-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N49KEP5s26QrB8xN/w/aNSMHW6Om0i8LX1OJBlofj8v8v35IAY2uSIoZfuNkYOCW LqNtgtLZXL4qjUfBxHxo5A== 0000950137-05-003144.txt : 20050316 0000950137-05-003144.hdr.sgml : 20050316 20050316171133 ACCESSION NUMBER: 0000950137-05-003144 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20041231 FILED AS OF DATE: 20050316 DATE AS OF CHANGE: 20050316 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GETTY REALTY CORP /MD/ CENTRAL INDEX KEY: 0001052752 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 113412575 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13777 FILM NUMBER: 05686420 BUSINESS ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5163382600 MAIL ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 10-K 1 c93068e10vk.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004 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 11-3412575 - -------- ---------- (State or other jurisdiction of incorporation or organization) (I.R.S. employer identification no.) 125 Jericho Turnpike, Suite 103, Jericho, New York 11753 - -------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (516) 478-5400 Securities registered pursuant to Section 12(b) of the Act: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - ------------------- ----------------------------------------- Common Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None (Title of Class) Indicate by check mark whether 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X] No [ ] The aggregate market value of common stock held by non-affiliates (17,566,673 shares of common stock) of the Company was $441,977,493 as of June 30, 2004. The registrant had outstanding 24,712,861 shares of common stock as of March 11, 2005. DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT PART OF FORM 10-K -------- ----------------- Annual Report to Shareholders for the year ended December 31, 2004 (the I and II "Annual Report") Definitive Proxy Statement for the 2005 Annual Meeting of Stockholders III (the "Proxy Statement") which will be filed by the registrant on or prior to 120 days following the end of the registrant's year ended December 31, 2004 pursuant to Regulation 14A.
PART I Item 1. Business The History of Our Company Getty Realty Corp., a Maryland corporation, is the largest publicly-traded real estate investment trust ("REIT") in the United States specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. As of December 31, 2004, we owned seven hundred ninety-five properties and leased two hundred fifty additional properties in thirteen states located principally in the Northeast United States. We are self-administered and self-managed by our experienced management team, which has over eighty-six years of combined experience in owning, leasing and managing retail motor fuel and convenience store properties. Our executive officers are engaged exclusively in the day-to-day business of the Company. We administer nearly all management functions for our properties, including leasing, legal, data processing, finance and accounting. We have invested, and will continue to invest, in real estate and real estate related investments, such as mortgage loans, when such opportunities arise. Our founders started the business in 1955 with the ownership of one gasoline service station in New York City and combined real estate ownership, leasing and management with actual service station operation. We held our initial public offering in 1971 under the name Power Test Corp. In 1985, we acquired from Texaco the petroleum distribution and marketing assets of Getty Oil Company in the Northeast United States along with the Getty(R) name and trademark for use in connection with our real estate and petroleum marketing operations in the United States. We became one of the largest independent owner/operators of petroleum marketing assets in the country, serving retail and wholesale customers through a distribution and marketing network of Getty and other branded retail motor fuel and convenience store properties and petroleum distribution terminals. Nearly all of our properties are leased or sublet to third-party operators who are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual operations conducted at these properties. We lease approximately 91% of our owned and leased properties on a long-term basis to Getty Petroleum Marketing Inc. ("Marketing"). Marketing is wholly owned by a subsidiary of OAO LUKoil ("Lukoil"), one of Russia's largest integrated oil companies. Marketing operates the petroleum distribution terminals but typically does not itself directly operate the retail motor fuel and convenience store properties it leases from us. Rather, Marketing subleases nearly all of our retail properties to third-party operators who are responsible for the actual operations at the locations. In 1997, we completed the spin-off of our petroleum marketing business to our shareholders, who received a tax-free dividend of one share of common stock of Marketing for each share of our common stock. Following the spin-off, Marketing held the assets and liabilities of our petroleum marketing operations and a portion of our home heating oil business, and we continued operating primarily as a real estate company specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. In 1998, we acquired Power Test Investors Limited Partnership (the "Partnership"), thereby acquiring fee title to two hundred ninety-five properties we had previously leased from the Partnership and which the Partnership had acquired in 1985 from Texaco. We later sold the remaining portion of our home heating oil business. As a result, we are now exclusively engaged in the ownership, leasing and management of real estate assets, principally in the petroleum marketing industry. In December 2000, Marketing was acquired by a U.S. subsidiary of Lukoil. In connection with Lukoil's acquisition of Marketing, we renegotiated our long-term master lease ("Master Lease") with Marketing. As of December 31, 2004, Marketing leases from us, under the Master Lease and a coterminous supplemental lease for one property (collectively the "Marketing Leases"), nine hundred thirty-nine retail motor fuel and convenience store properties and ten petroleum distribution terminals. The Marketing Leases have an initial term expiring in December 2015, and generally provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. Each of the renewal options may be exercised only on an "all or nothing" basis. We expect to receive $59.7 million in lease rental payments from Marketing in 2005, with annual 2% rental increases in subsequent years. The Marketing Leases are "triple-net" leases, pursuant to which Marketing -2- is responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses. We have licensed the Getty(R) trademarks to Marketing on an exclusive basis in its Northeast U.S. marketing territory as of December 2000. We have also licensed the trademarks to Marketing on a non-exclusive basis outside that territory, subject to a gallonage-based royalty, although to date, Marketing has not used the trademark outside that territory. In August 2001, we completed a public offering of 8,855,000 shares of our common stock. We used a portion of the net proceeds of the offering to pay a special one-time "earnings and profits" (as defined by the Internal Revenue Code) cash distribution of $64.1 million to preferred and common shareholders. In addition, our shareholders approved a charter amendment to include restrictions on the ownership of our stock which are typical of REITs. Accordingly, we elected to be taxed as a REIT beginning January 1, 2001. A REIT is a corporation, or a business trust that would otherwise be taxed as a corporation, which meets the requirements of the Internal Revenue Code. The Internal Revenue Code permits a qualifying REIT to deduct dividends paid, thereby effectively eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes. To meet the requirements of the Internal Revenue Code, a REIT must, among other things, invest substantially all of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real property or interest on loans secured by mortgages on real property, and distribute to shareholders annually a substantial portion of its otherwise taxable income. As a REIT, we are required to distribute at least ninety percent of our taxable income to our shareholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed. Real Estate Business The operators of our properties are primarily distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services. Over the past decade, these lines of business have matured into a single industry as operators increased their emphasis on co-branded locations with multiple uses. The combination of petroleum product sales with other offerings, particularly convenience store products, has helped provide one-stop shopping for consumers and we believe represents a driving force behind the industry's growth in recent years. Revenues from rental properties for the year ended December 31, 2004 were $66.3 million which includes $4.5 million of deferred rental income recognized due to the straight-line method of accounting for the leases with Marketing and certain of our other tenants. We received lease payments from Marketing aggregating approximately $58.9 million (or 95% of the $61.9 million total lease payments we received from all our rental properties in 2004). We are materially dependent upon the ability of Marketing to meet its monetary obligations under the Marketing Leases. Marketing's financial results depend largely on retail petroleum marketing margins and rental income from subtenants who operate our properties. The petroleum marketing industry has been and continues to be volatile and highly competitive. Marketing has made all required monthly rental payments under the Marketing Leases when due. As of December 31, 2004, we owned fee title to seven hundred eighty-eight retail motor fuel and convenience store properties and seven petroleum distribution terminals. We also leased two hundred forty-seven retail motor fuel and convenience store properties and three petroleum distribution terminals. Our typical property used as a retail motor fuel and convenience store is located on between one-half and three quarters of an acre of land in a metropolitan area in the Northeast United States. Approximately two-thirds of our retail motor fuel properties have repair bays (typically two or three bays per station) and nearly half have convenience stores, canopies or both. The title to substantially all of our owned properties is in the name of Leemilt's Petroleum, Inc., Getty CT Leasing, Inc, Getty Properties Corp. or Power Test Realty Company Limited Partnership, each of which is our wholly owned subsidiary. Leemilt's Petroleum Inc. and Getty Properties Corp., are the lessees of substantially all of the properties we lease from third parties. In addition, we lease four thousand one hundred square feet of office space at 125 Jericho Turnpike, Jericho, New York, which is used for our corporate headquarters. We believe our network of retail motor fuel and convenience store properties and terminal properties across the Northeast United States is unique and comparable networks of properties are not readily available for purchase or lease from other owners or landlords. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway on- and off-ramps. Furthermore, obtaining the permits necessary to operate a network of petroleum marketing properties such as ours would be a difficult, time consuming and costly process for any -3- potential competitor. However, the real estate industry is highly competitive, and we compete for tenants with a large number of property owners. Our principal means of competition are rents charged in relation to the income producing potential of the location. In addition, we expect other major real estate investors with significant capital will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future. Trademarks We have licensed the Getty(R) trademarks to Marketing on an exclusive basis in its Northeast U.S. marketing territory as of December 2000. We have also licensed the trademarks to Marketing on a non-exclusive basis outside that territory, subject to a gallonage-based royalty, although to date, Marketing has not used the trademark outside that territory. Regulation We are subject to numerous federal, state and local laws and regulations. The costs related to compliance with those laws and regulations have not had, and are not expected to have, a material adverse effect on our long-term financial position, although these costs may have a significant impact on our results of operations or liquidity for any single fiscal year or interim period. Petroleum properties are governed by numerous federal, state and local environmental laws and regulations. These laws have included (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate the soil and/or groundwater contamination pursuant to governmental order and directive, (ii) requirements to remove and replace underground storage tanks that have exceeded governmental-mandated age limitations and (iii) the requirement to provide a certificate of financial responsibility with respect to claims relating to underground storage tank failures. In recent years, environmental expenses have been attributable to remediation, monitoring, and governmental agency reporting incurred in connection with contaminated sites. In prior periods, a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tank systems ("USTs") to meet federal, state and local environmental standards. Under the Master Lease with Marketing, and in accordance with leases with other tenants, we agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure ("Closure") in an efficient and economical manner. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. We have agreed to pay all costs relating to, and to indemnify Marketing for, certain environmental liabilities and obligations that are scheduled in the Master Lease. We will continue to seek reimbursement from state UST remediation funds related to these environmental expenditures where available. As of December 31, 2004, we have regulatory approved remediation action plans in place for three hundred sixteen (92%) of the three hundred forty-five properties for which we retain remediation responsibility and have not received a no further action letter and the remaining twenty-nine properties (8%) were in the assessment phase. For additional information please refer to "Liquidity and Capital Resources" and "Environmental Matters" in "Management's Discussion and Analysis of Financial Condition and Results of Operations." We believe that we are in substantial compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters. Although we are unable to predict what legislation or regulations may be adopted in the future with respect to environmental protection and waste disposal, existing legislation and regulations have had no material adverse effect on our competitive position. See "Legal Proceedings." -4- Personnel As of December 31, 2004, we had sixteen employees. Access to our filings with the Securities and Exchange Commission and Corporate Governance Documents Our website address is www.gettyrealty.com. Our address, phone number and a list of our officers is available on our website. Our website contains a hyperlink to the SEC's EDGAR database at www.sec.gov where you can access, free-of-charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after such reports are filed. Our website also contains our business conduct guidelines, corporate governance guidelines and the charters of the Compensation, Nominating/Corporate Governance and Audit Committees of our Board of Directors. We also will provide copies of these reports and corporate governance documents free-of-charge upon request, addressed to Getty Realty Corp., 125 Jericho Turnpike, Suite 103, Jericho, NY 11753, Attn: Investor Relations. Information available on or accessible through our website shall not be deemed to be a part of this Annual Report on Form 10-K. You may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Special Factors Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When we use the words "believes", "expects", "plans", "projects", "estimates" and similar expressions, we intend to identify forward-looking statements. Examples of forward-looking statements include statements regarding our expectations regarding future payments from Marketing, including $59.7 million in lease rental payments in 2005; the expected effect of regulations on our long-term performance; our expected ability to maintain compliance with applicable regulations; our ability to renew expired leases; the adequacy of our current and anticipated cash flows; our ability to maintain our REIT status; our ability to obtain additional financing from JPMorgan on the terms described in this Annual Report on Form 10-K, or at all; the probable outcome of litigation or regulatory actions; our expected recoveries from underground storage tank funds; our exposure to environmental remediation expenses; our expectations regarding corporate level federal income taxes; the indemnification obligations of the Company and others; our intention to consummate future acquisitions; assumptions regarding the future applicability of accounting estimates, assumptions and policies and our intention to pay future dividends. These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and involve known and unknown risks (including the risks described below and other risks that we describe from time to time in our SEC filings), uncertainties and other factors which may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or circumstances or the occurrence of unanticipated events. Risks and Uncertainties We are subject to various risks that could have a negative effect on the Company and its financial condition, many of which are beyond our control. 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 and 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 detailed from time to time in our other filings with the Securities and Exchange Commission. -5- We are subject to risk 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 related to owning properties used in the petroleum marketing industry, risks include, among others, liability for long-term lease obligations, changes in regional and local economic and real estate market conditions; changes in supply of, or demand for rental properties similar to ours; competition for tenants and changes in rental rates; our ability to relet properties on favorable terms or at all; our ability to collect rent payments when due; changes in interest rates and in the availability, cost and terms of financing; the potential for uninsured casualty and other losses, the impact of present or future environmental legislation and compliance with environmental laws; adverse changes in zoning laws and other regulations; and acts of terrorism and war. In addition, real estate investments are relatively illiquid, which means that our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited. Our revenues are primarily dependent on the performance of Getty Petroleum Marketing Inc., our primary tenant. Although we periodically receive and review financial statements and other financial information from Marketing, such information is not publicly available. We may not have sufficient information to identify a deterioration of the financial performance or condition of Marketing, or have sufficient time to advise our shareholders of such deterioration prior to any default by Marketing on its monetary obligations to us that may result from such deterioration. If Marketing does not fulfill its monetary obligations to us, our financial condition and results of operations will be materially adversely affected. We rely upon the revenues from leasing retail motor fuel and convenience store properties and petroleum distribution terminals, primarily to Marketing, for substantially all of our revenues (95.5% for the year ended December 31, 2004). Accordingly, our revenues will be dependent to a large degree on the economic performance of Marketing and of the petroleum marketing industry, and any factor that adversely affects Marketing may have a material adverse effect on our financial condition and results of operations. Marketing is wholly owned by a subsidiary of Lukoil, one of the largest integrated Russian oil companies. In the event that Marketing cannot or will not perform its monetary obligations under the Marketing Leases with us, our financial condition and results of operations would be materially adversely affected. Although Marketing is wholly owned by a subsidiary of Lukoil, no assurance can be given that Lukoil will cause Marketing to fulfill any of its obligations under the Marketing Leases. We periodically receive and review Marketing's financial statements and other financial data. We receive this information from Marketing pursuant to the terms of the Master Lease. This information is not publicly available and the terms of the Master Lease prohibit us from including this financial information in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q or in our Annual Report to Shareholders. As a result, the financial performance of Marketing may deteriorate, and Marketing may ultimately default on its monetary obligations to us before we receive financial information from Marketing that would indicate the deterioration or before we would have the opportunity to advise our shareholders of any increased risk of default. Certain financial and other information concerning Marketing is available from Dun & Bradstreet and may be accessed by their web site (www.dnbsearch.com) upon payment of their fee. If Marketing does not fulfill its monetary obligations to us under the Marketing Leases, our financial condition and results of operations will be materially adversely affected. Based on our review of the financial statements and other financial data Marketing has provided to us to date, we believe that Marketing has the ability to make its rent payments to us under the Marketing Leases timely when due. Marketing's earnings and cash flow from operations depend upon rental income from its tenants and the sale of refined petroleum products at margins in excess of its fixed and variable expenses. A large, rapid increase in wholesale petroleum prices would adversely affect Marketing's profitability and cash flow if the increased cost of petroleum products could not be passed on to Marketing's customers or if automobile consumption of gasoline were to significantly decline. Petroleum products are commodities whose prices depend on numerous factors that affect the supply of and demand for petroleum products. The prices paid by Marketing and other petroleum marketers for products are affected by global, national and regional factors. We cannot be certain how these factors will affect -6- petroleum product prices or supply in the future, or how in particular they will affect Marketing or our other tenants. We believe that Marketing currently relies on various suppliers for the purchase of refined petroleum products. Substantially all of our tenants depend on the same industries for their revenues. We derive substantially all of our revenue from leasing, primarily on a triple-net basis, retail motor fuel and convenience store properties and petroleum distribution terminals to tenants in the petroleum marketing industry. Accordingly, our revenues will be dependent on the economic success of the petroleum marketing industry, and any factors that adversely affect that industry could also have a material adverse effect on our financial condition and results of operations. The success of participants in that industry depends upon the sale of refined petroleum products at margins in excess of fixed and variable expenses. A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of Marketing and our other tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline were to significantly decline. Petroleum products are commodities whose prices depend on numerous factors that affect the supply of and demand for petroleum products. The prices paid by Marketing and other petroleum marketers for products are affected by global, national and regional factors. We cannot be certain how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect Marketing or our other tenants. We believe that Marketing currently relies on various suppliers for the purchase of refined petroleum products. Property taxes on our properties may increase without notice. Each of our owned properties is subject to real property taxes. The real property taxes on our properties and any other properties that we develop or acquire 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. Compliance with environmental regulations may be costly. The real estate business and the petroleum products industry 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 without regard to whether the owner or operator knew of or caused the presence of the contaminants, or the timing or cause of the contamination, and the liability under such laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. For example, liability may arise as a result of the historical use of a property or from the migration of contamination from adjacent or nearby properties. Any such contamination or liability may also reduce the value of the property. In addition, the owner or operator of a property may be subject to claims by third parties based on injury, damage and/or costs, including investigation and clean-up costs, resulting from environmental contamination present at or emanating from a property. The properties owned or controlled by us are leased primarily as retail motor fuel and convenience store properties, and therefore may contain, or may have contained, underground storage tanks 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 the properties may be adjacent to or near properties that have contained or currently contain underground storage tanks 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 relet or sell our properties on favorable terms or at all. We have agreed to provide limited environmental indemnification, capped at $4.25 million and expiring in 2010, to Marketing for certain pre-existing conditions at six of the terminals we lease to Marketing. Under the indemnification agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. We have not -7- accrued a liability in connection with this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreement. As of December 31, 2004 we had accrued $20.6 million as management's best estimate of the fair value of reasonably estimable environmental remediation costs and we had also recorded $5.4 million as management's best estimate for recoveries from state UST remediation funds, net of allowance, related to environmental obligations and liabilities. Environmental expenditures were $6.8 million and recoveries from underground storage tank funds were $2.4 million for the year ended December 31, 2004. For 2004, net changes in estimated remediation costs and accretion expense included in our consolidated statements of operations amounted to $3.3 million, which was net of probable recoveries from state UST remediation funds. During 2005, we estimate that our net environmental spending will be approximately $5.0 million and our business plan for 2005 reflects a net change in estimated remediation costs and accretion expense of approximately $3.6 million. In view of the uncertainties associated with environmental expenditures, however, we believe it is possible that the fair value of future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in our financial statements as they become probable and a reasonable estimate of fair value can be made. Although future environmental costs may have a significant impact on results of operations for any single fiscal year or interim period, we believe that such costs will not have a material adverse effect on our long-term financial position. We cannot predict what environmental legislation or regulations may be enacted in the future, or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict whether state underground storage tank fund programs will be administered and funded in the future in a manner that is consistent with past practices or whether future environmental spending will continue to be eligible for reimbursement under these programs. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of existing laws which may develop in the future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation. For additional information with respect to environmental remediation costs and estimates see "Environmental Matters" in "Management's Discussion and Analysis of Financial Condition and Results of Operations", and note 5 to the financial statements in our Annual Report to Shareholders filed as Exhibit 13 to this Annual Report on Form 10-K and incorporated by reference herein. 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, damages resulting from leaking UST and toxic tort claims. The ultimate resolution of certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. Our ultimate liabilities resulting from such lawsuits and claims, if any, may be material to our results of operations in the period in which they are recognized. Our properties are concentrated in the Northeast United States, and adverse conditions in that region, in particular, could negatively impact our operations. A significant portion of the properties we own and lease are located in the Northeast United States. Because of the concentration of our properties in that region, in the event of adverse economic conditions in that region, we would likely experience higher risk of default on payment of rent payable to us (including under the Marketing Leases) than if our properties were more geographically diversified. Additionally, the rents on our properties may be subject to a greater risk of default than other properties in the event of adverse economic, political, or business developments or natural hazards that may affect the Northeast United States and the ability of our lessees to make rent payments. In the event of any natural disaster, our ability to pay dividends could be adversely affected. -8- 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 charged in relation to the income producing potential of the location. In addition, we expect other major real estate investors, some with much greater resources, will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future. Our future cash flow is dependent on renewal of leases and reletting of our space. We are subject to risks that financial distress of our tenants may lead to vacancies at our properties, that leases may not be renewed, that locations may not be relet or that the terms of renewal or reletting (including the cost of required renovations) may be less favorable than current lease terms. In addition, numerous properties compete with our properties in attracting tenants to lease space. The number of competitive properties in a particular area could have a material adverse effect on our ability to lease our properties or newly acquired properties and on the rents charged. If we were unable to promptly relet or renew the leases for all or a substantial portion of these locations, or if the rental rates upon such renewal or reletting were significantly lower than expected, our cash flow could be adversely affected and the resale values or our properties could decline. The Marketing Leases have an initial term expiring in December 2015, and generally provide Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. Each of the renewal options may be exercised only on an "all or nothing" basis. We may acquire or develop new properties, and this may create risks. We may acquire or develop properties or acquire other real estate companies when we believe that an acquisition or development matches our business strategies. We may not succeed in consummating desired acquisitions or in completing developments on time or within our budget. We also may not succeed in leasing newly developed or acquired properties at rents sufficient to cover their costs of acquisition or development and operations. We are subject to losses that may not be covered by insurance. Marketing, and other tenants, as the lessee of our properties, are required to provide insurance for such properties, including casualty, liability, fire and extended coverage in amounts and on other terms as set forth in our master leases. We 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 disorders) where, in the judgment of management, the insurance is not warranted due to cost or availability of coverage or the remoteness of perceived risk. There is no assurance that our insurance against loss will be sufficient. The destruction of, or significant damage to, or significant liabilities arising out of conditions at our properties due to an uninsured cause would result in an economic loss and could result in us losing both our investment in, and anticipated profits from, such properties. When a loss is insured, the coverage may be insufficient in amount or duration, or a lessee's customers may be lost, such that the lessee cannot resume its business after the loss at prior levels or at all, resulting in reduced rent or a default under its lease. Any such loss relating to a large number of properties could have a material adverse effect on our financial condition. Failure to qualify as a REIT would have adverse consequences to our shareholders. We elected to be taxed as a REIT beginning January 1, 2001. We cannot, however, guarantee that we will continue to qualify in the future as a REIT. In order to initially qualify for REIT status, we were required, among other items, to make a distribution to shareholders in an amount at least equal to our accumulated "earnings and profits" (as defined by the Internal Revenue Code) from the years we operated as a taxable corporation. On August 1, 2001, we paid the earnings and profits distribution to our shareholders in an amount that we estimated was required in order for us to qualify as a REIT. Determination of accumulated earnings and profits for federal income -9- tax purposes is extremely complex. Should the Internal Revenue Service successfully assert that our accumulated 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 accumulated earnings and profits. We may have to borrow money or sell assets to pay such a deficiency dividend. 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 will again be subject to federal income tax at regular corporate rates, and could be subject to the federal alternative minimum tax, we would be required to pay significant income taxes and would have less money available for our operations and distributions to shareholders. This would likely have a significant adverse effect on the value of our securities. We could also be precluded from treatment as a REIT for four taxable years following the year in which we lost the qualification, and all distributions to stockholders would be taxable as regular corporate dividends to the extent or our current and accumulated earnings and profits. As a REIT, we are dependent on external sources of capital which may not be available on favorable terms. To maintain our status as a REIT, we must distribute to our shareholders each year at least ninety percent 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 rely on third-party sources of capital, which may or may not be available on favorable terms or at all. Moreover, additional equity offerings may result in substantial dilution of shareholders' interests, and additional debt financing may substantially increase our leverage. 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, our current and potential future earnings and cash distributions and the market price of our common stock. The loss of certain members of our management team could adversely affect our business. We depend upon the skills and experience of our executive officers. Loss of the services of any of them could have a material adverse effect on our business and financial condition. We do not have employment agreements with any of our executives. Our business operations may not generate sufficient cash for distributions or debt service. We cannot assure you 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 make distributions 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. In March 2005 we entered into a Commitment Letter with JPMorgan Chase Bank ("JPMorgan") for an unsecured three-year senior revolving credit facility ("Credit Facility"). While the Commitment Letter is non-binding, is subject to JPMorgan's successful syndication of a substantial portion of the Credit Facility, and execution of definitive agreements containing customary terms and conditions, we believe that it will contain financial covenants that will require us to maintain certain financial ratios and limit the amount of distributions payable by us to our shareholders. Our ability to meet the financial and other covenants relating to the Credit Facility may be dependent on the performance of our tenants. Failure to comply with these covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all or a substantial portion of our indebtedness to JPMorgan. We may be unable to pay dividends and our equity may not appreciate. Under the Maryland General Corporation Law, our ability to pay dividends would be restricted if, after payment of the dividend, (1) we would not be able to pay indebtedness as it becomes due in the usual course of business or (2) our total assets would be less than the sum of our liabilities plus the amount that would be needed, if we were to be dissolved, to satisfy the rights of any shareholders with liquidation preferences. There currently are no shareholders with liquidation preferences. No assurance can be given that our financial performance in the future will permit our payment of any dividends. As a result of the factors described above, we may experience material -10- 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. 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 armed conflicts could affect our business or the businesses of our tenants or of Marketing or its parent. The consequences of armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the U.S. and worldwide financial markets and economy. They also could be a factor resulting in, or a continuation of, an economic recession in the U.S. or abroad. Any of these occurrences could have a significant adverse impact on our operating results and revenues and may result in volatility of the market price for our common stock. Item 2. Properties The following table summarizes the geographic distribution of our properties at December 31, 2004. The table also identifies the number and location of properties we lease from third-parties and which Marketing leases from us under the Marketing Leases.
OWNED BY GETTY REALTY LEASED BY GETTY REALTY --------------------- ---------------------- TOTAL PERCENT MARKETING OTHER MARKETING OTHER PROPERTIES OF TOTAL AS TENANT TENANTS AS TENANT TENANTS BY STATE PROPERTIES --------- ------- --------- ------- -------- ---------- New York 232 15 94 3 344 32.9% New Jersey 108 9 42 2 161 15.4 Massachusetts 130 -- 26 1 157 15.0 Pennsylvania 111 10 17 2 140 13.4 Connecticut 59 27 20 11 117 11.2 New Hampshire 28 -- 3 -- 31 3.0 Virginia 4 2 19 -- 25 2.4 Maine 17 1 3 1 22 2.1 Rhode Island 15 1 4 -- 20 1.9 Delaware 10 3 1 -- 14 1.3 Maryland 4 2 1 -- 7 0.7 Florida -- 6 -- -- 6 0.6 Vermont 1 -- -- -- 1 0.1 ----- ---- ----- ---- ----- ----- Total 719(1) 76 230(2) 20 1,045 100.0% ===== ==== ===== ==== ===== =====
(1) Includes seven terminal properties owned in New York, New Jersey, Connecticut and Rhode Island. (2) Includes three terminal properties leased in New York. The properties that we lease have a remaining lease term, including renewal option terms, averaging over twelve years. The following table sets forth information regarding lease expirations, including renewal and extension option terms, for properties that we lease from third parties:
PERCENT NUMBER OF OF TOTAL PERCENT OF LEASES LEASED TOTAL CALENDAR YEAR EXPIRING PROPERTIES PROPERTIES - ------------- -------- ---------- ---------- 2005 6 2.4 1.0 2006 15 6.0 1.3 2007 16 6.4 1.4 2008 12 4.8 1.1 2009 20 8.0 1.9 ----- ----- ------ Subtotal 69 27.6 6.7 ----- ----- ------ Thereafter 181 72.4 17.3 ----- ----- ------ Total 250 100.0% 24.0% ===== ===== ======
-11- We have rights-of-first refusal to purchase or lease one hundred ninety-eight of the properties we lease. Although there can be no assurance regarding any particular property, historically we generally have been successful in renewing or entering into new leases when lease terms expire. Approximately 67% of our leased properties are subject to automatic renewal or extension options. In the opinion of our management, our relationships with our landlords are good and our owned and leased properties are adequately covered by casualty and liability insurance. In addition, we require our tenants to provide insurance for all properties they lease from us, including casualty, liability, fire and extended coverage in amounts and on other terms satisfactory to us. Currently, we have no plans for material improvements to any of our properties. However, our tenants frequently make improvements to the properties leased from us at their expense. Three of our owned retail motor fuel and convenience store properties, with a net book value of approximately $1.9 million at December 31, 2004, are secured by mortgages with an aggregate principal balance of approximately $0.5 million at a weighted average interest rate of 5.7% per annum. No other material mortgages, liens or encumbrances exist on our properties. We lease nine hundred thirty-nine retail motor fuel and convenience store properties and our ten petroleum distribution terminals to Marketing under the Marketing Leases. The Master Lease is a unitary lease and has an initial term expiring in 2015, and generally provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. Each of the renewal options may be exercised only on an "all or nothing" basis. The Marketing Leases are "triple-net" leases, under which Marketing is responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses. If Marketing fails to pay rent, taxes or insurance premiums when due under the Marketing Leases, and the failure is not cured by Marketing within a specified time after receipt of notice, we have the right to terminate the Marketing Leases and to exercise other customary remedies against Marketing. If Marketing fails to comply with any other obligation under the Marketing Leases after notice and opportunity to cure, we do not have the right to terminate the Marketing Leases. Alternatively, our available remedies under the Marketing Leases are to seek to obtain an injunction or other equitable relief requiring Marketing to comply with its obligations under the Marketing Leases and to recover damages from Marketing resulting from the failure. If any lease we have with a third-party landlord for properties that we lease to Marketing is terminated as a result of our default and the default is not caused by Marketing, we have agreed to indemnify Marketing for its losses with respect to the termination. Where we lease a property from a third-party landlord under a lease which is about to expire and does not contain options to renew, we and Marketing each have a non-exclusive right to negotiate with that third-party landlord, except at fifteen identified locations where Marketing has the exclusive right to negotiate with the third-party landlord until six months before the lease expires. We have also agreed that if we decide to sell any property leased to Marketing under the Marketing Leases, we will first offer to sell that property to Marketing pursuant to procedures set forth in the Marketing Leases. We have also agreed to provide limited environmental indemnification, capped at $4.25 million and expiring in 2010, to Marketing for certain pre-existing conditions at six of the terminals we lease to Marketing. Under the agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any pre-existing terminal condition, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. We have not accrued a liability in connection with this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreement. Under the Master Lease, we continue to have additional ongoing environmental remediation obligations for two hundred sixty-four scheduled sites and our agreements with Marketing provide that Marketing otherwise remains liable for all environmental matters. Item 3. Legal Proceedings In 1988 and 1989, we were named as defendants in three separate lawsuits by multiple owners of adjacent properties seeking compensatory and punitive damages for personal injury and property damages having common allegations that a leak of an underground gasoline storage tank occurred in November 1985, at one of our retail -12- motor fuel properties. Although the first action was dismissed in January 1992 and the second action was dismissed in 1995, there is a possibility that the remaining defendants in this action, in the future, may assert claims against us for contribution or indemnity. We are not aware that any such claims have been asserted. The third action is still pending in New York Supreme Court, Suffolk County, remains in the pleadings stage and has remained dormant for more than ten years. We have been advised that these plaintiffs no longer will assert claims for personal injuries, and that the property has been sold. If this litigation resumes, we will assert third-party claims against the party we believe is responsible for the contamination. In 1991, the State of New York brought an action in the New York State Supreme Court in Albany against our former heating oil subsidiary seeking reimbursement for cleanup costs claimed to have been incurred at a retail motor fuel property in connection with a gasoline release. The State also is seeking penalties plus interest. Although there has been no activity in this proceeding in the past several years, in January 2002, we received a letter from the State's attorney indicating that the State intends to continue prosecuting the action. To date, we are not aware that the State has taken any additional actions in connection with this claim. In 1995, Pennsauken Solid Waste Management Authority, its successor-in-interest, the Pollution Control Financing Authority of Camden County and the Township of Pennsauken, New Jersey commenced an action for unspecified amounts against certain defendants for all costs and damages claimed to have been incurred for the remediation of the Pennsauken Sanitary Landfill. The claims against us were settled in November 2003, in exchange for a payment of $5,000 made in June 2004. In 1997, the State of Rhode Island commenced an action against us to recover damages resulting from an accident which occurred in March 1994, regarding an oil tanker truck which tipped over and exploded in Providence, RI. The State alleged damages to the highway area as well as the surrounding area and nearby overpass. The case was dismissed in June 2004. In 1997, an action was commenced in New York Supreme Court in Schenectady, naming us as defendants, and seeking to recover monetary damages for personal injuries allegedly suffered from the release of petroleum and vapors from one of our retail motor fuel properties. This action has not been pursued by the Plaintiff for more than six years. In June 1998, we were sued as a third-party defendant in the Superfund case of U.S. v. Champion Chemical Co. and Imperial Oil Co., pending in the U.S. District Court for New Jersey. Our defense is being conducted by Texaco Inc., which has agreed to fully indemnify us. In August 1998, we were sued as a third-party defendant in the Superfund case of U.S. v. Manzo, pending in the U. S. District Court for New Jersey. Our defense is also being conducted by Texaco Inc., which has agreed to fully indemnify us. Both matters involve periods prior to 1985, the year we purchased the properties from Texaco Inc. pursuant to an agreement under which Texaco is obligated to indemnify us for environmental matters of this kind. In December 1998, the New York State Department of Environmental Conservation filed an administrative complaint against us for civil penalties for alleged groundwater contamination and gasoline migration into a building basement in April 1997. In January 1999, an action was commenced in United States District Court (SDNY) by the owner of the property, seeking compensatory and punitive damages. We are vigorously defending the private claims of liability. In September 2004, our motion for summary judgment was granted as to all claims other than plaintiff's claim for compensatory damages resulting from an alleged diminution in property value. In June 1999, a case was commenced in New York Supreme Court in Nassau County against Marketing. The plaintiff is seeking monetary damages and alleges that he contracted acute myelogenous leukemia (AML) as a result of exposure to benzene-containing gasoline, between 1992 and 1998, when he worked periodically at an independently owned and operated retail motor fuel property which we supplied with gasoline. The plaintiff brought another case against Mobil Oil Corporation and Island Transportation Corp. alleging that he worked at another retail motor fuel property at which Mobil gasoline was sold and that his AML was caused by his exposure to that gasoline as well. The cases have been consolidated. We are not named in the cases. However, we are indemnifying Marketing pursuant to written agreements. -13- In September 1999, we brought a case against one of our tenants in the United States District Court, District of New Jersey, seeking the return of the property we leased to them and the cleanup of all contamination caused by them. Our tenant filed a counterclaim alleging that all or part of the contamination was attributable to contamination from underground storage tanks for which we were responsible. A trial is expected to be scheduled in the first half of 2005. In July 1999, the New Jersey Department of Environmental Protection ("NJDEP") issued a Directive and Notice to Insurers to several parties, including the Company regarding environmental contamination at a retail motor fuel property located in New Jersey. We signed an Administrative Consent Order and settlement agreement with our insurers in December 2003 that required the insurers to pay the State, under a reservation of rights, for past costs and take over responsibility for the completion of the remediation. The settlement agreement required us to pay $70,000 to the State and $15,000 toward the settlement that the insurers reach with the State regarding natural resource damages. These payments were made in May 2004. In August 2000, the State of New York commenced an action against us in the New York State Supreme Court in Albany County, seeking reimbursement of costs claimed to have been incurred to clean up a gasoline release that occurred in 1987. The matter was settled in June 2004, in exchange for a payment of $580,000, made in July 2004. In February 2002, the owner of a retail motor fuel property in Wareham, Massachusetts commenced an action in the Plymouth Superior Court against us and a former tenant at the property to recover cleanup costs and other incidental damages. The matter was settled in December 2004 in exchange for a payment of $125,000 that we will share equally with our co-defendant. The payment is expected to be made in 2005. In September 2002, a suit was brought against us in the United States District Court for the Eastern District of New York to recover legal fees incurred in connection with a pending Rhode Island litigation, based on a Guarantee and Indemnity Agreement. In January, 2002, we filed a counterclaim against the plaintiff in that earlier suit for recovery of our legal fees pursuant to a 1985 Settlement Agreement. Discovery has been completed, summary judgment motions were filed by both parties in the third quarter of 2004, and heard in November 2004. No decision on the motions has been rendered to date. In December 2002, the State of New York commenced an action in New York Supreme Court in Albany County against us and Marketing to recover costs claimed to have been expended by the State to investigate and remediate a petroleum release into the Ossining River commencing approximately in 1996. We are indemnifying Marketing and have filed a claim against a potentially responsible party who is upstream. In January 2003, a claim was brought against us in New York Supreme Court in Westchester County, alleging that we owe the Plaintiff rent in consideration for access to his property to continue on-going remediation of contamination allegedly due to spills at the property, formerly supplied by us with gasoline. The case is in its early stages. In February 2003, a case was filed against us, Marketing and others by the owners of an adjacent property in the Pennsylvania Court of Common Pleas in Lancaster County, asserting claims relating to a discharge of gasoline allegedly emanating from our property. The complaint states that the plaintiffs first became aware of a problem upon detecting gasoline vapors in their basement in 1996, yet did not file suit until February 28, 2003. The case is in its early stages. In April 2003, we were named in a class action, filed in New York Supreme Court in Dutchess County, NY, arising out of alleged contamination of ground water with methyl tertiary butyl ether (a fuel derived from methanol, which we refer to as MTBE). We served an answer that denied liability and asserted numerous affirmative defenses. The plaintiffs have not responded to our demands and there has not been any activity in the case for a considerable period. In April 2003, we received a Request for Reimbursement from the State of Maine Department of Environmental Protection seeking reimbursement of costs claimed to have been incurred by them in connection with the remediation of contamination claimed to have originated at a former retail motor fuel property supplied by us with gasoline in 1988. We discovered evidence that indicates that the contamination may not have originated from that -14- property and submitted a written response to the Request for Reimbursement, denying liability for the claim. In September 2004, we received a response from the Office of the Attorney General for the State of Maine rejecting our evidence. The matter was settled in January 2005 in exchange for a payment of $600,000 which was accrued for as of December 31, 2004 and is expected to be made in the first quarter of 2005. In July 2003, we were notified by the State of Rhode Island Department of Environmental Management of their Notice to Enforce compliance with a Letter of Responsibility issued by the Department in connection with a suspected petroleum release at a property that abuts property owned by us and leased to Marketing. We responded to the State's Notice in August 2003. Marketing is obligated to defend the matter and indemnify us pursuant to the Master Lease. In July 2003, we received a Request for Reimbursement from the State of Maine Department of Environmental Protection seeking reimbursement of costs claimed to have been incurred by them in connection with the remediation of contamination found at a retail motor fuel property, purportedly linked to numerous gasoline spills in the late 1980's. We have discovered substantial evidence that links the contamination to gasoline releases of another company who has operated at the property since we discontinued our operations at the property and are in the process of finalizing our response to the Request for Reimbursement that will deny liability for the claim. In September 2003, we were notified by the State of New Jersey Department of Environmental Protection (the "DEP") that we are one of approximately sixty potentially responsible parties for natural resources damages resulting from discharges of hazardous substances into the Lower Passaic River. The definitive list of potentially responsible parties and their actual responsibility for the alleged damages, the aggregate cost to remediate the Lower Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially responsible parties have not been determined. In September 2004, we received a General Notice Letter from the US EPA (the "EPA Notice"), advising us that we may be a potentially responsible party for costs of remediating certain conditions resulting from discharges of hazardous substances into the Lower Passaic River. ChevronTexaco received the same EPA Notice regarding those same conditions. We believe that ChevronTexaco is obligated to indemnify us, pursuant to an indemnification agreement, regarding the conditions at the property identified by the DEP and the EPA and that accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time. In September 2003, we were notified by the State of New Jersey Department of Environmental Protection that we may be responsible for damages to natural resources ("NRD") by reason of a petroleum release, more than fifteen years ago, at a retail motor fuel property formerly operated by us in Egg Harbor, NJ. We have been actively remediating the resulting contamination at the property in accordance with a plan approved by the State. In addition, we have responded to the notice and met with the Department to determine whether, and to what extent, we may be responsible for NRD regarding this property and our other properties formerly supplied by us with gasoline in New Jersey. The State's right to pursue NRD, the viability of defenses to NRD, generally, and the State's method for calculating NRD are subject to ongoing litigation in the State. We are not a party to such litigation. However, the outcome of that litigation likely will affect the State's claim against us for NRD with regard to this property and, generally, our other properties in New Jersey. In October 2003, an action was commenced in New York Supreme Court in Nassau County seeking money damages against us arising out of a petroleum release that occurred prior to 1985, at a property in Valley Stream, NY, which was later supplied by us with gasoline. We have denied responsibility and are defending this matter. The case is in its initial stages. From October 2003 through February 2004 we were made a party to thirty-six cases, and one additional case in the fourth quarter of 2004, in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Vermont, Virginia, and West Virginia, brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately fifty petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. The accuracy of the allegations as they relate to us, our defenses to such claims, the aggregate amount of damages, the definitive list of defendants and the method of allocating such amounts among the defendants have not been determined. Accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time. -15- In November 2003, we received a demand from the State of New York for reimbursement of cleanup and removal costs claimed to have been incurred by the New York Environmental Protection and Spill Compensation Fund regarding contamination it alleges emanated from one of our retail motor fuel properties in 1997. We have responded to the State's demand and have denied responsibility for reimbursement of such costs, as being attributable to contamination that emanated from other properties owned and operated by others. In September 2004, the State of New York commenced an action against us and others in New York Supreme Court in Albany County seeking recovery of such costs. The case is in its initial stages. In November 2003, an action was commenced in New York Supreme Court in Westchester County seeking money damages against us arising out of a petroleum release in 1996 at a former retail motor fuel property of ours. Our defense is being conducted by the company that sold us the property, and they have agreed to fully indemnify us pursuant to the purchase agreement, which calls for indemnification for environmental matters of this kind. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the three months ended December 31, 2004. -16- PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Information in response to this item is incorporated herein by reference to information under the headings "Capital Stock" and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Subsequent Events" in our Annual Report to Shareholders. Item 6. Selected Financial Data Information in response to this item is incorporated herein by reference to information under the heading "Selected Financial Data" in our Annual Report to Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information in response to this item is incorporated herein by reference to information under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report to Shareholders. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We do not use derivative financial or commodity instruments for trading, speculative or any other purpose. We had no outstanding derivative instruments as of December 31, 2004 or December 31, 2003 or at any time during the years then ended. We do not have any foreign operations, and are therefore not exposed to foreign currency exchange rate risks. We are exposed to interest rate risks, primarily as a result of our line of credit with JPMorgan Chase Bank. We manage our exposure to this risk by minimizing, to the extent feasible, our overall borrowing and monitoring available financing alternatives. Our interest rate risk has changed due to increased average outstanding borrowings under the line as compared to December 31, 2003, but we do not foresee any significant changes in our exposure or in how we manage this exposure in the near future. We use borrowings under the line of credit, which expires in June 2005, to finance acquisitions and for general corporate purposes. We had no borrowings against the line of credit prior to November 2004. Our line of credit bears interest at the prime rate or, at our option, LIBOR plus 1.25%. At December 31, 2004 we had total borrowings of $24.0 million under our line of credit, and had not entered into any instruments to hedge our resulting exposure to interest-rate risk. Based on our average outstanding borrowings under the line of credit of $11.5 million, and assuming $30.0 million of additional borrowings required to finance a pending acquisition on March 31, 2005 (see "Subsequent Events" in "Management's Discussion and Analysis of Financial Condition and Results of Operations"), if market interest rates for 2005 increase by an average of 0.5% more than the average interest rate for the last two months of 2004, the additional annualized interest expense would decrease 2005 net income and cash flows by $0.8 million attributable to increased borrowings and an additional $0.2 million attributable to higher interest rates. These amounts were determined by calculating the effect of a hypothetical interest rate on our line of credit borrowings and assumes that the average outstanding borrowings during the three month period from November 2004 through January 2005 is indicative of our future average borrowings for 2005 before considering additional borrowings required for acquisitions. The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings. Management believes that the fair value of the debt equals its carrying value at December 31, 2004 and 2003. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our line of credit. In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash investments with high-credit-quality institutions. Temporary cash investments are held in an institutional money market fund and short-term federal agency discount notes. -17- Item 8. Financial Statements and Supplementary Data Information in response to this item is incorporated herein by reference to the financial statements and supplementary financial information in our Annual Report to Shareholders. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports 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 the Company's management, including its 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 SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective 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 conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004. PricewaterhouseCoopers LLP, our independent registered public accounting firm which audited the financial statements included in this Annual Report on Form 10-K, has issued an attestation report on management's assessment of our internal control over financial reporting which is included herein. There have been no changes in the Company's internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Item 9B. Other Information None. -18- PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 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 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 AGE POSITION OFFICER SINCE ---- --- -------- ------------- Leo Liebowitz 77 Chairman and Chief Executive Officer 1971 Andrew M. Smith 52 President and Secretary 2003 Kevin C. Shea 45 Executive Vice President 2001 Thomas J. Stirnweis 46 Vice President, Treasurer and Chief Financial Officer 2001
Mr. Liebowitz has been Chief Executive Officer of Getty since 1985. He was the President of Getty from May 1971 to May 2004. Mr. Liebowitz served as Chairman, Chief Executive Officer and a director of Getty Petroleum Marketing Inc. from October 1996 until December 2000. He is also a director of the Regional Banking Advisory Board of J.P. Morgan Chase & Co. Mr. Smith has been with Getty since 2003 and has served as President and Secretary since May 2004 and was Vice President, General Counsel and Corporate Secretary since December 2003. Prior thereto, he was General Counsel and Corporate Secretary. Prior to joining Getty, he was in private law practice from 1999 to 2003. From 1997 to 1999 he served as the Vice President of Real Estate, General Counsel and Secretary of Discovery Zone, Inc., an international site-based children's entertainment company that commenced a Chapter 11 proceeding in April 1999. From 1995 to 1996, Mr. Smith was Vice President of Operations of Influence, Inc., a medical device developer and manufacturer. From 1986 to 1994, Mr. Smith was a partner in the real estate practice of Weil, Gotshal & Manges LLP, an international law firm. Mr. Shea has been with Getty since 1984 and has served as Executive Vice President since May 2004 and was Vice President since January 2001. Prior thereto, he was Director of National Real Estate Development. Mr. Stirnweis joined Getty in January 2001 as Corporate Controller and Treasurer and has served as Vice President, Treasurer and Chief Financial Officer since May 2003. Prior to joining Getty, he was Manager of Financial Reporting and Analysis of Getty Petroleum Marketing Inc., where he provided services to Getty under a services agreement since the spin-off of Marketing in March 1997. Prior thereto, he held the same position at Getty since November 1988. Management is not aware of any family relationships between any of its 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 headings "Directors' Meetings, Committees and Executive Officers", "Compensation" through "Report of the Compensation Committee" and "Stock Performance Graph" 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 "Equity Compensation Plan Information" in the Proxy Statement. -19- Item 13. Certain Relationships and Related Transactions None. 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. -20- PART IV Item 15. Exhibits and Financial Statement Schedules (a) 1. Financial Statements The financial statements listed in the Index to Financial Statements and Financial Statement Schedules on page 22 are incorporated herein by reference to the 2004 Annual Report to Shareholders as part of this Annual Report on Form 10-K. 2. Financial Statement Schedules The financial statement schedules listed in the Index to Financial Statements and Financial Statement Schedules on page 22 are filed as part of this Annual Report on Form 10-K. 3. Exhibits The exhibits listed in the Exhibit Index are filed (or furnished, as applicable) as part of this Annual Report on Form 10-K. -21- GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Items 15(a) 1 & 2
REFERENCE --------------------------- 2004 ANNUAL 2004 ANNUAL REPORT ON REPORT TO FORM 10-K SHAREHOLDERS (PAGES) (PAGES) ----------- ------------ Data incorporated by reference from attached 2004 Annual Report to Shareholders of Getty Realty Corp. Report of Independent Registered Public Accounting Firm 35 Consolidated Statements of Operations for the years ended December 31, 2004, 21 2003 and 2002 Consolidated Balance Sheets as of December 31, 2004 and 2003 22 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 23 2003 and 2002 Notes to Consolidated Financial Statements 24- 34 Report of Independent Registered Public Accounting Firm-Financial Statement Schedules 23 Schedule II - Valuation and Qualifying Accounts and Reserves for the years 24 ended December 31, 2004, 2003 and 2002 Schedule III - Real Estate and Accumulated Depreciation and Amortization 25-42
All other schedules are omitted for the reason that they are either not required, not applicable, not material or the information is included in the consolidated financial statements or notes thereto. The financial statements listed in the above index which are included in the 2004 Annual Report to Shareholders are hereby incorporated by reference. -22- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors of Getty Realty Corp.: Our audits of the consolidated financial statements, of management's assessment of the effectiveness of internal control over financial reporting and of the effectiveness of internal control over financial reporting referred to in our report dated March 11, 2005 appearing in the 2004 Annual Report to Shareholders of Getty Realty Corp. (which report, consolidated financial statements and assessment are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP New York, New York March 11, 2005 -23- GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE II -- VALUATION and QUALIFYING ACCOUNTS and RESERVES for the years ended December 31, 2004, 2003 and 2002 (in thousands)
BALANCE AT BALANCE BEGINNING AT END OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD ---------- --------- ---------- --------- December 31, 2004: Allowance for mortgages and accounts receivable $ 355 $ -- $ 350 $ 5 Allowance for recoveries from state underground storage tank funds $ 580 $ 330 $ -- $ 910 December 31, 2003: Allowance for mortgages and accounts receivable $ 278 $ 116 $ 39 $ 355 Allowance for recoveries from state underground storage tank funds $ 500 $ 80 $ -- $ 580 December 31, 2002: Allowance for mortgages and accounts receivable $ 115 $ 227 $ 64 $ 278 Allowance for recoveries from state underground storage tank funds $ -- $ 500 $ -- $ 500
-24- GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION for the years ended December 31, 2004, 2003 and 2002 (in thousands) The summarized changes in real estate assets and accumulated depreciation are as follows:
2004 2003 2002 --------- --------- --------- Investment in real estate: Balance at beginning of period $ 318,222 $ 308,054 $ 311,352 Acquisitions 29,812 14,186 2,735 Capital expenditures 756 80 86 Sales and condemnations (1,131) (2,960) (3,287) Lease terminations (1,069) (1,138) (2,832) --------- --------- --------- Balance at end of period $ 346,590 $ 318,222 $ 308,054 ========= ========= ========= Accumulated depreciation and amortization: Balance at beginning of period $ 100,488 $ 93,986 $ 89,242 Depreciation and amortization expense 7,490 8,411 9,016 Sales and condemnations (446) (771) (1,440) Lease terminations (1,069) (1,138) (2,832) --------- --------- --------- Balance at end of period $ 106,463 $ 100,488 $ 93,986 ========= ========= =========
Three of our owned retail motor fuel and convenience store properties, indicated by an asterisk(*) in the table below, with a net book value of approximately $1.9 million as of December 31, 2004 are secured by mortgages with an aggregate principal balance of approximately $0.5 million at a weighted average interest rate of 5.7% per annum. No other material mortgages, liens or encumbrances exist on our properties.
Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- BROOKLYN, NY $282,104 $301,052 $176,292 $406,864 $583,156 $320,907 1967 JAMAICA, NY 12,000 295,750 12,000 295,750 307,750 140,622 1970 REGO PARK, NY 33,745 281,380 23,000 292,125 315,125 183,473 1974 BROOKLYN, NY 74,808 125,120 30,694 169,234 199,928 160,759 1967 BRONX, NY 60,000 353,955 60,800 353,155 413,955 220,197 1965 CORONA, NY 114,247 300,172 112,800 301,619 414,419 155,542 1965
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- BRONX, NY 124,600 251,284 124,600 251,284 375,884 204,610 1965 OCEANSIDE, NY 40,378 169,929 40,000 170,307 210,307 118,065 1970 BLUEPOINT, NY 96,163 118,524 96,068 118,619 214,687 103,317 1972 BRENTWOOD, NY 253,058 84,485 125,000 212,543 337,543 173,913 1968 BAY SHORE, NY 47,685 289,972 337,657 337,657 333,187 1969 EAST ISLIP, NY 88,953 53,222 87,337 54,838 142,175 52,990 1972 ALBERTSON, NY 41,023 114,970 40,000 115,993 155,993 112,755 1969 YONKERS, NY 149,005 149,005 149,005 146,504 1970 OSSINING, NY 70,557 83,939 43,357 111,139 154,496 102,137 1977 PELHAM MANOR, NY 127,304 85,087 75,800 136,591 212,391 109,766 1972 VALLEY COTTAGE, NY 63,145 90,284 63,945 89,484 153,429 82,230 1965 BRONX, NY 293,507 293,507 293,507 149,603 1972 YONKERS, NY 132,045 132,045 132,045 98,060 1971 BROOKLYN, NY 365,767 365,767 365,767 254,454 1970 MAHOPAC, NY 35,000 97,700 35,000 97,700 132,700 74,757 1968 POUGHKEEPSIE, NY 16,206 121,597 9,400 128,403 137,803 128,403 1971 POUGHKEEPSIE, NY 32,885 168,354 35,904 165,335 201,239 148,624 1971 CARMEL, NY 20,419 158,943 20,750 158,612 179,362 149,603 1970 KINGSTON, NY 68,341 115,961 44,379 139,923 184,302 133,264 1971 WAPPINGERS FALLS, NY 114,185 159,162 111,785 161,562 273,347 141,106 1971 STONY POINT, NY 59,329 203,448 55,800 206,977 262,777 188,906 1971 KINGSTON, NY 29,010 159,986 12,721 176,275 188,996 158,630 1972 POUGHKEEPSIE, NY 63,030 158,415 26,226 195,219 221,445 192,983 1972 LAGRANGEVILLE, NY 129,133 101,140 64,626 165,647 230,273 160,371 1972 BRONX, NY 128,419 221,197 100,681 248,935 349,616 152,767 1972 RAHWAY, NJ 102,640 65,483 61,566 106,557 168,123 96,364 1972 STATEN ISLAND, NY 40,598 256,262 26,050 270,810 296,860 147,396 1973 BRONX, NY 141,322 141,909 86,800 196,431 283,231 163,126 1972 NEW YORK, NY 125,923 168,772 78,125 216,570 294,695 200,341 1972 JAMAICA, NY 95,713 59,943 68,400 87,256 155,656 76,940 1972 MIDDLE VILLAGE, NY 130,684 73,741 89,960 114,465 204,425 98,273 1972 LONG ISLAND CITY, NY 90,895 91,386 60,030 122,251 182,281 101,955 1972 BROOKLYN, NY 100,000 254,503 66,890 287,613 354,503 193,047 1972 ROCKAWAY BEACH, NY 110,676 51,519 79,200 82,995 162,195 78,651 1972 BROOKLYN, NY 135,693 91,946 100,035 127,604 227,639 92,017 1972 BROOKLYN, NY 147,795 228,379 103,815 272,359 376,174 194,874 1972 STATEN ISLAND, NY 101,033 371,591 75,650 396,974 472,624 196,696 1972 STATEN ISLAND, NY 25,000 351,829 376,829 376,829 199,246 1972 BRONX, NY 543,833 693,438 473,695 763,576 1,237,271 717,996 1970 BRONX, NY 98,234 54,956 53,234 99,956 153,190 95,595 1975 BRONX, NY 90,176 183,197 40,176 233,197 273,373 172,420 1976 BRONX, NY 82,141 106,173 32,941 155,373 188,314 132,882 1972 BRONX, NY 92,207 120,758 47,207 165,758 212,965 120,805 1972 BRONX, NY 105,176 70,736 40,176 135,736 175,912 104,005 1968 BRONX, NY 45,044 196,956 10,044 231,956 242,000 173,142 1976 BRONX, NY 128,049 315,917 83,849 360,117 443,966 191,492 1972 BRONX, NY 130,396 184,222 90,396 224,222 314,618 173,303 1972 BRONX, NY 118,025 290,298 73,025 335,298 408,323 223,258 1972 BRONX, NY 70,132 322,265 30,132 362,265 392,397 208,808 1972 BRONX, NY 78,168 450,267 65,680 462,755 528,435 258,999 1972
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- BRONX, NY 69,150 300,279 34,150 335,279 369,429 188,744 1972 YONKERS, NY 291,348 170,478 216,348 245,478 461,826 193,734 1972 SLEEPY HOLLOW, NY 280,825 102,486 129,744 253,567 383,311 236,103 1969 OLD BRIDGE, NJ 85,617 109,980 56,190 139,407 195,597 131,375 1972 BREWSTER, NY 117,603 78,076 72,403 123,276 195,679 107,104 1972 FLUSHING, NY 118,309 280,435 78,309 320,435 398,744 169,218 1973 VALLEY COTTAGE, NY 68,997 87,862 69,797 87,062 156,859 74,603 1972 BRONX, NY 278,517 278,517 278,517 161,045 1976 STATEN ISLAND, NY 173,667 133,198 113,369 193,496 306,865 156,550 1976 BRIARCLIFF MANOR, NY(*) 652,213 103,753 501,687 254,279 755,966 180,430 1976 BRONX, NY 62,554 84,672 44,290 102,936 147,226 88,928 1976 BRONX, NY 84,268 81,701 56,285 109,684 165,969 87,937 1976 BRONX, NY 95,328 102,639 73,750 124,217 197,967 104,266 1976 BRONX, NY 88,865 193,679 63,315 219,229 282,544 206,793 1976 BROOKLYN, NY 89,338 44,937 60,725 73,550 134,275 64,645 1976 NEW YORK, NY 106,363 103,035 79,275 130,123 209,398 115,562 1976 NEW YORK, NY 85,037 76,357 58,286 103,108 161,394 90,064 1976 NEW YORK, NY 146,159 407,286 43,461 509,984 553,445 298,166 1976 GLENDALE, NY 124,438 287,907 86,160 326,185 412,345 216,131 1976 OZONE PARK, NY 57,289 331,799 44,715 344,373 389,088 229,373 1976 LONG ISLAND CITY, NY 106,592 151,819 73,260 185,151 258,411 126,202 1976 RIDGE, NY 276,942 73,821 200,000 150,763 350,763 95,227 1977 SMITHTOWN, NY 88,569 50,182 51,098 87,653 138,751 82,419 1977 LAKE RONKONKOMA, NY 176,622 176,622 176,622 152,998 1977 KEYPORT, NJ 62,702 92,856 38,452 117,106 155,558 114,095 1977 NEW CITY, NY 180,979 100,597 109,025 172,551 281,576 165,840 1978 W. HAVERSTRAW, NY 194,181 38,141 140,000 92,322 232,322 69,596 1978 PIERMONT, NY 151,125 31,470 90,675 91,920 182,595 91,920 1978 STATEN ISLAND, NY 301,713 301,713 301,713 141,501 1978 BROOKLYN, NY 61,699 79,175 36,527 104,347 140,874 74,635 1978 BROOKLYN, NY 74,928 250,382 44,957 280,353 325,310 152,260 1978 WEST ISLIP, NY 87,103 84,057 44,957 126,203 171,160 121,200 1978 RONKONKOMA, NY 76,478 208,121 46,057 238,542 284,599 225,100 1978 STONY BROOK, NY 175,921 44,529 105,000 115,450 220,450 108,677 1978 MILLER PLACE, NY 110,000 103,160 66,000 147,160 213,160 133,125 1978 LAKE RONKONKOMA, NY 87,097 156,576 51,000 192,673 243,673 179,464 1978 E. PATCHOGUE, NY 57,049 210,390 34,213 233,226 267,439 224,515 1978 AMITYVILLE, NY 70,246 139,953 42,148 168,051 210,199 168,051 1978 BETHPAGE, NY 210,990 38,356 126,000 123,346 249,346 120,315 1978 HUNTINGTON STATION, NY 140,735 52,045 84,000 108,780 192,780 103,514 1978 BALDWIN, NY 101,952 106,328 61,552 146,728 208,280 96,184 1978 ELMONT, NY 388,848 114,933 231,000 272,781 503,781 217,743 1978 EDISON, NJ 60,000 73,798 36,750 97,048 133,798 95,528 1978 NORTH BABYLON, NY 91,888 117,066 59,059 149,895 208,954 136,415 1978 CENTRAL ISLIP, NY 103,183 151,449 61,435 193,197 254,632 192,659 1978 WHITE PLAINS, NY 120,393 67,315 187,708 187,708 166,458 1979 WOODSIDE, NY 152,740 152,740 152,740 85,472 1978 OZONE PARK, NY 217,234 217,234 217,234 111,278 1978 BRONX, NY 145,753 145,753 145,753 119,223 1979 STATEN ISLAND, NY 222,525 222,525 222,525 106,511 1981
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- BROOKLYN, NY 116,328 232,254 75,000 273,582 348,582 138,081 1980 LONG ISLAND CITY, NY 191,420 390,783 116,554 465,649 582,203 239,513 1981 BAY SHORE, NY 156,382 123,032 85,854 193,560 279,414 175,949 1981 N. WHITE PLAINS, NY 154,131 154,131 154,131 108,402 1983 BRIDGEPORT, CT 58,956 106,709 24,000 141,665 165,665 126,545 1982 BRISTOL, CT 108,808 81,684 44,000 146,492 190,492 135,503 1982 CROMWELL, CT 70,017 183,119 24,000 229,136 253,136 228,347 1982 EAST HARTFORD, CT 208,004 60,493 84,000 184,497 268,497 182,251 1982 FRANKLIN, CT 50,904 168,470 20,232 199,142 219,374 195,715 1982 MANCHESTER, CT 65,590 156,628 64,750 157,468 222,218 155,595 1982 MERIDEN, CT 207,873 39,829 84,000 163,702 247,702 160,272 1982 NEW MILFORD, CT 113,947 121,174 235,121 235,121 225,967 1982 NORTH HAVEN, CT 89,792 57,972 147,764 147,764 141,905 1982 NORWALK, CT 257,308 128,940 104,000 282,248 386,248 277,177 1982 NORWICH, CT 107,632 50,507 44,000 114,139 158,139 113,149 1982 WAUREGAN, CT 84,605 85,768 34,000 136,373 170,373 135,299 1982 SOUTHINGTON, CT 115,750 158,561 70,750 203,561 274,311 201,848 1982 SOUTH WINDSOR, CT 82,308 75,784 34,000 124,092 158,092 119,191 1982 STAFFORD SPRINGS, CT 85,456 63,485 34,000 114,941 148,941 111,407 1982 TERRYVILLE, CT 182,308 98,911 74,000 207,219 281,219 206,795 1982 TOLLAND, CT 107,902 100,178 44,000 164,080 208,080 154,452 1982 WATERBURY, CT 107,308 57,267 44,000 120,575 164,575 118,440 1982 WATERFORD, CT 76,981 133,059 210,040 210,040 188,108 1982 WEST HAVEN, CT 185,138 48,619 74,000 159,757 233,757 155,578 1982 WOODBRIDGE, CT 87,612 196,264 283,876 283,876 265,863 1982 AGAWAM, MA 65,000 120,665 185,665 185,665 178,025 1982 GRANBY, MA 58,804 232,477 24,000 267,281 291,281 152,633 1982 GREAT BARRINGTON, MA 30,000 124,074 6,000 148,074 154,074 128,254 1982 HADLEY, MA 123,196 68,748 40,000 151,944 191,944 142,602 1982 NORTH ADAMS, MA 97,301 54,567 49,777 102,091 151,868 87,147 1982 NORTH ADAMS, MA 97,126 57,922 40,000 115,048 155,048 109,046 1982 PITTSFIELD, MA 97,153 87,874 40,000 145,027 185,027 141,519 1982 PITTSFIELD, MA 123,167 118,273 50,000 191,440 241,440 184,008 1982 SOUTH HADLEY, MA 232,445 54,351 90,000 196,796 286,796 185,914 1982 SPRINGFIELD, MA 139,373 239,713 50,000 329,086 379,086 193,729 1983 SPRINGFIELD, MA 239,087 239,087 239,087 140,918 1984 SPRINGFIELD, MA 121,667 12,240 50,000 83,907 133,907 81,747 1982 SPRINGFIELD, MA 122,787 105,706 50,000 178,493 228,493 173,595 1982 WESTFIELD, MA 123,323 96,093 50,000 169,416 219,416 162,867 1982 OSSINING, NY 140,992 104,761 97,527 148,226 245,753 133,869 1982 FREEHOLD, NJ 494,275 68,507 402,834 159,948 562,782 71,410 1978 HOWELL, NJ 9,750 174,857 184,607 184,607 183,147 1978 LAKEWOOD, NJ 135,000 77,265 75,000 137,265 212,265 122,641 1978 NORTH PLAINFIELD, NJ 227,190 239,709 175,000 291,899 466,899 268,074 1978 SOUTH AMBOY, NJ 299,678 94,088 178,950 214,816 393,766 211,156 1978 ANDOVER, NJ 81,368 83,049 37,997 126,420 164,417 121,396 1982 GLEN HEAD, NY 234,395 192,295 102,645 324,045 426,690 322,613 1982 NEW ROCHELLE, NY 188,932 34,649 103,932 119,649 223,581 116,560 1982 ELMONT, NY 108,348 85,793 64,290 129,851 194,141 79,233 1982 TORRINGTON, CT 96,842 46,156 65,000 77,998 142,998 60,203 1982
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- NORTH BRANFORD, CT 130,057 23,436 83,088 70,405 153,493 69,168 1982 MERIDEN, CT 126,188 106,805 72,344 160,649 232,993 136,750 1982 PLAINVILLE, CT 80,000 290,433 370,433 370,433 264,079 1983 FRANKLIN SQUARE, NY 152,572 121,756 137,315 137,013 274,328 75,404 1978 SEAFORD, NY 32,000 157,665 189,665 189,665 136,388 1978 BROOKLYN, NY 276,831 376,706 168,423 485,114 653,537 274,193 1978 NEW HAVEN, CT 1,469,710 56,420 955,320 570,810 1,526,130 199,778 1985 BRISTOL, CT 359,906 359,906 359,906 5,999 2004 BRISTOL, CT 1,594,129 1,036,184 557,945 1,594,129 3,720 2004 BRISTOL, CT 297,389 193,303 104,086 297,389 694 2004 BRISTOL, CT 365,028 237,268 127,760 365,028 852 2004 COBALT, CT 395,683 395,683 395,683 6,595 2004 DURHAM, CT 993,909 993,909 993,909 16,565 2004 ELLINGTON, CT 1,294,889 841,678 453,211 1,294,889 3,021 2004 ENFIELD, CT 259,881 259,881 259,881 5,096 2004 FARMINGTON, CT 466,271 303,076 163,195 466,271 1,088 2004 HARTFORD, CT 664,966 432,228 232,738 664,966 1,552 2004 HARTFORD, CT 570,898 371,084 199,814 570,898 1,332 2004 MERIDEN, CT 1,531,772 989,165 542,607 1,531,772 3,717 2004 MIDDLETOWN, CT 1,038,592 675,085 363,507 1,038,592 2,423 2004 NEW BRITAIN, CT 390,497 253,823 136,674 390,497 911 2004 NEWINGTON, CT 953,512 619,783 333,729 953,512 2,225 2004 NORTH HAVEN, CT 405,389 251,985 153,404 405,389 1,299 2004 PLAINVILLE, CT 544,503 353,927 190,576 544,503 1,271 2004 PLYMOUTH, CT 930,885 605,075 325,810 930,885 2,172 2004 SOUTH WINDHAM, CT 644,141 418,692 225,449 644,141 1,503 2004 SOUTH WINDSOR, CT 544,857 336,737 208,120 544,857 2,202 2004 SUFFIELD, CT 237,401 237,401 237,401 5,652 2004 VERNON, CT 1,434,223 1,434,223 1,434,223 23,904 2004 WALLINGFORD, CT 550,553 334,901 215,652 550,553 1,791 2004 WALLINGFORD, CT 310,314 310,314 310,314 5,172 2004 WATERBURY, CT 804,040 516,387 287,653 804,040 2,100 2004 WATERBURY, CT 515,172 334,862 180,310 515,172 1,202 2004 WATERBURY, CT 468,469 304,505 163,964 468,469 1,093 2004 WATERTOWN, CT 924,586 566,986 357,600 924,586 3,778 2004 WETHERSFIELD, CT 446,610 446,610 446,610 7,444 2004 WEST HAVEN, CT 1,214,831 789,640 425,191 1,214,831 2,835 2004 WESTBROOK, CT 344,881 344,881 344,881 5,748 2004 WILLIMANTIC, CT 716,782 465,908 250,874 716,782 1,673 2004 WINDSOR, CT 1,042,081 669,804 372,277 1,042,081 6,205 2004 WINDSOR LOCKS, CT 1,433,330 1,433,330 1,433,330 23,889 2004 WINDSOR LOCKS, CT 360,664 360,664 360,664 2,405 2004 BLOOMFIELD, CT 141,452 54,786 90,000 106,238 196,238 82,820 1986 SIMSBURY, CT 317,704 144,637 206,700 255,641 462,341 137,296 1985 RIDGEFIELD, CT 535,140 33,590 347,900 220,830 568,730 79,104 1985 BRIDGEPORT, CT 349,500 56,209 227,600 178,109 405,709 82,372 1985 NORWALK, CT 510,760 209,820 332,200 388,380 720,580 160,969 1985 BRIDGEPORT, CT 313,400 20,303 204,100 129,603 333,703 46,935 1985 STAMFORD, CT 506,860 15,635 329,700 192,795 522,495 61,537 1985 BRIDGEPORT, CT 245,100 20,652 159,600 106,152 265,752 41,189 1985
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- BRIDGEPORT, CT 313,400 24,314 204,100 133,614 337,714 48,739 1985 BRIDGEPORT, CT 377,600 83,549 245,900 215,249 461,149 118,479 1985 BRIDGEPORT, CT 526,775 63,505 342,700 247,580 590,280 108,340 1985 BRIDGEPORT, CT 338,415 27,786 219,800 146,401 366,201 55,666 1985 NEW HAVEN, CT 538,400 176,230 350,600 364,030 714,630 226,712 1985 DARIEN, CT 667,180 26,061 434,300 258,941 693,241 86,376 1985 WESTPORT, CT 603,260 23,070 392,500 233,830 626,330 74,542 1985 STAMFORD, CT 603,260 112,305 392,500 323,065 715,565 162,786 1985 STAMFORD, CT 506,580 40,429 329,700 217,309 547,009 82,581 1985 GUILFORD, CT 147,071 28,486 30,000 145,557 175,557 72,676 1993 STRATFORD, CT 301,300 70,735 196,200 175,835 372,035 86,075 1985 STRATFORD, CT 285,200 14,728 185,700 114,228 299,928 39,528 1985 CHESHIRE, CT 490,200 19,050 319,200 190,050 509,250 64,916 1985 MILFORD, CT 293,512 43,846 191,000 146,358 337,358 66,536 1985 FAIRFIELD, CT 430,000 13,631 280,000 163,631 443,631 51,171 1985 MANCHESTER, CT 110,441 27,535 50,441 87,535 137,976 79,312 1987 HARTFORD, CT 233,000 32,563 151,700 113,863 265,563 49,215 1985 NEW HAVEN, CT 217,000 23,889 141,300 99,589 240,889 41,944 1985 RIDGEFIELD, CT 401,630 47,610 166,861 282,379 449,240 245,426 1985 BRIDGEPORT, CT 346,442 16,990 230,000 133,432 363,432 106,256 1985 WILTON, CT 518,881 71,425 337,500 252,806 590,306 108,509 1985 MIDDLETOWN, CT 133,022 86,915 131,312 88,625 219,937 87,236 1987 NEW BRITAIN, CT 130,560 130,560 130,560 122,928 1989 EAST HARTFORD, CT 555,826 13,797 301,322 268,301 569,623 25,941 1991 WATERTOWN, CT 351,771 58,812 204,027 206,556 410,583 78,334 1992 AVON, CT 730,886 402,949 327,937 730,886 37,164 2002 WILMINGTON, DE 309,300 67,834 201,400 175,734 377,134 78,385 1985 ST. GEORGES, DE 498,200 222,596 324,725 396,071 720,796 224,101 1985 WILMINGTON, DE 313,400 103,748 204,100 213,048 417,148 106,625 1985 WILMINGTON, DE 242,800 32,615 158,100 117,315 275,415 56,050 1985 WILMINGTON, DE 381,700 156,704 248,600 289,804 538,404 124,973 1985 CLAYMONT, DE 237,200 30,878 151,700 116,378 268,078 54,490 1985 NEWARK, DE 578,600 166,781 376,800 368,581 745,381 173,951 1985 NEWARK, DE 405,800 35,844 264,300 177,344 441,644 70,517 1985 WILMINGTON, DE 369,600 38,077 240,700 166,977 407,677 70,805 1985 WILMINGTON, DE 446,000 33,323 290,400 188,923 479,323 72,494 1985 WILMINGTON, DE 337,500 21,971 219,800 139,671 359,471 52,118 1985 DOVER, DE 263,508 263,508 263,508 177,241 1995 SOUTH PORTLAND, ME 176,700 6,938 115,100 68,538 183,638 21,903 1985 LEWISTON, ME 341,900 89,500 222,400 209,000 431,400 118,866 1985 PORTLAND, ME 325,400 42,652 211,900 156,152 368,052 55,364 1985 BIDDEFORD, ME 723,100 8,009 470,900 260,209 731,109 76,973 1985 AUBURN, ME 93,078 59,561 55,431 97,208 152,639 85,519 1986 PORTLAND, ME 118,703 29,640 80,598 67,745 148,343 65,780 1986 SACO, ME 204,006 37,173 150,694 90,485 241,179 88,807 1986 SANFORD, ME 265,523 9,178 201,316 73,385 274,701 72,832 1986 WESTBROOK, ME 93,345 193,654 50,431 236,568 286,999 152,553 1986 WISCASSET, ME 156,587 33,455 90,837 99,205 190,042 96,100 1986 AUBURN, ME 105,908 77,928 105,908 77,928 183,836 76,380 1986 SOUTH PORTLAND, ME 180,689 84,980 110,689 154,980 265,669 153,285 1986
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- LEWISTON, ME 180,338 62,629 101,338 141,629 242,967 137,584 1986 N. WINDHAM, ME 161,365 53,923 86,365 128,923 215,288 127,873 1986 BALTIMORE, MD 474,100 176,067 308,700 341,467 650,167 132,063 1985 FULLERTON HTS, MD 124,500 19,575 81,100 62,975 144,075 29,879 1985 RANDALLSTOWN, MD 590,600 33,594 384,600 239,594 624,194 89,533 1985 EMMITSBURG, MD 146,949 73,613 101,949 118,613 220,562 117,183 1986 MILFORD, MA 214,331 214,331 214,331 115,338 1985 AGAWAM, MA 209,555 63,621 136,000 137,176 273,176 78,291 1985 S. WEYMOUTH, MA 562,500 44,893 366,300 241,093 607,393 89,734 1985 WESTFIELD, MA 289,580 38,615 188,400 139,795 328,195 64,626 1985 WEST ROXBURY, MA 490,200 23,134 319,200 194,134 513,334 62,218 1985 MAYNARD, MA 735,200 12,714 478,800 269,114 747,914 79,944 1985 GARDNER, MA 1,008,400 73,740 656,700 425,440 1,082,140 147,057 1985 STOUGHTON, MA 775,300 34,554 504,900 304,954 809,854 101,535 1985 ARLINGTON, MA 518,300 27,906 337,500 208,706 546,206 74,180 1985 METHUEN, MA 379,664 64,941 245,900 198,705 444,605 95,102 1985 BELMONT, MA 301,300 27,938 196,200 133,038 329,238 53,212 1985 RANDOLPH, MA 743,200 25,069 484,000 284,269 768,269 91,853 1985 ROCKLAND, MA 534,300 23,616 347,900 210,016 557,916 72,674 1985 WATERTOWN, MA 357,500 296,588 321,030 333,058 654,088 145,492 1985 READING, MA 261,100 12,829 170,000 103,929 273,929 31,878 1985 WEYMOUTH, MA 643,297 36,516 418,600 261,213 679,813 89,809 1985 DEDHAM, MA 225,824 19,150 125,824 119,150 244,974 115,023 1987 HINGHAM, MA 352,606 22,484 242,520 132,570 375,090 115,635 1989 ASHLAND, MA 606,700 17,424 395,100 229,024 624,124 68,709 1985 WOBURN, MA 507,600 294,303 507,600 294,303 801,903 93,802 1985 BELMONT, MA 389,700 28,871 253,800 164,771 418,571 60,953 1985 HYDE PARK, MA 499,175 29,673 321,800 207,048 528,848 79,046 1985 EVERETT, MA 269,500 190,931 269,500 190,931 460,431 83,778 1985 PITTSFIELD, MA 281,200 51,100 183,100 149,200 332,300 71,356 1985 NORTH ATTLEBORO, MA 662,900 16,549 431,700 247,749 679,449 76,800 1985 WORCESTER, MA 497,642 67,806 321,800 243,648 565,448 116,904 1985 NEW BEDFORD, MA 522,300 18,274 340,100 200,474 540,574 62,801 1985 TAUNTON, MA 180,724 180,724 180,724 88,405 1989 FALL RIVER, MA 859,800 24,423 559,900 324,323 884,223 99,587 1985 WORCESTER, MA 385,600 21,339 251,100 155,839 406,939 55,446 1985 WEBSTER, MA 1,012,400 67,645 659,300 420,745 1,080,045 157,945 1985 CLINTON, MA 586,600 52,725 382,000 257,325 639,325 98,098 1985 FOXBOROUGH, MA 426,593 34,403 325,000 135,996 460,996 100,907 1990 CLINTON, MA 385,600 95,698 251,100 230,198 481,298 126,509 1985 HYANNIS, MA 650,800 42,552 423,800 269,552 693,352 102,808 1985 HOLYOKE, MA 329,500 38,345 214,600 153,245 367,845 63,872 1985 NEWTON, MA 691,000 42,832 450,000 283,832 733,832 95,447 1985 FALMOUTH, MA 519,382 43,841 458,461 104,762 563,223 97,030 1988 METHUEN, MA 490,200 16,282 319,200 187,282 506,482 62,977 1985 ROCKLAND, MA 578,600 185,285 376,800 387,085 763,885 161,561 1985 WILLIAMSTOWN, MA 221,000 54,948 143,900 132,048 275,948 61,948 1985 FAIRHAVEN, MA 725,500 48,828 470,900 303,428 774,328 113,148 1985 BELLINGHAM, MA 734,189 132,725 476,200 390,714 866,914 178,651 1985 NEW BEDFORD, MA 482,275 95,553 293,000 284,828 577,828 158,137 1985
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- SEEKONK, MA 1,072,700 29,112 698,500 403,312 1,101,812 122,805 1985 WALPOLE, MA 449,900 20,586 293,000 177,486 470,486 55,656 1985 NORTH ANDOVER, MA 393,700 220,132 256,400 357,432 613,832 151,831 1985 LOWELL, MA 360,949 83,674 200,949 243,674 444,623 240,524 1985 AUBURN, MA 175,048 30,890 125,048 80,890 205,938 79,855 1986 METHUEN, MA 147,330 188,059 50,731 284,658 335,389 198,392 1986 GEORGETOWN, MA 145,712 27,144 100,718 72,138 172,856 68,177 1986 IPSWICH, MA 138,918 46,831 95,718 90,031 185,749 81,498 1986 SALISBURY, MA 119,698 59,615 80,598 98,715 179,313 80,029 1986 BEVERLY, MA 275,000 150,741 175,000 250,741 425,741 178,750 1986 BILLERICA, MA 400,000 135,809 250,000 285,809 535,809 244,059 1986 HAVERHILL, MA 400,000 17,182 225,000 192,182 417,182 190,200 1986 CHATHAM, MA 275,000 197,302 175,000 297,302 472,302 192,661 1986 HARWICH, MA 225,000 12,044 150,000 87,044 237,044 82,173 1986 IPSWICH, MA 275,000 19,161 150,000 144,161 294,161 140,109 1986 LEOMINSTER, MA 200,000 49,592 100,000 149,592 249,592 142,430 1986 LOWELL, MA 375,000 175,969 250,000 300,969 550,969 201,076 1986 METHUEN, MA 300,000 50,861 150,000 200,861 350,861 196,692 1986 ORLEANS, MA 260,000 37,637 185,000 112,637 297,637 102,577 1986 PEABODY, MA 400,000 200,363 275,000 325,363 600,363 242,752 1986 QUINCY, MA 200,000 36,112 125,000 111,112 236,112 104,909 1986 REVERE, MA 250,000 193,854 150,000 293,854 443,854 209,542 1986 SALEM, MA 275,000 25,393 175,000 125,393 300,393 121,543 1986 TEWKSBURY, MA 125,000 90,338 75,000 140,338 215,338 118,278 1986 TWIN MILL, MA 125,000 7,607 50,000 82,607 132,607 80,849 1986 FALMOUTH, MA 150,000 322,942 75,000 397,942 472,942 237,873 1986 WEST YARMOUTH, MA 225,000 33,165 125,000 133,165 258,165 129,843 1986 WESTFORD, MA 275,000 196,493 175,000 296,493 471,493 196,415 1986 WOBURN, MA 350,000 45,681 200,000 195,681 395,681 188,944 1986 YARMOUTHPORT, MA 300,000 26,940 150,000 176,940 326,940 175,775 1986 BRIDGEWATER, MA 190,360 36,762 140,000 87,122 227,122 64,456 1987 STOUGHTON, MA 235,794 235,794 235,794 124,608 1990 WORCESTER, MA 476,102 174,233 309,466 340,869 650,335 99,599 1991 AUBURN, MA 369,306 27,792 240,049 157,049 397,098 28,677 1991 BARRE, MA 535,614 163,028 348,149 350,493 698,642 90,785 1991 WORCESTER, MA 275,866 11,674 179,313 108,227 287,540 16,898 1992 BROCKTON, MA 275,866 194,619 179,313 291,172 470,485 105,955 1991 CLINTON, MA 177,978 29,790 115,686 92,082 207,768 28,157 1992 WORCESTER, MA 167,745 275,852 167,745 275,852 443,597 97,258 1991 DUDLEY, MA 302,563 141,993 196,666 247,890 444,556 60,806 1991 FITCHBURG, MA 311,808 16,384 202,675 125,517 328,192 20,816 1991 FRANKLIN, MA 253,619 18,437 164,852 107,204 272,056 21,777 1988 WORCESTER, MA 342,608 11,101 222,695 131,014 353,709 17,348 1991 HYANNIS, MA 222,472 7,282 144,607 85,147 229,754 12,369 1991 LEOMINSTER, MA 195,776 177,454 127,254 245,976 373,230 94,495 1991 WORCESTER, MA 231,372 157,356 150,392 238,336 388,728 87,579 1991 NORTHBOROUGH, MA 404,900 18,353 263,185 160,068 423,253 22,927 1993 WEST BOYLSTON, MA 311,808 28,937 202,675 138,070 340,745 30,721 1991 WORCESTER, MA 186,877 33,510 121,470 98,917 220,387 30,129 1993 SOUTHBRIDGE, MA 172,279 172,279 172,279 95,847 1991
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- SOUTH YARMOUTH, MA 275,866 49,961 179,313 146,514 325,827 39,955 1991 STERLING, MA 476,102 165,998 309,466 332,634 642,100 89,481 1991 SUTTON, MA 714,159 187,355 464,203 437,311 901,514 114,220 1993 WORCESTER, MA 275,866 150,472 179,313 247,025 426,338 84,551 1991 FRAMINGHAM, MA 297,568 203,147 193,419 307,296 500,715 112,862 1992 UPTON, MA 428,498 24,611 278,524 174,585 453,109 31,093 1991 WESTBOROUGH, MA 311,808 205,994 202,675 315,127 517,802 113,062 1991 HARWICHPORT, MA 382,653 173,989 248,724 307,918 556,642 94,977 1991 WORCESTER, MA 547,283 205,733 355,734 397,282 753,016 115,655 1991 WORCESTER, MA 978,880 191,413 636,272 534,021 1,170,293 114,762 1991 FITCHBURG, MA 390,276 216,589 253,679 353,186 606,865 111,909 1992 WORCESTER, MA 146,832 140,589 95,441 191,980 287,421 74,503 1991 LEICESTER, MA 266,968 197,898 173,529 291,337 464,866 95,235 1991 NORTH GRAFTON, MA 244,720 35,136 159,068 120,788 279,856 32,022 1991 SOUTHBRIDGE, MA 249,169 62,205 161,960 149,414 311,374 55,487 1993 OXFORD, MA 293,664 9,098 190,882 111,880 302,762 14,739 1993 WORCESTER, MA 284,765 45,285 185,097 144,953 330,050 45,248 1991 ATHOL, MA 164,629 22,016 107,009 79,636 186,645 20,669 1991 FITCHBURG, MA 142,383 194,291 92,549 244,125 336,674 91,805 1992 WORCESTER, MA 271,417 183,331 176,421 278,327 454,748 97,376 1991 ORANGE, MA 476,102 4,015 309,466 170,651 480,117 13,480 1991 FRAMINGHAM, MA 400,449 22,280 260,294 162,435 422,729 27,095 1991 MILFORD, MA 262,436 262,436 262,436 118,716 1991 UXBRIDGE, MA 128,196 16,239 90,000 54,435 144,435 40,124 1992 AUBURN, MA 167,147 167,147 167,147 69,559 1996 MANCHESTER, NH 249,100 22,857 162,200 109,757 271,957 37,887 1985 MANCHESTER, NH 261,100 36,404 170,000 127,504 297,504 47,187 1985 CONCORD, NH 233,400 68,292 151,700 149,992 301,692 81,744 1985 DERRY, NH(*) 417,988 16,295 157,988 276,295 434,283 264,755 1987 PLAISTOW, NH 300,406 117,924 244,694 173,636 418,330 152,831 1987 SOMERSWORTH, NH 180,800 60,497 117,700 123,597 241,297 49,274 1985 SALEM, NH 743,200 19,847 484,000 279,047 763,047 85,056 1985 LONDONDERRY, NH 703,100 31,092 457,900 276,292 734,192 92,787 1985 ROCHESTER, NH 972,200 12,775 633,100 351,875 984,975 102,231 1985 HAMPTON, NH 193,103 26,449 135,598 83,954 219,552 80,972 1986 MERRIMACK, NH 151,993 205,823 100,598 257,218 357,816 151,492 1986 NASHUA, NH 197,142 219,639 155,837 260,944 416,781 147,349 1986 PELHAM, NH 169,182 53,497 136,077 86,602 222,679 72,512 1986 PEMBROKE, NH 138,492 174,777 100,837 212,432 313,269 116,073 1986 ROCHESTER, NH 179,717 208,103 100,000 287,820 387,820 189,830 1986 ROCHESTER, NH 110,598 43,142 80,598 73,142 153,740 66,621 1986 SEABROOK, NH 134,412 134,412 134,412 61,844 1987 SOMERSWORTH, NH 210,805 15,012 157,520 68,297 225,817 67,030 1986 EXETER, NH 113,285 149,265 65,000 197,550 262,550 160,181 1986 CANDIA, NH 130,000 184,004 80,000 234,004 314,004 219,663 1986 EPPING, NH 170,000 131,403 120,000 181,403 301,403 134,236 1986 EPSOM, NH 220,000 96,022 155,000 161,022 316,022 131,405 1986 EXETER, NH 160,000 44,343 105,000 99,343 204,343 73,280 1986 MILFORD, NH 190,000 41,689 115,000 116,689 231,689 107,311 1986 PORTSMOUTH, NH 235,000 20,257 150,000 105,257 255,257 103,566 1986
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- PORTSMOUTH, NH 225,000 228,704 125,000 328,704 453,704 208,469 1986 SALEM, NH 450,000 47,484 350,000 147,484 497,484 132,737 1986 SEABROOK, NH 199,780 19,102 124,780 94,102 218,882 92,327 1986 PELHAM, NH 234,915 234,915 234,915 82,899 1996 MCAFEE, NJ 670,900 15,711 436,900 249,711 686,611 75,755 1985 HAMBURG, NJ 598,600 22,121 389,800 230,921 620,721 75,420 1985 WEST MILFORD, NJ 502,200 31,918 327,000 207,118 534,118 76,858 1985 LIVINGSTON, NJ 871,800 30,003 567,700 334,103 901,803 108,644 1985 TRENTON, NJ 373,600 9,572 243,300 139,872 383,172 42,974 1985 WILLINGBORO, NJ 425,800 29,928 277,300 178,428 455,728 69,855 1985 BAYONNE, NJ 341,500 18,947 222,400 138,047 360,447 47,963 1985 CRANFORD, NJ 342,666 29,222 222,400 149,488 371,888 60,267 1985 TRENTON, NJ 466,100 13,987 303,500 176,587 480,087 56,921 1985 WALL TOWNSHIP, NJ 336,441 55,709 121,441 270,709 392,150 258,327 1986 UNION, NJ 490,200 41,361 319,200 212,361 531,561 79,038 1985 CRANBURY, NJ 606,700 31,467 395,100 243,067 638,167 85,413 1985 HILLSIDE, NJ 225,000 31,552 150,000 106,552 256,552 84,815 1987 SPOTSWOOD, NJ 466,675 69,036 303,500 232,211 535,711 110,203 1985 LONG BRANCH, NJ 514,300 22,951 334,900 202,351 537,251 72,169 1985 ELIZABETH, NJ 405,800 18,881 264,300 160,381 424,681 54,536 1985 BELLEVILLE, NJ 397,700 39,410 259,000 178,110 437,110 71,591 1985 NEPTUNE CITY, NJ 269,600 175,600 94,000 269,600 26,008 1985 BASKING RIDGE, NJ 362,172 32,960 200,000 195,132 395,132 86,814 1986 DEPTFORD, NJ 281,200 24,745 183,100 122,845 305,945 48,529 1985 CHERRY HILL, NJ 357,500 13,879 232,800 138,579 371,379 46,414 1985 SEWELL, NJ 551,912 48,485 355,712 244,685 600,397 89,696 1985 FLEMINGTON, NJ 546,742 17,494 346,342 217,894 564,236 67,973 1985 WILLIAMSTOWN, NJ 156,879 7,776 130,000 34,655 164,655 31,949 1988 BLACKWOOD, NJ 401,700 36,736 261,600 176,836 438,436 73,171 1985 TRENTON, NJ 684,650 33,275 444,800 273,125 717,925 97,679 1985 LODI, NJ 133,637 133,637 133,637 88,283 1988 EAST ORANGE, NJ 421,508 37,977 272,100 187,385 459,485 79,326 1985 FREEHOLD, NJ 240,642 240,642 240,642 125,891 1995 BELMAR, NJ 630,800 22,371 410,800 242,371 653,171 79,959 1985 MOORESTOWN, NJ 470,100 27,064 306,100 191,064 497,164 68,730 1985 SPRING LAKE, NJ 345,500 42,194 225,000 162,694 387,694 63,825 1985 HILLTOP, NJ 329,500 16,758 214,600 131,658 346,258 45,543 1985 CLIFTON, NJ 301,518 6,413 150,000 157,931 307,931 63,618 1987 SEWELL, NJ 405,800 12,338 264,300 153,838 418,138 49,083 1985 FRANKLIN TWP., NJ 683,000 30,257 444,800 268,457 713,257 94,570 1985 FLEMINGTON, NJ 708,160 33,072 460,500 280,732 741,232 90,085 1985 CLEMENTON, NJ 562,500 27,581 366,300 223,781 590,081 79,675 1985 BRADLEY BEACH, NJ 240,642 240,642 240,642 125,891 1995 MT. ROYAL, NJ 141,300 4,978 92,000 54,278 146,278 18,619 1985 ASBURY PARK, NJ 418,966 18,038 272,100 164,904 437,004 58,168 1985 MIDLAND PARK, NJ 201,012 4,080 150,000 55,092 205,092 36,281 1989 PATERSON, NJ 619,548 16,765 402,900 233,413 636,313 74,322 1985 FREEHOLD, NJ 450,300 7,822 293,200 164,922 458,122 49,497 1985 OCEAN CITY, NJ 843,700 113,162 549,400 407,462 956,862 188,411 1985 WHITING, NJ 447,199 3,519 167,090 283,628 450,718 271,751 1989
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- HILLSBOROUGH, NJ 237,122 7,729 100,000 144,851 244,851 45,668 1985 PRINCETON, NJ 703,100 40,615 457,900 285,815 743,715 105,037 1985 NEPTUNE, NJ 455,726 39,090 293,000 201,816 494,816 79,287 1985 NEWARK, NJ 3,086,592 164,432 2,005,800 1,245,224 3,251,024 458,934 1985 OAKHURST, NJ 225,608 46,405 100,608 171,405 272,013 162,345 1985 BELLEVILLE, NJ 215,468 38,163 149,237 104,394 253,631 97,933 1986 PINE HILL, NJ 190,568 39,918 115,568 114,918 230,486 106,335 1986 TUCKERTON, NJ 224,387 132,864 131,018 226,233 357,251 215,967 1987 WEST DEPTFORD, NJ 245,450 50,295 151,053 144,692 295,745 136,072 1987 ATCO, NJ 153,159 85,853 131,766 107,246 239,012 105,662 1987 SOMERVILLE, NJ 252,717 254,230 200,500 306,447 506,947 126,701 1987 CINNAMINSON, NJ 326,501 24,931 176,501 174,931 351,432 168,658 1987 RIDGEFIELD PARK, NJ 273,549 150,000 123,549 273,549 57,271 1997 BRICK, NJ 1,507,684 1,000,000 507,684 1,507,684 142,497 2000 LAKE HOPATCONG, NJ 1,305,034 800,000 505,034 1,305,034 174,422 2000 BERGENFIELD, NJ 381,590 36,271 300,000 117,861 417,861 99,184 1990 ORANGE, NJ 281,200 24,573 183,100 122,673 305,773 47,813 1985 BLOOMFIELD, NJ 695,000 21,021 452,600 263,421 716,021 87,329 1985 IRVINGTON, NJ 271,200 79,011 176,600 173,611 350,211 93,660 1985 UNION, NJ 441,900 36,198 287,800 190,298 478,098 190,298 1985 SCOTCH PLAINS, NJ 331,063 14,455 214,600 130,918 345,518 45,016 1985 NUTLEY, NJ 433,800 48,677 282,500 199,977 482,477 83,423 1985 PLAINFIELD, NJ 470,100 29,975 306,100 193,975 500,075 66,973 1985 MOUNTAINSIDE, NJ 664,100 31,620 431,700 264,020 695,720 87,555 1985 IRVINGTON, NJ 104,760 38,446 60,000 83,206 143,206 60,106 1987 WATCHUNG, NJ 449,900 20,339 293,000 177,239 470,239 59,696 1985 GREEN VILLAGE, NJ 277,900 44,471 127,900 194,471 322,371 185,626 1985 IRVINGTON, NJ 409,700 54,841 266,800 197,741 464,541 92,078 1985 JERSEY CITY, NJ 438,000 51,856 285,200 204,656 489,856 83,444 1985 BLOOMFIELD, NJ 441,900 32,951 287,800 187,051 474,851 72,282 1985 DOVER, NJ 606,700 30,153 395,100 241,753 636,853 82,024 1985 PARLIN, NJ 441,900 29,075 287,800 183,175 470,975 69,317 1985 UNION CITY, NJ 799,500 3,440 520,600 282,340 802,940 80,603 1985 COLONIA, NJ 253,100 3,395 164,800 91,695 256,495 27,826 1985 NORTH BERGEN, NJ 629,527 81,006 409,527 301,006 710,533 128,656 1985 WAYNE, NJ 490,200 21,766 319,200 192,766 511,966 65,281 1985 HASBROUCK HEIGHTS, NJ 639,648 19,648 416,000 243,296 659,296 76,287 1985 COLONIA, NJ 952,200 74,451 620,100 406,551 1,026,651 153,515 1985 OLD BRIDGE, NJ 319,521 24,445 204,621 139,345 343,966 53,915 1985 RIDGEWOOD, NJ 703,100 36,959 457,900 282,159 740,059 95,671 1985 HAWTHORNE, NJ 245,100 10,967 159,600 96,467 256,067 33,626 1985 WAYNE, NJ 474,100 42,926 308,700 208,326 517,026 86,954 1985 WASHINGTON TOWN, NJ 912,000 21,261 593,900 339,361 933,261 105,139 1985 PARAMUS, NJ 381,700 42,394 248,600 175,494 424,094 77,484 1985 JERSEY CITY, NJ 401,700 43,808 261,600 183,908 445,508 80,243 1985 FORT LEE, NJ 1,245,500 39,408 811,100 473,808 1,284,908 153,749 1985 EATONTOWN, NJ 117,865 19,446 87,375 49,936 137,311 24,053 1985 MONMOUTH BEACH, NJ 133,500 33,987 100,125 67,362 167,487 35,700 1985 AUDUBON, NJ 421,800 12,949 274,700 160,049 434,749 52,374 1985 TRENTON, NJ 337,500 69,461 219,800 187,161 406,961 99,846 1985
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- STRATFORD, NJ 215,597 215,597 215,597 145,017 1995 MAGNOLIA, NJ 329,500 26,488 214,600 141,388 355,988 57,183 1985 BEVERLY, NJ 470,100 24,003 306,100 188,003 494,103 64,681 1985 PISCATAWAY, NJ 269,200 28,232 175,300 122,132 297,432 49,852 1985 WEST ORANGE, NJ 799,500 34,733 520,600 313,633 834,233 110,712 1985 ROCKVILLE CENTRE, NY 350,325 315,779 201,400 464,704 666,104 266,404 1985 GLENDALE, NY 368,625 159,763 235,500 292,888 528,388 120,891 1985 BELLAIRE, NY 329,500 73,358 214,600 188,258 402,858 80,906 1985 BROOKLYN, NY 178,082 178,082 178,082 85,507 1987 BAYSIDE, NY 245,100 202,833 159,600 288,333 447,933 125,118 1985 YONKERS, NY 153,184 67,266 76,592 143,858 220,450 57,856 1987 DOBBS FERRY, NY 670,575 33,706 434,300 269,981 704,281 93,625 1985 NORTH MERRICK, NY 510,350 141,506 332,200 319,656 651,856 131,487 1985 GREAT NECK, NY 500,000 24,468 450,000 74,468 524,468 69,313 1985 GLEN HEAD, NY 462,468 45,355 300,900 206,923 507,823 88,077 1985 GARDEN CITY, NY 361,600 33,774 235,500 159,874 395,374 62,306 1985 HEWLETT, NY 490,200 85,618 319,200 256,618 575,818 81,156 1985 EAST HILLS, NY 241,613 21,070 241,613 21,070 262,683 18,342 1986 YONKERS, NY 111,300 80,000 65,000 126,300 191,300 92,208 1988 HEMPSTEAD, NY 396,200 258,000 138,200 396,200 38,236 1985 LEVITTOWN, NY 502,757 42,113 327,000 217,870 544,870 85,709 1985 LEVITTOWN, NY 546,400 113,057 355,800 303,657 659,457 116,254 1985 ST. ALBANS, NY 329,500 87,250 214,600 202,150 416,750 95,513 1985 RIDGEWOOD, NY 278,372 38,578 277,606 39,344 316,950 16,796 1986 BROOKLYN, NY 626,700 282,677 408,100 501,277 909,377 238,236 1985 BROOKLYN, NY 476,816 272,765 306,100 443,481 749,581 199,001 1985 SYOSSET, NY 139,686 37,407 65,982 111,111 177,093 100,847 1986 SEAFORD, NY 325,400 83,257 211,900 196,757 408,657 63,548 1985 BAYSIDE, NY 470,100 246,576 306,100 410,576 716,676 161,145 1985 BAY SHORE, NY 188,900 26,286 123,000 92,186 215,186 40,303 1985 ELMONT, NY 389,700 90,633 253,800 226,533 480,333 76,156 1985 WHITE PLAINS, NY 258,600 60,120 164,800 153,920 318,720 69,931 1985 SCARSDALE, NY 257,100 102,632 167,400 192,332 359,732 94,038 1985 EASTCHESTER, NY 614,700 34,500 400,300 248,900 649,200 89,306 1985 NEW ROCHELLE, NY 337,500 51,741 219,800 169,441 389,241 68,984 1985 BROOKLYN, NY 421,800 270,436 274,700 417,536 692,236 187,987 1985 COMMACK, NY 321,400 25,659 209,300 137,759 347,059 53,818 1985 SAG HARBOR, NY 703,600 36,012 458,200 281,412 739,612 101,704 1985 EAST HAMPTON, NY 663,100 39,313 431,800 270,613 702,413 92,315 1985 MASTIC, NY 313,400 110,180 204,100 219,480 423,580 140,075 1985 BRONX, NY 390,200 329,357 251,100 468,457 719,557 198,019 1985 YONKERS, NY 1,020,400 61,875 664,500 417,775 1,082,275 146,706 1985 GLENVILLE, NY 343,723 98,299 219,800 222,222 442,022 113,304 1985 YONKERS, NY 202,826 42,877 144,000 101,703 245,703 63,035 1986 MINEOLA, NY 341,500 34,411 222,400 153,511 375,911 63,729 1985 NEW YORK, NY 164,351 164,351 164,351 84,604 1989 ALBANY, NY 404,888 104,378 261,600 247,666 509,266 138,446 1985 LONG ISLAND CITY, NY 1,646,307 259,443 1,071,500 834,250 1,905,750 383,805 1985 ALBANY, NY 142,312 36,831 91,600 87,543 179,143 49,675 1985 RENSSELAER, NY 1,653,500 514,444 1,076,800 1,091,144 2,167,944 672,865 1985
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- RENSSELAER, NY 683,781 286,504 397,277 683,781 1,783 2004 PORT JEFFERSON, NY 400,725 63,743 259,000 205,468 464,468 98,311 1985 ROTTERDAM, NY 140,600 100,399 91,600 149,399 240,999 98,025 1985 OSSINING, NY 231,100 44,049 149,200 125,949 275,149 58,095 1985 ELLENVILLE, NY 233,000 53,690 151,700 134,990 286,690 67,095 1985 CHATHAM, NY 349,133 131,805 225,000 255,938 480,938 144,684 1985 HYDE PARK, NY 253,100 12,015 164,800 100,315 265,115 35,214 1985 SHRUB OAK, NY 1,060,700 81,807 690,700 451,807 1,142,507 166,354 1985 NEW YORK, NY 229,435 229,435 229,435 136,976 1985 BROOKLYN, NY 237,100 125,067 154,400 207,767 362,167 82,954 1985 STATEN ISLAND, NY 301,300 288,603 196,200 393,703 589,903 178,043 1985 STATEN ISLAND, NY 357,904 39,588 230,300 167,192 397,492 71,941 1985 STATEN ISLAND, NY 349,500 176,590 227,600 298,490 526,090 132,211 1985 BRONX, NY 93,817 120,396 67,200 147,013 214,213 98,859 1985 BRONX, NY 104,130 360,410 90,000 374,540 464,540 222,225 1985 OZONE PARK, NY 193,968 193,968 193,968 86,542 1986 MT. VERNON, NY 117,440 37,529 72,440 82,529 154,969 74,645 1985 PELHAM MANOR, NY 136,791 78,987 75,000 140,778 215,778 117,970 1985 FREEPORT, NY 119,745 30,930 65,000 85,675 150,675 72,531 1986 EAST MEADOW, NY 425,000 86,005 325,000 186,005 511,005 107,566 1986 E. ELMHURST, NY 134,284 134,284 134,284 62,460 1986 STATEN ISLAND, NY 389,700 88,922 253,800 224,822 478,622 113,303 1985 MERRICK, NY 477,498 77,925 240,764 314,659 555,423 86,353 1987 WANTAGH, NY 180,017 180,017 180,017 130,309 1988 MASSAPEQUA, NY 333,400 53,696 217,100 169,996 387,096 80,488 1985 UNIONDALE, NY 252,000 36,867 164,100 124,767 288,867 54,252 1985 TROY, NY 225,000 60,569 146,500 139,069 285,569 63,862 1985 BALDWIN, NY 290,923 5,007 151,280 144,650 295,930 24,563 1986 NEW YORK, NY 605,891 605,891 605,891 290,321 1986 MIDDLETOWN, NY 751,200 166,411 489,200 428,411 917,611 145,188 1985 OCEANSIDE, NY 313,400 88,863 204,100 198,163 402,263 63,738 1985 WANTAGH, NY 261,814 85,758 175,000 172,572 347,572 87,753 1985 NORTHPORT, NY 241,100 33,036 157,000 117,136 274,136 54,309 1985 BRONX, NY 130,597 130,597 130,597 85,132 1985 SCHENECTADY, NY 143,698 143,698 143,698 122,155 1987 BALLSTON, NY 160,000 134,021 110,000 184,021 294,021 177,488 1986 BALLSTON SPA, NY 210,000 105,073 100,000 215,073 315,073 205,804 1986 COLONIE, NY 245,150 28,322 120,150 153,322 273,472 146,126 1986 DELMAR, NY 150,000 42,478 70,000 122,478 192,478 114,473 1986 ELLENVILLE, NY 170,000 72,869 70,000 172,869 242,869 143,696 1986 FORT EDWARD, NY 225,000 65,739 150,000 140,739 290,739 132,098 1986 FT. PLAIN, NY 122,008 43,370 72,008 93,370 165,378 72,243 1986 QUEENSBURY, NY 225,000 105,592 165,000 165,592 330,592 154,854 1986 GLOVERSVILLE, NY 200,000 52,696 100,000 152,696 252,696 145,468 1986 HALFMOON, NY 415,000 205,598 228,100 392,498 620,598 361,584 1986 GREEN ISLAND, NY 50,000 94,827 50,000 94,827 144,827 74,197 1986 HANCOCK, NY 100,000 109,470 50,000 159,470 209,470 146,873 1986 HYDE PARK, NY 300,000 59,198 175,000 184,198 359,198 162,680 1986 LATHAM, NY 275,000 68,160 150,000 193,160 343,160 171,431 1986 MALTA, NY 190,000 91,726 65,000 216,726 281,726 200,834 1986
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- MELROSE, NY 105,000 69,624 55,000 119,624 174,624 102,009 1986 MILLERTON, NY 175,000 123,063 100,000 198,063 298,063 164,568 1986 NEW WINDSOR, NY 150,000 94,791 75,000 169,791 244,791 134,329 1986 NISKAYUNA, NY 425,000 35,421 275,000 185,421 460,421 174,842 1986 PLEASANT VALLEY, NY 398,497 115,129 240,000 273,626 513,626 171,274 1986 POUGHKEEPSIE, NY 250,000 82,485 150,000 182,485 332,485 150,847 1986 POUGHKEEPSIE, NY 175,000 175,000 175,000 1986 QUEENSBURY, NY 230,000 65,245 155,000 140,245 295,245 118,079 1986 ROTTERDAM, NY 132,287 166,077 298,364 298,364 195,470 1995 SCHENECTADY, NY 225,000 298,103 150,000 373,103 523,103 354,282 1986 S. GLENS FALLS, NY 325,000 58,892 225,000 158,892 383,892 138,983 1986 TROY, NY 175,000 65,690 75,000 165,690 240,690 140,994 1986 WARRENSBURG, NY 115,000 35,203 75,000 75,203 150,203 66,020 1986 HUDSON FALLS, NY 190,000 55,750 65,000 180,750 245,750 160,898 1986 MECHANICVILLE, NY 133,469 133,469 133,469 111,589 1987 ALBANY, NY 206,620 87,949 81,620 212,949 294,569 197,994 1986 NEWBURGH, NY 430,766 25,850 150,000 306,616 456,616 280,766 1989 JERICHO, NY 330,936 330,936 330,936 120,740 1998 CATSKILL, NY 73,705 74,726 73,704 74,727 148,431 56,652 1989 CATSKILL, NY 321,446 125,000 196,446 321,446 7,798 2004 CATSKILL, NY 305,285 99,076 203,523 200,838 404,361 99,294 1989 GREENVILLE, NY 77,153 105,325 77,152 105,326 182,478 94,575 1989 QUARRYVILLE, NY 35,917 168,199 35,916 168,200 204,116 154,356 1988 MENANDS, NY 150,580 60,563 49,999 161,144 211,143 137,372 1988 HOOSICK FALLS, NY 151,535 151,535 151,535 137,759 1988 BREWSTER, NY 302,564 44,393 142,564 204,393 346,957 194,281 1988 VALATIE, NY 165,590 394,981 90,829 469,742 560,571 338,646 1989 CAIRO, NY 191,928 142,895 46,650 288,173 334,823 257,764 1988 RED HOOK, NY 226,787 226,787 226,787 214,232 1991 WEST TAGHKANIC, NY 202,750 117,540 121,650 198,640 320,290 119,492 1986 RAVENA, NY 199,900 199,900 199,900 186,743 1991 SAYVILLE, NY 528,225 300,000 228,225 528,225 58,578 1998 WANTAGH, NY 640,680 370,200 270,480 640,680 69,421 1998 CENTRAL ISLIP, NY 572,244 357,500 214,744 572,244 55,007 1998 FLUSHING, NY 516,110 320,125 195,985 516,110 50,133 1998 NORTH LINDENHURST, NY 341,530 192,000 149,530 341,530 38,294 1998 WYANDANCH, NY 453,131 279,500 173,631 453,131 44,417 1998 NEW ROCHELLE, NY 415,180 251,875 163,305 415,180 41,584 1998 FLORAL PARK, NY 616,700 356,400 260,300 616,700 66,680 1998 RIVERHEAD, NY 723,346 431,700 291,646 723,346 74,710 1998 AMHERST, NY 223,009 173,451 49,558 223,009 17,176 2000 BUFFALO, NY 312,426 150,888 161,538 312,426 42,212 2000 KENMORE, NY 160,000 110,000 50,000 160,000 10,833 2000 GRAND ISLAND, NY 350,849 247,348 103,501 350,849 32,072 2000 HAMBURG, NY 298,805 168,680 130,125 298,805 28,193 2000 LACKAWANNA, NY 250,030 129,870 120,160 250,030 32,528 2000 LEWISTON, NY 205,000 125,000 80,000 205,000 17,333 2000 TONAWANDA, NY 189,296 147,122 42,174 189,296 9,138 2000 TONAWANDA, NY 304,762 11,493 211,337 104,918 316,255 22,733 2000 WEST SENECA, NY 257,142 184,385 72,757 257,142 15,767 2000
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- WILLIAMSVILLE, NY 211,972 176,643 35,329 211,972 7,654 2000 PHILADELPHIA, PA 687,000 25,017 447,400 264,617 712,017 86,970 1985 PHILADELPHIA, PA 237,100 205,495 154,400 288,195 442,595 122,911 1985 ALLENTOWN, PA 357,500 76,385 232,800 201,085 433,885 75,909 1985 NORRISTOWN, PA 241,300 78,419 157,100 162,619 319,719 61,314 1985 BRYN MAWR, PA 221,000 59,832 143,900 136,932 280,832 71,382 1985 CONSHOHOCKEN, PA 261,100 77,885 170,000 168,985 338,985 84,155 1985 PHILADELPHIA, PA 281,200 34,285 183,100 132,385 315,485 56,347 1985 HUNTINGDON VALLEY, PA 421,800 36,439 274,700 183,539 458,239 72,152 1985 FEASTERVILLE, PA 510,200 160,144 332,200 338,144 670,344 167,117 1985 PHILADELPHIA, PA 285,200 65,498 185,700 164,998 350,698 77,311 1985 PHILADELPHIA, PA 289,300 50,010 188,400 150,910 339,310 72,571 1985 PHILADELPHIA, PA 405,800 221,269 264,300 362,769 627,069 192,572 1985 PHILADELPHIA, PA 417,800 210,406 272,100 356,106 628,206 138,690 1985 PHILADELPHIA, PA 369,600 276,720 240,700 405,620 646,320 197,336 1985 HATBORO, PA 285,200 61,979 185,700 161,479 347,179 83,005 1985 HAVERTOWN, PA 402,000 22,660 253,800 170,860 424,660 71,089 1985 MEDIA, PA 326,195 24,082 191,000 159,277 350,277 83,376 1985 PHILADELPHIA, PA 389,700 28,006 253,800 163,906 417,706 63,748 1985 MILMONT PARK, PA 343,093 32,840 222,400 153,533 375,933 64,645 1985 PHILADELPHIA, PA 341,500 224,647 222,400 343,747 566,147 150,896 1985 ALDAN, PA 281,200 45,539 183,100 143,639 326,739 63,631 1985 BRISTOL, PA 430,500 82,981 280,000 233,481 513,481 114,139 1985 TREVOSE, PA 215,214 16,382 150,000 81,596 231,596 53,881 1987 HAVERTOWN, PA 265,200 24,500 172,700 117,000 289,700 44,123 1985 ABINGTON, PA 309,300 43,696 201,400 151,596 352,996 65,478 1985 HATBORO, PA 289,300 61,371 188,400 162,271 350,671 78,700 1985 CLIFTON HGTS., PA 428,201 63,403 256,400 235,204 491,604 129,470 1985 ALDAN, PA 433,800 21,152 282,500 172,452 454,952 59,375 1985 SHARON HILL, PA 411,057 39,574 266,800 183,831 450,631 77,180 1985 MEDIA, PA 474,100 5,055 308,700 170,455 479,155 50,817 1985 ROSLYN, PA 349,500 173,661 227,600 295,561 523,161 181,581 1985 CLIFTON HGTS, PA 213,000 46,824 138,700 121,124 259,824 58,661 1985 PHILADELPHIA, PA 369,600 273,642 240,700 402,542 643,242 228,031 1985 MORRISVILLE, PA 377,600 33,522 245,900 165,222 411,122 66,807 1985 PHILADELPHIA, PA 302,999 220,313 181,497 341,815 523,312 239,501 1985 FAIRLESS HILLS, PA 215,600 16,975 140,400 92,175 232,575 37,781 1985 PHOENIXVILLE, PA 413,800 17,561 269,500 161,861 431,361 55,910 1985 LANGHORNE, PA 122,202 69,328 50,000 141,530 191,530 83,563 1987 POTTSTOWN, PA 430,000 48,854 280,000 198,854 478,854 86,613 1985 BOYERTOWN, PA 233,000 5,373 151,700 86,673 238,373 27,661 1985 QUAKERTOWN, PA 379,111 89,812 243,300 225,623 468,923 108,008 1985 SOUDERTON, PA 381,700 172,170 248,600 305,270 553,870 138,755 1985 LANSDALE, PA 243,844 200,458 243,844 200,458 444,302 90,962 1985 CHALFONT, PA 296,500 12,019 193,100 115,419 308,519 40,416 1985 FURLONG, PA 175,300 151,150 175,300 151,150 326,450 78,696 1985 DOYLESTOWN, PA 405,800 32,659 264,300 174,159 438,459 67,943 1985 RICHBORO, PA 96,789 39,075 55,000 80,864 135,864 48,870 1987 PENNDEL, PA 137,429 31,015 90,000 78,444 168,444 55,673 1988 WEST CHESTER, PA 421,800 21,935 274,700 169,035 443,735 61,135 1985
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- NORRISTOWN, PA 175,300 120,786 175,300 120,786 296,086 49,376 1985 TRAPPE, PA 377,600 44,509 245,900 176,209 422,109 78,360 1985 GETTYSBURG, PA 157,602 28,530 67,602 118,530 186,132 115,956 1986 PARADISE, PA 132,295 151,188 102,295 181,188 283,483 103,278 1986 LINWOOD, PA 171,518 22,371 102,968 90,921 193,889 85,961 1987 READING, PA 750,000 49,125 799,125 799,125 751,282 1989 ELKINS PARK, PA 275,171 17,524 200,000 92,695 292,695 80,848 1990 NEW OXFORD, PA 1,044,707 13,500 18,687 1,039,520 1,058,207 530,981 1996 HANOVER, PA 108,435 417,763 108,435 417,763 526,198 406,803 1958 HANOVER, PA 22,526 113,336 27,231 108,631 135,862 99,671 1961 GLEN ROCK, PA 20,442 166,633 20,442 166,633 187,075 129,209 1961 BOILING SPRINGS, PA 14,792 167,641 14,792 167,641 182,433 131,060 1961 NORTH KINGSTOWN, RI 211,835 25,971 89,135 148,671 237,806 142,664 1985 MIDDLETOWN, RI 306,710 16,364 176,710 146,364 323,074 143,923 1987 WARWICK, RI 376,563 39,933 205,889 210,607 416,496 196,779 1989 PROVIDENCE, RI 231,372 191,647 150,392 272,627 423,019 82,098 1991 EAST PROVIDENCE, RI 2,297,435 574,528 1,495,700 1,376,263 2,871,963 363,040 1985 ASHAWAY, RI 618,609 402,096 216,513 618,609 1,444 2004 EAST PROVIDENCE, RI 309,950 49,546 202,050 157,446 359,496 70,914 1985 PAWTUCKET, RI 212,775 161,188 118,860 255,103 373,963 169,308 1986 WARWICK, RI 434,752 24,730 266,800 192,682 459,482 87,983 1985 CRANSTON, RI 466,100 12,576 303,500 175,176 478,676 56,157 1985 PAWTUCKET, RI 237,100 2,990 154,400 85,690 240,090 25,696 1985 BARRINGTON, RI 490,200 213,866 319,200 384,866 704,066 195,155 1985 WARWICK, RI 253,100 34,400 164,800 122,700 287,500 50,970 1985 N. PROVIDENCE, RI 542,400 61,717 353,200 250,917 604,117 110,732 1985 EAST PROVIDENCE, RI 486,675 13,947 316,600 184,022 500,622 58,802 1985 WAKEFIELD, RI 413,800 39,616 269,500 183,916 453,416 64,664 1985 READING, PA 34,620 121,446 10,433 145,633 156,066 95,400 1990 EPHRATA, PA 183,477 96,937 136,809 143,605 280,414 95,451 1990 DAUPHIN, PA 156,076 6,025 134,167 27,934 162,101 23,141 1990 DOUGLASSVILLE, PA 178,488 23,321 154,738 47,071 201,809 39,396 1990 YORK, PA 170,304 390 134,946 35,748 170,694 34,386 1990 GETTYSBURG, PA 170,642 7,230 134,111 43,761 177,872 38,706 1990 POTTSVILLE, PA 162,402 82,769 43,471 201,700 245,171 164,176 1990 POTTSVILLE, PA 451,360 19,361 147,740 322,981 470,721 300,057 1990 LANCASTER, PA 208,677 24,347 78,254 154,770 233,024 154,770 1989 BETHLEHEM, PA 208,677 42,927 130,423 121,181 251,604 112,182 1989 EASTON, PA 113,086 199,385 312,471 312,471 228,690 1989 BETHLEHEM, PA 115,636 97,776 213,412 213,412 175,185 1989 LANCASTER, PA 642,000 17,993 300,000 359,993 659,993 359,993 1989 HAMBURG, PA 219,280 75,745 130,423 164,602 295,025 139,828 1989 READING, PA 182,592 82,812 104,338 161,066 265,404 127,725 1989 MOUNTVILLE, PA 195,635 19,506 78,254 136,887 215,141 136,887 1989 EBENEZER, PA 147,058 88,474 68,804 166,728 235,532 122,433 1989 BETHLEHEM, PA 130,423 88,995 52,169 167,249 219,418 123,185 1989 INTERCOURSE, PA 311,503 81,287 157,801 234,989 392,790 63,502 1989 REINHOLDS, PA 176,520 83,686 82,017 178,189 260,206 117,463 1989 COLUMBIA, PA 225,906 13,206 75,000 164,112 239,112 101,241 1989 OXFORD, PA 191,449 118,321 65,212 244,558 309,770 188,482 1989
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- POTTSTOWN, PA 166,236 16,010 71,631 110,615 182,246 70,990 1989 EPHRATA, PA 208,604 52,826 30,000 231,430 261,430 120,229 1989 ROBESONIA, PA 225,913 102,802 70,000 258,715 328,715 164,554 1989 LANCASTER, PA 152,564 25,866 75,000 103,430 178,430 32,769 1998 KENHORST, PA 143,466 94,592 65,212 172,846 238,058 130,529 1989 NEFFSVILLE, PA 234,761 45,637 91,296 189,102 280,398 180,164 1989 LEOLA, PA 262,890 102,007 131,189 233,708 364,897 64,589 1989 EPHRATA, PA 187,843 9,400 65,212 132,031 197,243 130,572 1989 SHREWSBURY, PA 132,993 126,898 52,832 207,059 259,891 147,270 1989 RED LION, PA 221,719 29,788 52,169 199,338 251,507 195,569 1989 READING, PA 129,284 137,863 65,352 201,795 267,147 123,384 1989 ROTHSVILLE, PA 169,550 25,188 52,169 142,569 194,738 142,569 1989 HANOVER, PA 231,028 13,252 70,000 174,280 244,280 114,319 1989 LANCASTER, PA 156,507 19,215 52,169 123,553 175,722 123,553 1989 HARRISBURG, PA 399,016 347,590 198,740 547,866 746,606 279,090 1989 ADAMSTOWN, PA 213,424 108,844 100,000 222,268 322,268 119,263 1989 LANCASTER, PA 308,964 83,443 104,338 288,069 392,407 251,668 1989 NEW HOLLAND, PA 313,015 106,839 143,465 276,389 419,854 226,890 1989 CHRISTIANA, PA 182,593 11,178 65,212 128,559 193,771 128,559 1989 WYOMISSING HILLS, PA 319,320 113,176 76,074 356,422 432,496 299,087 1989 LAURELDALE, PA 262,079 15,550 86,941 190,688 277,629 178,921 1989 REIFFTON, PA 338,250 5,295 43,470 300,075 343,545 291,116 1989 W.READING, PA 790,432 68,726 387,641 471,517 859,158 430,097 1989 ARENDTSVILLE, PA 173,759 101,020 32,603 242,176 274,779 195,192 1989 MOHNTON, PA 317,228 56,374 66,425 307,177 373,602 272,400 1989 CARLISLE, PA 32,621 103,487 136,108 136,108 82,701 1989 MCCONNELLSBURG, PA 155,367 145,616 69,915 231,068 300,983 89,163 1989 BLACKSBURG, VA 23,644 206,308 229,952 229,952 113,810 1990 MARTINSVILLE, VA 33,837 106,699 140,536 140,536 88,903 1990 ROANOKE, VA 30,000 208,498 238,498 238,498 131,526 1990 RICH CREEK, VA 37,509 217,310 254,819 254,819 128,078 1990 ROANOKE, VA 91,281 206,221 297,502 297,502 179,827 1990 SALEM, VA 104,114 36,725 140,839 140,839 128,741 1990 STANLEYTOWN, VA 29,750 130,167 159,917 159,917 91,859 1990 ROANOKE, VA 30,000 142,340 172,340 172,340 108,122 1990 RICHMOND, VA 120,818 167,895 288,713 288,713 198,055 1990 DALEVILLE, VA 36,123 122,998 159,121 159,121 95,144 1990 CHESAPEAKE, VA(*) 1,184,759 25,382 604,983 605,158 1,210,141 38,910 1990 PORTSMOUTH, VA 562,255 17,106 221,610 357,751 579,361 316,831 1990 NORFOLK, VA 534,910 6,050 310,630 230,330 540,960 208,913 1990 PORTSMOUTH, VA 427,720 1,408 150,400 278,728 429,128 278,728 1990 CHESAPEAKE, VA 883,685 26,247 325,508 584,424 909,932 518,697 1990 CHESAPEAKE, VA 1,026,115 7,149 407,026 626,238 1,033,264 563,078 1990 BENNINGTON, VT 309,300 154,480 201,400 262,380 463,780 95,867 1985 JACKSONVILLE, FL 559,514 296,434 263,080 559,514 56,999 2000 JACKSONVILLE, FL 485,514 388,434 97,080 485,514 21,032 2000 JACKSONVILLE, FL 196,764 114,434 82,330 196,764 17,837 2000 JACKSONVILLE, FL 201,477 117,907 83,570 201,477 18,107 2000 JACKSONVILLE, FL 545,314 256,434 288,880 545,314 62,589 2000 ORLANDO, FL 867,515 401,435 466,080 867,515 100,982 2000
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Initial Cost Cost Gross Amount at Which Carried Date of of Leasehold Capitalized at Close of Period Accumulated Initial or Acquisition Subsequent ----------------------------------- Depreciation Leasehold or Investment to to Initial Building and and Acquisition Description Company (1) Investment (1) Land Improvements Total (2) Amortization Investment(1) - ----------- -------------- -------------- -------- ------------ --------- ------------ ------------- MISC. INVESTMENTS 4,121,031 13,079,803 2,092,936 15,106,898 17,199,834 13,693,663 ------------- -------------- ------------ ------------- ------------- ------------ $261,493,932 $85,097,218 $156,570,995 $190,019,155 $346,590,150 $106,462,900 ============= ============== ============ ============= ============= ============
(1) Initial cost of leasehold or acquisition investment to company represents the aggregate of the cost incurred during the year in which the Company purchased the property for owned properties or purchased a leasehold interest in leased properties. Cost capitalized subsequent to initial investment also includes investments made in previously leased properties prior to their acquisition. (2) The aggregate cost for federal income tax purposes was approximately $253,000,000 at December 31, 2004. -42 EXHIBIT INDEX GETTY REALTY CORP. Annual Report on Form 10-K for the year ended December 31, 2004
EXHIBIT NO. DESCRIPTION ------- ----------- 1.1 Agreement and Plan of Reorganization and Filed as Exhibit 2.1 to Company's Merger, dated as of December 16, 1997 Registration Statement on Form S-4, (the "Merger Agreement") by and among filed on January 12, 1998 (File No. Getty Realty Corp., Power Test Investors 333-44065), included as Appendix A To Limited Partnership and CLS General the Joint Proxy Statement/Prospectus Partnership Corp. that is a part thereof, and incorporated herein by reference. 3.1 Articles of Incorporation of Getty Filed as Exhibit 3.1 to Company's Realty Holding Corp. ("Holdings"), now Registration Statement on Form S-4, known as Getty Realty Corp., filed filed on January 12, 1998 (File No. December 23, 1997. 333-44065), included as Appendix D. to the Joint Proxy/Prospectus that is a part thereof, and incorporated herein by reference. 3.2 Articles Supplementary to Articles of Filed as Exhibit 3.2 to Company's Annual Incorporation of Holdings, filed January Report on Form 10-K for the fiscal year 21, 1998. ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 3.3 By-Laws of Getty Realty Corp. Filed as Exhibit 3.3 to Company's Annual Report On Form 10-K for the year ended December 31, 2002 (File No. 001-13777) and incorporated herein by reference. 3.4 Articles of Amendment of Holdings, Filed as Exhibit 3.4 to Company's Annual changing its name to Getty Realty Corp., Report on Form 10-K for the fiscal year filed January 30, 1998. ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 3.5 Amendment to Articles of Incorporation of Filed as Exhibit 99.2 to Company's Holdings, filed August 1, 2001. Current Report on Form 8-K dated August 1, 2001(File No. 001-13777) and incorporated herein by reference. 4.1 Dividend Reinvestment/Stock Purchase Plan. Filed under the heading "Description of Plan" on pages 4 through 17 to Company's Registration Statement on Form S-3D, filed on April 22, 2004 (File No.333-114730) and incorporated herein by reference. 10.1* Retirement and Profit Sharing Plan Filed as Exhibit 10.2(b) to Company's (amended and restated as of September Annual Report on Form 10-K for the fiscal 19, 1996), adopted by the Company on year ended January 31, 1997. (File No. December 16, 1997. 1-8059) and incorporated herein by reference.
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.1(a)* Retirement and Profit Sharing (amended Filed as Exhibit 10.1(a) to Company's and restated as of January 1, 2002), Annual Report on Form 10-K for the year adopted by the Company on September 3, ended December 31, 2002 (File No. 2002. 001-13777) and incorporated herein by reference. 10.2* 1998 Stock Option Plan, effective as of Filed as Exhibit 10.1 to Company's January 30, 1998. Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix H to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 10.3 Asset Purchase Agreement among Power Filed as Exhibit 2(a) to the Current Test Corp. (now known as Getty Report on Form 8-K of Power Test Corp., Properties Corp.), Texaco Inc., Getty filed February 19, 1985 (File No. Oil Company and Getty Refining and 1-8059) and incorporated herein by Marketing Company, dated as of December reference. 21, 1984. 10.4 Trademark License Agreement among Power Filed as Exhibit 2(b) to the Current Test Corp., Texaco Inc., Getty Oil Report on Form 8-K of Power Test Corp., Company and Getty Refining and Marketing filed February 19, 1985 (File No. Company, dated as of February 1, 1985. 1-8059) and incorporated herein by reference. 10.5* Form of Indemnification Agreement Filed as Exhibit 10.15 to Company's between the Company and its directors. Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.6* Supplemental Retirement Plan for Filed as Exhibit 10.22 to the Annual Executives of the Company (then known as Report on Form 10-K for the fiscal year Getty Petroleum Corp.) and Participating ended January 31, 1990 (File No. 1-8059) Subsidiaries (adopted by the Company on of Getty Petroleum Corp. and December 16, 1997). incorporated herein by reference. 10.7* Form of Agreement dated December 9, 1994 Filed as Exhibit 10.23 to the Annual between Getty Petroleum Corp. and its Report on Form 10-K for the fiscal year non-director officers and certain key ended January 31, 1995 (File No. 1-8059) employees regarding compensation upon of Getty Petroleum Corp. and change in control. incorporated herein by reference. 10.8* Form of Agreement dated as of March 7, Filed as Exhibit 10.27 to the Annual 1996 amending Agreement dated as of Report on Form 10-K for the fiscal year December 9, 1994 between Getty Petroleum ended January 31, 1996 (File No. 1-8059) Corp. (now known as Getty Properties of Getty Petroleum Corp. and Corp.) and its non-director officers and incorporated herein by reference. certain key employees regarding compensation upon change in control (See Exhibit 10.11). 10.9* Form of letter from Getty Petroleum Filed as Exhibit 10.19 to Company's Corp. dated April 8, 1997, confirming Annual Report on Form 10-K for the fiscal that a change of control event had year ended January 31, 1998 (File No. occurred pursuant to the change of 001-13777) and incorporated herein by control agreements. (See Exhibits 10.7 reference. and 10.8).
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.10* Form of Agreement dated March 9, 1998, Filed as Exhibit 10.20 to Company's from the Company to certain officers and Annual Report on Form 10-K for the fiscal key employees, adopting the prior change year ended January 31, 1998 (File No. of control agreements, as amended, and 001-13777) and incorporated and further amending those agreements. (See incorporated herein by reference. Exhibits 10.7, 10.8 and 10.9). 10.11 Form of Reorganization and Distribution Filed as Exhibit 10.29 to the Annual Agreement between Getty Petroleum Corp. Report on Form 10-K for the fiscal year (now known as Getty Properties Corp.) ended January 31, 1997 (File No. 1-8059) and Getty Petroleum Marketing Inc. dated of Getty Petroleum Corp. and as of February 1, 1997. incorporated herein by reference 10.12 Form of Tax Sharing Agreement between Filed as Exhibit 10.32 to the Annual Getty Petroleum Corp (now known as Report on Form 10-K for the fiscal year Getty. Properties Corp.) and Getty ended January 31, 1997 (File No. 1-8059) Petroleum Marketing Inc. of Getty Petroleum Corp. and incorporated herein by reference. 10.13* Form of Stock Option Reformation Filed as Exhibit 10.33 to the Annual Agreement made and entered into as of Report on Form 10-K for the fiscal year March 21, 1997 by and between Getty ended January 31, 1997 (File No. 1-8059) Petroleum Corp. (now known as Getty of Getty Petroleum Corp. and Properties Corp.) and Getty Petroleum incorporated herein by reference. Marketing Inc. 10.14 Consolidated, Amended and Restated Filed as Exhibit 10.21(a) to Company's Master Lease Agreement dated November 2, Quarterly Report on Form 10-Q dated 2000 between Getty Properties Corp. and December 15, 2000 (File No. 001-13777) Getty Petroleum Marketing Inc. and incorporated herein by reference. 10.15 Environmental Indemnity Agreement dated Filed as Exhibit 10.30 to Company's November 2, 2000 between Getty Quarterly Report on Form 10-Q dated Properties Corp. and Getty Petroleum December 15, 2000 (File No. 001-13777) Marketing Inc. and incorporated herein by reference. 10.17 Amended and Restated Trademark License Filed as Exhibit 10.23(a) to Company's Agreement, dated November 2, 2000, Quarterly Report on Form 10-Q dated between Getty Properties Corp. and Getty December 15, 2000 (File No. 001-13777) Petroleum Marketing Inc. and incorporated herein by reference. 10.18 Trademark License Agreement, dated Filed as Exhibit 10.23(b) to Company's November 2, 2000, between Getty (TM) Quarterly Report on Form 10-Q dated Corp. and Getty Petroleum Marketing Inc. December 15, 2000 (File No. 001-13777) and incorporated herein by reference. 10.19 Asset Purchase Agreement by and between Filed as Exhibit 10.19 to Company's Jems of New England, Inc., Charlex, Annual Report on Form 10-K for the year Inc., Jems Enterprises, Inc., and ended December 31, 2002 (File No. Robbins Realty Corp., and Getty 001-13777) and incorporated herein by Properties Corp. reference. 10.20* 2004 Getty Realty Corp. Omnibus Incentive Filed as Appendix B to the Definitive Compensation Plan. Proxy Statement of Getty Realty Corp., filed April 9, 2004 (File No. 001-13777) and incorporated herein by reference.
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EXHIBIT NO. DESCRIPTION ------- ----------- 10.20.1* Form of restricted stock unit grant award under (a) the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan. 13 Annual Report to Shareholders for the (b) fiscal year ended December 31, 2004. 14 The Getty Realty Corp. Business Conduct Filed as Exhibit 14 to Company's Guidelines (Code of Ethics). Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-13777) and incorporated herein by reference. 21 Subsidiaries of the Company. (a) 23 Consent of Independent Registered Public (a) Accounting Firm. 31.1 Rule 13a-14(a) Certification of Chief (a) Financial Officer. 31.2 Rule 13a-14(a) Certification of Chief (a) Executive Officer. 32.1 Section 1350 Certification of Chief Executive (c) Officer. 32.2 Section 1350 Certification of Chief Financial (c) Officer.
- ----------- (a) Filed herewith. (b) With the exception of information expressly incorporated herein by direct reference thereto, the Annual Report to Shareholders for the fiscal year ended December 31, 2004 is not deemed to be filed as part of this Annual Report on Form 10-K or incorporated therein. (c) Furnished herewith. These certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. Section. 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. * Management contract or compensatory plan or arrangement. -46- SIGNATURES 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. Getty Realty Corp. (Registrant) By: /s/ Thomas J. Stirnweis ----------------------- Thomas J. Stirnweis, Vice President, Treasurer and Chief Financial Officer March 11, 2005 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: /s/ Leo Liebowitz By: /s/ Thomas J. Stirnweis ----------------- ----------------------- Leo Liebowitz Thomas J. Stirnweis Chairman, Chief Executive Vice President, Treasurer and Officer and Director Chief Financial Officer March 11, 2005 (Principal Financial and Accounting Officer) March 11, 2005 By: /s/ Milton Cooper By: /s/ Philip E. Coviello ----------------- ---------------------- Milton Cooper Philip E. Coviello Director Director March 11, 2005 March 11, 2005 By: /s/ Howard Safenowitz By: /s/ Warren G. Wintrub --------------------- --------------------- Howard Safenowitz Warren G. Wintrub Director Director March 11, 2005 March 11, 2005 -47- EX-10.20.1 2 c93068exv10w20w1.txt FORM OF RESTRICTED STOCK UNIT GRANT AWARD EXHIBIT 10.20.1 FORM OF RESTRICTED STOCK UNIT GRANT AWARD UNDER THE 2004 GETTY REALTY CORP. OMNIBUS INCENTIVE COMPENSATION PLAN RESTRICTED STOCK UNIT AGREEMENT THIS RESTRICTED STOCK UNIT AGREEMENT (the "Agreement"), dated as of ____________ (the "Grant Date"), between Getty Realty Corp. (the "Company"), and ___________________ ("Holder"). RECITALS A. The Company has adopted the Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the "Plan") (the terms of which are hereby incorporated by reference and made part of this Agreement). B. The Committee appointed to administer the Plan has determined that it would be to the advantage and best interest of the Company and its shareholders to award Restricted Stock Units to Holder as an inducement for Holder to remain in the service of the Company and as an incentive for increased efforts during such service, and has advised the Company thereof and instructed the undersigned officer(s) to award such Restricted Stock Units to Holder, subject to the restrictions and conditions contained in this Agreement. AGREEMENTS In consideration of services to be rendered to the Company and the other mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following definitions ascribed to them: (a) "Cause" shall mean a determination by the Committee that the Holder's employment was terminated due to: (i) the Holder's conviction of any crime (whether or not involving the Company) constituting a felony in the applicable jurisdiction; (ii) conduct of the Holder related to the Holder's employment for which either criminal or civil penalties may be sought against the Holder and/or the Company; (iii) material violation of the Company's Business Conduct Guidelines, including, but not limited to those relating to sexual harassment, the disclosure or misuse of confidential information, or those set forth in other Company manuals or statements of policy; or (iv) serious neglect or misconduct in the performance of the Holder's duties for the Company or willful or repeated failure or refusal to perform such duties. (b) "Code" shall mean the Internal Revenue Code of 1986, as amended. (c) "Committee" shall mean the Compensation Committee of the Company's Board of Directors, or another committee or subcommittee of the Board. (d) "Disability" shall mean a disability described in Section 442(c)(6) of the Code. The existence of a Disability shall be determined by the Committee in its sole and absolute discretion. (e) "Fair Market Value" of a share of Common Stock as of a given date shall be (i) the closing price of a share of Common Stock on the principal exchange on which shares of Common Stock are then trading, if any (or as reported on any composite index which includes such principal exchange), on the trading day previous to such date, or if shares were not traded on the trading day previous to such date, then on the next preceding date on which a trade occurred, or (ii) if Common Stock is not traded on an exchange but is quoted on Nasdaq or a successor quotation system, the mean between the closing representative bid and asked prices for the Common Stock on the trading day previous to such date as reported by Nasdaq or such successor quotation system, or (iii) if Common Stock is not publicly traded on an exchange and not quoted on Nasdaq or a successor quotation system, the Fair Market Value of a share of Common Stock as established by the Administrator acting in good faith." (f) "Termination of Employment" shall mean the time when the employee-employer relationship between the Holder and the Company or any Subsidiary is terminated for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or Retirement; but excluding (a) terminations where there is a simultaneous reemployment or continuing employment of the Holder by the Company or any Subsidiary, (b) at the discretion of the Committee, terminations which result in a temporary severance of the employee-employer relationship, and (c) at the discretion of the Committee, terminations which are followed by the simultaneous establishment of a consulting relationship by the Company or a Subsidiary with the Holder. 2. Grant of Restricted Stock Units. Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants ________ Restricted Stock Units ("Units") to Holder, to be credited to a separate account maintained for Holder on the books of the Company (the "Account"). On any date, the value of each Unit shall equal the Fair Market Value of one share of the common stock of the Company, par value $0.01 per share ("Common Stock"). 3. Vesting. (a) Subject to the accelerated vesting provisions set forth in Section 2(b) below, the Units shall vest, on a cumulative basis, with respect to 20% of the Units on the first anniversary of the Grant Date, and as to an additional 20% on each succeeding anniversary of the Grant Date (each such date, a "Vesting Date"), so as to be 100% vested on the fifth anniversary thereof, provided that Holder is employed by the Company or a Subsidiary on each such date. (b) Notwithstanding the foregoing: 1. the Units shall vest as to 100% of the then unvested Units in the Holder's Account upon the Holder's Termination of Employment by the Company without Cause; 2. the Units shall vest as to 100% of the then unvested Units in the Holder's Account upon the Holder's death; and 3. if the Holder incurs a Termination of Employment for any reason other than by the Company without Cause, all Units which have not vested at the time of such termination shall be automatically forfeited. -2- 4. Settlement. Each vested Unit credited to the Holder's Account will be settled by the Company (and, upon such settlement, cease to be credited to the Holder's Account) by either (a) the issuance to the Holder of one share of Common Stock or (b) a payment to the Holder of an amount equal to the Fair Market Value of a share of Common Stock on the Settlement Date (hereinafter defined), such election to be made by the Committee in its sole and absolute discretion. Settlement of vested Units shall occur on the date (the "Settlement Date") that is the later to occur of (i) the first anniversary of the Grant Date, or (ii) within 30 days after the Holder's Termination of Employment, unless the Holder is a "specified employee" within the meaning of Section 409A of the code at the time of his/her Termination of Employment, in which case settlement shall occur on the first day following the six month anniversary of the Holder's Termination of Employment. Notwithstanding the foregoing, the Committee may settle vested Units on a date that is earlier than the Settlement Date described above if in its sole and absolute discretion the Committee determines that the Holder has incurred an "unforeseeable emergency" within the meaning of Section 409A(a)(2)(b)(ii) of the Code, in which case, such date shall be a "Settlement Date" under this Agreement. 5. Dividend Equivalent. If on any date the Company pays any dividend on the Common Stock (the "Payment Date"), then Holder shall receive, within 14 days after the Payment Date, a cash payment equal to the product of (i) the number of Units in the Holder's Account that have vested as of the Payment Date, multiplied by (ii) the per share cash amount of such dividend (or, in the case of a dividend payable in Common Stock or in property other than cash, the per share equivalent cash value of such dividend, as determined in good faith by the Committee). For purposes of this paragraph only, the Units shall be treated as being 100% vested as of the date hereof. 6. Restrictions. The Units granted hereunder may not be sold, pledged or otherwise transferred (other than by will or the laws of descent and distribution) and may not be subject to lien, garnishment, attachment or other legal process. The Holder acknowledges and agrees that, with respect to each Unit credited to his Account, Holder has no voting rights with respect to the Company unless and until such Unit is settled in Common Stock. 7. Taxation. On each Vesting Date, Holder will be obligated to pay all Social Security, Withholding and other (income based) taxes, that are due and payable by reason of the vesting of Units on such date. If Holder shall fail to deliver to the Company the entire amount of such Security, Withholding and other (income based) taxes, prior to the payment of Holder's next regular salary payment, then the Company shall have the right to withhold from such salary payment the unpaid amount of such Security, Withholding and other (income based) taxes. Additionally, upon the settlement of vested Units in cash on the Settlement Date, the Company shall have the right to withhold from such cash settlement an amount sufficient to satisfy all applicable Security, Withholding and other (income based) taxes. Upon the settlement of vested Units in Common Stock, the Holder shall be required as a condition of such settlement to pay to the Company by check the amount of any Security, Withholding and other (income based) taxes that the Company determines is required to be paid; provided, however, that, with the prior written consent of the Committee, the Holder may elect to satisfy such payment obligation by having the Company withhold from the settlement that number of shares of Common Stock having a Fair Market Value equal to the amount of such payment; and provided further, however, that the number of shares that may be so withheld by the Company shall be limited to -3- that number of shares of Common Stock having an aggregate Fair Market Value on the date of such withholding equal to the aggregate amount of the Holder's payment obligation on that date (i.e. Holder's federal and state income and payroll tax liabilities based upon the applicable minimum statutory withholding rates for federal and state income and payroll tax purposes). 8. No Effect on Employment. Neither this Agreement nor the Units granted hereunder shall confer upon Holder any right to, or impose upon Holder any obligation of, continued employment with the Company and shall not in any way modify or restrict any right the Company may otherwise have to terminate such employment. 9. Notices. Any notice hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telecopy, or certified or registered mail, postage prepaid, as follows: (a) If to the Company: Getty Realty Corp. 125 Jericho Turnpike, Ste. 103 Jericho, NY 11753 Attn: Chairman, Compensation Committee (b) If to the Holder, to the address set forth on the signature page hereof, or at any other address as any party shall have specified by notice in writing to the other party. 10. Miscellaneous. (a) All amounts credited to the Holder's Account under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Holder's interest in the Account shall make him only a general, unsecured creditor of the Company. (b) This Agreement, together with the Plan, constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be modified or amended except by a written agreement signed by the Company and Holder. In the event that any provision of this Agreement shall conflict with any provision of the Plan, the provision of this Agreement shall control, except to the extent that the same would violate applicable law. (c) Capitalized terms not defined herein shall have the meaning ascribed to such terms in the Plan. (d) The Units shall be subject to adjustment in accordance with Section 8.3 of the Plan. (e) No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. -4- (f) Except as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and the Holder and his heirs and personal representatives. (g) If any provision of this Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. (h) The section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said sections. Except as may otherwise be expressly provided, all references herein to "Section" or "Sections" shall mean the applicable section or sections of this Agreement. (i) Words in the singular shall be read and construed as though in the plural and words in the plural shall be read and construed as though in the singular in all cases where they would so apply. (j) This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed one original. (k) This Agreement shall be deemed to be a contract under the laws of the State of New York and for all purposes shall be construed and enforced in accordance with the internal laws of said state without regard to the principles of conflicts of law. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. GETTY REALTY CORP. By: ------------------------------- Leo Liebowitz, Chairman and CEO - ------------------------------- [Holder] - ------------------------------- Residence Address: - ------------------------------- Social Security Number: -5- EX-13 3 c93068exv13.txt ANNUAL REPORT TO SHAREHOLDERS EXHIBIT 13 GETTY REALTY CORP. AND SUBSIDIARIES SELECTED FINANCIAL DATA (in thousands, except per share amounts and number of properties)
FOR THE YEARS ENDED FOR THE ELEVEN DECEMBER 31, MONTHS ENDED --------------------------------------------------------- DECEMBER 31, 2004 2003 2002 2001 2000(a) --------- --------- --------- --------- -------------- OPERATING DATA: Revenues from rental properties $ 66,331 $ 66,601 $ 67,157 $ 68,322 $ 53,916 Earnings before income taxes 39,352 36,887 36,163 32,083 18,950 (Benefit) provision for income taxes -- -- -- (36,648)(b) 7,875 --------- --------- --------- --------- --------- Net earnings 39,352 36,887 36,163 68,731 11,075 Diluted earnings per common share 1.59 1.49(c) 1.44 3.18 .47 Diluted weighted average common shares outstanding 24,721 23,082 21,446 16,244 12,818 Cash dividends declared per share: Preferred -- 1.159 1.866 5.975 (d) 1.775 Common 1.700 1.675 1.650 5.275 (d) .60 FUNDS FROM OPERATIONS (e): Earnings before income taxes 39,352 36,887 36,163 32,083 18,950 Preferred stock dividends -- (2,538) (5,350) (5,088)(f) (5,098) --------- --------- --------- --------- --------- Earnings before income taxes applicable to common shareholders 39,352 34,349 30,813 26,995 13,852 Depreciation and amortization 7,490 8,411 9,016 9,281 9,196 Gains on sales of real estate (618) (928) (1,153) (990) (1,106) Cumulative effect of accounting change -- 550 -- -- -- --------- --------- --------- --------- --------- Funds from operations available to common shareholders 46,224 42,382 38,676 35,286 21,942 Straight-line rent (4,464) (5,537) (6,728) (8,388) -- --------- --------- --------- --------- --------- Adjusted funds from operations available to common shareholders 41,760 36,845 31,948 26,898 21,942 BALANCE SHEET DATA (AT END OF PERIOD): Real estate before accumulated depreciation and amortization 346,590 318,222 308,054 311,352 313,037 Total assets 290,728 272,003 282,491 288,188 255,725 Total debt 24,509 844 923 997 49,969 Shareholders' equity 225,503 228,025 233,426 237,773 128,099 ========= ========= ========= ========= ========= NUMBER OF PROPERTIES: Owned 795 772 739 744 753 Leased 250 256 310 335 344 --------- --------- --------- --------- --------- Total properties 1,045 1,028 1,049 1,079 1,097 --------- --------- --------- --------- ---------
- ---------- (a) The Company's fiscal year end changed to December 31 from January 31, effective December 31, 2000. (b) Represents a tax benefit due to the reversal of previously accrued income taxes that the Company would no longer be required to pay as a REIT. (c) Diluted earnings per common share of $1.51 before the impact of the cumulative effect of accounting change. (d) Includes $4.20 and $4.15 per share "earnings and profits" cash distribution paid on August 2, 2001 to preferred and common shareholders, respectively. (e) In addition to measurements defined by generally accepted accounting principles ("GAAP"), our management also focuses on funds from operations available to common shareholders ("FFO") and adjusted funds from operations available to common shareholders ("AFFO") to measure our performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of the performance of real estate investment trusts ("REITs"). FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization, gains or losses on sales of real estate, non-FFO items reported in discontinued operations, extraordinary items, and cumulative effect of accounting change. Other REITs may use definitions of FFO and or AFFO that are different than ours and, accordingly, may not be comparable. We believe that FFO is helpful to investors because FFO excludes various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance such as gains or losses from property sales and depreciation and amortization. In our case, however, GAAP net earnings and FFO include the significant impact of straight-line rent on our recognition of revenue from rental properties, which largely results from 2% annual rental increases scheduled under a master lease. In accordance with GAAP, the aggregate minimum rent due over the initial fifteen year term of the master lease is recognized on a straight-line basis rather than when due. As a result, management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less straight-line rent. In management's view, AFFO provides a more accurate depiction of the impact of the scheduled rent increases under the maser lease than FFO. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with generally accepted accounting principles and therefore should not be considered an alternative for GAAP net earnings or as a measure of liquidity. The provision (benefit) for income taxes has been excluded in calculating FFO and AFFO in 2001 and 2000 in order make the comparison to these earlier periods more meaningful. (f) Excludes $4.20 per share "earnings and profits" cash distribution paid on August 2, 2001 to preferred shareholders. -7- GETTY REALTY CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS of Financial Condition and Results of Operations GENERAL We are a real estate investment trust specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. We elected to be taxed as a REIT under the federal income tax laws beginning January 1, 2001. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our taxable income to shareholders each year. We lease or sublet our properties primarily to distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services. Nearly all of our properties are leased or sublet to third-party operators who are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual operations conducted at these properties. Nine hundred forty-nine of our one thousand forty-five properties are leased on a long-term basis under a master lease (the "Master Lease") and a coterminous supplemental lease for one property, (collectively the "Marketing Leases") to Getty Petroleum Marketing Inc. ("Marketing") which was spun-off to our shareholders as a separate publicly held company in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil ("Lukoil"), one of Russia's largest integrated oil companies. We rely upon revenues from leasing retail motor fuel and convenience store properties and petroleum distribution terminals, primarily to Marketing, for substantially all of our revenues (95.5% for the year ended December 31, 2004). Accordingly, our revenues will be dependent to a large degree on the economic performance of Marketing and of the petroleum marketing industry and any factor that adversely affects Marketing or our other lessees may have a material adverse effect on our financial condition and results of operations. In the event that Marketing cannot or will not perform its monetary obligations under the Marketing Leases with us, our financial condition and results of operations would be materially adversely affected. Although Marketing is wholly owned by a subsidiary of Lukoil, no assurance can be given that Lukoil will cause Marketing to fulfill any of its monetary obligations under the Marketing Leases. We periodically receive and review Marketing's financial statements and other financial data. We receive this information from Marketing pursuant to the terms of the Master Lease. This information is not publicly available and the terms of the Master Lease prohibit us from including this financial information in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q or in our Annual Report to Shareholders. As a result, the financial performance of Marketing may deteriorate, and Marketing may ultimately default on its monetary obligations to us before we receive financial information from Marketing that would indicate the deterioration or before we would have the opportunity to advise our shareholders of any increased risk of default. Certain financial and other information concerning Marketing is available from Dun & Bradstreet and may be accessed by their web site (www.dnbsearch.com) upon payment of their fee. If Marketing does not fulfill its monetary obligations to us under the Marketing Leases, our financial condition and results of operations will be materially adversely affected. Based on our review of the financial statements and other financial data Marketing has provided to us to date, we believe that Marketing has the ability to make its rent payments to us under the Marketing Leases timely when due. In August 2003, we called for redemption of all our outstanding preferred stock. Prior to the September 24, 2003 redemption date, shareholders with 98% of the preferred stock exercised their right to convert their shares of preferred stock into 3.2 million shares of common stock. The remaining shares of outstanding preferred stock were redeemed for an aggregate amount, including accrued dividends through the call date, of $1.2 million. We manage our business to enhance the value of our real estate portfolio and, as a REIT, place particular emphasis on minimizing risk and generating cash sufficient to make required distributions to shareholders of at least ninety percent of our taxable income each year. In addition to measurements defined by generally accepted -8- accounting principles ("GAAP"), our management also focuses on funds from operations available to common shareholders ("FFO") and adjusted funds from operations available to common shareholders ("AFFO") to measure our performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of performance of REITs. FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization, gains or losses on sales of real estate, non-FFO items reported in discontinued operations, extraordinary items and cumulative effect of accounting change. Other REITs may use definitions of FFO and or AFFO that are different than ours and, accordingly, may not be comparable. We believe that FFO is helpful to investors in measuring our performance because FFO excludes various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance such as gains or losses from property sales and depreciation and amortization. In our case, however, GAAP net earnings and FFO include the significant impact of straight-line rent on our recognition of revenues from rental properties, which largely results from 2% annual rental increases scheduled under the Master Lease. In accordance with GAAP, the aggregate minimum rent due over the initial fifteen-year term of the Master Lease is recognized on a straight-line basis rather than when due. As a result, management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less straight-line rent. In management's view, AFFO provides a more accurate depiction of the impact of scheduled rent increases under the Master Lease, than FFO. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with generally accepted accounting principles and therefore should not be considered an alternative for GAAP net earnings or as a measure of liquidity. FFO and AFFO are reconciled to net earnings in Selected Financial Data on page 7. RESULTS OF OPERATIONS Year ended December 31, 2004 compared to year ended December 31, 2003 Revenues from rental properties for the year ended December 31, 2004 were $66.3 million compared to $66.6 million for 2003. We received approximately $58.9 million in 2004 and $58.7 million in 2003 of rent from properties leased to Marketing under the Marketing Leases. We also received $2.9 million in 2004 and $2.3 million in 2003 from other tenants. The increase in rent received was primarily due to $0.5 million of rent from properties acquired in November 2004 and rent escalations and was partially offset by the effect of lease terminations and property dispositions. In addition, revenues from rental properties include $4.5 million in 2004 and $5.5 million in 2003 of deferred rental revenue recognized, as required by GAAP, primarily related to the 2% future annual rent increases due from Marketing under the terms of the Master Lease. The aggregate minimum rent due over the initial fifteen-year term of the Master Lease is recognized on a straight-line basis rather than when due. Rental property expenses, which are principally comprised of rent expense and real estate and other state and local taxes, were $9.8 million for 2004, a decrease of $0.8 million from 2003. The decrease was primarily due to a reduction in rent expense of $0.8 million as a result of the full year impact of 43 lease purchase options exercised in 2003 and an additional 8 lease purchase options exercised in 2004, partially offset by $0.1 million of rent expense from leasehold interests acquired in November 2004. -9- Environmental expenses for 2004 were $6.0 million, a decrease of $1.6 million from 2003. Environmental expenses for 2004 include a net change in estimated remediation costs and accretion expense aggregating $3.3 million, a $2.1 million decrease from the prior year. The decrease in the net change in estimated environmental costs was principally due to increases in expected recoveries from underground storage tank funds related to both past and future environmental spending partially offset by increases in changes in estimated remediation costs. The decrease in the net change in estimated remediation costs was partially offset by an increase in the amount accrued for environmental litigation of $0.5 million. General and administrative expenses for 2004 were $5.0 million compared to $4.1 million for 2003. The increase was primarily caused by approximately $0.4 million of higher legal and audit expenses, including internal controls review costs, incurred in 2004, primarily due to compliance with various requirements the Sarbanes-Oxley Act of 2002. The increase was also due to a smaller credit to insurance loss reserves recorded in 2004 as compared to 2003 and higher insurance premiums. A credit of $0.5 million was recorded in 2003 and a smaller credit of $0.3 million was recorded in 2004. The insurance loss reserves were established under our self funded insurance program that was terminated in 1997. Depreciation and amortization expense for 2004 was $7.5 million, a decrease of $0.9 million from 2003, as a result of certain assets becoming fully depreciated and dispositions of properties, partially offset by $0.2 million of depreciation and amortization expense on properties and leasehold interests acquired in November 2004. Other income was $1.5 million for 2004 as compared with $1.7 million for 2003. The $0.2 million decrease was due to lower gains on dispositions of properties, investment income and other items, partially offset by $0.4 million of income recorded in the fourth quarter of 2004 due to the elimination of reserves for late paying mortgage note receivable accounts and late fees recognized related to mortgage notes that were renegotiated in 2004 and are now current. The cumulative effect of accounting change recorded for 2003 is due to the adoption of Statement of Financial Accounting Standards No. ("SFAS") 143 effective January 1, 2003. Accrued environmental remediation costs and the related recoveries from state underground storage tank funds were adjusted to their estimated fair value resulting in a one-time cumulative effect of change in accounting charge of $0.6 million in 2003 (see "Environmental Matters" below). As a result, our net earnings of $39.4 million in 2004 increased $2.5 million, or 6.7%, over 2003 due to the items discussed above. FFO increased $3.8 million, or 9.1%, to $46.2 million in 2004, principally due to the elimination of $2.5 million in preferred stock dividends partially offset by the impact of lower depreciation expense recorded in 2004 and the one-time accounting charge recorded in 2003. The preferred stock dividends were eliminated as a result of the conversion of 98% of our outstanding convertible preferred stock into 3.2 million common shares and the redemption of the remaining preferred shares in September 2003. AFFO increased $4.9 million, or 13.3%, to $41.8 million in 2004. AFFO increased more than FFO on both a dollar and percentage basis due to $1.1 million in lower deferred rental revenues (which are included in FFO, but excluded from AFFO) recorded in 2004 as compared to 2003. Diluted earnings per common share in 2004 increased 6.7% to $1.59 per share, as compared to $1.49 per share in 2003. Diluted FFO per common share increased 2.8% to $1.87 per share in 2004, as compared to $1.82 per share in 2003 and diluted AFFO per common share increased 6.3% to $1.69 per share in 2004, as compared to $1.59 per share in 2003. The percentage changes in FFO per common share and AFFO per common share are different than the respective percentage changes in FFO and AFFO, when compared to the prior year period, since the diluted per share amounts for 2004 reflect the actual September 2003 conversion and redemption of our preferred shares discussed above, while the per share amounts for 2003 reflect the assumed conversion of our outstanding preferred stock as if the conversion had occurred at the beginning of the year. Accordingly, preferred stock dividends of $2.5 million were added back to FFO and AFFO in calculating FFO and AFFO per share amounts in 2003. The effect of the potential dilution from the assumed conversion utilizing the two class method in computing earnings per share would have been anti-dilutive and was not assumed. There were no preferred shares outstanding during the year ended 2004. -10- Year ended December 31, 2003 compared to year ended December 31, 2002 Revenues from rental properties for the year ended December 31, 2003 were $66.6 million compared to $67.2 million for 2002. We received approximately $58.7 million in 2003 and $58.1 million in 2002 of rent from properties leased to Marketing under the Master Lease. We also received $2.3 million in 2003 and 2002 from other tenants. The increase in rent received was primarily due to rent escalations and was partially offset by the effect of lease terminations and property dispositions. In addition, revenues from rental properties include $5.5 million in 2003 and $6.7 million in 2002 of deferred rental revenue. Rental property expenses, were $10.7 million for 2003, a decrease of $1.3 million from 2002. The decrease was primarily due to a reduction in rent expense of $1.1 million as a result of the exercise of 43 lease purchase options, including the acquisition of 41 leased properties in May 2003 for an aggregate purchase price of approximately $13.0 million. Environmental expenses for 2003 were $7.6 million, a decrease of $1.1 million from 2002. Environmental expenses for 2003 include $4.2 million for the net change in estimated environmental costs, as compared to $6.7 million for the prior period. The decrease in the net change in estimated environmental costs from 2002 to 2003 of $2.5 million was due to a required change in the method used to account for estimated environmental costs and estimated recoveries from underground storage tank funds beginning in 2003, partially offset by related accretion expense of $1.3 million recorded in the current period. Effective January 1, 2003, environmental liabilities and related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value (see "Environmental Matters" below). The net change in estimated environmental costs for 2003 of $4.2 million is primarily due to reductions in recovery rates used to estimate recoveries from underground storage tank remediation funds based on recent experience with the funds, partially offset by reductions in estimated environmental expenses. General and administrative expenses for 2003 were $4.1 million compared to $3.7 million for 2002. The increase was also due to a smaller credit to insurance loss reserves recorded in 2003 as compared to 2002. A credit of $0.9 million was recorded in 2002 and a smaller credit of $0.5 million was recorded in 2003. The insurance loss reserves were established under our self funded insurance program that was terminated in 1997. Depreciation and amortization for 2003 was $8.4 million, a decrease of $0.6 million from 2002, as a result of certain assets becoming fully depreciated and dispositions of properties. Other income was $1.7 million for 2003 as compared with $2.5 million for 2002. The $0.8 million decrease was due to lower gains on dispositions of properties, investment income and other items. The cumulative effect of accounting change recorded for 2003 is due to the adoption of SFAS 143 effective January 1, 2003. Accrued environmental remediation costs and the related recoveries from state underground storage tank funds were adjusted to their estimated fair value resulting in a one-time cumulative effect of change in accounting charge of $0.6 million (see "Environmental Matters" below). As a result, our net earnings were $36.9 million in 2003, an increase of 2.0% over 2002, while FFO increased 9.6% to $42.4 million in 2003 and AFFO (defined as FFO minus straight-line rent) increased 15.3% to $36.8 million during the period. AFFO increased more than FFO on both a dollar and percentage basis due to the $1.2 million reduction in deferred rental revenues recorded in 2003 compared to 2002, which are included in FFO but excluded from AFFO. The increases in FFO and AFFO were partially due to the reduction in preferred stock dividends as a result of the conversion and redemption of our outstanding preferred stock in the quarter ended September 30, 2003. Diluted earnings per common share in 2003 increased 3.5% to $1.49 compared to $1.44 in 2002, while FFO per common share and AFFO per common share increased 2.2% and 5.3% to $1.82 and $1.59, respectively. The increases in net earnings, FFO and AFFO per common share were partly offset by an increase in the weighted number of common shares outstanding in calculating per share amounts, principally due to the conversion of preferred shares into 3.2 million common shares. -11- LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are available cash and equivalents, the cash flows from our business and a short-term uncommitted line of credit with JPMorgan Chase Bank ("JPMorgan"). Management believes that dividend payments and cash requirements for our business for the next twelve months, including environmental remediation expenditures, capital expenditures and debt service, can be met by cash flows from operations, available cash and equivalents and the credit line. However, we intend to borrow funds to complete the pending acquisition. See "Subsequent Events" below. As of December 31, 2003, we had a line of credit amounting to $25.0 million. Total borrowings outstanding under the uncommitted line of credit at December 31, 2004 were $24.0 million and an additional $0.2 million was utilized for outstanding letters of credit. Borrowings under the line of credit are unsecured and bear interest at the prime rate or, at our option, LIBOR plus 1.25%. The line of credit is subject to annual renewal in June 2005 at the discretion of the bank. In March 2005 we entered into a non-binding Commitment Letter with JPMorgan for an unsecured three-year senior revolving credit facility ("Credit Facility") in the aggregate amount of $100.0 million which we anticipate will replace the outstanding $25.0 million uncommitted line of credit. We intend to use the Credit Facility to repay borrowings outstanding under the uncommitted line of credit and to provide funds for the pending acquisition. We expect that the remaining unused availability will approximate $55.0 million and will be available for general corporate purposes including acquisitions. See "Subsequent Events" below. We elected to be taxed as a REIT under the federal income tax laws with the year beginning January 1, 2001. As a REIT, we are required, among other things, to distribute at least 90% of our taxable income to shareholders each year. Payment of dividends is subject to market conditions, our financial condition and other factors, and therefore cannot be assured. Dividends declared for our common and preferred shareholders aggregated $42.0 million, $41.2 million and $40.7 million for 2004, 2003 and 2002, respectively. We declared common stock dividends of $0.425 per share for the four quarters of 2004 and the last two quarters of 2003. Common stock dividends were $0.4125 per share for the first two quarters of 2003 and for the four quarters of 2002. The Board of Directors declared a common stock dividend of $0.435 per share in February 2005, which is an increase of $0.01 per share over the prior quarter. We presently intend to pay common stock dividends of $0.435 per quarter ($1.74 per share on an annual basis). In August 2003, we notified holders of Series A Participating Convertible Redeemable Preferred Stock that the preferred stock would be redeemed on September 24, 2003 for $25.00 per share plus a mandatory redemption dividend of $0.271 per share. Prior to the redemption date, shareholders with 98% of the preferred stock exercised their right to convert 2,816,919 shares of preferred stock into 3,186,355 shares of common stock at the conversion rate of 1.1312 shares of common stock for each share of preferred stock so converted, and received cash in lieu of fractional shares of common stock. The remaining 48,849 shares of the outstanding preferred stock were redeemed for $1.2 million which included accrued dividends through the call date. The preferred stock ceased accruing dividends and trading on the NYSE in September 2003. In addition to the mandatory redemption dividend, we declared quarterly cash preferred stock dividends of $0.44375 per share for the first two quarters of 2003, and for the first three quarters of 2002. The preferred stock dividend for the fourth quarter of 2002 was $0.53523 per share. In order to initially qualify for REIT status, we were required to make a distribution to shareholders in an amount at least equal to our accumulated earnings and profits from the years we operated as a taxable corporation. A special one-time earnings and profits distribution was paid in August 2001 to holders of Getty common stock and preferred stock. Determination of accumulated earnings and profits for federal income tax purposes is extremely complex. Should the Internal Revenue Service successfully assert that our accumulated earnings and profits were greater than the amount distributed in 2001, 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 accumulated earnings and profits. We may have to borrow money or sell assets to pay such a deficiency dividend. -12- Since we generally lease our properties on a triple-net basis and we do not capitalize environmental remediation equipment, we do not incur significant capital expenditures other than those related to acquisitions. Capital expenditures, including acquisitions, for 2004, 2003 and 2002 amounted to $30.6 million, $14.3 million and $2.8 million, respectively. On November 1, 2004, we completed the acquisition of 36 convenience store and retail motor fuel properties located in Connecticut and Rhode Island for approximately $25.7 million. Simultaneously with the closing on the acquisition, we entered into a triple-net lease with a single tenant for all of the properties. The lease provides for annual rentals at a competitive lease capitalization rate and provides escalations thereafter. The triple-net lease has an initial term of fifteen years and provides the tenant options for three renewal terms of five years each. The lease also provides that the tenant is responsible for environmental conditions at the properties, including those properties where remediation activities are ongoing. On May 1, 2003, we completed the acquisition of forty-one retail motor fuel and convenience store properties that we had been leasing for the past twelve years. The aggregate purchase price for these properties was approximately $13.0 million, excluding transaction costs. Forty of the locations are subleased to Marketing under the Master Lease through at least 2015. Annual rent expense of approximately $1.3 million, and future rent escalations scheduled through 2056, will be eliminated as a result of the acquisition. Since the seller has agreed to indemnify us for historical environmental costs, and the seller's indemnity is supported by an escrow fund established solely for that purpose, our exposure to environmental remediation expenses should not change because of the acquisition. SUBSEQUENT EVENTS On February 23, 2005, we entered into a definitive real estate purchase agreement to acquire 23 convenience store and retail motor fuel properties in Virginia for approximately $29.0 million. The closing is expected to be completed by the end of the first quarter 2005. We also entered into a triple-net lease with a single tenant for all of the properties. The tenant currently leases the properties from the seller and operates these locations under its proprietary convenience store brand in its network of over 200 locations. The lease provides for annual rentals at a competitive lease capitalization rate and provides for escalations thereafter. The lease has an initial term of fifteen years and provides the tenant options for three renewal terms of five years each. The lease also provides that the tenant is responsible for all existing and future environmental conditions at the properties. An affiliate of the tenant currently leases other properties from us. In March 2005 we entered into a Commitment Letter with JPMorgan for an unsecured three-year senior revolving credit facility in the aggregate amount of $100.0 million which we anticipate will replace the outstanding $25.0 million uncommitted line of credit. Under the terms of the proposed Credit Facility, we expect to have the option to increase the Credit Facility by $25.0 million and extend the Credit Facility for one additional year. While the Commitment Letter is non-binding, is subject to JPMorgan's successful syndication of a substantial portion of the Credit Facility, and execution of definitive agreements containing customary terms and conditions, we believe that the Credit Facility will be committed and available in the second quarter of 2005. We anticipate that borrowings under the proposed Credit Facility will bear interest at a rate equal to the sum of a base rate or a LIBOR rate plus an applicable margin ranging from 1.25% to 1.75%, which is based on our leverage ratio, as defined by the Credit Facility. The annual commitment fee on the unused proposed Credit Facility Fee will range from 0.10% to 0.20%, and will be based on usage. We expect that the Credit Facility will include financial covenants such as leverage and coverage ratios and other customary covenants, including limitations on our ability to incur debt and pay dividends, maintenance of tangible net worth and events of default, including a change of control and maintenance of REIT status. We believe that these covenants will not limit our current business practices. -13- In addition, JPMorgan has agreed to increase the funds available under the existing $25.0 million uncommitted line of credit, which expires on June 30, 2005, if required to enable us to complete the acquisition discussed above prior to funds becoming available under the proposed Credit Facility. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Our significant contractual obligations and commitments and our other commercial commitments are comprised of borrowings under credit lines, long-term debt, operating lease payments due to landlords and projected environmental remediation expenditures, net of projected recoveries from state underground storage tank funds. In addition, as a REIT we are required to pay dividends equal to at least ninety percent of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and estimated commercial commitments are summarized below (in thousands):
TOTAL 2005 2006 2007 2008 2009 2010 THEREAFTER -------- -------- -------- -------- ------- ------- ------- ---------- Operating leases $ 38,668 $ 8,950 $ 7,692 $ 6,176 $ 4,977 $ 3,254 $ 1,793 $ 5,826 Borrowings under credit lines 24,000 24,000 Long-term debt 509 285 30 31 33 27 21 82 -------- -------- -------- -------- ------- ------- ------- ------- Total contractual obligations $ 63,177 $ 33,235 $ 7,722 $ 6,207 $ 5,010 $ 3,281 $ 1,824 $ 5,908 ======== ======== ======== ======== ======= ======= ======= ======= Environmental remediation expenditures (a) $ 20,626 $ 6,516 $ 4,504 $ 2,942 $ 1,815 $ 1,113 812 $ 2,924 Recoveries from state underground storage tank funds (a) (5,437) (1,542) (1,144) (845) (574) (401) (287) (644) -------- -------- -------- -------- ------- ------- ------- ------- Net environmental remediation expenditures (a) $ 15,189 $ 4,974 $ 3,360 $ 2,097 $ 1,241 $ 712 525 $ 2,280 ======== ======== ======== ======== ======= ======= ======= =======
(a) Projected environmental remediation expenditures and projected recoveries from state underground storage tank funds have been adjusted for inflation and discounted to present value. Generally the leases with our tenants are "triple-net" leases, with the tenant responsible for the payment of taxes, maintenance, repair, insurance, environmental remediation and other operating expenses. We estimate that Marketing makes annual real estate tax payments for properties leased under the Marketing Leases of approximately $11.6 million and makes additional payments for other operating expenses related to our properties, including environmental remediation costs other than those liabilities that were retained by us. These costs are not reflected in our consolidated financial statements. We have agreed to reimburse Marketing for one-half of certain capital expenditures for work required to comply with local zoning requirements up to a maximum amount designated for each property and an aggregate maximum reimbursement of $875,000. We have reimbursed Marketing for $265,000 of these costs during 2004 and expect to reimburse Marketing for the remaining balance in 2005. We have no significant contractual obligations not fully recorded on our Consolidated Balance Sheets or fully disclosed in the Notes to our Consolidated Financial Statements. We have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K under the Securities Exchange Act of 1934, as amended. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The consolidated financial statements included in this report include the accounts of Getty Realty Corp. and our wholly-owned subsidiaries. The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect amounts reported in its financial statements. We have made our best estimates, judgments and assumptions relating to certain amounts that are included in our financial statements, giving due consideration to the accounting policies selected and materiality. We do not believe that there is a great likelihood that materially different amounts would be reported related to the application of the accounting policies described below. -14- Application of these accounting policies, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates, judgments and assumptions. Our accounting policies are described in note 1 to the consolidated financial statements. Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state underground storage tank funds, environmental remediation costs, (see "Environmental Maters" below) real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses and income taxes. We believe the following are our critical accounting policies: Revenue recognition--We earn revenue primarily from operating leases with Marketing and other tenants. We recognize income under the Master Lease with Marketing, and with other tenants, on the straight-line method, which effectively recognizes contractual lease payments evenly over the initial term of the leases. A critical assumption in applying this accounting method is that the tenant will make all contractual lease payments during the initial lease term and that the deferred rent receivable of $25.1 million recorded as of December 31, 2004 will be collected when due, in accordance with the annual rent escalations provided for in the leases. Historically our tenants have generally made rent payments when due. However, we may be required to reverse, or provide reserves for, a portion of the recorded deferred rent receivable if it becomes apparent that a property may be disposed of before the end of the initial lease term or if the tenant fails to make its contractual lease payments when due. Impairment of long-lived assets--Real estate assets represent "long-lived" assets for accounting purposes. We review the recorded value of long-lived assets for impairment in value whenever any events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We may become aware of indicators of potentially impaired assets upon tenant or landlord lease renewals, upon receipt of notices of potential governmental takings and zoning issues, or upon other events that occur in the normal course of business that would cause us to review the operating results of the property. We believe our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts. Income taxes--Our future financial results generally will not reflect provisions for current or deferred federal income taxes since we elected to be taxed as a REIT effective January 1, 2001. Our intention is to operate in a manner that will allow us to continue to be taxed 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. Certain states do not follow the federal REIT rules and we have included provisions for these taxes in rental property expenses. Environmental costs and recoveries from state underground storage tank funds--We provide for the estimated fair value of future environmental remediation costs when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made (see "Environmental Matters" below). 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. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to past and future spending, are accrued as income, net of allowance for collection risk, 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 underground storage tank 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. Effective January 1, 2003, environmental liabilities and related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. -15- Litigation--Legal fees related to litigation are expensed as legal services are performed. We provide for litigation reserves, including certain environmental litigation (see "Environmental Matters" below), when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. If the best 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. 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. ENVIRONMENTAL MATTERS We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. In recent years, environmental expenses were principally attributable to remediation, monitoring and governmental agency reporting incurred in connection with contaminated properties. In prior periods, a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tank systems ("USTs") to meet federal, state and local environmental standards. In accordance with the leases with certain of our tenants, we have agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure ("Closure") in an efficient and economical manner. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. We will continue to seek reimbursement from state UST remediation funds related to these environmental liabilities where available. We have also agreed to provide limited environmental indemnification, capped at $4.25 million and expiring in 2010, to Marketing for certain pre-existing conditions at six of the terminals owned by us. Under the indemnification agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. We have not accrued a liability in connection with this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreement. 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 environmental remediation liability is estimated based on the level and impact of contamination at each property. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to both past and future environmental spending, are accrued at fair value as income, net of allowance for collection risk, based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable. The accrued liability is the aggregate of the best estimate for the fair value of cost for each component of the liability. In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires that obligations associated with the retirement of tangible long-lived assets be recognized at their fair value if the asset retirement obligation results from the normal operation of those assets and a reasonable estimate of fair value can be made. Due to the adoption of SFAS 143 effective January 1, 2003, accrued environmental remediation costs and recoveries from state underground storage tank funds were adjusted to their estimated fair value resulting in a one-time cumulative effect of change in accounting charge of $550,000. Environmental liabilities and related assets are currently measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. Prior to the adoption of SFAS 143 generally accepted accounting principles required that if the best estimate of cost for a component of the liability could only be identified as a range, and no amount within the range was a better estimate than any other amount, the minimum of the range was accrued for that cost component. Historically, such accruals were not adjusted for inflation or discounted to present value. Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination. -16- In developing our liability for probable and reasonably estimable environmental remediation costs, on a property by property basis, we consider among other things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as these contingencies become more clearly defined and reasonably estimable. As of December 31, 2004, we have remediation action plans in place for 316 (92%) of the 345 properties for which we retained environmental responsibility and have not received a no further action letter and the remaining 29 properties (8%) remain in the assessment phase. As of December 31, 2004, December 31, 2003 and January 1, 2003, we had accrued $20.6 million, $23.6 million and $29.4 million, respectively, as management's best estimate of the fair value of reasonably estimable environmental remediation costs. As of December 31, 2004, December 31, 2003 and January 1, 2003, we had also recorded $5.4 million, $7.5 million and $14.3 million, respectively, as management's best estimate for net recoveries from state UST remediation funds, net of allowance, related to environmental obligations and liabilities. The net environmental liabilities of $16.1 million as of December 31, 2003 and $15.1 million as of January 1, 2003 were subsequently accreted for the change in present value due to the passage of time, and accordingly, $1.1 million and $1.3 million of accretion expense is included in environmental expenses for 2004 and 2003, respectively. Environmental expenditures and recoveries from underground storage tank funds were $6.8 million and $2.4 million, respectively, for 2004. The decrease in accrued environmental costs and net recoveries during 2004 were primarily due to payments made and cash received during the period, respectively, partially offset by changes in estimated expenditures and recoveries, respectively. During 2005, we estimate that our net environmental remediation spending will be approximately $5.0 million. Our business plan for 2005 reflects a net change in estimated remediation costs and accretion expense of approximately $3.6 million. Environmental liabilities and related assets are currently measured at fair value based on their expected future cash flows which have been adjusted for inflation and discounted to present value. We also use probability weighted alternative cash flow forecasts to determine fair value. For locations where remediation efforts are not assumed to be completed during 2005, we assumed a 50% probability factor that the actual environmental expenses will exceed engineering estimates for an amount assumed to equal one year of net expenses aggregating $5.4 million for those sites. Accordingly, the environmental accrual as of December 31, 2004 was increased by $2.2 million, net of assumed recoveries and before inflation and present value discount adjustments. The resulting net environmental accrual as of December 31, 2004 was then further increased by $1.5 million for the assumed impact of inflation using an inflation rate of 2.75%. Assuming a credit-adjusted risk-free discount rate of 7.0%, we then reduced the net environmental accrual, as previously adjusted, by a $4.2 million discount to present value. Had we assumed an inflation rate that was 0.5% higher and a discount rate that was 0.5% lower, net environmental liabilities as of December 31, 2004 would have increased by $0.2 million for each of those factors for an aggregate increase in the net environmental accrual of $0.4 million. In addition, the aggregate net change in environmental estimates and accretion expense recorded during the year ended December 31, 2004 would have increased by $0.2 million due to these changes in the assumptions. In view of the uncertainties associated with environmental expenditures, however, we believe it is possible that the fair value of future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in our financial statements as they become probable and a reasonable estimate of fair value can be made. For 2004, 2003 and 2002, the aggregate of the net change in estimated remediation costs and accretion expense included in our consolidated statements of operations amounted to $3.3 million, $5.5 million and $6.6 million, respectively, which amounts were net of probable recoveries from state UST remediation funds. Although future environmental costs may have a significant impact on results of operations for any single fiscal year or interim period, we believe that such costs will not have a material adverse effect on our long-term financial position. We cannot predict what environmental legislation or regulations may be enacted in the future or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict if state underground storage tank 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 -17- continue to be eligible for reimbursement at historical recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of existing laws, which may develop in the future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation. In September 2003, we were notified by the State of New Jersey Department of Environmental Protection that we are one of approximately 60 potentially responsible parties for natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The definitive list of potentially responsible parties and their actual responsibility for the alleged damages, the aggregate cost to remediate the Lower Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially responsible parties have not been determined. In September 2004, we received a General Notice Letter from the US EPA (the "EPA Notice"), advising us that we may be a potentially responsible party for costs of remediating certain conditions resulting from discharges of hazardous substances into the Lower Passaic River. ChevronTexaco received the same EPA Notice regarding those same conditions. We believe that ChevronTexaco is obligated to indemnify us, pursuant to an indemnification agreement regarding the conditions at the property identified by the DEP and EPA and accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time. From October 2003 through February 2004 we were notified that we were made party to 36 cases, and one additional case in the fourth quarter of 2004, in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Vermont, Virginia and West Virginia brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. The accuracy of the allegations as they relate to us, our defenses to such claims, the aggregate amount of damages, the definitive list of defendants and the method of allocating such amounts among the defendants have not been determined. Accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time. DISCLOSURES ABOUT MARKET RISK We do not use derivative financial or commodity instruments for trading, speculative or any other purpose. We had no outstanding derivative instruments as of December 31, 2004 or December 31, 2003 or at any time during the years then ended. We do not have any foreign operations, and are therefore not exposed to foreign currency exchange rate risks. We are exposed to interest rate risks, primarily as a result of our line of credit with JPMorgan Chase Bank. We manage our exposure to this risk by minimizing, to the extent feasible, our overall borrowing and monitoring available financing alternatives. Our interest rate risk has changed due to increased average outstanding borrowings under the line as compared to December 31, 2003, but we do not foresee any significant changes in our exposure or in how we manage this exposure in the near future. We use borrowings under the line of credit, which expires in June 2005, to finance acquisitions and for general corporate purposes. We had no borrowings against the line of credit prior to November 2004. Our line of credit bears interest at the prime rate or, at our option, LIBOR plus 1.25%. At December 31, 2004 we had total borrowings of $24.0 million under our line of credit, and had not entered into any instruments to hedge our resulting exposure to interest-rate risk. Based on our average outstanding borrowings under the line of credit of $11.5 million, and assuming $30.0 million of additional borrowings required to finance a pending acquisition on March 31, 2005 (see "Subsequent Events" in "Management's Discussion and Analysis of Financial Condition and Results of Operations"), if market interest rates for 2005 increase by an average of 0.5% more than the average interest rate for the last two months of 2004, the additional annualized interest expense would decrease 2005 net income and cash flows by $0.8 million attributable to increased borrowings and an additional $0.2 million attributable to higher interest rates. These amounts were determined by calculating the effect of a hypothetical interest rate on our line of credit borrowings and assumes that the average outstanding borrowings during the three month period from November 2004 through January 2005 is indicative of our future average borrowings for 2005 before considering additional borrowings required for acquisitions. The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings. Management believes that the fair value of the debt equals its carrying value at December 31, 2004 and 2003. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our line of credit. In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash investments with high-credit-quality institutions. Temporary cash investments are held in an institutional money market fund and short-term federal agency discount notes. -18- FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When we use the words "believes," "expects," "plans," "projects," "estimates" and similar expressions, we intend to identify forward-looking statements. Examples of forward-looking statements include statements regarding our expectations regarding future payments from Marketing, including $59.7 million in lease rental payments in 2005; the expected effect of regulations on our long-term performance; our expected ability to maintain compliance with applicable regulations; our ability to renew expired leases; the adequacy of our current and anticipated cash flows; our ability to maintain our REIT status; our ability to obtain additional financing from JPMorgan on the terms described in this Annual Report or at all; the probable outcome of litigation or regulatory actions; our expected recoveries from underground storage tank funds; our exposure to environmental remediation expenses; our expectations regarding corporate level federal income taxes; the indemnification obligations of the Company and others; our intention to consummate future acquisitions; assumptions regarding the future applicability of accounting estimates, assumptions and policies and our intention to pay future dividends. These forward-looking statements are based on our current beliefs and assumptions and information currently available to us and involve known and unknown risks (including the risks described herein and other risks that we describe from time to time in our filings with the Securities and Exchange Commission), uncertainties and other factors, which may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements, expressed or implied by these forward-looking statements. These factors include, but are not limited to: risks associated with owning and leasing real estate generally; dependence on Marketing as a tenant and on rentals from companies engaged in the petroleum marketing and convenience store businesses; competition for properties and tenants; risk of tenant non-renewal; the effects of taxation and other regulations; potential litigation exposure; our expectations as to the cost of completing environmental remediation; the risk of loss of our management team; the impact of our electing to be taxed as a REIT, including subsequent failure to qualify as a REIT; risks associated with owning real estate located in the same region of the United States; risks associated with potential future acquisitions; losses not covered by insurance; future dependence on external sources of capital; our potential inability to pay dividends and terrorist attacks and other acts of violence and war. 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 and stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in this report and those that are detailed from time to time in our other filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or circumstances or reflect the occurrence of unanticipated events. -19- GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
YEAR ENDED DECEMBER 31, ------------------------------------ 2004 2003 2002 -------- -------- -------- Revenues from rental properties $ 66,331 $ 66,601 $ 67,157 Expenses: Rental property expenses 9,814 10,662 11,975 Environmental expenses, net 6,027 7,594 8,668 General and administrative expenses 5,006 4,074 3,691 Depreciation and amortization expense 7,490 8,411 9,016 -------- -------- -------- Total expenses 28,337 30,741 33,350 -------- -------- -------- Operating income 37,994 35,860 33,807 Other income, net 1,485 1,705 2,488 Interest expense (127) (128) (132) -------- -------- -------- Earnings before cumulative effect of accounting change 39,352 37,437 36,163 Cumulative effect of accounting change -- (550) -- -------- -------- -------- Net earnings 39,352 36,887 36,163 Preferred stock dividends -- 2,538 5,350 -------- -------- -------- Net earnings applicable to common shareholders $ 39,352 $ 34,349 $ 30,813 ======== ======== ======== Net earnings per common share: Basic $ 1.59 $ 1.49 $ 1.44 Diluted $ 1.59 $ 1.49 $ 1.44 Weighted average common shares outstanding: Basic 24,679 23,063 21,436 Diluted 24,721 23,082 21,446 Dividends declared per share: Common $ 1.700 $ 1.675 $ 1.650 Preferred -- $ 1.159 $ 1.866
The accompanying notes are an integral part of these consolidated financial statements. -21- GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
DECEMBER 31, ------------------------ 2004 2003 --------- --------- ASSETS: Real Estate: Land $ 156,571 $ 142,724 Buildings and improvements 190,019 175,498 --------- --------- 346,590 318,222 Less--accumulated depreciation and amortization (106,463) (100,488) --------- --------- Real estate, net 240,127 217,734 Deferred rent receivable 25,117 20,653 Cash and equivalents 15,700 19,905 Recoveries from state underground storage tank funds, net 5,437 7,454 Mortgages and accounts receivable, net 3,961 5,565 Prepaid expenses and other assets 386 692 --------- --------- Total assets $ 290,728 $ 272,003 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY: Environmental remediation costs $ 20,626 $ 23,551 Borrowings under credit line 24,000 -- Dividends payable 10,495 10,483 Accounts payable and accrued expenses 9,595 9,100 Mortgages payable 509 844 --------- --------- Total liabilities 65,225 43,978 --------- --------- Commitments and contingencies (notes 2, 3 and 5) Shareholders' equity: Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 24,694,071 at December 31, 2004 and 24,664,384 at December 31, 2003 247 247 Paid-in capital 257,295 257,206 Dividends paid in excess of earnings (32,039) (29,428) --------- --------- Total shareholders' equity 225,503 228,025 --------- --------- Total liabilities and shareholders' equity $ 290,728 $ 272,003 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. -22- GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
YEAR ENDED DECEMBER 31, ------------------------------------ 2004 2003 2002 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 39,352 $ 36,887 $ 36,163 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization expense 7,490 8,411 9,016 Deferred rental revenue (4,464) (5,537) (6,728) Gain on dispositions of real estate (618) (928) (1,153) Accretion expense 1,054 1,284 -- Cumulative effect of accounting change -- 550 -- Stock-based employee compensation expense 25 -- -- Changes in assets and liabilities: Recoveries from state underground storage tank funds, net 2,512 7,559 880 Mortgages and accounts receivable, net 238 (1,528) (663) Prepaid expenses and other assets 306 300 80 Environmental remediation costs (4,474) (7,824) 632 Accounts payable and accrued expenses 495 (739) (2,179) -------- -------- -------- Net cash provided by operating activities 41,916 38,435 36,048 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisitions and capital expenditures (30,568) (14,266) (2,821) Collection of mortgages receivable, net 1,366 1,156 289 Proceeds from dispositions of real estate 1,303 3,117 3,000 -------- -------- -------- Net cash provided by (used in) investing activities (27,899) (9,993) 468 -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends paid (41,951) (41,115) (40,451) Borrowings under credit line, net 24,000 -- -- Repayment of mortgages payable, net (335) (79) (74) Preferred stock redemption and conversion -- (1,224) -- Stock options and treasury stock, net 64 155 212 -------- -------- -------- Net cash used in financing activities (18,222) (42,263) (40,313) -------- -------- -------- Net decrease in cash and equivalents (4,205) (13,821) (3,797) Cash and equivalents at beginning of period 19,905 33,726 37,523 -------- -------- -------- Cash and equivalents at end of period $ 15,700 $ 19,905 $ 33,726 ======== ======== ======== Supplemental disclosures of cash flow information Cash paid (refunded) during the period for: Interest $ 114 $ 127 $ 132 Income taxes, net 571 949 662 Recoveries from state underground storage tank funds (2,362) (2,135) (3,431) Environmental remediation costs 6,776 6,642 8,545
The accompanying notes are an integral part of these consolidated financial statements. -23- GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries (the "Company"). The Company is a real estate investment trust ("REIT") specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. The Company manages and evaluates its operations as a single segment. All significant inter-company accounts and transactions have been eliminated. Certain reclassifications have been made in the financial statements for 2003 and 2002 to conform to the presentation for 2004. Use of Estimates, Judgments and Assumptions: The financial statements have been prepared in conformity with GAAP, which requires management to make its best estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. While all available information has been considered, actual results could differ from those estimates, judgments and assumptions. Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state underground storage tank funds, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses and income taxes. Real Estate: Real estate assets are stated at cost less accumulated depreciation and amortization. Upon acquisition of real estate operating properties and leasehold interests, the Company 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 and below-market leases, in-place leases and tenant relationships) and assumed debt in accordance with Statement of Financial Accounting Standards No. ("SFAS") 141, Business Combinations. Based on these estimates, the Company allocates the purchase price to the applicable assets and liabilities. 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. 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 sixteen to twenty-five years for buildings and improvements, or the term of the lease if shorter. Leasehold interests, capitalized above and below-market leases, in-place leases and tenant relationships are amortized over the remaining term of the underlying lease. Cash and Equivalents: The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Deferred Rent Receivable and Revenue Recognition: The Company earns rental income under operating leases with tenants. Minimum lease rentals are recognized on a straight-line basis over the initial term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on the consolidated balance sheet. Environmental Remediation Costs and Recoveries from State Underground Storage Tank Funds, Net: 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 environmental remediation liability is estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of the best estimate of the fair value of cost for each component of the liability. Recoveries of environmental costs from state underground storage tank ("UST") remediation funds, with respect to both past and future environmental spending, are accrued at fair value as income, net of allowance for collection risk, based on estimated recovery rates developed from prior experience with the funds when such recoveries are considered probable. Environmental liabilities and related assets are currently measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires that obligations associated with the retirement of tangible long-lived assets be recognized at their fair value if the asset retirement obligation results from the normal operation of those assets and a -24- reasonable estimate of fair value can be made. Due to the adoption of SFAS 143 effective January 1, 2003, accrued environmental remediation costs and recoveries from state underground storage tank funds were adjusted to their estimated fair value resulting in a one-time cumulative effect of change in accounting charge of $550,000, or $0.02 per diluted common share, in the year ended December 31, 2003. Prior to the adoption of SFAS 143, GAAP required that if the best estimate of cost for a component of the liability could only be identified as a range, and no amount within the range was a better estimate than any other amount, the minimum of the range was accrued for that cost component. Historically, such accruals were not adjusted for inflation or discounted to present value. Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of: Assets are written down to fair value when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Assets held for disposal are written down to fair value less disposition costs. Litigation: Legal fees related to litigation are expensed as legal services are performed. The Company provides for litigation reserves, including certain litigation related to environmental matters, when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. If the best 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: The Company and its subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, the Company elected to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Internal Revenue Code. If the Company sells any property within ten years after its REIT election that is not exchanged for a like-kind property, it will be taxed on the built-in gain realized from such sale at the highest corporate rate. This ten-year built-in gain tax period will end in 2011. Earnings per Common Share: Basic earnings per common share is computed by dividing net earnings less preferred dividends by the weighted average number of common shares outstanding during the year. The weighted average number of shares outstanding for the year ended December 31, 2003 gives effect to the conversion of Series A Participating Convertible Redeemable Preferred Stock into 3,186,000 shares of common stock as if the conversion had occurred at the beginning of the period (see note 7). For the year ended December 31, 2002, conversion of the preferred shares utilizing the two class method would have been antidilutive and therefore conversion was not assumed for purposes of computing either basic or diluted earnings per common share. There were no preferred shares outstanding during 2004. Diluted earnings per common share also gives effect to the potential dilution from the exercise of stock options and the issuance of common shares in settlement of restricted stock units aggregating 42,000 shares, 19,000 shares and 10,000 shares for the years ended December 31, 2004, 2003 and 2002, respectively. Diluted earnings before cumulative effect of accounting change per common share were $1.51 for the year ended December 31, 2003. Stock-Based Compensation: In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation--Transition and Disclosure--an amendment of SFAS 123." SFAS 148 provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation. SFAS 148 requires disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation, a description of the transition method utilized and the effect of the method used on reported results. The Company adopted SFAS 148 effective December 31, 2002. The Company voluntarily changed to the fair value basis of accounting for stock-based employee compensation for awards granted subsequent to January 1, 2003. The Company continued to account for options granted under its stock option plan prior to January 1, 2003 using the intrinsic value method in 2004. Effective January 1, 2005, the Company will adopt the fair value basis of accounting for the unvested portion of the outstanding stock options granted prior to January 1, 2003 and will recognize additional stock-based compensation expense of $32,000 and $8,000 in 2005 and 2006, respectively (see note 8). Historically, the exercise price of options granted by the Company was the same as the market price at the grant date and stock-based compensation expense was not included in reported net earnings. There were no stock options granted under the stock option plan subsequent to January 1, 2003. -25- On June 1, 2004, the Company granted 10,800 restricted stock units under its 2004 Omnibus Incentive Compensation Plan (the "2004 Plan") following shareholder approval of the 2004 Plan at the Annual Meeting of Shareholders on May 20, 2004 (see note 8). Accordingly, $25,000 of stock-based employee compensation expense is included in general and administrative expense for the year ended December 31, 2004. Had compensation cost for the Company's stock-based compensation plans been accounted for using the fair value method for all grants, the Company's total stock-based employee compensation expense using the fair value method, pro-forma net earnings and pro-forma net earnings per share on a basic and diluted basis would have been as follows (in thousands, except per share amounts):
YEAR ENDED DECEMBER 31, ------------------------------- 2004 2003 2002 ------- ------- ------- Net earnings, as reported $39,352 $36,887 $36,163 Add: Stock-based employee compensation expense included in reported net earnings 25 -- -- Deduct: Total stock-based employee compensation expense using the fair value method 118 133 124 ------- ------- ------- Pro-forma net earnings $39,259 $36,754 $36,039 ======= ======= ======= Net earnings per common share: As reported $ 1.59 $ 1.49 $ 1.44 Pro-forma $ 1.59 $ 1.48 $ 1.43
The fair value of the options granted during the year ended December 31, 2002 was estimated as $0.56 per share on the date of grant using the Black-Scholes option-pricing model assuming an expected dividend yield of 9.0%, an expected volatility of 18.0%, a risk-free interest rate of 3.6% and an expected option life of seven years. 2. LEASES The Company leases or sublets its properties primarily to distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services who are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual operations conducted at these properties. The Company's properties are primarily located in the Northeast and Mid-Atlantic regions of the United States. The Company and Getty Petroleum Marketing Inc. ("Marketing"), are parties to an amended and restated Master Lease Agreement (the "Master Lease"), which became effective on December 9, 2000, and a coterminous supplemental lease for a single property (collectively the "Marketing Leases"). As of December 31, 2004, the Marketing Leases included nine hundred thirty-nine retail motor fuel and convenience store properties and ten distribution terminals, two hundred thirty of which are leased by the Company from third parties. The Master Lease has an initial term of fifteen years commencing December 9, 2000, and generally provides Marketing with options for three renewal terms of ten years each and a final renewal option of three years and ten months extending to 2049 (or such shorter initial or renewal term as the underlying lease may provide). The Marketing Leases include provisions for 2% annual rent escalations. The Master Lease is a unitary lease and, accordingly, Marketing's exercise of renewal options must be on an "all or nothing" basis. The Company estimates that Marketing makes annual real estate tax payments for properties leased under the Marketing Leases of approximately $11.6 million and makes additional payments for other operating expenses related to these properties, including environmental remediation costs other than those liabilities that were retained by the Company. These costs, which have been assumed by Marketing under the terms of the Marketing Leases, are not reflected in the consolidated financial statements. -26- Revenues from rental properties for the years ended December 31, 2004, 2003 and 2002 were $66,331,000, $66,601,000 and $67,157,000, respectively, of which $58,938,000, $58,723,000 and $58,104,000, respectively, were received from Marketing under the Marketing Leases. In addition, revenues from rental properties for the years ended December 31, 2004, 2003 and 2002 includes $4,464,000, $5,537,000 and $6,728,000, respectively, of deferred rental revenue accrued due to recognition of rental revenue on a straight-line basis. Future minimum annual rentals receivable from Marketing under the Marketing Leases and from other tenants, which have terms in excess of one year as of December 31, 2004, are as follows (in thousands):
OTHER YEAR ENDING DECEMBER 31, MARKETING TENANTS TOTAL (a) - ------------------------ --------- ------- --------- 2005 $ 59,501 $ 5,403 $ 64,904 2006 60,028 5,263 65,291 2007 59,846 4,893 64,739 2008 60,437 4,762 65,199 2009 60,734 4,510 65,244 Thereafter 364,468 45,653 410,121
(a) Includes $135,142 of future minimum annual rentals receivable under subleases. Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to $8,928,000, $9,704,000 and $10,805,000 for the years ended December 31, 2004, 2003 and 2002, respectively, and is included in rental property expenses when contractually due, which approximates the straight-line method. Rent received under subleases for the years ended December 31, 2004, 2003 and 2002 was $14,943,000, $17,305,000 and $17,373,000, respectively. The Company has obligations to lessors under non-cancelable operating leases which have terms (excluding renewal term options) in excess of one year, principally for gasoline stations and convenience stores. Substantially all of these leases contain renewal options and rent escalation clauses. The leased properties have a remaining lease term averaging over twelve years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows (in thousands):
YEAR ENDING DECEMBER 31, - ------------------------ 2005 $8,950 2006 7,692 2007 6,176 2008 4,977 2009 3,254 Thereafter 7,619
3. COMMITMENTS AND CONTINGENCIES In order to qualify as a REIT, among other items, the Company paid a $64,162,000 special one-time "earnings and profits" (as defined in the Internal Revenue Code) cash distribution to shareholders in August 2001. Determination of accumulated earnings and profits for federal income tax purposes is extremely complex. Should the Internal Revenue Service successfully assert that the Company's accumulated earnings and profits were greater than the amount distributed, the Company may fail to qualify as a REIT; however, the Company may avoid losing its REIT status by paying a deficiency dividend to eliminate any remaining accumulated earnings and profits. The Company may have to borrow money or sell assets to pay such a deficiency dividend. In order to minimize the Company's exposure to credit risk associated with financial instruments, the Company places its temporary cash investments with high credit quality institutions. Temporary cash investments are held in an institutional money market fund and federal agency discount notes. -27- The Company leases nine hundred forty-nine of its one thousand forty-five properties on a long-term net basis to Marketing under the Marketing Leases (see note 2). Marketing operated substantially all of the Company's petroleum marketing businesses when it was spun-off to the Company's shareholders as a separate publicly held company in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil, one of Russia's largest integrated oil companies. The Company's financial results depend largely on rental income from Marketing, and to a lesser extent on rental income from other tenants, and are therefore materially dependent upon the ability of Marketing to meet its obligations under the Marketing Leases. Substantially all of the deferred rental revenue of $25,117,000 recorded as of December 31, 2004 is due to recognition of rental revenue on a straight-line basis under the Marketing Leases. Marketing's financial results depend largely on retail petroleum marketing margins and rental income from its dealers. The petroleum marketing industry has been and continues to be volatile and highly competitive. Marketing has made all required monthly rental payments under the Marketing Leases when due. Under the Master Lease, the Company has also agreed to provide limited environmental indemnification, capped at $4,250,000 and expiring in 2010, to Marketing for certain pre-existing conditions at six of the terminals which are owned by the Company. Under the agreement, Marketing will pay the first $1,500,000 of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing and the Company will share equally the next $8,500,000 of those costs and expenses and Marketing will pay all additional costs and expenses over $10,000,000. The Company has not accrued a liability in connection with this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreements. The Company has agreed to reimburse Marketing for one-half of certain capital expenditures for work required to comply with local zoning requirements up to a maximum amount designated for each property and an aggregate maximum reimbursement of $875,000. The Company reimbursed Marketing $265,000 in 2004 and expects to reimburse Marketing for the balance of these costs during 2005. The Company is subject to various legal proceedings and claims which arise in the ordinary course of its business. In addition, the Company has retained responsibility for all pre-spin-off legal proceedings and claims relating to the petroleum marketing business. As of December 31, 2004 and 2003 the Company had accrued $3,623,000 and $3,415,000, respectively, for certain of these matters which it believes are appropriate based on information currently available. The ultimate resolution of these matters is not expected to have a material adverse effect on the Company's financial condition or results of operations. In September 2003, the Company was notified by the State of New Jersey Department of Environmental Protection that the Company is one of approximately sixty potentially responsible parties for natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The definitive list of potentially responsible parties and their actual responsibility for the alleged damages, the aggregate cost to remediate the Lower Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially responsible parties have not been determined. In September 2004, the Company received a General Notice Letter from the US EPA (the "EPA Notice"), advising the Company that it may be a potentially responsible party for costs of remediating certain conditions resulting from discharges of hazardous substances into the Lower Passaic River. ChevronTexaco received the same EPA Notice regarding those same conditions. Additionally, the Company believes that ChevronTexaco is contractually obligated to indemnify the Company, pursuant to an indemnification agreement, for of the conditions at the property identified by the New Jersey Department of Environmental Protection and the EPA. Accordingly, the ultimate legal and financial liability of the Company, if any, cannot be estimated with any certainty at this time. From October 2003 through February 2004 the Company was notified that the Company was made party to thirty-six cases, and one additional case in the fourth quarter of 2004, in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Vermont, Virginia and West Virginia brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately fifty petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. The accuracy of the allegations as they relate to the Company, its defenses to such claims, the aggregate amount of damages, the definitive list of defendants and the method of allocating such amounts among the defendants have not been determined. Accordingly, the ultimate legal and financial liability of the Company, if any, cannot be estimated with any certainty at this time. -28- Prior to the spin-off, the Company was self-insured for workers' compensation, general liability and vehicle liability up to predetermined amounts above which third-party insurance applies. As of December 31, 2004 and 2003, the Company's consolidated balance sheets included, in accounts payable and accrued expenses, $500,000 and $833,000, respectively, relating to insurance obligations that may be deemed to have arisen prior to the spin-off of the Marketing business. The Company's consolidated statements of operations for the years ended December 31, 2004, 2003 and 2002 included, in general and administrative expenses, credits of $312,000, $500,000 and $873,000, respectively, for self-insurance. Since the spin-off, the Company has maintained insurance coverage subject to certain deductibles. 4. DEBT Mortgages payable consists of $509,000 of real estate mortgages, bearing interest at a weighted average interest rate of 5.7% per annum, due in varying amounts through May 1, 2015. Aggregate principal payments in subsequent years for real estate mortgages are as follows: 2005--$285,000; 2006--$30,000; 2007--$31,000; 2008--$33,000; 2009--$27,000 and $103,000 thereafter. These mortgages payable are collateralized by real estate having an aggregate net book value of approximately $1,886,000 as of December 31, 2004. As of December 31, 2004, the Company had an uncommitted line of credit with a JPMorgan Chase Bank ("JPMorgan") in the amount of $25,000,000. Total borrowings outstanding under the uncommitted line of credit at December 31, 2004 were $24,000,000. In addition, $157,000 was utilized in the form of outstanding letters of credit relating to insurance obligations. Borrowing under the line of credit is unsecured and bears interest at the bank's prime rate or, at the Company's option, LIBOR plus 1.25% (aggregating 3.56% at December 31, 2004). The line of credit is subject to annual renewal in June 2005 at the discretion of the bank (see note 11). 5. ENVIRONMENTAL REMEDIATION COSTS The Company is subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. In recent years, environmental expenses were principally attributable to remediation, monitoring, and governmental agency reporting incurred in connection with contaminated properties. In prior periods a larger portion of the expenses also included soil disposal and the replacement or upgrading of USTs to meet federal, state and local environmental standards. For the years ended December 31, 2004, 2003 and 2002, the aggregate of the net changes in estimated remediation costs and accretion expenses included in the Company's consolidated statements of operations were $3,346,000, $5,450,000 and $6,626,000, respectively, which amounts were net of estimated recoveries from state UST remediation funds. In accordance with the leases with certain tenants, the Company has agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure ("Closure") in an efficient and economical manner. Generally, upon achieving Closure at each individual property, the Company's environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenants. The Company has agreed to pay all costs relating to, and to indemnify Marketing for, certain environmental liabilities and obligations for two hundred sixty-four properties that are scheduled in the Master Lease. The Company will continue to seek reimbursement from state UST remediation funds related to these environmental expenditures where available. -29- 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 environmental remediation liability is estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of the best estimate of the fair value of cost for each component of the liability. Recoveries of environmental costs from state UST remediation funds, with respect to both past and future environmental spending, are accrued at fair value as income, net of allowance for collection risk, based on estimated recovery rates developed from prior experience with the funds when such recoveries are considered probable. Prior to the adoption of SFAS 143, effective January 1, 2003, if the best estimate of cost for a component of the liability could only be identified as a range, and no amount within the range was a better estimate than any other amount, the minimum of the range had been accrued for that cost component rather than the estimated fair value currently required under SFAS 143. Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination. In developing the Company's liability for probable and reasonably estimable environmental remediation costs, on a property by property basis, the Company considers among other things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as these contingencies become more clearly defined and reasonably estimable. As of December 31, 2004, the Company has remediation action plans in place for 316 (92%) of the 345 properties for which it retained environmental responsibility and has not received a no further action letter and the remaining 29 properties (8%) remain in the assessment phase. As of December 31, 2004, 2003 and January 1, 2003, the Company had accrued $20,626,000, $23,551,000 and $29,426,000 respectively, as management's best estimate of the fair value of reasonably estimable environmental remediation costs. As of December 31, 2004, 2003 and January 1, 2003, the Company had also recorded $5,437,000, $7,454,000 and $14,348,000, respectively, as management's best estimate for recoveries from state UST remediation funds, net of allowance, related to environmental obligations and liabilities. The net environmental liabilities of $16,097,000 and 15,078,000 as of December 31, 2003 and January 1, 2003, respectively, were subsequently accreted for the change in present value due to the passage of time and, accordingly, $1,054,000 and $1,284,000 of accretion expense is included in environmental expenses for the years ended December 31, 2004 and 2003, respectively. Environmental expenditures were $6,776,000 and recoveries from underground storage tank funds were $2,362,000 for the year ended December 31, 2004. In view of the uncertainties associated with environmental expenditures, however, the Company believes it is possible that the fair value of future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in the Company's financial statements as they become probable and a reasonable estimate of fair value can be made. Although future environmental expenses may have a significant impact on results of operations for any single fiscal year or interim period, the Company currently believes that such costs will not have a material adverse effect on the Company's long-term financial position. 6. INCOME TAXES Net cash paid for income taxes for the years ended December 31, 2004, 2003 and 2002 of $571,000, $949,000 and $662,000, respectively, includes amounts related to state and local income taxes for jurisdictions that do not follow the federal tax rules, which are provided for in rental property expenses in the Company's consolidated statements of operations. Net cash paid for income taxes also includes audit settlements which were provided for in the periods prior to 2001 when the Company was taxed as a C-corp. -30- 7. SHAREHOLDERS' EQUITY A summary of the changes in shareholders' equity for the years ended December 31, 2004, 2003, and 2002 is as follows (in thousands, except per share amounts):
PREFERRED STOCK COMMON STOCK DIVIDENDS PAID ------------------ ------------------ PAID-IN IN EXCESS SHARES AMOUNT SHARES AMOUNT CAPITAL OF EARNINGS ------ ------ ------ ------ ------- ----------- BALANCE, DECEMBER 31, 2001 2,889 72,220 22,441 224 198,575 (20,537) Net earnings 36,163 Cash dividends: Common--$1.65 per share (35,372) Preferred--$1.867 per share (5,350) Issuance of treasury stock 1 Cancellation of treasury stock (23) (576) (1,019) (10) (12,120) Stock options 20 208 ----- --------- ------ ------ ----------- ---------- BALANCE, DECEMBER 31, 2002 2,866 71,644 21,442 214 186,664 (25,096) ----- --------- ------ ------ ----------- ---------- Net earnings 36,887 Cash dividends: Common--$1.675 per share (38,681) Preferred--$1.159 per share (2,538) Preferred stock redemption and conversion (2,866) (71,644) 3,186 32 70,388 Stock options 36 1 154 ----- --------- ------ ------ ----------- ---------- BALANCE, DECEMBER 31, 2003 -- -- 24,664 247 257,206 (29,428) ===== ========= ------ ------ ----------- ---------- Net earnings 39,352 Cash dividends: Common--$1.70 per share (41,963) Restricted stock unit 25 expense Stock options 30 -- 64 ----- --------- ------ ------ ----------- ---------- BALANCE, DECEMBER 31, 2004 -- $ -- 24,694 $247 $ 257,295 $ (32,039)(a) ===== ========= ====== ====== =========== ==========
PREFERRED STOCK COMMON STOCK HELD IN TREASURY, HELD IN TREASURY, AT COST AT COST ----------------- ------------------- SHARE AMOUNT SHARES AMOUNT TOTAL ------ ------ ------ -------- -------- BALANCE, DECEMBER 31, 2001 (23) $ (430) (1,019) $(12,279) $237,773 Net earnings 36,163 Cash dividends: Common--$1.65 per share (35,372) Preferred--$1.867 per share (5,350) Issuance of treasury stock 3 4 Cancellation of treasury stock 23 430 1,019 12,276 -- Stock options 208 ------ ------ ------ -------- -------- BALANCE, DECEMBER 31, 2002 -- -- -- -- 233,426 ------ ------ ------ -------- -------- Net earnings 36,887 Cash dividends: Common--$1.675 per share (38,681) Preferred--$1.159 per share (2,538) Preferred stock redemption and conversion (1,224) Stock options 155 ------ ------ ------ -------- -------- BALANCE, DECEMBER 31, 2003 -- -- -- -- 228,025 ------ ------ ------ -------- -------- Net earnings 39,352 Cash dividends: Common--$1.70 per share (41,963) Restricted stock unit expense 25 Stock options -- -- 64 ------ ------ ------ -------- -------- BALANCE, DECEMBER 31, 2004 -- $ -- -- $ -- $225,503 ====== ====== ====== ======== ========
(a) Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends. -31- In August 2003, the Company notified holders of Series A Participating Convertible Redeemable Preferred Stock that the preferred stock would be redeemed on September 24, 2003 for $25.00 per share plus a mandatory redemption dividend of $0.271 per share. Prior to the redemption date, shareholders with 98% of the preferred stock exercised their right to convert 2,816,919 shares of preferred stock into 3,186,355 shares of common stock at the conversion rate of 1.1312 shares of common stock for each share of preferred stock so converted, and received cash in lieu of fractional shares of common stock. The remaining 48,849 shares of the outstanding preferred stock were redeemed for an aggregate amount, including accrued dividends through the call date, of approximately $1,234,000. Each share of preferred stock was convertible into 1.1312 shares of common stock of the Company and paid stated cumulative dividends of $1.775 per annum, or if greater on an "as converted basis," the cash dividends declared per share of common stock for the calendar year. The Company has authorized 20,000,000 shares of preferred stock, par value $.01 per share, for issuance in series, of which none were issued as of December 31, 2004 and 2003. -31- 8. EMPLOYEE BENEFIT PLANS The Company has 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 Board of Directors. Also, under the Retirement Plan, employees may make voluntary contributions and the Company has elected to match an amount equal to fifty percent of such contributions but in no event more than three percent of the employee's eligible compensation. Under the Supplemental Plan, a participating executive may receive an amount equal to ten percent of eligible compensation, reduced by the amount of any contributions allocated to such executive under the Retirement Plan. Contributions, net of forfeitures, under the plans approximated $139,000, $125,000 and $118,000 for the years ended December 31, 2004, 2003 and 2002, respectively. These amounts are included in the accompanying consolidated statements of operations. The Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the "2004 Plan") became effective upon its approval at the Annual Meeting of Shareholders held May 20, 2004. The 2004 Plan provides for the grant of restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments and stock awards to all employees and members of the Board of Directors. The 2004 Plan authorizes the Company to grant awards with respect to an aggregate of 1,000,000 shares of common stock through 2014. The aggregate maximum number of shares of common stock that may be subject to awards granted under the 2004 Plan during any calendar year is 80,000. On June 1, 2004, the Company awarded 10,800 restricted stock units ("RSUs") and dividend equivalents to employees. On the settlement date each RSU will have a value equal to one share of common stock and may be settled, in the sole discretion of the Compensation Committee, in cash or by the issuance of one share of common stock. The RSUs do not provide voting or other shareholder rights unless and until the RSU is settled for a share of common stock. The RSUs vest starting one year from the date of grant, on a cumulative basis at the annual rate of twenty percent of the total number of RSUs covered by the award. The dividend equivalents represent the value of the dividend paid per common share paid multiplied by the number of RSUs vested as of the dividend payment date assuming that the RSUs vest starting three months from the date of grant, on a cumulative basis at the quarterly rate of five percent of the total number of RSUs covered by the award. The fair value of the RSUs granted on June 1, 2004 was estimated at $19.91 per unit on the date of grant. The fair value of the grant, aggregating approximately $215,000, will be recognized as compensation expense ratably over the five year vesting period of the RSUs. Dividend equivalents will be charged against retained earnings when common stock dividends are declared. The Company has a stock option plan (the "Stock Option Plan") which authorizes the Company to grant options to purchase shares of the Company's common stock (see note 1). The aggregate number of shares of the Company's common stock which may be made the subject of options under the Stock Option Plan may not exceed 1,100,000 shares, subject to further adjustment for stock dividends and stock splits. The Stock Option Plan provides that options are exercisable starting one year from the date of grant, on a cumulative basis at the annual rate of twenty-five percent of the total number of shares covered by the option. -32- The following is a schedule of stock option prices and activity relating to the Stock Option Plan:
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------- 2004 2003 2002 ---------------------- -------------------- -------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE OF SHARES PRICE OF SHARES PRICE OF SHARES PRICE --------- -------- --------- -------- --------- -------- Outstanding at beginning of year 173,085 $ 18.19 358,773 $ 19.12 352,324 $ 19.51 Granted -- -- -- -- 69,500 18.30 Exercised (60,344) 16.40 (153,412) 19.10 (46,055) 15.78 Cancelled (2,192) 24.06 (32,276) 24.06 (16,996) 23.36 --------- -------- --------- -------- --------- -------- Outstanding at end of year 110,549 $ 18.64 173,085 $ 18.19 358,773 $ 19.12 --------- -------- --------- -------- --------- -------- Exercisable at end of year 66,299 $ 18.63 91,023 $ 18.63 214,711 $ 20.72 ========= ======== ========= ======== ========= ======== Available for grant at end of year 663,073 660,881 628,605 ========= ========= =========
The following table summarizes information concerning options outstanding and exercisable at December 31, 2004:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------------------------------------ ------------------------------- WEIGHTED AVERAGE REMAINING RANGE OF NUMBER CONTRACTUAL WEIGHTED AVERAGE NUMBER WEIGHTED AVERAGE EXERCISE PRICES OUTSTANDING LIFE (YEARS) EXERCISE PRICE EXERCISABLE EXERCISE PRICE - --------------- ----------- ------------ -------------- ----------- -------------- $11.125-$14.50 16,563 6 $ 13.48 16,563 $ 13.48 16.15 - 18.30 64,000 7 17.43 19,750 17.08 24.06 29,986 2 24.06 29,986 24.06 ------- ------ 110,549 66,299 ======= ======
9. QUARTERLY FINANCIAL DATA The following is a summary of the quarterly results of operations for the years ended December 31, 2004 and 2003 (unaudited as to quarterly information) (in thousands, except per share amounts):
THREE MONTHS ENDED ---------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2004 MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, ---------------------------- --------- -------- ------------- ------------ ------------ Revenues from rental properties $ 16,511 $ 16,443 $ 16,425 $ 16,952 $ 66,331 Net earnings 9,157 9,367 9,969 10,859(a) 39,352 Diluted earnings per common share .37 .38 .40 .44 1.59
THREE MONTHS ENDED ---------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2003 MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31, ---------------------------- --------- -------- ------------- ------------ ------------ Revenues from rental properties $ 16,677 $ 16,672 $ 16,676 $ 16,576 $ 66,601 Earnings before cumulative effect of accounting change 9,107 9,431 9,467 9,432 37,437 Net earnings 8,557 9,431 9,467 9,432 36,887 Diluted earnings per common share (b) .34 .38 .38 .38 1.49
(a) Includes credits aggregating $686 for reductions in insurance and mortgage receivable reserves. (b) After giving effect to quarterly preferred stock dividends aggregating $2,538 for the year ended December 31, 2003 and a reduction of $0.02 per share for the cumulative effect of accounting change recorded in the first quarter. -33- 10. PROPERTY ACQUISITIONS On November 1, 2004, the Company acquired thirty-six convenience store and retail motor fuel properties located in Connecticut and Rhode Island for approximately $25.7 million. Simultaneously with the closing on the acquisition, the Company entered into a triple-net lease with a single tenant for all of the properties. The lease provides for annual rentals at a competitive lease capitalization rate and provides for escalations thereafter. The triple-net lease has an initial term of fifteen years and provides the tenant options for three renewal terms of five years each. The lease also provides that the tenant is responsible for environmental conditions at the properties, including those properties where remediation activities are ongoing. On May 1, 2003, the Company completed the acquisition of forty-one retail motor fuel and convenience store properties that it had been leasing for the past twelve years. The aggregate purchase price for these properties was approximately $13.0 million, excluding transaction costs. Forty of the locations are subleased to Marketing under the Master Lease through at least 2015. Annual rent expense of approximately $1.3 million, and future rent escalations scheduled through 2056, will be eliminated as a result of the acquisition. Since the seller has agreed to indemnify the Company for historical environmental costs, and the seller's indemnity is supported by an escrow fund established solely for that purpose, the Company's exposure to environmental remediation expenses should not change because of the acquisition. 11. SUBSEQUENT EVENTS On February 23, 2005, the Company entered into a definitive real estate asset purchase agreement to acquire 23 convenience store and retail motor fuel properties in Virginia for approximately $29,000,000. The closing is expected to be completed by the end of the first quarter 2005. The Company entered into a triple-net lease with a single tenant for all of the properties. The tenant currently leases the properties from the seller and operates the locations under its proprietary convenience store brand in its network of over 200 locations. The lease provides for annual rentals at a competitive lease capitalization rate and provides for escalations thereafter. The lease has an initial term of fifteen years and provides the tenant options for three renewal terms of five years each. The lease also provides that the tenant is responsible for all existing and future environmental conditions at the properties. An affiliate of the tenant currently leases other properties from the Company. In March 2005 the Company entered into a Commitment Letter with JPMorgan for an unsecured three-year senior revolving credit facility ("Credit Facility") in the aggregate amount of $100,000,000 which the Company anticipates will replace the outstanding $25,000,000 uncommitted line of credit. Under the terms of the proposed Credit Facility, the Company will have the options to increase the Credit Facility by $25,000,000 and extend the Credit Facility for one additional year. While the Commitment Letter is non-binding and is subject to JPMorgan's successful syndication of a substantial portion of the Credit Facility, and execution of definitive agreements containing customary terms and conditions, the Company believes that the Credit Facility will be committed and available in the second quarter of 2005. The Company anticipates that borrowings under the proposed Credit Facility will bear interest at a rate equal to the sum of a base rate or a LIBOR rate plus an applicable margin ranging from 1.25% to 1.75%, which is based on the Company's leverage ratio, as defined by the Credit Facility. The annual commitment fee on the unused proposed Credit Facility Fee will range from 0.10% to 0.20%, which will be based on usage. The Company expects that the Credit Facility will include financial covenants such as leverage and coverage ratios and other customary covenants, including limitations on the Company's ability to incur debt and pay dividends, maintenance of tangible net worth and events of default, including a change of control and maintenance of REIT status. The Company does not believe that these covenants will limit its current business practices. In addition, JPMorgan has agreed to increase the funds available under the existing $25,000,000 uncommitted line of credit, which expires on June 30, 2005, if required to enable the Company to complete the acquisition discussed above prior to funds becoming available under the proposed Credit Facility. -34- REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Getty Realty Corp.: We have completed an integrated audit of Getty Realty Corp.'s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below: Consolidated financial statements In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and cash flows present fairly, in all material respects, the financial position of Getty Realty Corp. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. Internal control over financial reporting Also, in our opinion, management's assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP New York, New York March 11, 2005 -35- MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management's Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004. PricewaterhouseCoopers LLP, our independent registered public accounting firm which audited the financial statements included in this Annual Report, has issued an attestation report on management's assessment of our internal control over financial reporting which is included herein. CAPITAL STOCK Our common stock is traded on the New York Stock Exchange (symbol: "GTY"). At December 31, 2004, there were approximately 1,500 holders of record and 11,000 beneficial holders of our common stock. The price range of our common stock and cash dividends declared with respect to each share of common stock during the years ended December 31, 2004 and 2003 was as follows:
PRICE RANGE CASH --------------------- DIVIDENDS PERIOD ENDING HIGH LOW PER SHARE ------------- -------- -------- --------- December 31, 2004 $ 30.10 $ 26.04 $ .4250 September 30, 2004 26.22 22.75 .4250 June 30, 2004 25.52 21.35 .4250 March 31, 2004 27.47 25.27 .4250 December 31, 2003 $ 27.35 $ 23.95 $ .4250 September 30, 2003 25.25 22.41 .4250 June 30, 2003 23.42 18.78 .4125 March 31, 2003 19.49 17.90 .4125
-36- EX-21 4 c93068exv21.txt SUBSIDIARIES . . . EXHIBIT 21 SUBSIDIARIES OF THE COMPANY
STATE OF SUBSIDIARY INCORPORATION ---------- ------------- Getty Properties Corp. Delaware AOC Transport, Inc. Delaware Getty CT Leasing, Inc. New York Getty VA Leasing, Inc. New York Getty TM Corp. Maryland GettyMart Inc. Delaware Leemilt's Flatbush Avenue, Inc. New York Leemilt's Petroleum, Inc. New York Slattery Group Inc. New Jersey Power Test Realty Company Limited Partnership* New York
*ninety-nine percent owned by the Company, representing the limited partner units, and one percent owned by Getty Properties Corp., representing the general partner interest. EX-23 5 c93068exv23.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-115672, 333-45249 and 333-45251) and on Form S-3 (Nos. 333-114730 and 333-63060) of Getty Realty Corp. of our report dated March 11, 2005 relating to the financial statements, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 11, 2005 relating to the financial statement schedules, which appear in this Form 10-K. /s/ PricewaterhouseCoopers LLP New York, New York March 11, 2005 EX-31.1 6 c93068exv31w1.txt RULE 13A-14(A) CERTIFICATION OF CFO EXHIBIT 31.1 RULE 13a-14(a) CERTIFICATION OF CHIEF FINANCIAL OFFICER I, Thomas J. Stirnweis, certify that: 1. I have reviewed this Annual Report on Form 10-K of Getty Realty Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting: and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 11, 2005 By: /s/ THOMAS J. STIRNWEIS ----------------------- Thomas J. Stirnweis Vice President, Treasurer and Chief Financial Officer EX-31.2 7 c93068exv31w2.txt RULE 13A-14(A) CERTIFICATION OF CEO EXHIBIT 31.2 RULE 13a-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Leo Liebowitz, certify that: 1. I have reviewed this Annual Report on Form 10-K of Getty Realty Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting: and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 11, 2005 By: /s/ LEO LIEBOWITZ ----------------- Leo Liebowitz Chairman and Chief Executive Officer EX-32.1 8 c93068exv32w1.txt SECTION 1350 CERTIFICATION OF CEO EXHIBIT 32.1 SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp. (the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 11, 2005 By: /s/ LEO LIEBOWITZ ----------------- Leo Liebowitz Chairman and Chief Executive Officer A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. EX-32.2 9 c93068exv32w2.txt SECTION 1350 CERTIFICATION OF CFO EXHIBIT 32.2 SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp.(the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 11, 2005 By: /s/ THOMAS J. STIRNWEIS ----------------------- Thomas J. Stirnweis Vice President, Treasurer and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. -----END PRIVACY-ENHANCED MESSAGE-----