(cid:20)
(cid:16)
(cid:20)
(cid:16)
(cid:3)
(cid:64)
(cid:78)
(cid:78)
(cid:85)
(cid:64)
(cid:76)
(cid:3)
(cid:82)
(cid:68)
(cid:80)
(cid:79)
(cid:82)
(cid:84)
GETTY REALTY CORP.
292 Madison Avenue, 9th Floor
New York, NY 10017
2
5 3
COMMITMENT TO OUR TEAM, TENANTS AND SHAREHOLDERS
DEAR SHAREHOLDERS
Our focff
Our focus continues to be
the health and safety of our
employees and the impact
of COVID-19 on our
tenants and their
businesses.
Although uncertainty
remains regarding the
longer-term effect of the
pandemic on the broader
economy, we are
encouraged by the resilience
and strong performance of
our team and our portfolio.
Getty had a highly productive year during 2020 which saw each aspect of our business post
significant accomplishments. The net result was that Getty achieved substantially all of our business
objectives and produced growth of both our revenues from rental properties, which increased by 5%
for the year, and our adjusted funds from operations (“AFFO”) per share, which grew by 7% for the
year. In a normal year, I would be proud to report these results to our shareholders. When you
consider the countless challenges brought upon us by the COVID-19 pandemic, I take even greater
satisfaction from our results, which were only possible due to the extraordinary efforts put forth by the
entire Getty team. I also believe that our performance reflects the value of our in-place portfolio which,
combined with our strong balance sheet and growing pipeline of investment prospects, positions the
Company for continued success as we look towards 2021 and beyond.
COVID-RELATED CHALLENGES
Getty’s business began to feel the impacts of the COVID-19 pandemic in March of 2020. Our initial
focus was the health and safety of our employees and the potential negative impacts to our tenants’
businesses. We were fortunate that our portfolio of triple-net leased assets was performing well prior to
the onset of the COVID-19 pandemic. With that said, the convenience & gas (“C&G”) sector began to
feel the adverse effects of the public health crisis when several
large states on the East and West
Coasts instituted travel restrictions and stay at home orders. Fortunately for Getty, the vast majority of
our C&G and other automotive properties were deemed “essential” under state and federal guidelines
meaning that more than 95% of our assets remained operational throughout 2020. Yet even though
our tenants were open for business, they still faced numerous pandemic-related operational, health
and safety challenges.
Nationally, the COVID-19 pandemic reduced motor vehicle use and, as a result, fuel volumes declined
significantly year-over-year, with the extent of the decline varying by region. While it is impossible to
replace the lost revenue from lower fuel volumes, it is important to note that many of our tenants
benefited from historically high retail fuel margins in 2020 (gross profit made on a per gallon basis).
This increase in retail fuel margins, which was driven by the considerable drop in oil prices, partially
offset the pressure of volume-related weakness at times during the year.
In contrast to fuel-related challenges, our tenants’ convenience store businesses displayed far greater
resiliency during the public health crisis. Several of our
tenants actually reported that
their
convenience sales grew year-over-year as consumers increased their use of neighborhood stores for
food, traditional merchandise, grocery items, household goods and cleaning products.
I am pleased to report that to date the COVID-19 pandemic has had a minimal
impact on Getty’s
business. We collected more than 98% of contractual rent and mortgage payments for the year, and
also collected substantially all of our “COVID-related” rent and mortgage deferrals due in 2020.
Although uncertainty remains regarding the forward impact of COVID-19 to the broader economy, we
are encouraged by the strength exhibited by our tenants and assets since the beginning of the
pandemic. Nevertheless, we will continue to vigilantly monitor the health of our tenants’ businesses, as
we believe the pandemic will continue to impact consumer and retail activity through at least the first
half of 2021 and possibly beyond that.
2
5 3
COMMITMENT TO OUR TEAM, TENANTS AND SHAREHOLDERS
DEAR SHAREHOLDERS
Our focff
Our focus continues to be
the health and safety of our
employees and the impact
of COVID-19 on our
tenants and their
businesses.
Although uncertainty
remains regarding the
longer-term effect of the
pandemic on the broader
economy, we are
encouraged by the resilience
and strong performance of
our team and our portfolio.
Getty had a highly productive year during 2020 which saw each aspect of our business post
significant accomplishments. The net result was that Getty achieved substantially all of our business
objectives and produced growth of both our revenues from rental properties, which increased by 5%
for the year, and our adjusted funds from operations (“AFFO”) per share, which grew by 7% for the
year. In a normal year, I would be proud to report these results to our shareholders. When you
consider the countless challenges brought upon us by the COVID-19 pandemic, I take even greater
satisfaction from our results, which were only possible due to the extraordinary efforts put forth by the
entire Getty team. I also believe that our performance reflects the value of our in-place portfolio which,
combined with our strong balance sheet and growing pipeline of investment prospects, positions the
Company for continued success as we look towards 2021 and beyond.
COVID-RELATED CHALLENGES
Getty’s business began to feel the impacts of the COVID-19 pandemic in March of 2020. Our initial
focus was the health and safety of our employees and the potential negative impacts to our tenants’
businesses. We were fortunate that our portfolio of triple-net leased assets was performing well prior to
the onset of the COVID-19 pandemic. With that said, the convenience & gas (“C&G”) sector began to
feel the adverse effects of the public health crisis when several
large states on the East and West
Coasts instituted travel restrictions and stay at home orders. Fortunately for Getty, the vast majority of
our C&G and other automotive properties were deemed “essential” under state and federal guidelines
meaning that more than 95% of our assets remained operational throughout 2020. Yet even though
our tenants were open for business, they still faced numerous pandemic-related operational, health
and safety challenges.
Nationally, the COVID-19 pandemic reduced motor vehicle use and, as a result, fuel volumes declined
significantly year-over-year, with the extent of the decline varying by region. While it is impossible to
replace the lost revenue from lower fuel volumes, it is important to note that many of our tenants
benefited from historically high retail fuel margins in 2020 (gross profit made on a per gallon basis).
This increase in retail fuel margins, which was driven by the considerable drop in oil prices, partially
offset the pressure of volume-related weakness at times during the year.
In contrast to fuel-related challenges, our tenants’ convenience store businesses displayed far greater
resiliency during the public health crisis. Several of our
their
convenience sales grew year-over-year as consumers increased their use of neighborhood stores for
food, traditional merchandise, grocery items, household goods and cleaning products.
tenants actually reported that
I am pleased to report that to date the COVID-19 pandemic has had a minimal
impact on Getty’s
business. We collected more than 98% of contractual rent and mortgage payments for the year, and
also collected substantially all of our “COVID-related” rent and mortgage deferrals due in 2020.
Although uncertainty remains regarding the forward impact of COVID-19 to the broader economy, we
are encouraged by the strength exhibited by our tenants and assets since the beginning of the
pandemic. Nevertheless, we will continue to vigilantly monitor the health of our tenants’ businesses, as
we believe the pandemic will continue to impact consumer and retail activity through at least the first
half of 2021 and possibly beyond that.
4
5
5
SUSTAINED BUSINESS STRATEGY EXECUTION
MAINTAINING OUR FLEXIBLE & CONSERVATIVE BALANCE SHEET
Our(cid:1) team(cid:1) is(cid:1) more(cid:1) focused(cid:1) than(cid:1) ever(cid:1) on(cid:1) executing(cid:1) each(cid:1) of(cid:1) our(cid:1) growth(cid:1) initiatives:(cid:1) (i)(cid:1) enhancing(cid:1) our
portfolio(cid:1) through(cid:1) accretive(cid:1) acquisitions(cid:1) of(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) assets(cid:1) that(cid:1) support(cid:1) consumer
mobility;(cid:1) (ii)(cid:1) unlocking(cid:1) embedded(cid:1) value(cid:1) through(cid:1) selective(cid:1) redevelopments;(cid:1) and(cid:1) (iii)(cid:1) maximizing(cid:1) the
quality(cid:1)of(cid:1)our(cid:1)in-place(cid:1)portfolio(cid:1)through(cid:1)continued(cid:1)active(cid:1)asset(cid:1)management.
The(cid:1) acquisition(cid:1) program(cid:1) at(cid:1) Getty(cid:1) remains(cid:1) our(cid:1) primary(cid:1) growth(cid:1) driver.(cid:1) In(cid:1) 2020,(cid:1) we(cid:1) acquired(cid:1) 34(cid:1) high-
quality(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) properties(cid:1) for(cid:1) $150(cid:1) million(cid:1) through(cid:1) a(cid:1) combination(cid:1) of(cid:1) portfolio(cid:1) and
individual(cid:1) transactions.(cid:1) This(cid:1) activity(cid:1) reflected(cid:1) our(cid:1) disciplined(cid:1) investment(cid:1) approach,(cid:1) which(cid:1) carefully
considers(cid:1)real(cid:1)estate(cid:1)attributes(cid:1)as(cid:1)well(cid:1)as(cid:1)the(cid:1)operational(cid:1)and(cid:1)credit(cid:1)quality(cid:1)of(cid:1)our(cid:1)prospective(cid:1)tenants.
The(cid:1) pipeline(cid:1) of(cid:1) opportunities(cid:1) was(cid:1) robust;(cid:1) during(cid:1) the(cid:1) year(cid:1) we(cid:1) reviewed(cid:1) approximately(cid:1) $2.1(cid:1) billion(cid:1) of
potential(cid:1) acquisitions,(cid:1) with(cid:1) approximately(cid:1) 60%(cid:1) being(cid:1) C&G(cid:1) and(cid:1) the(cid:1) remaining(cid:1) 40%(cid:1) focused(cid:1) on(cid:1) other
automotive(cid:1)categories.(cid:1)Included(cid:1)in(cid:1)our(cid:1)acquisitions(cid:1)were(cid:1)two(cid:1)portfolio(cid:1)sale-leaseback(cid:1)transactions(cid:1)with
Go(cid:1) Car(cid:1) Wash(cid:1) in(cid:1) the(cid:1) Kansas(cid:1) City(cid:1) and(cid:1) San(cid:1) Antonio(cid:1) MSAs,(cid:1) as(cid:1) well(cid:1) as(cid:1) a(cid:1) C&G(cid:1) portfolio(cid:1) transaction(cid:1) with
CEFCO(cid:1) Convenience(cid:1) Stores(cid:1) throughout(cid:1) the(cid:1) state(cid:1) of(cid:1) Texas.(cid:1) As(cid:1) we(cid:1) enter(cid:1) 2021,(cid:1) we(cid:1) remain(cid:1) committed
to(cid:1)growing(cid:1)our(cid:1)portfolio(cid:1)in(cid:1)terms(cid:1)of(cid:1) both(cid:1) the(cid:1)convenience(cid:1)store(cid:1)industry(cid:1) which(cid:1)offers(cid:1) consumers(cid:1) food,
traditional(cid:1) merchandise,(cid:1) and(cid:1) fuel,(cid:1) and(cid:1) with(cid:1) other(cid:1) automotive(cid:1) related(cid:1) assets(cid:1) which(cid:1) support(cid:1) consumer
mobility.
Our(cid:1) redevelopment(cid:1) program(cid:1) continued(cid:1) to(cid:1) mature(cid:1) in(cid:1) 2020(cid:1) as(cid:1) we(cid:1) completed(cid:1) six(cid:1) projects(cid:1) and(cid:1) signed
eight(cid:1)new(cid:1)leases(cid:1)for(cid:1)future(cid:1)projects(cid:1)with(cid:1)national(cid:1)tenants.(cid:1)The(cid:1)completed(cid:1)projects(cid:1)in(cid:1)2020(cid:1)were(cid:1)leased
to(cid:1)high-quality(cid:1)national(cid:1)retailers(cid:1)including(cid:1)7-11,(cid:1)AutoZone,(cid:1)Bank(cid:1)of(cid:1)America,(cid:1)and(cid:1)Wendy’s.(cid:1)We(cid:1)invested
a(cid:1) total(cid:1) of(cid:1) $3.6(cid:1) million(cid:1) in(cid:1) these(cid:1) projects(cid:1) and(cid:1) generated(cid:1) an(cid:1) incremental(cid:1) return(cid:1) on(cid:1) our(cid:1) investment(cid:1) of
approximately(cid:1) 20%.(cid:1) In(cid:1) terms(cid:1) of(cid:1) our(cid:1) redevelopment(cid:1) outlook,(cid:1) we(cid:1) maintain(cid:1) a(cid:1) solid(cid:1) pipeline,(cid:1) ending(cid:1) the
year(cid:1) with(cid:1) six(cid:1) active(cid:1) projects(cid:1) and(cid:1) four(cid:1) projects(cid:1) in(cid:1) planning(cid:1) stages(cid:1) with(cid:1) signed(cid:1) tenant(cid:1) leases.(cid:1) We
continue(cid:1)to(cid:1)believe(cid:1)that(cid:1)the(cid:1)redevelopment(cid:1)program(cid:1)demonstrates(cid:1)the(cid:1)embedded(cid:1)value(cid:1)of(cid:1)our(cid:1)in-place
portfolio,(cid:1) and(cid:1) that(cid:1) by(cid:1) strategically(cid:1) investing(cid:1) in(cid:1) our(cid:1) assets,(cid:1) we(cid:1) can(cid:1) generate(cid:1) attractive(cid:1) risk-adjusted
returns,(cid:1)improve(cid:1)the(cid:1)credit(cid:1)quality(cid:1)of(cid:1)our(cid:1)portfolio,(cid:1)and(cid:1)diversify(cid:1)our(cid:1)retail(cid:1)tenant(cid:1)base.
On(cid:1) the(cid:1) asset(cid:1) management(cid:1) front,(cid:1) we(cid:1) continued(cid:1) to(cid:1) refine(cid:1) the(cid:1) nature(cid:1) of(cid:1) our(cid:1) portfolio(cid:1) by(cid:1) selectively(cid:1) re-
leasing(cid:1) or(cid:1) disposing(cid:1) of(cid:1) certain(cid:1) assets,(cid:1) while(cid:1) opportunistically(cid:1) exiting(cid:1) third-party(cid:1) leased(cid:1) sites.(cid:1) The(cid:1) net
result(cid:1) is(cid:1) a(cid:1) portfolio(cid:1) of(cid:1) 959(cid:1) properties(cid:1) that(cid:1) was(cid:1) 99.3%(cid:1) occupied(cid:1) at(cid:1) year(cid:1) end(cid:1) and(cid:1) spans(cid:1) 35(cid:1) states(cid:1) plus
Washington,(cid:1)DC(cid:1)with(cid:1)65%(cid:1)of(cid:1)annualized(cid:1)base(cid:1)rent(cid:1)coming(cid:1)from(cid:1)the(cid:1)Top(cid:1)50(cid:1)National(cid:1)MSAs.
In a year where liquidity and balance sheet flexibility were critical, the Company’s long-held philosophy
of maintaining a conservatively leveraged balance sheet proved itself important to our success. As
further demonstration, we issued a $175 million, 10-year, 3.4% debt private placement to three life
insurance companies in December to more permanently fund our business and support our growth
initiatives. A portion of the issuance was used for the early retirement of our $100 million, 6.0% series
A notes coming due in early 2021. As I sit here today, Getty has a net debt to EBITDA ratio of less
than 5.0x and a revolving credit facility that is essentially undrawn meaning that we have significant
capacity to fund our growth plans as we look ahead. We have no debt maturities until 2023 and the
weighted average term of our indebtedness is the longest in the Company’s history at more than 7
years.
We also financed a significant portion of our growth in 2020 through the issuance of $64.4 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. In February 2021, we
launched a refreshed $250 million ATM equity issuance program, which we believe will help the
Company maintain its conservative leverage profile and help us actively manage our capital structure
to prudently grow over the long-term.
DRIVING GROWTH AND SHAREHOLDER RETURNS
Our 2020 financial results, strategic growth and capital markets activities resulted in our Board’s
decision to increase our dividend by 5.6% to an annualized rate of $1.56 per share – making 2020 the
sixth consecutive year that the Company has rewarded shareholders with a significant increase in its
recurring cash dividend rate. The dividend remains well-covered and its increase stems from the
stability of our current portfolio along with our expectation of continued growth in AFFO.
Financial Highlights (for the years ended December 31)
Number of Properties
Total Revenues
2020
959
2019
945
2018
933
$147,346
$140,655
$136,106
Adjusted Funds from Operations
$79,134
$71,816
$69,669
Adjusted Funds from Operations Per Share
Dividends Per Share
$1.84
$1.50
$1.72
$1.42
$1.71
$1.31
4
5
5
SUSTAINED BUSINESS STRATEGY EXECUTION
MAINTAINING OUR FLEXIBLE & CONSERVATIVE BALANCE SHEET
Our(cid:1) team(cid:1) is(cid:1) more(cid:1) focused(cid:1) than(cid:1) ever(cid:1) on(cid:1) executing(cid:1) each(cid:1) of(cid:1) our(cid:1) growth(cid:1) initiatives:(cid:1) (i)(cid:1) enhancing(cid:1) our
portfolio(cid:1) through(cid:1) accretive(cid:1) acquisitions(cid:1) of(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) assets(cid:1) that(cid:1) support(cid:1) consumer
mobility;(cid:1) (ii)(cid:1) unlocking(cid:1) embedded(cid:1) value(cid:1) through(cid:1) selective(cid:1) redevelopments;(cid:1) and(cid:1) (iii)(cid:1) maximizing(cid:1) the
quality(cid:1)of(cid:1)our(cid:1)in-place(cid:1)portfolio(cid:1)through(cid:1)continued(cid:1)active(cid:1)asset(cid:1)management.
The(cid:1) acquisition(cid:1) program(cid:1) at(cid:1) Getty(cid:1) remains(cid:1) our(cid:1) primary(cid:1) growth(cid:1) driver.(cid:1) In(cid:1) 2020,(cid:1) we(cid:1) acquired(cid:1) 34(cid:1) high-
quality(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) properties(cid:1) for(cid:1) $150(cid:1) million(cid:1) through(cid:1) a(cid:1) combination(cid:1) of(cid:1) portfolio(cid:1) and
individual(cid:1) transactions.(cid:1) This(cid:1) activity(cid:1) reflected(cid:1) our(cid:1) disciplined(cid:1) investment(cid:1) approach,(cid:1) which(cid:1) carefully
considers(cid:1)real(cid:1)estate(cid:1)attributes(cid:1)as(cid:1)well(cid:1)as(cid:1)the(cid:1)operational(cid:1)and(cid:1)credit(cid:1)quality(cid:1)of(cid:1)our(cid:1)prospective(cid:1)tenants.
The(cid:1) pipeline(cid:1) of(cid:1) opportunities(cid:1) was(cid:1) robust;(cid:1) during(cid:1) the(cid:1) year(cid:1) we(cid:1) reviewed(cid:1) approximately(cid:1) $2.1(cid:1) billion(cid:1) of
potential(cid:1) acquisitions,(cid:1) with(cid:1) approximately(cid:1) 60%(cid:1) being(cid:1) C&G(cid:1) and(cid:1) the(cid:1) remaining(cid:1) 40%(cid:1) focused(cid:1) on(cid:1) other
automotive(cid:1)categories.(cid:1)Included(cid:1)in(cid:1)our(cid:1)acquisitions(cid:1)were(cid:1)two(cid:1)portfolio(cid:1)sale-leaseback(cid:1)transactions(cid:1)with
Go(cid:1) Car(cid:1) Wash(cid:1) in(cid:1) the(cid:1) Kansas(cid:1) City(cid:1) and(cid:1) San(cid:1) Antonio(cid:1) MSAs,(cid:1) as(cid:1) well(cid:1) as(cid:1) a(cid:1) C&G(cid:1) portfolio(cid:1) transaction(cid:1) with
CEFCO(cid:1) Convenience(cid:1) Stores(cid:1) throughout(cid:1) the(cid:1) state(cid:1) of(cid:1) Texas.(cid:1) As(cid:1) we(cid:1) enter(cid:1) 2021,(cid:1) we(cid:1) remain(cid:1) committed
to(cid:1)growing(cid:1)our(cid:1)portfolio(cid:1)in(cid:1)terms(cid:1)of(cid:1) both(cid:1) the(cid:1)convenience(cid:1)store(cid:1)industry(cid:1) which(cid:1)offers(cid:1) consumers(cid:1) food,
traditional(cid:1) merchandise,(cid:1) and(cid:1) fuel,(cid:1) and(cid:1) with(cid:1) other(cid:1) automotive(cid:1) related(cid:1) assets(cid:1) which(cid:1) support(cid:1) consumer
mobility.
Our(cid:1) redevelopment(cid:1) program(cid:1) continued(cid:1) to(cid:1) mature(cid:1) in(cid:1) 2020(cid:1) as(cid:1) we(cid:1) completed(cid:1) six(cid:1) projects(cid:1) and(cid:1) signed
eight(cid:1)new(cid:1)leases(cid:1)for(cid:1)future(cid:1)projects(cid:1)with(cid:1)national(cid:1)tenants.(cid:1)The(cid:1)completed(cid:1)projects(cid:1)in(cid:1)2020(cid:1)were(cid:1)leased
to(cid:1)high-quality(cid:1)national(cid:1)retailers(cid:1)including(cid:1)7-11,(cid:1)AutoZone,(cid:1)Bank(cid:1)of(cid:1)America,(cid:1)and(cid:1)Wendy’s.(cid:1)We(cid:1)invested
a(cid:1) total(cid:1) of(cid:1) $3.6(cid:1) million(cid:1) in(cid:1) these(cid:1) projects(cid:1) and(cid:1) generated(cid:1) an(cid:1) incremental(cid:1) return(cid:1) on(cid:1) our(cid:1) investment(cid:1) of
approximately(cid:1) 20%.(cid:1) In(cid:1) terms(cid:1) of(cid:1) our(cid:1) redevelopment(cid:1) outlook,(cid:1) we(cid:1) maintain(cid:1) a(cid:1) solid(cid:1) pipeline,(cid:1) ending(cid:1) the
year(cid:1) with(cid:1) six(cid:1) active(cid:1) projects(cid:1) and(cid:1) four(cid:1) projects(cid:1) in(cid:1) planning(cid:1) stages(cid:1) with(cid:1) signed(cid:1) tenant(cid:1) leases.(cid:1) We
continue(cid:1)to(cid:1)believe(cid:1)that(cid:1)the(cid:1)redevelopment(cid:1)program(cid:1)demonstrates(cid:1)the(cid:1)embedded(cid:1)value(cid:1)of(cid:1)our(cid:1)in-place
portfolio,(cid:1) and(cid:1) that(cid:1) by(cid:1) strategically(cid:1) investing(cid:1) in(cid:1) our(cid:1) assets,(cid:1) we(cid:1) can(cid:1) generate(cid:1) attractive(cid:1) risk-adjusted
returns,(cid:1)improve(cid:1)the(cid:1)credit(cid:1)quality(cid:1)of(cid:1)our(cid:1)portfolio,(cid:1)and(cid:1)diversify(cid:1)our(cid:1)retail(cid:1)tenant(cid:1)base.
On(cid:1) the(cid:1) asset(cid:1) management(cid:1) front,(cid:1) we(cid:1) continued(cid:1) to(cid:1) refine(cid:1) the(cid:1) nature(cid:1) of(cid:1) our(cid:1) portfolio(cid:1) by(cid:1) selectively(cid:1) re-
leasing(cid:1) or(cid:1) disposing(cid:1) of(cid:1) certain(cid:1) assets,(cid:1) while(cid:1) opportunistically(cid:1) exiting(cid:1) third-party(cid:1) leased(cid:1) sites.(cid:1) The(cid:1) net
result(cid:1) is(cid:1) a(cid:1) portfolio(cid:1) of(cid:1) 959(cid:1) properties(cid:1) that(cid:1) was(cid:1) 99.3%(cid:1) occupied(cid:1) at(cid:1) year(cid:1) end(cid:1) and(cid:1) spans(cid:1) 35(cid:1) states(cid:1) plus
Washington,(cid:1)DC(cid:1)with(cid:1)65%(cid:1)of(cid:1)annualized(cid:1)base(cid:1)rent(cid:1)coming(cid:1)from(cid:1)the(cid:1)Top(cid:1)50(cid:1)National(cid:1)MSAs.
In a year where liquidity and balance sheet flexibility were critical, the Company’s long-held philosophy
of maintaining a conservatively leveraged balance sheet proved itself important to our success. As
further demonstration, we issued a $175 million, 10-year, 3.4% debt private placement to three life
insurance companies in December to more permanently fund our business and support our growth
initiatives. A portion of the issuance was used for the early retirement of our $100 million, 6.0% series
A notes coming due in early 2021. As I sit here today, Getty has a net debt to EBITDA ratio of less
than 5.0x and a revolving credit facility that is essentially undrawn meaning that we have significant
capacity to fund our growth plans as we look ahead. We have no debt maturities until 2023 and the
weighted average term of our indebtedness is the longest in the Company’s history at more than 7
years.
We also financed a significant portion of our growth in 2020 through the issuance of $64.4 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. In February 2021, we
launched a refreshed $250 million ATM equity issuance program, which we believe will help the
Company maintain its conservative leverage profile and help us actively manage our capital structure
to prudently grow over the long-term.
DRIVING GROWTH AND SHAREHOLDER RETURNS
Our 2020 financial results, strategic growth and capital markets activities resulted in our Board’s
decision to increase our dividend by 5.6% to an annualized rate of $1.56 per share – making 2020 the
sixth consecutive year that the Company has rewarded shareholders with a significant increase in its
recurring cash dividend rate. The dividend remains well-covered and its increase stems from the
stability of our current portfolio along with our expectation of continued growth in AFFO.
Financial Highlights (for the years ended December 31)
Number of Properties
Total Revenues
2020
959
2019
945
2018
933
$147,346
$140,655
$136,106
Adjusted Funds from Operations
$79,134
$71,816
$69,669
Adjusted Funds from Operations Per Share
Dividends Per Share
$1.84
$1.50
$1.72
$1.42
$1.71
$1.31
6
6
7
7
COMMITTED TO A FUTURE OF CONSUMER SPENDING TIED TO
AUTOMOTIVE-BASED MOBILITY
COMMITTED TO A FUTURE OF CONSUMER SPENDING TIED TO
AUTOMOTIVE-BASED MOBILITY
Our portfolio was built around serving the needs of automobile-based consumers, and it is continuing
to do so – whether it is stopping for convenience store items including beverages, meals, snacks,
other merchandise, and fuel, or getting a car washed or serviced. These needs are in high demand
today and we believe they will continue to be staples for consumer spending tied to mobility for years
to come.
Our portfolio was built around serving the needs of automobile-based consumers, and it is continuing
to do so – whether it is stopping for convenience store items including beverages, meals, snacks,
other merchandise, and fuel, or getting a car washed or serviced. These needs are in high demand
today and we believe they will continue to be staples for consumer spending tied to mobility for years
to come.
As we enter 2021, we feel encouraged about our nearly 1,000 properties and our target asset classes.
Our ability to underwrite and acquire properties, invest in targeted geographies, and optimize our
portfolio through active asset management continues to demonstrate the value of our platform and our
focus on owning well-located real estate in stable and growing metropolitan markets.
As we enter 2021, we feel encouraged about our nearly 1,000 properties and our target asset classes.
Our ability to underwrite and acquire properties, invest in targeted geographies, and optimize our
portfolio through active asset management continues to demonstrate the value of our platform and our
focus on owning well-located real estate in stable and growing metropolitan markets.
In addition, our service and consumer-oriented portfolio of C&G and other automotive properties is
In(cid:1) addition,(cid:1) our(cid:1) service(cid:1) and(cid:1) consumer-oriented(cid:1) portfolio(cid:1) of(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) properties(cid:1) is
considered essential and serves many aspects of the retail marketplace which are insulated from the
considered(cid:1) essential(cid:1)and(cid:1) serves(cid:1) many(cid:1) aspects(cid:1) of(cid:1) the(cid:1) retail(cid:1) marketplace(cid:1) which(cid:1)are(cid:1) insulated(cid:1) from(cid:1) the
growth of e-commerce.
growth(cid:1)of(cid:1)e-commerce.
Despite fuel-related headwinds for the C&G industry, 2020 was a year which saw the convenience
Despite(cid:1) fuel-related(cid:1) headwinds(cid:1) for(cid:1) the(cid:1) C&G(cid:1) industry,(cid:1) 2020(cid:1) was(cid:1) a(cid:1) year(cid:1) which(cid:1) saw(cid:1) the(cid:1) convenience
side of the business outperform due to the wide array of products offered by many of our tenants. The
side(cid:1)of(cid:1)the(cid:1)business(cid:1)outperform(cid:1)due(cid:1)to(cid:1)the(cid:1)wide(cid:1)array(cid:1)of(cid:1)products(cid:1)offered(cid:1)by(cid:1)many(cid:1)of(cid:1)our(cid:1)tenants.(cid:1)The
C&G industry continues to evolve, and our tenants are placing additional emphasis on branding and
C&G(cid:1) industry(cid:1) continues(cid:1) to(cid:1) evolve,(cid:1) and(cid:1) our(cid:1) tenants(cid:1) are(cid:1) placing(cid:1) additional(cid:1) emphasis(cid:1) on(cid:1) branding(cid:1) and
customer loyalty inside their stores to drive higher margin sales and reduce their overall dependence
customer(cid:1) loyalty(cid:1) inside(cid:1) their(cid:1) stores(cid:1) to(cid:1) drive(cid:1) higher(cid:1) margin(cid:1)sales(cid:1)and(cid:1) reduce(cid:1) their(cid:1) overall(cid:1)dependence
on customer visits derived solely from refueling. We believe that our portfolio of well-located properties
on(cid:1)customer(cid:1)visits(cid:1)derived(cid:1)solely(cid:1)from(cid:1)refueling.(cid:1)We(cid:1)believe(cid:1)that(cid:1)our(cid:1)portfolio(cid:1)of(cid:1)well-located(cid:1)properties
in major metropolitan markets will remain resilient and thrive in the ever-changing consumer retail
in(cid:1) major(cid:1) metropolitan(cid:1) markets(cid:1) will(cid:1) remain(cid:1) resilient(cid:1) and(cid:1) thrive(cid:1) in(cid:1) the(cid:1) ever-changing(cid:1) consumer(cid:1) retail
landscape.
landscape.
Note: All data is as of December 31, 2020.
1)
Annualized(cid:1) GAAP(cid:1)base(cid:1)rent.
2)
Adjusted(cid:1)Funds(cid:1)From(cid:1)Operations(cid:1) per(cid:1)share(cid:1)annual(cid:1)growth(cid:1)2015-2020.
3)
Excludes(cid:1)six(cid:1)properties(cid:1) classified(cid:1) as(cid:1)redevelopment.
4)
Unitary(cid:1) lease(cid:1)portfolio(cid:1)coverage(cid:1)calculated(cid:1) one(cid:1)quarter(cid:1)in(cid:1)arrears(cid:1)based(cid:1)on(cid:1)site(cid:1)level(cid:1) information(cid:1) provided(cid:1)by(cid:1)tenants.
Note: All data is as of December 31, 2020.
Annualized GAAP base rent.
1)
Adjusted Funds From Operations per share annual growth 2015-2020.
2)
Excludes six properties classified as redevelopment.
3)
Unitary lease portfolio coverage calculated one quarter in arrears based on site level information provided by tenants.
4)
6
6
7
7
COMMITTED TO A FUTURE OF CONSUMER SPENDING TIED TO
COMMITTED TO A FUTURE OF CONSUMER SPENDING TIED TO
AUTOMOTIVE-BASED MOBILITY
AUTOMOTIVE-BASED MOBILITY
Our portfolio was built around serving the needs of automobile-based consumers, and it is continuing
Our portfolio was built around serving the needs of automobile-based consumers, and it is continuing
to do so – whether it is stopping for convenience store items including beverages, meals, snacks,
to do so – whether it is stopping for convenience store items including beverages, meals, snacks,
other merchandise, and fuel, or getting a car washed or serviced. These needs are in high demand
other merchandise, and fuel, or getting a car washed or serviced. These needs are in high demand
today and we believe they will continue to be staples for consumer spending tied to mobility for years
today and we believe they will continue to be staples for consumer spending tied to mobility for years
to come.
to come.
As we enter 2021, we feel encouraged about our nearly 1,000 properties and our target asset classes.
As we enter 2021, we feel encouraged about our nearly 1,000 properties and our target asset classes.
Our ability to underwrite and acquire properties, invest in targeted geographies, and optimize our
Our ability to underwrite and acquire properties, invest in targeted geographies, and optimize our
portfolio through active asset management continues to demonstrate the value of our platform and our
portfolio through active asset management continues to demonstrate the value of our platform and our
focus on owning well-located real estate in stable and growing metropolitan markets.
focus on owning well-located real estate in stable and growing metropolitan markets.
In addition, our service and consumer-oriented portfolio of C&G and other automotive properties is
considered essential and serves many aspects of the retail marketplace which are insulated from the
growth of e-commerce.
In(cid:1) addition,(cid:1) our(cid:1) service(cid:1) and(cid:1) consumer-oriented(cid:1) portfolio(cid:1) of(cid:1) C&G(cid:1) and(cid:1) other(cid:1) automotive(cid:1) properties(cid:1) is
considered(cid:1) essential(cid:1)and(cid:1) serves(cid:1) many(cid:1) aspects(cid:1) of(cid:1) the(cid:1) retail(cid:1) marketplace(cid:1) which(cid:1)are(cid:1) insulated(cid:1) from(cid:1) the
growth(cid:1)of(cid:1)e-commerce.
Despite fuel-related headwinds for the C&G industry, 2020 was a year which saw the convenience
side of the business outperform due to the wide array of products offered by many of our tenants. The
C&G industry continues to evolve, and our tenants are placing additional emphasis on branding and
customer loyalty inside their stores to drive higher margin sales and reduce their overall dependence
on customer visits derived solely from refueling. We believe that our portfolio of well-located properties
in major metropolitan markets will remain resilient and thrive in the ever-changing consumer retail
landscape.
Despite(cid:1) fuel-related(cid:1) headwinds(cid:1) for(cid:1) the(cid:1) C&G(cid:1) industry,(cid:1) 2020(cid:1) was(cid:1) a(cid:1) year(cid:1) which(cid:1) saw(cid:1) the(cid:1) convenience
side(cid:1)of(cid:1)the(cid:1)business(cid:1)outperform(cid:1)due(cid:1)to(cid:1)the(cid:1)wide(cid:1)array(cid:1)of(cid:1)products(cid:1)offered(cid:1)by(cid:1)many(cid:1)of(cid:1)our(cid:1)tenants.(cid:1)The
C&G(cid:1) industry(cid:1) continues(cid:1) to(cid:1) evolve,(cid:1) and(cid:1) our(cid:1) tenants(cid:1) are(cid:1) placing(cid:1) additional(cid:1) emphasis(cid:1) on(cid:1) branding(cid:1) and
customer(cid:1) loyalty(cid:1) inside(cid:1) their(cid:1) stores(cid:1) to(cid:1) drive(cid:1) higher(cid:1) margin(cid:1)sales(cid:1)and(cid:1) reduce(cid:1) their(cid:1) overall(cid:1)dependence
on(cid:1)customer(cid:1)visits(cid:1)derived(cid:1)solely(cid:1)from(cid:1)refueling.(cid:1)We(cid:1)believe(cid:1)that(cid:1)our(cid:1)portfolio(cid:1)of(cid:1)well-located(cid:1)properties
in(cid:1) major(cid:1) metropolitan(cid:1) markets(cid:1) will(cid:1) remain(cid:1) resilient(cid:1) and(cid:1) thrive(cid:1) in(cid:1) the(cid:1) ever-changing(cid:1) consumer(cid:1) retail
landscape.
Note: All data is as of December 31, 2020.
Note: All data is as of December 31, 2020.
1)
Annualized GAAP base rent.
Annualized(cid:1) GAAP(cid:1)base(cid:1)rent.
2)
Adjusted Funds From Operations per share annual growth 2015-2020.
Adjusted(cid:1)Funds(cid:1)From(cid:1)Operations(cid:1) per(cid:1)share(cid:1)annual(cid:1)growth(cid:1)2015-2020.
Excludes six properties classified as redevelopment.
3)
1)
2)
3)
4)
4)
Excludes(cid:1)six(cid:1)properties(cid:1) classified(cid:1) as(cid:1)redevelopment.
Unitary lease portfolio coverage calculated one quarter in arrears based on site level information provided by tenants.
Unitary(cid:1) lease(cid:1)portfolio(cid:1)coverage(cid:1)calculated(cid:1) one(cid:1)quarter(cid:1)in(cid:1)arrears(cid:1)based(cid:1)on(cid:1)site(cid:1)level(cid:1) information(cid:1) provided(cid:1)by(cid:1)tenants.
8
SAYING GOODBYE
In February 2021, we announced that Leo Liebowitz, our Chairman & Co-Founder, retired from the
Board of Directors. Leo was our Chairman for more than 50 years and also served as our Chief
Executive Officer from 1985 until 2010 and as our President from 1971 until 2004. Leo co-founded
the Company, along with Milton Safenowitz, through the acquisition of a single gas station in New
York City in 1955. From there, they built a significant portfolio of gas and service stations, which
eventually went public in 1971 and grew to become the largest independent gasoline distributor
on the East Coast.
In 1985, Leo led the acquisition of all of the Northeastern gasoline stations,
terminals, and retail supply contracts from the Getty Oil Company, and changed the name of our
predecessor company to Getty Petroleum Corp. In 1997, Leo orchestrated the spin-off of the
petroleum marketing and distribution assets formerly held by the company to a newly created
public company, unlocking significant value for stockholders at the time, and formed Getty Realty
to manage and lease the Company’s retained real estate portfolio. Many of the properties
purchased by our predecessor entities remain core to our business today, and Leo’s vision and
leadership is one of the primary reasons that we have become a leading net lease REIT focused
on C&G and other automotive-related real estate. On a personal note, I want to thank Leo for his
many years of dedicated and distinguished service to the Company as our Chairman and CEO. Leo
always made himself available to all of us, and his deep knowledge of the petroleum marketing
and distribution business has been critical to our understanding of our tenants’ businesses,
making us better investors as a result. We will miss having him in the office and on our Board of
Directors and wish him the best in his retirement.
THANK YOU
I will conclude by reiterating how proud I am of Getty’s 2020 accomplishments and how optimistic
I am about Getty’s prospects. I believe we have the right growth strategy and a first-rate team in
place to execute on it and to create value for our shareholders for years to come. While it is an
honor to lead the Company, we would not be as successful without the contributions of Board of
Directors, our management team, and our employees. I would like to personally thank everyone
for all of their hard work during the past year. I would also like to thank our shareholders for their
continued support.
Best Regards,
CChhrriissttoopphheerr JJ.. CCoonnssttaanntt
President and Chief Executive Officer
FORM 10K
8
SAYING GOODBYE
In February 2021, we announced that Leo Liebowitz, our Chairman & Co-Founder, retired from the
Board of Directors. Leo was our Chairman for more than 50 years and also served as our Chief
Executive Officer from 1985 until 2010 and as our President from 1971 until 2004. Leo co-founded
the Company, along with Milton Safenowitz, through the acquisition of a single gas station in New
York City in 1955. From there, they built a significant portfolio of gas and service stations, which
eventually went public in 1971 and grew to become the largest independent gasoline distributor
on the East Coast.
In 1985, Leo led the acquisition of all of the Northeastern gasoline stations,
terminals, and retail supply contracts from the Getty Oil Company, and changed the name of our
predecessor company to Getty Petroleum Corp. In 1997, Leo orchestrated the spin-off of the
petroleum marketing and distribution assets formerly held by the company to a newly created
public company, unlocking significant value for stockholders at the time, and formed Getty Realty
to manage and lease the Company’s retained real estate portfolio. Many of the properties
purchased by our predecessor entities remain core to our business today, and Leo’s vision and
leadership is one of the primary reasons that we have become a leading net lease REIT focused
on C&G and other automotive-related real estate. On a personal note, I want to thank Leo for his
many years of dedicated and distinguished service to the Company as our Chairman and CEO. Leo
always made himself available to all of us, and his deep knowledge of the petroleum marketing
and distribution business has been critical to our understanding of our tenants’ businesses,
making us better investors as a result. We will miss having him in the office and on our Board of
Directors and wish him the best in his retirement.
I will conclude by reiterating how proud I am of Getty’s 2020 accomplishments and how optimistic
I am about Getty’s prospects. I believe we have the right growth strategy and a first-rate team in
place to execute on it and to create value for our shareholders for years to come. While it is an
honor to lead the Company, we would not be as successful without the contributions of Board of
Directors, our management team, and our employees. I would like to personally thank everyone
for all of their hard work during the past year. I would also like to thank our shareholders for their
THANK YOU
continued support.
Best Regards,
CChhrriissttoopphheerr JJ.. CCoonnssttaanntt
President and Chief Executive Officer
FORM 10K
BOARD OF DIRECTORS
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, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 001-13777
GETTY REALTY CORP.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of
incorporation or organization)
11-3412575
(I.R.S. employer
identification no.)
292 Madison Avenue, 9th Floor
New York, New York 10017-6318
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (646) 349-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
GTY
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 ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ☒ No ☐
Indicate by check mark 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 ☐
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.
☒
☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of common stock held by non-affiliates (33,839,999 shares of common stock) of the Company was $1,004,400,000 as of June 30, 2020.
Accelerated filer
Emerging growth company
Smaller reporting company
☐
☐
☐
The registrant had outstanding 43,751,920 shares of common stock as of February 25, 2021.
DOCUMENT
Selected Portions of Definitive Proxy Statement for the 2021 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, 2020, pursuant to Regulation 14A.
III
DOCUMENTS INCORPORATED BY REFERENCE
Item Description
Cautionary Note Regarding Forward-Looking Statements
TABLE OF CONTENTS
Business
1
1A Risk Factors
1B Unresolved Staff Comments
2
3
4
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
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
5
6
7
7A Quantitative and Qualitative Disclosures About Market Risk
8
9
9A Controls and Procedures
9B Other Information
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
10 Directors, Executive Officers and Corporate Governance
11
12
13
14
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 III
PART IV
15
16
Exhibits and Financial Statement Schedules
Form 10-K Summary
Exhibit Index
Signatures
Page
3
5
8
22
22
24
27
28
29
30
42
44
75
75
75
76
76
76
76
77
78
78
98
102
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
statements regarding 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 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; the impact of the novel coronavirus (“COVID-19”) pandemic on our business and results of operations; 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; our workplace demographics, recruiting efforts, and employee compensation program; 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 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 and our senior unsecured notes; 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
3
changes to our dividend policy; changes in market conditions; provisions in our corporate charter and by-laws; Maryland law
discouraging a third-party takeover; changes in LIBOR reporting practices or the method in which LIBOR is calculated or changes to
alternative rates if LIBOR is discontinued; the loss of a member or members of our management team or Board of Directors; changes
in accounting standards; future impairment charges; terrorist attacks and other acts of violence and war; our information systems;
failure to maintain effective internal controls over financial reporting; and negative impacts from the continued spread of the COVID-
19 pandemic, including on the global economy or on our tenants’ businesses, financial position, or results of operations.
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, our growth or
reinvestment strategies, our 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 acquisition, ownership, leasing, financing and redevelopment of convenience stores, gasoline stations and
other automotive-related and retail real estate, including express car washes, instant oil change centers, automotive service centers,
automotive parts retailers and select other properties. Our predecessor was originally founded in 1955 and our common stock was
listed on the NYSE in 1997.
Our portfolio includes 959 properties located in 35 states and Washington, D.C., and our tenants operate under a variety of
national and regional brands. We are internally managed by our management team, which has extensive experience acquiring, owning
and managing convenience stores, gasoline stations and other automotive-related and retail real estate.
We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. 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 if certain REIT qualifications are met. To meet the applicable
requirements of the Internal Revenue Code, a REIT must, among other things, invest substantially all of its assets in interests in real
estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real
property or interest on loans secured by mortgages on real property, and distribute to 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.
Our company is headquartered in New York, New York and as of February 25, 2021, we had 31 employees.
Company Operations
As of December 31, 2020, we owned 901 properties and leased 58 properties from third-party landlords. Our nationwide
portfolio includes a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for
purchase or lease from other owners or landlords. Our typical property consists of between one-half and one acre of land in a
metropolitan area and is used as a convenience store and gasoline station or to provide other automotive-related services. Many of our
properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps.
Substantially all of our properties are leased on a triple-net basis to convenience store operators, petroleum distributors and other
automotive-related and retail tenants. Our tenants either operate their business at our properties directly or sublet our properties and
supply fuel to third parties that operate the convenience store and gasoline station businesses. 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 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
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. (For additional information regarding risks related to our tenants’ dependence on the
performance of the petroleum industry, see “Item 1A. Risk Factors – Substantially all of our tenants depend on the same industry for
their revenues” in this Form 10-K.) During the terms of our leases, we monitor the credit quality of our triple-net lease 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, 2020, we leased 946 of our properties to tenants under triple-net leases.
Our net lease properties include 829 properties leased under 31 separate unitary or master triple-net leases and 117 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, 2020, our contractual rent weighted
average lease term, excluding renewal options, was approximately 9.5 years.
5
Several of our leases provide for additional rent based on the aggregate volume of fuel sold. For the year ended December 31,
2020, 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, 2020, we have a remaining commitment to fund
up to $6.8 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, 2020, 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.
Vacancies. As of December 31, 2020, seven of our properties were vacant. We expect that we will either sell or enter into new
leases on these properties over time.
Human Capital Resources
As of December 31, 2020, we had 31 full-time employees, all of which are located in our New York office. In 2020, we hired
our new Executive Vice President and Chief Financial Officer, Brian Dickman, following the planned departure of Danion Fielding
for personal reasons. Our employees are offered necessary flexibility to meet personal and family needs. We aim to maintain a
workplace that is free from discrimination or harassment on the basis of color, race, sex, national origin, ethnicity, religion, disability,
sexual orientation, gender identification or expression or any other status protected by applicable law. We conduct annual training to
prevent harassment and discrimination and monitor employee conduct year-round. Our recruiting efforts, as well as employee training,
compensation and advancement are all based on qualifications, performance, skills and experience. We believe that our employees are
fairly compensated, without regard to gender, race and ethnicity, and are routinely recognized for outstanding performance. Our
compensation program is designed to attract and retain talent, and includes the employee benefit plans described in Note 8 “Employee
Benefit Plan” included in Part II, Item 8 of this Annual Report on Form 10-K. We continually assess and strive to enhance employee
satisfaction and engagement. Our employees, many of whom have a long tenure with the Company, frequently express satisfaction
with management. Our employees are offered regular opportunities to participate in various professional development programs.
Investment Strategy and Activity
As part of our overall growth strategy, we regularly review acquisition and financing opportunities to invest in additional
convenience stores, gasoline stations and other automotive-related and retail real estate. We primarily pursue sale-leaseback
transactions and other real estate acquisitions that result in us owning fee simple interests in our properties. Our investment activities
may also include purchase money financing with respect to properties we sell, real property loans relating to our leasehold portfolios
and construction loans. 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 enhance our geographic and tenant diversification.
During the year ended December 31, 2020, we acquired fee simple interests in 34 properties for an aggregate purchase price of
$150.0 million. During the year ended December 31, 2019, we acquired fee simple interests in 27 properties for an aggregate purchase
price of $87.2 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 209 properties, including single property and portfolio transactions located in various
states, for an aggregate purchase price of $537.0 million.
Redevelopment Strategy and Activity
We believe that certain of our properties are well-suited for either new convenience store use or for alternative single-tenant net
lease retail uses, such as automotive parts and service, quick service restaurants, specialty retail and bank branches. We believe that
the redeveloped properties can be leased or sold at higher values than their current use.
For the years ended December 31, 2020 and 2019, rent commenced on six and four completed redevelopment projects,
respectively, that were placed back into service in our net lease portfolio. Since the inception of our redevelopment program in 2015,
we have completed 19 redevelopment projects.
For the year ended December 31, 2020, we spent $0.3 million (net of write-offs) of construction-in-progress costs related to our
redevelopment activities and transferred $1.6 million of construction-in-progress to buildings and improvements on our consolidated
balance sheet. For the year ended December 31, 2019, we spent $0.4 million of construction-in-progress costs related to our
redevelopment activities and transferred $0.5 million of construction-in-progress to buildings and improvements on our consolidated
balance sheet.
6
As of December 31, 2020, we had six properties under active redevelopment and others in various stages of feasibility planning
for potential recapture from our net lease portfolio, including four properties for which we have signed new leases and which will be
transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured.
Major Tenants
As of December 31, 2020, we had four significant tenants by revenue:
(cid:129) We leased 150 convenience store and gasoline station properties pursuant to three separate unitary leases and two
stand-alone leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with
subsidiaries of Global represented 16% and 18% of our total revenues for the years ended December 31, 2020 and
2019, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company.
(cid:129) We leased 129 convenience store and gasoline station properties pursuant to four separate unitary leases to subsidiaries
of Arko Corp. (NASDAQ: ARKO) (“Arko”). In the aggregate, our leases with subsidiaries of Arko represented 15% of
our total revenues for each of the years ended December 31, 2020 and 2019. All of our unitary leases with subsidiaries
of Arko 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 12% and 13% of our total revenues for
the years ended December 31, 2020 and 2019, respectively.
(cid:129) We leased 74 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
10% and 11% of our total revenues for the years ended December 31, 2020 and 2019, respectively. The largest of these
unitary leases, covering 56 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 real estate sector in which we operate is highly competitive and we expect major 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
7
remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering
properties previously leased to Getty Petroleum Marketing Inc. (“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.
For additional information, see “Item 1A. Risk Factors” and “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
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.
Our business is subject to risks and uncertainties, including those risks and uncertainties discussed at-length below, that could
cause our actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the
following:
Summary of Risk Factors
Risks Related to Our Business and Operations
(cid:129)
(cid:129)
The risks inherent in owning or leasing real estate.
The real estate industry is highly competitive.
(cid:129) 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.
(cid:129)
(cid:129)
Substantially all of our tenants depend on the same industry for their revenues.
It may be difficult for our investors to determine the creditworthiness of our tenants.
(cid:129) An increase in costs and liability accruals as a result of environmental laws and regulations could adversely affect our
business.
(cid:129) We are defending pending lawsuits and claims that may subject us to material losses.
8
(cid:129) We may be subject to losses that may not be covered by insurance.
(cid:129)
(cid:129)
The concentration of a significant number of our properties in the Northeast and Mid-Atlantic regions of the United States,
and adverse conditions in those regions, in particular, could negatively impact our operations.
Property taxes on our properties may increase without notice.
(cid:129) Our business operations may not generate sufficient cash for distributions or debt service.
(cid:129) Adverse developments in general business, economic or political conditions could have a material adverse effect on us.
(cid:129)
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.
(cid:129) Our exposure to counterparty risk.
(cid:129)
Inflation may adversely affect our financial condition and results of operations.
(cid:129) Our assets may be subject to impairment charges.
(cid:129) Our accounting policies and methods require management to make estimates, judgments and assumptions about matters that
are inherently uncertain.
(cid:129) Amendments to the Accounting Standards Codification made by the Financial Accounting Standards Board (the “FASB”) or
changes in accounting standards may adversely affect our reported revenues, profitability or financial position.
(cid:129)
If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report
our financial results.
(cid:129) Our reliance on certain members of our management team or Board of Directors, the loss of any one of which could
adversely affect our business or the market price of our common stock.
(cid:129) Our reliance on information technology in our operations, and any material failure, inadequacy, interruption or security
failure of that technology could harm our business.
(cid:129) Our business and results of operations have been, and our financial condition may be, impacted by the COVID-19 pandemic.
Risks Related to Financing Our Business
(cid:129) Our dependency on external sources of capital, which may or may not be available on favorable terms, or at all.
(cid:129)
Interest rate risk and our ability to manage or mitigate this risk effectively.
(cid:129) Adverse effects by changes in LIBOR reporting practices or the method in which LIBOR is calculated.
Risks Related to Our Investment Strategy
(cid:129) We may not be able to successfully implement our investment strategy.
(cid:129) We expect to acquire new properties and this may create risks.
(cid:129) We are pursuing redevelopment opportunities and this creates risks to our Company.
9
Risks Related to Our Status as a REIT
(cid:129)
The 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.
(cid:129) A risk of changes in the tax law applicable to REITs.
(cid:129) 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.
(cid:129)
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.
Risks Related to Ownership of Our Securities
(cid:129)
(cid:129)
(cid:129)
Changes in market conditions could adversely affect the market price of our publicly traded common stock.
Changes in our dividend policy and the dividends we pay may be subject to significant volatility.
Future issuances of equity securities could dilute the interest of holders of our equity securities.
(cid:129) Maryland law may discourage a third-party from acquiring us.
Risks Related to Our Business and Operations
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.
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.
10
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 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.
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, and consumer demand for, alternative fuel, electric 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.
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We incur significant operating costs and, from time to time, may have significant liability accruals as a result of environmental
laws and regulations, which costs and accruals could significantly increase, and reduce our profitability or have a material adverse
effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
We are subject to 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. 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. Additionally, 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.
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.
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 does not satisfy them, and we are required to accrue for environmental liabilities that we
believe are allocable to others under our leases if we determine that it is probable that our tenant will not meet its environmental
obligations. 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 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. We may ultimately be responsible to pay for environmental liabilities as the
property owner if our tenant fails to pay them. 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
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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 preexisting 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.
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 an 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, 2020, we had accrued a total of $48.1 million for our prospective
environmental remediation obligations. This accrual consisted of (a) $11.7 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) $36.4 million for future environmental liabilities related to preexisting unknown contamination.
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.
Environmental exposures are difficult to assess and estimate for numerous reasons, including the amount of data available upon
initial assessment 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, 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 allocation of
responsibilities to others, 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, 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
derived upon facts known to us at this time, which are subject to significant change as circumstances change, and as environmental
contingencies become more clearly defined and reasonably estimable.
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. As a result, our estimates in respect of recoveries from state UST remediation funds could change, which could
adversely affect our accruals for environmental remediation liabilities.
Any changes to our estimates or our assumptions that form the basis of our estimates may result in our providing an accrual, or
adjustments to the amounts recorded, for environmental remediation liabilities. 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 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.
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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.
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, 2020, 43.6% 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.
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.
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.
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.
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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 lenders that are the counterparties to our
senior unsecured notes 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, 2020, we leased 150 convenience store and gasoline station properties in three separate unitary leases and
two stand-alone leases to subsidiaries of Global. In the aggregate, our leases with subsidiaries of Global represented 16% and 18% of
our total revenues for the years ended December 31, 2020 and 2019, respectively. All of our unitary leases with subsidiaries of Global
are guaranteed by the parent company. As of December 31, 2020, we leased 129 convenience store and gasoline station properties in
four separate unitary leases to subsidiaries of Arko. In the aggregate, our leases with subsidiaries of Arko represented 15% of our total
revenues for the years ended December 31, 2020 and 2019. All of our unitary leases with subsidiaries of Arko are guaranteed by the
parent company. As of December 31, 2020, 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 12% and 13% of our total revenues for each of the years
ended December 31, 2020 and 2019, respectively. As of December 31, 2020, we leased 74 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 10% and 11% of our total revenues for each of the years ended December 31, 2020 and 2019, respectively. The largest of
these unitary leases, covering 56 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut
affiliates.
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.
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.
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, 2020 and 2019, we incurred $4.3 million and $4.0 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.
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
15
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.
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.
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 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.
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 31 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,
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.
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
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information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and
could materially and adversely affect us.
Our business and results of operations have been, and our financial condition may be, impacted by the COVID-19 pandemic and
such impact could be materially adverse.
The global spread of COVID-19 has created significant volatility, uncertainty, and economic disruption. The extent to which
the COVID-19 pandemic impacts our business, operations and financial results is uncertain, and will depend on numerous evolving
factors that we may not be able to accurately predict, including the duration and scope of the pandemic; governmental, business and
individual actions taken in response to the pandemic and the impact of those actions on global economic activity; the actions taken in
response to economic disruption; the reduced economic activity, if not closures from time to time of our tenants’ facilities, may impact
our tenants' businesses, financial condition and liquidity, and may cause one or more of our tenants to be unable to meet their
obligations to us in full, or at all, or to otherwise seek modifications of such obligations; general decline in business activity and
demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; the financial impact
of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our Restated Credit Agreement
and our senior unsecured notes and result in a default and potentially an acceleration of indebtedness, which non-compliance could
negatively impact our ability to make additional borrowings under our Revolving Facility and pay dividends; and a deterioration in
our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors
that are needed for our or our tenants’ efficient operations could adversely affect our operations and those of our tenants.
We have granted a small number of tenants short-term rent or mortgage payment relief requests, most of them in the form
of deferral of payments. Notwithstanding the granting of such deferrals, certain of our tenants may be unable to make timely
rental payments in whole or in part under their leases or may seek further waivers or deferrals of rental payments. Accordingly,
the worsening of estimated future cash flows could result in our recognition of increased impairment charges on certain of our
properties. Moreover, in the event of any of our tenants default under or seek early termination for their leases, we might not be able to
fully recover and/or experience delays and additional costs in enforcing our rights under the terms of our leases due to potential
COVID-19-related moratoriums imposed by various jurisdictions on landlord initiated commercial eviction and collection actions.
Further, one or more of our tenants may seek the protection of the bankruptcy laws as a result of the prolonged impact of the COVID-
19 pandemic, which could result in the termination of its lease. Tenant bankruptcies may make it more difficult for us to release or
redevelop the property or properties in which the bankrupt tenant operates, which could materially and adversely affect our business,
financial condition or results of operations.
The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19
pandemic. Nevertheless, the COVID-19 pandemic presents material uncertainty and risk with respect to our performance, financial
condition, results of operations, cash flows and performance. Moreover, many risk factors set forth in our Annual Report on Form 10-
K for the year ended December 31, 2020, should be interpreted as heightened risks as a result of the impact of the COVID-19
pandemic.
Risks Related to Financing Our Business
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., 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 $300.0 million
unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022. 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 to $600.0 million in the aggregate. We have also issued $525.0 million of senior unsecured
notes. 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 and our senior unsecured notes 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 and our senior unsecured notes also contain customary events of
17
default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the senior
unsecured notes require a mandatory offer to prepay the notes 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 or our senior unsecured notes, 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 and our senior unsecured notes, and the market price of our common stock.
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 or our senior unsecured notes, 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 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 (“FCA”), which regulates LIBOR, announced that it
intends to stop compelling banks to submit rates for the calculation of LIBOR after the end of 2021. The U.S. Federal Reserve Board
and the Federal Reserve Bank of New York convened the Alternative Reference Rates Committee (“ARRC”), a steering committee
comprised of large U.S. financial institutions, to identify an alternative reference rate. ARRC identified the Secured Overnight
Financing Rate (“SOFR”), calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, as the
recommended alternative reference rate for USD-LIBOR in derivative and other financial contracts and proposed a paced transition
plan to transition USD-LIBOR to SOFR. The first publication of SOFR was released by the Federal Reserve Bank of New York in
April 2018. In November 2020, the ICE Benchmark Administration Limited (the administrator of LIBOR) announced that it would
consult on its intention to cease the publication of the one-week and two-month USD-LIBOR tenors only on December 31, 2021 and
all other USD-LIBOR tenors on June 30, 2023. The consultation period ended on January 25, 2021; however, no official statement
has been made as of the date of this report.
We cannot predict when LIBOR will cease to be available and there is no guarantee that a transition from LIBOR to an
alternative rate will not result in financial market disruptions, significant increases in benchmark rates or financing costs to borrowers.
If LIBOR is discontinued, pursuant to the Second Amendment to the Restated Credit Agreement, the administrative agent and the
borrower may amend the Restated Credit Agreement to replace LIBOR with a SOFR-based rate or an alternative rate otherwise agreed
upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings, but the alternative rate could
18
be higher and more volatile than LIBOR prior to its discontinuance. If a LIBOR successor rate has not been implemented under the
Restated Credit Agreement, interest on borrowing shall accrue at the base rate. Accordingly, the potential effects of the foregoing on
our cost of capital cannot yet be determined. As of December 31, 2020, we had $25,000,000 of borrowings based on LIBOR.
Risks Related to Our Investment Strategy
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 expect to 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, for 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
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.
19
Risks Related to Our Status as a REIT
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 2019, 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.
There is a risk of changes in the tax law applicable to real estate investment trusts.
Because the IRS, the United States Treasury Department and Congress frequently review federal income tax legislation, we
cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. Any of
such legislative actions may prospectively or retroactively modify our tax treatment and, therefore, may adversely affect taxation of us
and/or our investors.
The Tax Cuts and Jobs Act of 2017, or the TCJA, as amended by the Coronavirus Aid, Relief, and Economic Security Act, or
the CARES Act, has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and
their shareholders. Changes made by the TCJA and the CARES Act that could affect us and our shareholders include:
● temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal
income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1,
2026;
● permanently eliminating the progressive corporate tax rate structure, with a maximum corporate tax rate of 35%, and
replacing it with a flat corporate tax rate of 21%;
● permitting a deduction for certain pass-through business income, including dividends received by our shareholders from
us that are not designated by us as capital gain dividends or qualified dividend income, which will generally allow individuals, trusts,
and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026;
● reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as
attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
● limiting our deduction for net operating losses to 80% of REIT taxable income (prior to the application of the dividends
paid deduction) for taxable years beginning after December 31, 2020;
● generally limiting the deduction for net business interest expense in excess of a specified percentage (50% for taxable
years beginning in 2019 and 2020 and 30% for subsequent taxable years) of a business’s adjusted taxable income except for taxpayers
that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative
depreciation system for certain property); and
● eliminating the corporate alternative minimum tax.
20
You are urged to consult with your tax advisor with respect to the status of legislative, regulatory, judicial or administrative
developments and proposals and their potential effect on an investment in our securities.
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.
Certain federal tax legislation (the “2017 Legislation”) included 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 Legislation changed 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 Legislation do not 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 Legislation and any other regulatory or administrative developments and
proposals and the potential effects thereof on an investment in our common stock.
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.
Risks Related to Ownership of Our Securities
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.
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 and senior
unsecured notes 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 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 our senior unsecured notes 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.
21
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.
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.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Substantially all of our properties are leased on a triple-net basis to convenience store retailers, petroleum distributors, operators
of other automotive-related and retail businesses. Our tenants are engaged in the sale of day-to-day consumer goods and services,
convenience foods and refined petroleum products and are responsible for the operations conducted at our properties, including the
payment of all taxes, maintenance, repair, insurance and other operating expenses. 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 independently obtain and maintain a program of insurance which we believe adequately covers our owned and leased
properties for casualty and liability risks. Our insurance program is underwritten in view of primary insurance coverages in amounts
and on other terms satisfactory to us, which we require to be provided by most of our tenants for properties they lease from us,
including in respect to casualty, liability, pollution legal liability, fire and extended coverage risks.
22
The following table summarizes the geographic distribution of our properties as of December 31, 2020, including the number
and location of properties we lease from third-parties. In addition, we lease approximately 11,100 square feet of office space at 292
Madison Avenue, New York, New York for our corporate headquarters, which we believe will remain suitable and adequate for such
purposes for the immediate future.
Owned by
Getty Realty
Leased by
Getty Realty
Total
Properties
by State
Percent
of Total
Properties
New York
Massachusetts
Connecticut
Texas
New Jersey
Virginia
New Hampshire
South Carolina
Maryland
California
Washington State
Arizona
Colorado
Pennsylvania
Oregon
Arkansas
Hawaii
North Carolina
Ohio
Maine
Missouri
Nevada
Georgia
New Mexico
Florida
Kansas
Louisiana
Oklahoma
Rhode Island
Kentucky
Illinois
Washington, D.C.
Alabama
Delaware
Minnesota
North Dakota
Total
204
99
65
64
45
48
45
45
40
35
31
23
23
22
13
11
10
9
9
7
7
6
5
5
4
4
4
4
4
3
2
2
1
—
1
1
901
35
8
7
—
4
1
—
—
2
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
—
—
58
239
107
72
64
49
49
45
45
42
35
31
23
23
22
13
11
10
9
9
7
7
6
5
5
4
4
4
4
4
3
2
2
1
1
1
1
959
24.9%
11.2
7.5
6.7
5.1
5.1
4.7
4.7
4.4
3.7
3.2
2.4
2.4
2.3
1.4
1.2
1.0
1.0
1.0
0.7
0.7
0.6
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.3
0.2
0.2
0.1
0.1
0.1
0.1
100.0%
23
The properties that we lease from third parties have a remaining lease term, including renewal and extension option terms,
averaging approximately 8.0 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
2021
2022
2023
2024
2025
Subtotal
Thereafter
Total
Number of
Leases
Expiring
Percent of
Total Leased
Properties
Percent
of Total
Properties
9
5
2
4
2
22
36
58
15.5%
8.6
3.5
6.9
3.5
38.0
62.0
100%
0.9%
0.5
0.2
0.4
0.2
2.2
3.8
6.0%
Revenues from rental properties for the year ended December 31, 2020 were $144.6 million, an average of approximately
$152,000 per property given the 952 average rental properties held during the year. Revenues from rental properties for the year ended
December 31, 2019, were $137.7 million, an average of $147,000 per property given the 937 average rental properties held during the
year. Rental property lease expirations and annualized contractual rent as of December 31, 2020, are as follows (in thousands, except
for number of properties):
CALENDAR YEAR
Redevelopment
Vacant
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Thereafter
Total
Number of
Rental
Properties (a)
Annualized
Contractual
Rent (b)
6
7
24
32
26
26
42
82
255
45
76
20
318
959
$
$
—
—
2,047
2,815
3,617
3,712
7,074
14,259
19,809
7,842
11,605
1,729
60,743
135,252
Percentage
of Total
Annualized Rent
—
—
1.5%
2.1
2.7
2.7
5.2
10.6
14.6
5.8
8.6
1.3
44.9
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, 2020, 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,
2020 and 2019, we had accrued $4.3 million and $17.8 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, 2020, 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.
24
MTBE Litigation – State of New Jersey
We were 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 many cases that were transferred from various 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. 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 owners and operators of gasoline station properties from which the releases
occurred. The New Jersey MDL Proceedings named us as a defendant along with approximately 50 petroleum refiners, manufacturers,
distributors and retailers of MTBE, or gasoline containing MTBE, including Atlantic Richfield, BP, Chevron, Citgo, ConocoPhillips,
Cumberland Farms, Duke Energy, ExxonMobil, Getty Petroleum Marketing, Inc., Gulf, Hess, Lyondell Chemical, Lyondell-Citgo,
Lukoil Americas, Marathon Oil, Mobil, Motiva, Shell, Sunoco, Unocal, and Valero. The majority of the named defendants have
settled their case with the State of New Jersey.
In 2020, we settled the New Jersey MDL Proceedings in accordance with the terms of a Judicial Consent Order (“JCO”), which
included payment by us of $13.5 million in exchange for satisfaction and release of claims made against us by various parties
including the NJDEP. Our settlement payment was within our previously established litigation loss reserve for the case. The JCO was
approved and entered by the United States District Court for the Southern District of New York on December 17, 2020 and, in
accordance with the terms thereof, payment was made by the Company and the case against the Company dismissed.
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, BP, 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 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 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 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, APEX Oil, Astra Oil, Atlantic Richfield, BP,
Chevron, Citgo, ConocoPhillips, Hess, Kinder Morgan, Lukoil, Marathon, Shell, Sunoco, Texaco, Valero, Cumberland Farms, Duke
Energy, El Paso Merchant Energy-Petroleum, Energy Transfer Partners, Equilon Enterprises, ETP Holdco, George E. Warren
Corporation, Getty Petroleum Marketing, Inc., Gulf, Guttman Energy, Hartree Partners, Holtzman Oil, Motiva Enterprises, Nustar
Terminals Operations Partnership, Phillips 66, Premcor, 7-Eleven, Sheetz, Total Petrochemicals & Refining USA, Transmontaigne
Product Services, Vitol S.A., WAWA, and Western Refining. 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.
25
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. 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 2004, the United States Environmental Protection Agency (“EPA”) issued General Notice Letters (“GNL”) to over 100
entities, including us, alleging that they are PRPs at the Diamond Alkali Superfund Site (“Superfund Site”), which includes the former
Diamond Shamrock Corporation manufacturing facility located at 80-120 Lister Ave. in Newark, New Jersey and a 17-mile stretch of
the Passaic River from Dundee Dam to the Newark Bay and its tributaries (the Lower Passaic River Study Area or “LPRSA”). In May
2007, over 70 GNL recipients, including us, entered into an Administrative Settlement Agreement and Order on Consent (“AOC”)
with the EPA to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the LPRSA, which is intended to address the
investigation and evaluation of alternative remedial actions with respect to alleged damages to the LPRSA. Many 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 interim allocation formula
is not binding on the parties in terms of any potential liability for the costs to remediate the LPRSA. The CPG submitted to the EPA its
draft RI/FS in 2015, which sets forth various alternatives for remediating the entire 17 miles of the LPRSA. In October 2018, the EPA
issued a letter directing the CPG to prepare a streamlined feasibility study for just the upper 9-miles of the LPRSA based on an
iterative approach using adaptive management strategies. On December 4, 2020, The CPG submitted a Final Draft Interim Remedy
Feasibility Study (“IR/FS”) to the EPA which identifies various targeted dredge and cap alternatives for the upper 9-miles of the
LPRSA. On December 11, 2020, EPA conditionally approved the CPG’s IR/FS for the upper 9-miles of the LPRSA, which recognizes
that interim actions and adaptive management may be appropriate before deciding a final remedy. It is anticipated that EPA will issue
a proposed plan for an interim remedy for the upper 9-miles, which will be published for public comment. Subject to EPA’s response
to any comments and/or objections received, it is anticipated that EPA will issue a Record of Decision (“ROD”) for an interim remedy
for the upper 9-mile portion of the LPRSA in 2021 (“Upper 9-mile IR ROD”).
In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the LPRSA 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”) with the EPA 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”),
the former owner/operator of the Diamond Shamrock Corporation facility responsible for the discharge of 2,3,8,8-TCDD (“dioxin”)
and other hazardous substances from the Lister facility. The Order directed 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 LPRSA. The FFS was subject to public
comments and objections and, on March 4, 2016, the EPA issued a ROD for the lower 8-miles (“Lower 8-mile ROD”) 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 PRPs 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 (who the EPA considers the primary contributor of dioxin and other pesticides generated from
the production of Agent Orange at its Diamond Shamrock Corporation facility and a discharger of other contaminants of concern
(“COCs”) to the Superfund Site for remedial design of the remedy selected in the Lower 8-mile ROD, after which the EPA plans to
begin negotiations with “major” PRPs for implementation and/or payment of the selected remedy. The Notice also stated that the EPA
believes that some of the PRPs and other parties not yet identified will be eligible for a cash out settlement with the EPA. On
September 30, 2016, Occidental entered into an agreement with the EPA to perform the remedial design for the Lower 8-mile ROD. In
December 2019, Occidental submitted a report to the EPA on the progress of the remedial design work, which is still ongoing.
Occidental has asserted that it is entitled to indemnification by Maxus Energy Corporation (“Maxus”) and Tierra Solutions, Inc.
(“Tierra”) for its liability in connection with the Site. Occidental has also asserted that Maxus and Tierra’s parent company, YPF, S.A.
(“YPF”) and certain of its affiliates must indemnify Occidental. On June 16, 2016, Maxus and Tierra filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. In July 2017, an amended Chapter 11 plan of liquidation became effective and, in
connection therewith, Maxus and Tierra entered into a mutual contribution release agreement with certain parties, including us,
pertaining to certain past costs, but not future remedy costs.
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 PRPs to resolve their alleged liability for the remedial actions addressed in the Lower 8-mile ROD, who the EPA stated did
not discharge any of the eight hazardous substances identified as a COC in the ROD. The letter also stated that other parties who did
not discharge dioxins, furans or polychlorinated biphenyls (which are considered the COCs posing the greatest risk to the river) may
also be eligible for cash out settlements, and that the EPA would begin a process for identifying other PRPs for negotiation of similar
26
cash out settlements. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements, but we
believe we meet EPA’s criteria for a cash out settlement and should be considered for same in any future discussions. In January 2018,
the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the initial group of parties to resolve their
respective alleged liability for the Lower 8-mile ROD work, each for a payment to the EPA in the amount of $0.3 million. In August
2017, the EPA appointed an independent third-party allocation expert to conduct allocation proceedings with most of the remaining
recipients of the Notice, which is anticipated to lead to additional offers of cash out settlements to certain additional parties and/or a
consent decree in which parties that are not offered a cash out settlement will agree to perform the Lower 8-mile ROD remedial
action. The allocation proceedings, which we are participating in, are still ongoing.
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 for its alleged
expenses with respect to the investigation, design, and anticipated implementation of the remedy for the Lower 8-mile ROD work. The
complaint lists over 120 defendants, including us, many of whom were also named in the EPA’s 2016 Notice. Factual discovery is
ongoing, and we are defending the claims consistent with our defenses in the related proceedings.
Many uncertainties remain regarding the anticipated interim remedy selection for the Upper 9-mile IR ROD and how the EPA
intends to implement either the Upper 9-mile IR ROD and/or the Lower 8-mile ROD work, including whether EPA will designate
certain PRPs as work parties and/or if EPA will identify PRPs for future cash-out settlement negotiations for the Upper 9-mile IR
ROD, the Lower 8-mile ROD work or both. Further, none of the above referenced AOCs and RODs relating to the LPRSA obligate
us to fund or perform any remedial action contemplated for the LPRSA and do not resolve liability issues for remedial work or the
restoration of or compensation for alleged natural resource damages to the LPRSA, which are not known at this time. Therefore, we
anticipate that performance of the EPA’s selected remedies for the LPRSA will be subject to future negotiation, potential enforcement
proceedings and/or possible litigation.
Based on currently known facts and circumstances, including, among other factors, anticipated allocations, our belief that there
was not any use or discharge of dioxins, furans or polychlorinated biphenyls in connection with our former petroleum storage
operations at our former Newark, New Jersey Terminal, and because there are numerous other parties who will likely bear the costs of
remediation and/or damages, the Company does not believe that resolution of this matter as relates to the Company is reasonably
likely to have a material impact on our results of operations. Nevertheless, our ultimate liability in the pending and possible future
proceedings pertaining to the LPRSA remains uncertain and subject to numerous contingencies which cannot be predicted and the
outcome of which are not yet known. Therefore, it is possible that our ultimate liability resulting from this matter and the impact on
our results of operations could be material.
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, Sharon Irni, 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 possible loss or range of loss
in excess of the amount we have accrued for this lawsuit. It is possible that losses related to this case could exceed the amounts
accrued, as of December 31, 2020.
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 alleged 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. We settled this case effective December 17, 2020
pursuant to the terms of a Settlement Agreement and General Release which among other things included a payment to the Company.
The case has been dismissed. For additional information see “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in this Form 10-K.
Item 4. Mine Safety Disclosures
None.
27
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 16,239 beneficial
holders of our common stock as of February 5, 2020, of which approximately 862 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*
Getty Realty Corp.
Standard & Poor's 500
Peer Group
$173.36
$136.40
$124.75
$155.68
$121.27
$111.96
$100.00
$196.94
$140.58
$130.42
$230.06
$176.45
$171.49
$204.25
$203.04
$151.26
$250.00
$200.00
$150.00
$100.00
$50.00
$-
1 2 / 3 1 / 2 0 1 5
1 2 / 3 0 / 2 0 1 6
1 2 / 2 9 / 2 0 1 7
1 2 / 3 1 / 2 0 1 8
1 2 / 3 1 / 2 0 1 9
1 2 / 3 1 / 2 0 2 0
Source: SNL Financial
Getty Realty Corp.
Standard & Poor's 500
Peer Group
12/31/2015
100.00
100.00
100.00
12/31/2016
155.68
$
111.96
$
121.27
$
12/31/2017
173.36
$
136.40
$
124.75
$
12/31/2018
196.94
$
130.42
$
140.58
$
12/31/2019
230.06
$
171.49
$
176.45
$
12/31/2020
204.25
$
203.04
$
151.26
$
Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2014, in Getty
Realty Corp. common stock, Standard & Poor’s 500 and Peer Group.
* Cumulative total return assumes reinvestment of dividends.
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
28
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.
Item 6. Reserved
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”; and the consolidated financial statements and related notes in
“Item 8. Financial Statements and Supplementary Data”.
This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between 2020 and 2019.
Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found
in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
General
Real Estate Investment Trust
We are a REIT specializing in the acquisition, ownership, leasing, financing and redevelopment of convenience stores, gasoline
stations and other automotive-related and retail real estate, including express car washes, instant oil change centers, automotive service
centers, automotive parts retailers and select other properties. As of December 31, 2020, we owned 901 properties and leased 58
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.
COVID-19
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic. The impact from the rapidly
changing market and economic conditions due to the COVID-19 pandemic remains uncertain. While we have not incurred significant
disruptions to our financial results thus far from the COVID-19 pandemic, we are unable to accurately predict the impact that COVID-
19 will have on our business, operations and financial result due to numerous evolving factors, including the severity of the disease,
the duration of the pandemic, actions that may be taken by governmental authorities, the impact to our tenants, including the ability of
our tenants to make their rental payments and any closures of tenants’ facilities. Additionally, while we expect to continue our overall
growth strategy during the 2021 and to fund our business operations from cash flows from our properties and our Revolving Facility,
the rapid developments and fluidity of COVID-19 may cause us to re-evaluate, if not suspend, our growth strategy and/or to rely more
heavily on borrowings under our Revolving Facility, proceeds from the sale of shares of our common stock under our ATM Program,
or other sources of liquidity. See “Part I. Item. 1A. Risk Factors” in this Annual Report on Form 10-K for additional information.
Our Triple-Net Leases
Substantially all of our properties are leased on a triple-net basis to convenience store operators, petroleum distributors and other
automotive-related and retail tenants. Our tenants either operate their business at our properties directly or sublet our properties and
supply fuel to third parties that operate the convenience store and gasoline station businesses. 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.
Substantially all of our tenants’ financial results depend on convenience store sales, the sale of refined petroleum products 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. (For additional information regarding risks related
to our tenants’ dependence on the performance of the petroleum industry, see “Item 1A. Risk Factors – Substantially all of our tenants
depend on the same industry for their revenues” in this Form 10-K.) During the terms of our leases, we monitor the credit quality of
our triple-net lease 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, 2020, we leased 946 of our properties to tenants under triple-net leases.
Our net lease properties include 829 properties leased under 31 separate unitary or master triple-net leases and 117 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, substantially all
of which is related to the replacement of USTs that are owned by our tenants.
30
Redevelopment. As of December 31, 2020, 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, 2020, seven 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 stores, gasoline stations and other automotive-related and retail real estate. We primarily pursue sale-leaseback
transactions and other real estate acquisitions that result in us owning fee simple interests in our properties. 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 enhance our geographic and
tenant diversification.
During the year ended December 31, 2020, we acquired fee simple interests in 34 properties for an aggregate purchase price of
$150.0 million. In February 2020, we acquired fee simple interests in ten car wash properties located in the Kansas City Metropolitan
Statistical Area (“MSA”) for an aggregate purchase price of $50.3 million and entered into a unitary lease at the closing of the
transactions. In August 2020, we acquired fee simple interests in seven car wash properties located in the San Antonio MSA for an
aggregate purchase price of $28.3 million and entered into a unitary lease at the closing of the transaction. In October 2020, we
acquired fee simple interests in six convenience store and gasoline station properties located throughout the state of Texas for an
aggregate purchase price of $28.7 million and entered into a unitary lease at the closing of the transaction. In addition, during the year
ended December 31, 2020, we acquired fee simple interests in 11 convenience store and other automotive-related properties in various
transactions for an aggregate purchase price of $42.7 million.
During the year ended December 31, 2019, we acquired fee simple interests in 27 properties for an aggregate purchase price of
$87.2 million. In June 2019, we acquired fee simple interests in six convenience store and gasoline station properties located in the
Los Angeles MSA for $24.7 million and entered into a unitary lease at the closing of the transaction. In November 2019, we acquired
fee simple interests in four car wash properties located in the Las Vegas MSA for $14.1 million and entered into a unitary lease at the
closing of the transaction. In addition, during the year ended December 31, 2019, we acquired fee simple interests in 17 convenience
store and other automotive-related properties in various transactions for an aggregate purchase price of $48.3 million.
Redevelopment Strategy and Activity
We believe that certain of our properties are well-suited for either new convenience store use or for alternative single-tenant net
lease retail uses, such as automotive parts and service, quick service restaurants, specialty retail and bank branches. We believe that
the redeveloped properties can be leased or sold at higher values than their current use.
For the year ended December 31, 2020 and 2019, rent commenced on six and four completed redevelopment projects,
respectively, that were placed back into service in our net lease portfolio. Since the inception of our redevelopment program in 2015,
we have completed 19 redevelopment projects.
For the year ended December 31, 2020, we spent $0.3 million (net of write-offs) of construction-in-progress costs related to our
redevelopment activities and transferred $1.6 million of construction-in-progress to buildings and improvements on our consolidated
balance sheet. For the year ended December 31, 2019, we spent $0.4 million (net of write-offs) of construction-in-progress costs
related to our redevelopment activities and transferred $0.5 million of construction-in-progress to buildings and improvements on our
consolidated balance sheet.
As of December 31, 2020, we had six properties under active redevelopment and others in various stages of feasibility planning
for potential recapture from our net lease portfolio, including four properties for which we have signed new leases and which will be
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 impairment charges aggregating $4.3 million and $4.0
million for the years ended December 31, 2020 and 2019, 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 to
certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of
these 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
31
contracts, letters of intent or indicative bids for certain of our properties. The evaluation and estimates of anticipated cash flows used
to conduct our impairment analysis are highly subjective and actual results could vary significantly from our estimates. For a
discussion of the risks associated with asset impairments, see “Item 1A. Risk Factors – Our assets may be subject to impairment
charges.”
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 (“NAREIT”) as GAAP net earnings before
depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, impairment charges and the
cumulative effect of accounting changes. Our definition of AFFO is defined as FFO less (i) certain revenue recognition adjustments
(defined below), (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.
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. Specifically, FFO excludes items such as depreciation and amortization of real estate assets, gains or losses on
dispositions of real estate, and impairment charges. However, GAAP net earnings and FFO typically include certain other items that
the we exclude from AFFO, including 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 the recognition of rental
income from direct financing leases and the amortization of deferred lease incentives (collectively, “Revenue Recognition
Adjustments”) that do not impact our recurring cash flow and which are not indicative of our core operating performance. 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 also include non-cash and/or unusual items such as changes in environmental estimates, environmental accretion
expense, allowances for credit loss on notes and mortgages receivable and direct finance leases, environmental litigation accruals,
insurance reimbursements, legal settlements and judgments, property acquisition costs expensed and loss on extinguishment of debt,
that do not impact our recurring cash flow and which are not indicative of our core operating performance.
We pay particular attention to AFFO which we believe provides a more accurate depiction of our core operating performance
than either GAAP net earnings or FFO. 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.
32
A reconciliation of net earnings to FFO and AFFO is as follows (in thousands, except per share amounts):
Year ended December 31,
2020
2019
2018
Net earnings
Depreciation and amortization of real estate assets
Gains on dispositions of real estate
Impairments
Funds from operations
Revenue recognition adjustments
Allowance for credit loss on notes and mortgages receivable and direct
financing leases
Loss on extinguishment of debt
Changes in environmental estimates
Accretion expense
Environmental litigation accruals
Insurance reimbursements
Legal settlements and judgments
Adjusted funds from operations
Basic per share amounts:
Earnings per share
Funds from operations per share
Adjusted funds from operations per share
Diluted per share amounts:
Earnings per share
Funds from operations per share
Adjusted funds from operations per share
Weighted average common shares outstanding:
Basic
Diluted
Results of Operations
$
$
$
$
$
$
69,388
30,191
(4,548)
4,258
99,289
895
368
1,233
(3,135)
1,841
85
(142)
(21,300)
79,134
1.62
2.32
1.85
1.62
2.31
1.84
$
$
$
$
$
$
49,723
25,161
(1,063)
4,012
77,833
(960)
—
—
(5,386)
2,006
5,896
(4,866)
(2,707)
71,816
1.19
1.86
1.72
1.19
1.86
1.72
$
$
$
$
$
$
47,706
23,636
(3,948)
6,170
73,564
(2,223)
—
—
(1,319)
2,409
(45)
(2,570)
(147)
69,669
1.17
1.81
1.71
1.17
1.80
1.71
42,040
42,070
41,072
41,110
40,171
40,191
Year ended December 31, 2020, compared to year ended December 31, 2019
Revenues from rental properties increased by $6.9 million to $144.6 million for the year ended December 31, 2020, as
compared to $137.7 million for the year ended December 31, 2019. The increase in revenues from rental properties was primarily due
to $6.1 million of revenue from the properties acquired in 2020. Rental income contractually due from our tenants included in
revenues from rental properties was $128.2 million for the year ended December 31, 2020, as compared to $119.3 million for the year
ended December 31, 2019. Tenant reimbursements, which are included in revenues from rental properties, and 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 $17.3 million and $17.5 million for the years ended December 31, 2020 and 2019, respectively. Interest income on
notes and mortgages receivable was $2.7 million for the year ended December 31, 2020, as compared to $2.9 million for the year
ended December 31, 2019.
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 include Revenue Recognition
Adjustments which decreased rental revenue by $0.9 million and increased rental revenue by $1.0 million for the years ended
December 31, 2020 and 2019, respectively.
Property costs, which are primarily comprised of rent expense, real estate and other state and local taxes, municipal charges,
professional fees, maintenance expense and reimbursable tenant expenses, were $23.5 million for the year ended December 31, 2020,
as compared to $25.0 million for the year ended December 31, 2019. The decrease in property costs for the year ended December 31,
2020, was principally due to a decrease in rent expense, professional fees related to property redevelopments and reimbursable real
estate taxes partially offset by an increase in other professional fees.
33
Impairment charges were $4.3 million for the year ended December 31, 2020, as compared to $4.0 million for the year ended
December 31, 2019. Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment
charges for the years ended December 31, 2020 and 2019, were attributable to the effect of adding asset retirement costs to certain
properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these
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 were $1.1 million for the year ended December 31, 2020, as compared to $5.4 million for the year
ended December 31, 2019. The decrease in environmental expenses for the year ended December 31, 2020, was principally due to a
$5.8 million decrease in environmental litigation accruals and a $0.6 million decrease in environmental legal and professional fees,
partially offset by a $2.1 million change in net environmental remediation costs and estimates. 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 $17.3 million for the year ended December 31, 2020, as compared to $15.4 million for
the year ended December 31, 2019. The increase in general and administrative expense for the year ended December 31, 2020, was
principally due to a $0.7 million increase in stock-based compensation, a $0.7 million increase in other employee-related expenses and
a $0.6 million increase in legal and other professional fees.
Depreciation and amortization expense was $30.2 million for the year ended December 31, 2020, as compared to $25.2 million
for the year ended December 31, 2019. 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 $4.5 million for the year ended December 31, 2020, as compared to $1.1 million for the
year ended December 31, 2019. The gains were the result of the sale of 11 and nine properties during the years ended December 31,
2020 and 2019, respectively.
Other income was $21.1 million for the year ended December 31, 2020, as compared to $7.6 million for the year ended
December 31, 2019. For the year ended December 31, 2020, other income was primarily attributable to $21.3 million received from
legal settlements and judgments and $0.1 million received from environmental insurance reimbursements, partially offset by a $0.4
million allowance for credit loss on notes and mortgages receivable and direct financings leases. Other income for the year ended
December 31, 2019, was primarily attributable to $4.9 million received from environmental insurance reimbursements and $2.7
million received from legal settlements and judgments.
Interest expense was $26.1 million for the year ended December 31, 2020, as compared to $24.6 million for the year ended
December 31, 2019. The increase was due to higher average borrowings outstanding for the year ended December 31, 2020, as
compared to the year ended December 31, 2019.
For the year ended December 31, 2020, FFO was $99.3 million, as compared to $77.8 million for the year ended December 31,
2019. For the year ended December 31, 2020, AFFO was $79.1 million, as compared to $71.8 million for the year ended
December 31, 2019. FFO for the year ended December 31, 2020, was impacted by changes in net earnings, but excludes a $0.3 million
increase in impairment charges, a $5.0 million increase in depreciation and amortization expense and a $3.4 million increase in gains
on dispositions of real estate. The increase in AFFO for the year ended December 31, 2020, also excludes a $18.6 million increase in
legal settlements and judgments, a $2.1 million increase in environmental estimates and accretion expense, a $4.8 million decrease in
insurance reimbursements, a $5.8 million decrease in environmental litigation accruals, a $1.9 million decrease in Revenue
Recognition Adjustments, a $1.2 million increase in loss on extinguishment of debt and a $0.4 million allowance for credit loss on
notes and mortgages receivable and direct financing leases.
Basic and diluted earnings per share was $1.62 per share for the year ended December 31, 2020, as compared to $1.19 per share
for the year ended December 31, 2019. Basic and diluted FFO per share for the year ended December 31, 2020, was $2.31 per share as
compared to $1.86 per share, for the year ended December 31, 2019. Basic and diluted AFFO per share for the year ended
December 31, 2020, was $1.85 and $1.84 per share, respectively, as compared to $1.72 per share for the year ended December 31,
2019.
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 Revolving Facility, proceeds from the sale of shares of our common stock under our ATM
Program and available cash and cash equivalents.
34
Our cash flow activities for the years ended December 31, 2020, 2019 and 2018, are summarized as follows (in thousands):
Net cash flow provided by operating activities
Net cash flow (used in) investing activities
Net cash flow provided by (used in) financing activities
Operating Activities
2020
Year ended December 31,
2019
$
$
82,827
(127,417)
77,980
$
$
76,774
(82,553)
(19,299)
$
$
2018
66,361
(78,946)
40,514
Net cash flow from operating activities increased by $6.0 million for the year ended December 31, 2020, to $82.8 million, as
compared to $76.8 million for the year ended December 31, 2019. 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, 2020,
2019 and 2018, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above and the
other changes in assets and liabilities on our consolidated statements of cash flows.
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 increased by $44.8 million for the year ended December 31, 2020,
to a use of $127.4 million, as compared to a use of $82.6 million for the year ended December 31, 2019. The increase in net cash flow
from investing activities for the year ended December 31, 2020, was primarily due to an increase of $62.8 million of property
acquisitions a $2.4 million increase in issuance of notes receivable and a $1.9 million increase in deposits for property acquisitions,
partially offset by an increase of $18.6 million in collections of notes and mortgages receivable and an increase of $3.8 million in
proceeds from dispositions of real estate.
Financing Activities
Net cash flow provided by financing activities increased by $97.3 million for the year ended December 31, 2020, to $78.0
million, as compared to a use of $19.3 million for the year ended December 31, 2019. The increase in net cash flow from financing
activities for the year ended December 31, 2020, was primarily due to an increase in net borrowings of $54.0 million and an increase
in net proceeds from issuances of common stock of $49.0 million, partially offset by an increase in dividends paid of $5.7 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 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, 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, prior to its repayment pursuant to a subsequent amendment to
the Restated Credit Agreement, bore interest 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%.
On September 19, 2018, we entered into an amendment (the “First Amendment”) of our Restated Credit Agreement. The First
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 First Amendment) plus the Applicable Rate
(as defined in the First Amendment) for such facility.
35
On September 12, 2019, in connection with prepayment of the Term Loan, we entered into a consent and amendment (the
“Second Amendment”) of our Restated Credit Agreement. The Second Amendment modifies the Restated Credit Agreement to,
among other things, (a) increase our borrowing capacity under the Revolving Facility from $250.0 million to $300.0 million and (b)
decrease lender commitments under the Term Loan to $0.0 million.
On December 14, 2020, we used a portion of the net proceeds from the Series I Notes, Series J Notes and Series K Notes (each
as described below) to repay $75.0 million of borrowings outstanding under our Restated Credit Agreement.
Senior Unsecured Notes
On December 4, 2020, we entered into a fifth amended and restated note purchase and guarantee agreement (the “Fifth
Amended and Restated Prudential Agreement”) with Prudential and certain of its affiliates amending and restating our existing fourth
amended and restated note purchase agreement. Pursuant to the Fifth Amended and Restated Prudential 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”), (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”) and (d) 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 (e) 3.52% Series F Guaranteed Senior Notes due September 12, 2029, in
the aggregate principal amount of $50.0 million (the “Series F Notes”) that were outstanding under the existing fourth restated
prudential note purchase agreement would continue to remain outstanding under the Fifth Amended and Restated Prudential
Agreement and we authorized and issued our 3.43% Series I Guaranteed Senior Notes due November 25, 2030, in the aggregate
principal amount of $100.0 million (the “Series I Notes” and, together with the Series A Notes, Series B Notes, Series C Notes, Series
D Notes and Series F Notes, the “Notes”) to Prudential. On December 4, 2020, we completed the early redemption of our 6.0% Series
A Notes due February 25, 2021, in the original aggregate principal amount of $100.0 million. As a result of the early redemption, we
recognized a $1.2 million loss on extinguishment of debt on our consolidated statement of operations for the year ended December 31,
2020. The Fifth Amended and Restated Prudential Agreement does not provide for scheduled reductions in the principal balance of the
Series I Notes, or any of our previously issued Series B Notes, Series C Notes, Series D Notes, or Series F 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 their
maturity.
On December 4, 2020, we entered into a first amendment to note purchase and guarantee agreement (the “First Amended and
Restated AIG Agreement”) with American General Life Insurance Company amending and restating our existing note purchase and
guarantee agreement. Pursuant to the First Amended and Restated AIG Agreement, we agreed that our 3.52% Series G Guaranteed
Senior Notes due September 12, 2029, in the aggregate principal amount of $50.0 million (the “Series G Notes”) that were outstanding
under the existing note purchase and guarantee agreement would continue to remain outstanding under the First Amended and
Restated AIG Agreement and we authorized and issued our $50.0 million of 3.43% Series J Guaranteed Senior Notes due November
25, 2030 (the “Series J Notes”) to AIG. The First Amended and Restated AIG Agreement does not provide for scheduled reductions in
the principal balance of the Series J Notes or any of our previously issued Series G Notes prior to their respective maturities.
On December 4, 2020, we entered into a first amended and restated note purchase and guarantee agreement (the “First Amended
and Restated MassMutual Agreement”) amending and restating our existing note purchase and guarantee agreement. Pursuant to the
First Amended and Restated MassMutual Agreement, we agreed that our 3.52% Series H Guaranteed Senior Notes due September 12,
2029, in the aggregate principal amount of $25.0 million (the “Series H Notes”) that were outstanding under the existing note purchase
and guarantee agreement would continue to remain outstanding under the First Amended and Restated MassMutual Agreement and
we authorized and issued our $25.0 million of 3.43% Series K Guaranteed Senior Notes due November 25, 2030 (the “Series K
Notes”) to MassMutual. The First Amended and Restated MassMutual Agreement does not provide for scheduled reductions in the
principal balance of the Series K or any of our previously issued Series H Notes prior to their respective maturities.
We used the net proceeds from the issuance of the Series I Notes, Series J Notes and Series K Notes to prepay in full our Series
A Notes due February 25, 2021, and repay $75.0 million of borrowings outstanding under our Restated Credit Agreement.
The Notes, the Series E Notes, the Series G Notes, the Series H Notes, the Series I Notes, the Series J Notes and, the Series K
Notes, respectively issued thereunder, are collectively referred to as the “senior unsecured notes.”
36
Debt Maturities
The amounts outstanding under our Restated Credit Agreement and our senior unsecured notes, exclusive of extension options,
are as follows (in thousands):
Revolving Facility
Series A Notes
Series B Notes
Series C Notes
Series D Notes
Series E Notes
Series F Notes
Series G Notes
Series H Notes
Series I Notes
Series J Notes
Series K Notes
Total debt
Unamortized debt issuance costs, net (a)
Total debt, net
Maturity
Date
March 2022
February 2021
June 2023
February 2025
June 2028
June 2028
September 2029
September 2029
September 2029
November 2030
November 2030
November 2030
Interest
Rate
December 31,
2020
December 31,
2019
1.85% $
6.00%
5.35%
4.75%
5.47%
5.47%
3.52%
3.52%
3.52%
3.43%
3.43%
3.43%
$
25,000
—
75,000
50,000
50,000
50,000
50,000
50,000
25,000
100,000
50,000
25,000
550,000
(2,307)
547,693
$
$
20,000
100,000
75,000
50,000
50,000
50,000
50,000
50,000
25,000
—
—
—
470,000
(2,949)
467,051
(a) Unamortized debt issuance costs, related to the Revolving Facility, at December 31, 2020 and 2019, of $1,135 and $2,014,
respectively, are included in prepaid expenses and other assets on our consolidated balance sheets.
As of December 31, 2020, we are in compliance with all of the material terms of the Restated Credit Agreement and our senior
unsecured notes.
ATM Program
In March 2018, we established an 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 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, 2020 and 2019, we issued 2.2 million and 0.4 million shares of common stock and
received net proceeds of $63.2 million and $14.2 million, respectively, under the ATM Program. 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 convenience stores, gasoline
stations and other automotive-related and retail real estate, and we expect to continue to pursue acquisitions that we believe will
benefit our financial performance.
During the year ended December 31, 2020, we acquired fee simple interests in 34 properties for an aggregate purchase price of
$150.0 million. During the year ended December 31, 2019, we acquired fee simple interests in 27 properties for an aggregate purchase
price of $87.2 million. We accounted for the acquisitions of fee simple interests as asset acquisitions. For additional information
regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
We also seek opportunities to recapture select properties from our net lease portfolio and 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, 2020, we
spent $0.3 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities. For the year ended
December 31, 2019, we spent $0.4 million (net of write-offs) of construction-in-progress costs 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, 2020, we have a remaining commitment to fund up to $6.8 million in the aggregate in
37
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, our senior unsecured notes and other factors, and therefore is not assured. In particular, the Restated
Credit Agreement and our senior unsecured notes prohibit the payment of dividends during certain events of default.
Regular quarterly dividends paid to our stockholders aggregated $62.6 million, $56.9 million and $50.5 million for the years
ended December 31, 2020, 2019 and 2018, respectively. There can be no assurance that we will continue to pay dividends at historical
rates.
Contractual Obligations
Our significant contractual obligations and commitments, excluding extension options and unamortized debt issuance costs, as
of December 31, 2020, were comprised of borrowings under the credit agreement, our senior unsecured notes, operating and finance
lease payments due to landlords, estimated environmental remediation expenditures and our funding commitments for capital
improvements at certain properties.
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, 2020, exclusive of extension options and
unamortized debt issuance costs, are summarized below (in thousands):
Operating and finance leases
Credit agreement
Senior unsecured notes
Interest on debt (a)
Estimated environmental remediation expenditures (b)
Capital improvements (c)
Total
Total
15,570
25,000
525,000
159,245
48,084
6,829
779,728
$
$
$
$
Less
Than
One Year
4,646
—
—
22,724
6,346
94
33,810
One to
Three
Years
6,049
25,000
75,000
42,842
18,601
—
167,492
$
$
Three
to
Five
Years
$
$
3,058
—
50,000
34,476
8,757
2,335
98,626
$
$
More
Than
Five
Years
1,817
—
400,000
59,203
14,380
4,400
479,800
(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, 2020.
(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 that are 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
38
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 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
39
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 Litigation” 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.
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. Assumptions used are property and geographic specific and may include, among
other things, capitalization rates, market rental rates and EBITDA to rent coverage ratios.
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 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 does not satisfy them, and we are required to accrue for environmental liabilities that we
believe are allocable to others under our leases if we determine that it is probable that our tenant will not meet its environmental
obligations. 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 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. We may ultimately be responsible to pay for environmental liabilities as the
property owner if our tenant fails to pay them.
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
40
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.
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 preexisting 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.
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 an 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, 2020, we had accrued a total of $48.1 million for our prospective environmental remediation obligations. This accrual
consisted of (a) $11.7 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) $36.4 million for future environmental
liabilities related to preexisting unknown contamination. As of December 31, 2019, we had accrued a total of $50.7 million for our
prospective environmental remediation obligations. This accrual consisted of (a) $12.4 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) $38.3 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, $1.8 million,
$2.0 million and $2.4 million of net accretion expense was recorded for the years ended December 31, 2020, 2019 and 2018,
respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2020, 2019 and 2018, we
recorded credits to environmental expenses aggregating $3.1 million, $5.4 million and $1.3 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, 2020 and 2019, we increased the carrying values of certain of our properties by $2.6
million and $1.9 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 our consolidated statements of cash flows.
41
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, 2020, 2019 and 2018, were $4.0
million, $4.1 million and $4.3 million, respectively. Capitalized asset retirement costs were $39.6 million (consisting of $23.6 million
of known environmental liabilities and $16.0 million of reserves for future environmental liabilities) as of December 31, 2020, and
$39.7 million (consisting of $22.2 million of known environmental liabilities and $17.5 million of reserves for future environmental
liabilities) as of December 31, 2019. We recorded impairment charges aggregating $3.5 million and $3.7 million for the years ended
December 31, 2020 and 2019, respectively, for capitalized asset retirement costs.
Environmental exposures are difficult to assess and estimate for numerous reasons, including the amount of data available upon
initial assessment 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, 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 allocation of
responsibilities to others, 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, 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
derived upon facts known to us at this time, which are subject to significant change as circumstances change, and as environmental
contingencies become more clearly defined and reasonably estimable.
Any changes to our estimates or our assumptions that form the basis of our estimates may result in our providing an accrual, or
adjustments to the amounts recorded, for environmental remediation liabilities.
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. 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.
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.
Environmental Litigation
We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of December 31,
2020 and 2019, we had accrued $4.3 million and $17.8 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 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 and September 12, 2019 (as amended, the “Restated Credit Agreement”),
with a group of commercial banks led by Bank of America, N.A. The Restated Credit Agreement currently consists of a $300.0
million unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022. 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 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
42
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%. 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, 2020, were $25.0 million.
Based on our outstanding borrowings under the Restated Credit Agreement of $25.0 million for the year ended December 31,
2020, an increase in market interest rates of 1.0% for 2021 would decrease our 2021 net income and cash flows by approximately $0.3
million. This amount was determined by calculating the effect of a hypothetical interest rate change on our borrowings floating at
market rates, and assumes that the $25.0 million outstanding borrowings under the Restated Credit Agreement is indicative of our
future average floating interest rate borrowings for 2021 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.
As discussed elsewhere in this report, the COVID-19 pandemic may negatively impact our business and results of operations.
As we cannot predict the duration or scope of COVID-19 there is potential for future negative financial impacts to our
results that could be material. Our business and results of operations will be, and our financial condition may be, impacted by COVID-
19 pandemic and such impact could be materially adverse. See “Part I. Item. 1A. Risk Factors” in this Annual Report on Form 10-
K for additional information.
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, 2020 and 2019
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Page
45
46
47
48
72
44
GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31,
2020
December 31,
2019
ASSETS:
Real Estate:
Land
Buildings and improvements
Construction in progress
Less accumulated depreciation and amortization
Real estate held for use, net
Real estate held for sale, net
Real estate, net
Investment in direct financing leases, net
Notes and mortgages receivable
Cash and cash equivalents
Restricted cash
Deferred rent receivable
Accounts receivable
Right-of-use assets - operating
Right-of-use assets - finance
Prepaid expenses and other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Borrowings under credit agreement
Senior unsecured notes, net
Environmental remediation obligations
Dividends payable
Lease liability - operating
Lease liability - finance
Accounts payable and accrued liabilities
Total liabilities
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 20,000,000 authorized; unissued
Common stock, $0.01 par value; 100,000,000 shares authorized; 43,605,759 and
41,367,846 shares issued and outstanding, respectively
Additional paid-in capital
Dividends paid in excess of earnings
Total stockholders’ equity
Total liabilities and stockholders’ equity
$
$
$
$
$
$
$
707,613
537,272
734
1,245,619
(186,964)
1,058,655
872
1,059,527
77,238
11,280
55,075
1,979
44,155
3,811
24,319
763
71,365
1,349,512
25,000
523,828
48,084
17,332
25,045
3,541
47,081
689,911
—
—
669,351
442,220
2,080
1,113,651
(165,892)
947,759
—
947,759
82,366
30,855
21,781
1,883
41,252
3,063
21,191
987
60,640
1,211,777
20,000
449,065
50,723
15,557
21,844
4,191
60,958
622,338
—
—
436
722,608
(63,443)
659,601
1,349,512
$
414
656,127
(67,102)
589,439
1,211,777
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
Interest on notes and mortgages receivable
Total revenues
Operating expenses:
Property costs
Impairments
Environmental
General and administrative
Depreciation and amortization
Total operating expenses
Gains on dispositions of real estate
Operating income
Other income, net
Interest expense
Loss on extinguishment of debt
Net earnings
Basic earnings per common share:
Net Earnings
Diluted earnings per common share:
Net Earnings
Weighted average common shares outstanding:
Basic
Diluted
2020
Year ended December 31,
2019
2018
$
$
144,601
2,745
147,346
$
137,736
2,919
140,655
133,019
3,087
136,106
23,520
4,258
1,054
17,294
30,191
76,317
4,548
75,577
21,129
(26,085)
(1,233)
69,388
1.62
1.62
$
$
$
24,978
4,012
5,428
15,377
25,161
74,956
1,063
66,762
7,593
(24,632)
—
49,723
1.19
1.19
$
$
$
23,645
6,170
4,151
15,131
23,636
72,733
3,948
67,321
2,730
(22,345)
—
47,706
1.17
1.17
42,040
42,070
41,072
41,110
40,171
40,191
$
$
$
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)
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 on dispositions of real estate
Loss on extinguishment of debt
Deferred rent receivable
Allowance for credit loss on notes and mortgages receivable and direct financing leases
Amortization of above-market and below-market leases
Amortization of investment in direct financing 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
Deposits for property acquisitions
Issuance of notes and mortgages receivable
Collection of notes and mortgages receivable
Net cash flow used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements
Repayments under credit agreements
Proceeds from senior unsecured notes
Repayments under senior unsecured notes
Payment for extinguishment of debt
Payments of finance lease liability
Payments of cash dividends
Payments of debt issuance costs
Security deposits refunded
Payments in settlement of restricted stock units
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
Supplemental disclosures of cash flow information
Cash paid 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
2020
Year ended December 31,
2019
2018
$
69,388
$
49,723
$
47,706
30,191
4,258
(4,548)
1,233
(2,903)
368
(314)
4,210
1,053
1,841
3,130
(1,048)
(1,253)
(9,490)
(13,289)
82,827
(149,955)
(282)
(275)
5,433
(2,368)
(2,932)
22,962
(127,417)
140,000
(135,000)
175,000
(100,000)
(1,233)
(650)
(62,626)
(410)
(31)
(257)
63,187
77,980
33,390
23,664
57,054
$
25,161
4,012
(1,063)
—
(3,530)
—
(623)
3,526
971
2,006
2,468
(546)
(503)
(12,931)
8,103
76,774
(87,157)
(14)
(365)
1,558
(510)
(464)
4,399
(82,553)
75,000
(175,000)
125,000
—
—
(542)
(56,889)
(556)
(347)
(115)
14,150
(19,299)
(25,078)
48,742
23,664
2020
Year ended December 31,
2019
$
25,651
350
6,355
17,332
23,030
304
7,544
15,557
$
$
792
$
1,206
$
23,636
6,170
(3,948)
—
(4,112)
—
(808)
3,015
871
2,409
1,777
(344)
(708)
(11,210)
1,907
66,361
(77,972)
(3,794)
(2,657)
3,303
(430)
(530)
3,134
(78,946)
95,000
(130,000)
100,000
—
—
(468)
(50,503)
(3,393)
(260)
—
30,138
40,514
27,929
20,813
48,742
2018
20,790
244
9,891
14,495
3,743
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
47
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 year amounts have been reclassified to conform to current year presentation. Such reclassifications had no impact
on previously reported net earnings.
Real Estate
Real estate assets are stated at cost less accumulated depreciation and amortization. For acquisitions of real estate 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. Assumptions used are property and
geographic specific and may include, among other things, capitalization rates, market rental rates and EBITDA to rent coverage ratios.
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
48
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.
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.
On June 16, 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”). The accounting standard
became effective for us and was adopted on January 1, 2020. Upon adoption, we had five unitary leases subject to this standard
classified as a direct financing leases with a net investment balance aggregating $82,366,000 prior to the credit loss adjustment. In
these direct financing leases, the payment obligations of the lessees are collateralized by real estate properties. Historically, we have
had no collection issues related to these direct financing leases; therefore, we assessed the probability of default on these leases based
on the lessee’s financial condition, business prospects, remaining term of the lease, expected value of the underlying collateral upon its
repossession, and our historical loss experience related to other leases in which we are the lessor. Based on the aforementioned
considerations, we estimated a credit loss reserve related to these direct financing leases totaling $578,000, which was recognized as a
cumulative adjustment to retained earnings and as a reduction of the investment in direct financing leases balance on our consolidated
balance sheets on January 1, 2020. Periods prior to the adoption date that are presented for comparative purposes were not adjusted.
During the year ended December 31, 2020, we recorded an additional allowance for credit losses of $340,000 on our net investments
in direct financing leases due to changes in expected economic conditions, which was included within other income in our
consolidated statements of operations.
We review our direct financing leases each reporting period to determine whether there were any indicators that the value of our
net investments in direct financing leases may be impaired and adjust the allowance for any estimated changes in the credit loss with
the resulting change recorded through our consolidated statement of operations. When determining a possible impairment, we take
into consideration the collectability of direct financing lease receivables for which a reserve would be required. In addition, we
determine whether there has been a permanent decline in the current estimate of the residual value of the property.
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. In conjunction with our adoption of ASU 2016-13 on January 1, 2020, we estimate our credit loss reserve
for our notes and mortgages receivable using the weighted average remaining maturity (“WARM”) method, which has been identified
as an acceptable loss-rate method for estimating credit loss reserves in the FASB Staff Q&A Topic 326, No. 1. The WARM method
requires us to reference historic loan loss data across a comparable data set and apply such loss rate to our notes and mortgages
portfolio over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. We
applied the WARM method for our notes and mortgages portfolio, which share similar risk characteristics. Application of the WARM
method to estimate a credit loss reserve requires significant judgment, including (i) the historical loan loss reference data, (ii) the
expected timing and amount of loan repayments, and (iii) the current credit quality of our portfolio and our expectations of
performance and market conditions over the relevant time period. To estimate the historic loan losses relevant to our portfolio, we
used our historical loan performance since the launch of our loan origination business in 2013. Upon adoption of ASU 2016-13 on
January 1, 2020, we recorded a credit loss reserve of $309,000, which was recognized as a cumulative adjustment to retained earnings
and as a reduction of the aggregate outstanding principal balance of $30,855,000 on the notes and mortgages receivable balance on our
consolidated balance sheets on January 1, 2020. Periods prior to the adoption date that are presented for comparative purposes were
not adjusted. In addition, during the year ended December 31, 2020, we recorded an additional allowance for credit losses of $28,000
on these notes and mortgages receivable due to changes in expected economic conditions, which was included within other income in
our consolidated statements of operations.
From time to time, we may originate construction loans for the construction of income-producing properties. During the year
ended December 31, 2020, we funded a construction loan in the amount of $2.9 million, which was repaid as of December 31, 2020,
and we exercised our option to purchase the property. At December 31, 2020, there were no outstanding balances for construction
49
loans. Our construction loans generally provide for funding only during the construction phase, which is typically up to nine months,
although our policy is to consider construction periods as long as 24 months. Funds are disbursed based on inspections in accordance
with a schedule reflecting the completion of portions of the project. We also review and inspect each property before disbursement of
funds during the term of the construction loan. At the end of the construction phase, the construction loan will be repaid with the
proceeds from the sale of the property. We have the option to purchase the property at the end of the construction period.
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, 2020 and 2019, restricted cash of $1,979,000 and $1,883,000, 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, 2020, 2019 and 2018.
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 review our accounts receivable, including its deferred rent receivable, related to
base rents, straight-line rents, tenant reimbursements and other revenues for collectability. Our evaluation of collectability primarily
consists of reviewing past due account balances and considers such factors as the credit quality of our tenant, historical trends of the
tenant, changes in tenant payment terms, current economic trends, including the novel coronavirus (“COVID-19”) pandemic, and
other facts and circumstances related to the applicable tenants. In addition, with respect to tenants in bankruptcy, we estimate the
probable recovery through bankruptcy claims. If a tenant’s accounts receivable balance is considered uncollectable, we will write off
the related receivable balances and cease to recognize lease income, including straight-line rent unless cash is received. If the
collectability assessment subsequently changes to probable, any difference between the lease income that would have been recognized
if collectability had always been assessed as probable and the lease income recognized to date, is recognized as a current-period
adjustment to revenues from rental properties. Our reported net earnings are directly affected by our estimate of the collectability of
our accounts receivable.
In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of
COVID-19. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and
instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease
concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. Some concessions will
provide a deferral of payments with no substantive changes to the consideration in the original contract. A deferral affects the timing
of cash receipts, but the amount of the consideration is substantially the same as that required by the original contract. The FASB staff
provides two ways to account for those deferrals:
(1) Account for the concessions as if no changes to the lease contract were made. Under that accounting, a lessor
would increase its lease receivable. In its income statement, a lessor would continue to recognize income during
the deferral period.
(2) Account for the deferred payments as variable lease payments.
We elected to treat lease concessions with option (1) above for the year ended December 31, 2020.
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.
50
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 $4,258,000, $4,012,000 and $6,170,000 for the years ended December 31, 2020,
2019 and 2018, respectively. 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 $1,111,000 of the $4,258,000
in impairments recognized during the year ended December 31, 2020) and (ii) discounted cash flow models (this method was used to
determine $117,000 of the $4,258,000 in impairments recognized during the year ended December 31, 2020). During the year ended
December 31, 2020, we recorded $3,030,000 of the $4,258,000 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. For the years ended December 31, 2020, 2019 and 2018, impairment charges
aggregating $932,000, $1,202,000 and $1,268,000, respectively, were related to properties that were previously disposed of by us.
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.
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.
51
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 file a federal income tax return on which are consolidated our tax items and the tax items of our subsidiaries that are pass-
through entities. 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 2017, 2018 and 2019, and tax returns which will be filed for the year ended 2020, remain open to examination by federal and
state tax jurisdictions under the respective statutes of limitations.
New Accounting Pronouncements
On June 16, 2016, the FASB issued 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 applies to financial assets measured at amortized cost and certain other
instruments, including notes and mortgages receivable and net investments in direct financing leases. This standard does not apply to
receivables arising from operating leases, which are within the scope of Topic 842. ASU 2016-13 became effective for us and was
adopted on January 1, 2020 and required a modified retrospective approach through a cumulative-effect adjustment to retained
earnings. We recorded a credit loss reserve related to our direct financing leases totaling $578,000, which was recognized as a
cumulative adjustment to retained earnings and as a reduction of the investment in direct financing leases balance on our consolidated
balance sheets on January 1, 2020. In addition, we recorded a credit loss reserve as of January 1, 2020 of $309,000 related to our notes
and mortgages receivable balance, which was recognized as a cumulative adjustment to retained earnings.
On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04
contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The
guidance in ASU 2020-04 provides optional expedients and exceptions for applying generally accepted accounting principles to
contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate
expected to be discontinued. We are currently evaluating the impact the adoption of ASU 2020-04 will have on our consolidated
financial statements.
NOTE 2. — LEASES
As of December 31, 2020, we owned 901 properties and leased 58 properties from third-party landlords. These 959 properties
are located in 35 states across the United States and Washington, D.C. Substantially all of our properties are leased on a triple-net
basis to convenience store retailers, petroleum distributors and other automotive-related and retail tenants. Our tenants either operate
their business at our properties directly or sublet our properties and supply fuel to third parties that operate the convenience store and
gasoline station businesses. 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. Our tenants
either operate our properties directly or sublet our properties and supply fuel to third parties that operate the convenience stores and
gasoline stations businesses. 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.
52
Substantially all of our tenants’ financial results depend on convenience store sales, the sale of refined petroleum products,
and/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 lease 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.
We adopted ASU 2016-02 as of January 1, 2019. 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.
For leases in which we are the lessor, we are (i) retaining classification of our historical leases as we are not required to reassess
classification upon adoption of the new standard, (ii) expensing indirect leasing costs in connection with new or extended tenant
leases, the recognition of which would have been deferred under prior accounting guidance and (iii) aggregating revenue from our
lease components and non-lease components (comprised of tenant reimbursements) into revenue from rental properties.
Revenues from rental properties for the years ended December 31, 2020, 2019 and 2018, were $144,601,000, $137,736,000 and
$133,019,000, respectively. Rental income contractually due from our tenants included in revenues from rental properties was
$128,246,000, $119,293,000 and $114,105,000 for the years ended December 31, 2020, 2019 and 2018, 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
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
(collectively, “Revenue Recognition Adjustments”). Revenue Recognition Adjustments included in revenues from rental properties
resulted in a reduction in revenue of $895,000, for the year ended December 31, 2020 and increases in revenue of $960,000 and
$2,223,000 for the years ended December , 2019 and 2018, respectively.
Tenant reimbursements, which are included in revenues from rental properties and which consist of real estate taxes and other
municipal charges paid by us which were reimbursed by our tenants pursuant to the terms of triple-net lease agreements, were
$17,250,000, $17,483,000 and $16,691,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
We incurred $351,000, $373,000 and $579,000 of lease origination costs for the years ended December 31, 2020, 2019 and
2018, 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 $77,238,000 investment in direct financing leases as of December 31, 2020, are lease payments
receivable of $113,256,000 plus unguaranteed estimated residual value of $13,928,000 less unearned income of $49,028,000 and
$918,000 allowance for credit losses. The components of the $82,366,000 investment in direct financing leases as of December 31,
2019, are lease payments receivable of $126,412,000 plus unguaranteed estimated residual value of $13,928,000 less unearned income
of $57,974,000.
In accordance with ASU 2016-13, we applied changes in loss reserves related to these direct financing leases totaling $578,000,
as a cumulative adjustment to retained earnings and as a reduction of the investment in direct financing leases balance on our
consolidated balance sheets on January 1, 2020. During the year ended December 31, 2020, we recorded an additional allowance for
credit losses of $340,000 on our net investments in direct financing leases due to changes in expected economic conditions, which was
included within other income in our consolidated statements of operations.
Future contractual annual rentals receivable from our tenants, which have terms in excess of one year as of December 31, 2020,
are as follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
Operating
Leases
Direct
Financing Leases
$
$
120,540
121,134
120,530
118,757
117,934
655,985
1,254,880
$
$
13,339
13,420
13,467
13,611
13,512
45,907
113,256
53
For leases in which we are the lessee, ASU 2016-02 requires leases with durations greater than twelve months to be recognized
on our consolidated balance sheets. We elected the package of transition provisions available for expired or existing contracts, which
allowed us to carryforward our historical assessments of (i) whether contracts are or contain leases, (ii) lease classification and
(iii) initial direct costs.
As of January 1, 2019, we recognized operating lease right-of-use assets of $25,561,000 (net of deferred rent expense) and
operating lease liabilities of $26,087,000, which were presented on our consolidated financial statements. The right-of-use assets and
lease liabilities are carried at the present value of the remaining expected future lease payments. When available, we use the rate
implicit in the lease to discount lease payments to present value; however, our current leases did not provide a readily determinable
implicit rate. Therefore, we estimated our incremental borrowing rate to discount the lease payments based on information available
and considered factors such as interest rates available to us on a fully collateralized basis and terms of the leases. ASU 2016-02 did not
have a material impact on our consolidated balance sheets or on our consolidated statements of operations. The most significant
impact was the recognition of right-of-use assets and lease liabilities for operating leases, while our accounting for finance leases
remained substantially unchanged.
The following presents the lease-related assets and liabilities (in thousands):
Assets
Right-of-use assets - operating
Right-of-use assets - finance
Total lease assets
Liabilities
Lease liability - operating
Lease liability - finance
Total lease liabilities
The following presents the weighted average lease terms and discount rates of our leases:
Weighted-average remaining lease term (years)
Operating leases
Finance leases
Weighted-average discount rate
Operating leases (a)
Finance leases
$
$
$
$
December 31,
2020
24,319
763
25,082
25,045
3,541
28,586
9.2
10.6
4.80%
17.30%
(a) Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.
The following presents our total lease costs (in thousands):
Operating lease cost
Finance lease cost
Amortization of leased assets
Interest on lease liabilities
Short-term lease cost
Total lease cost
The following presents supplemental cash flow information related to our leases (in thousands):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
December 31,
2020
3,999
650
719
82
5,450
December 31,
2020
3,798
719
650
$
$
$
$
54
As of December 31, 2020, scheduled lease liabilities mature as follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
Total lease payments
Less: amount representing interest
Present value of lease payments
Operating
Leases
Direct
Financing Leases
$
$
3,471
3,780
3,680
3,532
3,155
13,880
31,498
(6,453)
25,045
$
$
1,273
1,093
856
785
475
1,546
6,028
(2,487)
3,541
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 eight
years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as
follows: 2021 – $4,646,000, 2022 – $3,374,000, 2023 – $2,675,000, 2024 – $2,021,000, 2025 – $1,037,000 and $1,817,000 thereafter.
Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to
$3,769,000, $4,664,000 and $4,660,000 for the years ended December 31, 2020, 2019 and 2018, respectively, and is included in
property costs. Rent received under subleases for the years ended December 31, 2020, 2019 and 2018, was $7,892,000, $8,699,000
and $9,023,000, respectively, and is included in rental revenue discussed above.
Major Tenants
As of December 31, 2020, we had four significant tenants by revenue:
(cid:129) We leased 150 convenience store and gasoline station properties in three separate unitary leases and two stand-alone
leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with subsidiaries of
Global represented 16% and 18% of our total revenues for the years ended December 31, 2020 and 2019, respectively.
All of our unitary leases with subsidiaries of Global are guaranteed by the parent company.
(cid:129) We leased 129 convenience store and gasoline station properties in four separate unitary leases to subsidiaries of
ARKO Corp. (NASDAQ: ARKO) (“Arko”). In the aggregate, our leases with subsidiaries of Arko represented 15% of
our total revenues for each of the years ended December 31, 2020 and 2019. All of our unitary leases with subsidiaries
of Arko 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 12% and 13% of our total revenues for
the years ended December 31, 2020 and 2019, respectively.
(cid:129) We leased 74 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
10% and 11% of our total revenues for the years ended December 31, 2020 and 2019, respectively. The largest of these
unitary leases, covering 56 of our properties, is guaranteed by the parent company, its principals and numerous
Chestnut affiliates.
Getty Petroleum Marketing Inc.
Getty Petroleum Marketing Inc. (“Marketing”) was our largest tenant from 1997 until 2012 under a unitary triple-net master
lease that 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, 2020, 355 of the properties we own or lease were previously leased to Marketing, of which 317
properties are subject to long-term triple-net leases with petroleum distributors in 14 separate property portfolios and 29 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 the 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, 2020, we have a
remaining commitment to fund up to $6,829,000 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.
55
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, 2020, 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
$1,317,000 (net of accumulated amortization of $1,688,000) 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 involved in various legal proceedings and claims which arise in the ordinary course of our business. As of
December 31, 2020 and 2019, we had accrued $4,275,000 and $17,820,000, respectively, for certain of these matters which we
believe were appropriate based on information then currently available. We recorded provisions aggregating $85,000 and $5,896,000,
for the year ended December 31, 2020, and 2019, respectively, for environmental litigation accruals 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, 2020 and 2019, we received $21,300,000 and $2,707,000, respectively, for former legal litigation
settlements.
Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River.
In 2004, the United States Environmental Protection Agency (“EPA”) issued General Notice Letters (“GNL”) to over 100
entities, including us, alleging that they are PRPs at the Diamond Alkali Superfund Site (“Superfund Site”), which includes the former
Diamond Shamrock Corporation manufacturing facility located at 80-120 Lister Ave. in Newark, New Jersey and a 17-mile stretch of
the Passaic River from Dundee Dam to the Newark Bay and its tributaries (the Lower Passaic River Study Area or “LPRSA”). In May
2007, over 70 GNL recipients, including us, entered into an Administrative Settlement Agreement and Order on Consent (“AOC”)
with the EPA to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the LPRSA, which is intended to address the
investigation and evaluation of alternative remedial actions with respect to alleged damages to the LPRSA. Many 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 interim allocation formula
is not binding on the parties in terms of any potential liability for the costs to remediate the LPRSA. The CPG submitted to the EPA its
draft RI/FS in 2015, which sets forth various alternatives for remediating the entire 17 miles of the LPRSA. In October 2018, the EPA
issued a letter directing the CPG to prepare a streamlined feasibility study for just the upper 9-miles of the LPRSA based on an
iterative approach using adaptive management strategies. On December 4, 2020, The CPG submitted a Final Draft Interim Remedy
Feasibility Study (“IR/FS”) to the EPA which identifies various targeted dredge and cap alternatives for the upper 9-miles of the
LPRSA. On December 11, 2020, EPA conditionally approved the CPG’s IR/FS for the upper 9-miles of the LPRSA, which recognizes
that interim actions and adaptive management may be appropriate before deciding a final remedy. It is anticipated that EPA will issue
a proposed plan for an interim remedy for the upper 9-miles, which will be published for public comment. Subject to EPA’s response
to any comments and/or objections received, it is anticipated that EPA will issue a Record of Decision (“ROD”) for an interim remedy
for the upper 9-mile portion of the LPRSA in 2021 (“Upper 9-mile IR ROD”).
In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the LPRSA 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”) with the EPA 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”),
56
the former owner/operator of the Diamond Shamrock Corporation facility responsible for the discharge of 2,3,8,8-TCDD (“dioxin”)
and other hazardous substances from the Lister facility. The Order directed 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 LPRSA. The FFS was subject to public
comments and objections and, on March 4, 2016, the EPA issued a ROD for the lower 8-miles (“Lower 8-mile ROD”) 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 PRPs 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 (who the EPA considers the primary contributor of dioxin and other pesticides generated from
the production of Agent Orange at its Diamond Shamrock Corporation facility and a discharger of other contaminants of concern
(“COCs”) to the Superfund Site for remedial design of the remedy selected in the Lower 8-mile ROD, after which the EPA plans to
begin negotiations with “major” PRPs for implementation and/or payment of the selected remedy. The Notice also stated that the EPA
believes that some of the PRPs and other parties not yet identified will be eligible for a cash out settlement with the EPA. On
September 30, 2016, Occidental entered into an agreement with the EPA to perform the remedial design for the Lower 8-mile ROD. In
December 2019, Occidental submitted a report to the EPA on the progress of the remedial design work, which is still ongoing.
Occidental has asserted that it is entitled to indemnification by Maxus Energy Corporation (“Maxus”) and Tierra Solutions, Inc.
(“Tierra”) for its liability in connection with the Site. Occidental has also asserted that Maxus and Tierra’s parent company, YPF, S.A.
(“YPF”) and certain of its affiliates must indemnify Occidental. On June 16, 2016, Maxus and Tierra filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. In July 2017, an amended Chapter 11 plan of liquidation became effective and, in
connection therewith, Maxus and Tierra entered into a mutual contribution release agreement with certain parties, including us,
pertaining to certain past costs, but not future remedy costs.
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 PRPs to resolve their alleged liability for the remedial actions addressed in the Lower 8-mile ROD, who the EPA stated did
not discharge any of the eight hazardous substances identified as a COC in the ROD. The letter also stated that other parties who did
not discharge dioxins, furans or polychlorinated biphenyls (which are considered the COCs posing the greatest risk to the river) may
also be eligible for cash out settlements, and that the EPA would begin a process for identifying other PRPs for negotiation of similar
cash out settlements. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements, but we
believe we meet EPA’s criteria for a cash out settlement and should be considered for same in any future discussions. In January 2018,
the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the initial group of parties to resolve their
respective alleged liability for the Lower 8-mile ROD work, each for a payment to the EPA in the amount of $280,600. In August
2017, the EPA appointed an independent third-party allocation expert to conduct allocation proceedings with most of the remaining
recipients of the Notice, which is anticipated to lead to additional offers of cash out settlements to certain additional parties and/or a
consent decree in which parties that are not offered a cash out settlement will agree to perform the Lower 8-mile ROD remedial
action. The allocation proceedings, which we are participating in, are still ongoing.
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 for its alleged
expenses with respect to the investigation, design, and anticipated implementation of the remedy for the Lower 8-mile ROD work. The
complaint lists over 120 defendants, including us, many of whom were also named in the EPA’s 2016 Notice. Factual discovery is
ongoing, and we are defending the claims consistent with our defenses in the related proceedings.
Many uncertainties remain regarding the anticipated interim remedy selection for the Upper 9-mile IR ROD and how the EPA
intends to implement either the Upper 9-mile IR ROD and/or the Lower 8-mile ROD work, including whether EPA will designate
certain PRPs as work parties and/or if EPA will identify PRPs for future cash-out settlement negotiations for the Upper 9-mile IR
ROD, the Lower 8-mile ROD work or both. Further, none of the above referenced AOCs and RODs relating to the LPRSA obligate
us to fund or perform any remedial action contemplated for the LPRSA and do not resolve liability issues for remedial work or the
restoration of or compensation for alleged natural resource damages to the LPRSA, which are not known at this time. Therefore, we
anticipate that performance of the EPA’s selected remedies for the LPRSA will be subject to future negotiation, potential enforcement
proceedings and/or possible litigation.
Based on currently known facts and circumstances, including, among other factors, anticipated allocations, our belief that there
was not any use or discharge of dioxins, furans or polychlorinated biphenyls in connection with our former petroleum storage
operations at our former Newark, New Jersey Terminal, and because there are numerous other parties who will likely bear the costs of
remediation and/or damages, the Company does not believe that resolution of this matter as relates to the Company is reasonably
likely to have a material impact on our results of operations. Nevertheless, our ultimate liability in the pending and possible future
proceedings pertaining to the LPRSA remains uncertain and subject to numerous contingencies which cannot be predicted and the
outcome of which are not yet known. Therefore, it is possible that our ultimate liability resulting from this matter and the impact on
our results of operations could be material.
57
MTBE Litigation – State of New Jersey
We were 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 many cases that were transferred from various 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. 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 owners and operators of gasoline station properties from which the releases
occurred. The New Jersey MDL Proceedings named us as a defendant along with approximately 50 petroleum refiners, manufacturers,
distributors and retailers of MTBE, or gasoline containing MTBE. The majority of the named defendants have settled their case with
the State of New Jersey.
In 2020, we settled the New Jersey MDL Proceedings in accordance with the terms of a Judicial Consent Order (“JCO”), which
included payment by us of $13,500,000 in exchange for satisfaction and release of claims made against us by various parties including
the NJDEP. Our settlement payment was within our previously established litigation loss reserve for the case. The JCO was approved
and entered by the United States District Court for the Southern District of New York on December 17, 2020 and, in accordance with
the terms thereof, payment was made by the Company and the case against the Company dismissed.
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 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 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 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 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. 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. 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.
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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, Sharon Irni, The Ingraham Bedell Corporation, Richard Berger and Exxon Mobil 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 served an
answer to the complaint denying responsibility. In 2007, the State of New York commenced action against Shell, Motiva, and related
parties, in the New York Supreme Court, Albany County seeking basically the same relief sought in the action involving us. We also
filed a third-party complaint against Hess, 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 possible loss or range of loss in excess of the amount we have accrued for this lawsuit. It is possible that losses related to this case
could exceed the amounts accrued, as of December 31, 2020.
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 alleged 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. We settled this case effective December 17, 2020
pursuant to the terms of a Settlement Agreement and General Release which among other things included a payment to the Company
of $20,500,000 (net of contingency fees paid to the law firm representing the Company in this litigation). The case has been
dismissed.
NOTE 4. — DEBT
The amounts outstanding under our Restated Credit Agreement and our senior unsecured notes are as follows (in thousands):
Revolving Facility
Series A Notes
Series B Notes
Series C Notes
Series D Notes
Series E Notes
Series F Notes
Series G Notes
Series H Notes
Series I Notes
Series J Notes
Series K Notes
Total debt
Unamortized debt issuance costs, net (a)
Total debt, net
Maturity
Date
March 2022
February 2021
June 2023
February 2025
June 2028
June 2028
September 2029
September 2029
September 2029
November 2030
November 2030
November 2030
Interest
Rate
December 31,
2020
December 31,
2019
1.85% $
6.00%
5.35%
4.75%
5.47%
5.47%
3.52%
3.52%
3.52%
3.43%
3.43%
3.43%
$
25,000
—
75,000
50,000
50,000
50,000
50,000
50,000
25,000
100,000
50,000
25,000
550,000
(2,307)
547,693
$
$
20,000
100,000
75,000
50,000
50,000
50,000
50,000
50,000
25,000
—
—
—
470,000
(2,949)
467,051
(a) Unamortized debt issuance costs, related to the Revolving Facility, at December 31, 2020 and 2019, of $1,135 and $2,014,
respectively, are included in prepaid expenses and other assets on our consolidated balance sheets.
Credit Agreement
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 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”).
59
On March 23, 2018, we entered into an amended and restated credit agreement (as amended, 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 prior to its repayment pursuant to a subsequent amendment to
the Restated Credit Agreement bore 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%.
On September 19, 2018, we entered into an amendment (the “First Amendment”) of our Restated Credit Agreement. The First
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 First Amendment) plus the Applicable Rate
(as defined in the First Amendment) for such facility.
On September 12, 2019, in connection with prepayment of the Term Loan, we entered into a consent and amendment (the
“Second Amendment”) of our Restated Credit Agreement. The Second Amendment modifies the Restated Credit Agreement to,
among other things, (a) increase our borrowing capacity under the Revolving Facility from $250,000,000 to $300,000,000 and
(b) decrease lender commitments under the Term Loan to $0.
On December 14, 2020, we used a portion of the net proceeds from the Series I Notes, Series J Notes and Series K Notes (each
as described below) to repay $75,000,000 of borrowings outstanding under our Restated Credit Agreement.
Senior Unsecured Notes
On December 4, 2020, we entered into a fifth amended and restated note purchase and guarantee agreement (the “Fifth
Amended and Restated Prudential Agreement”) with Prudential and certain of its affiliates amending and restating our existing fourth
amended and restated note purchase agreement. Pursuant to the Fifth Amended and Restated Prudential 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”), (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”) and (d) 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 (e) 3.52% Series F Guaranteed Senior Notes due September 12, 2029, in
the aggregate principal amount of $50,000,000 (the “Series F Notes”) that were outstanding under the existing fourth restated
prudential note purchase agreement would continue to remain outstanding under the Fifth Amended and Restated Prudential
Agreement and we authorized and issued our 3.43% Series I Guaranteed Senior Notes due November 25, 2030, in the aggregate
principal amount of $100,000,000 (the “Series I Notes” and, together with the Series A Notes, Series B Notes, Series C Notes, Series
D Notes and Series F Notes, the “Notes”). On December 4, 2020, we completed the early redemption of our 6.0% Series A Notes due
February 25, 2021, in the original aggregate principal amount of $100,000,000. As a result of the early redemption, we recognized
a $1,233,000 loss on extinguishment of debt on our consolidated statement of operations for the year ended December 31, 2020. The
Fifth Amended and Restated Prudential Agreement does not provide for scheduled reductions in the principal balance of the Series I
Notes, or any of our previously issued Series B Notes, Series C Notes, Series D Notes, or Series F 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 their
maturity.
On December 4, 2020, we entered into a first amendment to note purchase and guarantee agreement (the “First Amended and
Restated AIG Agreement”) with American General Life Insurance Company amending and restating our existing note purchase and
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guarantee agreement. Pursuant to the First Amended and Restated AIG Agreement, we agreed that our 3.52% Series G Guaranteed
Senior Notes due September 12, 2029, in the aggregate principal amount of $50,000,000 (the “Series G Notes”) that were outstanding
under the existing note purchase and guarantee agreement would continue to remain outstanding under the First Amended and
Restated AIG Agreement and we authorized and issued our $50,000,000 of 3.43% Series J Guaranteed Senior Notes due November
25, 2030 (the “Series J Notes”) to AIG. The First Amended and Restated AIG Agreement does not provide for scheduled reductions in
the principal balance of the Series J Notes or any of our previously issued Series G Notes prior to their respective maturities.
On December 4, 2020, we entered into a first amended and restated note purchase and guarantee agreement (the “First Amended
and Restated MassMutual Agreement”) amending and restating our existing note purchase and guarantee agreement. Pursuant to the
First Amended and Restated MassMutual Agreement, we agreed that our 3.52% Series H Guaranteed Senior Notes due September 12,
2029, in the aggregate principal amount of $25.0 million (the “Series H Notes”) that were outstanding under the existing note purchase
and guarantee agreement would continue to remain outstanding under the First Amended and Restated MassMutual Agreement and
we authorized and issued our $25.0 million of 3.43% Series K Guaranteed Senior Notes due November 25, 2030 (the “Series K
Notes”) to MassMutual. The First Amended and Restated MassMutual Agreement does not provide for scheduled reductions in the
principal balance of the Series K or any of our previously issued Series H Notes prior to their respective maturities.
Covenants
The Restated Credit Agreement and our senior unsecured notes 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 and our senior unsecured notes also contain customary events of
default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the senior
unsecured notes 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 and our senior unsecured notes, and could result in the acceleration of our indebtedness under
the Restated Credit Agreement and our senior unsecured notes. 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.
As of December 31, 2020, we are in compliance with all of the material terms of the Restated Credit Agreement and our senior
unsecured notes, including the various financial covenants described herein.
Debt Maturities
As of December 31, 2020, scheduled debt maturities, including balloon payments, are as follows (in thousands):
2021
2022 (a)
2023
2024
2025
Thereafter
Total
Revolving
Facility
Senior
Unsecured Notes
Total
$
$
— $
25,000
—
—
—
—
25,000
$
— $
—
75,000
—
50,000
400,000
525,000
$
—
25,000
75,000
—
50,000
400,000
550,000
(a) 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 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
61
obligations in the event that our tenant does not satisfy them, and we are required to accrue for environmental liabilities that we
believe are allocable to others under our leases if we determine that it is probable that our tenant will not meet its environmental
obligations. 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 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. We may ultimately be responsible to pay for environmental liabilities as the
property owner if our tenant fails to pay them.
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.
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 preexisting 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.
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 an 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, 2020, we had accrued a total of $48,084,000 for our prospective environmental remediation obligations. This accrual
consisted of (a) $11,718,000, 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) $36,366,000 for future environmental
liabilities related to preexisting unknown contamination. As of December 31, 2019, we had accrued a total of $50,723,000 for our
prospective environmental remediation obligations. This accrual consisted of (a) $12,470,000, 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) $38,253,000 for future environmental liabilities related to preexisting unknown contamination.
62
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $1,841,000,
$2,006,000 and $2,409,000 of net accretion expense was recorded for the years ended December 31, 2020, 2019 and 2018,
respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2020, 2019 and 2018, we
recorded credits to environmental expenses aggregating $3,136,000, $5,386,000 and $1,319,000, 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. For the years ended December 31,
2020, 2019 and 2018, changes in environmental estimates aggregating, $154,000, $324,000 and $560,000, respectively, were related
to properties that were previously disposed of by us.
During the years ended December 31, 2020 and 2019, we increased the carrying values of certain of our properties by
$2,596,000 and $1,875,000, 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 our 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, 2020, 2019 and 2018, were
$4,020,000, $4,132,000 and $4,255,000, respectively. Capitalized asset retirement costs were $39,610,000 (consisting of $23,573,000
of known environmental liabilities and $16,037,000 of reserves for future environmental liabilities) as of December 31, 2020, and
$39,684,000 (consisting of $22,150,000 of known environmental liabilities and $17,534,000 of reserves for future environmental
liabilities) as of December 31, 2019. We recorded impairment charges aggregating $3,502,000 and $3,730,000 for the years ended
December 31, 2020 and 2019, respectively, for capitalized asset retirement costs.
Environmental exposures are difficult to assess and estimate for numerous reasons, including the amount of data available upon
initial assessment 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, 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 allocation of
responsibilities to others, 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, 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
derived upon facts known to us at this time, which are subject to significant change as circumstances change, and as environmental
contingencies become more clearly defined and reasonably estimable.
Any changes to our estimates or our assumptions that form the basis of our estimates may result in our providing an accrual, or
adjustments to the amounts recorded, for environmental remediation liabilities.
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. 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.
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.
NOTE 6. — INCOME TAXES
Net cash paid for income taxes for the years ended December 31, 2020, 2019 and 2018, of $350,000, $304,000 and $244,000,
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, 2020, 2019 and 2018, were: ordinary
63
income of 88.7%, 96.6% and 89.2%, capital gain distributions of 3.4%, 3.4% and 10.8% and non-taxable distributions of 7.9%, 0.0%
and 0.0%, 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 2017, 2018 and 2019, and tax returns which will be filed for the year ended 2020, 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, 2020
or 2019. However, uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim
period.
NOTE 7. — STOCKHOLDERS’ EQUITY
A summary of the changes in stockholders’ equity for the years ended December 31, 2020, 2019 and 2018, is as follows (in
thousands except per share amounts):
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
Net earnings
Dividends declared — $1.42 per share
Shares issued pursuant to ATM Program, net
Shares issued pursuant to dividend reinvestment
Stock-based compensation and settlements
BALANCE, DECEMBER 31, 2019
Cumulative-effect adjustment for the adoption of new
accounting pronouncement (Note 2)
Net earnings
Dividends declared — $1.50 per share
Shares issued pursuant to ATM Program, net
Shares issued pursuant to dividend reinvestment
Stock-based compensation and settlements
BALANCE, DECEMBER 31, 2020
Common Stock
Shares
Amount
39,696
$
397
$
Additional
Paid-in
Capital
604,872
Dividends
Paid
in Excess
of Earnings
$
1,106
52
1
40,855
449
47
17
41,368
2,208
14
16
43,606
$
$
$
11
1
—
409
4
1
—
414
22
—
—
436
30,127
1,402
1,777
638,178
14,146
1,450
2,353
656,127
63,165
443
2,873
722,608
$
$
$
$
$
$
(51,574) $
47,706
(53,555)
—
—
—
(57,423) $
49,723
(59,402)
—
—
—
(67,102) $
(886)
69,388
(64,843)
—
—
—
(63,443) $
Total
553,695
47,706
(53,555)
30,138
1,403
1,777
581,164
49,723
(59,402)
14,150
1,451
2,353
589,439
(886)
69,388
(64,843)
63,187
443
2,873
659,601
On March 1, 2020, and December 14, 2020 our Board of Directors granted 176,050 and 15,000 restricted stock units (“RSU” or
“RSUs”), respectively, under our Amended and Restated 2004 Omnibus Incentive Compensation Plan. On March 1, 2019, our Board
of Directors granted 156,750 of RSUs under our Amended and Restated 2004 Omnibus Incentive Compensation Plan.
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.
ATM Program
In March 2018, we established an 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
64
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, 2020 and 2019, we issued 2,208,000 and 449,000 shares of common stock and received
net proceeds of $63,187,000 and $14,150,000, respectively, under the ATM Program. 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, 2020, we paid regular quarterly dividends of $62,626,000 or $1.48 per share. For the year
ended December 31, 2019, we paid regular quarterly dividends of $56,889,000 or $1.40 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,
2020 and 2019, we issued 14,229 and 46,896 shares of common stock, respectively, under the dividend reinvestment plan and
received proceeds of $443,000 and $1,451,000, respectively.
Stock-Based Compensation
Compensation cost for our stock-based compensation plans using the fair value method was $3,130,000, $2,468,000 and
$1,777,000 for the years ended December 31, 2020, 2019 and 2018, 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.
We awarded to employees and directors 191,050, 156,750 and 124,650 RSUs and dividend equivalents in 2020, 2019 and 2018,
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 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, 2020, 2019 and 2018, dividend equivalents aggregating
approximately $1,279,000, $997,000 and $749,000, respectively, were charged against retained earnings when common stock
dividends were declared.
65
The following is a schedule of the activity relating to RSUs outstanding:
RSUs OUTSTANDING AT DECEMBER 31, 2017
Granted
Settled
Cancelled
RSUs OUTSTANDING AT DECEMBER 31, 2018
Granted
Settled
Cancelled
RSUs OUTSTANDING AT DECEMBER 31, 2019
Granted
Settled
Cancelled
RSUs OUTSTANDING AT DECEMBER 31, 2020
Number of
RSUs
Outstanding
Fair Value
Amount
Average
Per RSU
448,925
124,650
—
— $
$
573,575
156,750
(28,300)
$
$
— $
3,106,400
-
$
— $
5,203,000
943,800
$
$
— $
702,025
191,050
(24,250)
(31,350)
837,475
$
$
5,534,000
701,500
904,552
$
24.92
-
—
33.19
33.35
—
28.97
28.93
28.85
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, 2020, 2019 and 2018, was $3,109,000, $2,447,000 and $1,752,000, respectively,
and is included in general and administrative expense in our consolidated statements of operations. As of December 31, 2020, there
was $9,321,000 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 four years. The aggregate intrinsic value of the 837,475 outstanding
RSUs and the 420,635 vested RSUs as of December 31, 2020, was $23,064,000 and $11,584,000, respectively.
The following is a schedule of the vesting activity relating to RSUs outstanding:
RSUs VESTED AT DECEMBER 31, 2017
Vested
Settled
RSUs VESTED AT DECEMBER 31, 2018
Vested
Settled
RSUs VESTED AT DECEMBER 31, 2019
Vested
Settled
RSUs VESTED AT DECEMBER 31, 2020
Number of
RSUs Vested
Fair
Value
225,385
63,635
$
— $
289,020
88,415
(28,300)
349,135
95,750
(24,250)
420,635
$
$
$
$
1,871,500
—
2,906,200
943,800
2,637,000
701,500
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 $353,000, $327,000 and $295,000 for the years ended December 31, 2020, 2019 and 2018,
respectively. These amounts are included in general and administrative expense in our consolidated statements of operations. During
the year ended December 31, 2020, there were no distributions from the Supplemental Plan. For the year ended December 31, 2019,
we distributed $30,000 from the Supplemental Plan to a former officer of the Company. There were no distributions from the
Supplemental Plan for the year ended December 31, 2018.
66
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, 2020, 2019 and 2018.
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):
Net earnings
Less dividend equivalents attributable to RSUs outstanding
Net earnings attributable to common stockholders used in 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
2020
Year ended December 31,
2019
2018
69,388
(1,355)
$
49,723
(997)
$
68,033
42,040
30
42,070
1.62
1.62
$
$
48,726
41,072
38
41,110
1.19
1.19
$
$
47,706
(751)
46,955
40,171
20
40,191
1.17
1.17
As of December 31, 2020 and 2019, the carrying value of the borrowings under the Restated Credit Agreement approximated
fair value. As of December 31, 2020 and 2019, the fair value of the borrowings under senior unsecured notes was $549,800,000 and
$470,600,000, respectively. The fair value of the borrowings outstanding as of December 31, 2020 and 2019, 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.
The following summarizes as of December 31, 2020, 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
$
$
970
$
— $
— $
— $
970
$
— $
970
970
The following summarizes as of December 31, 2019, 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
737
$
— $
— $
— $
737
$
— $
737
737
$
$
67
Real Estate Assets
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, 2020 and 2019, of $1,979,000 and $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. For information regarding the valuation techniques and unobservable inputs used
when assessing impairments of real estate assets, see Note 1 - Summary of Significant Accounting Policies.
NOTE 11. —ASSETS HELD FOR SALE
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. As of December 31, 2020 and 2019, there were
three and no properties, respectively that met criteria to be classified as held for sale.
Real estate held for sale consisted of the following at December 31, 2020 and 2019 (in thousands):
Land
Buildings and improvements
Accumulated depreciation and amortization
Real estate held for sale, net
Year ended December 31,
2020
2019
$
$
486
483
969
(97)
872
$
$
—
—
—
—
—
During the year ended December 31, 2020, we sold 11 properties, in separate transactions, which resulted in an aggregate gain
of $4,368,000, 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 $180,000, included in gain on dispositions of real estate, on our consolidated
statements of operations.
During the year ended December 31, 2019, we sold nine properties, in separate transactions, which resulted in an aggregate gain
of $1,114,000, included in gain on dispositions of real estate, on our consolidated statements of operations. We also received funds
from property condemnations resulting in a loss of $51,000, included in gain on dispositions of real estate, on our consolidated
statements of operations.
NOTE 12. — QUARTERLY FINANCIAL DATA
The following is a summary of the quarterly results of operations for the years ended December 31, 2020 and 2019 (unaudited
as to quarterly information) (in thousands, except per share amounts):
Three Months Ended
Year Ended December 31, 2020
Revenues from rental properties
Net earnings
Diluted earnings per common share:
Net earnings
Year Ended December 31, 2019
Revenues from rental properties
Net earnings
Diluted earnings per common share:
Net earnings
March 31,
June 30,
36,336
10,973
September 30,
37,194
$
11,884
$
December 31,
36,421
$
33,831
$
0.26
$
0.27
$
0.77
June 30,
33,560
13,198
September 30,
35,692
$
11,890
$
December 31,
35,197
$
13,708
$
0.32
$
0.28
$
0.33
$
$
$
$
$
$
34,650
12,700
0.30
March 31,
33,287
10,927
0.26
$
$
$
$
$
$
68
NOTE 13. — PROPERTY ACQUISITIONS
2020
During the year ended December 31, 2020, we acquired fee simple interest in 34 convenience store, gasoline station and other
automotive-related properties for an aggregate purchase price of $149,955,000.
In February 2020, we acquired fee simple interests in ten car wash properties located in the Kansas City Metropolitan Statistical
Area (“MSA”) for an aggregate purchase price of $50,303,000 and entered into a unitary lease at the closing of the transactions. We
funded the transactions through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15
years, with five five-year renewal options. The unitary lease requires the tenant 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. 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 $4,775,000 of the purchase
price to land, $41,093,000 to buildings and improvements, $3,727,000 to in-place leases, $1,955,000 to above-market leases and
$1,247,000 to below-market leases, which is accounted for as a deferred liability.
In August 2020, we acquired fee simple interests in seven car wash properties located in the San Antonio MSA for an aggregate
purchase price of $28,302,000 and entered into a unitary lease at the closing of the transaction. We funded the transaction through
funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with five five-year renewal
options. The unitary lease requires the tenant 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 third anniversary of the commencement date and annually thereafter during the initial
and renewal terms of the lease. 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
$5,335,000 of the purchase price to land, $21,093,000 to buildings and improvements, $2,396,000 to in-place leases and $522,000 to
below-market leases, which is accounted for as a deferred liability.
In October 2020, we acquired fee simple interests in six convenience store and gasoline station properties located throughout the
state of Texas for an aggregate purchase price of $28,722,000 and entered into a unitary lease at the closing of the transaction. We
funded the transaction through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years,
with five five-year renewal options. The unitary lease requires the tenant 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 and tenth anniversary of the commencement date during the
initial and renewal terms of the lease. 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 $16,561,000 of the purchase price to land, $9,595,000 to buildings and improvements and $2,566,000 to in-place leases.
In addition, during the year ended December 31, 2020, we acquired fee simple interests in 11 convenience store, gasoline station
and other automotive-related properties in various transactions for an aggregate purchase price of $42,628,000. 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 $13,601,000 of the purchase
price to land, $26,032,000 to buildings and improvements and $2,995,000 to in-place leases.
2019
During the year ended December 31, 2019, we acquired fee simple interests in 27 convenience store, gasoline station and other
automotive-related properties for an aggregate purchase price of $87,157,000.
In June 2019, we acquired fee simple interests in six convenience store and gasoline station properties located in the Los
Angeles MSA properties for an aggregate purchase price of $24,724,000 and entered into a unitary lease at the closing of the
transaction. We funded the transaction through funds available under our Revolving Facility. The unitary lease provides for an initial
term of 15 years, with two ten-year renewal options. The unitary lease requires the tenant 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. 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 $18,086,000 of the purchase
price to land, $4,789,000 to buildings and improvements, $1,849,000 to in-place leases.
In November 2019, we acquired fee simple interests in four car wash properties located in the Las Vegas MSA for an aggregate
purchase price of $14,144,000 and entered into a unitary lease at the closing of the transaction. We funded the transaction through
funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with five five-year renewal
69
options. The unitary lease requires the tenant 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. 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 $2,663,000 of the purchase price to land, $10,469,000 to
buildings and improvements and $1,012,000 to in-place leases.
In addition, during the year ended December 31, 2019, we also acquired fee simple interests in 17 convenience store, gasoline
station and other automotive-related properties in various transactions for an aggregate purchase price of $48,290,000. 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 $18,820,000 of the purchase
price to land, $26,790,000 to buildings and improvements and $2,744,000 to in-place leases, $277,000 to above-market leases and
$341,000 to below-market leases, which is accounted for as a deferred liability.
.
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 $3,859,000 and $2,298,000 (net of accumulated amortization of $6,047,000 and $5,653,000,
respectively) at December 31, 2020 and 2019, 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 $18,787,000 and $18,754,000 (net of
accumulated amortization of $21,641,000 and $19,905,000, respectively) at December 31, 2020 and 2019, 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 $1,438,000, $1,955,000
and $2,067,000 for the years ended December 31, 2020, 2019 and 2018, respectively. Rent expense included amortization from
acquired leases of $97,000, $333,000 and $317,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
In-place leases are included in prepaid expenses and other assets and had a balance of $49,031,000 and $41,013,000 (net of
accumulated amortization of $16,788,000 and $13,042,000, respectively) at December 31, 2020 and 2019, 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 $3,745,000,
$3,134,000 and $2,866,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
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,
2021
2022
2023
2024
2025
Thereafter
Above-Market
Leases
Below-Market
Leases
In-Place
Leases
$
$
301,000
291,000
291,000
291,000
291,000
2,363,000
3,828,000
$
$
1,606,000
1,528,000
1,437,000
1,437,000
1,414,000
11,365,000
18,787,000
$
$
2,868,000
2,853,000
2,769,000
2,727,000
2,690,000
35,124,000
49,031,000
70
As Lessee:
Year ending December 31,
2021
2022
2023
2024
2025
Thereafter
Below-Market
Leases
$
$
31,000
—
—
—
—
—
31,000
NOTE 15. — SUBSEQUENT EVENTS
In preparing our consolidated financial statements, we have evaluated events and transactions occurring after December 31,
2020, for recognition or disclosure purposes. Based on this evaluation, there were no significant subsequent events from December 31,
2020, through the date the financial statements were issued.
71
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 index appearing under Item
8, 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, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2020 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, 2020, 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.
72
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Purchase Price Allocation for Asset Acquisitions
As described in Notes 1 and 13 to the consolidated financial statements, during the year ended December 31, 2020, the
Company acquired fee simple interests in 34 properties which were accounted for as asset acquisitions for an aggregate purchase price
of $149,955,000. For acquired properties accounted for as asset acquisitions management estimates 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, management allocates 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. The valuation of the applicable assets and liabilities involves
the use of significant estimates and assumptions related to capitalization rates, market rental rates, and the EBITDA-to-rent coverage
ratios.
The principal considerations for our determination that performing procedures relating to the purchase price allocation for
asset acquisitions is a critical audit matter are (i) the significant judgment by management when developing the fair value
measurements for purchase price allocations, which in turn led to a high degree of auditor judgment and subjectivity in performing
procedures related to these fair value measurements, (ii) significant auditor judgment was necessary to evaluate the audit evidence for
the relevant significant assumptions relating to the tangible and intangible assets, such as the capitalization rates, market rental rates,
and EBITDA-to-rent coverage ratios, and (iii) the audit effort included the involvement of professionals with specialized skill and
knowledge to assist in performing these procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to purchase
price accounting, including controls over the development of significant inputs and assumptions used in the estimated fair values of
tangible and intangible assets. These procedures also included, among others, the involvement of professionals with specialized skill
and knowledge to assist in testing the process used by management to develop fair value estimates of acquired tangible and intangible
assets, which involved evaluating the appropriateness of the valuation methods used and the reasonableness of the significant
assumptions related to capitalization rates, market rental rates, and EBITDA-to- rent coverage ratios. Evaluating the reasonableness of
the significant assumptions included considering whether these assumptions were consistent with external market data, comparable
transactions, and evidence obtained in other areas of the audit. Testing the process used by management involved testing the
completeness and accuracy of data provided by management.
Environmental Remediation Obligations
As described in Notes 1 and 5 to the consolidated financial statements, as of December 31, 2020 management has accrued a
total of $48,084,000 for their prospective environmental remediation obligations. Management records the fair value 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 contaminations at each property. Management measures their environmental remediation liabilities at fair
value based on expected future net cash flows, adjusted for inflation and discounted to present value.
The principal considerations for our determination that performing procedures relating to environmental remediation
obligations is a critical audit matter are (i) the significant judgment by management when developing the fair value measurements for
the environmental remediation obligations, which in turn led to a high degree of auditor judgment and subjectivity in performing
procedures related to these fair value measurements, (ii) significant auditor judgment was necessary to evaluate the significant
assumption and audit evidence relating to the projections of future net cash flows and estimated remediation costs and (iii) the audit
effort included the involvement of professionals with specialized skill and knowledge to assist in performing these procedures and
evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
valuation of the environmental remediation obligation, including controls over the development of the significant inputs and
assumptions related to estimated remediation costs. These procedures also included, among others, testing the process used by
management to develop fair value estimates of environmental remediation obligations, which involved evaluating the appropriateness
73
of the methods and testing the completeness and accuracy of the data provided by management. Evaluating the reasonableness of the
estimated remediation costs assumption included considering whether the assumption was consistent with external market data and
evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the
reasonableness of the significant assumptions related to estimated remediation costs.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 25, 2021
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.
74
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports filed or furnished pursuant to the Exchange Act 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 15d-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,
2020, 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, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020, 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
None.
75
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
Joshua Dicker
Brian Dickman
Mark J. Olear
Age
42
60
45
56
Position
President, Chief Executive Officer and Director
Executive Vice President, General Counsel and Secretary
Executive Vice President, Chief Financial Officer and Treasurer
Executive Vice President and Chief Operating Officer
Officer Since
2012
2008
2020
2014
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. Constant earned an A.B. from Princeton University.
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. Dicker received his B.A. from the State University of New York at Albany, his
JD magna cum laude from New York Law School and his LL.M. from New York University.
Mr. Dickman has served as Executive Vice President, Chief Financial Officer and Treasurer since December 2020. Prior to
joining the Company, Mr. Dickman served as Executive Vice President and Chief Financial Officer of Seritage Growth Properties
(NYSE:SRG), as Chief Financial Officer and Secretary of Agree Realty Corporation (NYSE: ADC) and as a real estate investment
banker beginning at Lehman Brothers in 2005. He began his career in corporate finance at Intel Corporation in 1998. Mr. Dickman
received a B.A. in Economics from the University of Michigan and an M.B.A. with emphases in Finance and Accounting from the
Ross School of Business at the University of Michigan.
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. Olear earned a B.A. from Upsala College. Mr. Olear is also a board member of the Board of
Trustees for Springpoint Senior Living.
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, 2020.
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.
76
Item 14. Principal Accountant Fees and Services
Information in response to this item is incorporated herein by reference to information under the heading “Ratification of
Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement.
77
Item 15. Exhibits and Financial Statement Schedules
(a) (1) Financial Statements
PART IV
Information in response to this Item is included in “Item 8. Financial Statements and Supplementary Data” of this Annual
Report on Form 10-K.
(a) (2) Financial Statement Schedules
The following Financial Statement Schedules are included beginning on page 77 of this Annual Report on Form 10-K.
Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2020, 2019 and 2018
Schedule III — Real Estate and Accumulated Depreciation and Amortization as of December 31, 2020
Schedule IV — Mortgage Loans on Real Estate as of December 31, 2020
(a) (3) Exhibits
Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 96 of this Annual Report
on Form 10-K.
Item 16. Form 10-K Summary
None.
78
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES
for the years ended December 31, 2020, 2019 and 2018
(in thousands)
December 31, 2020:
Allowance for accounts receivable
December 31, 2019:
Allowance for accounts receivable
December 31, 2018:
Allowance for accounts receivable
Balance at
Beginning
of Year
Additions
Deductions
$
$
$
— $
— $
— $
2,094
1,840
$
$
480
480
$
$
2,574
226
$
$
Balance
at End
of Year
—
—
2,094
79
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION
As of December 31, 2020
(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
2020
2019
2018
$
$
$
$
1,113,651
141,240
(5,324)
(2,603)
(376)
1,246,588
165,892
25,869
(1,066)
(929)
(2,705)
187,061
$
$
$
$
1,043,106
80,518
(4,252)
(2,246)
(3,475)
1,113,651
150,691
21,573
(240)
(546)
(5,586)
165,892
$
$
$
$
970,964
84,069
(7,950)
(3,091)
(886)
1,043,106
133,353
20,549
(1,780)
(530)
(901)
150,691
80
Phenix City, AL
Sulphur, AR
Jonesboro, AR
Rogers, AR
Little Rock, AR
Lake Charles, AR
Brookland, AR
Lake Charles, AR
Hope, AR
Texarkana, AR
Fayetteville, AR
Little Rock, AR
Fayetteville, AR
Pine Bluff, AR
Jonesboro, AR
Tucson, AZ
Tucson, AZ
Tucson, AZ
Peoria, AZ
Gilbert, AZ
Mesa, AZ
Gilbert, AZ
Glendale, AZ
Sierra Vista, AZ
Chandler, AZ
Phoenix, AZ
Tucson, AZ
Phoenix, AZ
Mesa, AZ
Phoenix, AZ
Queen Creek, AZ
Gilbert, AZ
Mesa, AZ
Gilbert, AZ
Tucson, AZ
Buckeye, AZ
San Tan Valley, AZ
Sierra Vista, AZ
Stockton, CA
Indio, CA
Fillmore, CA
Bellflower, CA
Grass Valley, CA
Pomona, CA
Hesperia, CA
San Dimas, CA
La Palma, CA
Hesperia, CA
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
1,670 $
777
868
927
978
1,069
1,468
1,468
1,472
1,592
2,266
2,763
2,867
2,985
2,985
1,261
1,301
1,303
1,331
1,448
1,503
1,602
1,722
1,765
1,838
1,943
2,085
2,177
2,185
2,415
2,868
3,112
3,169
3,204
3,652
3,928
4,022
4,440
1,187
1,250
1,354
1,369
1,485
1,497
1,643
1,941
1,971
2,055
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
942
375
173
533
535
620
149
1,002
999
1,058
1,637
497
1,971
2,166
330
664
557
590
992
983
839
796
1,178
269
1,261
1,311
1,487
1,532
1,612
433
1,255
1,593
2,005
1,839
2,924
2,334
2,549
1,849
627
302
950
910
853
674
849
749
1,389
492
81
Building and
Improvements
$
728 $
402
695
394
443
449
1,319
466
473
534
629
2,266
896
819
2,655
597
744
713
339
465
664
806
544
1,496
577
632
598
645
573
1,982
1,613
1,519
1,164
1,365
728
1,594
1,473
2,591
560
948
404
459
632
823
794
1,192
582
1,563
Total
Cost
Accumulated
Depreciation
69
65
389
61
69
65
715
63
65
77
86
157
122
109
1,493
121
150
146
76
99
136
169
112
271
125
88
130
132
119
318
320
296
219
266
148
289
297
454
206
313
263
300
200
75
494
704
376
584
1,670 $
777
868
927
978
1,069
1,468
1,468
1,472
1,592
2,266
2,763
2,867
2,985
2,985
1,261
1,301
1,303
1,331
1,448
1,503
1,602
1,722
1,765
1,838
1,943
2,085
2,177
2,185
2,415
2,868
3,112
3,169
3,204
3,652
3,928
4,022
4,440
1,187
1,250
1,354
1,369
1,485
1,497
1,643
1,941
1,971
2,055
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2019
2018
2007
2018
2018
2018
2007
2018
2018
2018
2018
2019
2018
2018
2007
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2018
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2015
2015
2007
2007
2015
2019
2007
2007
2007
2015
Riverside, CA
Benicia, CA
Coachella, CA
Pomona, CA
Chula Vista, CA
Lakewood, CA
Indio, CA
Riverside, CA
Stockton, CA
Sacramento, CA
Lakeside, CA
Sacramento, CA
Harbor City, CA
Phelan, CA
Shingle Springs, CA
Torrance, CA
San Jose, CA
Oakland, CA
Sacramento, CA
San Leandro, CA
Cotati, CA
Alhambra, CA
Los Angeles, CA
Ontario, CA
La Puente, CA
Colorado Springs, CO
Westminster, CO
Broomfield, CO
Denver, CO
Lakewood, CO
Broomfield, CO
Englewood, CO
Aurora, CO
Colorado Springs, CO
Longmont, CO
Superior, CO
Monument, CO
Boulder, CO
Greenwood Village, CO
Littleton, CO
Highlands Ranch, CO
Golden, CO
Thornton, CO
Morrison, CO
Castle Rock, CO
Golden, CO
Louisville, CO
Lone Tree, CO
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
2,130 $
2,224
2,235
2,347
2,385
2,612
2,727
2,737
3,001
3,193
3,715
4,247
4,442
4,611
4,751
5,386
5,412
5,434
5,942
5,978
6,072
6,591
6,612
6,613
7,615
1,382
1,457
1,785
2,157
2,349
2,380
2,495
2,874
3,274
3,619
3,748
3,828
3,900
4,077
4,139
4,356
4,641
5,003
5,081
5,269
6,151
6,605
6,612
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $ 1,619
1,058
-
1,217
-
1,916
-
889
-
1,804
-
1,486
-
1,216
-
1,460
-
2,207
-
2,695
-
2,604
-
3,597
-
3,276
-
3,489
-
4,017
-
4,219
-
4,123
-
4,233
-
5,078
-
4,008
-
6,078
-
5,006
-
4,523
-
6,405
-
756
-
752
-
1,388
-
1,579
-
1,541
-
1,496
-
2,207
-
2,284
-
2,865
-
2,315
-
2,477
-
2,798
-
2,875
-
2,889
-
2,272
-
2,921
-
3,247
-
2,722
-
3,018
-
3,141
(128)
4,201
-
5,228
-
5,125
-
82
Building and
Improvements
511
$
1,166
1,018
431
1,496
808
1,241
1,521
1,541
986
1,020
1,643
845
1,335
1,262
1,369
1,193
1,311
1,709
900
2,064
513
1,606
2,090
1,210
626
705
397
578
808
884
288
590
409
1,304
1,271
1,030
1,025
1,188
1,867
1,435
1,394
2,281
2,063
2,000
1,950
1,377
1,487
$
Total
Cost
2,130
2,224
2,235
2,347
2,385
2,612
2,727
2,737
3,001
3,193
3,715
4,247
4,442
4,611
4,751
5,386
5,412
5,434
5,942
5,978
6,072
6,591
6,612
6,613
7,615
1,382
1,457
1,785
2,157
2,349
2,380
2,495
2,874
3,274
3,619
3,748
3,828
3,900
4,077
4,139
4,356
4,641
5,003
5,081
5,141
6,151
6,605
6,612
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2015
2007
2007
2019
2014
2019
2015
2014
2015
2015
2015
2015
2019
2015
2015
2019
2015
2015
2015
2015
2015
2019
2015
2015
2015
2017
2015
2017
2017
2015
2017
2017
2017
2017
2015
2015
2017
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
Accumulated
Depreciation
221
$
782
654
44
445
75
430
486
510
362
352
534
90
491
452
113
463
465
593
343
635
49
578
752
440
123
237
91
126
265
166
73
123
91
470
437
234
334
384
643
495
471
787
736
695
693
487
535
Ridgefield, CT
Wethersfield, CT
Farmington, CT
Waterbury, CT
Cheshire, CT
New Haven, CT
Waterbury, CT
Stamford, CT
South Windsor, CT
Brookfield, CT
Norwalk, CT
Wallingford, CT
Middletown, CT
Bridgeport, CT
Westport, CT
Hamden, CT
Hartford, CT
Bridgeport, CT
Norwalk, CT
Stamford, CT
North Haven, CT
Willimantic, CT
Wilton, CT
New Haven, CT
Bridgeport, CT
Avon, CT
Waterbury, CT
Suffield, CT
Watertown, CT
Plymouth, CT
Darien, CT
Newington, CT
Stamford, CT
Durham, CT
Windsor Locks, CT
New Haven, CT
West Haven, CT
Old Greenwich, CT
Ellington, CT
Meriden, CT
Bristol, CT
South Windham, CT
Windsor Locks, CT
Washington, DC
Washington, DC
Orlando, FL
Yulee, FL
Largo, FL
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
402 $
447
466
469
490
217
515
507
545
57
511
551
133
313
604
645
665
350
-
603
90
717
520
539
377
731
804
237
925
931
667
954
507
994
1,031
1,413
1,215
-
1,295
1,532
1,594
644
1,434
848
941
867
1,963
2,064
Cost
Capitalized
Subsequent
to Initial
Investment
Land
43 $
-
-
-
(3)
297
-
16
-
488
39
-
430
298
12
-
-
330
693
103
617
-
211
209
391
50
-
603
-
-
281
-
464
-
-
(262)
-
1,219
-
-
-
1,398
1,400
-
-
34
-
-
167
-
303
305
267
141
335
330
337
20
332
335
131
204
393
527
432
228
402
393
365
466
338
351
246
403
516
201
567
605
434
620
330
-
670
569
790
620
842
989
1,036
598
1,055
418
664
401
570
1,143
83
Building and
Improvements
$
278 $
447
163
164
220
373
180
193
208
525
218
216
432
407
223
118
233
452
291
313
342
251
393
397
522
378
288
639
358
326
514
334
641
994
361
582
425
599
453
543
558
1,444
1,779
430
277
500
1,393
921
Total
Cost
Accumulated
Depreciation
271
447
106
106
102
257
117
178
144
391
203
152
306
289
206
12
151
332
175
262
197
162
338
356
398
304
189
529
250
211
493
216
456
994
233
316
275
361
293
354
361
779
1,514
164
122
422
256
59
445 $
447
466
469
487
514
515
523
545
545
550
551
563
611
616
645
665
680
693
706
707
717
731
748
768
781
804
840
925
931
948
954
971
994
1,031
1,151
1,215
1,219
1,295
1,532
1,594
2,042
2,834
848
941
901
1,963
2,064
Date of
Initial
Leasehold or
Acquisition
Investment (1)
1985
2004
2004
2004
1985
1985
2004
1985
2004
1985
1985
2004
1987
1985
1985
2018
2004
1985
1988
1985
1982
2004
1985
1985
1985
2002
2004
2004
2004
2004
1985
2004
1985
2004
2004
1985
2004
1969
2004
2004
2004
2004
2004
2013
2013
2000
2017
2019
Callahan, FL
Hinesville, GA
Columbus, GA
Perry, GA
Augusta, GA
Augusta, GA
Honolulu, HI
Kaneohe, HI
Waianae, HI
Haleiwa, HI
Honolulu, HI
Honolulu, HI
Waianae, HI
Kaneohe, HI
Waipahu, HI
Honolulu, HI
Prospect Heights, IL
Roselle, IL
Overland Park, KS
Olathe, KS
Merriam, KS
Kansas City, KS
Bowling Green, KY
Louisville, KY
Owensboro, KY
Bossier City, LA
Dracut, MA
Shrewsbury, MA
Westborough, MA
Lowell, MA
Hingham, MA
Sterling, MA
Worcester, MA
Foxborough, MA
Walpole, MA
Upton, MA
Arlington, MA
Barre, MA
Gardner, MA
Marlborough, MA
Peabody, MA
Worcester, MA
Worcester, MA
Watertown, MA
Leominster, MA
Methuen, MA
Auburn, MA
Burlington, MA
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
2,894 $
995
1,617
1,724
1,843
3,150
1,071
1,364
1,520
1,522
1,539
1,769
1,997
1,977
2,458
9,211
1,547
2,851
4,620
4,658
4,659
4,666
3,153
3,356
3,810
2,181
450
450
450
361
353
476
500
427
450
429
519
536
550
550
550
550
548
358
571
490
600
600
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $ 2,056
245
-
-
984
1,312
-
1,077
-
286
-
981
30
822
-
-
648
1,058
-
1,219
-
1,192
-
-
871
1,473
188
-
945
8,194
-
698
-
1,741
-
1,511
-
498
-
743
-
331
-
499
-
-
818
1,011
-
1,333
-
450
-
450
-
450
-
201
90
243
111
309
2
500
-
325
98
293
92
279
114
338
27
348
12
550
-
550
-
550
-
550
-
356
10
321
209
199
-
319
98
600
-
600
-
84
Building and
Improvements
$
838 $
750
633
412
766
2,864
120
542
872
464
320
577
1,126
692
1,513
1,017
849
1,110
3,109
4,160
3,916
4,335
2,654
2,538
2,799
848
-
-
-
250
221
169
-
200
249
264
208
200
-
-
-
-
202
246
372
269
-
-
Total
Cost
Accumulated
Depreciation
177
42
61
91
65
506
91
362
530
346
204
351
687
426
899
631
102
79
37
161
149
170
156
180
315
177
-
-
-
248
187
120
-
167
203
184
193
144
-
-
-
-
145
199
173
222
-
-
2,894 $
995
1,617
1,724
1,843
3,150
1,101
1,364
1,520
1,522
1,539
1,769
1,997
2,165
2,458
9,211
1,547
2,851
4,620
4,658
4,659
4,666
3,153
3,356
3,810
2,181
450
450
450
451
464
478
500
525
542
543
546
548
550
550
550
550
558
567
571
588
600
600
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2017
2019
2019
2017
2019
2017
2007
2007
2007
2007
2007
2007
2007
2007
2007
2007
2018
2019
2020
2020
2020
2020
2020
2019
2019
2017
2011
2011
2011
1985
1989
1991
2011
1990
1985
1991
1985
1991
2011
2011
2011
2011
1991
1985
2012
1985
2011
2011
Melrose, MA
Salem, MA
Wilmington, MA
Auburn, MA
West Roxbury, MA
Rockland, MA
Auburn, MA
Lowell, MA
Bradford, MA
Methuen, MA
Peabody, MA
Hyde Park, MA
Seekonk, MA
Tewksbury, MA
Auburn, MA
Sutton, MA
Gardner, MA
Newton, MA
Bellingham, MA
Randolph, MA
Maynard, MA
Lynn, MA
Wakefield, MA
Woburn, MA
Worcester, MA
Worcester, MA
Worcester, MA
Tewksbury, MA
Burlington, MA
Revere, MA
Wilmington, MA
Bedford, MA
Littleton, MA
Gardner, MA
Webster, MA
Falmouth, MA
Bellingham, MA
College Park, MD
Landover Hills, MD
Capitol Heights, MD
District Heights, MD
Hyattsville, MD
Beltsville, MD
College Park, MD
Bladensburg, MD
Riverdale, MD
Hyattsville, MD
Capitol Heights, MD
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
600 $
600
600
369
490
579
625
-
650
650
650
499
1,073
125
725
714
787
691
734
574
735
850
900
508
196
978
498
1,200
1,250
1,300
1,300
1,350
1,357
1,009
1,012
416
3,961
445
457
468
479
491
525
536
571
582
594
628
Cost
Capitalized
Subsequent
to Initial
Investment
Land
0 $
-
-
233
129
45
-
635
-
-
-
194
(373)
591
-
57
-
98
73
245
99
-
-
394
790
8
607
-
-
-
-
-
-
389
1,260
2,220
-
-
-
-
-
-
-
-
-
-
-
-
600
600
600
240
319
377
625
429
650
650
650
322
576
75
725
464
638
450
476
430
479
850
900
508
-
636
322
1,200
1,250
1,300
1,300
1,350
759
657
659
458
2,042
445
457
468
479
491
525
536
571
582
594
628
85
Building and
Improvements
$
0 $
-
-
362
300
247
-
206
-
-
-
371
124
641
-
307
149
339
331
389
355
-
-
394
986
350
783
-
-
-
-
-
598
741
1,613
2,178
1,919
-
-
-
-
-
-
-
-
-
-
-
Total
Cost
Accumulated
Depreciation
0
-
-
290
247
230
-
103
-
-
-
279
88
375
-
234
61
319
309
313
297
-
-
334
148
250
434
-
-
-
-
-
112
580
826
329
114
-
-
-
-
-
-
-
-
-
-
-
600 $
600
600
602
619
624
625
635
650
650
650
693
700
716
725
771
787
789
807
819
834
850
900
902
986
986
1,105
1,200
1,250
1,300
1,300
1,350
1,357
1,398
2,272
2,636
3,961
445
457
468
479
491
525
536
571
582
594
628
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2011
2011
2011
1991
1985
1985
2011
1996
2011
2011
2011
1985
1985
1986
2011
1993
2014
1985
1985
1985
1985
2011
2011
1985
2017
1991
1985
2011
2011
2011
2011
2011
2017
1985
1985
1988
2019
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
Clinton, MD
Landover, MD
Suitland, MD
Accokeek, MD
Laurel, MD
Beltsville, MD
Greater Landover, MD
Baltimore, MD
Lanham, MD
Upper Marlboro, MD
Ellicott City, MD
District Heights, MD
Beltsville, MD
Bowie, MD
Beltsville, MD
Greenbelt, MD
Laurel, MD
Oxon Hills, MD
Laurel, MD
Landover Hills, MD
Laurel, MD
Laurel, MD
Baltimore, MD
Laurel, MD
Lewiston, ME
Biddeford, ME
Maple Grove, MN
Raymore, MO
Kansas City, MO
Parkville, MO
Blue Springs, MO
Kansas City, MO
Blue Springs, MO
Independence, MO
Kernersville, NC
Fayetteville, NC
High Point, NC
Raleigh, NC
Lexington, NC
Rockingham, NC
Kannapolis, NC
Greensboro, NC
Belfield, ND
Nashua, NH
Northwood, NH
Portsmouth, NH
Manchester, NH
Nashua, NH
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
651 $
662
673
692
696
731
753
802
822
845
895
1,039
1,050
1,084
1,130
1,153
1,210
1,256
1,267
1,358
1,415
1,530
2,259
2,523
342
618
4,233
3,582
3,863
4,636
4,646
4,982
5,065
5,109
449
986
1,155
1,601
1,776
3,035
3,791
3,857
1,232
500
500
525
550
550
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
188
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
651
662
673
692
696
731
753
-
822
845
-
1,039
1,050
1,084
1,130
1,153
1,210
1,256
1,267
1,358
1,415
1,530
722
2,523
222
235
955
570
366
317
386
609
354
600
338
509
368
1,149
301
233
616
969
382
500
500
525
550
550
86
Building and
Improvements
$
0 $
-
-
-
-
-
-
802
-
-
895
-
-
-
-
-
-
-
-
-
-
-
1,537
-
308
391
3,278
3,012
3,497
4,319
4,260
4,373
4,711
4,509
111
477
787
452
1,475
2,802
3,175
2,888
850
-
-
-
-
-
Total
Cost
Accumulated
Depreciation
0
-
-
-
-
-
-
553
-
-
650
-
-
-
-
-
-
-
-
-
-
-
924
-
258
391
218
125
140
164
174
167
186
181
106
69
16
42
204
196
214
93
768
-
-
-
-
-
651 $
662
673
692
696
731
753
802
822
845
895
1,039
1,050
1,084
1,130
1,153
1,210
1,256
1,267
1,358
1,415
1,530
2,259
2,523
530
626
4,233
3,582
3,863
4,636
4,646
4,982
5,065
5,109
449
986
1,155
1,601
1,776
3,035
3,791
3,857
1,232
500
500
525
550
550
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2009
2009
2009
2010
2009
2009
2009
2007
2009
2009
2007
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2009
2007
2009
1985
1985
2019
2020
2020
2020
2020
2020
2020
2020
2007
2018
2020
2019
2017
2019
2019
2020
2007
2011
2011
2011
2011
2011
Raymond, NH
Dover, NH
Concord, NH
Rochester, NH
Pelham, NH
Londonderry, NH
Nashua, NH
Salem, NH
Nashua, NH
Concord, NH
Derry, NH
Rochester, NH
Londonderry, NH
Nashua, NH
Dover, NH
Salem, NH
Rochester, NH
Kingston, NH
Hooksett, NH
Rochester, NH
Goffstown, NH
Nashua, NH
Allenstown, NH
Flemington, NJ
Mountainside, NJ
Midland Park, NJ
Flemington, NJ
Watchung, NJ
Parlin, NJ
Paterson, NJ
Basking Ridge, NJ
Union, NJ
Bergenfield, NJ
North Plainville, NJ
North Bergen, NJ
Somerset, NJ
Livingston, NJ
Long Branch, NJ
Paramus, NJ
Vernon, NJ
Ridgewood, NJ
West Orange, NJ
Washington Township, NJ
Lawrence Township, NJ
Lake Hopatcong, NJ
Freehold, NJ
Hasbrouck Heights, NJ
Fort Lee, NJ
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
550 $
650
675
700
-
703
750
743
825
900
950
939
1,100
1,132
1,200
450
1,400
1,500
1,562
1,600
1,737
1,750
1,787
709
664
201
547
449
418
619
363
437
382
228
630
683
872
514
382
671
703
799
912
1,303
1,305
494
639
1,245
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $
-
-
-
730
30
-
20
-
-
-
12
-
-
-
871
-
-
-
-
-
-
-
(252)
(191)
308
17
160
202
17
284
216
321
542
147
230
65
504
714
472
465
428
373
-
-
842
699
407
550
650
675
700
317
458
750
484
825
900
950
600
1,100
780
1,200
350
1,400
1,500
824
1,600
697
1,750
467
168
134
150
346
226
203
403
200
239
300
175
410
445
568
335
249
437
458
521
594
1,146
800
95
416
811
87
Building and
Improvements
$
0 $
-
-
-
413
275
-
279
-
-
-
351
-
352
-
971
-
-
738
-
1,040
-
1,320
289
339
359
218
383
417
233
447
414
403
595
367
468
369
683
847
706
710
706
691
157
505
1,241
922
841
Total
Cost
Accumulated
Depreciation
0
-
-
-
172
255
-
257
-
-
-
323
-
80
-
200
-
-
681
-
588
-
845
179
220
258
201
210
238
215
334
275
284
509
327
410
321
429
200
449
493
574
486
78
461
385
582
641
550 $
650
675
700
730
733
750
763
825
900
950
951
1,100
1,132
1,200
1,321
1,400
1,500
1,562
1,600
1,737
1,750
1,787
457
473
509
564
609
620
636
647
653
703
770
777
913
937
1,018
1,096
1,143
1,168
1,227
1,285
1,303
1,305
1,336
1,338
1,652
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2011
2011
2011
2011
1996
1985
2011
1985
2011
2011
2011
1985
2011
2017
2011
1986
2011
2011
2007
2011
2012
2011
2007
1985
1985
1989
1985
1985
1985
1985
1986
1985
1990
1978
1985
1985
1985
1985
1985
1985
1985
1985
1985
2012
2000
1978
1985
1985
Brick, NJ
Albuquerque, NM
Las Cruces, NM
Albuquerque, NM
Albuquerque, NM
Albuquerque, NM
Fernley, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Las Vegas, NV
Bronx, NY
Glen Head, NY
Brooklyn, NY
Stony Brook, NY
Brooklyn, NY
Ossining, NY
Niskayuna, NY
Amherst, NY
Staten Island, NY
Franklin Square, NY
Bay Shore, NY
New York, NY
Newburgh, NY
Brooklyn, NY
Levittown, NY
Prattsburgh, NY
Buffalo, NY
White Plains, NY
New Rochelle, NY
Pleasant Valley, NY
Sayville, NY
Poughkeepsie, NY
Garden City, NY
Brooklyn, NY
Massapequa, NY
Staten Island, NY
Levittown, NY
Staten Island, NY
Wantagh, NY
Batavia, NY
Sleepy Hollow, NY
East Hampton, NY
Dobbs Ferry, NY
Elmont, NY
Alfred Station, NY
Middletown, NY
Riverhead, NY
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
1,508 $
1,829
1,843
2,308
2,321
3,682
1,666
2,814
3,094
3,472
3,752
390
234
75
176
422
231
425
223
390
153
156
126
527
282
503
553
312
-
189
398
345
591
362
237
333
301
546
350
641
684
281
659
671
389
714
719
723
Cost
Capitalized
Subsequent
to Initial
Investment
Land
375 $ 1,000
1,382
1,375
1,830
1,795
3,141
222
563
830
655
615
251
102
31
105
275
117
275
173
254
137
85
78
527
176
327
303
150
303
104
240
301
591
236
154
217
196
355
228
371
364
130
427
435
231
414
719
431
-
-
-
-
-
-
-
-
-
-
54
216
382
281
36
229
35
246
89
331
355
399
-
259
42
-
241
569
389
182
246
-
242
371
285
323
86
290
-
-
406
39
34
319
-
-
-
88
Building and
Improvements
$
883 $
447
468
478
526
541
1,444
2,251
2,264
2,817
3,137
193
348
426
352
183
343
185
296
225
347
426
447
-
365
218
250
403
266
474
340
290
-
368
454
401
428
277
412
270
320
557
271
270
477
300
-
292
Total
Cost
Accumulated
Depreciation
600
93
99
106
114
120
570
113
122
138
158
182
348
317
257
26
234
185
193
213
244
333
355
-
318
203
148
288
222
308
232
187
-
266
310
289
321
253
303
240
190
443
251
251
380
178
-
266
1,883 $
1,829
1,843
2,308
2,321
3,682
1,666
2,814
3,094
3,472
3,752
444
450
457
457
458
460
460
469
479
484
511
525
527
541
545
553
553
569
578
580
591
591
604
608
618
624
632
640
641
684
687
698
705
708
714
719
723
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2000
2017
2017
2017
2017
2017
2015
2019
2019
2019
2019
1985
1982
1967
1978
1985
1985
1986
2000
1985
1978
1981
1972
2011
1967
1985
2006
2000
1972
1982
1986
1998
2011
1985
1985
1985
1985
1985
1985
1998
2006
1969
1985
1985
1978
2006
2011
1998
Bayside, NY
Sag Harbor, NY
Glen Head, NY
Spring Valley, NY
Great Neck, NY
Flushing, NY
Floral Park, NY
East Pembroke, NY
Brewster, NY
Brooklyn, NY
Yaphank, NY
Rye, NY
Bronx, NY
Bronx, NY
Avoca, NY
West Nyack, NY
Brooklyn, NY
Yonkers, NY
Elmsford, NY
Bronx, NY
Tarrytown, NY
Byron, NY
New Platz, NY
Mount Vernon, NY
Warsaw, NY
Hyde Park, NY
Churchville, NY
Port Chester, NY
Poughkeepsie, NY
Middletown, NY
Lakeville, NY
Pelham, NY
Bronx, NY
Warwick, NY
Yonkers, NY
New Windsor, NY
Katonah, NY
Chester, NY
Hopewell Junction, NY
Newburgh, NY
Poughkeepsie, NY
Briarcliff Manor, NY
Bronxville, NY
Bronx, NY
Naples, NY
Forest Hills, NY
Poughkeepsie, NY
Middletown, NY
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
470 $
704
462
749
500
516
617
787
789
477
-
872
877
884
936
936
627
-
-
953
956
969
971
985
990
990
1,011
1,015
1,020
751
1,028
1,035
1,049
1,049
1,020
1,084
1,084
1,158
1,163
1,192
1,232
652
1,232
46
1,257
1,273
1,340
1,281
Cost
Capitalized
Subsequent
to Initial
Investment
Land
254 $
35
282
-
252
241
169
-
-
319
798
-
-
-
(1)
-
313
944
948
-
-
-
-
-
-
-
-
-
-
274
-
-
-
-
63
-
-
-
-
-
(32)
550
-
1,208
-
-
(60)
-
306
458
300
749
450
320
356
537
789
306
375
872
877
884
635
936
408
684
581
953
956
669
971
985
690
990
601
1,015
1,020
489
203
1,035
485
1,049
664
1,084
1,084
1,158
1,163
1,192
1,200
501
1,232
84
827
1,273
1,280
1,281
89
Building and
Improvements
$
418 $
281
444
-
302
437
430
250
-
490
423
-
-
-
300
-
532
260
367
-
-
300
-
-
300
-
410
-
-
536
825
-
564
-
419
-
-
-
-
-
-
701
-
1,170
430
-
-
-
Total
Cost
Accumulated
Depreciation
283
260
335
-
211
323
330
148
-
378
261
-
-
-
178
-
411
147
292
-
-
178
-
-
178
-
243
-
-
418
578
-
249
-
390
-
-
-
-
-
-
611
-
128
255
-
-
-
724 $
739
744
749
752
757
786
787
789
796
798
872
877
884
935
936
940
944
948
953
956
969
971
985
990
990
1,011
1,015
1,020
1,025
1,028
1,035
1,049
1,049
1,083
1,084
1,084
1,158
1,163
1,192
1,200
1,202
1,232
1,254
1,257
1,273
1,280
1,281
Date of
Initial
Leasehold or
Acquisition
Investment (1)
1985
1985
1985
2011
1985
1998
1998
2006
2011
1985
1993
2011
2013
2013
2006
2011
1985
1990
1971
2013
2011
2006
2011
2011
2006
2011
2006
2011
2011
1985
2008
2011
2013
2011
1985
2011
2011
2011
2011
2011
2011
1976
2011
1972
2006
2013
2011
2011
Scarsdale, NY
Poughkeepsie, NY
Yonkers, NY
Dobbs Ferry, NY
Poughkeepsie, NY
Mamaroneck, NY
Perry, NY
Millwood, NY
Elmsford, NY
White Plains, NY
Shrub Oak, NY
Wappingers Falls, NY
Garnerville, NY
Rockaway Park, NY
Hartsdale, NY
Tuckahoe, NY
Astoria, NY
Yorktown Heights, NY
Fishkill, NY
Cortlandt Manor, NY
New Rochelle, NY
East Meadow, NY
Mount Kisco, NY
Yonkers, NY
Bronx, NY
Flushing, NY
Flushing, NY
Hawthorne, NY
Peekskill, NY
Nanuet, NY
Yorktown Heights, NY
Bronx, NY
Flushing, NY
Latham, NY
Corona, NY
Long Island City, NY
Eastchester, NY
Rego Park, NY
Port Jefferson, NY
Troy, NY
Mansfield, OH
Loveland, OH
Crestline, OH
Akron, OH
Mansfield, OH
Monroeville, OH
Springdale, OH
Cincinnati, OH
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
1,301 $
1,306
291
1,345
1,355
1,429
1,444
1,448
1,453
1,458
1,061
1,488
1,508
1,605
1,626
1,650
1,684
1,700
1,793
1,872
1,887
-
1,907
1,907
1,910
1,936
1,947
2,084
2,207
2,316
2,365
2,407
2,479
2,498
2,543
2,717
1,724
2,784
185
4,690
921
1,045
1,202
1,530
1,950
2,580
3,379
3,715
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $ 1,301
1,306
-
1,050
216
1,345
-
1,355
-
1,429
-
1,044
-
1,448
-
1,453
-
1,458
-
398
691
1,488
-
1,508
-
1,605
-
1,626
-
1,650
-
1,105
-
-
-
1,793
-
1,872
-
1,887
-
1,670
1,903
1,907
-
1,907
-
1,349
-
1,413
-
1,405
-
2,084
-
2,207
-
2,316
-
2,365
-
1,712
-
1,801
-
1,813
-
1,903
-
1,183
-
2,302
993
2,104
-
3,084
246
4,119
-
332
-
362
-
285
-
385
-
700
-
485
-
381
-
541
-
90
Total
Cost
Accumulated
Depreciation
1,301 $
1,306
1,341
1,345
1,355
1,429
1,444
1,448
1,453
1,458
1,459
1,488
1,508
1,605
1,626
1,650
1,684
1,700
1,793
1,872
1,887
1,903
1,907
1,907
1,910
1,936
1,947
2,084
2,207
2,316
2,365
2,407
2,479
2,498
2,543
2,717
2,717
2,784
3,269
4,690
921
1,045
1,202
1,530
1,950
2,580
3,379
3,715
-
-
720
-
-
-
237
-
-
-
605
-
-
-
-
-
254
501
-
-
-
61
-
-
259
231
220
-
-
-
-
289
275
19
271
563
91
288
364
16
322
133
525
199
675
1,129
69
112
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2011
2011
1972
2011
2011
2011
2006
2011
2011
2011
1985
2011
2011
2013
2011
2011
2013
2013
2011
2011
2011
1988
2011
2011
2013
2013
2013
2011
2011
2011
2011
2013
2013
2020
2013
2013
2011
2013
1985
2020
2008
2017
2008
2017
2009
2009
2020
2020
Building and
Improvements
$
- $
-
1,125
-
-
-
400
-
-
-
768
-
-
-
-
-
579
1,700
-
-
-
233
-
-
561
523
542
-
-
-
-
695
678
685
640
1,534
415
680
3,023
571
589
683
917
1,145
1,250
2,095
2,998
3,174
Fairfield, OH
Oklahoma City, OK
Oklahoma City, OK
Oklahoma City, OK
Stillwater, OK
Banks, OR
Stayton, OR
Estacada, OR
Pendleton, OR
Silverton, OR
Salem, OR
Salem, OR
Springfield, OR
Salem, OR
McMinnville, OR
Salem, OR
Portland, OR
Salem, OR
Pottsville, PA
Phoenixville, PA
Harrisburg, PA
Philadelphia, PA
Lancaster, PA
Reading, PA
Philadelphia, PA
New Kensington, PA
Allison Park, PA
Barrington, RI
N. Providence, RI
Columbia, SC
Columbia, SC
Lexington, SC
Lexington, SC
Lexington, SC
Columbia, SC
Lexington, SC
Columbia, SC
Columbia, SC
Lexington, SC
Gilbert, SC
Lexington, SC
Irmo, SC
West Columbia, SC
Irmo, SC
Irmo, SC
Columbia, SC
Lexington, SC
Columbia, SC
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
3,769 $
868
1,182
1,311
2,800
498
544
646
765
957
1,071
1,350
1,398
1,408
2,867
4,214
4,416
4,614
451
384
399
406
642
750
1,252
1,375
1,500
490
542
464
575
633
694
720
792
816
868
926
973
1,036
1,056
1,113
1,116
1,246
1,339
1,436
1,624
1,643
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
89
213
255
56
49
-
-
-
180
159
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
582
371
587
625
1,469
498
296
84
122
456
399
521
796
524
394
3,182
3,368
3,517
148
76
199
264
300
-
814
675
850
319
353
253
345
309
172
219
463
336
455
495
582
434
432
667
50
69
867
472
999
1,302
91
Building and
Improvements
$
3,187 $
497
595
686
1,331
-
248
562
643
501
672
829
602
884
2,473
1,032
1,048
1,097
304
397
413
397
398
799
438
700
650
351
348
211
230
324
522
501
329
480
413
431
391
602
624
446
1,066
1,177
472
964
625
341
Total
Cost
Accumulated
Depreciation
16
69
79
88
71
-
63
170
216
110
271
268
237
295
423
352
333
350
305
108
345
291
367
799
212
327
509
299
291
41
42
62
107
92
64
70
90
69
77
110
122
82
201
203
89
183
117
50
3,769 $
868
1,182
1,311
2,800
498
544
646
765
957
1,071
1,350
1,398
1,408
2,867
4,214
4,416
4,614
452
473
612
661
698
799
1,252
1,375
1,500
670
701
464
575
633
694
720
792
816
868
926
973
1,036
1,056
1,113
1,116
1,246
1,339
1,436
1,624
1,643
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2020
2018
2018
2018
2019
2015
2017
2015
2015
2017
2015
2015
2015
2015
2017
2015
2015
2015
1990
1985
1989
1985
1989
1989
2009
2010
2010
1985
1985
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
West Columbia, SC
Chapin, SC
Lexington, SC
Lexington, SC
Lexington, SC
Pelion, SC
Columbia, SC
West Columbia, SC
Elgin, SC
Columbia, SC
Elgin, SC
Lexington, SC
Gaston, SC
Columbia, SC
Columbia, SC
Johns Island, SC
Lexington, SC
Columbia, SC
Blythewood, SC
Lexington, SC
Lexington, SC
Columbia, SC
Irmo, SC
Irmo, SC
Lexington, SC
Austin, TX
Lewisville, TX
Arlington, TX
El Paso, TX
Rowlett, TX
Arlington, TX
Grand Prairie, TX
El Paso, TX
Corpus Christi, TX
Arlington, TX
Wake Village, TX
Longview, TX
El Paso, TX
Mesquite, TX
Houston, TX
Austin, TX
Watauga, TX
Texarkana, TX
Arlington, TX
El Paso, TX
Texarkana, TX
San Marcos, TX
Grand Prairie, TX
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
1,644 $
1,682
1,712
1,729
1,738
1,901
1,995
2,046
2,082
2,109
2,177
2,179
2,230
2,460
2,531
2,561
2,603
2,637
3,217
3,231
3,234
3,371
3,655
3,950
4,413
462
494
789
1,278
1,284
1,352
1,413
1,425
1,526
1,560
1,637
1,660
1,679
1,687
1,689
1,711
1,771
1,791
1,796
1,816
1,861
1,954
2,000
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $ 1,283
1,135
-
1,410
-
1,268
-
1,189
-
1,021
-
1,130
-
746
-
1,166
-
1,120
-
-
974
1,476
-
-
934
1,569
-
1,612
-
1,885
-
1,869
-
1,254
-
2,405
-
2,001
-
1,198
-
2,016
-
1,742
-
2,802
-
3,418
-
274
-
110
50
414
-
825
-
840
-
887
-
-
914
1,098
-
1,056
-
1,008
-
-
685
1,239
-
1,085
-
1,093
-
-
224
1,364
-
1,139
-
-
992
1,189
-
1,413
-
1,197
-
-
251
1,415
-
92
Building and
Improvements
$
361 $
547
302
461
549
880
865
1,300
916
989
1,203
703
1,296
891
919
676
734
1,383
812
1,230
2,036
1,355
1,913
1,148
995
188
434
375
453
444
465
499
327
470
552
952
421
594
594
1,465
347
632
799
607
403
664
1,703
585
Total
Cost
Accumulated
Depreciation
71
113
48
100
81
190
125
234
176
134
219
131
238
185
123
79
109
252
170
175
263
269
346
217
210
138
261
56
96
59
65
74
71
89
74
123
58
112
83
846
78
87
105
83
88
101
1,000
82
1,644 $
1,682
1,712
1,729
1,738
1,901
1,995
2,046
2,082
2,109
2,177
2,179
2,230
2,460
2,531
2,561
2,603
2,637
3,217
3,231
3,234
3,371
3,655
3,950
4,413
462
544
789
1,278
1,284
1,352
1,413
1,425
1,526
1,560
1,637
1,660
1,679
1,687
1,689
1,711
1,771
1,791
1,796
1,816
1,861
1,954
2,000
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2017
2017
2017
2017
2017
2017
2018
2017
2017
2018
2017
2017
2017
2017
2018
2018
2018
2017
2017
2018
2018
2017
2017
2017
2017
2007
2008
2018
2017
2018
2018
2018
2017
2017
2018
2018
2018
2017
2018
2007
2017
2018
2018
2018
2017
2018
2007
2018
Center, TX
Harker Heights, TX
Linden, TX
Corpus Christi, TX
Garland, TX
Fort Worth, TX
Texarkana, TX
Austin, TX
El Paso, TX
Temple, TX
Corpus Christi, TX
Keller, TX
Port Arthur, TX
Schertz, TX
Houston, TX
Shamrock, TX
Mathis, TX
El Paso, TX
Cibolo, TX
Garland, TX
Childress, TX
San Antonio, TX
Austin, TX
San Antonio, TX
San Antonio, TX
San Antonio, TX
San Antonio, TX
Paris, TX
Waco, TX
The Colony, TX
San Antonio, TX
San Antonio, TX
Garland, TX
Panhandle, TX
Paris, TX
Temple, TX
Norfolk, VA
Ruther Glen, VA
Chesapeake, VA
Portsmouth, VA
Woodstock, VA
Alexandria, VA
Alexandria, VA
Alexandria, VA
Sandston, VA
Alexandria, VA
Ashland, VA
Mechanicsville, VA
Gross Amount at Which Carried
at Close of Period
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
2,073 $
2,052
2,159
2,162
2,208
2,115
2,316
2,368
2,369
2,406
2,400
2,507
2,648
2,794
2,803
3,045
3,138
3,168
3,228
3,296
3,335
3,427
3,510
3,618
3,630
3,718
3,820
3,832
3,884
4,396
4,397
4,411
4,439
5,068
5,322
5,554
535
466
780
562
611
649
656
712
722
735
840
903
Cost
Capitalized
Subsequent
to Initial
Investment
Land
- $ 1,482
580
1,513
1,729
1,504
866
1,643
738
1,766
1,206
1,110
996
505
813
535
1,222
2,687
2,153
1,004
245
1,959
446
1,595
494
1,020
732
1,459
2,645
894
337
997
642
439
2,637
3,979
4,119
235
31
399
222
354
649
409
712
102
735
840
273
28
-
-
-
142
-
-
-
(10)
-
57
-
-
-
-
-
-
-
-
-
-
67
-
-
-
-
-
-
-
-
-
-
-
-
-
(70)
-
(185)
34
-
-
-
-
-
-
-
-
93
Building and
Improvements
591
$
1,500
646
433
704
1,391
673
1,630
603
1,190
1,290
1,568
2,143
1,981
2,268
1,823
451
1,015
2,224
3,051
1,376
2,981
1,982
3,124
2,610
2,986
2,361
1,187
2,990
4,059
3,400
3,769
4,000
2,431
1,343
1,435
230
435
196
374
257
-
247
-
620
-
-
630
$
Total
Cost
2,073
2,080
2,159
2,162
2,208
2,257
2,316
2,368
2,369
2,396
2,400
2,564
2,648
2,794
2,803
3,045
3,138
3,168
3,228
3,296
3,335
3,427
3,577
3,618
3,630
3,718
3,820
3,832
3,884
4,396
4,397
4,411
4,439
5,068
5,322
5,554
465
466
595
596
611
649
656
712
722
735
840
903
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2018
2007
2018
2017
2018
2007
2018
2007
2017
2007
2017
2007
2016
2020
2016
2020
2017
2017
2020
2014
2020
2020
2007
2020
2020
2020
2020
2020
2007
2007
2020
2020
2014
2020
2020
2020
1990
2005
1990
1990
2020
2013
2013
2013
2005
2013
2005
2005
Accumulated
Depreciation
89
$
1,193
92
93
95
802
87
970
118
744
247
952
413
23
423
26
97
200
44
815
19
53
1,155
54
54
54
10
13
1,874
2,306
66
68
1,116
35
17
19
230
275
96
370
6
-
118
-
391
-
-
398
Mechanicsville, VA
Glen Allen, VA
Mechanicsville, VA
Glen Allen, VA
Arlington, VA
Richmond, VA
Chesapeake, VA
Mechanicsville, VA
Farmville, VA
Fredericksburg, VA
Spotsylvania, VA
Alexandria, VA
Alexandria, VA
Petersburg, VA
Arlington, VA
Mechanicsville, VA
Alexandria, VA
Mechanicsville, VA
King William, VA
Fredericksburg, VA
Annandale, VA
Alexandria, VA
Fairfax, VA
Arlington, VA
Arlington, VA
Fairfax, VA
Montpelier, VA
Salem, VA
Fairfax, VA
Emporia, VA
Fredericksburg, VA
Springfield, VA
Fairfax, VA
Tacoma, WA
Wilbur, WA
Tacoma, WA
Seattle, WA
South Bend, WA
Puyallup, WA
Tenino, WA
Snohomish, WA
Chehalis, WA
Fife, WA
Vancouver, WA
Renton, WA
Bellevue, WA
Seattle, WA
Port Orchard, WA
Gross Amount at Which Carried
at Close of Period
$
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
957
$
1,037
1,043
1,077
1,083
1,132
1,004
1,125
1,227
1,279
1,290
1,327
1,388
1,441
1,464
1,476
1,582
1,677
1,688
1,716
1,718
1,757
1,825
2,014
2,062
2,078
2,481
3,337
3,348
3,364
3,623
4,257
4,454
518
629
671
717
760
831
937
955
1,176
1,181
1,215
1,485
1,725
1,884
2,019
Cost
Capitalized
Subsequent
to Initial
Investment
Land
14
-
-
-
-
(41)
110
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(114)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
324
412
223
322
1,083
506
385
505
622
469
490
1,327
1,020
816
1,085
876
1,150
1,157
1,068
996
1,718
1,313
1,190
1,516
1,603
1,365
1,612
915
2,351
2,227
2,828
2,969
3,370
518
153
671
193
121
172
219
955
313
414
164
952
886
1,223
161
94
$
Building and
Improvements
647
$
625
820
755
-
585
729
620
605
810
800
-
368
625
379
600
432
520
620
720
-
444
635
498
459
713
755
2,422
997
1,137
795
1,288
1,084
-
476
-
524
639
659
718
-
863
767
1,051
533
839
661
1,858
Total
Cost
971
1,037
1,043
1,077
1,083
1,091
1,114
1,125
1,227
1,279
1,290
1,327
1,388
1,441
1,464
1,476
1,582
1,677
1,688
1,716
1,718
1,757
1,825
2,014
2,062
2,078
2,367
3,337
3,348
3,364
3,623
4,257
4,454
518
629
671
717
760
831
937
955
1,176
1,181
1,215
1,485
1,725
1,884
2,019
Accumulated
Depreciation
419
$
395
518
477
-
369
688
391
382
511
505
-
178
395
170
379
189
328
391
455
-
207
277
216
198
267
477
127
408
68
502
522
444
-
166
-
166
198
253
225
-
313
275
297
239
277
210
525
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2005
2005
2005
2005
2013
2005
1990
2005
2005
2005
2005
2013
2013
2005
2013
2005
2013
2005
2005
2005
2013
2013
2013
2013
2013
2013
2005
2020
2013
2019
2005
2013
2013
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
Gross Amount at Which Carried
at Close of Period
Puyallup, WA
Silverdale, WA
Monroe, WA
Kent, WA
Auburn, WA
Puyallup, WA
Federal Way, WA
Colfax, WA
Miscellaneous
Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)
$
2,035 $
2,178
2,791
2,900
3,022
4,050
4,218
4,800
51,183
$ 1,182,681 $
Cost
Capitalized
Subsequent
to Initial
Investment
Land
0 $
465
-
1,217
-
1,555
-
2,066
-
1,965
-
2,394
-
2,973
-
3,611
26,459
14,650
63,907 $ 708,099
Building and
Improvements
$
1,570 $
961
1,236
834
1,057
1,656
1,245
1,189
39,374
Total
Cost
Accumulated
Depreciation
510
343
418
299
349
671
443
394
2,035 $
2,178
2,791
2,900
3,022
4,050
4,218
4,800
65,833
$
538,489 $ 1,246,588 $
187,061
30,999 various
Date of
Initial
Leasehold or
Acquisition
Investment (1)
2015
2015
2015
2015
2015
2015
2015
2015
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 $1,276,000 at December 31, 2020.
95
GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE
As of December 31, 2020
(in thousands)
Description
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
Bristol, CT
Hartford, CT
Valley Cottage, NY
Smithtown, NY
Nyack, NY
Baldwin, NY
Norwalk, CT
Stafford Springs, CT
Seller financing
East Islip, NY
Seller financing Middlesex, NJ
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing Waterbury, CT
Seller financing Westfield, MA
Seller financing
Seller financing
Seller financing Middletown, CT
New Britain, CT
Seller financing
Plainville, CT
Seller financing
Simsbury, CT
Seller financing
Seller financing Milford, CT
Fairfield, CT
Seller financing
Seller financing
Hartford, CT
Seller financing Wilmington, DE
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing
Seller financing Malta, NY
Coxsackie, NY
Seller financing
Brewster, NY
Seller financing
Lindenhurst, NY
Seller financing
Rochester, NY
Seller financing
Savona, NY
Seller financing
Rochester, NY
Seller financing
Greigsville, NY
Seller financing
Seller financing
Horsham, PA
Seller financing Warwick, RI
Seller financing Warwick, RI
Cranston, RI
Seller financing
Fairhaven, MA
New Bedford, MA
Belleville, NJ
Ridgefield, NJ
Irvington, NJ
Colonia, NJ
Glendale, NY
Elmont, NY
Pleasant Valley, NY
Freeport, NY
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.5%
9.0%
9.5%
9.5%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.0%
9.5%
9.0%
9.0%
9.0%
9.0%
10.0%
9.0%
9.0%
9.0%
11/2024
5/2021
10/2020(d)
1/2027
9/2022
9/2020(d)
4/2022
1/2021
2/2021
11/2021
5/2026
2/2027
5/2026
4/2027
3/2027
5/2026
3/2025
3/2025
3/2024
11/2020(d)
9/2020(d)
10/2021
3/2021
4/2021
7/2022
7/2020(d)
7/2025
10/2021
9/2020(d)
5/2020(d)
3/2023
7/2021
10/2022
6/2026
2/2025
2/2025
10/2025
11/2025
7/2024
8/2022
10/2021
8/2022
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
Promissory Note Various-CT
Allowance for
credit losses
9.0%
12/2028(b)
$
— $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
743
255
431
280
253
300
319
232
171
303
76
440
308
192
160
192
398
390
70
84
458
363
315
172
300
320
525
450
230
206
572
153
554
350
174
157
230
200
237
333
357
153
12,406
—
695
214
353
184
226
254
277
192
143
260
74
434
299
190
158
186
376
368
64
69
374
309
263
144
182
260
385
341
188
166
512
129
485
341
163
148
220
192
82
295
304
133
10,632
985
—
$ 12,406
$
(337)
11,280
Type of
Loan/Borrower
Mortgage Loans:
Borrower A
Borrower B
Borrower C
Borrower D
Borrower E
Borrower F
Borrower G
Borrower H
Borrower I
Borrower J
Borrower K
Borrower L
Borrower M
Borrower N
Borrower O
Borrower P
Borrower Q
Borrower R
Borrower S
Borrower T
Borrower U
Borrower V
Borrower W
Borrower X
Borrower Y
Borrower Z
Borrower AA
Borrower AB
Borrower AC
Borrower AD
Borrower AE
Borrower AF
Borrower AG
Borrower AH
Borrower AI
Borrower AJ
Borrower AK
Borrower AL
Borrower AM
Borrower AN
Borrower AO
Borrower AP
Note receivable
Total (c)
(a) P & I = Principal and interest paid monthly.
(b) Note for funding of capital improvements.
(c) The aggregate cost for federal income tax purposes approximates the amount of principal unpaid.
(d) Note is in the process of being refinanced or repaid.
96
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. We adopted ASU 2016-13 on January 1, 2020 using the modified retrospective method, under which
we recorded a cumulative-effect adjustment as a charge to retained earnings of $309,000. In addition, during the year ended December
31, 2020, we recorded an additional allowance for credit losses of $28,000 on these notes and mortgages receivable due to changes in
expected economic conditions.
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
Allowance for credit losses
Balance at December 31,
2020
2019
2018
$
30,855
$
33,519
$
32,366
3,724
1,734
4,287
(22,260)
(702)
(337)
11,280
$
(3,771)
(627)
—
30,855
$
(2,368)
(766)
—
33,519
$
97
EXHIBIT INDEX
Exhibit
Number
3.1
GETTY REALTY CORP.
Annual Report on Form 10-K
for the year ended December 31, 2020
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.
3.4
Articles of Amendment of Holdings, changing its name to
Getty Realty Corp., filed January 30, 1998.
3.5
Articles of Amendment of Holdings, filed August 1, 2001.
3.6
Articles Supplementary to Articles of Incorporation of
Holdings, filed October 25, 2017.
3.7
Articles of Amendment to Articles of Incorporation of Getty
Realty Corp. filed May 17, 2018
3.8
Amendment to By-Laws of Getty Realty Corp.
4.1
Dividend Reinvestment/Stock Purchase Plan.
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
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
Filed as Exhibit 3.2 to the Company’s Current Report on
Form 8-K filed on November 14, 2011 (File No. 001-
13777) and incorporated herein by reference.
Filed as Exhibit 3.4 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
Filed as Exhibit 3.5 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
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.
Filed as Exhibit 3.1 to the Company’s Current Report on
Form 8-K filed on May 18, 2018 (File No. 001-13777) and
incorporated herein by reference.
Filed as Exhibit 3.7 to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018 (File No.
001-13777) and incorporated herein by reference.
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.
4.2
Description of Securities.
Filed herewith.
10.1*
Retirement and Profit Sharing Plan (restated as of
December 1, 2012).
10.4*
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).
10.6*
2004 Getty Realty Corp. Omnibus Incentive Compensation
Plan.
Filed as Exhibit 10.1 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2012
(File No. 001-13777) and incorporated herein by reference.
for
Filed as Exhibit 10.6 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
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.
10.7*
Form of restricted stock unit grant award under the 2004
Getty Realty Corp. Omnibus Incentive Compensation Plan,
as amended.
Filed as Exhibit 10.15 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
98
Exhibit
Number
10.8*
10.15*
Description of Document
Amendment to the 2004 Getty Realty Corp. Omnibus
Incentive Compensation Plan dated December 31, 2008.
Location of Document
Filed as Exhibit 10.19 to the Company’s Annual Report on
Form 10-K
the year ended December 31, 2008
(File No. 001-13777) and incorporated herein by reference.
for
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.
10.18* Getty Realty Corp. Amended and Restated 2004 Omnibus
Incentive Compensation Plan.
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.
10.19* Getty Realty Corp. Second Amended and Restated 2004
Omnibus Incentive Compensation Plan
Annexed as Appendix A to the Company’s Definitive Proxy
Statement on Schedule 14A filed on March 23, 2017
10.20** 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.
10.21** 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.
10.28
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.
10.29** 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 America
(“Prudential”) and certain affiliates of Prudential.
10.30** Transaction Agreement between Empire Petroleum
Partners, LLC and Getty Realty Corp., dated June 22, 2017.
10.31
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.
10.32** 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.
10.33** 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.
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.
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.
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.
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.
99
Exhibit
Number
Description of Document
10.34** 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.
10.35*
Form of Indemnification Agreement between the Company
and its directors.
10.36** Fourth Amended and Restated Note Purchase and Guarantee
Agreement, dated as of September 12, 2019, among Getty
Realty Corp., certain of its subsidiaries party thereto, the
Prudential and certain affiliates of Prudential.
10.37** Note Purchase and Guarantee Agreement, dated as of
September 12, 2019, among Getty Realty Corp., certain of
its subsidiaries party thereto and American General Life
Insurance Company (“AIG”).
10.38** Note Purchase and Guarantee Agreement, dated as of
September 12, 2019, among Getty Realty Corp., certain of
its subsidiaries party thereto, Massachusetts Mutual Life
Insurance Company (“MassMutual”) and certain of its
affiliates.
Location of Document
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.
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.
Filed as Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q filed on September 30, 2019 (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 September 30, 2019 (File No. 001-
13777) and incorporated herein by reference.
Filed as Exhibit 10.3 to the Company’s Quarterly Report on
Form 10-Q filed on September 30, 2019 (File No. 001-
13777) and incorporated herein by reference.
10.39
10.40***
10.41***
10.42***
10.43*
21
23
31.1
31.2
32.1
Consent and Second Amendment, dated as of September 12,
2019, 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.
Filed as Exhibit 10.4 to the Company’s Quarterly Report on
Form 10-Q filed on September 30, 2019 (File No. 001-
13777) and incorporated herein by reference.
Fifth Amended and Restated Note Purchase and Guarantee
Agreement, dated as of December 4, 2020, among Getty
Realty Corp., Prudential and certain of its affiliates.
Filed herewith.
First Amended and Restated Note Purchase and Guarantee
Agreement, dated as of December 4, 2020, between Getty
Realty Corp. and AIG.
Filed herewith.
First Amended and Restated Note Purchase and Guarantee
Agreement, dated as of December 4, 2020, among Getty
Realty Corp., MassMutual and certain of its affiliates.
Filed herewith.
Form of Restricted Stock Unit Agreement under the Getty
Realty Corp. Second Amended and Restated 2004 Omnibus
Incentive Compensation Plan.
Filed herewith.
Subsidiaries of the Company.
Filed herewith.
Consent of Independent Registered Public Accounting Firm. Filed herewith.
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.
Filed herewith.
Certification of Brian Dickman, Executive Vice President,
Chief Financial Officer and Treasurer, pursuant to Rule 13a-
14(a) under the Securities Exchange Act of 1934, as
amended.
Filed herewith.
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
Filed herewith.
100
Exhibit
Number
32.2
Description of Document
Location of Document
U.S.C. § 1350.
Certification of Brian Dickman, Executive 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.
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema
Filed herewith.
Filed herewith.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase
Filed herewith.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
Filed herewith.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
Filed herewith.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
Filed herewith.
104
Cover Page Interactive Data File
Formatted as Inline XBRL and contained in Exhibit 101.
* 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.
*** Certain portions of this exhibit (indicated by “[***]”) have been omitted because they are not material.
Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.
The exhibits listed in this Exhibit Index which were filed or furnished with our 2020 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 2020 Annual Report on Form 10-K.
101
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:
By:
/S/ Brian Dickman
Brian Dickman
Executive
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
February 25, 2021
/S/ Eugene Shnayderman
Eugene Shnayderman
Chief Accounting Officer and Controller
(Principal Accounting Officer)
February 25, 2021
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:
/S/ CHRISTOPHER J. CONSTANT
Christopher J. Constant
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 25, 2021
/S/ PHILIP E. COVIELLO
Philip E. Coviello
Director
February 25, 2021
/S/ Mary Lou Malanoski
Mary Lou Malanoski
Director
February 25, 2021
By:
By:
By:
/S/ MILTON COOPER
Milton Cooper
Director
February 25, 2021
/S/ Howard Safenowitz
Howard Safenowitz
Director
February 25, 2021
/S/ RICHARD E. MONTAG
Richard E. Montag
Director
February 25, 2021
102
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BOARD OF DIRECTORS
BOARD OF DIRECTORS
DEAR SHAREHOLDERS
Mary Lou Malanoski
Chief Financial Officer
Colony S2k Holdings
Christopher J. Constant
Chief Executive Officer and President
Getty Realty Corp.
Getty had a highly productive year during 2020 which saw each aspect of our business post
significant accomplishments. The net result was that Getty achieved substantially all of our business
objectives and produced growth of both our revenues from rental properties, which increased by 5%
for the year, and our adjusted funds from operations (“AFFO”) per share, which grew by 7% for the
year. In a normal year, I would be proud to report these results to our shareholders. When you
consider the countless challenges brought upon us by the COVID-19 pandemic, I take even greater
satisfaction from our results, which were only possible due to the extraordinary efforts put forth by the
entire Getty team. I also believe that our performance reflects the value of our in-place portfolio which,
combined with our strong balance sheet and growing pipeline of investment prospects, positions the
Company for continued success as we look towards 2021 and beyond.
Milton Cooper
Executive Chairman of the Board of Directors
Kimco Realty Corporation
Richard E. Montag
Former Senior Executive
Richard E. Jacobs Group
Philip E. Coviello
Retired Partner
Latham & Watkins LLP
COVID-RELATED CHALLENGES
Howard B. Safenowitz
President
Safenowitz Family Corp.
EXECUTIVE OFFICERS
Getty’s business began to feel the impacts of the COVID-19 pandemic in March of 2020. Our initial
focus was the health and safety of our employees and the potential negative impacts to our tenants’
businesses. We were fortunate that our portfolio of triple-net leased assets was performing well prior to
the onset of the COVID-19 pandemic. With that said, the convenience & gas (“C&G”) sector began to
feel the adverse effects of the public health crisis when several
large states on the East and West
Coasts instituted travel restrictions and stay at home orders. Fortunately for Getty, the vast majority of
our C&G and other automotive properties were deemed “essential” under state and federal guidelines
meaning that more than 95% of our assets remained operational throughout 2020. Yet even though
Joshua Dicker
our tenants were open for business, they still faced numerous pandemic-related operational, health
Executive Vice President
and safety challenges.
General Counsel and Secretary
Brian R. Dickman
Executive Vice President
Chief Financial Officer and Treasurer
Mark J. Olear
Executive Vice President
Chief Operating Officer
Christopher J. Constant
Chief Executive Officer
President
Nationally, the COVID-19 pandemic reduced motor vehicle use and, as a result, fuel volumes declined
significantly year-over-year, with the extent of the decline varying by region. While it is impossible to
replace the lost revenue from lower fuel volumes, it is important to note that many of our tenants
benefited from historically high retail fuel margins in 2020 (gross profit made on a per gallon basis).
This increase in retail fuel margins, which was driven by the considerable drop in oil prices, partially
offset the pressure of volume-related weakness at times during the year.
CORPORATE INFORMATION
Independent Auditor
PricewaterhouseCoopers LLP
Annual Meeting of Shareholders
April 27, 2021
Virtual Meeting
In contrast to fuel-related challenges, our tenants’ convenience store businesses displayed far greater
Getty Realty Corp.
resiliency during the public health crisis. Several of our
their
292 Madison Avenue,
convenience sales grew year-over-year as consumers increased their use of neighborhood stores for
New York, NY
food, traditional merchandise, grocery items, household goods and cleaning products.
9th Floor
New York, NY 10017
I am pleased to report that to date the COVID-19 pandemic has had a minimal
impact on Getty’s
(646) 349-6000
business. We collected more than 98% of contractual rent and mortgage payments for the year, and
www.gettyrealty.com
also collected substantially all of our “COVID-related” rent and mortgage deferrals due in 2020.
tenants actually reported that
Corporate Headquarters
Although uncertainty remains regarding the forward impact of COVID-19 to the broader economy, we
are encouraged by the strength exhibited by our tenants and assets since the beginning of the
pandemic. Nevertheless, we will continue to vigilantly monitor the health of our tenants’ businesses, as
we believe the pandemic will continue to impact consumer and retail activity through at least the first
half of 2021 and possibly beyond that.
Transfer Agent
Computershare Inc.
462 South 4th Street,
Suite 1600
Louisville, KY 40202
(800) 368-5948
www.computershare.com
Investor Relations
(646) 349-0822
ir@gettyrealty.com
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(cid:16)
(cid:20)
(cid:16)
(cid:3)
(cid:64)
(cid:78)
(cid:78)
(cid:85)
(cid:64)
(cid:76)
(cid:3)
(cid:82)
(cid:68)
(cid:80)
(cid:79)
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(cid:84)
GETTY REALTY CORP.
292 Madison Avenue, 9th Floor
New York, NY 10017