8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 15, 2008

Getty Realty Corp.

(Exact name of registrant as specified in charter)

Maryland (State of Organization) 001-13777 (Commission File Number) 11-3412575 (IRS 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

Not Applicable                                           

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[   ] Written communications pursuant to Rule 425 under the Securities Act

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02 Results of Operations and Financial Condition.

On March 18, 2008, Getty Realty Corp. (“Getty” or the “Company”) issued a press release (the “Press Release”) disclosing that as a result of events arising subsequent to its announcement on February 5, 2008 of the Company’s preliminary results of operations for the quarter and year ended December 31, 2007, the Company revised its preliminary results of operations for those periods.  The Company disclosed that the continued deterioration in the financial condition and results of operations of Getty Petroleum Marketing Inc. (“Marketing”), the Company’s primary tenant, and other developments described in Item 8.01 hereof, have caused the Company to take a non-cash $10.5 million reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 for approximately 40% of the properties (the “Subject Properties”) under leases with Marketing (the “Marketing Leases”).  This reserve is reflected in the Company’s results of operations for the fourth quarter and year ended December 31, 2007.  Net earnings decreased by $8.8 million to $33.9 million for the year ended December 31, 2007, as compared to $42.7 million for the year ended December 31, 2006.  The Company incurred a net loss of $0.6 million for the quarter ended December 31, 2007 as compared net earnings of $9.8 million for the quarter ended December 31, 2006.

Taking this non-cash reserve negatively impacts the Company’s results of operation for the quarter and year ended December 31, 2007.  As a result, the Company cautions its investors, shareholders and other parties that the preliminary results of operations of the Company included in the February 5, 2008 press release and the related information discussed on the conference call on February 6, 2008 should not be relied upon.

A copy of the press release announcing the revised results of operations of the Company for the quarter and year ended December 31, 2007 is attached as Exhibit 99.1 and incorporated herein by reference.

Item 2.06. Material Impairments.

On March 15, 2008, the Audit Committee of the Company’s Board of Directors, upon the recommendation of management, concluded that based on recent developments regarding Marketing, as explained in Item 8.01 below, the Company should revise its previously announced preliminary results of operations for the quarter and year ended December 31, 2007.  The Company is, accordingly, taking a non-cash $10.5 million reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 related to the Subject Properties under the Marketing Leases.  This non-cash reserve has been reflected in the Company’s results of operations for the fourth quarter and year ended December 31, 2007.  After recording this reserve, the Company had a net deferred rent receivable balance of $24.9 million.  The Company presently does not believe that any material amount of the deferred rent receivable impairment charge will result in future cash expenditures.

The information provided in Item 8.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 8.01 Other Events.

A substantial portion of our revenues (76% for the three months ended December 31, 2007 and 78% for the year ended December 31, 2007) are derived from leases (the “Marketing Leases”) with our primary tenant, Getty Petroleum Marketing Inc. (“Marketing”).  Accordingly, our revenues are 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 relationship with Marketing, may have a material adverse effect on us.  Through March 2008, Marketing has made all required monthly rental payments under the Marketing Leases when due, although there is no assurance that it will continue to do so.  Even though Marketing is wholly-owned by a subsidiary of OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies, Lukoil is not a guarantor of the Marketing Leases and there can be no assurance that Lukoil will continue to provide credit enhancement or additional capital to Marketing in the future.

In accordance with generally accepted accounting principles (“GAAP”), the aggregate minimum rent due over the current terms of the Marketing Leases, substantially all of which are scheduled to expire in December 2015, is recognized on a straight-line basis rather than when the cash payment is due.  We have recorded as deferred rent receivable on our consolidated balance sheet the cumulative difference between lease revenue recognized under this straight line accounting method and the lease revenue recognized when the payment is due under the contractual payment terms. We provide reserves for a portion of the recorded deferred rent receivable if circumstances indicate that a property may be disposed of before the end of the current lease term or if it is not reasonable to assume that a tenant will make all of its contractual lease payments when due during the current lease term.  Our assessments and assumptions regarding the recoverability of the deferred rent receivable related to the properties subject to the Marketing Leases are reviewed on a quarterly basis and such assessments and assumptions are subject to change.

We have had periodic discussions with representatives of Marketing regarding potential modifications to the Marketing Leases and in the course of such discussions Marketing has proposed to (i) remove approximately 40% of the properties (the “Subject Properties”) from the Marketing Leases and eliminate payment of rent to us, and eliminate or reduce payment of operating expenses, with respect to the Subject Properties, and (ii) reduce the aggregate amount of rent payable to us for the approximately 60% of the properties that would remain under the Marketing Leases (the “Remaining Properties”).  In light of these developments, and Marketing’s financial performance, which continued to deteriorate in the fourth quarter and for the year ended December 31, 2007 (as discussed below), we intend to attempt to negotiate with Marketing for a modification of the Marketing Leases which removes the Subject Properties from the Marketing Leases.  Following any such modification, we intend either to relet the Subject Properties or to sell the Subject Properties and reinvest the proceeds in new properties.  Any such modification would likely significantly reduce the amount of rent we receive from Marketing and increase our operating expenses.  We cannot accurately predict if or when the Marketing Leases will be modified or what the terms of any agreement may be if the Marketing Leases are modified.  We also cannot accurately predict what actions Marketing and Lukoil may take, and what our recourse may be, whether the Marketing Leases are modified or not.

Representatives of Marketing have also indicated to us that they are considering significant changes to Marketing’s business model.  We intend to attempt to negotiate with Marketing for a modification of the Marketing Leases to remove the Subject Properties; however if Marketing ultimately determines that its business strategy is to exit all of the properties it leases from us or to divest a composition of properties different from the properties comprising the Subject Properties, it is our intention to cooperate with Marketing in accomplishing those objectives to the extent that is prudent for us to do so by seeking replacement tenants or buyers for the properties subject to the Marketing Leases, either individually, in groups of properties, or by seeking a single tenant for the entire portfolio of properties subject to the Marketing Leases.  Although we are the fee or leasehold owner of the properties subject to the Marketing Leases and the owner of the Getty® brand and have prior experience with tenants who operate their gas stations, convenience stores, automotive repair services or other businesses at our properties, in the event that the Subject Properties or other properties are removed from the Marketing Leases, we cannot accurately predict if, when, or on what terms, such properties could be re-let or sold.

In February 2008 we received Marketing’s unaudited financial statements for the year ended December 31, 2007 and became aware that the previously disclosed deterioration in Marketing’s financial performance had continued to a point where, in conjunction with our intention to attempt to negotiate with Marketing for a modification of the Marketing Leases to remove the Subject Properties, we can no longer reasonably assume that we will collect all of the rent due to us related to the Subject Properties for the remainder of the current lease terms.  In reaching this conclusion, we relied on various indicators, including, but not limited to, the following: (i) Marketing’s significant operating losses, (ii) its negative cash flow from operating activities, (iii) its asset impairment charges for underperforming assets, and (iv) its negative earnings before interest, taxes, depreciation, amortization and rent payable to the Company.  Based upon our assessments and assumptions, we believe that it is probable at this time that Lukoil would not allow Marketing to fail to perform its obligations under the Marketing Leases.  Should our assessments and assumptions prove to be incorrect, the conclusions reached by the Company relating to (i) recoverability of the deferred rent receivable for the Remaining Properties and (ii) Marketing’s ability to pay its environmental liabilities (as discussed below) would likely change.

Based upon our belief that Marketing desires to have the Subject Properties removed from the Marketing Leases, and our intention to attempt to negotiate a modification of the Marketing Leases to such end, we believe that Marketing will not make all contractual lease payments when due for the entire current term of the Marketing Leases with respect to the Subject Properties.  Accordingly, we have reserved approximately $10.5 million of the deferred rent receivable recorded as of December 31, 2007, which is the full amount of the deferred rent receivable related to the Subject Properties.  This non-cash reserve has been reflected in our results of operations for the fourth quarter and year ended December 31, 2007 based on information that became available to us from Marketing after we announced our results of operations for those periods.  Providing this $10.5 million reserve reduces our net earnings and our funds from operations but does not impact our cash flow from operating activities or adjusted funds from operations since the impact of the straight-line method of accounting is not included in our determination of adjusted funds from operations. For additional information regarding funds from operations and adjusted funds from operations, which are non-GAAP measures, see “General – Supplemental Non-GAAP Measures” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Selected Financial Data” both of which appear in our Annual Report to Shareholders filed as exhibit 13 in our 2007 Annual Report on Form 10-K and are incorporated by reference herein.  While we believe it is no longer reasonable to assume that Marketing will make all contractual lease payments when due for the entire current term of the Marketing Leases with respect to the Subject Properties, after considering Marketing’s financial condition, our intention to negotiate a modification of the Marketing Leases, and certain other factors, including but not limited to those described above, we continue to believe that it is probable that we will collect the deferred rent receivable recorded as of December 31, 2007 related to the Remaining Properties.  In addition, based upon our evaluation of the carrying value of the Subject Properties, we believe that no impairment adjustment is necessary for the Subject Properties as of December 31, 2007 pursuant to the provisions of Statement of Financial Accounting Standards No. 144. We intend to regularly review our assumptions that affect the accounting for rental revenue related to the Remaining Properties subject to the Marketing Leases and our assumptions regarding potential impairment of the Subject Properties and, if appropriate, to consider adjusting our reserves.  Beginning in the first quarter of 2008, we anticipate that the rental revenue for the Remaining Properties will continue to be recognized on a straight-line basis and the rental revenue for the Subject Properties will be recognized when paid under the contractual payment terms.

As the operator of our properties under the Marketing Leases, Marketing is directly responsible to pay for the remediation of environmental contamination it causes and to comply with various environmental laws and regulations.  In addition, the Marketing Leases and various other agreements between Marketing and us allocate responsibility for known and unknown environmental liabilities between Marketing and us relating to the properties subject to the Marketing Leases.  Based on various factors, including our assessments and assumptions at this time that Lukoil would not allow Marketing to fail to perform its obligations under the Marketing Leases, we believe that Marketing will continue to pay for substantially all environmental contamination and remediation costs allocated to it under the Marketing Leases.  It is possible that our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities may change as a result of the factors discussed above, or otherwise, which may result in adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets.  We may ultimately be responsible to directly pay for environmental liabilities as the property owner if Marketing fails to pay them.  We are required to accrue for environmental liabilities that we believe are allocable to Marketing under the Marketing Leases and various other agreements if we determine that it is probable that Marketing will not pay its environmental obligations.

Based upon our assessment of Marketing's financial condition and certain other factors, including but not limited to those described above, we believe at this time that it is not probable that Marketing will not pay the environmental liabilities allocable to it under the Marketing Leases and various other agreements and, therefore, have not accrued for such environmental liabilities. Our assessments and assumptions that affect the recording of environmental liabilities related to the properties subject to the Marketing Leases are reviewed on a quarterly basis and such assessments and assumptions are subject to change.

We cannot provide any assurance that Marketing will continue to pay its debts or meet its rental, environmental or other obligations under the Marketing Leases prior or subsequent to any potential modification to the Marketing Leases discussed above. Additionally, we may be required to (i) reserve additional amounts of the deferred rent receivable at a later time, (ii) accrue for environmental liabilities that we believe are allocable to Marketing under the Marketing Leases and various other agreements, or (iii) record an impairment charge related to the Subject Properties as a result of the proposed modification of the Marketing Leases.  In the event that Marketing cannot or will not perform its rental, environmental or other obligations under the Marketing Leases; if the Marketing Leases are modified significantly or terminated; if we determine that it is probable that Marketing will not meet its environmental obligations and we accrue for such liabilities; if we are unable to relet or sell the properties subject to the Marketing Leases; or if we change our assumptions that affect the accounting for rental revenue or environmental liabilities related to the Marketing Leases; our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and stock price may be materially adversely affected.

For additional information regarding factors that could adversely affect us relating to Marketing, see “Part I, Item 1A. Risk Factors” in our 2007 Annual Report on Form 10-K.

CERTAIN STATEMENTS IN THIS CURRENT REPORT ON FORM 8-K MAY CONSTITUTE “FORWARD LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN THE WORDS “BELIEVES,” “EXPECTS,” “PLANS,” “INTENDS,” “PROJECTS,” “ESTIMATES” AND SIMILAR EXPRESSIONS ARE USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS. STATEMENTS IN THIS CURRENT REPORT ON FORM 8-K THAT ARE FORWARD-LOOKING INCLUDE, BUT ARE NOT LIMITED TO, STATEMENTS ABOUT  (A) THE COMPANY’S BELIEF THAT ANY MATERIAL AMOUNT OF THE DEFERRED RENT RECEIVABLE IMPAIRMENT CHARGE WILL NOT RESULT IN FUTURE CASH EXPENDITURES, (B) THE COMPANY’S STATEMENTS RELATING TO MARKETING’S ABILITY TO MAKE CONTRACTUAL LEASE PAYMENTS WHEN DUE FOR THE ENTIRE CURRENT TERM OF THE MARKETING LEASES, AND (C) THE COMPANY’S INTENTION WITH RESPECT TO ASSISTING LUKOIL AND MARKETING IF MARKETING DECIDES TO EXIT ALL OR SOME PART OF THE RETAIL MOTOR FUEL AND CONVENIENCE STORE BUSINESS IT IS CURRENTLY ENGAGED IN WITH RELATION TO THE PROPERTIES IT LEASES FROM THE COMPANY.  THESE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.  INFORMATION CONCERNING FACTORS THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.  THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

Exhibit
Number	Description
99.1	Press Release, dated March 18, 2008, issued by Getty Realty Corp.

The information contained in Item 2.02 and Exhibit 99.1 to this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.  Such information in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GETTY REALTY CORP.
Date: March 18, 2008	By:	/s/ Thomas J. Stirnweis
		Thomas J. Stirnweis
		Vice President, Treasurer and
		Chief Financial Officer

EX-99.1

Exhibit 99.1

Getty Realty Corp. Announces Revised Results of Operations for the Quarter and

Year Ended December 31, 2007

Significant Portion of Deferred Rent Receivable Reserved at Year End

JERICHO, NY, March 18, 2008 - Getty Realty Corp. (NYSE: GTY) (“Getty” or the “Company”) announced that as a result of events arising subsequent to its announcement on February 5, 2008 of the Company’s preliminary results of operations for the quarter and year ended December 31, 2007, the Company is revising its preliminary results of operations for those periods.

The Company notes that that the continued deterioration in the financial condition and results of operations of Getty Petroleum Marketing Inc. (“Marketing”), the Company’s primary tenant, has caused the Company to review its assessment of whether it could reasonably assume that it would collect all of the rent due to it under leases with Marketing (the “Marketing Leases”).  As a result and as further described in the Company’s Current Report on Form 8-K (the “Form 8-K”) filed today with the Securities and Exchange Commission (the “SEC”), the Company has provided a non-cash $10.5 million reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 related to the deferred rent receivable for approximately 40% of the properties (“Subject Properties”) leased to Marketing under the Marketing Leases.  This reserve is reflected in the Company’s results of operations for the fourth quarter and year ended December 31, 2007.

Taking this reserve negatively impacts the Company’s results of operations for the fourth quarter and year ended December 31, 2007.  As a result, the Company cautions its investors, shareholders and other parties that the preliminary results of operations of the Company included in the February 5, 2008 press release and the related information discussed on the conference call on February 6, 2008 should not be relied upon.

The revised results of operations of the Company for the quarter and year ended December 31, 2007 are as follows:

Net earnings decreased by $8.8 million to $33.9 million for the year ended December 31, 2007 as compared to $42.7 million for the year ended December 31, 2006.  Earnings from continuing operations were $28.1 million for the year ended December 31, 2007 as compared to $42.3 million for the year ended December 31, 2006, a decrease of $14.2 million.  Net earnings and earnings from continuing operations for 2007 reflect a non-cash $10.5 million reserve for the full amount of the deferred rent receivable for the Subject Properties recorded as of December 31, 2007, higher environmental, general and administrative, depreciation and amortization and interest expenses and lower income tax benefit, which were partially offset by additional rental revenue from properties acquired and rent escalations as compared to the prior year.  If the amount of the non-cash reserve were added to our actual net earnings and net earning from continuing operations, as compared to 2006, our net earnings would have increased by $1.7 million to $44.4 million, or $1.79 per share, for the year ended December 31, 2007 and our earnings from continuing operations would have decreased by $3.7 million to $38.6 million for the year ended December 31, 2007. These supplemental non-GAAP measures are provided to assist in the analysis of our performance for 2007, as compared to 2006, exclusive of the material impact of the non-cash reserve on our results and are defined and reconciled to net earnings in the financial tables at the end of this press release.

The Company incurred a net loss of $0.6 million for the quarter ended December 31, 2007 as compared net earnings of $9.8 million for the quarter ended December 31, 2006.  The Company had a loss from continuing operations of $0.8 million for the quarter ended December 31, 2007 as compared to earnings from continuing operations of $9.7 million for the quarter ended December 31, 2006.  The loss from continuing operations for the quarter ended December 31, 2007 was due to the non-cash $10.5 million reserve for the full amount of the deferred rent receivable for the Subject Properties recorded as of December 31, 2007, higher general and administrative, depreciation and amortization and interest expenses and lower other income which were partially offset by lower environmental expenses and additional rental revenue from properties acquired and rent escalations as compared to the same period in 2006.  If the amount of the non-cash reserve were added to our actual net earnings and net earning from continuing operations for the quarter, as compared to 2006, net earnings would have increased by $1.3 million to $11.1 million for the quarter ended December 31, 2007 and earnings from continuing operations would have been comparable to the quarter ended December 31, 2007.  These supplemental non-GAAP measures are provided to assist in the analysis of our performance for 2007, as compared to 2006, exclusive of the material impact of the non-cash reserve on our results and are defined and reconciled to net earnings in the financial tables at the end of this press release.

The financial results for the quarter and year ended December 31, 2007 include the effect of the $84.6 million acquisition of convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to the Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter of 2007. In addition, the Company acquired nine properties and redeveloped one property during the twelve months ended December 31, 2007 for an aggregate cost of $6.0 million. Approximately $3.3 million of those acquisitions were funded with the proceeds from dispositions of real estate using tax free exchanges, as permitted by the Internal Revenue Code.

The operating results and gains or losses from certain dispositions of real estate have been reclassified as discontinued operations. Discontinued operations for the quarter and year ended December 31, 2007 are primarily comprised of gains on dispositions of real estate and the rental revenue from those properties, including early lease termination income.

Funds from operations, or FFO, were $2.4 million for the quarter and  $37.6 million for the year ended December 31, 2007, as compared to $11.5 million and $49.0 million for the respective prior year periods.  If the amount of the non-cash reserve were added to FFO, as compared to 2006, FFO would have decreased by $1.0 million to $48.0 million, or $1.94 per share, for the year ended December 31, 2007.  Adjusted funds from operations, or AFFO, were $11.6 million for the quarter and $43.8 million for the year ended December 31, 2007, as compared to $10.8 million and $45.3 million for the respective prior year periods.

The decrease in FFO for the quarter ended December 31, 2007 was primarily due to the non-cash $10.5 million reserve described above, higher general and administrative and interest expenses and lower other income which were partially offset by lower environmental expenses and additional rental revenue from properties acquired and rent escalations, but exclude the increases in depreciation and amortization expense and the increases in gains on dispositions of real estate.  The decrease in FFO for the year ended December 31, 2007 was primarily due to the non-cash $10.5 million reserve described above, higher environmental, general and administrative, and interest expenses and lower income tax benefit, which were partially offset by additional rental revenue from properties acquired and rent escalations, but exclude the increases in depreciation and amortization expense and the increases in gains on dispositions of real estate.  The increase in AFFO for the quarter and the decrease in AFFO for the year ended December 31, 2007 exclude the decreases in income tax benefit, deferred rental revenue and the increases in net amortization of above-market and below-market leases (which are included in net earnings and FFO but are excluded from AFFO).  FFO and AFFO are supplemental non-GAAP measures of the performance of real estate investment trusts and are defined and reconciled to net earnings in the financial tables at the end of this press release.

Diluted net earnings per share decreased by $0.38 per share for the quarter and by $0.36 per share for the year ended December 31, 2007 to $0.02 per share and $1.37 per share, respectively, as compared to $0.40 per share and $1.73 per share for the respective prior year periods.  FFO for the quarter and year ended December 31, 2007, were $0.10 per share and $1.51 per share, respectively, as compared to $0.46 per share and $1.98 per share for the respective prior year periods. AFFO for the quarter and year ended December 31, 2007, were $0.47 per share and $1.77 per share, respectively, as compared to $0.44 per share and $1.83 per share for the respective prior year periods.

Revenues from rental properties increased by $2.1 million for the quarter and by $6.6 million for the year ended December 31, 2007 to $20.1 million and $78.5 million, respectively, as compared to the respective prior year periods. Rent received increased by $2.0 million to $19.3 million for the quarter and by $6.1 million to $75.0 million for the year ended December 31, 2007, as compared to the respective prior year periods. The increases in rent received were primarily due to additional rental income from property acquisitions and rent escalations. In addition to rent received, revenues from rental properties include deferred rental revenues accrued due to recognition of rental income on a straight-line basis and net amortization of above-market and below-market leases related to the properties acquired in 2007.

Environmental expenses, net of estimated recoveries from state underground storage tank funds, for the quarter ended December 31, 2007 decreased by $0.6 million to $1.4 million and increased by $2.8 million to $8.2 million for the year ended December 31, 2007, as compared to the respective prior year periods. The net decrease in environmental expenses for the three months ended December 31, 2007 was primarily due to lower change in net estimated environmental costs and lower environmental related litigation expenses. The net increase in environmental expenses for the year ended December 31, 2007 was primarily due to $1.9 million of higher net change in estimated environmental costs and higher environmental related litigation expenses. The increase in the change in estimated environmental costs for the year ended December 31, 2007 includes the increases in project scope or duration and related cost forecasts at a limited number of properties including one site that Getty agreed to remediate as a result of a legal settlement with the State of New York and regulator mandated project changes at other sites.

General and administrative expenses increased by $0.4 million for the quarter and by $1.1 million for the year ended December 31, 2007 to $1.9 million and to $6.7 million, respectively, as compared to the respective prior year periods. General and administrative expenses increased, in part, due to higher employee related expenses related to the previously disclosed resignation of Mr. Andrew Smith, Getty’s former President and Chief Legal Officer, during the fourth quarter of 2007. The increase in general and administrative expenses for the year ended December 31, 2007 was also due to higher professional fees and changes in insurance loss reserves recorded in 2007 as compared to 2006. The insurance loss reserves were established under Getty’s self-funded insurance program that was terminated in 1997.

Depreciation and amortization expense increased by $0.5 million for the quarter and by $1.9 million for the year ended December 31, 2007 to $2.6 million and $9.8 million, respectively, as compared to the respective prior year periods due to the acquisition of properties during 2007 and 2006.

Gains on dispositions of real estate, included in other income and discontinued operations, increased by an aggregate of $0.4 million to $0.8 million for the quarter and by $4.6 million to $6.2 million for the year ended December 31, 2007, as compared to the respective prior year periods.

Interest expense increased by $1.3 million to $2.3 million for the quarter and by $4.2 million to $7.8 million for the year ended December 31, 2007, as compared to the respective prior year periods primarily due to additional borrowings used to finance the acquisition of properties.

Getty Realty Corp. is the largest publicly-traded real estate investment trust in the United States specializing in ownership and leasing of convenience store/gas station properties and petroleum distribution terminals.  The Company owns and leases approximately 1,100 properties throughout the United States.

CERTAIN STATEMENTS IN THIS PRESS RELEASE MAY CONSTITUTE “FORWARD LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. WHEN THE WORDS “BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,” “ESTIMATES” AND SIMILAR EXPRESSIONS ARE USED, THEY IDENTIFY FORWARD-LOOKING STATEMENTS.  THESE FORWARD-LOOKING STATEMENTS ARE BASED ON MANAGEMENT’S CURRENT BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY AVAILABLE TO MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. INFORMATION CONCERNING FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN OUR PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.  WE UNDERTAKE NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES OR REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
	December 31,			December 31,
Assets:	2007			2006
Real Estate:
Land	$	222,194		$	180,409
Buildings and improvements		252,060			203,149
		474,254			383,558
Less – accumulated depreciation and amortization		(122,465	)		(116,089	)
Real estate, net		351,789			267,469
Deferred rent receivable (net of allowance of $10,494 at December 31, 2007)		24,915			32,297
Cash and cash equivalents		2,071			1,195
Recoveries from state underground storage tank funds, net		4,652			3,845
Mortgages and accounts receivable, net		1,473			1,784
Prepaid expenses and other assets		12,011			4,332
Total assets	$	396,911		$	310,922
Liabilities and Shareholders' Equity:
Debt	$	132,500		$	45,194
Environmental remediation costs		18,523			17,201
Dividends payable		11,534			11,284
Accounts payable and accrued expenses		22,176			11,668
Total liabilities		184,733			85,347
Commitments and contingencies		--			--
Shareholders' equity:
Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 24,765,065 at December 31, 2007and 24,764,765 at December 31, 2006		248			248
Paid-in capital		258,734			258,647
Dividends paid in excess of earnings		(44,505	)		(32,499	)
Accumulated other comprehensive loss		(2,299	)		(821	)
Total shareholders' equity		212,178			225,575
Total liabilities and shareholders' equity	$	396,911		$	310,922

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
	Three months ended December 31,						Year ended December 31,
	2007			2006			2007			2006
Revenues from rental properties	$	20,052		$	17,931		$	78,462		$	71,904
Expenses:
Rental property expenses		2,275			2,322			9,356			9,684
Environmental expenses, net		1,385			1,949			8,247			5,476
General and administrative expenses		1,911			1,484			6,669			5,607
Allowance for deferred rent receivable		10,494			-			10,494			-
Depreciation and amortization expense		2,602			2,071			9,756			7,849
Total expenses		18,667			7,826			44,522			28,616
Operating income		1,385			10,105			33,940			43,288
Other income, net		115			491			1,923			1,859
Interest expense		(2,258	)		(920	)		(7,760	)		(3,527	)
Earnings (loss) before income taxes and discontinued operations		(758	)		9,676			28,103			41,620
Income tax benefit		-			-			-			700
Earnings (loss) from continuing operations		(758	)		9,676			28,103			42,320
Discontinued operations:
Earnings from operating activities		552			130			1,226			405
Gains on dispositions of real estate		793			-			4,565			-
Earnings from discontinued operations		1,345			130			5,791			405
Net earnings	$	587		$	9,806		$	33,894		$	42,725
Basic earnings (loss) per common share:
Earnings (loss) from continuing operations	$	(.03	)	$	.39		$	1.13		$	1.71
Earnings  from discontinued operations	$	.05		$	.01		$	.23		$	.02
Net earnings	$	.02		$	.40		$	1.37		$	1.73
Diluted earnings (loss) per common share:
Earnings (loss) from continuing operations	$	(.03	)	$	.39		$	1.13		$	1.71
Earnings  from discontinued operations	$	.05		$	.01		$	.23		$	.02
Net earnings	$	.02		$	.40		$	1.37		$	1.73
Weighted average shares outstanding:
Basic		24,765			24,757			24,765			24,735
Stock options and restricted stock units		-			24			22			24
Diluted		24,765			24,781			24,787			24,759
Dividends declared per share	$	.465		$	.455		$	1.850		$	1.820

GETTY REALTY CORP. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
(unaudited)
	Three months ended December 31,						Year ended December 31,
	2007			2006			2007			2006
Net earnings	$	587		$	9,806		$	33,894		$	42,725
Depreciation and amortization of real estate assets		2,608			2,080			9,794			7,883
Gains on dispositions of real estate		(793	)		(429	)		(6,179	)		(1,581	)
Funds from operations		2,402			11,457			37,509			49,027
Deferred rental revenue		(1,190	)		(665	)		(3,112	)		(3,010	)
Allowance for deferred rent receivable		10,494			-			10,494			-
Net amortization of above-market and below-market leases		(105	)		-			(1,047	)		-
Income tax benefit		-			-			-			(700	)
Adjusted funds from operations	$	11,601		$	10,792		$	43,844		$	45,317
Diluted per share amounts:
Earnings per share	$	.02		$	.40		$	1.37		$	1.73
Funds from operations per share	$	.10		$	.46		$	1.51		$	1.98
Adjusted funds from operations per share	$	.47		$	.44		$	1.77		$	1.83
Diluted weighted average shares outstanding		24,765			24,781			24,787			24,759

In addition to measurements defined by generally accepted accounting principles (“GAAP”), Getty also focuses on funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) to measure its performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of the performance of REITs. FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, (including non-FFO items reported in discontinued operations) and extraordinary items. Other REITs may use definitions of FFO and/or AFFO that are different than Getty’s and, accordingly, may not be comparable.

Getty believes that FFO is helpful to investors in measuring its performance because FFO excludes various items included in GAAP net earnings that do not relate to, or are not indicative of, Getty’s fundamental operating performance such as gains or losses from property dispositions and depreciation and amortization of real estate assets. In Getty’s case, however, GAAP net earnings and FFO include the significant impact of deferred rental revenue (straight-line rental revenue) and net amortization of above-market and below-market leases on its recognition of revenues from rental properties, as offset by the impact of collection reserves. Deferred rental revenue primarily results from fixed rental increases scheduled under certain leases with its tenants. In accordance with GAAP, the aggregate minimum rent due over the current term of these leases is recognized on a straight-line basis rather than when due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. GAAP net earnings and FFO may also include an income tax provision or benefit recognized due to adjustments in amounts accrued for uncertain tax positions related to being taxed as a C-corp., rather than as a REIT, prior to 2001. As a result, Getty pays particular attention to AFFO, a supplemental non-GAAP performance measure that Getty defines as FFO less straight-line rental revenue, net amortization of above-market and below-market leases and income taxes. In Getty’s view, AFFO provides a more accurate depiction than FFO of the impact of scheduled rent increases under these leases, rental revenue from in-place leases and Getty’s election to be taxed as a REIT beginning in 2001. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity.

Net earnings and FFO for the three months and year ended December 31, 2007 were reduced by the non-cash $10.5 million reserve for the deferred rent receivable recorded as of December 31, 2007 for approximately 40% of the properties leased to Marketing under the Marketing Leases. The table below adds back the non-cash reserve to our actual net earnings and FFO for the three months and year ended December 31, 2007. We believe that these supplemental non-GAAP measures are important to assist in the analysis of our performance for 2007, as compared to 2006, exclusive of the material impact of the non-cash reserve on our results.

	Three Months ended December 31, 2007							Year ended December 31, 2007
	Non- Adjusted			Reserve		As Adjusted		Non- Adjusted		Reserve		As Adjusted
Net earnings	$	587		$	10,494	$	11,081	$	33,894	$	10,494	$	44,388
Net earnings (loss) from continuing operations		(758	)		10,494		9,736		28,103		10,494		38,597
Funds from operations		2,402			10,494		48,003		37,509		10,494		48,003

Contact	Thomas J. Stirnweis
	(516) 478-5403