - - - - - - - - - - - - - - - - - - - - - 391 308 1,475 477 111 243 850 1,320 - - 277 - - - 1,040 738 - 275 - - - 628 651 445 536 479 895 1,039 422 1,153 491 594 662 753 457 1,358 822 696 1,210 1,267 1,415 1,530 2,523 1,256 582 468 673 845 626 530 1,776 986 449 433 1,232 1,787 675 900 435 950 650 1,200 1,737 1,562 1,500 733 1,100 550 500 Date of Initial Leasehold or Acquisition Investment (1) 2009 2009 2009 2009 2009 2007 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 2009 1985 1985 2017 2018 2007 2007 2007 2007 2011 2011 1987 2011 2011 2011 2012 2007 2011 1985 2011 2011 2011 Accumulated Depreciation - - - - - 555 - - - - - - - - - - - - - - - - - - - - - 391 229 79 19 105 168 753 759 - - 276 - - - 457 671 - 235 - - - Nashua, NH Nashua, NH Nashua, NH Nashua, NH Nashua, NH Northwood, NH Pelham, NH Plaistow, NH Portsmouth, NH Raymond, NH Rochester, NH Rochester, NH Rochester, NH Rochester, NH Salem, NH Salem, NH Basking Ridge, NJ Bergenfield, NJ Brick, NJ Colonia, NJ Elizabeth, NJ Flemington, NJ Flemington, NJ Fort Lee, NJ Franklin Twp, NJ Freehold, NJ Hasbrouck Heights, NJ Hillsborough, NJ Lake Hopatcong, NJ Livingston, NJ Long Branch, NJ Mcafee, NJ Midland Park, NJ Mountainside, NJ North Bergen, NJ North Plainfield, NJ Paramus, NJ Parlin, NJ Paterson, NJ Ridgewood, NJ Trenton, NJ Union, NJ Washington Township, NJ Watchung, NJ West Orange, NJ Bernalillo, NM Bernalillo, NM Bernalillo, NM Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 550 750 825 1,132 1,750 500 - 300 525 550 700 939 1,400 1,600 743 450 363 381 1,508 719 406 709 547 1,245 684 495 640 238 1,305 872 515 671 201 664 630 227 382 418 619 703 1,303 437 912 449 800 1,829 2,308 2,322 - - - - - - 730 101 - - - 12 - - 20 871 284 323 229 (299) 33 (252) 17 365 169 533 483 182 - 292 439 448 309 (197) 147 544 81 159 17 398 - 214 334 114 409 - - - 550 750 825 780 1,750 500 317 245 525 550 700 600 1,400 1,600 484 350 200 300 1,000 72 227 168 346 811 445 95 416 100 800 568 335 437 150 134 410 175 249 203 403 458 1,146 239 594 226 521 1,382 1,830 1,796 83 - - - 352 - - 413 156 - - - 351 - - 279 971 447 404 737 348 212 289 218 799 408 933 707 320 505 596 619 682 360 333 367 596 214 374 233 643 157 412 652 337 688 447 478 526 550 750 825 1,132 1,750 500 730 401 525 550 700 951 1,400 1,600 763 1,321 647 704 1,737 420 439 457 564 1,610 853 1,028 1,123 420 1,305 1,164 954 1,119 510 467 777 771 463 577 636 1,101 1,303 651 1,246 563 1,209 1,829 2,308 2,322 Date of Initial Leasehold or Acquisition Investment (1) 2011 2011 2011 2017 2011 2011 1996 1987 2011 2011 2011 1985 2011 2011 1985 1986 1986 1990 2000 1985 1985 1985 1985 1985 1985 1978 1985 1985 2000 1985 1985 1985 1989 1985 1985 1978 1985 1985 1985 1985 2012 1985 1985 1985 1985 2017 2017 2017 Accumulated Depreciation - - - 33 - - 120 156 - - - 296 - - 236 122 278 225 509 282 188 120 185 538 352 170 449 245 436 391 323 342 208 152 296 448 150 158 198 395 58 192 394 140 475 37 43 45 Bernalillo, NM Dona Ana, NM Fernley, NV Alfred Station, NY Amherst, NY Astoria, NY Avoca, NY Batavia, NY Bay Shore, NY Bayside, NY Brewster, NY Briarcliff Manor, NY Bronx, NY Bronx, NY Bronx, NY Bronx, NY Bronx, NY Bronx, NY Bronx, NY Bronx, NY Bronxville, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Brooklyn, NY Buffalo, NY Byron, NY Chester, NY Churchville, NY Corona, NY Corona, NY Cortland Manor, NY Dobbs Ferry, NY Dobbs Ferry, NY East Hampton, NY East Pembroke, NY Eastchester, NY Elmont, NY Elmsford, NY Elmsford, NY Fishkill, NY Floral Park, NY Flushing, NY Flushing, NY Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 3,682 1,842 1,665 714 223 1,684 936 684 157 470 789 652 423 390 877 884 953 1,049 1,910 2,408 1,232 100 75 282 148 237 476 422 627 313 969 1,158 1,012 115 2,543 1,872 670 1,345 660 787 1,724 389 - 1,453 1,793 616 516 1,936 - - - - 246 - (1) - 355 254 - 553 - 54 - - - - - - - 345 382 271 437 372 320 383 313 241 - - - 300 - - 34 - 39 - 993 319 948 - - 170 241 - 3,141 1,374 221 414 173 1,105 635 364 86 306 789 502 423 251 877 884 953 485 1,349 1,712 1,232 67 31 176 104 154 306 275 408 151 669 1,158 602 113 1,903 1,872 434 1,345 428 537 2,302 231 581 1,453 1,793 356 320 1,413 84 541 468 1,444 300 296 579 300 320 426 418 - 703 - 193 - - - 564 561 696 - 378 426 377 481 455 490 530 532 403 300 - 410 302 640 - 270 - 271 250 415 477 367 - - 430 437 523 3,682 1,842 1,665 714 469 1,684 935 684 512 724 789 1,205 423 444 877 884 953 1,049 1,910 2,408 1,232 445 457 553 585 609 796 805 940 554 969 1,158 1,012 415 2,543 1,872 704 1,345 699 787 2,717 708 948 1,453 1,793 786 757 1,936 Date of Initial Leasehold or Acquisition Investment (1) 2017 2017 2015 2006 2000 2013 2006 2006 1981 1985 2011 1976 2013 1985 2013 2013 2013 2013 2013 2013 2011 1972 1967 1967 1972 1985 1985 1985 1985 2000 2006 2011 2006 1965 2013 2011 1985 2011 1985 2006 2011 1978 1971 2011 2011 1998 1998 2013 Accumulated Depreciation 48 40 366 154 141 188 154 164 286 227 - 515 - 171 - - - 184 191 214 - 227 264 361 294 233 316 322 342 228 154 - 210 302 200 - 232 - 233 128 45 333 244 - - 275 258 170 Flushing, NY Flushing, NY Forrest Hills, NY Franklin Square, NY Garden City, NY Garnerville, NY Glen Head, NY Glen Head, NY Great Neck, NY Hartsdale, NY Hawthorne, NY Hopewell Junction, NY Huntington Station, NY Hyde Park, NY Katonah, NY Lakeville, NY Levittown, NY Levittown, NY Long Island City, NY Mamaroneck, NY Massapequa, NY Mastic, NY Middletown, NY Middletown, NY Middletown, NY Millwood, NY Mount Kisco, NY Mount Vernon, NY Nanuet, NY Naples, NY New Paltz, NY New Rochelle, NY New Rochelle, NY New Windsor, NY New York, NY Newburgh, NY Newburgh, NY Niskayuna, NY North Andover, NY Ossining, NY Ozone Park, NY Peekskill, NY Pelham, NY Pelham Manor, NY Perry, NY Pleasant Valley, NY Port Chester, NY Port Chester, NY Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 1,947 2,478 1,273 153 362 1,508 235 463 500 1,626 2,084 1,163 141 990 1,084 1,028 503 547 2,717 1,429 333 313 719 751 1,281 1,448 1,907 985 2,316 1,257 971 189 1,887 1,084 126 527 1,192 425 393 231 58 2,207 1,035 137 1,444 398 941 1,015 - - - 331 242 - 216 282 252 - - - 284 - - - 42 86 - - 285 110 - 274 - - - - - - - 358 - - 399 - - 35 33 198 365 - - 307 - 62 - - 1,405 1,801 1,273 137 236 1,508 103 301 450 1,626 2,084 1,163 84 990 1,084 203 327 356 1,183 1,429 217 204 719 489 1,281 1,448 1,907 985 2,316 827 971 104 1,887 1,084 78 527 1,192 275 256 117 45 2,207 1,035 75 1,044 240 - 1,015 85 542 677 - 347 368 - 348 444 302 - - - 341 - - 825 218 277 1,534 - 401 219 - 536 - - - - - 430 - 443 - - 447 - - 185 170 312 378 - - 369 400 220 941 - 1,947 2,478 1,273 484 604 1,508 451 745 752 1,626 2,084 1,163 425 990 1,084 1,028 545 633 2,717 1,429 618 423 719 1,025 1,281 1,448 1,907 985 2,316 1,257 971 547 1,887 1,084 525 527 1,192 460 426 429 423 2,207 1,035 444 1,444 460 941 1,015 Date of Initial Leasehold or Acquisition Investment (1) 2013 2013 2013 1978 1985 2011 1982 1985 1985 2011 2011 2011 1978 2011 2011 2008 1985 1985 2013 2011 1985 1985 2011 1985 2011 2011 2011 2011 2011 2006 2011 1982 2011 2011 1972 2011 2011 1986 1985 1985 1976 2011 2011 1985 2006 1986 2011 2011 Accumulated Depreciation 162 203 - 195 210 - 348 275 166 - - - 202 - - 537 189 231 416 - 228 202 - 348 - - - - - 221 - 240 - - 309 - - 185 148 171 228 - - 230 205 209 443 - Port Jefferson, NY Poughkeepsie, NY Poughkeepsie, NY Poughkeepsie, NY Poughkeepsie, NY Poughkeepsie, NY Poughkeepsie, NY Prattsburgh, NY Rego Park, NY Riverhead, NY Rockaway Park, NY Rockville Centre, NY Rye, NY Sag Harbor, NY Sayville, NY Scarsdale, NY Shrub Oak, NY Sleepy Hollow, NY Spring Valley, NY St. Albans, NY Staten Island, NY Staten Island, NY Staten Island, NY Stony Brook, NY Tarrytown, NY Tuchahoe, NY Wantagh, NY Wappingers Falls, NY Wappingers Falls, NY Warsaw, NY Warwick, NY West Nyack, NY White Plains, NY White Plains, NY Yaphank, NY Yonkers, NY Yonkers, NY Yonkers, NY Yonkers, NY Yonkers, NY Yorktown Heights, NY Yorktown Heights, NY Clermont, OH Crestline, OH Mansfield, OH Mansfield, OH Monroeville, OH Summit, OH Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 185 591 1,020 1,232 1,340 1,306 1,355 553 2,783 724 1,605 350 872 704 344 1,301 1,061 281 749 330 390 301 350 176 956 1,650 640 452 1,488 990 1,049 936 - 1,458 - - - 1,021 291 1,907 1,700 2,365 1,045 1,202 922 1,950 2,580 1,530 3,080 - - (32) (60) - - - - - - 66 - 35 246 - 368 301 - 106 89 323 290 281 - - - - - - - - 569 - 798 588 944 63 1,050 - - - - - - - - - 246 591 1,020 1,200 1,280 1,306 1,355 303 2,104 432 1,605 201 872 458 300 1,301 691 130 749 215 254 196 228 105 956 1,650 370 - 1,488 690 1,049 936 303 1,458 375 - 684 665 216 1,907 - 2,365 362 285 332 700 485 385 86 3,019 - - - - - - 250 679 292 - 215 - 281 290 - 738 452 - 221 225 428 412 352 - - 270 452 - 300 - - 266 - 423 588 260 419 1,125 - 1,700 - 683 917 590 1,250 2,095 1,145 3,265 591 1,020 1,200 1,280 1,306 1,355 553 2,783 724 1,605 416 872 739 590 1,301 1,429 582 749 436 479 624 640 457 956 1,650 640 452 1,488 990 1,049 936 569 1,458 798 588 944 1,084 1,341 1,907 1,700 2,365 1,045 1,202 922 1,950 2,580 1,530 Date of Initial Leasehold or Acquisition Investment (1) 1985 2011 2011 2011 2011 2011 2011 2006 2013 1998 2013 1985 2011 1985 1998 2011 1985 1969 2011 1985 1985 1985 1985 1978 2011 2011 1998 2011 2011 2006 2011 2011 1972 2011 1993 1970 1990 1985 1972 2011 2013 2011 2017 2008 2008 2009 2009 2017 Accumulated Depreciation 14 - - - - - - 128 213 241 - 197 - 241 134 - 511 392 - 183 203 263 244 210 - - 219 323 - 154 - - 204 - 182 345 114 361 542 - 274 - 64 463 280 587 970 95 Oklahoma City, OK Oklahoma City, OK Oklahoma City, OK Banks, OR Estacada, OR Marion, OR Marion, OR Pendleton, OR Portland, OR Salem, OR Salem, OR Salem, OR Salem, OR Salem, OR Springfield, OR Yamhill, OR Allison Park, PA Harrisburg, PA Lancaster, PA New Kensington, PA Philadelphia, PA Philadelphia, PA Phoenixville, PA Pottsville, PA, PA Reading, PA Barrington, RI East Providence,, RI N. Providence, RI Columbia, SC Columbia, SC Columbia, SC Johns Island, SC Kershaw, SC Kershaw, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 868 1,182 1,311 498 646 543 956 766 4,416 1,071 1,350 1,408 4,215 4,614 1,398 2,867 1,500 399 642 1,375 405 1,252 385 452 750 490 2,298 543 1,995 2,109 2,531 2,561 2,082 2,177 412 633 694 720 816 973 1,036 1,056 1,116 1,436 1,624 1,644 1,682 1,712 - - - - - - - - - - - - - - - - - 213 18 - 175 - 89 1 49 180 (1,855) 158 - - - - - - - - - - - - - - - - - - - - 371 587 625 498 84 296 456 122 3,368 399 521 524 3,182 3,517 796 394 850 199 300 675 264 814 76 148 - 319 14 353 1,130 1,120 1,612 1,885 1,166 974 145 309 172 219 336 582 434 432 50 472 999 1,283 1,135 1,410 87 497 595 686 - 562 247 500 644 1,048 672 829 884 1,033 1,097 602 2,473 650 413 360 700 316 438 398 305 799 351 429 348 865 989 919 676 916 1,203 267 324 522 501 480 391 602 624 1,066 964 625 361 547 302 868 1,182 1,311 498 646 543 956 766 4,416 1,071 1,350 1,408 4,215 4,614 1,398 2,867 1,500 612 660 1,375 580 1,252 474 453 799 670 443 701 1,995 2,109 2,531 2,561 2,082 2,177 412 633 694 720 816 973 1,036 1,056 1,116 1,436 1,624 1,644 1,682 1,712 Date of Initial Leasehold or Acquisition Investment (1) 2018 2018 2018 2015 2015 2017 2017 2015 2015 2015 2015 2015 2015 2015 2015 2017 2010 1989 1989 2010 1985 2009 1985 1990 1989 1985 1985 1985 2018 2018 2018 2018 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 Accumulated Depreciation 19 22 24 - 109 29 50 138 213 174 172 190 226 225 152 192 444 329 360 269 263 177 27 304 799 266 74 255 21 23 21 6 68 84 19 24 41 35 27 30 42 47 77 70 45 27 43 19 Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Lexington, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Richland, SC Arlington, TX Arlington, TX Arlington, TX Arlington, TX Austin, TX Austin, TX Austin, TX Center, TX El Paso, TX El Paso, TX El Paso, TX El Paso, TX El Paso, TX El Paso, TX Ft Worth, TX Garland, TX Garland, TX Garland, TX Grand Prairie, TX Grand Prairie, TX Harker Heights, TX Houston, TX Houston, TX Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 1,729 1,738 1,901 2,046 2,179 2,230 2,603 3,231 3,234 4,413 464 575 792 868 927 1,114 1,246 1,339 1,643 2,460 2,637 3,217 3,371 3,655 3,950 789 1,352 1,560 1,796 462 2,368 3,511 2,073 1,278 1,425 1,679 1,816 2,370 3,168 2,115 2,208 3,296 4,439 1,413 2,000 2,051 1,689 2,803 461 549 880 1,300 703 1,296 734 1,230 2,036 995 211 230 329 413 432 447 1,177 472 341 891 1,383 812 1,355 1,913 1,148 375 465 552 607 188 1,630 1,982 591 453 327 594 403 603 1,015 1,298 704 3,051 4,000 499 585 1,463 1,465 2,268 1,729 1,738 1,901 2,046 2,179 2,230 2,603 3,231 3,234 4,413 464 575 792 868 927 1,114 1,246 1,339 1,643 2,460 2,637 3,217 3,371 3,655 3,950 789 1,352 1,560 1,796 462 2,368 3,577 2,073 1,278 1,425 1,679 1,816 2,370 3,168 2,164 2,208 3,296 4,439 1,413 2,000 2,042 1,689 2,803 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 66 - - - - - - - 49 - - - - - (9) - - 1,268 1,189 1,021 746 1,476 934 1,869 2,001 1,198 3,418 253 345 463 455 495 667 69 867 1,302 1,569 1,254 2,405 2,016 1,742 2,802 414 887 1,008 1,189 274 738 1,595 1,482 825 1,098 1,085 1,413 1,767 2,153 866 1,504 245 439 914 1,415 579 224 535 88 Date of Initial Leasehold or Acquisition Investment (1) 2017 2017 2017 2017 2017 2017 2018 2018 2018 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2017 2018 2018 2018 2018 2007 2007 2007 2018 2017 2017 2017 2017 2017 2017 2007 2018 2014 2014 2018 2018 2007 2007 2016 Accumulated Depreciation 39 31 73 90 50 92 19 30 45 81 16 16 25 35 27 32 78 34 19 71 97 65 104 133 84 15 18 20 23 130 851 1,012 24 38 29 45 35 47 80 721 26 550 754 20 22 1,144 735 220 Keller, TX Lewisville, TX Linden, TX Longview, TX Mesquite, TX Midlothian, TX Nueces, TX Nueces, TX Nueces, TX Port Arthur, TX Rowlett, TX San Marcos, TX San Patricio, TX Temple, TX Texarkana, TX Texarkana, TX Texarkana, TX The Colony, TX Travis, TX Waco, TX Wake Village, TX Watauga, TX Alexandria, VA Alexandria, VA Alexandria, VA Alexandria, VA Alexandria, VA Alexandria, VA Alexandria, VA Alexandria, VA Annandale, VA Arlington, VA Arlington, VA Arlington, VA Arlington, VA Ashland, VA Chesapeake, VA Chesapeake, VA Fairfax, VA Fairfax, VA Fairfax, VA Fairfax, VA Farmville, VA Fredericksburg, VA Fredericksburg, VA Fredericksburg, VA Fredericksburg, VA Glen Allen, VA Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost 2,507 494 2,160 1,660 1,687 429 1,526 2,162 2,400 2,648 1,284 1,954 3,138 2,405 1,791 1,861 2,316 4,396 1,711 3,884 1,637 1,771 649 656 712 735 1,327 1,388 1,582 1,757 1,718 1,083 1,464 2,014 2,062 840 779 1,004 1,825 2,078 3,348 4,454 1,227 1,279 1,289 1,716 3,623 1,037 - - - - - - - - - - - - - (10) - - - - - - - - - - - - - - - - - - - - - - (185) 110 - - - - - - 30 - - - 996 110 1,514 1,239 1,093 72 1,056 1,729 1,110 505 840 251 2,687 1,205 992 1,197 1,643 337 1,364 894 685 1,139 649 409 712 735 1,327 1,020 1,150 1,313 1,718 1,083 1,085 1,516 1,603 840 398 385 1,190 1,365 2,351 3,370 622 469 798 996 2,828 412 89 1,511 384 646 421 594 357 470 433 1,290 2,143 444 1,703 451 1,190 799 664 673 4,059 347 2,990 952 632 - 247 - - - 368 432 444 - - 379 498 459 - 196 729 635 713 997 1,084 605 810 521 720 795 625 2,507 494 2,160 1,660 1,687 429 1,526 2,162 2,400 2,648 1,284 1,954 3,138 2,395 1,791 1,861 2,316 4,396 1,711 3,884 1,637 1,771 649 656 712 735 1,327 1,388 1,582 1,757 1,718 1,083 1,464 2,014 2,062 840 594 1,114 1,825 2,078 3,348 4,454 1,227 1,279 1,319 1,716 3,623 1,037 Date of Initial Leasehold or Acquisition Investment (1) 2007 2008 2018 2018 2018 2007 2017 2017 2017 2016 2018 2007 2017 2007 2018 2018 2018 2007 2017 2007 2018 2018 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 2005 1990 1990 2013 2013 2013 2013 2005 2005 2005 2005 2005 2005 Accumulated Depreciation 827 239 25 16 23 229 36 37 99 215 16 874 39 664 29 27 24 1,992 31 1,674 34 24 - 87 - - - 131 140 153 - - 126 160 146 - 72 667 204 197 302 328 333 446 288 397 438 344 Gross Amount at Which Carried at Close of Period Initial Cost of Leasehold or Acquisition Investment to Company (1) Cost Capitalized Subsequent to Initial Investment Land Building and Improvements Total Cost Glen Allen, VA King William, VA Mechanicsville, VA Mechanicsville, VA Mechanicsville, VA Mechanicsville, VA Mechanicsville, VA Mechanicsville, VA Montpelier, VA Norfolk, VA Petersburg, VA Portsmouth, VA Richmond, VA Ruther Glen, VA Sandston, VA Spotsylvania, VA Springfield, VA Auburn, WA Bellevue, WA Chehalis, WA Colfax, WA Federal Way, WA Fife, WA Kent, WA Monroe, WA Port Orchard, WA Puyallup, WA Puyallup, WA Puyallup, WA Renton, WA Seattle, WA Seattle, WA Silverdale, WA Snohomish, WA South Bend, WA Tacoma, WA Tacoma, WA Tenino, WA Vancouver, WA Wilbur, WA Miscellaneous 1,077 1,688 903 957 1,043 1,125 1,476 1,677 2,481 535 1,441 563 1,132 466 722 1,290 4,257 3,022 1,725 1,176 4,800 4,218 1,181 2,900 2,792 2,019 831 2,035 4,050 1,485 717 1,884 2,178 955 760 518 671 937 1,214 629 45,846 978,973 - - - - - - - - (114) (70) - 33 (41) - - - - - - - - - - - - - - - - - - - - - - - - - - - 322 1,068 273 324 223 505 876 1,157 1,612 235 816 222 506 31 102 490 2,969 1,965 886 313 3,611 2,973 414 2,066 1,556 161 172 465 2,394 952 193 1,223 1,217 955 121 518 671 219 163 153 15,133 21,703 64,133 $ 631,185 $ $ 1,077 755 1,688 620 903 630 957 633 1,043 820 1,125 620 1,476 600 1,677 520 2,367 755 465 230 1,441 625 596 374 1,091 585 466 435 722 620 1,290 800 4,257 1,288 3,022 1,057 1,725 839 1,176 863 4,800 1,189 4,218 1,245 1,181 767 2,900 834 2,792 1,236 2,019 1,858 831 659 2,035 1,570 4,050 1,656 1,485 533 717 524 1,884 661 2,178 961 955 - 760 639 518 - 671 - 937 718 1,214 1,051 629 476 39,276 60,979 411,921 $ 1,043,106 $ Accumulated Depreciation 416 342 347 371 452 342 331 286 416 230 344 366 322 240 342 441 386 224 178 201 253 284 176 192 268 337 162 327 430 153 107 135 220 - 127 - - 144 191 106 26,242 150,691 Date of Initial Leasehold or Acquisition Investment (1) 2005 2005 2005 2005 2005 2005 2005 2005 2005 1990 2005 1990 2005 2005 2005 2005 2013 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 2015 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 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 16 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 $1,046,120,000 at December 31, 2018. 90 GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE As of December 31, 2018 (in thousands) Description Type of Loan/Borrower Mortgage Loans: Seller financing Borrower A Seller financing Borrower B Seller financing Borrower C Seller financing Borrower D Seller financing Borrower E Seller financing Borrower F Seller financing Borrower G Seller financing Borrower H Seller financing Borrower I Seller financing Borrower J Seller financing Borrower K Seller financing Borrower L Seller financing Borrower M Seller financing Borrower N Seller financing Borrower O Seller financing Borrower P Seller financing Borrower Q Seller financing Borrower R Seller financing Borrower S Seller financing Borrower T Seller financing Borrower U Seller financing Borrower V Seller financing Borrower W Seller financing Borrower X Seller financing Borrower Y Seller financing Borrower Z Seller financing Borrower AA Seller financing Borrower AB Seller financing Borrower AC Seller financing Borrower AD Seller financing Borrower AE Seller financing Borrower AF Seller financing Borrower AG Seller financing Borrower AH Seller financing Borrower AI Seller financing Borrower AJ Seller financing Borrower AK Borrower AL Seller financing Borrower AM Seller financing Seller financing Borrower AN Seller financing Borrower AO Seller financing Borrower AP Seller financing Borrower AQ Seller financing Borrower AR Seller financing Borrower AS Seller financing Borrower AT Seller financing Borrower AU Location(s) Interest Rate Final Maturity Date Periodic Payment Terms (a) Prior Liens Face Value at Inception Amount of Principal Unpaid at Close of Period East Islip, NY Middlesex, NJ Valley Cottage, NY Brooklyn, NY Nyack, NY E. Patchogue, NY Baldwin, NY Norwalk, CT Stafford Springs, CT Waterbury, CT Great Barrington, MA Springfield, MA Westfield, MA Milford, CT Fairfield, CT Hartford, CT Wilmington, DE Clinton, MA Fairhaven, MA New Bedford, MA Fitchburg, MA Worcester, MA S. Yarmouth, MA Harwich Port, MA Southbridge, MA Oxford, MA Kernersville/Lexington, NC Concord, NH Pelham, NH Bayonne, NJ Spotswood, NJ Belleville, NJ Ridgefield, NJ Irvington, NJ Jersey City, NJ Colonia, NJ Swedesboro, NJ Piscataway, NJ Glendale, NY Seaford, NY Elmont, NY White Plains, NY Scarsdale, NY Pleasant Valley, NY Bronx, NY Freeport, NY Wantagh, NY 91 9.0% 11/2024 9.0% 5/2021 9.0% 10/2020 6/2019 8.0% 9/2022 9.0% 8/2019 9.0% 9/2020 9.0% 4/2022 9.0% 1/2021 9.0% 2/2021 9.0% 4/2021 9.0% 9.0% 7/2019 9.0% 11/2021 3/2025 9.0% 3/2025 9.0% 9.0% 3/2024 9.0% 11/2020 3/2022 9.0% 9/2020 9.0% 9.0% 10/2021 9.0% 10/2021 9.0% 11/2021 1/2022 9.0% 1/2022 9.0% 3/2021 9.0% 3/2023 9.0% 7/2026 8.0% 8/2028 9.5% 1/2023 9.0% 3/2020 9.0% 1/2020 9.0% 3/2021 9.0% 4/2021 9.0% 7/2022 9.0% 7/2025 9.5% 7/2020 9.0% 9.0% 4/2021 9.0% 11/2020 9.0% 7/2025 1/2020 9.0% 9.0% 10/2021 9.0% 2/2021 9.0% 11/2025 9/2020 9.0% 9.0% 12/2019 5/2020 9.0% 5/2022 9.0% P & I — $ P & I — P & I — I(b) — 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 — 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 — P & I — 743 $ 255 431 2,000 253 200 300 319 232 171 58 131 303 398 390 70 84 158 458 363 187 237 275 293 300 86 568 210 73 308 306 315 172 300 500 320 77 121 525 488 450 444 337 230 240 206 455 727 229 381 2,000 237 169 265 294 206 153 52 98 277 392 385 68 74 85 403 330 170 216 252 268 268 81 150 148 68 266 263 282 154 193 417 280 69 71 502 419 364 396 300 202 44 180 382 Type of Description Loan/Borrower Borrower AV Seller financing Borrower AW Seller financing Seller financing Borrower AX Seller financing Borrower AY Seller financing Borrower AZ Seller financing Borrower BA Seller financing Borrower BB Seller financing Borrower BC Seller financing Borrower BD Seller financing Borrower BE Seller financing Borrower BF Seller financing Borrower BG Seller financing Borrower BH Seller financing Borrower BI Seller financing Borrower BJ Seller financing Borrower BK Borrower BL Seller financing Borrower BM Seller financing Seller financing Borrower BN Seller financing Borrower BO Seller financing Borrower BP Seller financing Borrower BQ Note receivable Location(s) Colonie, NY Latham, NY Malta, NY Newburgh, NY Coxsackie, NY Brewster, NY Cairo, NY Central Islip, NY Kenmore, NY Rochester, NY Savona, NY Rochester, NY Greigsville, NY Horsham, PA Warwick, RI Providence, RI Warwick, RI Cranston, RI E. Providence, RI York, PA Ephrata, PA McConnellsburg, PA Interest Rate Final Maturity Date 8/2023 9.0% 1/2021 9.0% 3/2023 9.0% 9/2021 9.0% 9.0% 7/2021 9.0% 10/2022 8/2023 9.0% 6/2023 9.0% 9.0% 12/2020 2/2025 9.0% 9.0% 2/2025 9.0% 10/2025 9.0% 11/2025 7/2024 10.0% 8/2022 9.0% 9/2021 9.0% 9.0% 10/2021 8/2022 9.0% 2/2022 9.0% 2/2021 9.0% 9.0% 10/2020 1/2023 9.0% Periodic Payment Terms (a) Prior Liens Face Value at Inception 143 169 572 394 153 554 113 780 74 174 157 230 200 237 333 184 357 153 186 102 265 38 20,908 Amount of Principal Unpaid at Close of Period 136 150 539 359 138 518 107 741 66 171 154 229 200 117 309 167 325 142 171 91 158 36 18,254 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 — P & I — Purchase/leaseback Various-NY Various-CT Promissory Note 1/2021 9.5% 9.0% 12/2028 I(b) (c) 18,400 — $ 39,308 $ 14,720 545 33,519 Total (d) (a) P & I = Principal and interest paid monthly. (b) I = Interest only paid monthly with principal deferred. (c) Note for funding of capital improvements. (d) The aggregate cost for federal income tax purposes approximates the amount of principal unpaid. 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. The summarized changes in the carrying amount of mortgage loans are as follows: Balance at January 1, Additions: New mortgage loans Deductions: Loan repayments Collection of principal Balance at December 31, 2018 2017 2016 $ 32,366 $ 32,737 $ 48,455 4,287 1,505 1,814 (2,368) (766) 33,519 $ (1,227) (649) 32,366 $ (16,714) (818) 32,737 $ 92 EXHIBIT INDEX Exhibit Number 3.1 GETTY REALTY CORP. Annual Report on Form 10-K for the year ended December 31, 2018 Description of Document Location of Document Articles of Incorporation of Getty Realty Holding Corp. (“Holdings”), now known as Getty Realty Corp., filed December 23, 1997. 3.2 Articles Supplementary to Articles of Incorporation of Holdings, filed January 21, 1998. 3.3 By-Laws of Getty Realty Corp. Annexed as Appendix D to the Joint Proxy/Prospectus that is a part of the Company’s Registration Statement on Form S-4 filed on January 12, 1998 (File No. 333- 44065) and incorporated herein by reference. Filed as Exhibit 3.2 to the 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 3.2 to the Company’s Current Report on Form 8-K 2011 (File No. 001-13777) and incorporated herein by reference. on November 14, filed 3.4 3.5 3.6 3.7 4.1 10.1* 10.2* 10.4* Articles of Amendment of Holdings, changing its name to Getty Realty Corp., filed January 30, 1998. Articles of Amendment of Holdings, filed August 1, 2001. Articles Supplementary to Articles of Incorporation of Holdings, filed October 25, 2017. Filed as Exhibit 3.4 to the 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 3.5 to the 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 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-13777) and incorporated herein by reference. Amendment to By-Laws of Getty Realty Corp. Filed herewith. Dividend Reinvestment/Stock Purchase Plan. Retirement and Profit Sharing Plan (restated as of December 1, 2012). Included under the heading “Description of Plan” on pages 5 through 18 of the Company’s Registration Statement on Form S-3D filed on April 22, 2004 (File No. 333-114730) and incorporated herein by reference. Filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-13777) and incorporated herein by reference. 1998 Stock Option Plan, effective as of January 30,1998. Annexed as Appendix H to the Joint Proxy Statement/Prospectus that is a part of the Company’s filed on Registration Statement on Form S-4 January 12, and incorporated herein by reference. (File No. 333-44065) 1998 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). Filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference. 10.6* 2004 Getty Realty Corp. Omnibus Compensation Plan. Incentive Annexed as Appendix B. to the Company’s Definitive Proxy Statement filed on April 9, 2004 (File No. 001- 13777) and incorporated herein by reference. 93 Description of Document Location of Document Exhibit Number 10.7* Form of restricted stock unit grant award under the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan, as amended. 10.8* Amendment to the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan dated December 31, 2008. Filed as Exhibit 10.15 to the 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 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference. 10.15* 10.18* 10.20** 10.21** 10.28 10.29** 10.30** 10.31 10.32** Form of incentive restricted stock unit grant award under the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan, as amended. Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2013 (File No. 001-13777) and incorporated herein by reference. Getty Realty Corp. Amended and Restated 2004 Omnibus Incentive Compensation Plan. Credit Agreement, dated as of June 2, 2015, among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A. as Administrative Agent, Swing Line Lender, an L/C Issuer and as a Lender, and the other leaders party thereto. Amended and Restated Note Purchase and Guarantee Agreement, dated as of June 2, 2015, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential Insurance Company of America, and the Prudential Retirement Insurance and Annuity Company. First Amendment, dated as of February 21, 2017, to Credit Agreement among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A. as Administrative Agent, Swing Line Lender, an L/C Issuer and as a Lender, and the other leaders party thereto. Second Amended and Restated Note Purchase and Guarantee Agreement, dated as of February 21, 2017, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential Insurance Company of (“Prudential”) and certain affiliates of America Prudential. Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed on March 16, 2015 (File No. 001- 13777) and incorporated herein by reference. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 001-13777) and incorporated herein by reference. Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 001-13777) and incorporated herein by reference. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2017 (File No. 001-13777) and incorporated herein by reference. Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2017 (File No. 001-13777) and incorporated herein by reference. Transaction Agreement between Empire Petroleum Partners, LLC and Getty Realty Corp., dated June 22, 2017. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 28, 2017 (File No. 001-13777) and incorporated herein by reference. Distribution Agreement by and among Getty Realty Corp., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, KeyBanc Capital Markets Inc., RBC Capital Markets, LLC, BTIG, LLC, Capital One Securities, Inc. and JMP Securities LLC, dated March 9, 2018. Amended and Restated Credit Agreement, dated as of March 23, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A., as Administrative Agent and Swing Line Lender, each lender from time to time party thereto and each L/C Issuer from time to time party thereto. Filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 9, 2016 (File No. 001- 13777) and incorporated herein by reference. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2018 (File No. 001-13777) and incorporated herein by reference. 94 Exhibit Number 10.33** 10.34** Description of Document Location of Document Third Amended and Restated Note Purchase and Guarantee Agreement, dated as of June 21, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential and certain affiliates of Prudential. Note Purchase and Guarantee Agreement, dated as of June 21, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, Metropolitan Life Insurance Company (“MetLife”) and certain affiliates of MetLife. Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 26, 2018 (File No. 001-13777) and incorporated herein by reference. Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on July 26, 2018 (File No. 001-13777) and incorporated herein by reference. 10.35* Form of Indemnification Agreement between Company and its directors. the Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 25, 2018 (File No. 001-13777) and incorporated herein by reference. 21 23 31.1 31.2 32.1 32.2 Subsidiaries of the Company. Consent of Independent Registered Public Accounting Firm. Certification of Christopher J. Constant, President and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended. Certification of Danion Fielding, Vice President, Chief Financial Officer and Treasurer, pursuant to Rule 13a- 14(a) under the Securities Exchange Act of 1934, as amended. Certification of Christopher J. Constant, President and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350. Certification of Danion Fielding, Vice President, Chief Financial Officer and Treasurer, pursuant to Rule 13a- 14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE XBRL Instance Document XBRL Taxonomy Extension Schema Filed herewith. Filed herewith. XBRL Taxonomy Extension Calculation Linkbase Filed herewith. XBRL Taxonomy Extension Definition Linkbase Filed herewith. XBRL Taxonomy Extension Label Linkbase Filed herewith. XBRL Taxonomy Extension Presentation Linkbase Filed herewith. * 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 2018 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., Two Jericho Plaza, Suite 110, Jericho, NY 11753-1681. 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 2018 Annual Report on Form 10-K. 95 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/ DANION FIELDING Danion Fielding Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) February 27, 2019 By: /S/ EUGENE SHNAYDERMAN Eugene Shnayderman Chief Accounting Officer and Controller (Principal Accounting Officer) February 27, 2019 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/ CHRISTOPHER J. CONSTANT Christopher J. Constant President, Chief Executive Officer and Director (Principal Executive Officer) February 27, 2019 /S/ PHILIP E. COVIELLO Philip E. Coviello Director February 27, 2019 /S/ Mary Lou Malanoski Mary Lou Malanoski Director February 27, 2019 /S/ HOWARD SAFENOWITZ Howard Safenowitz Director February 27, 2019 By: By: By: /S/ MILTON COOPER Milton Cooper Director February 27, 2019 /S/ LEO LIEBOWITZ Leo Liebowitz Director and Chairman of the Board February 27, 2019 /S/ RICHARD E. MONTAG Richard E. Montag Director February 27, 2019 96 AMENDMENT TO THE BYLAWS OF GETTY REALTY CORP. Effective as of February 26, 2019 Exhibit 3.7 The following amendment is made to the Bylaws (the “Bylaws”) of Getty Realty Corp. (the “Corporation”) pursuant to resolutions adopted by the Board of Directors of the Corporation on February 26, 2019: 1. Article II, Section 2 of the Bylaws is hereby amended in its entirety to read as follows: “Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on such date and at such time annually as shall be set by the Board of Directors.” 2. Except as set forth herein, the Bylaws shall remain in full force and effect. 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. GTY-CPG (VA/DC) Leasing, Inc. GTY-CPG (QNS./BX) Leasing, Inc. GTY-EPP Leasing, LLC GTY-GPM-EZ Leasing, LLC GTY-Pacific Leasing, LLC GTY-SC Leasing, LLC 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 Delaware Delaware Delaware Delaware Delaware Delaware 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. EXHIBIT 23. CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No.333-221836) and Form S-8 (No. 333-115672 and 333-223054) of Getty Realty Corp. of our report dated February 27, 2019 relating to the financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP New York, New York February 27, 2019 Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Christopher J. Constant, 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 consolidated 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) b) c) d) 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; 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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles; 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 disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) 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) b) 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 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: February 27, 2019 By: /s/ CHRISTOPHER J. CONSTANT Christopher J. Constant President and Chief Executive Officer Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Danion Fielding, 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 consolidated 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) b) c) d) 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; 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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles; 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 disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) 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) b) 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 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: February 27, 2019 By: /s/ DANION FIELDING Danion Fielding Vice President, Chief Financial Officer and Treasurer CERTIFICATION OF CHIEF EXECUTIVE OFFICER Exhibit 32.1 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) (ii) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2018 (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 the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 27, 2019 By: /s/ CHRISTOPHER J. CONSTANT Christopher J. Constant 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. CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 32.2 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) (ii) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2018 (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 the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: February 27, 2019 By: /s/ DANION FIELDING Danion Fielding Vice President, Chief Financial Officer and Treasurer 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. This page is intentionally blank CO RPO R ATE DATA Board of Directors Christopher J. Constant Chief Executive Officer and President of Getty Realty Corp. Milton Cooper Chairman of the Board of Directors of Kimco Realty Corporation Philip E. Coviello Retired Partner of Latham & Watkins LLP Corporate Headquarters Getty Realty Corp. Two Jericho Plaza, Suite 110 Jericho, New York 11753-1681 (516) 478-5400 www.gettyrealty.com 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. About Our Shareholders Mary Lou Malanoski Chief Financial Officer, Colony S2k Holdings Richard E. Montag Former Senior Executive of the Richard E. Jacobs Group Howard Safenowitz President, Safenowitz Family Corp. Executive Officers Christopher J. Constant Chief Executive Officer and President Joshua Dicker Executive Vice President, General Counsel and Secretary Danion Fielding Vice President, Chief Financial Officer and Treasurer Mark J. Olear Executive Vice President and Chief Operating Officer As of February 27, 2019, we had 40,866,854 outstanding shares of common stock owned by approximately 10,895 shareholders. Annual Meeting All shareholders are cordially invited to attend our annual meeting on April 30, 2019, at 3:30 p.m. at the offices of Arent Fox LLP located at 1301 Avenue of the Americas, 42nd Floor, New York, NY 10019. Holders of common stock of record at the close of business on March 6, 2019, 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, securi- ties analysts and others desiring financial information should contact Investor Relations at (516) 478-5400 or by writing to: Investor Relations Getty Realty Corp. Two Jericho Plaza, Suite 110 Jericho, New York 11753-1681 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 Computershare Inc. 462 South 4th St Suite 1600 Louisville, KY 40202 (800) 368-5948 www.computershare.com Two Jericho Plaza, Suite 110 Jericho, NY 11753 -1681 (516) 478 - 5400 G E T T Y R E A L T Y C O R P . 2 0 1 8 A N N U A L R E P O R T 

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