gty-10k_20181231.htm

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of common stock held by non-affiliates (32,462,564 shares of common stock) of the Company was $914,470,000 as of June 30, 2018.

The registrant had outstanding 40,866,854 shares of common stock as of February 27, 2019.

Certain statements in this Annual Report on Form 10-K may constitute “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements preceded by, followed by, or that otherwise include the words “believes,” “expects,” “seeks,” “plans,” “projects,” “estimates,” “anticipates,” “predicts” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and are not historical facts. (All capitalized and undefined terms used in this section shall have the same meanings hereafter defined in this Annual Report on Form 10-K.)

Examples of forward-looking statements included in this Annual Report on Form 10-K include, but are not limited to, our network of convenience store and gasoline station properties; substantial compliance of our properties with federal, state and local provisions enacted or adopted pertaining to environmental matters; the effects of recently enacted U.S. federal tax reform and other legislative, regulatory and administrative developments; the impact of existing legislation and regulations on our competitive position; our prospective future environmental liabilities, including those resulting from preexisting unknown environmental contamination; quantifiable trends, which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs; the impact of our redevelopment efforts related to certain of our properties; the amount of revenue we expect to realize from our properties; our belief that our owned and leased properties are adequately covered by casualty and liability insurance; AFFO as a measure that best represents our core operating performance and its utility in comparing the sustainability of our core operating performance with the sustainability of the core operating performance of other REITs; the reasonableness of our estimates, judgments, projections and assumptions used regarding our accounting policies and methods; our critical accounting policies; our exposure and liability due to and our accruals, estimates and assumptions regarding our environmental liabilities and remediation costs; loan loss reserves or allowances; our belief that our accruals for environmental and litigation matters including matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, our MTBE multi-district litigation cases in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, were appropriate based on the information then available; our claims for reimbursement of monies expended in the defense and settlement of certain MTBE cases under pollution insurance policies; compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters; our beliefs about the settlement proposals we receive and the probable outcome of litigation or regulatory actions and their impact on us; our expected recoveries from UST funds; our indemnification obligations and the indemnification obligations of others; our investment strategy and its impact on our financial performance; the adequacy of our current and anticipated cash flows from operations, borrowings under our Restated Credit Agreement and available cash and cash equivalents; our continued compliance with the covenants in our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement; our belief that certain environmental liabilities can be allocated to others under various agreements; our belief that our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts; our beliefs regarding our properties, including their alternative uses and our ability to sell or lease our vacant properties over time; and our ability to maintain our federal tax status as a REIT.

These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and are subject to known and unknown risks, uncertainties and other factors and were derived utilizing numerous important assumptions that may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors and assumptions involved in the derivation of forward-looking statements, and the failure of such other assumptions to be realized as well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control. These factors and assumptions may have an impact on the continued accuracy of any forward-looking statements that we make.

Factors which may cause actual results to differ materially from our current expectations include, but are not limited to, the risks described in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, as such risk factors may be updated from time to time in our public filings, and risks associated with: complying with environmental laws and regulations and the costs associated with complying with such laws and regulations; substantially all of our tenants depending on the same industry for their revenues; the creditworthiness of our tenants; our tenants’ compliance with their lease obligations; renewal of existing leases and our ability to either re-lease or sell properties; our dependence on external sources of capital; counterparty risks; the uncertainty of our estimates, judgments, projections and assumptions associated with our accounting policies and methods; our ability to successfully manage our investment strategy; potential future acquisitions and redevelopment opportunities; changes in interest rates and our ability to manage or mitigate this risk effectively; owning and leasing real estate; our business operations generating sufficient cash for distributions or debt service; adverse developments in general business, economic or political conditions; adverse effect of inflation; federal tax reform; property taxes; potential exposure related to pending lawsuits and claims; owning real estate primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; competition in our industry; the adequacy of our insurance coverage and that of our tenants; failure to qualify as a REIT; dilution as a result of future issuances of equity securities; our dividend policy, ability to pay dividends and changes to our dividend policy; changes in market conditions; provisions in our corporate charter and by-laws; Maryland law discouraging a third-party takeover; the loss of a member or members of our management team or Board of Directors; changes in accounting standards; future impairment

charges; terrorist attacks and other acts of violence and war; our information systems; failure to maintain effective internal controls over financial reporting; and changes in LIBOR reporting practices or the method in which LIBOR is calculated.

As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results, ability to pay dividends or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in this Annual Report on Form 10-K and those that are described from time to time in our other filings with the SEC.

You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events, unless required by law. For any forward-looking statements contained in this Annual Report on Form 10-K or in any other document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Getty Realty Corp., a Maryland corporation, is the leading publicly-traded real estate investment trust (“REIT”) in the United States specializing in the ownership, leasing and financing of convenience store and gasoline station properties. Our 933 properties are located in 30 states across the United States and Washington, D.C. Our properties are operated under a variety of nationally recognized brands including, among others, 76, BP, Citgo, Conoco, Exxon, Getty, Gulf, Mobil, Shell, Sunoco and Valero. We own the Getty® trademark and trade name in connection with our real estate and the petroleum marketing business in the United States.

We are self-administered and self-managed by our management team, which has extensive experience in owning, leasing and managing convenience store and gasoline station properties. We have invested, and will continue to invest, in real estate and real estate related investments when appropriate opportunities arise. Our company is headquartered in Jericho, New York and as of February 27, 2019, we had 29 employees.

As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. Our typical property is used as a convenience store and gasoline station, and is located on between one-half and one acre of land in a metropolitan area. In addition, many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. We have a national portfolio of properties with a concentration in the Northeast and Mid-Atlantic regions. We believe our network of convenience store and gasoline station properties across the Northeast and the Mid-Atlantic regions of the United States is unique and that comparable networks of properties are not readily available for purchase or lease from other owners or landlords.

Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced. For additional information regarding our environmental obligations, see Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

Convenience store and gasoline station properties are an integral component of the transportation infrastructure supported by highly inelastic demand for refined petroleum products, day-to-day consumer goods and convenience foods. Substantially all of our tenants’ financial results depend on the sale of refined petroleum products, convenience store sales or rental income from their subtenants. As a result, our tenants’ financial results are highly dependent on the performance of the petroleum marketing industry, which is highly competitive and subject to volatility. During the terms of our leases, we monitor the credit quality of our triple-net tenants by reviewing their published credit rating, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements, monitoring news reports regarding our tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases.

Net Lease. As of December 31, 2018, we leased 918 of our properties to tenants under triple-net leases.

Our net lease properties include 814 properties leased under 26 separate unitary or master triple-net leases and 104 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years with options for successive renewal terms of up to 20 years and periodic rent escalations. As of December 31, 2018, our contractual rent weighted average lease term, excluding renewal options, was approximately 10 years.

Several of our leases provide for additional rent based on the aggregate volume of fuel sold. For the year ended December 31, 2018, additional rent based on the aggregate volume of fuel sold was not material to our financial results. In addition, certain of our leases require the tenants to invest capital in our properties, substantially all of which are related to the replacement of underground storage tanks (“UST” or “USTs”) that are owned by our tenants. As of December 31, 2018, we have a remaining commitment to fund up to $7.6 million in the aggregate with our tenants for our portion of such capital improvements. For additional information regarding our leases, see Note 2 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

Redevelopment. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. For additional information regarding our redevelopment properties, see “Redevelopment Strategy and Activity” below.

Vacancies. As of December 31, 2018, nine of our properties were vacant. We expect that we will either sell or enter into new leases on these properties over time.

As part of our overall growth strategy, we regularly review acquisition and financing opportunities to invest in additional convenience store and gasoline station, and other automotive related properties, and we expect to continue to pursue investments that we believe will benefit our financial performance. In addition to sale/leaseback and other real estate acquisitions, our investment activities include purchase money financing with respect to properties we sell, and real property loans relating to our leasehold portfolios. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate. To achieve that goal, we seek to invest in high quality individual properties and real estate portfolios that are in strong primary markets that serve high density population centers. A key element of our investment strategy is to invest in properties that will promote our geographic and tenant diversity.

During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. For additional information regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

Over the last five years, we have acquired 238 properties, located in various states, for an aggregate purchase price of $536.5 million. These acquisitions included single property transactions and portfolio transactions.

We believe that certain of our properties are located in geographic areas, which together with other factors, may make them well-suited for a new convenience and gasoline use or for alternative single-tenant net lease retail uses, such as quick service restaurants, automotive parts and service stores, specialty retail stores and bank branch locations. We believe that the redeveloped properties can be leased or sold at higher values than their current use.

For the year ended December 31, 2018, rent commenced on six completed redevelopment projects that were placed back into service in our net lease portfolio. Since the inception of our redevelopment program in 2015, we have completed nine redevelopment projects.

For the year ended December 31, 2018, we spent $2.7 million of construction-in-progress costs related to our redevelopment activities. During the year ended December 31, 2018, we transferred $2.2 million of construction-in-progress to buildings and improvements on our consolidated balance sheet. In addition, during the year ended December 31, 2018, we spent $4.4 million to reimburse tenants for capital expenditures related to our redevelopment activities.

As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses. In addition, to the six properties currently classified as redevelopment, we are in various stages of feasibility and planning for the recapture of select properties from our net lease portfolio that are suitable for redevelopment to either a new convenience and gasoline use or for alternative single-tenant net lease retail uses. As of December 31, 2018, we have signed leases on seven properties, that are currently part of our net lease portfolio, which will be recaptured and transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured.

Our founders started the business in 1955 with the ownership of one gasoline service station in New York City and combined real estate ownership, leasing and management with service station operation and petroleum distribution. We held our initial public offering in 1971 under the name Power Test Corp. In 1985, we acquired from Texaco the petroleum distribution and marketing assets of Getty Oil Company in the Northeast United States along with the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States.

Getty Petroleum Marketing, Inc. (“Marketing”), which was an indirect wholly owned subsidiary of OAO Lukoil (“Lukoil”) from December 2000 until March 2011, was our principal tenant under a long-term unitary triple-net master lease. In December 2011, Marketing filed with the U.S. Bankruptcy Court for Chapter 11 bankruptcy protection. The bankruptcy proceedings resulted in the termination of the master lease effective April 30, 2012, followed by the liquidation of Marketing. As of December 31, 2018, 374 of the properties we own or lease were previously leased to Marketing.

We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. A REIT is a corporation, or a business trust that would otherwise be taxed as a corporation, which meets certain requirements of the Internal Revenue Code. The Internal Revenue Code permits a qualifying REIT to deduct dividends paid, thereby effectively eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes. To meet the applicable requirements of the

Internal Revenue Code, a REIT must, among other things, invest substantially all of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real property or interest on loans secured by mortgages on real property, and distribute to stockholders annually a substantial portion of its taxable income. As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed.

Our major tenants are part of larger corporate organizations and the financial distress of one subsidiary or other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. For information regarding factors that could adversely affect us relating to our leases with these tenants, see “Item 1A. Risk Factors”.

The single-tenant net lease retail sector of the real estate industry in which we operate is highly competitive. In addition, we expect major real estate investors with significant capital will continue to compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, public and private investment funds, and other individual and institutional investors.

We own the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States and we permit certain of our tenants to use the Getty® trademark at properties that they lease from us.

Our properties are subject to numerous federal, state and local laws and regulations including matters related to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. These laws include: (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate soil and groundwater contamination, including pursuant to governmental order and directive, (ii) requirements to remove and replace USTs that have exceeded governmental-mandated age limitations and (iii) the requirement to provide a certificate of financial responsibility with respect to potential claims relating to UST failures. Our triple-net lease tenants are directly responsible for compliance with environmental laws and regulations with respect to their operations at our properties.

We believe that our properties are in substantial compliance with federal, state and local provisions pertaining to environmental matters. Although we are unable to predict what legislation or regulations may be adopted in the future with respect to environmental protection and waste disposal, we do not believe that existing legislation and regulations will have a material adverse effect on our competitive position. For additional information regarding pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” in this Form 10-K.

contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant.

For additional information, see “Item 1A. Risk Factors” and to “Liquidity and Capital Resources,” “Environmental Matters” and “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

Our website address is www.gettyrealty.com. Information available on our website shall not be deemed to be a part of this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the U.S. Securities and Exchange Commission (“SEC”).

Our website also contains our business conduct guidelines (“Code of Ethics”), corporate governance guidelines and the charters of the Audit, Compensation and Nominating/Corporate Governance Committees of our Board of Directors. We intend to make available on our website any future amendments or waivers to our Code of Ethics within four business days after any such amendments or waivers become effective.

We are subject to various risks, many of which are beyond our control. As a result of these and other factors, we may experience material fluctuations in our future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. An investment in our stock involves various risks, including those mentioned below and elsewhere in this Annual Report on Form 10-K and those that are described from time to time in our other filings with the SEC.

We incur significant operating costs as a result of environmental laws and regulations which costs could significantly rise and reduce our profitability.

We are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment. Under certain environmental laws, a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances or petroleum products at, on, or under, such property, and may be required to investigate and clean-up such contamination. Such laws typically impose liability and clean-up responsibility first on the party responsible for the contamination, but can also impose liability and clean-up responsibility on the owner and the current operator without regard to whether the owner or operator knew of or caused the presence of the contaminants, or the timing or cause of the contamination. Liability under such environmental laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility and the financial resources are available to perform the remediation. For example, liability may arise as a result of the historical use of a property or from the migration of contamination from adjacent or nearby properties. Any such contamination or liability may also reduce the value of the property. In addition, the owner or operator of a property may be subject to claims by third-parties based on injury, damage and/or costs, including investigation and clean-up costs, resulting from environmental contamination present at or emanating from a property. The properties owned or controlled by us are leased primarily as convenience store and gasoline station properties, and therefore may contain, or may have contained, USTs for the storage of petroleum products and other hazardous or toxic substances, which creates a potential for the release of such products or substances. Some of our properties are subject to regulations regarding the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Some of the properties may be adjacent to or near properties that have contained or currently contain USTs used to store petroleum products or other hazardous or toxic substances. In addition, certain of the properties are on, adjacent to, or near properties upon which others have engaged or may in the future engage in activities that may release petroleum products or other hazardous or toxic substances. There may be other environmental problems associated with our properties of which we are unaware. These problems may make it more difficult for us to re-lease or sell our properties on favorable terms, or at all.

For additional information regarding pending environmental lawsuits and claims, and environmental remediation obligations and estimates, see “Item 3. Legal Proceedings”, “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 3 and 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. We are contingently liable for these environmental obligations in the event that our tenant or other counterparty does not satisfy them. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities. We are required to accrue for environmental liabilities that we believe are allocable to others under our leases and other agreements if we determine that it is probable that our tenant or other counterparty will not meet its environmental obligations. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant or other counterparty fails to pay them. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the past will continue to do so. The ultimate resolution of these matters could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant.

We anticipate that a majority of the USTs at properties previously leased to Marketing will be replaced over the next several years because these USTs are either at or near the end of their useful lives. For long-term, triple-net leases covering sites previously leased to Marketing, our tenants are responsible for the cost of removal and replacement of USTs and for remediation of contamination found during such UST removal and replacement, unless such contamination was found during the first 10 years of the lease term and also existed prior to commencement of the lease. In those cases, we are responsible for costs associated with the remediation of such contamination. We have also agreed to be responsible for environmental contamination that existed prior to the sale of certain properties assuming the contamination is discovered (other than as a result of a voluntary site investigation) during the first five years after the sale of the properties. For properties that are vacant, we are responsible for costs associated with UST removals and for the cost of remediation of contamination found during the removal of USTs.

In the course of certain UST removals and replacements at properties previously leased to Marketing where we retained continuing responsibility for preexisting environmental obligations, previously unknown environmental contamination was and continues to be discovered. As a result, we have developed a reasonable estimate of fair value for the prospective future environmental liability resulting from preexisting unknown environmental contamination and have accrued for these estimated costs. These estimates are based primarily upon quantifiable trends which we believe allow us to make reasonable estimates of fair value for the future costs of environmental remediation resulting from the removal and replacement of USTs. Our accrual of the additional liability represents our estimate of the fair value of cost for each component of the liability, net of estimated recoveries from state UST remediation funds considering estimated recovery rates developed from prior experience with the funds. In arriving at our accrual, we analyzed the ages of USTs at properties where we would be responsible for preexisting contamination found within 10 years after commencement of a lease (for properties subject to long-term triple-net leases) or five years from a sale (for divested properties), and projected a cost to closure for preexisting unknown environmental contamination.

We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation, and then discount them to present value. We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59.8 million for our prospective environmental remediation obligations. This accrual consisted of (a) $14.5 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.3 million for future environmental liabilities related to preexisting unknown contamination.

for treatment, alternative methods of remediation and prior experience. Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and reasonably estimable.

Our estimates are based upon facts that are known to us at this time and an assessment of the possible ultimate remedial action outcomes. It is possible that our assumptions, which form the basis of our estimates, regarding our ultimate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities. Among the many uncertainties that impact the estimates are our assumptions, the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of contamination, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to additional claims, and possible changes in the environmental rules and regulations, enforcement policies, and reimbursement programs of various states. Additional environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We cannot predict what environmental legislation or regulations may be enacted in the future, or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict if state UST fund programs will be administered and funded in the future in a manner that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at historical recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of existing laws, which may develop in the future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation. Accordingly, compliance with environmental laws and regulations could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

Substantially all of our tenants depend on the same industry for their revenues.

We derive substantially all of our revenues from leasing, primarily on a triple-net basis, and financing convenience store and gasoline station properties to tenants in the petroleum marketing industry. Accordingly, our revenues are substantially dependent on the economic success of the petroleum marketing industry, and any factors that adversely affect that industry, such as disruption in the supply of petroleum or a decrease in the demand for conventional motor fuels due to conservation, technological advancements in petroleum-fueled motor vehicles or an increase in the use of alternative fuel and battery-operated vehicles, or other “green technologies,” could have a material adverse effect on our business, financial condition and results of operations, liquidity, ability to pay dividends or stock price. The success of participants in the petroleum marketing industry depends upon the sale of refined petroleum products at margins in excess of fixed and variable expenses. The petroleum marketing industry is highly competitive and volatile. Petroleum products are commodities, the prices of which depend on numerous factors that affect supply and demand. The prices paid by our tenants and other petroleum marketers for products are affected by global, national and regional factors. A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of our tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline was to decline significantly. We cannot be certain as to how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect our tenants.

Because certain of our tenants are not rated and their financial information is not available to you, it may be difficult for our investors to determine their creditworthiness.

The majority of our properties are leased to tenants who are not rated by any nationally recognized statistical rating organizations. In addition, our tenants’ financial information is not generally available to our investors. Additionally, many of our tenants are part of larger corporate organizations and we do not receive financial information for the other entities in those organizations. The financial distress of other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. Because of the lack of financial information or credit ratings it is, therefore, difficult for our investors to assess the creditworthiness of our tenants and to determine the ability of our tenants to meet their obligations to us. It is possible that the assumptions and estimates we make after reviewing publicly and privately obtained information about our tenants are not accurate and that we may be required to increase reserves for bad debts, record allowances for deferred rent receivable or record additional expenses if our tenants are unable or unwilling to meet their obligations to us.

Our future cash flow is dependent on the performance of our tenants of their lease obligations, renewal of existing leases and either re-leasing or selling our properties.

We are subject to risks that financial distress, default or bankruptcy of our tenants may lead to vacancy at our properties or disruption in rent receipts as a result of partial payment or nonpayment of rent or that expiring leases may not be renewed. Under unfavorable general economic conditions, there can be no assurance that our tenants’ level of sales and financial performance generally will not be adversely affected, which in turn could negatively impact our rental revenues. We are subject to risks that the terms governing renewal or re-leasing of our properties (including, compliance with numerous federal, state and local laws and regulations related to the

protection of the environment, such as the remediation of contamination and the retirement and decommissioning or removal of long-lived assets, the cost of required renovations, or replacement of USTs and related equipment) may be less favorable than current lease terms.

We are also subject to the risk that we may receive less net proceeds from the properties we sell as compared to their current carrying value or that the value of our properties may be adversely affected by unfavorable general economic conditions. Unfavorable general economic conditions may also negatively impact our ability to re-lease or sell our properties. Numerous properties compete with our properties in attracting tenants to lease space. The number of available or competitive properties in a particular area could have a material adverse effect on our ability to lease or sell our properties and on the rents we are able to charge. In addition to the risk of disruption in rent receipts, we are subject to the risk of incurring real estate taxes, maintenance, environmental and other expenses at vacant properties. The financial distress, default or bankruptcy of our tenants may also lead to protracted and expensive processes for retaking control of our properties than would otherwise be the case, including, eviction or other legal proceedings related to or resulting from the tenant’s default. These risks are greater with respect to certain of our tenants who lease multiple properties from us. If a tenant files for bankruptcy protection it is possible that we would recover substantially less than the full value of our claims against the tenant. If (i) our tenants do not perform their lease obligations, (ii) we are unable to renew existing leases and promptly recapture and re-lease or sell our properties, (iii) lease terms upon renewal or re-leasing are less favorable than current or historical lease terms, (iv) the values of properties that we sell are adversely affected by market conditions, or (v) we incur significant costs or disruption related to or resulting from tenant financial distress, default or bankruptcy, then our cash flow could be significantly adversely affected.

We are dependent on external sources of capital which may not be available on favorable terms, or at all.

We are dependent on external sources of capital to maintain our status as a REIT and must distribute to our stockholders each year at least 90% of our net taxable income, excluding any net capital gain. Because of these distribution requirements, it is not likely that we will be able to fund all future capital needs, including acquisitions, from income from operations. Therefore, we will have to continue to rely on third-party sources of capital, which may or may not be available on favorable terms, or at all. We may need to access the capital markets in order to execute future significant acquisitions. There can be no assurance that sources of capital will be available to us on favorable terms, or at all.

Our principal sources of liquidity are the cash flows from our operations, funds available under our $300.0 million senior unsecured credit agreement (as amended, the “Restated Credit Agreement”), with a group of commercial banks led by Bank of America, N.A. (the “Bank Syndicate”), proceeds from the sale of shares of our common stock through offerings, from time to time, under our at-the-market program (“ATM Program”) and available cash and cash equivalents. The Restated Credit Agreement consists of a $250.0 million unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022 and a $50.0 million unsecured term loan (the “Term Loan”), which is scheduled to mature in March 2023. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate.

On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100.0 million (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75.0 million (the “Series B Notes”), and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50.0 million (the “Series C Notes”), that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series D Notes” and, together with the Series A Notes, the Series B Notes and the Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities.

On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity.

On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including a rate based on the LIBOR Daily Floating Rate (as defined in the

Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility. For additional information, see “Credit Agreement” and “Senior Unsecured Notes” in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as leverage, coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends. The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement require a mandatory offer to prepay the Notes and the Series E Notes, respectively, upon a change in control in lieu of a change of control event of default). Our ability to meet the terms of the agreements is dependent upon our continued ability to meet certain criteria, as further described in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K, the performance of our tenants and the other risks described in this section. If we are not in compliance with one or more of our covenants, which could result in an event of default under our Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement or our MetLife Note Purchase Agreement, there can be no assurance that our lenders would waive such non-compliance. This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price.

Under our ATM Program, we may issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting as agents. Sales of shares of our common stock under our ATM Program may be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent. Sales of shares of our common stock under our ATM Program, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions and the trading price of our common stock. Our agents are not required to sell any specific number or dollar amount of our common stock, but each agent will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulation to sell shares designated by us in accordance with the terms of the distribution agreement with our agents. The net proceeds we receive will be the gross proceeds received from such sales less the commissions and any other costs we may incur in issuing the shares of our common stock.

We may use a portion of the net proceeds from any of such sales to reduce our outstanding indebtedness, including borrowings under our Revolving Facility. The Revolving Credit Facility includes lenders who are affiliates of our agents. As a result, a portion of the net proceeds from any sale of shares of our common stock under our ATM Program that is used to repay amounts outstanding under our Revolving Credit Facility will be received by these affiliates. Because an affiliate may receive a portion of the net proceeds from any of these sales, each of our agents may have an interest in these sales beyond the sales commission it will receive. This could result in a conflict of interest and cause such agents to act in a manner that is not in the best interests of us or our investors in connection with any sale of shares of our common stock under our ATM Program.

Our access to third-party sources of capital depends upon a number of factors including general market conditions, the market’s perception of our growth potential, financial stability, our current and potential future earnings and cash distributions, covenants and limitations imposed under our Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement and our MetLife Note Purchase Agreement and the market price of our common stock.

We are exposed to counterparty risk and there can be no assurances that we will effectively manage or mitigate this risk.

We regularly interact with counterparties in various industries. The types of counterparties most common to our transactions and agreements include, but are not limited to, landlords, tenants, vendors and lenders. We also enter into agreements to acquire and sell properties which allocate responsibility for certain costs to the counterparty. Our most significant counterparties include, but are not limited to, the members of the Bank Syndicate related to our Restated Credit Agreement, the lender that is the counterparty to the Third Restated Prudential Note Purchase Agreement, the lender that is the counterparty to the MetLife Note Purchase Agreement and our major tenants from whom we derive a significant amount of rental revenue. The default, insolvency or other inability or unwillingness of a significant counterparty to perform its obligations under an agreement, including, without limitation, as a result of the rejection of an agreement in bankruptcy proceedings, is likely to have a material adverse effect on us.

As of December 31, 2018, we leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global. In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company. As of December 31, 2018, we leased 77 convenience store and gasoline station properties in three separate unitary leases to United Oil. In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, we leased 76 convenience store and gasoline station properties in two separate unitary leases to subsidiaries of Chestnut. In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates.

We may also undertake additional transactions with these or other existing tenants, which would further concentrate our sources of rental revenues. Many of our tenants, including those noted above, are part of larger corporate organizations and the financial distress of one subsidiary or other affiliated companies or businesses in those organizations may negatively impact the ability or willingness of our tenant to perform its obligations under its lease with us. The failure of a major tenant or their default in their rental and other obligations to us is likely to have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

Our accounting policies and methods are fundamental to how we record and report our financial position and results of operations, and they require management to make estimates, judgments and assumptions about matters that are inherently uncertain.

Our accounting policies and methods are fundamental to how we record and report our financial position and results of operations. We have identified several accounting policies as being critical to the presentation of our financial position and results of operations because they require management to make particularly subjective or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be recorded under different conditions or using different assumptions. We cannot provide any assurance that we will not make subsequent significant adjustments to our consolidated financial statements. Estimates, judgments and assumptions underlying our consolidated financial statements include, but are not limited to, receivables and related reserves, deferred rent receivable, income under direct financing leases, asset retirement obligations (including environmental remediation obligations and future environmental liabilities for pre-existing unknown environmental contamination), real estate, depreciation and amortization, carrying value of our properties, impairment of long-lived assets, litigation, accrued liabilities, income taxes and allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. If our accounting policies, methods, judgments, assumptions, estimates and allocations prove to be incorrect, or if circumstances change, our business, financial condition, revenues, operating expense, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.

We may not be able to successfully implement our investment strategy. We cannot assure you that our portfolio of properties will expand at all, or if it will expand at any specified rate or to any specified size. As part of our overall growth strategy, we regularly review acquisition, financing and redevelopment opportunities, and we expect to continue to pursue investments that we believe will benefit our financial performance. We cannot assure you that investment opportunities which meet our investment criteria will be available. Pursuing our investment opportunities may result in additional debt or new equity issuances, that may initially be dilutive to our net income, and such investments may not perform as we expect or produce the returns that we anticipate (including, without limitation, as a result of tenant bankruptcies, tenant concessions, our inability to collect rents and higher than anticipated operating expenses). Further, we may not be able to successfully integrate investments into our existing portfolio without operating disruptions or unanticipated costs. To the extent that our current sources of liquidity are not sufficient to fund such investments, we will require other sources of capital, which may or may not be available on favorable terms or at all. Additionally, to the extent that we increase the size of our portfolio, we may not be able to adapt our management, administrative, accounting and operational systems, or hire and retain sufficient operational staff to integrate investments into our portfolio or manage any future investments without operating disruptions or unanticipated costs. Moreover, our continued growth will require increased investment in management personnel, professional fees, other personnel, financial and management systems and controls and facilities, which will result in additional operating expenses. Under the circumstances described above, our results of operations, financial condition and growth prospects may be materially adversely affected.

We may acquire properties when we believe that an acquisition matches our business and investment strategies. These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is possible that the operating performance of these properties may decline after we acquire them, or that they may not perform as expected. Further, if financed by additional debt or new equity issuances, our acquisition of properties may result in stockholder dilution. Our acquisition of properties will expose us to the liabilities of those properties, some of which we may not be aware of at the time of such acquisitions. We face competition in pursuing these acquisitions and we may not succeed in leasing acquired properties at rents sufficient to cover the costs of their acquisition and operations.

Newly acquired properties may require significant management attention that would otherwise be devoted to our ongoing business. We may not succeed in consummating desired acquisitions. Consequences arising from or in connection with any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We are pursuing redevelopment opportunities and this creates risks to our Company.

We have commenced a program to redevelop certain of our properties, and to recapture select properties from our net lease portfolio in order to redevelop such properties, to either a new convenience and gasoline use or for alternative single-tenant net lease retail uses. The success at each stage of our redevelopment program is dependent on numerous factors and risks, including our ability

to identify and extract qualified sites from our portfolio and successfully prepare and market them for alternative uses, and project development issues, including those relating to planning, zoning, licensing, permitting, third party and governmental authorizations, changes in local market conditions, increases in construction costs, the availability and cost of financing, and issues arising from possible discovery of new environmental contamination and the need to conduct environmental remediation. Occupancy rates and rents at any particular redeveloped property may fail to meet our original expectations for reasons beyond our control, including changes in market and economic conditions and the development by competitors of competing properties. We could experience increased and unexpected costs or significant delays or abandonment of some or all of these redevelopment opportunities. For any of the above-described reasons, and others, we may determine to abandon opportunities that we have already begun to explore or with respect to which we have commenced redevelopment efforts and, as a result, we may fail to recover expenses already incurred. We cannot assure you that we will be able to successfully redevelop and lease any of our identified opportunities or that our overall redevelopment program will be successful. Consequences arising from or in connection with any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We are exposed to interest rate risk and there can be no assurances that we will manage or mitigate this risk effectively.

We are exposed to interest rate risk, primarily as a result of our Restated Credit Agreement. Borrowings under our Restated Credit Agreement bear interest at a floating rate. Accordingly, an increase in interest rates will increase the amount of interest we must pay under our Restated Credit Agreement. Our interest rate risk may materially change in the future if we increase our borrowings under the Restated Credit Agreement or amend our Restated Credit Agreement, our Third Restated Prudential Note Purchase Agreement or our MetLife Note Purchase Agreement, seek other sources of debt or equity capital or refinance our outstanding indebtedness. A significant increase in interest rates could also make it more difficult to find alternative financing on desirable terms. For additional information with respect to interest rate risk, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-K.

We are subject to varying degrees of risk generally related to leasing and owning real estate, many of which are beyond our control. In addition to general risks applicable to us, our risks include, among others: our liability as a lessee for long-term lease obligations regardless of our revenues; deterioration in national, regional and local economic and real estate market conditions; potential changes in supply of, or demand for, rental properties similar to ours; competition for tenants and declining rental rates; difficulty in selling or re-leasing properties on favorable terms or at all; impairments in our ability to collect rent or other payments due to us when they are due; increases in interest rates and adverse changes in the availability, cost and terms of financing; uninsured property liability; the impact of present or future environmental legislation and compliance with environmental laws; adverse changes in zoning laws and other regulations; acts of terrorism and war; acts of God; the unforeseen impacts of climate change, compliance with any future laws or regulations designed to prevent or mitigate the impacts of climate change, and any material costs related thereto; the potential risk of functional obsolescence of properties over time the need to periodically renovate and repair our properties; and physical or weather-related damage to our properties. Certain significant expenditures generally do not change in response to economic or other conditions, including: (i) debt service, (ii) real estate taxes, (iii) environmental remediation costs and (iv) operating and maintenance costs. The combination of variable revenue and relatively fixed expenditures may result, under certain market conditions, in reduced earnings and could have an adverse effect on our financial condition.

Each of the factors listed above could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. In addition, real estate investments are relatively illiquid, which means that our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited.

Our business operations may not generate sufficient cash for distributions or debt service.

There is no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay dividends on our common stock, to pay our indebtedness or to fund our other liquidity needs. We may not be able to repay or refinance existing indebtedness on favorable terms, which could force us to dispose of properties on disadvantageous terms (which may also result in losses) or accept financing on unfavorable terms.

Adverse developments in general business, economic or political conditions could have a material adverse effect on us.

Adverse developments in general business and economic conditions, including through recession, downturn or otherwise, either in the economy generally or in those regions in which a large portion of our business is conducted, could have a material adverse effect on us and significantly increase certain of the risks we are subject to. Among other effects, adverse economic conditions could depress real estate values, impact our ability to re-lease or sell our properties and have an adverse effect on our tenants’ level of sales and financial performance generally. As our revenues are substantially dependent on the economic success of our tenants, any factors that adversely impact our tenants could also have a material adverse effect on our business, financial condition and results of operations, liquidity, ability to pay dividends or stock price.

Inflation may adversely affect our financial condition and results of operations.

Although inflation has not materially impacted our results of operations in the recent past, increased inflation could have a more pronounced negative impact on any variable rate debt we incur in the future and on our results of operations. During times when inflation is greater than increases in rent, as provided for in our leases, rent increases may not keep up with the rate of inflation. Likewise, even though our triple-net leases reduce our exposure to rising property expenses due to inflation, substantial inflationary pressures and increased costs may have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect our tenants’ ability to pay rent.

Recently enacted U.S. federal tax reform legislation could affect REITs generally, our tenants, the markets in which we operate, the price of our common stock and our results of operations, in ways, both positively and negatively, that are difficult to predict.

On December 22, 2017, the Tax Cuts and Jobs Act (the “2017 Act”) was enacted. The 2017 Act includes significant changes to corporate and individual tax rates and the calculation of taxes. As a REIT, we are generally not required to pay federal taxes otherwise applicable to regular corporations if we distribute all of our income and comply with the various tax rules governing REITs. Stockholders, however, are generally required to pay taxes on REIT dividends. The 2017 Act changes the way in which dividends paid on our stock are taxed by the holder of that stock and could impact the price of our common stock or how stockholders and potential investors view an investment in REITs. In addition, while certain elements of the 2017 Act do not appear to impact us directly as a REIT, they could impact our tenants and the markets in which we operate in ways, both positive and negative, that are difficult to predict. Prospective stockholders are urged to consult with their tax advisors with respect to the 2017 Act and any other regulatory or administrative developments and proposals and the potential effects thereof on an investment in our common stock.

Each of the properties we own or lease is subject to real property taxes. The leases for certain of the properties that we lease from third-parties obligate us to pay real property taxes with regard to those properties. The real property taxes on our properties and any other properties that we acquire or lease in the future may increase as property tax rates change and as those properties are assessed or reassessed by tax authorities. To the extent that our tenants are unable or unwilling to pay such increase in accordance with their leases, our net operating expenses may increase.

We are defending pending lawsuits and claims and are subject to material losses.

We are subject to various lawsuits and claims, including litigation related to environmental matters, such as those arising from leaking USTs, contamination of groundwater with methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) and releases of motor fuel into the environment, and toxic tort claims. The ultimate resolution of certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. Our ultimate liabilities resulting from the lawsuits and claims we face could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. For additional information with respect to certain pending lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

A significant portion of our properties are concentrated in the Northeast and Mid-Atlantic regions of the United States, and adverse conditions in those regions, in particular, could negatively impact our operations.

A significant portion of the properties we own and lease are located in the Northeast and Mid-Atlantic regions of the United States and, as of December 31, 2018, 47.5% of our properties are concentrated in three states (New York, Massachusetts and Connecticut). Because of the concentration of our properties in those regions, in the event of adverse economic conditions in those regions, we would likely experience higher risk of default on payment of rent to us than if our properties were more geographically diversified. Additionally, the rents on our properties may be subject to a greater risk of default than other properties in the event of adverse economic, political or business developments, natural disasters or severe weather that may affect the Northeast or Mid-Atlantic regions of the United States and the ability of our lessees to make rent payments. This lack of geographical diversification could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

The real estate industry is highly competitive. Where we own properties, we compete for tenants with a large number of real estate property owners and other companies that sublet properties. Our principal means of competition are rents we are able to charge in relation to the income producing potential of the location. In addition, we expect other major real estate investors, some with much greater financial resources or more experienced personnel than we have, will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, convenience store retailers, other REITs, public and private investment funds, and other individual and institutional investors. This competition has increased prices for properties we seek to acquire and may impair our ability to make suitable property acquisitions on favorable terms in the future.

We and our tenants carry insurance against certain risks and in such amounts as we believe are customary for businesses of our kind. However, as the costs and availability of insurance change, we may decide not to be covered against certain losses (such as certain environmental liabilities, earthquakes, hurricanes, floods and civil disorder) where, in the judgment of management, the insurance is not warranted due to cost or availability of coverage or the remoteness of perceived risk. Furthermore, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. There is no assurance that the existing insurance coverages are or will be sufficient to cover actual losses incurred. The destruction of, or significant damage to, or significant liabilities arising out of conditions at, our properties due to an uninsured loss would result in an economic loss and could result in us losing both our investment in, and anticipated profits from, such properties. When a loss is insured, the coverage may be insufficient in amount or duration, or a lessee’s customers may be lost, such that the lessee cannot resume its business after the loss at prior levels or at all, resulting in reduced rent or a default under its lease. Any such loss relating to a large number of properties could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

Failure to qualify as a REIT under the federal income tax laws would have adverse consequences to our stockholders. Uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period or may cause us to fail to qualify as a REIT.

We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. To qualify for taxation as a REIT, we must, among other requirements such as those related to the composition of our assets and gross income, distribute annually to our stockholders at least 90% of our taxable income, including taxable income that is accrued by us without a corresponding receipt of cash. Accordingly, we generally will not be subject to federal income tax on qualifying REIT income, provided that distributions to our stockholders equal at least the amount of our taxable income as defined under the Internal Revenue Code. But, we may have to borrow money or sell assets to satisfy such distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. Many of the REIT requirements are highly technical and complex. If we were to fail to meet the requirements, we may be subject to federal income tax, excise taxes, penalties and interest or we may have to pay a deficiency dividend. We may have to borrow money or sell assets to pay such a deficiency dividend.

We cannot guarantee that we will continue to qualify in the future as a REIT. We cannot give any assurance that new legislation, regulations, administrative interpretations or court decisions will not significantly change the requirements relating to our qualification. If we fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income and will again be subject to federal income tax at regular corporate rates, we could be subject to the federal alternative minimum tax for taxable years beginning before 2018, we could be required to pay significant income taxes and we would have less money available for our operations and distributions to stockholders. This would likely have a significant adverse effect on the value of our securities. We could also be precluded from treatment as a REIT for four taxable years following the year in which we lost the qualification, and all distributions to stockholders would be taxable as regular corporate dividends to the extent of our current and accumulated earnings and profits. Loss of our REIT status could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

Future issuances of equity securities could dilute the interest of holders of our equity securities.

Our future growth depends upon our ability to raise additional capital. If we were to raise additional capital through the issuance of equity securities, such issuance, the receipt of the net proceeds thereof and the use of such proceeds may have a dilutive effect on our expected earnings per share, funds from operations per share and adjusted funds from operations per share. The actual amount of such dilution cannot be determined at this time and will be based on numerous factors. Additionally, we are not restricted from issuing additional shares of our common stock or preferred stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar securities in the future. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after an offering or the perception that such sales could occur.

We may change our dividend policy and the dividends we pay may be subject to significant volatility.

The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend upon such factors as the Board of Directors deems relevant and the dividend paid may vary from expected amounts. Any change in our dividend policy could adversely affect our business and the market price of our common stock. In addition, each of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement prohibit the payments of dividends during certain events of default. No assurance can be given that our financial performance in the future will permit our payment of any dividends or that the amount of dividends we pay, if any, will not fluctuate significantly. Under the Maryland General Corporation Law, our ability to pay dividends would be restricted if, after payment of the dividend, (i) we would not be able to pay indebtedness as it becomes due

in the usual course of business or (ii) our total assets would be less than the sum of our liabilities plus the amount that would be needed, if we were to be dissolved, to satisfy the rights of any stockholders with liquidation preferences. There currently are no stockholders with liquidation preferences.

No assurance can be given that our financial performance in the future will permit our payment of any dividends. Each of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as availability, leverage and coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends. As a result of the factors described above, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, stock price and ability to pay dividends.

Changes in market conditions could adversely affect the market price of our publicly traded common stock.

As with other publicly traded securities, the market price of our publicly traded common stock depends on various market conditions, which may change from time-to-time. Among the market conditions that may affect the market price of our publicly traded common stock are the following: our financial condition and performance and that of our significant tenants; the market’s perception of our growth potential and potential future earnings; the reputation of REITs generally and the reputation of REITs with portfolios similar to us; the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for publicly traded securities; the extent of institutional investor interest in us; and general economic and financial market conditions.

In order to preserve our REIT status, our charter limits the number of shares a person may own, which may discourage a takeover that could result in a premium price for our common stock or otherwise benefit our stockholders.

Our charter, with certain exceptions, authorizes our Board of Directors to take such actions as are necessary and desirable to preserve our qualification as a REIT for federal income tax purposes. Unless exempted by our Board of Directors, no person may (i) own, or be deemed to own by virtue of certain constructive ownership provisions of the Internal Revenue Code, in excess of 5.0% (in value or in number of shares, whichever is more restrictive) of the aggregate of the outstanding shares of our common stock or (ii) own, or be deemed to own by virtue of certain other constructive ownership provisions of the Internal Revenue Code, in excess of 9.9% (by value or number of shares, whichever is more restrictive) of the outstanding shares of our common stock, which may discourage large investors from purchasing our stock. This restriction may have the effect of delaying, deferring or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for our common stock or otherwise be in the best interest of our stockholders.

We are subject to the provisions of the Maryland Business Combination Act (the “Business Combination Act”) which prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Generally, pursuant to the Business Combination Act, an “interested stockholder” is a person who, together with affiliates and associates, beneficially owns, directly or indirectly, 10% or more of a Maryland corporation’s voting stock. These provisions could have the effect of delaying, preventing or deterring a change in control of our Company or reducing the price that certain investors might be willing to pay in the future for shares of our capital stock. Additionally, the Maryland Control Share Acquisition Act may deny voting rights to shares involved in an acquisition of one-tenth or more of the voting stock of a Maryland corporation. In our charter and bylaws, we have elected not to have the Maryland Control Share Acquisition Act apply to any acquisition by any person of shares of stock of our Company. However, in the case of the control share acquisition statute, our Board of Directors may opt to make this statute applicable to us at any time by amending our bylaws, and may do so on a retroactive basis. Finally, the “unsolicited takeovers” provisions of the Maryland General Corporation Law permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain provisions that may have the effect of inhibiting a third-party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of our Company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then current market price or that stockholders may otherwise believe is in their best interests.

The loss of certain members of our management team or Board of Directors could adversely affect our business or the market price of our common stock.

Our future success and ability to implement our business and investment strategy depends, in part, on our ability to attract and retain key management personnel and directors, and on the continued contributions of such persons, each of whom may be difficult to replace. As a REIT, we employ only 29 employees and have a cost-effective management structure. We do not have any employment agreements with any of our executives. In the event of the loss of key management personnel or directors, or upon unexpected death,

disability or retirement, we may not be able to find replacements with comparable skill, ability and industry expertise, which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. Additionally, certain of our directors beneficially own more than 5% of the outstanding shares of our common stock. If any of these directors cease to be a director of the Company and they or their estate sell a significant portion of such holdings into the public market, it could adversely affect the market price of our common stock.

Amendments to the Accounting Standards Codification made by the Financial Accounting Standards Board (the “FASB”) or changes in accounting standards issued by other standard-setting bodies may adversely affect our reported revenues, profitability or financial position.

Our consolidated financial statements are subject to the application of Generally Accepted Accounting Principles (“GAAP”) in accordance with the Accounting Standards Codification, which is periodically amended by the FASB. The application of GAAP is also subject to varying interpretations over time. Accordingly, we are required to adopt amendments to the Accounting Standards Codification or comply with revised interpretations that are issued from time-to-time by recognized authoritative bodies, including the FASB and the SEC. Those changes could adversely affect our reported revenues, profitability or financial position.

We periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based on GAAP, and includes a variety of factors such as market conditions, the accumulation of asset retirement costs due to changes in estimates associated with our estimated environmental liabilities, the status of significant leases, the financial condition of major tenants and other assumptions and factors that could affect the cash flow from or fair value of our properties. During the years ended December 31, 2018 and 2017, we incurred $6.2 million and $9.3 million, respectively, of impairment charges. We may be required to take similar impairment charges, which could affect the implementation of our current business strategy and have a material adverse effect on our financial condition and results of operations.

Terrorist attacks and other acts of violence or war may affect the market on which our common stock trades, the markets in which we operate, our operations and our results of operations.

Terrorist attacks or other acts of violence or war could affect our business or the businesses of our tenants. The consequences of armed conflicts are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy. Terrorist attacks also could be a factor resulting in, or which could exacerbate, an economic recession in the United States or abroad. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information of tenants and lease data. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting and storing confidential tenant information, such as individually identifiable information relating to financial accounts. Although we have taken steps to protect the security of the data maintained in our information systems, it is possible that our security measures will not be able to prevent the systems’ improper functioning, or the improper disclosure of personally identifiable information such as in the event of cyberattacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could materially and adversely affect us.

If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports, effectively prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002.

As a result of material weaknesses or significant deficiencies that may be identified in our internal control over financial reporting in the future, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require

remediation. If we or our independent registered public accounting firm discover any such weaknesses or deficiencies, we will make efforts to further improve our internal control over financial reporting controls. However, there is no assurance that we will be successful. Any failure to maintain effective controls or timely effect any necessary improvement of our internal control over financial reporting controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect the listing of our common stock on the NYSE. Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.

We may be adversely affected by changes in LIBOR reporting practices or the method in which LIBOR is calculated.

On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a newly-created index, calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, called the Secured Overnight Financing Rate (“SOFR”). The first publication of SOFR was released by the Federal Reserve Bank of New York in April 2018. Whether SOFR will become a widely-accepted benchmark in place of LIBOR, however, remains in question. As such, the future of LIBOR and potential alternatives thereto are uncertain at this time. If LIBOR ceases to exist, we may need to renegotiate our Restated Credit Agreement, which extends beyond 2021, to replace LIBOR with the new standard that is established. The potential effects of the foregoing on our cost of capital cannot yet be determined.

Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators, engaged in the sale of refined petroleum products, day-to-day consumer goods and convenience foods, who are responsible for the operations conducted at our properties and for the payment of all taxes, maintenance, repair, insurance and other operating expenses relating to our properties. In those instances where we determine that the best use for a property is no longer its existing use and the property is not subject to a lease, we will either redevelop the property or seek an alternative tenant or buyer for the property. We manage and evaluate our operations as a single segment.

We believe that most of our owned and leased properties are adequately covered by casualty and liability insurance. In addition, in almost all cases we require our tenants to provide insurance for properties they lease from us, including casualty, liability, pollution legal liability, fire and extended coverage in amounts and on other terms satisfactory to us.

The following table summarizes the geographic distribution of our properties as of December 31, 2018. The table also identifies the number and location of properties we lease from third-parties. In addition, we lease approximately 8,900 square feet of office space at Two Jericho Plaza, Jericho, New York, which is used for our corporate headquarters, which we believe will remain suitable and adequate for such purposes for the immediate future.

	Owned by Getty Realty		Leased by Getty Realty		Total Properties by State		Percent of Total Properties
New York		207		44		251		26.9	%
Massachusetts		100		11		111		11.9
Connecticut		72		9		81		8.7
New Jersey		47		5		52		5.6
Texas		49		—		49		5.3
Virginia		45		1		46		4.9
New Hampshire		45		1		46		4.9
South Carolina		45		—		45		4.8
Maryland		40		2		42		4.5
Washington State		31		—		31		3.3
California		29		—		29		3.1
Pennsylvania		23		—		23		2.5
Colorado		23		—		23		2.5
Arizona		23		—		23		2.5
Oregon		13		—		13		1.4
Arkansas		10		—		10		1.1
Hawaii		10		—		10		1.1
Maine		7		—		7		0.8
Ohio		6		—		6		0.6
New Mexico		5		—		5		0.5
North Carolina		5		—		5		0.5
Rhode Island		5		—		5		0.5
Florida		4		—		4		0.5
Louisiana		4		—		4		0.4
Oklahoma		3		—		3		0.3
Georgia		2		—		2		0.2
Nevada		2		—		2		0.2
Washington, D.C.		2		—		2		0.2
Delaware		—		1		1		0.1
Illinois		1		—		1		0.1
North Dakota		1		—		1		0.1
Total		859		74		933		100	%

The properties that we lease from third-parties have a remaining lease term, including renewal and extension option terms, averaging approximately nine years. The following table sets forth information regarding lease expirations, including renewal and extension option terms, for properties that we lease from third-parties:

Revenues from rental properties and tenant reimbursements for the year ended December 31, 2018, were $133.0 million with respect to 926 average rental properties held during the year for an average revenue per rental property of approximately $143,600. Revenues from rental properties and tenant reimbursements for the year ended December 31, 2017, were $117.2 million with respect to 857 average rental properties held during the year for an average revenue per rental property of approximately $136,700.

Rental property lease expirations and annualized contractual rent as of December 31, 2018, are as follows (in thousands, except for number of properties):

We are subject to various legal proceedings, many of which we consider to be routine and incidental to our business. Many of these legal proceedings involve claims relating to alleged discharges of petroleum into the environment at current and former gasoline stations. We routinely assess our liabilities and contingencies in connection with these matters based upon the latest available information. The following is a description of material legal proceedings, including those involving private parties and governmental authorities under federal, state and local laws regulating the discharge of hazardous substances into the environment. We are vigorously defending all of the legal proceedings against us, including each of the legal proceedings listed below. As of December 31, 2018 and 2017, we had accrued $12.2 million and $12.3 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available. It is possible that losses related to these legal proceedings could exceed the amounts accrued as of December 31, 2018, and that such additional losses could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

In September 2004, the State of New York commenced an action against us, United Gas Corp., Costa Gas Station, Inc., Vincent Costa, The Ingraham Bedell Corporation, Richard Berger and Exxon Mobil Corporation in New York Supreme Court in Albany County seeking recovery for reimbursement of investigation and remediation costs claimed to have been incurred by the New York Environmental Protection and Spill Compensation Fund relating to contamination it alleges emanated from various gasoline station properties located in the same vicinity in Uniondale, New York, including a site formerly owned by us and at which a petroleum release and cleanup occurred. The complaint also seeks future costs for remediation, as well as interest and penalties. We have served an answer to the complaint denying responsibility. In 2007, the State of New York commenced action against Shell Oil Company, Shell Oil Products Company, Motiva Enterprises, LLC, and related parties, in the New York Supreme Court, Albany County seeking basically the same relief sought in the action involving us. We have also filed a third-party complaint against Hess Corporation, Sprague Operating Resources LLC (successor to RAD Energy Corp.), Service Station Installation of NY, Inc., and certain individual defendants based on alleged contribution to the contamination that is the subject of the State’s claims arising from a petroleum discharge at a gasoline station up-gradient from the site formerly owned by us. In 2016, the various actions filed by the State of New York and our third-party actions were consolidated for discovery proceedings and trial. Discovery in this case is in later stages and, as it nears completion, a schedule for trial will be established. We are unable to estimate the range of loss in excess of the amount we have accrued for this lawsuit. It is possible that losses related to this case, in excess of the amounts accrued, as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

In September 2008, we received a directive and notice of violation from the New Jersey Department of Environmental Protection (“NJDEP”) calling for a remedial investigation and cleanup, to be conducted by us and Gary and Barbara Galliker (the “Gallikers”), individually and trading as Millstone Auto Service (“Millstone”), Auto Tech and other named parties, of petroleum-related contamination found at a gasoline station property located in Millstone Township, New Jersey. We did not own or lease this property, but in 1985 we did acquire ownership of certain USTs located at the property. In 1986 we tried to remove these USTs and were refused access by the Gallikers to do so. We believe the USTs were transferred to the Gallikers by operation of law not later than 1987 and responded to the NJDEP’s directive and notice by denying liability. In November 2009, the NJDEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment (the “Order and Assessment”) to us, Marketing and the Gallikers, individually and trading as Millstone. We filed for, and were granted, a hearing to contest the allegations of the Order and Assessment. In 2014, the NJDEP issued a notice of violation directing the Gallikers and Millstone to register and remove the contents of the USTs at the property. Thereafter, the Gallikers made written demand of us to investigate and remediate all contamination at the property, which we have rejected on the basis that we are not responsible for the alleged contamination. In December 2018, we agreed with the NJDEP upon terms of settlement which require us to conduct a limited remedial investigation and limited remedial work at the property in exchange for NJDEP’s agreement to release us from any future remediation obligations at the property and to withdraw its demand against us for civil penalties and fines. The settlement agreement remains subject to public notice and final NJDEP approval.

We are a party to a case involving a large number of gasoline station sites throughout the State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP. This New Jersey case (the “New Jersey MDL Proceedings”) is among the more than one hundred cases that were transferred from various state and federal courts throughout the country and consolidated in the United States District Court for the Southern District of New York for coordinated Multi-District Litigation (“MDL”) proceedings. The New Jersey MDL Proceedings allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. New Jersey is seeking reimbursement of significant clean-up and remediation costs arising out of the alleged release of MTBE containing gasoline in the State of New Jersey and is asserting various natural resource damage claims as well as liability against the owners and operators of gasoline station properties from which the releases occurred. The New Jersey MDL Proceedings name us as a defendant along with approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE, including Atlantic Richfield Company, BP America, Inc., BP Amoco Chemical Company, BP Products North America, Inc., Chevron Corporation, Chevron U.S.A., Inc., Citgo Petroleum Corporation, ConocoPhillips Company, Cumberland Farms, Inc., Duke Energy Merchants, LLC, ExxonMobil Corporation, ExxonMobil Oil Corporation, Getty Petroleum Marketing, Inc., Gulf Oil Limited Partnership, Hess Corporation, Lyondell Chemical Company, Lyondell-Citgo Refining, LP, Lukoil Americas Corporation, Marathon Oil Corporation, Mobil Corporation, Motiva Enterprises, LLC, Shell Oil Company, Shell Oil Products Company LLC, Sunoco, Inc., Unocal Corporation, Valero Energy Corporation, and Valero Refining & Marketing Company. The majority of the named defendants have already settled their case with the State of New Jersey. A portion of the case (“bellwether” trials) has been transferred to the United States District Court for the District of New Jersey for pre-trial proceedings and trial, although a trial date has not yet been set. We continue to engage in settlement negotiations and a dialogue with the plaintiffs’ counsel to educate them on the unique role of the Company and our business as compared to other defendants in the litigation. Although the ultimate outcome of the New Jersey MDL Proceedings cannot be ascertained at this time, we believe that it is probable that this litigation will be resolved in a manner that is unfavorable to us. We are unable to estimate the range of loss in excess of the amount accrued for the New Jersey MDL Proceedings with certainty as we do not believe that plaintiffs’ settlement proposal is realistic and there remains uncertainty as to the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from other parties and the aggregate possible amount of damages for which we may be held liable. It is possible that losses related to the New Jersey MDL Proceedings in excess of the amounts accrued as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania. The named plaintiffs are the State, by and through (then) Pennsylvania Attorney General Kathleen G. Kane (as Trustee of the waters of the State), the Pennsylvania Insurance Department (which governs and administers the Underground Storage Tank Indemnification Fund), the Pennsylvania Department of Environmental Protection (vested with the authority to protect the environment) and the Pennsylvania Underground Storage Tank Indemnification Fund. The complaint names us and more than 50 other defendants, including Exxon Mobil, various BP entities, Chevron, Citgo, Gulf, Lukoil Americas, Getty Petroleum Marketing Inc., Marathon, Hess, Shell Oil, Texaco, Valero, as well as other smaller petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE who are alleged to have distributed, stored and sold MTBE gasoline in Pennsylvania. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of “defendants’ unfair and deceptive trade practices and act in the marketing of MTBE and gasoline containing MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater. The plaintiffs assert causes of action against all

defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; public nuisance; negligence; trespass; and violation of consumer protection law.

The case was filed in the Court of Common Pleas, Philadelphia County, but was removed by defendants to the United States District Court for the Eastern District of Pennsylvania and then transferred to the United States District Court for the Southern District of New York so that it may be managed as part of the ongoing MTBE MDL. In November 2015, plaintiffs filed a second amended complaint naming additional defendants and adding factual allegations intended to bolster their claims against the defendants. We have joined with other defendants in the filing of a motion to dismiss the claims against us. This motion is pending with the Court. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

On December 17, 2017, the State of Maryland, by and through the Attorney General on behalf of the Maryland Department of Environment and the Maryland Department of Health (the “State of Maryland”), filed a complaint in the Circuit Court for Baltimore City related to alleged statewide MTBE contamination in Maryland. The complaint was served upon us on January 19, 2018. The complaint names us and more than 60 other defendants, including Exxon Mobil Corporation, APEX Oil Company, Astra Oil Company, Atlantic Richfield Company, various BP, Chevron, Citgo, ConocoPhillips, Hess, Kinder Morgan, Lukoil, Marathon, Shell Oil, Sunoco, Texaco and Valero entities, Cumberland Farms, Duke Energy Merchants, El Paso Merchant Energy-Petroleum Company, Energy Transfer Partners, L.P., Equilon Enterprises, Inc., ETP Holdco Corporation, George E. Warren Corporation, Getty Petroleum Marketing, Inc., Gulf Oil Limited Partnership, Guttman Energy, Inc., Hartree Partners L.P., Holtzman Oil Corporation, Motiva Enterprises LLC, Nustar Terminals Operations Partnership LP, Phillips 66 Company, Premcor, 7-Eleven, Inc., Sheetz, Inc. , Total Petrochemicals & Refining USA, Inc., Transmontaigne Product Services, Inc., Vitol S.A., WAWA, Inc. and Western Refining, Inc. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of the defendants’ unfair and deceptive trade practices in the marketing of MTBE and gasoline containing MTBE. The plaintiffs also seek to recover costs paid or incurred by the State of Maryland to detect, investigate, treat and remediate MTBE from public and private water wells and groundwater, punitive damages and the award of attorneys’ fees and litigation costs. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; strict liability for abnormally dangerous activity; public nuisance; negligence; trespass; and violations of Titles 4, 7 and 9 of the Maryland Environmental Code.

On February 14, 2018, defendants removed the case to the United States District Court for the District of Maryland. It is unclear whether the matter will ultimately be removed to the MTBE MDL proceedings or remain in federal court in Maryland. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River

In September 2003, we received a directive (the “Directive”) issued by the NJDEP under the New Jersey Spill Compensation and Control Act. The Directive indicated that we are one of approximately 66 potentially responsible parties for alleged natural resource damages resulting from the discharges of hazardous substances along the Lower Passaic River (the “Lower Passaic River”). Other named recipients of the Directive are 360 North Pastoria Environmental Corporation, Amerada Hess Corporation, American Modern Metals Corporation, Apollo Development and Land Corporation, Ashland Inc., AT&T Corporation, Atlantic Richfield Assessment Company, Bayer Corporation, Benjamin Moore & Company, Bristol Myers-Squibb, Chemical Land Holdings, Inc., Chevron Texaco Corporation, Diamond Alkali Company, Diamond Shamrock Chemicals Company, Diamond Shamrock Corporation, Dilorenzo Properties Company, Dilorenzo Properties, L.P., Drum Service of Newark, Inc., E.I. Dupont De Nemours and Company, Eastman Kodak Company, Elf Sanofi, S.A., Fine Organics Corporation, Franklin-Burlington Plastics, Inc., Franklin Plastics Corporation, Freedom Chemical Company, H.D. Acquisition Corporation, Hexcel Corporation, Hilton Davis Chemical Company, Kearny Industrial Associates, L.P., Lucent Technologies, Inc., Marshall Clark Manufacturing Corporation, Maxus Energy Corporation, Monsanto Company, Motor Carrier Services Corporation, Nappwood Land Corporation, Noveon Hilton Davis Inc., Occidental Chemical Corporation, Occidental Electro-Chemicals Corporation, Occidental Petroleum Corporation, Oxy-Diamond Alkali Corporation, Pitt-Consol Chemical Company, Plastics Manufacturing Corporation, PMC Global Inc., Propane Power Corporation, Public Service Electric & Gas Company, Public Service Enterprise Group, Inc., Purdue Pharma Technologies, Inc., RTC Properties, Inc., S&A Realty Corporation, Safety-Kleen Envirosystems Company, Sanofi S.A., SDI Divestiture Corporation, Sherwin Williams Company, SmithKline Beecham Corporation, Spartech Corporation, Stanley Works Corporation, Sterling Winthrop, Inc., STWB Inc., Texaco Inc., Texaco Refining and Marketing Inc., Thomasset Colors, Inc., Tierra Solution, Incorporated, Tierra Solutions, Inc., and Wilson Five Corporation.

The Directive provides, among other things, that the named recipients must conduct an assessment of the natural resources that have been injured by discharges into the Lower Passaic River and must implement interim compensatory restoration for the injured natural resources. The NJDEP alleges that our liability arises from alleged discharges originating from our former Newark, New Jersey

Terminal site (which was sold in October 2013). We responded to the Directive by asserting that we are not liable. There has been no material activity and/or communications by the NJDEP with respect to the Directive since early after its issuance.

In May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for a 17-mile stretch of the Lower Passaic River in New Jersey. The RI/FS is intended to address the investigation and evaluation of alternative remedial actions with respect to alleged damages to the Lower Passaic River. Most of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). The CPG agreed to an interim allocation formula for purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this agreed-upon allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the Lower Passaic River. The CPG submitted to the EPA its draft RI/FS in 2015. The draft RI/FS set forth various alternatives for remediating the entire 17-mile stretch of the Lower Passaic River, and provides that the cost estimate for the preferred remedial action presented therein is in the range of approximately $483 million to $725 million. The EPA has provided comments to the draft RI/FS which led to discussions between the CPG and the EPA regarding an alternative approach to completing the RI/FS, including various adaptive management scenarios focusing on source control interim remedies for the upper 9-miles of the Lower Passaic River. These discussions between the CPG and the EPA are ongoing.

In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the Lower Passaic River have proceeded as follows. First, in June 2012, certain members of the CPG entered into an Administrative Settlement Agreement and Order on Consent (“10.9 AOC”) effective June 18, 2012, to perform certain remediation activities, including removal and capping of sediments at the river mile 10.9 area and certain testing. The EPA also issued a Unilateral Order to Occidental Chemical Corporation (“Occidental”) directing Occidental to participate and contribute to the cost of the river mile 10.9 work. Concurrent with the CPG’s work on the RI/FS, on April 11, 2014, the EPA issued a draft Focused Feasibility Study (“FFS”) with proposed remedial alternatives to remediate the lower 8-miles of the 17-mile stretch of the Lower Passaic River. The FFS was subject to public comments and objections and, on March 4, 2016, the EPA issued its Record of Decision (“ROD”) for the lower 8-miles selecting a remedy that involves bank-to-bank dredging and installing an engineered cap with an estimated cost of $1.38 billion. On March 31, 2016, we and more than 100 other potentially responsible parties received from the EPA a “Notice of Potential Liability and Commencement of Negotiations for Remedial Design” (“Notice”), which informed the recipients that the EPA intends to seek an Administrative Order on Consent and Settlement Agreement with Occidental for remedial design of the remedy selected in the ROD, after which the EPA plans to begin negotiations with “major” potentially responsible parties for implementation and/or payment of the selected remedy. The Notice also stated that the EPA believes that some of the potentially responsible parties and other parties not yet identified as potentially responsible parties will be eligible for a cash out settlement with the EPA. On October 5, 2016, the EPA announced that it had entered into a settlement agreement with Occidental which requires that Occidental perform the remedial design (which is expected to take four years to complete) for the remedy selected for the lower 8-miles of the Lower Passaic River.

On June 16, 2016, Maxus Energy Corporation and Tierra Solutions, Inc., who have contractual liability to Occidental for Occidental’s potential liability related to the Lower Passaic River, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In the Chapter 11 proceedings, YPF SA, Maxus and Tierra’s corporate parent, sought bankruptcy approval of a settlement under which YPF would pay $130 million to the bankruptcy estate in exchange for a release in favor of Maxus, Tierra, YPF and YPF’s affiliates of Maxus and Tierra’s contractual environmental liability to Occidental. We and the CPG filed proofs of claims for costs incurred by the CPG relating to the Lower Passaic River.

On April 19, 2017, Maxus, Tierra and certain of its affiliates (collectively, the “Debtors”), together with the Official Committee of Unsecured Creditors, of which the CPG is a member, filed an Amended Chapter 11 Plan of Liquidation (the “Chapter 11 Plan”) in the Chapter 11 proceedings, which has been confirmed by order of the bankruptcy court, having an effective date of July 14, 2017 (the “Effective Date”). The Chapter 11 Plan provides for, among other things, the creation of a Liquidating Trust to liquidate and distribute from available assets certain allowed claims pursuant to the procedures set forth therein. Under the terms of the Chapter 11 Plan, the CPG’s proof of claim, which includes past costs incurred in the performance of the RI/FS and River Mile 10.9 work, is classified as an Allowed Class 4 Claim in the approximate amount of $14.3 million. To the extent that the CPG receives any distributions from the Liquidating Trust with respect to its Allowed Class 4 Claim, we would be entitled to seek reimbursement of our pro-rata share of said distribution for past costs we incurred with respect to performance of the RI/FS and River Mile 10.9 work. The Chapter 11 Plan also provides for a Mutual Contribution Release Agreement under which claims for contribution relating to liabilities associated with the Lower Passaic River and incurred prior to the Effective Date are mutually released by and among the parties identified therein. We are one of 59 parties (the “Released Parties”) that entered into the Mutual Contribution Release Agreement, pursuant to which (i) the Debtors release the Released Parties from any contribution claim they may have, (ii) Occidental releases the Released Parties for the amounts itemized in Occidental’s Class 4 Claim, and (iii) the Released Parties release the Debtors and Occidental for the amounts itemized in the CPG’s Class 4 Claim. The Mutual Contribution Release Agreement does not reduce or affect the CPG’s right to receive distributions from the Liquidating Trust on account of the CPG’s Class 4 Claim or our pro-rata share of any such distributions, nor does it affect our right to assert any future claims against Occidental for costs that we may incur related to the remediation of the Lower Passaic River after the Effective Date.

By letter dated March 30, 2017, the EPA advised the recipients of the Notice that it would be entering into cash out settlements with 20 potentially responsible parties to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. The letter also stated that the EPA would begin a process for identifying other potentially responsible parties for negotiation of cash out settlements to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements. In January 2018, the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the identified 20 parties to resolve their respective alleged liability for the ROD work, each for a payment to the EPA in the amount of $280,600. The EPA has also been engaged in discussions, in which we are participating, with the remaining recipients of the Notice regarding a proposed framework for an allocation process that will lead to offers of cash-out settlements to certain additional parties and a consent decree in which parties that are not offered a cash-out settlement will agree to perform the lower 8-mile remedial action. The EPA-commenced allocation process was scheduled to conclude by mid-2019, but is likely to be extended.

On June 30, 2018, Occidental filed a complaint in the United States District Court for the District of New Jersey seeking cost recovery and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) for its alleged expenses with respect to the investigation, design, and anticipated implementation of the remedy for the lower 8-miles of the Passaic River. The complaint lists over 120 defendants, including us, many of which were also named in the NJDEP’s 2003 Directive and the EPA’s 2016 Notice. We do not know whether this new complaint will impact the EPA’s allocation process or the ultimate outcome of the matter. We intend to defend the claims consistent with our defenses in the related proceedings.

Many uncertainties remain regarding how the EPA intends to implement the ROD. We anticipate that performance of the EPA’s selected remedy will be subject to future negotiation, potential enforcement proceedings and/or possible litigation. The RI/FS, AOC and 10.9 AOC and Notice do not obligate us to fund or perform remedial action contemplated by either the ROD or RI/FS and do not resolve liability issues for remedial work or the restoration of or compensation for alleged natural resource damages to the Lower Passaic River, which are not known at this time. Our ultimate liability, if any, in the pending and possible future proceedings pertaining to the Lower Passaic River is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

We have made a demand upon Chevron/Texaco for indemnity under certain agreements between us and Chevron/Texaco that allocate environmental liabilities for the Newark Terminal site between the parties. In response, Chevron/Texaco has asserted that the proceedings and claims are still not yet developed enough to determine the extent to which indemnities apply. We have engaged in discussions with Chevron/Texaco regarding our demands for indemnification. To facilitate these discussions, in October 2009, the parties entered into a Tolling/Standstill Agreement which tolls all claims by and among Chevron/Texaco and us that relate to the various Lower Passaic River matters, until either party terminates such Tolling/Standstill Agreement.

In March 2016, we filed a civil lawsuit in the New York State Supreme Court, New York County, against Lukoil Americas Corporation and certain of its current or former executives, seeking recovery of environmental remediation costs that we either have incurred, or expect to incur, at properties previously leased to Marketing pursuant to a master lease. The lawsuit alleges various theories of liability, including claims based on environmental liability statutes in effect in the states in which the properties are located, as well as a breach of contract claim seeking to pierce Marketing’s corporate veil. In August 2017, the court denied in part and granted in part a motion by Lukoil Americas Corporation to dismiss our claims. In the fall of 2018, we appealed the dismissal of our breach of contract claim, and the defendants have cross-appealed the partial denial of their motion to dismiss. Further trial court litigation is currently stayed pending completion of a court ordered mediation, which began in 2018 and in which the parties continue to participate. This case is still in an early stage of its proceedings and it is not yet possible to predict or estimate the potential outcome of this case.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Capital Stock

Our common stock is traded on the New York Stock Exchange (symbol: GTY). There were approximately 10,895 beneficial holders of our common stock as of December 20, 2018, of which approximately 924 were holders of record.

For a discussion of potential limitations on our ability to pay future dividends see “Item 1A. Risk Factors – We may change our dividend policy and the dividends we pay may be subject to significant volatility” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.

Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2013, in Getty Realty Corp. common stock, Standard & Poor’s 500 and Peer Group.

We have chosen as our Peer Group the following companies: Agree Realty Corporation, EPR Properties (formerly known as Entertainment Properties Trust), National Retail Properties, Realty Income Corporation, Spirit Realty Capital, Inc. and STORE Capital Corporation. We have chosen these companies as our Peer Group because a substantial segment of each of their businesses is owning and leasing single-tenant net lease retail properties. We cannot assure you that our stock performance will continue in the future with the same or similar trends depicted in the performance graph above. We do not make or endorse any predictions as to future stock performance.

The above performance graph and related information shall not be deemed filed for the purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section and shall not be deemed to be incorporated by reference into any filing that we make under the Securities Act or the Exchange Act.

	For the Years ended December 31,
	2018 (a)			2017 (b)			2016			2015 (c)			2014
OPERATING DATA:
Total revenues	$	136,106		$	120,153		$	115,271		$	110,776		$	99,905
Earnings from continuing operations		48,410			45,048			39,825			39,478			19,890
Earnings (loss) from discontinued operations		(704	)		2,138			(1,414	)		(2,068	)		3,528
Net earnings	$	47,706		$	47,186		$	38,411		$	37,410		$	23,418
Basic and diluted per share amounts:
Earnings from continuing operations		1.19			1.20			1.16			1.17			0.59
Net earnings		1.17			1.26			1.12			1.11			0.69
Basic weighted average common shares outstanding		40,171			36,897			33,806			33,420			33,409
Diluted weighted average common shares outstanding		40,191			36,897			33,806			33,420			33,409
Dividends declared per share (d)		1.31			1.16			1.03			1.15			0.96

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS (e):
Net earnings	$	47,706		$	47,186		$	38,411		$	37,410		$	23,418
Depreciation and amortization of real estate assets		23,636			19,089			19,170			16,974			10,549
Gains on dispositions of real estate		(3,948	)		(1,041	)		(6,213	)		(2,611	)		(10,218	)
Impairments		6,170			9,321			12,814			17,361			21,534
Funds from operations		73,564			74,555			64,182			69,134			45,283
Revenue recognition adjustments		(2,223	)		(1,976	)		(3,417	)		(4,471	)		(5,372	)
(Recovery) allowance for deferred rent/mortgage receivables		—			—			—			(93	)		2,331
Changes in environmental estimates		(1,319	)		(6,854	)		(7,007	)		(4,639	)		(2,756	)
Accretion expense		2,409			3,448			4,107			4,829			3,046
Environmental litigation accruals		(45	)		1,044			801			374			—
Insurance reimbursements		(2,570	)		(1,804	)		(1,146	)		—			—
Legal settlements and judgments		(147	)		(6,381	)		(514	)		(18,176	)		—
Acquisition costs		—			—			86			445			104
Adjusted funds from operations	$	69,669		$	62,032		$	57,092		$	47,403		$	42,636

BALANCE SHEET DATA (AT END OF YEAR):
Real estate before accumulated depreciation and amortization	$	1,043,106		$	970,964		$	782,166		$	783,233		$	595,959
Total assets		1,159,175			1,072,754			877,306			896,918			686,582
Total debt		441,636			379,158			298,544			317,093			124,425
Stockholders’ equity	$	581,164		$	553,695		$	430,918		$	406,561		$	407,024

NUMBER OF PROPERTIES:
Owned		859			828			740			753			757
Leased		74			79			89			98			106
Total properties		933			907			829			851			863

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements”; the sections in Part I entitled “Item 1A. Risk Factors”; the selected financial data in Part II entitled “Item 6. Selected Financial Data”; and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data”.

We are a real estate investment trust (“REIT”) specializing in the ownership, leasing and financing of convenience store and gasoline station properties. As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our ordinary taxable income to our stockholders each year.

Substantially all of our tenants’ financial results depend on the sale of refined petroleum products, convenience store sales or rental income from their subtenants. As a result, our tenants’ financial results are highly dependent on the performance of the petroleum marketing industry, which is highly competitive and subject to volatility. During the terms of our leases, we monitor the credit quality of our triple-net tenants by reviewing their published credit rating, if available, reviewing publicly available financial statements, or reviewing financial or other operating statements which are delivered to us pursuant to applicable lease agreements, monitoring news reports regarding our tenants and their respective businesses, and monitoring the timeliness of lease payments and the performance of other financial covenants under their leases. For additional information regarding our real estate business, our properties and environmental matters, see “Item 1. Business – Company Operations”, “Item 2. Properties” and “Environmental Matters” below.

Net Lease. As of December 31, 2018, we leased 918 of our properties to tenants under triple-net leases.

Our net lease properties include 814 properties leased under 26 separate unitary or master triple-net leases and 104 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years with options for successive renewal terms of up to 20 years and periodic rent escalations. Several of our leases provide for additional rent based on the aggregate volume of fuel sold. In addition, certain of our leases require the tenants to invest capital in our properties.

Redevelopment. As of December 31, 2018, we were actively redeveloping six of our properties either as a new convenience and gasoline use or for alternative single-tenant net lease retail uses.

Vacancies. As of December 31, 2018, nine of our properties were vacant. We expect that we will either sell or enter into new leases on these properties over time.

As part of our overall growth strategy, we regularly review acquisition and financing opportunities to invest in additional convenience store and gasoline station, and other automotive related, properties, and we expect to continue to pursue investments that we believe will benefit our financial performance. In addition to sale/leaseback and other real estate acquisitions, our investment activities include purchase money financing with respect to properties we sell, and real property loans relating to our leasehold portfolios. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate. To achieve that goal, we seek to invest in high quality individual properties and real estate portfolios that are in strong primary markets that serve high density population centers. A key element of our investment strategy is to invest in properties that will promote our geographic and tenant diversity.

During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. Included in these acquisitions was our April 17, 2018, acquisition of fee simple interests in 30 convenience store and gasoline station properties from GPM Investments, LLC (“GPM”). These properties were simultaneously leased to GPM, a leading regional convenience store and gasoline station operator, under a long-

term triple-net unitary lease. The properties are located across Arkansas, Louisiana, Oklahoma and Texas. The total purchase price for the transaction was $52.6 million, which was funded with funds available under our Revolving Facility. On August 1, 2018, we acquired fee simple interests in six convenience store and gasoline station properties from a U.S. subsidiary of Applegreen PLC (“Applegreen”), the largest convenience store and gasoline station operator in the Republic of Ireland. These properties were simultaneously leased to a U.S. subsidiary of Applegreen under a long-term triple-net unitary lease. The properties are located within the metropolitan market of Columbia, SC. The total purchase price for the transaction was $17.4 million, which was funded with funds available under our Revolving Facility. In addition to the GPM and Applegreen transactions, in 2018, we acquired fee simple interests in five convenience store and gasoline station, and other automotive related properties in various transactions for an aggregate purchase price of $8.0 million.

During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. Included in these acquisitions was our September 6, 2017, acquisition of fee simple interests in 49 convenience store and gasoline station properties from Empire Petroleum Partners LLC (“Empire”). These properties were simultaneously leased to Empire, a leading regional convenience store and gasoline station operator, under a long-term triple-net unitary lease. The properties are located primarily within metropolitan markets in the states of Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Texas. The total purchase price for the transaction was $123.1 million, which was funded with a combination of funds from our Equity Offering and funds available under our Revolving Facility. On October 3, 2017, we acquired fee simple interests in 33 convenience store and gasoline station properties and five stand-alone Burger King quick service restaurants from a U.S. subsidiary of Applegreen. These properties were simultaneously leased to a U.S. subsidiary of Applegreen under a long-term triple-net unitary lease. The properties are located within the metropolitan market of Columbia, SC. The total purchase price for the transaction was $68.7 million, which was funded with a combination of funds from our Equity Offering and funds available under our Revolving Facility. In addition to the Empire and Applegreen transactions, in 2017, we acquired fee simple interests in 16 convenience store and gasoline station, and other automotive properties in various transactions for an aggregate purchase price of $22.2 million.

We believe that certain of our properties are located in geographic areas which, together with other factors, may make them well-suited for a new convenience and gasoline use or for alternative single-tenant net lease retail uses, such as quick service restaurants, automotive parts and service stores, specialty retail stores and bank branch locations. We believe that the redeveloped properties can be leased or sold at higher values than their current use.

We perform an impairment analysis for the carrying amounts of our properties in accordance with GAAP when indicators of impairment exist. We reduced the carrying amounts to fair value, and recorded in continuing and discontinued operations, impairment charges aggregating $6.2 million and $9.3 million for the years ended December 31, 2018 and 2017, respectively, where the carrying amounts of the properties exceed the estimated undiscounted cash flows expected to be received during the assumed holding period which includes the estimated sales value expected to be received at disposition. The impairment charges were attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties. The evaluation of and estimates of anticipated cash flows used to conduct our impairment analysis are highly subjective and actual results could vary significantly from our estimates.

We manage our business to enhance the value of our real estate portfolio and, as a REIT, place particular emphasis on minimizing risk, to the extent feasible, and generating cash sufficient to make required distributions to stockholders of at least 90% of our ordinary taxable income each year. In addition to measurements defined by GAAP, we also focus on Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) to measure our performance. FFO and AFFO are generally considered by analysts and investors to be appropriate supplemental non-GAAP measures of the performance of REITs. FFO and AFFO are not in accordance with, or a substitute for, measures prepared in accordance with GAAP. In addition, FFO and AFFO are not based on any comprehensive set of accounting rules or principles. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity. These measures should only be used to evaluate our performance in conjunction with corresponding GAAP measures.

FFO is defined by the National Association of Real Estate Investment Trusts as GAAP net earnings before depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, impairment charges and cumulative effect of accounting changes. Our definition of AFFO is defined as FFO less (i) Revenue Recognition Adjustments (net of allowances), (ii) changes in environmental estimates, (iii) accretion expense, (iv) environmental litigation accruals, (v) insurance reimbursements, (vi) legal settlements and judgments, (vii) acquisition costs expensed and (viii) other unusual items that are not reflective of our core operating performance. Other REITs may use definitions of FFO and/or AFFO that are different from ours and, accordingly, may not be comparable.

Beginning in the fourth quarter of 2017, we revised our definition of AFFO to exclude three additional items – environmental litigation accruals, insurance reimbursements, and legal settlements and judgments – because we believe that these items are not indicative of our core operating performance. While we do not label excluded items as non-recurring, management believes that excluding items from our definition of AFFO that are either non-cash or not reflective of our core operating performance provides analysts and investors the ability to compare our core operating performance between periods. AFFO for the years ended December 31, 2016 and 2015, has been restated to conform to our revised definition.

We believe that FFO and AFFO are helpful to analysts and investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, our core operating performance. FFO excludes various items such as depreciation and amortization of real estate assets, gains or losses on dispositions of real estate and impairment charges. In our case, however, GAAP net earnings and FFO typically include the impact of revenue recognition adjustments comprised of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases, adjustments recorded for recognition of rental income recognized from direct financing leases on revenues from rental properties and the amortization of deferred lease incentives, as offset by the impact of related collection reserves. Deferred rental revenue results primarily from fixed rental increases scheduled under certain leases with our tenants. In accordance with GAAP, the aggregate minimum rent due over the current term of these leases is recognized on a straight-line basis rather than when payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenues from rental properties over the remaining lives of the in-place leases. Income from direct financing leases is recognized over the lease terms using the effective interest method which produces a constant periodic rate of return on the net investments in the leased properties. The amortization of deferred lease incentives represents our funding commitment in certain leases, which deferred expense is recognized on a straight-line basis as a reduction of rental revenue. GAAP net earnings and FFO include non-cash changes in environmental estimates and environmental accretion expense, which do not impact our recurring cash flow. GAAP net earnings and FFO also include environmental litigation accruals, insurance reimbursements, and legal settlements and judgments, which items are not indicative of our core operating performance. GAAP net earnings and FFO from time to time may also include property acquisition costs expensed and other unusual items that are not reflective of our core operating performance. Acquisition costs are expensed, generally in the period when properties are acquired and are not reflective of our core operating performance.

We pay particular attention to AFFO, as we believe it best represents our core operating performance. In our view, AFFO provides a more accurate depiction than FFO of our core operating performance. By providing AFFO, we believe that we are presenting useful information that assists analysts and investors to better assess our core operating performance. Further, we believe that AFFO is useful in comparing the sustainability of our core operating performance with the sustainability of the core operating performance of other real estate companies. For a reconciliation of FFO and AFFO to GAAP net earnings, see “Item 6. Selected Financial Data”.

Revenues from rental properties increased by $15.0 million to $116.3 million for the year ended December 31, 2018, as compared to $101.3 million for the year ended December 31, 2017. The increase in revenues from rental properties was primarily due to $13.4 million of revenue from the properties acquired in 2018 and the second half of 2017. Rental income contractually due from our tenants included in revenues from rental properties in continuing operations was $114.1 million for the year ended December 31, 2018, as compared to $99.4 million for the year ended December 31, 2017. Tenant reimbursements, which consist of real estate taxes and other

municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements were $16.7 million and $15.8 million for the years ended December 31, 2018 and 2017, respectively. Interest income on notes and mortgages receivable was $3.1 million for the year ended December 31, 2018, as compared to $3.0 million for the year ended December 31, 2017.

In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include Revenue Recognition Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, the net amortization of above-market and below-market leases, recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties and the amortization of deferred lease incentives. Revenues from rental properties includes Revenue Recognition Adjustments which increased rental revenue by $2.2 million for the year ended December 31, 2018, and $2.0 million for the year ended December 31, 2017.

Property costs, which are primarily comprised of rent expense, real estate taxes, state and local taxes, municipal charges, professional fees, maintenance expense and reimbursable tenant expenses, were $23.6 million for the year ended December 31, 2018, as compared to $22.3 million for the year ended December 31, 2017. The increase in property costs for the year ended December 31, 2018, was principally due to an increase in real estate taxes and property related professional fees.

Impairment charges included in continuing operations were $4.9 million for the year ended December 31, 2018, as compared to $8.3 million for the year ended December 31, 2017. Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges in continuing operations for the years ended December 31, 2018 and 2017, were attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties.

Environmental expenses included in continuing operations were $4.7 million for the year ended December 31, 2018, as compared to $3.1 million for the year ended December 31, 2017. The increase in environmental expenses for the year ended December 31, 2018, was principally due to a $0.7 million increase in environmental legal fees and expenses, and a $1.9 million increase in net environmental remediation costs, offset by a $1.1 million decrease in environmental litigation accruals. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period, as compared to prior periods.

General and administrative expense was $14.7 million for the year ended December 31, 2018, as compared to $13.9 million for the year ended December 31, 2017. The increase in general and administrative expense for the year ended December 31, 2018, was principally due to a $0.4 million increase in stock-based compensation, a $0.2 million increase in employee related expenses and a $0.2 million increase in public company expenses.

Depreciation and amortization expense was $23.6 million for the year ended December 31, 2018, as compared to $19.1 million for the year ended December 31, 2017. The increase in depreciation and amortization expense was primarily due to depreciation and amortization of properties acquired offset by a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate.

Gains on dispositions of real estate were $3.9 million for the year ended December 31, 2018, as compared to $1.0 million for the year ended December 31, 2017. The gains were the result of the sale of nine and 12 properties during each of the years ended December 31, 2018 and 2017, respectively.

Other income was $2.7 million for the year ended December 31, 2018, as compared to $8.5 million for the year ended December 31, 2017. For the year ended December 31, 2018, other income was primarily attributable to $2.6 million received from insurance reimbursements. Other income for the year ended December 31, 2017, was primarily attributable to $1.8 million received from insurance reimbursements and $6.4 million received from legal settlements and judgments.

Interest expense was $22.3 million for the year ended December 31, 2018, as compared to $17.8 million for the year ended December 31, 2017. The increase was due to higher average borrowings outstanding and an increase in average interest rates on borrowings outstanding for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

Loss from discontinued operations was $0.7 million for the year ended December 31, 2018, as compared to earnings of $2.1 million for the year ended December 31, 2017. For the year ended December 31, 2018, environmental credits recorded in discontinued operations were $0.6 million, as compared to $3.2 million for the year ended December 31, 2017. For the year ended December 31, 2018, impairment charges recorded in discontinued operations were $1.3 million, as compared to $1.0 million for the year ended December 31, 2017, and were attributable to the accumulation of asset retirement costs as a result of increases in estimated environmental liabilities which increased the carrying values of discontinued properties above their fair values. Environmental expenses and impairment charges vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of changes for one period, as compared to prior periods.

For the year ended December 31, 2018, FFO was $73.6 million, as compared to $74.6 million for the year ended December 31, 2017. For the year ended December 31, 2018, AFFO was $69.7 million, as compared to $62.0 million for the year ended December 31, 2017. FFO for the year ended December 31, 2018, was impacted by changes in net earnings, but excludes a $3.1 million decrease in impairment charges, a $4.5 million increase in depreciation and amortization expense and a $2.9 million decrease in gains on dispositions of real estate. The increase in AFFO for the year ended December 31, 2018, also excludes a $6.3 million decrease in legal settlements and judgments, a $4.5 million increase in environmental estimates and accretion expense, a $0.8 million increase in insurance reimbursements, a $1.1 million decrease in environmental litigation accruals, and a $0.2 million decrease in Revenue Recognition Adjustments.

Basic and diluted earnings per share was $1.17 per share for the year ended December 31, 2018, as compared to $1.26 per share for the year ended December 31, 2017. Basic and diluted FFO per share for the year ended December 31, 2018, was $1.81 and $1.80 per share, respectively, as compared to $2.00 per share for the year ended December 31, 2017. Basic and diluted AFFO per share for the year ended December 31, 2018, was $1.71 per share, as compared to $1.66 per share for the year ended December 31, 2017.

Revenues from rental properties increased by $4.6 million to $101.3 million for the year ended December 31, 2017, as compared to $96.7 million for the year ended December 31, 2016. The increase in revenues from rental properties was primarily due to $3.2 million and $1.4 million of revenue from the properties acquired in the Empire and Applegreen transactions, respectively. Rental income contractually due from our tenants included in revenues from rental properties in continuing operations was $99.4 million for the year ended December 31, 2017, as compared to $93.3 million for the year ended December 31, 2016. Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements were $15.8 million and $15.0 million for the years ended December 31, 2017 and 2016, respectively. Interest income on notes and mortgages receivable was $3.0 million for the year ended December 31, 2017, as compared to $3.5 million for the year ended December 31, 2016.

In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include Revenue Recognition Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, the net amortization of above-market and below-market leases, recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties and the amortization of deferred lease incentives. Revenues from rental properties includes Revenue Recognition Adjustments which increased rental revenue by $2.0 million for the year ended December 31, 2017, and $3.4 million for the year ended December 31, 2016.

Property costs, which are primarily comprised of rent expense, real estate taxes, state and local taxes, municipal charges, maintenance expense and reimbursable tenant expenses, were $22.3 million for the year ended December 31, 2017, as compared to $23.2 million for the year ended December 31, 2016. The decrease in property costs for the year ended December 31, 2017, was principally due to a decrease in rent, maintenance and state and local taxes.

Impairment charges included in continuing operations were $8.3 million for the year ended December 31, 2017, as compared to $8.6 million for the year ended December 31, 2016. Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges in continuing operations for the years ended December 31, 2017 and 2016, were primarily attributable to the effect of adding asset retirement costs due to changes in estimates associated with our environmental liabilities, which increased the carrying values of certain properties in excess of their fair values, and reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties.

Environmental expenses included in continuing operations for the year ended December 31, 2017, were $3.1 million, as compared to $2.7 million for the year ended December 31, 2016. The increase in environmental expenses for the year ended December 31, 2017, was principally due to a $0.8 million increase in environmental litigation accruals and legal fees, partially offset by a $0.4 million decrease in net environmental remediation costs. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of changes in reported environmental expenses for one period, as compared to prior periods.

General and administrative expense was $13.9 million for the year ended December 31, 2017, as compared to $14.2 million for the year ended December 31, 2016. The decrease in general and administrative expense for the year ended December 31, 2017, was principally due to a $0.4 million decline in legal and professional fees and a $0.4 million decrease of non-recurring employee related expenses predominantly due to reductions in severance and retirement costs, partially offset by a $0.5 million increase in employee related expenses.

Recoveries and allowances for uncollectible accounts included in continuing operations increased by $0.6 million to a $0.2 million allowance for the year ended December 31, 2017, as compared to a recovery of $0.4 million for the year ended December 31, 2016.

Depreciation and amortization expense was $19.1 million for the year ended December 31, 2017, as compared to $19.2 million for the year ended December 31, 2016. The decrease was primarily due to a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate offset by depreciation and amortization of properties acquired.

Gains on dispositions of real estate were $1.0 million for the year ended December 31, 2017, as compared to $6.4 million for the year ended December 31, 2016. The gains were the result of the sale of 12 properties during each of the years ended December 31, 2017 and 2016, which did not previously meet the criteria to be held for sale. For the year ended December 31, 2016, the gains were primarily the result of the full recognition of the remaining deferred gain of $3.9 million resulting from the repayment of the entire seller financing mortgage by affiliates of Hanuman Business, Inc. (d/b/a “Ramoco”).

Other income was $8.5 million for the year ended December 31, 2017, as compared to $2.0 million for the year ended December 31, 2016. For the year ended December 31, 2017, other income was primarily attributable to $1.8 million received from insurance reimbursements and $6.4 million received from legal settlements and judgments. Other income for the year ended December 31, 2016, was primarily attributable to $1.1 million received from insurance reimbursements and $0.5 million received from legal settlements and judgments.

Interest expense was $17.8 million for the year ended December 31, 2017, as compared to $16.6 million for the year ended December 31, 2016. The increase for the year ended December 31, 2017, was due to higher average borrowings outstanding and the incurrence of new indebtedness required to fund the Empire and Applegreen transactions.

We report as discontinued operations properties which met the criteria to be accounted for as held for sale in accordance with GAAP as of June 30, 2014, and certain properties disposed of during the periods presented that were previously classified as held for sale as of June 30, 2014. Earnings from discontinued operations were $2.1 million for the year ended December 31, 2017, as compared to a loss of $1.4 million for the year ended December 31, 2016. Environmental credits recorded in discontinued operations was $3.2 million for the year ended December 31, 2017, as compared to $3.0 million for the year ended December 31, 2016. There were no dispositions of real estate included in discontinued operations for the year ended December 31, 2017. Loss on dispositions of real estate included in discontinued operations was $0.2 million for the year ended December 31, 2016. For the year ended December 31, 2016, there were two property dispositions recorded in discontinued operations. Impairment charges recorded in discontinued operations during the years ended December 31, 2017 and 2016, of $1.0 million and $4.2 million, respectively, were attributable to the accumulation of asset retirement costs as a result of increases in estimated environmental liabilities which increased the carrying values of certain properties above their fair values. Environmental expenses and impairment charges vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the directions of changes for one period, as compared to prior periods.

For the year ended December 31, 2017, FFO increased by $10.4 million to $74.6 million, as compared to $64.2 million for the year ended December 31, 2016, and AFFO increased by $4.9 million to $62.0 million, as compared to $57.1 million for the prior year. The increase in FFO for the year ended December 31, 2017, was due to changes in net earnings but excludes a $3.5 million decrease in impairment charges, a $0.1 million decrease in depreciation and amortization expense and a $5.2 million decrease in gains on dispositions of real estate. The increase in AFFO for the year ended December 31, 2017, also excludes a $5.9 million increase in legal settlements and judgments, a $0.7 million increase in insurance reimbursements, a $0.2 million increase in environmental litigation accruals, a $0.5 million increase in environmental estimates and accretion expense, a $0.1 million decrease in acquisition costs and a $1.4 million decrease in Revenue Recognition Adjustments.

Basic and diluted earnings per share was $1.26 per share for the year ended December 31, 2017, as compared to $1.12 per share for the year ended December 31, 2016. Basic and diluted FFO per share for the year ended December 31, 2017, was $2.00 per share, as compared to $1.87 per share for the year ended December 31, 2016. Basic and diluted AFFO per share for the year ended December 31, 2017, was $1.66 per share, as compared to $1.67 per share for the year ended December 31, 2016.

Our principal sources of liquidity are the cash flows from our operations, funds available under our Revolving Facility which is scheduled to mature in March 2022, proceeds from the sale of shares of our common stock through offerings, from time to time, under our ATM Program and available cash and cash equivalents. Our business operations and liquidity are dependent on our ability to generate cash flow from our properties. We believe that our operating cash needs for the next twelve months can be met by cash flows from operations, borrowings under our Restated Credit Agreement, proceeds from the sale of shares of our common stock under our ATM Program and available cash and cash equivalents.

Our cash flow activities for the years ended December 31, 2018, 2017 and 2016, are summarized as follows (in thousands):

Net cash flow from operating activities increased by $6.6 million for the year ended December 31, 2018, to $63.3 million, as compared to $56.7 million for the year ended December 31, 2017. Net cash provided by operating activities represents cash received primarily from rental and interest income less cash used for property costs, environmental expense, general and administrative expense and interest expense. The change in net cash flow provided by operating activities for the years ended December 31, 2018, 2017 and 2016, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above.

Our investing activities are primarily real estate-related transactions. Because we generally lease our properties on a triple-net basis, we have not historically incurred significant capital expenditures other than those related to investments in real estate and our redevelopment activities. Net cash flow used in investing activities decreased by $130.3 million for the year ended December 31, 2018, to a use of $75.9 million, as compared to a use of $206.2 million for the year ended December 31, 2017. The decrease in net cash flow used in investing activities for the year ended December 31, 2018, was primarily due to a decrease of $136.0 million of property acquisitions, partially offset by an increase in capital expenditures of $3.4 million and an increase of $1.4 million in additions to construction in progress.

Net cash flow provided by financing activities decreased by $116.6 million for the year ended December 31, 2018, to $40.5 million, as compared to a use of $157.1 million for the year ended December 31, 2017. The decrease in net cash flow from financing activities for the year ended December 31, 2018, was primarily due to a decrease in net proceeds from issuances of common stock of $87.7 million, an increase in dividends paid of $11.2 million, an increase of $3.2 million in debt issuance costs and a decrease in net borrowings of $15.0 million.

On June 2, 2015, we entered into a $225.0 million senior unsecured credit agreement (the “Credit Agreement”) with a group of banks led by Bank of America, N.A. (the “Bank Syndicate”). The Credit Agreement consisted of a $175.0 million unsecured revolving credit facility (the “Revolving Facility”) and a $50.0 million unsecured term loan (the “Term Loan”).

On March 23, 2018, we entered in to an amended and restated credit agreement (as amended, as described below, the “Restated Credit Agreement”) amending and restating our Credit Agreement. Pursuant to the Restated Credit Agreement, we (a) increased the borrowing capacity under the Revolving Facility from $175.0 million to $250.0 million, (b) extended the maturity date of the Revolving Facility from June 2018 to March 2022, (c) extended the maturity date of the Term Loan from June 2020 to March 2023 and (d) amended certain financial covenants and provisions.

Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate.

The Restated Credit Agreement incurs interest and fees at various rates based on our total indebtedness to total asset value ratio at the end of each quarterly reporting period. The Revolving Facility permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.50% to 1.30% or a LIBOR rate plus a margin of 1.50% to 2.30%. The annual commitment fee on the undrawn funds under the Revolving Facility is 0.15% to 0.25%. The Term Loan bears interest at a rate equal to the sum of a base rate plus a margin of 0.45% to 1.25% or a LIBOR rate plus a margin of 1.45% to 2.25%. The Term Loan does not provide for scheduled reductions in the principal balance prior to its maturity.

On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into (a) an amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates and (b) a note purchase and guarantee agreement with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates; and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including

a rate based on the LIBOR Daily Floating Rate (as defined in the Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility.

On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with Prudential and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100.0 million (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75.0 million (the “Series B Notes”) and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50.0 million (the “Series C Notes”) that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series D Notes” and, together with the Series A Notes, Series B Notes and Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities.

On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with MetLife and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50.0 million (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity.

The amounts outstanding under our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement, exclusive of extension options, are as follows (in thousands):

As of December 31, 2018, we are in compliance with all of the material terms of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement.

On July 10, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and KeyBanc Capital Markets Inc., as representatives of the several underwriters (the “Underwriters”), pursuant to which we sold to the Underwriters 4.1 million shares of common stock (the “Equity Offering”). Pursuant to the terms of the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase up to an additional 0.6 million shares of common stock. We received net proceeds from the Equity Offering, including the full exercise by the Underwriters of their option to purchase additional shares, of $104.3 million after deducting the underwriting discount and offering expenses. The net proceeds of the Equity Offering were used to repay amounts outstanding under our Revolving Facility and subsequently were used to fund the Empire and Applegreen transactions.

In June 2016, we established an at-the-market equity offering program (the “2016 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting as agents. The 2016 ATM Program was terminated in January 2018.

as agents. Sales of the shares of common stock may be made, as needed, from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent.

During the years ended December 31, 2018 and 2017, we issued 1.1 million and 0.5 million shares of our common stock, respectively, and received net proceeds of $30.1 million and $13.5 million, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

As part of our overall business strategy, we regularly review opportunities to acquire additional properties and we expect to continue to pursue acquisitions that we believe will benefit our financial performance.

During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $78.0 million. We accounted for the acquisitions of fee simple interests as asset acquisitions. During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214.0 million. For additional information regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

We are reviewing select opportunities for capital expenditures, redevelopment and alternative uses for certain of our properties. We are also seeking to recapture select properties from our net lease portfolio to redevelop such properties either for a new convenience and gasoline use or for alternative single-tenant net lease retail uses. For the year ended December 31, 2018, we spent $2.7 million of construction-in-progress costs related to our redevelopment activities. In addition, during the year ended December 31, 2018, we spent $4.4 million to reimburse tenants for capital expenditures related to our redevelopment activities.

Because we generally lease our properties on a triple-net basis, we have not historically incurred significant capital expenditures other than those related to acquisitions. However, our tenants frequently make improvements to the properties leased from us at their expense. As of December 31, 2018, we have a remaining commitment to fund up to $7.6 million in the aggregate in capital improvements in certain properties previously leased to Marketing and now subject to unitary triple-net leases with other tenants.

We elected to be treated as a REIT under the federal income tax laws with the year beginning January 1, 2001. To qualify for taxation as a REIT, we must, among other requirements such as those related to the composition of our assets and gross income, distribute annually to our stockholders at least 90% of our taxable income, including taxable income that is accrued by us without a corresponding receipt of cash. We cannot provide any assurance that our cash flows will permit us to continue paying cash dividends.

It is also possible that instead of distributing 100% of our taxable income on an annual basis, we may decide to retain a portion of our taxable income and to pay taxes on such amounts as permitted by the Internal Revenue Service. Payment of dividends is subject to market conditions, our financial condition, including but not limited to, our continued compliance with the provisions of the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement, the MetLife Note Purchase Agreement and other factors, and therefore is not assured. In particular, the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement prohibit the payment of dividends during certain events of default.

Cash dividends paid to our stockholders aggregated $50.5 million, $39.3 million and $36.2 million, for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, during the year ended December 31, 2016, we paid $4.4 million in stock dividends as part of a special dividend. There can be no assurance that we will continue to pay dividends at historical rates.

Our significant contractual obligations and commitments as of December 31, 2018, were comprised of borrowings under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement, the MetLife Note Purchase Agreement (excluding extension options and unamortized debt issuance costs), operating and capital lease payments due to landlords, estimated environmental remediation expenditures and our funding commitments for capital improvements at certain properties which were previously leased to Marketing.

In addition, as a REIT, we are required to pay dividends equal to at least 90% of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and commitments as of December 31, 2018, exclusive of extension options and unamortized debt issuance costs, are summarized below (in thousands):

Generally, leases with our tenants are triple-net leases with the tenant responsible for the operations conducted at our properties and for the payment of taxes, maintenance, repair, insurance, environmental remediation and other operating expenses.

We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements. We have no off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the Exchange Act.

The consolidated financial statements included in this Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements. Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included in our consolidated financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.

Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. The information included in our consolidated financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined.

Our accounting policies are described in Note 1 in “Item 8. Financial Statements and Supplementary Data”. The SEC’s Financial Reporting Release (“FRR”) No. 60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies (“FRR 60”), suggests that companies provide additional disclosure on those accounting policies considered most critical. FRR 60 considers an accounting policy to be critical if it is important to our financial condition and results of operations and requires significant judgment and estimates on the part of management in its application. We believe that our most critical accounting policies relate to revenue recognition and deferred rent receivable, direct financing leases, impairment of long-lived assets, environmental remediation obligations, litigation, income taxes, and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed as described below.

We earn revenue primarily from operating leases with our tenants. We recognize income under leases with our tenants, on the straight-line method, which effectively recognizes contractual lease payments evenly over the current term of the leases. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. A critical assumption in applying the straight-line accounting method is that the tenant will make all contractual lease payments during the current lease term and that the net deferred rent receivable balance will be collected when the payment is due, in accordance with the annual rent escalations provided for

in the leases. We may be required to reserve, or provide reserves for a portion of, the recorded deferred rent receivable if it becomes apparent that the tenant may not make all of its contractual lease payments when due during the current term of the lease.

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.

We provide for the estimated fair value of future environmental remediation obligations when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made. See “Environmental Matters” below for additional information. Environmental liabilities net of related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. Since environmental exposures are difficult to assess and estimate and knowledge about these liabilities is not known upon the occurrence of a single event, but rather is gained over a continuum of events, we believe that it is appropriate that our accrual estimates are adjusted as the remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and reasonably estimable. A critical assumption in accruing for these liabilities is that the state environmental laws and regulations will be administered and enforced in the future in a manner that is consistent with past practices. Environmental liabilities are estimated net of recoveries of environmental costs from state UST remediation funds, with respect to past and future spending based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable. A critical assumption in accruing for these recoveries is that the state UST fund programs will be administered and funded in the future in a manner that is consistent with past practices and that future environmental spending will be eligible for reimbursement at historical rates under these programs. We accrue environmental liabilities based on our share of responsibility as defined in our lease contracts with our tenants and under various other agreements with others or if circumstances indicate that our counterparty may not have the financial resources to pay its share of the costs. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenants or other counterparties fail to pay them. In certain environmental matters the effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. The ultimate liabilities resulting from such lawsuits and claims, if any, may be material to our results of operations in the period in which they are recognized.

Legal fees related to litigation are expensed as legal services are performed. We provide for litigation accruals, including certain litigation related to environmental matters (see “Environmental Matters” below for additional information), when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. If the estimate of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for the liability.

Our financial results generally do not reflect provisions for current or deferred federal income taxes because we elected to be treated as a REIT under the federal income tax laws effective January 1, 2001. Our intention is to operate in a manner that will allow us to continue to be treated as a REIT and, as a result, we do not expect to pay substantial corporate-level federal income taxes. Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the requirements, we may be subject to federal income tax, excise taxes, penalties and interest or we may have to pay a deficiency dividend to eliminate any earnings and profits that were not distributed. Certain states do not follow the federal REIT rules and we have included provisions for these taxes in property costs.

Upon acquisition of real estate and leasehold interests, we estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place leases and tenant relationships) and assumed debt. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities.

We are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Environmental costs are principally attributable to remediation costs which are incurred for, among other things, removing USTs, excavation of contaminated soil and water, installing, operating, maintaining and decommissioning remediation systems, monitoring contamination and governmental agency compliance reporting required in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental costs where available. The estimated future costs for known environmental remediation requirements are accrued when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made. The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability, net of estimated recoveries from state UST remediation funds considering estimated recovery rates developed from prior experience with the funds.

In July 2012, we purchased a 10-year pollution legal liability insurance policy covering substantially all of our properties at that time for preexisting unknown environmental liabilities and new environmental events. The policy has a $50.0 million aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our intention in purchasing this policy was to obtain protection predominantly for significant events. No assurances can be given that we will obtain a net financial benefit from this investment. In addition to the environmental insurance policy purchased by the Company, we also took assignment of certain environmental insurance policies, and rights to reimbursement for claims made thereunder, from Marketing, by order of the U.S. Bankruptcy Court during Marketing’s bankruptcy proceedings. Under these assigned polices, we have received and expect to continue to receive reimbursement of certain remediation expenses for covered claims.

contamination. We have also agreed to be responsible for environmental contamination that existed prior to the sale of certain properties assuming the contamination is discovered (other than as a result of a voluntary site investigation) during the first five years after the sale of the properties. For properties that are vacant, we are responsible for costs associated with UST removals and for the cost of remediation of contamination found during the removal of USTs.

We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation (using a range of 2.0% to 2.75%), and then discount them to present value (using a range of 4.0% to 7.0%). We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59.8 million for our prospective environmental remediation obligations. This accrual consisted of (a) $14.5 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.3 million for future environmental liabilities related to preexisting unknown contamination. As of December 31, 2017, we had accrued a total of $63.6 million for our prospective environmental remediation obligations. This accrual consisted of (a) $18.6 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45.0 million for future environmental liabilities related to preexisting unknown contamination.

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $2.4 million, $3.4 million and $4.1 million of net accretion expense was recorded for the years ended December 31, 2018, 2017 and 2016, respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2018, 2017 and 2016, we recorded credits to environmental expenses, included in continuing and discontinued operations, aggregating $1.3 million, $6.9 million and $7.0 million, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.

During the years ended December 31, 2018 and 2017, we increased the carrying values of certain of our properties by $5.1 million and $5.5 million, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on the face of the consolidated statements of cash flows.

Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is related to environmental remediation obligations or such shorter period if circumstances warrant, such as the remaining lease term for properties we lease from others. Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, were $4.3 million, $4.3 million and $5.1 million, respectively. Capitalized asset retirement costs were $45.7 million (consisting of $20.4 million of known environmental liabilities and $25.3 million of reserves for future environmental liabilities) as of December 31, 2018 and $45.4 million (consisting of $18.7 million of known environmental liabilities and $26.7 million of reserves for future environmental liabilities) as of December 31, 2017. We recorded impairment charges aggregating $3.9 million and $6.9 million for the years ended December 31, 2018 and 2017, respectively, in continuing and discontinued operations for capitalized asset retirement costs.

Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination and receive regulatory approval. In developing our liability for estimated environmental remediation obligations on a property by property basis, we consider, among other things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change, and as environmental contingencies become more clearly defined and reasonably estimable.

may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities. Among the many uncertainties that impact the estimates are our assumptions, the necessary regulatory approvals for, and potential modifications of remediation plans, the amount of data available upon initial assessment of contamination, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to additional claims, and possible changes in the environmental rules and regulations, enforcement policies, and reimbursement programs of various states.

In light of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges in excess of the amount accrued with any certainty; however, we believe that it is possible that the fair value of future actual net expenditures could be substantially higher than amounts currently recorded by us. Adjustments to accrued liabilities for environmental remediation obligations will be reflected in our consolidated financial statements as they become probable and a reasonable estimate of fair value can be made. Additional environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of December 31, 2018 and 2017, we had accrued $12.2 million and $12.3 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation accruals. Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, our MTBE litigations in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. For additional information with respect to these and other pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.

We are exposed to interest rate risk, primarily as a result of our $300.0 million senior unsecured credit agreement entered into on March 23, 2018, and amended on September 19, 2018 (as amended, the “Restated Credit Agreement”), with a group of commercial banks led by Bank of America, N.A. (the “Bank Syndicate”). The Restated Credit Agreement consists of a $250.0 million unsecured revolving facility (the “Revolving Facility”), which is scheduled to mature in March 2022 and a $50.0 million unsecured term loan (the “Term Loan”), which is scheduled to mature in March 2023. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300.0 million in the amount of the Revolving Facility and/or Term Loan to $600.0 million in the aggregate. The Restated Credit Agreement incurs interest and fees at various rates based on our total indebtedness to total asset value ratio at the end of each quarterly reporting period. The Revolving Facility permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.50% to 1.30% or a LIBOR rate plus a margin of 1.50% to 2.30%. The annual commitment fee on the undrawn funds under the Revolving Facility is 0.15% to 0.25%. The Term Loan bears interest at a rate equal to the sum of a base rate plus a margin of 0.45% to 1.25% or a LIBOR rate plus a margin of 1.45% to 2.25%. The Term Loan does not provide for scheduled reductions in the principal balance prior to its maturity. We use borrowings under the Restated Credit Agreement to finance acquisitions and for general corporate purposes. Borrowings outstanding at variable interest rates under the Restated Credit Agreement as of December 31, 2018, were $120.0 million.

Based on our outstanding borrowings under the Restated Credit Agreement of $120.0 million for the year ended December 31, 2018, an increase in market interest rates of 1.0% for 2019 would decrease our 2019 net income and cash flows by approximately $1.2 million. This amount was determined by calculating the effect of a hypothetical interest rate change on our borrowings floating at market rates, and assumes that the $120.0 million outstanding borrowings under the Restated Credit Agreement is indicative of our future average floating interest rate borrowings for 2019 before considering additional borrowings required for future acquisitions or repayment of outstanding borrowings from proceeds of future equity offerings. The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Restated Credit Agreement and with increases or decreases in amounts outstanding under borrowing agreements entered into with interest rates floating at market rates.

In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash investments, if any, with high credit quality institutions. Temporary cash investments, if any, are currently held in an overnight bank time deposit with JPMorgan Chase Bank, N.A. and these balances, at times, may exceed federally insurable limits.

	December 31,
	2018			2017
ASSETS:
Real Estate:
Land	$	631,185		$	589,497
Buildings and improvements		409,753			379,785
Construction in progress		2,168			1,682
		1,043,106			970,964
Less accumulated depreciation and amortization		(150,691	)		(133,353	)
Real estate, net		892,415			837,611
Investment in direct financing leases, net		85,892			89,587
Notes and mortgages receivable		33,519			32,366
Cash and cash equivalents		46,892			19,992
Restricted cash		1,850			821
Deferred rent receivable		37,722			33,610
Accounts receivable, net of allowance of $2,094 and $1,840, respectively		3,008			3,712
Prepaid expenses and other assets		57,877			55,055
Total assets	$	1,159,175		$	1,072,754
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Borrowings under credit agreement, net	$	117,227		$	154,502
Senior unsecured notes, net		324,409			224,656
Environmental remediation obligations		59,821			63,565
Dividends payable		14,495			12,846
Accounts payable and accrued liabilities		62,059			63,490
Total liabilities		578,011			519,059
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.01 par value; 20,000,000 and 10,000,000 shares authorized, respectively; unissued		—			—
Common stock, $0.01 par value; 100,000,000 and 60,000,000 shares authorized, respectively; 40,854,491 and 39,696,110 shares issued and outstanding, respectively		409			397
Additional paid-in capital		638,178			604,872
Dividends paid in excess of earnings		(57,423	)		(51,574	)
Total stockholders’ equity		581,164			553,695
Total liabilities and stockholders’ equity	$	1,159,175		$	1,072,754

The accompanying notes are an integral part of these consolidated financial statements.

	Year ended December 31,
	2018			2017			2016
Revenues:
Revenues from rental properties	$	116,328		$	101,332		$	96,711
Tenant reimbursements		16,691			15,829			15,017
Interest on notes and mortgages receivable		3,087			2,992			3,543
Total revenues		136,106			120,153			115,271
Operating expenses:
Property costs		23,649			22,345			23,205
Impairments		4,902			8,279			8,566
Environmental		4,711			3,098			2,654
General and administrative		14,661			13,879			14,155
Allowance (recoveries) for uncollectible accounts		470			205			(448	)
Depreciation and amortization		23,636			19,089			19,170
Total operating expenses		72,029			66,895			67,302

Gains on dispositions of real estate		3,948			1,041			6,390

Operating income		68,025			54,299			54,359

Other income, net		2,730			8,518			2,027
Interest expense		(22,345	)		(17,769	)		(16,561	)
Earnings from continuing operations		48,410			45,048			39,825
Discontinued operations:
Earnings (loss) from operating activities		(704	)		2,138			(1,236	)
(Loss) gains on dispositions of real estate		—			—			(178	)
Earnings (loss) from discontinued operations		(704	)		2,138			(1,414	)
Net earnings	$	47,706		$	47,186		$	38,411
Basic earnings per common share:
Earnings from continuing operations	$	1.19		$	1.20		$	1.16
Earnings (loss) earnings from discontinued operations		(0.02	)		0.06			(0.04	)
Net earnings	$	1.17		$	1.26		$	1.12
Diluted earnings per common share:
Earnings from continuing operations	$	1.19		$	1.20		$	1.16
Earnings (loss) earnings from discontinued operations		(0.02	)		0.06			(0.04	)
Net earnings	$	1.17		$	1.26		$	1.12
Weighted average common shares outstanding:
Basic		40,171			36,897			33,806
Diluted		40,191			36,897			33,806

The accompanying notes are an integral part of these consolidated financial statements.

	Year ended December 31,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	47,706		$	47,186		$	38,411
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization expense		23,636			19,089			19,170
Impairment charges		6,170			9,321			12,814
(Gains) loss on dispositions of real estate
Continuing operations		(3,948	)		(1,041	)		(6,390	)
Discontinued operations		—			—			178
Deferred rent receivable		(4,112	)		(3,644	)		(4,516	)
Allowance (recoveries) for uncollectible accounts		470			205			(448	)
Amortization of above-market and below-market leases		(808	)		(522	)		(569	)
Amortization of debt issuance costs		871			771			851
Accretion expense		2,409			3,448			4,107
Stock-based compensation expense		1,777			1,350			1,426
Changes in assets and liabilities:
Accounts receivable		(814	)		(1,295	)		(2,383	)
Prepaid expenses and other assets		(708	)		489			445
Environmental remediation obligations		(11,210	)		(19,798	)		(24,640	)
Accounts payable and accrued liabilities		1,907			1,183			(1,582	)
Net cash flow provided by operating activities		63,346			56,742			36,874
CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions		(77,972	)		(214,000	)		(7,688	)
Capital expenditures		(3,794	)		(434	)		(298	)
Addition to construction in progress		(2,657	)		(1,255	)		(406	)
Proceeds from dispositions of real estate
Continuing operations		3,303			2,739			3,957
Discontinued operations		—			—			88
Deposits for property acquisitions		(430	)		2,346			(2,206	)
Amortization of investment in direct financing leases		3,015			2,511			2,001
(Issuance) of notes and mortgages receivable		(530	)		—			—
Collection of notes and mortgages receivable		3,134			1,876			17,532
Net cash flow (used in) provided by investing activities		(75,931	)		(206,217	)		12,980
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements		95,000			135,000			8,000
Repayments under credit agreements		(130,000	)		(105,000	)		(27,000	)
Proceeds from senior unsecured notes		100,000			50,000			—
Payments of capital lease obligations		(468	)		(342	)		(236	)
Repayment of mortgage payable		—			—			(400	)
Payments of cash dividends		(50,503	)		(39,299	)		(36,231	)
Payments of debt issuance costs		(3,393	)		(157	)		—
Security deposits received (refunded)		(260	)		247			260
Payments in settlement of restricted stock units		—			(1,195	)		(290	)
Proceeds from issuance of common stock, net - equity offering		—			104,312			—
Proceeds from issuance of common stock, net - ATM		30,138			13,528			14,886
Net cash flow provided by (used in) financing activities		40,514			157,094			(41,011	)
Change in cash, cash equivalents and restricted cash		27,929			7,619			8,843
Cash, cash equivalents and restricted cash at beginning of year		20,813			13,194			4,351
Cash, cash equivalents and restricted cash at end of year	$	48,742		$	20,813		$	13,194

The accompanying notes are an integral part of these consolidated financial statements.

The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We do not distinguish our principal business or our operations on a geographical basis for purposes of measuring performance. We manage and evaluate our operations as a single segment. All significant intercompany accounts and transactions have been eliminated.

The consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported. Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation costs, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. Application of these estimates and assumptions requires exercise of judgment as to future uncertainties and, as a result, actual results could differ materially from these estimates.

Certain prior years amounts in the consolidated financial statements have been reclassified to conform to the presentation used in the year ended December 31, 2018.

Real estate assets are stated at cost less accumulated depreciation and amortization. For acquisitions of real estate which are accounted for as business combinations, we estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place leases and tenant relationships) and assumed debt. Based on these estimates, we allocate the estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We expense transaction costs associated with business combinations in the period incurred. Acquisitions of real estate which do not meet the definition of a business are accounted for as asset acquisitions. The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition costs are capitalized and allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. For additional information regarding property acquisitions, see Note 13 – Property Acquisitions.

We capitalize direct costs, including costs such as construction costs and professional services, and indirect costs associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use. The capitalization period begins when development activities are underway and ends when it is determined that the asset is substantially complete and ready for its intended use.

We evaluate the held for sale classification of our real estate as of the end of each quarter. Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell.

When real estate assets are sold or retired, the cost and related accumulated depreciation and amortization is eliminated from the respective accounts and any gain or loss is credited or charged to income. We evaluate real estate sale transactions where we provide seller financing to determine sale and gain recognition in accordance with GAAP. Expenditures for maintenance and repairs are charged to income when incurred.

Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets, which generally range from 16 to 25 years for buildings and improvements, or the term of the lease if shorter. Asset retirement costs are depreciated over the shorter of the remaining useful lives of USTs or 10 years for asset retirement costs related to environmental remediation obligations, which costs are attributable to the group of assets identified at a property. Leasehold interests and in-place leases are amortized over the remaining term of the underlying lease.

Income under direct financing leases is included in revenues from rental properties and is recognized over the lease terms using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties. The investments in direct financing leases are increased for interest income earned and amortized over the life of the leases and reduced by the receipt of lease payments. We consider direct financing leases to be past-due or delinquent when a contractually required payment is not remitted in accordance with the provisions of the underlying agreement. We evaluate each account individually and set up an allowance when, based upon current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms, and the amount can be reasonably estimated.

We review our direct financing leases at least annually to determine whether there has been an-other-than-temporary decline in the current estimate of residual value of the property. The residual value is our estimate of what we could realize upon the sale of the property at the end of the lease term, based on market information and third-party estimates where available. If this review indicates that a decline in residual value has occurred that is other-than-temporary, we recognize an impairment charge. There were no impairments of any of our direct financing leases during the years ended December 31, 2018 and 2017.

When we enter into a contract to sell properties that are recorded as direct financing leases, we evaluate whether we believe that it is probable that the disposition will occur. If we determine that the disposition is probable and therefore the property’s holding period is reduced, we record an allowance for credit losses to reflect the change in the estimate of the undiscounted future rents. Accordingly, the net investment balance is written down to fair value.

Notes and mortgages receivable consists of loans originated by us in conjunction with property dispositions and funding provided to tenants in conjunction with property acquisitions and capital improvements. Notes and mortgages receivable are recorded at stated principal amounts. We evaluate the collectability of both interest and principal on each loan to determine whether it is impaired. A loan is considered to be impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due under the existing contractual terms. When a loan is considered to be impaired, the amount of the loss is calculated by comparing the recorded investment to the fair value determined by discounting the expected future cash flows at the loan’s effective interest rate or to the fair value of the underlying collateral, if the loan is collateralized. Interest income on performing loans is accrued as earned. Interest income on impaired loans is recognized on a cash basis. We do not provide for an additional allowance for loan losses based on the grouping of loans, as we believe that the characteristics of the loans are not sufficiently similar to allow an evaluation of these loans as a group for a possible loan loss allowance. As such, all of our loans are evaluated individually for impairment purposes. There were no impairments related to our notes and mortgages receivable during the years ended December 31, 2018 and 2017.

We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents are held in the custody of financial institutions, and these balances, at times, may exceed federally insurable limits.

Restricted cash consists of cash that is contractually restricted or held in escrow pursuant to various agreements with counterparties. At December 31, 2018 and 2017, restricted cash of $1,850,000 and $821,000, respectively, consisted of security deposits received from our tenants.

On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“Topic 606”) using the modified retrospective method applying it to any open contracts as of January 1, 2018. The new guidance provides a unified model to determine how revenue is recognized. To determine the proper amount of revenue to be recognized, we perform the following steps: (i) identify the contract with the customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when (or as) a performance obligation is satisfied. Our primary source of revenue consists of revenue from rental properties and tenant reimbursements that is derived from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of December 31, 2018.

We concluded that our revenue consists of rental income from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of December 31, 2018.

Minimum lease payments from operating leases are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on our consolidated balance sheets. We reserve for a portion of the recorded deferred rent receivable if circumstances indicate that a tenant will not make all of its contractual lease payments during the current lease term. We make estimates of the collectability of our accounts receivable related to revenue from rental properties. We analyze accounts receivable and historical bad debt levels, customer creditworthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Additionally, with respect to tenants in bankruptcy, we estimate the expected recovery through bankruptcy claims and increase the allowance for amounts deemed uncollectible. If our assumptions regarding the collectability of accounts receivable prove incorrect, we could experience write-offs of the accounts receivable or deferred rent receivable in excess of our allowance for doubtful accounts.

The present value of the difference between the fair market rent and the contractual rent for above-market and below-market leases at the time properties are acquired is amortized into revenues from rental properties over the remaining terms of the in-place leases. Lease termination fees are recognized as other income when earned upon the termination of a tenant’s lease and relinquishment of space in which we have no further obligation to the tenant.

The sales of nonfinancial assets, such as real estate, are to be recognized when control of the asset transfers to the buyer, which will occur when the buyer has the ability to direct the use of or obtain substantially all of the remaining benefits from the asset. This generally occurs when the transaction closes and consideration is exchanged for control of the property.

Assets are written down to fair value when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Assets held for disposal are written down to fair value less estimated disposition costs.

We recorded impairment charges aggregating $6,170,000, $9,321,000 and $12,814,000 for the years ended December 31, 2018, 2017 and 2016, respectively, in continuing and discontinued operations. Our estimated fair values, as they relate to property carrying values were primarily based upon (i) estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids, for which we do not have access to the unobservable inputs used to determine these estimated fair values, and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence (this method was used to determine $2,553,000 of the $6,170,000 in impairments recognized during the year ended December 31, 2018) and (ii) discounted cash flow models (this method was used to determine $175,000 of the $6,170,000 in impairments recognized during the year ended December 31, 2018). During the year ended December 31, 2018, we recorded $3,442,000 of the $6,170,000 in impairments recognized due to the accumulation of asset retirement costs as a result of changes in estimates associated with our estimated environmental liabilities which increased the carrying values of certain properties in excess of their fair values.

The estimated fair value of real estate is based on the price that would be received from the sale of the property in an orderly transaction between market participants at the measurement date. In general, we consider multiple internal valuation techniques when measuring the fair value of a property, all of which are based on unobservable inputs and assumptions that are classified within Level 3 of the Fair Value Hierarchy. These unobservable inputs include assumed holding periods ranging up to 15 years, assumed average rent increases of 2.0% annually, income capitalized at a rate of 8.0% and cash flows discounted at a rate of 7.0%. These assessments have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future rental rates and operating expenses that could differ materially from actual results in future periods. Where properties held for use have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the projected undiscounted cash flows should include the operating cash flows and the amount included as the estimated residual value. This requires significant judgment. In some cases, the results of whether impairment is indicated are sensitive to changes in assumptions input into the estimates, including the holding period until expected sale.

On August 3, 2015, we terminated our unitary triple-net lease with Hanuman Business, Inc. (d/b/a “Ramoco”) and sold to Ramoco affiliates 48 of the 61 properties that had been subject to the lease. The total consideration for the 48 properties we sold to Ramoco affiliates, including a seller financing mortgage of $13,900,000, was $15,000,000. In accordance with ASC 360-20, Property, Plant and Equipment - Real Estate Sales, we evaluated the accounting for the gain on sales of these assets, noting that the buyer’s initial investment did not represent the amount required for recognition of the gain by the full accrual method. Accordingly, we recorded a deferred gain of $3,900,000 related to the Ramoco sale. The deferred gain was recorded in accounts payable and accrued liabilities on our balance sheet at December 31, 2015. On April 28, 2016, Ramoco affiliates repaid the entire seller financing mortgage and, as a result, the deferred gain was recognized in our consolidated statements of operations for the year ended December 31, 2016.

All of our financial instruments are reflected in the accompanying consolidated balance sheets at amounts which, in our estimation based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values, except those separately disclosed in the notes below.

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates of fair value that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported using a hierarchy (the “Fair Value Hierarchy”) that prioritizes the inputs to valuation techniques used to measure the fair value. The Fair Value Hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The levels of the Fair Value Hierarchy are as follows: “Level 1” – inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date; “Level 2” – inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and “Level 3” – inputs that are unobservable. Certain types of assets and liabilities are recorded at fair value either on a recurring or non-recurring basis. Assets required or elected to be marked-to-market and reported at fair value every reporting period are valued on a recurring basis. Other assets not required to be recorded at fair value every period may be recorded at fair value if a specific provision or other impairment is recorded within the period to mark the carrying value of the asset to market as of the reporting date. Such assets are valued on a non-recurring basis.

We record the fair value of a liability for an environmental remediation obligation as an asset and liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. Environmental remediation obligations are estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability. The accrued liability is net of estimated recoveries from state UST remediation funds considering estimated recovery rates developed from prior experience with the funds. Net environmental liabilities are currently measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. We accrue for environmental liabilities that we believe are allocable to other potentially responsible parties if it becomes probable that the other parties will not pay their environmental remediation obligations.

Legal fees related to litigation are expensed as legal services are performed. We provide for litigation accruals, including certain litigation related to environmental matters, when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made. If the estimate of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for the liability. We accrue our share of environmental litigation liabilities based on our assumptions of the ultimate allocation method and share that will be used when determining our share of responsibility.

We and our subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, we elected to qualify, and believe that we are operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, we generally will not be subject to federal income tax on qualifying REIT income, provided that distributions to our stockholders equal at least the amount of our taxable income as defined under the Internal Revenue Code. We accrue for uncertain tax matters when appropriate. The accrual for uncertain tax positions is adjusted as circumstances change and as the uncertainties become more clearly defined, such as when audits are settled or exposures expire. Tax returns for the years 2015, 2016 and 2017, and tax returns which will be filed for the year ended 2018, remain open to examination by federal and state tax jurisdictions under the respective statutes of limitations.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets. Under ASU 2016-02 lessor accounting will remain similar to lessor accounting under previous GAAP, while aligning with the FASB’s new revenue recognition guidance. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard. In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give entities another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows entities to not apply the new leases standard in the comparative periods in their financial statements in the year of adoption. In December 2018, the FASB issued ASU 2018-20, which clarifies lessor treatment of sales taxes and other similar taxes collected from lessees, lessor costs paid directly by lessees and recognition of variable payments for contracts with lease and non-lease components. We elected the package of practical expedients and the lease and non-lease component practical expedient. We have elected to apply the transition requirements at the January 1, 2019, effective date

rather than at the beginning of the earliest comparative period presented and continue to evaluate the impact of the adoption on our consolidated financial statements. We expect to recognize operating lease liabilities and right of use assets of $22,000,000 to $32,000,000, which will be presented separately on our consolidated financial statements for the quarter ending March 31, 2019. The lease liability and right-of-use asset are to be carried at the present value of remaining expected future lease payments.

On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”) to amend the accounting for credit losses for certain financial instruments. Under the new guidance, an entity recognizes its estimate of expected credit losses as an allowance, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact the adoption of ASU 2016-13 will have on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to clarify the presentation of cash receipts and payments in specific situations. The amendments in this update were effective for financial statements issued for annual periods beginning after December 15, 2017, including interim periods within those annual periods. Effective January 1, 2018, we adopted ASU 2016-15. The adoption of this guidance did not have an impact on our consolidated financial statements or notes to our consolidated financial statements.

On February 22, 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”) to provide guidance for recognizing gains and losses from the transfer of nonfinancial assets and in substance nonfinancial assets in contracts with non-customers, unless other specific guidance applies. ASU 2017-05 requires a company to derecognize nonfinancial assets once it transfers control of a distinct nonfinancial asset or distinct in substance nonfinancial asset. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20 was eliminated. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. ASU 2017-05 was effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period. Effective January 1, 2018, we adopted ASU 2017-05 on a modified retrospective basis. Upon adoption, we apply the guidance to prospective disposals of nonfinancial assets within the scope of Subtopic 610-20. The adoption of this guidance did not have an impact on our consolidated financial statements or notes to our consolidated financial statements.

In August 2018, the Securities and Exchange Commission (“SEC”) adopted amendments to update and simplify disclosure requirements as well as eliminate outdated, superseded and/or redundant requirements with GAAP. The amendments are effective for all SEC filings made on or after November 5, 2018. The amendments removed certain SEC guidance that conflicted with GAAP guidance, under which we previously followed SEC guidance and recorded Gain/(loss) on dispositions of real estate, after Operating income. We have reclassified Gain/(loss) on dispositions of real estate within Operating income, per GAAP for all periods presented.

As of December 31, 2018, we owned 859 properties and leased 74 properties from third-party landlords. These 933 properties are located in 30 states across the United States and Washington, D.C. Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced. For additional information regarding environmental obligations, see Note 5 – Environmental Obligations.

Revenues from rental properties for the years ended December 31, 2018, 2017 and 2016, were $116,328,000, $101,332,000 and $96,711,000, respectively. Rental income contractually due from our tenants included in revenues from rental properties was $114,105,000, $99,355,000 and $93,294,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include non-cash adjustments recorded for deferred rental revenue

due to the recognition of rental income on a straight-line basis over the current lease term, the net amortization of above-market and below-market leases, rental income recorded under direct financing leases using the effective interest method which produces a constant periodic rate of return on the net investments in the leased properties and the amortization of deferred lease incentives (the “Revenue Recognition Adjustments”). Revenue Recognition Adjustments included in revenues from rental properties were $2,223,000, $1,976,000 and $3,417,000 for the years ended December 2018, 2017 and 2016, respectively. We reserve for a portion of the recorded deferred rent receivable if circumstances indicate that a tenant will not make all of its contractual lease payments during the current lease term. Our assessments and assumptions regarding the recoverability of the deferred rent receivable are reviewed on an ongoing basis and such assessments and assumptions are subject to change. There were no deferred rent receivable reserves at December 31, 2018 and 2017, respectively.

Tenant reimbursements, which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $16,691,000, $15,829,000 and $15,017,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

We incurred $579,000, $126,000 and $148,000 of lease origination costs for the years ended December 31, 2018, 2017 and 2016, respectively. This deferred expense is recognized on a straight-line basis as amortization expense in our consolidated statements of operations over the terms of the various leases.

The components of the $85,892,000 investment in direct financing leases as of December 31, 2018, are minimum lease payments receivable of $139,276,000 plus unguaranteed estimated residual value of $13,928,000 less unearned income of $67,312,000. The components of the $89,587,000 investment in direct financing leases as of December 31, 2017, are minimum lease payments receivable of $154,441,000 plus unguaranteed estimated residual value of $13,979,000 less unearned income of $78,833,000.

Future contractual minimum annual rentals receivable from our tenants, which have terms in excess of one year as of December 31, 2018, are as follows (in thousands):

We have obligations to lessors under non-cancelable operating leases which have terms in excess of one year, principally for convenience store and gasoline station properties. The leased properties have a remaining lease term averaging approximately nine years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows: 2019 – $6,016,000, 2020 – $5,284,000, 2021 – $4,371,000, 2022 – $2,766,000, 2023 – $2,021,000 and $2,754,000 thereafter.

Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to $4,660,000, $5,091,000 and $5,376,000 for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in property costs using the straight-line method. Rent received under subleases for the years ended December 31, 2018, 2017 and 2016, was $9,023,000, $9,296,000 and $9,153,000, respectively, and is included in rental revenue discussed above.

Getty Petroleum Marketing Inc. (“Marketing”) was our largest tenant from 1997 until 2012, leasing substantially all of our properties acquired or leased prior to 1997 under a master lease. Our master lease with Marketing was terminated in April 2012, as a consequence of Marketing’s bankruptcy, at which time we either sold or released these properties. As of December 31, 2018, 374 of the properties we own or lease were previously leased to Marketing, of which 331 properties are subject to long-term triple-net leases with petroleum distributors in 14 separate property portfolios and 30 properties are leased as single unit triple-net leases. The leases covering properties previously leased to Marketing are unitary triple-net lease agreements generally with an initial term of 15 years and options for successive renewal terms of up to 20 years. Rent is scheduled to increase at varying intervals during both the initial and renewal terms of our leases. Several of the leases provide for additional rent based on the aggregate volume of fuel sold. In addition, the majority of the leases require the tenants to invest capital in our properties, substantially all of which are related to the replacement of USTs that are owned by our tenants. As of December 31, 2018, we have a remaining commitment to fund up to $7,621,000 in the aggregate with our tenants for our portion of such capital improvements. Our commitment provides us with the option to either reimburse our tenants or to offset rent when these capital expenditures are made. This deferred expense is recognized on a straight-line basis as a reduction of rental revenue in our consolidated statements of operations over the life of the various leases.

As part of the triple-net leases for properties previously leased to Marketing, we transferred title of the USTs to our tenants, and the obligation to pay for the retirement and decommissioning or removal of USTs at the end of their useful lives, or earlier if circumstances warranted, was fully or partially transferred to our new tenants. We remain contingently liable for this obligation in the event that our tenants do not satisfy their responsibilities. Accordingly, through December 31, 2018, we removed $13,813,000 of asset retirement obligations and $10,808,000 of net asset retirement costs related to USTs from our balance sheet. The cumulative change of $1,754,000 (net of accumulated amortization of $1,251,000) is recorded as deferred rental revenue and will be recognized on a straight-line basis as additional revenues from rental properties over the terms of the various leases.

We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of December 31, 2018 and 2017, we had accrued $12,231,000 and $12,311,000, respectively, for certain of these matters which we believe were appropriate based on information then currently available. We have recorded credits aggregating $45,000 for the year ended December 31, 2018, and provisions aggregating $1,044,000, for environmental litigation accruals for the year ended December 31, 2017, for certain of these matters. We are unable to estimate ranges in excess of the amount accrued with any certainty for these matters. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation accruals. Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, our methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) litigations in the states of New Jersey, Pennsylvania and Maryland, and our lawsuit with the State of New York pertaining to a property formerly owned by us in Uniondale, New York, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. During the years ended December 31, 2018 and 2017, we received $147,000 and $6,381,000, respectively, for former legal litigation settlements.

Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River

In September 2003, we received a directive (the “Directive”) issued by the New Jersey Department of Environmental Protection (“NJDEP”) under the New Jersey Spill Compensation and Control Act. The Directive indicated that we are one of approximately 66 potentially responsible parties for alleged natural resource damages resulting from the discharges of hazardous substances along the Lower Passaic River (the “Lower Passaic River”). The Directive provides, among other things, that the named recipients must conduct an assessment of the natural resources that have been injured by discharges into the Lower Passaic River and must implement interim compensatory restoration for the injured natural resources. The NJDEP alleges that our liability arises from alleged discharges originating from our former Newark, New Jersey Terminal site (which was sold in October 2013). We responded to the Directive by asserting that we are not liable. There has been no material activity and/or communications by the NJDEP with respect to the Directive since early after its issuance.

stretch of the Lower Passaic River in New Jersey. The RI/FS is intended to address the investigation and evaluation of alternative remedial actions with respect to alleged damages to the Lower Passaic River. Most of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). The CPG agreed to an interim allocation formula for purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this agreed-upon allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the Lower Passaic River. The CPG submitted to the EPA its draft RI/FS in 2015. The draft RI/FS set forth various alternatives for remediating the entire 17-mile stretch of the Lower Passaic River, and provides that the cost estimate for the preferred remedial action presented therein is in the range of approximately $483,000,000 to $725,000,000. The EPA has provided comments to the draft RI/FS, which led to discussions between the CPG and the EPA regarding an alternative approach to completing the RI/FS, including various adaptive management scenarios focusing on source control interim remedies for the upper 9-miles of the Lower Passaic River. These discussions between the CPG and the EPA are ongoing.

In addition to the RI/FS activities, other actions relating to the investigation and/or remediation of the Lower Passaic River have proceeded as follows. First, in June 2012, certain members of the CPG entered into an Administrative Settlement Agreement and Order on Consent (“10.9 AOC”) effective June 18, 2012, to perform certain remediation activities, including removal and capping of sediments at the river mile 10.9 area and certain testing. The EPA also issued a Unilateral Order to Occidental Chemical Corporation (“Occidental”) directing Occidental to participate and contribute to the cost of the river mile 10.9 work. Concurrent with the CPG’s work on the RI/FS, on April 11, 2014, the EPA issued a draft Focused Feasibility Study (“FFS”) with proposed remedial alternatives to remediate the lower 8-miles of the 17-mile stretch of the Lower Passaic River. The FFS was subject to public comments and objections, and on March 4, 2016, the EPA issued its Record of Decision (“ROD”) for the lower 8-miles selecting a remedy that involves bank-to-bank dredging and installing an engineered cap with an estimated cost of $1,380,000,000. On March 31, 2016, we and more than 100 other potentially responsible parties received from the EPA a “Notice of Potential Liability and Commencement of Negotiations for Remedial Design” (“Notice”), which informed the recipients that the EPA intends to seek an Administrative Order on Consent and Settlement Agreement with Occidental for remedial design of the remedy selected in the ROD, after which the EPA plans to begin negotiations with “major” potentially responsible parties for implementation and/or payment of the selected remedy. The Notice also stated that the EPA believes that some of the potentially responsible parties and other parties not yet identified as potentially responsible parties will be eligible for a cash out settlement with the EPA. On October 5, 2016, the EPA announced that it had entered into a settlement agreement with Occidental which requires that Occidental perform the remedial design (which is expected to take four years to complete) for the remedy selected for the lower 8-miles of the Lower Passaic River.

On June 16, 2016, Maxus Energy Corporation and Tierra Solutions, Inc., who have contractual liability to Occidental for Occidental’s potential liability related to the Lower Passaic River, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In the Chapter 11 proceedings, YPF SA, Maxus and Tierra’s corporate parent, sought bankruptcy approval of a settlement under which YPF would pay $130,000,000 to the bankruptcy estate in exchange for a release in favor of Maxus, Tierra, YPF and YPF’s affiliates of Maxus and Tierra’s contractual environmental liability to Occidental. We and the CPG filed proofs of claims for costs incurred by the CPG relating to the Lower Passaic River.

On April 19, 2017, Maxus, Tierra and certain of its affiliates (collectively, the “Debtors”), together with the Official Committee of Unsecured Creditors, of which the CPG is a member, filed an Amended Chapter 11 Plan of Liquidation (the “Chapter 11 Plan”) in the Chapter 11 proceedings, which has been confirmed by order of the bankruptcy court, having an effective date of July 14, 2017 (the “Effective Date”). The Chapter 11 Plan provides for, among other things, the creation of a Liquidating Trust to liquidate and distribute from available assets certain allowed claims pursuant to the procedures set forth therein. Under the terms of the Chapter 11 Plan, the CPG’s proof of claim, which includes past costs incurred in the performance of the RI/FS and River Mile 10.9 work, is classified as an Allowed Class 4 Claim in the approximate amount of $14,300,000. To the extent that the CPG receives any distributions from the Liquidating Trust with respect to its Allowed Class 4 Claim, we would be entitled to seek reimbursement of our pro-rata share of said distribution for past costs we incurred with respect to performance of the RI/FS and River Mile 10.9 work. The Chapter 11 Plan also provides for a Mutual Contribution Release Agreement under which claims for contribution relating to liabilities associated with the Lower Passaic River and incurred prior to the Effective Date are mutually released by and among the parties identified therein. We are one of 59 parties (the “Released Parties”) that entered into the Mutual Contribution Release Agreement, pursuant to which (i) the Debtors release the Released Parties from any contribution claim they may have, (ii) Occidental releases the Released Parties for the amounts itemized in Occidental’s Class 4 Claim, and (iii) the Released Parties release the Debtors and Occidental for the amounts itemized in the CPG’s Class 4 Claim. The Mutual Contribution Release Agreement does not reduce or affect the CPG’s right to receive distributions from the Liquidating Trust on account of the CPG’s Class 4 Claim or our pro-rata share of any such distributions, nor does it affect our right to assert any future claims against Occidental for costs that we may incur related to the remediation of the Lower Passaic River after the Effective Date.

the ROD work, each for a payment to the EPA in the amount of $280,600. The EPA has also been engaged in discussions, in which we are participating, with the remaining recipients of the Notice regarding a proposed framework for an allocation process that will lead to offers of cash-out settlements to certain additional parties and a consent decree in which parties that are not offered a cash-out settlement will agree to perform the lower 8-mile remedial action. The EPA-commenced allocation process was scheduled to conclude by mid-2019, but is likely to be extended.

Many uncertainties remain regarding how the EPA intends to implement the ROD. We anticipate that performance of the EPA’s selected remedy will be subject to future negotiations, potential enforcement proceedings and/or possible litigation. The RI/FS, AOC, 10.9 AOC and Notice do not obligate us to fund or perform remedial action contemplated by either the ROD or RI/FS and do not resolve liability issues for remedial work or the restoration of or compensation for alleged natural resource damages to the Lower Passaic River, which are not known at this time. Our ultimate liability, if any, in the pending and possible future proceedings pertaining to the Lower Passaic River is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

We are defending against a lawsuit brought by various governmental agencies of the State of New Jersey, including the NJDEP alleging various theories of liability due to contamination of groundwater with MTBE involving multiple locations throughout the State of New Jersey (the “New Jersey MDL Proceedings”). The complaint names as defendants approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The State of New Jersey is seeking reimbursement of significant clean-up and remediation costs arising out of the alleged release of MTBE containing gasoline in the State of New Jersey and is asserting various natural resource damage claims as well as liability against the owners and operators of gasoline station properties from which the releases occurred. The majority of the named defendants have already settled their cases with the State of New Jersey. A portion of the case (“bellwether” trials) has been transferred to the United States District Court for the District of New Jersey for pre-trial proceedings and trial, although a trial date has not yet been set. We continue to engage in settlement negotiations and a dialogue with the plaintiffs’ counsel to educate them on the unique role of the Company and our business as compared to other defendants in the litigation. Although the ultimate outcome of the New Jersey MDL Proceedings cannot be ascertained at this time, we believe that it is probable that this litigation will be resolved in a manner that is unfavorable to us. We are unable to estimate the range of loss in excess of the amount accrued with certainty for the New Jersey MDL Proceedings as we do not believe that plaintiffs’ settlement proposal is realistic and there remains uncertainty as to the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from other parties and the aggregate possible amount of damages for which we may be held liable. It is possible that losses related to the New Jersey MDL Proceedings in excess of the amounts accrued as of December 31, 2018, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

The case was filed in the Court of Common Pleas, Philadelphia County, but was removed by defendants to the United States District Court for the Eastern District of Pennsylvania and then transferred to the United States District Court for the Southern District of New York so that it may be managed as part of the ongoing MTBE MDL proceedings. In November 2015, plaintiffs filed a second amended complaint naming additional defendants and adding factual allegations intended to bolster their claims against the defendants. We have joined with other defendants in the filing of a motion to dismiss the claims against us. This motion is pending with the Court. We intend to defend vigorously the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

The amounts outstanding under our Restated Credit Agreement, Third Restated Prudential Note Purchase Agreement and MetLife Note Purchase Agreement (as defined below) are as follows (in thousands):

On June 2, 2015, we entered into a $225,000,000 senior unsecured credit agreement (the “Credit Agreement”) with a group of banks led by Bank of America, N.A. (the “Bank Syndicate”). The Credit Agreement consisted of a $175,000,000 unsecured revolving credit facility (the “Revolving Facility”) and a $50,000,000 unsecured term loan (the “Term Loan”).

On March 23, 2018, we entered into an amended and restated credit agreement (as amended, as described below, the “Restated Credit Agreement”) amending and restating our Credit Agreement. Pursuant to the Restated Credit Agreement, we (a) increased the borrowing capacity under the Revolving Facility from $175,000,000 to $250,000,000, (b) extended the maturity date of the Revolving Facility from June 2018 to March 2022, (c) extended the maturity date of the Term Loan from June 2020 to March 2023 and (d) amended certain financial covenants and provisions.

Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to (a) extend the term of the Revolving Facility for one additional year to March 2023 and (b) request that the lenders approve an increase of up to $300,000,000 in the amount of the Revolving Facility and/or the Term Loan to $600,000,000 in the aggregate.

On September 19, 2018, we entered into an amendment (the “Amendment”) of our Restated Credit Agreement. The Amendment modifies the Restated Credit Agreement to, among other things: (i) reflect that we had previously entered into (a) an amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America (“Prudential”) and certain of its affiliates and (b) a note purchase and guarantee agreement with the Metropolitan Life Insurance Company (“MetLife”) and certain of its affiliates; and (ii) permit borrowings under each of the Revolving Facility and the Term Loan at three different interest rates, including a rate based on the LIBOR Daily Floating Rate (as defined in the Amendment) plus the Applicable Rate (as defined in the Amendment) for such facility.

On June 21, 2018, we entered into a third amended and restated note purchase and guarantee agreement (the “Third Restated Prudential Note Purchase Agreement”) amending and restating our existing senior note purchase agreement with Prudential and certain of its affiliates. Pursuant to the Third Restated Prudential Note Purchase Agreement, we agreed that our (a) 6.0% Series A Guaranteed Senior Notes due February 25, 2021, in the original aggregate principal amount of $100,000,000 (the “Series A Notes”), (b) 5.35% Series B Guaranteed Senior Notes due June 2, 2023, in the original aggregate principal amount of $75,000,000 (the “Series B Notes”) and (c) 4.75% Series C Guaranteed Senior Notes due February 25, 2025, in the aggregate principal amount of $50,000,000 (the “Series C Notes”) that were outstanding under the existing senior note purchase agreement would continue to remain outstanding under the Third Restated Prudential Note Purchase Agreement and we authorized and issued our 5.47% Series D Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50,000,000 (the “Series D Notes” and, together with the Series A Notes, Series B Notes and Series C Notes, the “Notes”). The Third Restated Prudential Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Notes prior to their respective maturities.

On June 21, 2018, we entered into a note purchase and guarantee agreement (the “MetLife Note Purchase Agreement”) with MetLife and certain of its affiliates. Pursuant to the MetLife Note Purchase Agreement, we authorized and issued our 5.47% Series E Guaranteed Senior Notes due June 21, 2028, in the aggregate principal amount of $50,000,000 (the “Series E Notes”). The MetLife Note Purchase Agreement does not provide for scheduled reductions in the principal balance of the Series E Notes prior to its maturity.

The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement contain customary financial covenants such as leverage, coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends. The Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement require a mandatory offer to prepay the notes upon a change in control in lieu of a change of control event of default). Any event of default, if not cured or waived in a timely manner, would increase by 200 basis points (2.00%) the interest rate we pay under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement, and could result in the acceleration of our indebtedness under the Restated Credit Agreement, the Third Restated Prudential Note Purchase Agreement and the MetLife Note Purchase Agreement. We may be prohibited from drawing funds under the Revolving Facility if there is any event or condition that constitutes an event of default under the Restated Credit Agreement or that, with the giving of any notice, the passage of time, or both, would be an event of default under the Restated Credit Agreement.

As of December 31, 2018, scheduled debt maturities, including balloon payments, are as follows (in thousands):

In July 2012, we purchased a 10-year pollution legal liability insurance policy covering substantially all of our properties at that time for preexisting unknown environmental liabilities and new environmental events. The policy has a $50,000,000 aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our intention in purchasing this policy was to obtain protection predominantly for significant events. No assurances can be given that we will obtain a net financial benefit from this investment. In addition to the environmental insurance policy purchased by the Company, we also took assignment of certain environmental insurance policies, and rights to reimbursement for claims made thereunder, from Marketing, by order of the U.S. Bankruptcy Court during Marketing’s bankruptcy proceedings. Under these assigned polices, we have received and expect to continue to receive reimbursement of certain remediation expenses for covered claims.

prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases). After expiration of such 10-year (or, in certain cases, shorter) period, responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of the lease, is contractually allocated to our tenant. Our tenants at properties previously leased to Marketing are in all cases responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties. Under substantially all of our other triple-net leases, responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant.

We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation (using a range of 2.0% to 2.75%), and then discount them to present value (using a range of 4.0% to 7.0%). We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2018, we had accrued a total of $59,821,000 for our prospective environmental remediation obligations. This accrual consisted of (a) $14,477,000, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45,344,000 for future environmental liabilities related to preexisting unknown contamination. As of December 31, 2017, we had accrued a total of $63,565,000 for our prospective environmental remediation obligations. This accrual consisted of (a) $18,537,000, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $45,028,000 for future environmental liabilities related to preexisting unknown contamination.

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $2,409,000, $3,448,000 and $4,107,000 of net accretion expense was recorded for the years ended December 31, 2018, 2017 and 2016, respectively, which is included in environmental expenses. In addition, during the years ended December 31, 2018, 2017 and 2016, we recorded credits to environmental expenses, included in continuing and discontinued operations, aggregating $1,319,000, $6,854,000 and $7,007,000, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.

During the years ended December 31, 2018 and 2017, we increased the carrying values of certain of our properties by $5,111,000 and $5,477,000, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on the face of the consolidated statements of cash flows.

Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is related to environmental remediation obligations or such shorter period if circumstances warrant, such as the remaining lease term for properties we lease from others. Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, were $4,255,000, $4,347,000 and $5,126,000, respectively. Capitalized asset retirement costs were $45,659,000 (consisting of $20,348,000 of known environmental liabilities and $25,311,000 of reserves for future environmental liabilities) as of December 31, 2018, and $45,380,000 (consisting of $18,692,000 of known environmental liabilities and $26,688,000 of reserves for future environmental liabilities) as of

December 31, 2017, respectively. We recorded impairment charges aggregating $3,850,000 and $6,932,000 for the years ended December 31, 2018 and 2017, respectively, in continuing and discontinued operations for capitalized asset retirement costs.

Net cash paid (refunded) for income taxes for the years ended December 31, 2018, 2017 and 2016, of $244,000, $(195,000) and $368,000, respectively, includes amounts related to state and local income taxes for jurisdictions that do not follow the federal tax rules, which are provided for in property costs in our consolidated statements of operations.

Earnings and profits (as defined in the Internal Revenue Code) are used to determine the tax attributes of dividends paid to stockholders and will differ from income reported for consolidated financial statements purposes due to the effect of items which are reported for income tax purposes in years different from that in which they are recorded for consolidated financial statements purposes. The federal tax attributes of the common dividends for the years ended December 31, 2018, 2017 and 2016, were: ordinary income of 89.2%, 100.0% and 61.6%, capital gain distributions of 10.8%, 0.0% and 34.4% and non-taxable distributions of 0.0%, 0.0% and 4.0%, respectively.

To qualify for taxation as a REIT, we, among other requirements such as those related to the composition of our assets and gross income, must distribute annually to our stockholders at least 90% of our taxable income, including taxable income that is accrued by us without a corresponding receipt of cash. We cannot provide any assurance that our cash flows will permit us to continue paying cash dividends. Should the Internal Revenue Service successfully assert that our earnings and profits were greater than the amount distributed, we may fail to qualify as a REIT; however, we may avoid losing our REIT status by paying a deficiency dividend to eliminate any remaining earnings and profits. We may have to borrow money or sell assets to pay such a deficiency dividend. Although tax returns for the years 2015, 2016 and 2017, and tax returns which will be filed for the year ended 2018, remain open to examination by federal and state tax jurisdictions under the respective statute of limitations, we have not currently identified any uncertain tax positions related to those years and, accordingly, have not accrued for uncertain tax positions as of December 31, 2018 or 2017. However, uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period.

A summary of the changes in stockholders’ equity for the years ended December 31, 2018, 2017 and 2016, is as follows (in thousands except per share amounts):

	Common Stock				Additional Paid-in		Dividends Paid in Excess
	Shares		Amount		Capital		of Earnings			Total
BALANCE, DECEMBER 31, 2015		33,422	$	334	$	464,338	$	(58,111	)	$	406,561
Net earnings								38,411			38,411
Dividends declared — $1.03 per share								(35,385	)		(35,385	)
Shares issued pursuant to ATM Program, net	653		7			14,879					14,886
Shares issued pursuant to stock dividends	256		3			4,409					4,412
Shares issued pursuant to dividend reinvestment	43			—	897						897
Stock-based compensation and settlements		19		—		1,136		—			1,136
BALANCE, DECEMBER 31, 2016		34,393	$	344	$	485,659	$	(55,085	)	$	430,918
Net earnings								47,186			47,186
Dividends declared — $1.16 per share								(43,675	)		(43,675	)
Shares issued pursuant to Equity Offering, net		4,715	47			104,265		—			104,312
Shares issued pursuant to ATM Program, net	513		5			13,523		—			13,528
Shares issued pursuant to dividend reinvestment	48			1		1,270		—			1,271
Stock-based compensation and settlements		27		—		155		—			155
BALANCE, DECEMBER 31, 2017		39,696	$	397	$	604,872	$	(51,574	)	$	553,695
Net earnings								47,706			47,706
Dividends declared — $1.31 per share								(53,555	)		(53,555	)
Shares issued pursuant to ATM Program, net		1,106		11		30,127		—			30,138
Shares issued pursuant to dividend reinvestment		52		1		1,402		—			1,403
Stock-based compensation and settlements		1		—		1,777		—			1,777
BALANCE, DECEMBER 31, 2018		40,855	$	409	$	638,178	$	(57,423	)	$	581,164

On March 1, 2018, and October 23, 2018, our Board of Directors granted 121,650 and 3,000 of restricted stock units (“RSU” or “RSUs”), respectively, under our Amended and Restated 2004 Omnibus Incentive Compensation Plan. On March 1, 2017, our Board of Directors granted 94,250 of restricted stock units under our Amended and Restated 2004 Omnibus Incentive Compensation Plan.

On October 24, 2017, our Board of Directors approved Articles Supplementary to our Articles of Incorporation, as amended, to reclassify 10,000,000 authorized shares of preferred stock, par value $.01 per share, into the same number of authorized but unissued shares of common stock, par value $.01 per share, subject to further classification or reclassification and issuance by our Board of Directors. The Articles Supplementary were filed with the Maryland State Department of Assessments and Taxation on October 25, 2017, and became effective on that date.

On May 8, 2018, our stockholders approved an amendment to our Articles of Incorporation to increase the aggregate number of shares of stock of all classes which we have the authority to issue from 70,000,000 shares to 120,000,000 shares, by increasing (i) the aggregate number of shares of common stock which we have the authority to issue from 60,000,000 to 100,000,000 shares, and (ii) the aggregate number of shares of preferred stock which we have the authority to issue from 10,000,000 to 20,000,000 shares.

On July 10, 2017, we entered into an underwriting agreement (the “Underwriting Agreement”) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and KeyBanc Capital Markets Inc., as representatives of the several underwriters (the “Underwriters”), pursuant to which we sold to the Underwriters 4,100,000 shares of common stock (the “Equity Offering”). Pursuant to the terms of the Underwriting Agreement, we granted the Underwriters a 30-day option to purchase up to an additional 615,000 shares of common stock. We received net proceeds from the Equity Offering, including the full exercise by the Underwriters of their option to purchase additional shares, of $104,312,000 after deducting the underwriting discount and offering expenses. The net proceeds of the Equity Offering were used to repay amounts outstanding under our Revolving Facility and subsequently were used to fund the Empire and Applegreen transactions.

In June 2016, we established an at-the-market equity offering program (the “2016 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $125,000,000 through a consortium of banks acting as agents. The 2016 ATM Program was terminated in January 2018.

In March 2018, we established a new at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $125,000,000 through a consortium of banks acting as agents. Sales of the shares of common stock may be made, as needed, from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent.

During the years ended December 31, 2018 and 2017, we issued 1,106,000 and 513,000 shares of common stock, respectively, and received net proceeds of $30,138,000 and $13,528,000, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

For the year ended December 31, 2018, we paid dividends of $50,503,000 or $1.28 per share. For the year ended December 31, 2017, we paid dividends of $39,299,000 or $1.12 per share.

Our dividend reinvestment plan provides our common stockholders with a convenient and economical method of acquiring additional shares of common stock by reinvesting all or a portion of their dividend distributions. During the years ended December 31, 2018 and 2017, we issued 51,920 and 47,922 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $1,403,000 and $1,271,000, respectively.

Compensation cost for our stock-based compensation plans using the fair value method was $1,777,000, $1,350,000 and $1,426,000 for the years ended December 31, 2018, 2017 and 2016, respectively, and is included in general and administrative expense in our consolidated statements of operations.

The Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the “2004 Plan”) provided for the grant of restricted stock, restricted stock units (“RSUs”), performance awards, dividend equivalents, stock payments and stock awards to all employees and members of the Board of Directors. In May 2014, an Amended and Restated 2004 Omnibus Incentive Compensation Plan (the “Restated Plan”) was approved at our annual meeting of stockholders. The Restated Plan maintained the 2004 Plan’s authorization to grant awards with respect to an aggregate of 1,000,000 shares of common stock, extended the term to May 2019 and increased the aggregate maximum number of shares of common stock that may be subject to awards granted during any calendar year to 100,000. In May 2017, the Second Amended and Restated 2004 Omnibus Incentive Compensation Plan (the “Second Restated Plan”) was approved at our annual meeting of stockholders, in order to, among other things, (i) increase by 500,000 to a total of 1,500,000 the aggregate number of shares that the Company may issue under awards granted pursuant to the Second Restated Plan; (ii) increase from 100,000 to 200,000 the maximum number of shares that may be subject to awards made in a calendar year to all participants under the Second Restated Plan; and (iii) extended the term of the Second Restated Plan to May 2022. RSUs awarded under the Second Restated Plan vest on a cumulative basis ratably over a five-year period with the first 20% vesting occurring on the first anniversary of the date of the grant.

In April 2012, the Compensation Committee of the Board of Directors adopted, for 2012 only, a performance-based incentive compensation feature to our compensation program for named executive officers (“NEOs”) and other executives. Under the 2012 performance-based incentive compensation program, the RSUs that were granted, were granted on terms substantially consistent with the 2004 Plan, except for the relative vesting schedules. RSUs granted under the 2012 performance-based incentive compensation program vest on a cumulative basis, with the first 20% vesting occurring on May 1, 2013, and an additional 20% vesting on each May 1 thereafter, through May 1, 2017. In February 2013, the Compensation Committee granted a total of 35,000 RSUs to NEOs and other executives under the 2012 performance-based incentive compensation program. All such RSU grants include related dividend equivalents.

We awarded to employees and directors 124,650, 94,250 and 86,600 RSUs and dividend equivalents in 2018, 2017 and 2016, respectively. RSUs granted before 2009 provide for settlement upon termination of employment with the Company or termination of service from the Board of Directors. RSUs granted in 2009 and thereafter provide for settlement upon the earlier of 10 years after grant or termination of employment with the Company. On the settlement date each vested RSU will have a value equal to one share of

common stock and may be settled, at the sole discretion of the Compensation Committee, in cash or by the issuance of one share of common stock. The RSUs do not provide voting or other stockholder rights unless and until the RSU is settled for a share of common stock. The RSUs vest starting one year from the date of grant, on a cumulative basis at the annual rate of 20% of the total number of RSUs covered by the award. The dividend equivalents represent the value of the dividends paid per common share multiplied by the number of RSUs covered by the award. For the years ended December 31, 2018, 2017 and 2016, dividend equivalents aggregating approximately $749,000, $542,000 and $445,000, respectively, were charged against retained earnings when common stock dividends were declared.

The fair values of the RSUs were determined based on the closing market price of our stock on the date of grant. The fair value of the grants is recognized as compensation expense ratably over the five-year vesting period of the RSUs. Compensation expense related to RSUs for the years ended December 31, 2018, 2017 and 2016, was $1,752,000, $1,328,000 and $1,418,000, respectively, and is included in general and administrative expense in our consolidated statements of operations. As of December 31, 2018, there was $5,121,000 of unrecognized compensation cost related to RSUs granted under the 2004 Plan, which cost is expected to be recognized over a weighted average period of approximately three years. The aggregate intrinsic value of the 573,575 outstanding RSUs and the 289,020 vested RSUs as of December 31, 2018, was $16,869,000 and $8,500,000, respectively.

The following is a schedule of the vesting activity relating to RSUs outstanding:

We have a retirement and profit sharing plan with deferred 401(k) savings plan provisions (the “Retirement Plan”) for employees meeting certain service requirements and a supplemental plan for executives (the “Supplemental Plan”). Under the terms of these plans, the annual discretionary contributions to the plans are determined by the Compensation Committee of the Board of Directors.

Also, under the Retirement Plan, employees may make voluntary contributions and we have elected to match an amount equal to fifty percent of such contributions but in no event more than three percent of the employee’s eligible compensation. Under the Supplemental Plan, a participating executive may receive an amount equal to 10 percent of eligible compensation, reduced by the amount of any contributions allocated to such executive under the Retirement Plan. Contributions, net of forfeitures, under the retirement plans approximated $295,000, $282,000 and $268,000 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in general and administrative expense in our consolidated statements of operations. During the year ended December 31,

2017 and 2016, we distributed $278,000 and $469,000, respectively from the Supplemental Plan to former officers of the Company. There were no distributions from the Supplemental Plan for the year ended December 31, 2018.

Basic and diluted earnings per common share gives effect, utilizing the two-class method, to the potential dilution from the issuance of shares of our common stock in settlement of RSUs which provide for non-forfeitable dividend equivalents equal to the dividends declared per common share. Basic and diluted earnings per common share is computed by dividing net earnings less dividend equivalents attributable to RSUs by the weighted average number of common shares outstanding during the year.

Diluted earnings per common share, also gives effect to the potential dilution from the exercise of stock options utilizing the treasury stock method. There were no options outstanding as of December 31, 2018 and 2017. There were 5,000 stock options excluded from the earnings per share calculations below as they were anti-dilutive as of December 31, 2016.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (in thousands except per share data):

As of December 31, 2018 and 2017, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value. As of December 31, 2018 and 2017, the fair value of the borrowings under senior unsecured notes was $335,600,000 and $233,500,000, respectively. The fair value of the borrowings outstanding as of December 31, 2018 and 2017, was determined using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, risk profile and borrowings outstanding, which are based on unobservable inputs within Level 3 of the Fair Value Hierarchy.

We have mutual fund assets that are measured at fair value on a recurring basis using Level 1 inputs. We have a Supplemental Retirement Plan for executives. The amounts held in trust under the Supplemental Retirement Plan using Level 2 inputs may be used to satisfy claims of general creditors in the event of our or any of our subsidiaries’ bankruptcy. We have liability to the executives participating in the Supplemental Retirement Plan for the participant account balances equal to the aggregate of the amount invested at the executives’ direction and the income earned in such mutual funds.

The following summarizes as of December 31, 2018, our assets and liabilities measured at fair value on a recurring basis by level within the Fair Value Hierarchy (in thousands):

The following summarizes as of December 31, 2017, our assets and liabilities measured at fair value on a recurring basis by level within the Fair Value Hierarchy (in thousands):

We have certain real estate assets that are measured at fair value on a non-recurring basis using Level 3 inputs as of December 31, 2018 and 2017, of $3,096,000 and $2,785,000, respectively, where impairment charges have been recorded. Due to the subjectivity inherent in the internal valuation techniques used in estimating fair value, the amounts realized from the sale of such assets may vary significantly from these estimates.

During the year ended December 31, 2018, we sold nine properties, in separate transactions that did not meet the criteria to be classified as discontinued operations, which resulted in an aggregate gain of $3,888,000, included in gain on dispositions of real estate, on our consolidated statements of operations. We also received funds from property condemnations resulting in a gain of $60,000, included in gain on dispositions of real estate, on our consolidated statements of operations.

During the year ended December 31, 2017, we sold 12 properties and a portion of one property, in separate transactions that did not meet the criteria to be classified as discontinued operations, which resulted in an aggregate gain of $1,025,000, included in gain on dispositions of real estate, on our consolidated statements of operations. We also received funds from property condemnations resulting in a gain of $16,000, included in gain on dispositions of real estate, on our consolidated statements of operations.

As of December 31, 2018 and 2017, there were no properties that met criteria to be classified as held for sale.

The following is a summary of the quarterly results of operations for the years ended December 31, 2018 and 2017 (unaudited as to quarterly information) (in thousands, except per share amounts):

On April 17, 2018, we acquired fee simple interests in 30 convenience store and gasoline station properties for $52,592,000 and entered into a unitary lease with GPM Investments, LLC (“GPM”) at the closing of the transaction. We funded the GPM transaction through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires GPM to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are located primarily within metropolitan markets in the states of Arkansas, Louisiana, Oklahoma and Texas. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $31,633,000 of the purchase price to land, $17,489,000 to buildings and improvements, $4,047,000 to in-place leases, and $577,000 to below-market leases, which is accounted for as a deferred liability.

On August 1, 2018, we acquired fee simple interests in six convenience store and gasoline station properties for $17,412,000 and entered into a unitary lease with a U.S. subsidiary of Applegreen PLC (“Applegreen”) at the closing of the transaction. We funded the Applegreen transaction through funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Applegreen to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are all located within the metropolitan market of Columbia, SC. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $8,930,000 of the purchase price to land, $6,773,000 to buildings and improvements, $1,371,000 to in-place leases, $773,000 to above-market leases and $435,000 to below-market leases, which is accounted for as a deferred liability.

In addition, during the year ended December 31, 2018, we also acquired fee simple interests in five convenience store and gasoline station, and other automotive related properties, in separate transactions, for an aggregate purchase price of $7,968,000. We accounted for these acquisitions as asset acquisitions. We estimated the fair value of acquired tangible assets for each of these acquisitions (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $4,929,000 of the purchase price to land, $2,753,000 to buildings and improvements and $286,000 to in-place leases.

On September 6, 2017, we acquired fee simple interests in 49 convenience store and gasoline station properties for $123,126,000 and entered into a unitary lease with Empire Petroleum Partners, LLC (“Empire”) at the closing of the transaction. We funded the Empire transaction through a combination of funds from our Equity Offering and funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Empire to pay a fixed annual rent plus all amounts pertaining to the properties including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase annually during the initial and renewal terms of the lease. The properties are located primarily within metropolitan markets in the states of Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Texas. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $75,674,000 of the purchase price to land, $38,205,000 to buildings and improvements, $189,000 to above-market leases and $9,058,000 to in-place leases.

On October 3, 2017, we acquired fee simple interests in 33 convenience store and gasoline station properties and five stand-alone Burger King quick service restaurants for $68,710,000 and entered into a unitary lease with a U.S. subsidiary of Applegreen at the closing of the transaction. We funded the Applegreen transaction through a combination of funds from our Equity Offering and funds available under our Revolving Facility. The unitary lease provides for an initial term of 15 years, with four five-year renewal options. The unitary lease requires Applegreen to pay a fixed annual rent plus all amounts pertaining to the properties including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges. Rent is scheduled to increase on the fifth anniversary of the commencement of the lease and annually thereafter. The properties are all located within the metropolitan market of Columbia, SC. We accounted for the acquisition of the properties as an asset acquisition. We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $36,874,000 of the purchase price to land, $27,431,000 to buildings and improvements, $961,000 to above-market leases, $1,104,000 to below-market leases, which is accounted for as a deferred liability, and $4,548,000 to in-place leases.

In addition, during the year ended December 31, 2017, we acquired fee simple interests in 16 convenience store and gasoline station, and other automotive related properties, in separate transactions, for an aggregate purchase price of $22,164,000. We accounted for these acquisitions as asset acquisitions. We estimated the fair value of acquired tangible assets for each of these acquisitions (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $5,800,000 of the purchase price to land, $14,424,000 to buildings and improvements, $1,028,000 to below-market leases, which is accounted for as a deferred liability, and $2,969,000 to in-place leases.

We evaluated each of the acquisitions and determined that substantially all the fair value related to each acquisition is concentrated in a similar identifiable operating property. Accordingly, these transactions did not meet the definition of a business and consequently were accounted for as asset acquisitions. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets acquired on a relative fair value basis.

Acquired above-market (when we are a lessor) and below-market leases (when we are a lessee) are included in prepaid expenses and other assets and had a balance of $3,500,000 and $3,189,000 (net of accumulated amortization of $5,160,000 and $4,698,000, respectively) at December 31, 2018 and 2017, respectively. Acquired above-market (when we are lessee) and below-market (when we are lessor) leases are included in accounts payable and accrued liabilities and had a balance of $21,514,000 and $22,714,000 (net of accumulated amortization of $17,790,000 and $15,578,000, respectively) at December 31, 2018 and 2017, respectively. When we are a lessor, above-market and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental revenue over the remaining term of the associated lease in place at the time of purchase. When we are a lessee, above-market and below-market leases are amortized and recorded as either an increase (in the case of below-market leases) or a decrease (in the case of above-market leases) to rental expense over the remaining term of the associated lease in place at the time of purchase. Rental income included amortization from acquired leases of $2,067,000, $1,791,000 and $1,833,000 for the years ended December 31, 2018, 2017 and 2016, respectively. Rent expense included amortization from acquired leases of $317,000, $320,000 and $333,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

In-place leases are included in prepaid expenses and other assets and had a balance of $38,542,000 and $35,704,000 (net of accumulated amortization of $9,908,000 and $7,043,000, respectively) at December 31, 2018 and 2017, respectively. The value associated with in-place leases and lease origination costs are amortized into depreciation and amortization expense over the remaining life of the lease. Depreciation and amortization expense included amortization from in-place leases of $2,866,000, $1,855,000 and $1,395,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

The amortization for acquired intangible assets during the next five years and thereafter, assuming no early lease terminations, is as follows:

In preparing our consolidated financial statements, we have evaluated events and transactions occurring after December 31, 2018, for recognition or disclosure purposes. Based on this evaluation there were no significant subsequent events from December 31, 2018, through the date the financial statements were issued.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the consolidated financial statements, including the related notes, as listed in the accompanying index, and the financial statement schedules listed in the index appearing under Item 15(a)(2), of Getty Realty Corp. and its subsidiaries (the “Company”) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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.

We have served as the Company’s auditor since at least 1975. We have not been able to determine the specific year we began serving as auditor of the Company.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or furnished pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 13d-15(b) of the Exchange Act, we have carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of December 31, 2018, at the reasonable assurance level.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in Internal Control – Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2018.

The effectiveness of our internal control over financial reporting as of December 31, 2018, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in “Item 8. Financial Statements and Supplementary Data”.

On February 26, 2019, our Board of Directors amended Article II, Section 2 of our Bylaws to provide that annual meetings of our stockholders shall be held on such date and at such time annually as shall be set by the Board of Directors. The foregoing description of the amendment to our Bylaws is only a summary and is qualified in its entirety by reference to the full text of the amendment, a copy of which is attached hereto as Exhibit 3.7.

Information with respect to compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to information under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement. Information with respect to directors, the audit committee and the audit committee financial expert, and procedures by which stockholders may recommend nominees to the board of directors in response to this item is incorporated herein by reference to information under the headings “Election of Directors” and “Directors’ Meetings, Committees and Executive Officers” in the Proxy Statement. The following table lists our executive officers, their respective ages and the offices and positions held.

Mr. Constant has served as President, Chief Executive Officer and Director since January 2016. Mr. Constant joined the Company in November 2010 as Director of Planning and Corporate Development and was later promoted to Treasurer in May 2012, Vice President in May 2013 and Chief Financial Officer in December 2013. Prior to joining the Company, Mr. Constant was a Vice President in the corporate finance department at Morgan Joseph & Co. Inc. and began his career in the corporate finance department at ING Barings.

Mr. Olear has served as Executive Vice President since May 2014 and Chief Operating Officer since May 2015 (Chief Investment Officer since May 2014). Prior to joining the Company, Mr. Olear held various positions in real estate with TD Bank, Home Depot, Toys “R” Us and A&P.

Mr. Dicker has served as Executive Vice President, General Counsel and Secretary since May 2017. He was Senior Vice President, General Counsel and Secretary since 2012. He was Vice President, General Counsel and Secretary since February 2009. Prior to joining the Company in 2008, he was a partner at the law firm Arent Fox, LLP, resident in its New York City office, specializing in corporate and transactional matters.

Mr. Fielding joined the Company in February 2016 as Vice President, Chief Financial Officer and Treasurer. Prior to joining the Company, Mr. Fielding held various positions in real estate and investment banking with Wilbraham Capital, Moinian Group, Nationwide Health Properties, J.P. Morgan, PricewaterhouseCoopers and Daiwa Securities.

There are no family relationships between any of the Company’s directors or executive officers.

The Getty Realty Corp. Business Conduct Guidelines (“Code of Ethics”), which applies to all employees, including our Chief Executive Officer and Chief Financial Officer, is available on our website at www.gettyrealty.com.

Information in response to this item is incorporated herein by reference to information under the heading “Executive Compensation” in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information in response to this item is incorporated herein by reference to information under the heading “Beneficial Ownership of Capital Stock” and “Executive Compensation – Compensation Discussion and Analysis – Equity Compensation – Equity Compensation Plan Information” in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

There were no such relationships or transactions to report for the year ended December 31, 2018.

Information with respect to director independence is incorporated herein by reference to information under the heading “Directors’ Meetings, Committees and Executive Officers – Independence of Directors” in the Proxy Statement.

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.

Information in response to this Item is included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

The following Financial Statement Schedules are included beginning on page 75 of this Annual Report on Form 10-K.

Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 93 of this Annual Report on Form 10-K.

The summarized changes in real estate assets and accumulated depreciation are as follows:

					Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Bluff, AR	$	2,985	$	-	$	2,166	$	819	$	2,985	$	30	2018
Brookland, AR		1,468		-		149		1,319		1,468	615		2007
Fayetteville, AR		2,266		-		1,637		629		2,266	23		2018
Fayetteville, AR		2,867		-		1,971		896		2,867	33		2018
Hope, AR		1,472		-		999		473		1,472	18		2018
Jonesboro, AR		868		-		173		695		868	338		2007
Jonesboro, AR		2,985		-		330		2,655		2,985	1285		2007
Little Rock, AR		978		-		535		443		978	19		2018
Rogers, AR		927		-		533		394		927	17		2018
Texarkana, AR		1,592		-		1,058		534		1,592	21		2018
Cochise, AZ		1,765		-		269		1,496		1,765	133		2017
Cochise, AZ		4,440		-		1,849		2,591		4,440	182		2017
Maricopa, AZ		1,331		-		992		339		1,331	30		2017
Maricopa, AZ		1,448		-		983		465		1,448	40		2017
Maricopa, AZ		1,503		-		839		664		1,503	55		2017
Maricopa, AZ		1,602		-		796		806		1,602	68		2017
Maricopa, AZ		1,722		-		1,178		544		1,722	45		2017
Maricopa, AZ		1,838		-		1,261		577		1,838	50		2017
Maricopa, AZ		2,177		-		1,532		645		2,177	53		2017
Maricopa, AZ		2,185		-		1,612		573		2,185	48		2017
Maricopa, AZ		2,415		-		433		1,982		2,415	140		2017
Maricopa, AZ		2,868		-		1,255		1,613		2,868	128		2017
Maricopa, AZ		3,112		-		1,593		1,519		3,112	118		2017
Maricopa, AZ		3,169		-		2,005		1,164		3,169	87		2017
Maricopa, AZ		3,204		-		1,839		1,365		3,204	106		2017
Maricopa, AZ		3,928		-		2,334		1,594		3,928	116		2017
Phoenix, AZ		1,943		-		1,311		632		1,943	18		2018
Pima, AZ		1,261		-		664		597		1,261	49		2017
Pima, AZ		1,301		-		557		744		1,301	60		2017
Pima, AZ		1,303		-		590		713		1,303	58		2017
Pima, AZ		2,085		-		1,487		598		2,085	52		2017
Pima, AZ		3,652		-		2,924		728		3,652	59		2017
Pinal, AZ		4,022		-		2,549		1,473		4,022	119		2017
Bellflower, CA		1,369		-		910		459		1,369	271		2007
Benicia, CA		2,224		-		1,058		1,166		2,224	714		2007
Chula Vista, CA		2,385		-		889		1,496		2,385	299		2014
Coachella, CA		2,235		-		1,217		1,018		2,235	589		2007
Cotati, CA		6,072		-		4,008		2,064		6,072	407		2015
Fillmore, CA		1,354		-		950		404		1,354	238		2007
Grass Valley, CA		1,485		-		853		632		1,485	128		2015
Hesperia, CA		1,643		-		849		794		1,643	440		2007
Hesperia, CA		2,055		-		492		1,563		2,055	375		2015
Indio, CA		1,250		-		302		948		1,250	201		2015
Indio, CA		2,727		-		1,486		1,241		2,727	276		2015
La Palma, CA		1,971		-		1,389		582		1,971	339		2007
La Puenta, CA		7,615		-		6,405		1,210		7,615	282		2015
Lakeside, CA		3,715		-		2,695		1,020		3,715	226		2015
Los Angeles, CA		6,612		-		5,006		1,606		6,612		371	2015

					Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Oakland, CA		5,434		-		4,123		1,311		5,434		298	2015
Ontario, CA		6,613		-		4,523		2,090		6,613		483	2015
Phelan, CA		4,611		-		3,276		1,335		4,611		315	2015
Riverside, CA		2,130		-		1,619		511		2,130		144	2015
Riverside, CA		2,737		-		1,216		1,521		2,737		333	2014
Sacramento, CA		3,193		-		2,207		986		3,193		232	2015
Sacramento, CA		4,247		-		2,604		1,643		4,247		343	2015
Sacramento, CA		5,942		-		4,233		1,709		5,942		381	2015
San Dimas, CA		1,941		-		749		1,192		1,941		617	2007
San Jose, CA		5,412		-		4,219		1,193		5,412		297	2015
San Leandro, CA		5,978		-		5,078		900		5,978		220	2015
Shingle Springs, CA		4,751		-		3,489		1,262		4,751		290	2015
Stockton, CA		1,187		-		627		560		1,187		132	2015
Stockton, CA		3,001		-		1,460		1,541		3,001		327	2015
Adams, CO		2,157		-		1,579		578		2,157		50	2017
Arapahoe, CO		2,495		-		2,207		288		2,495		29	2017
Arapahoe, CO		2,874		-		2,284		590		2,874		49	2017
Boulder, CO		3,900		-		2,875		1,025		3,900		214	2015
Broomfield, CO		2,380		-		1,496		884		2,380		67	2017
Castle Rock, CO		5,269		-		3,269		2,000		5,269		446	2015
El Paso, CO		1,382		-		756		626		1,382		49	2017
El Paso, CO		3,274		-		2,865		409		3,274		36	2017
El Paso, CO		3,828		-		2,798		1,030		3,828		94	2017
Golden, CO		4,641		-		3,247		1,394		4,641		302	2015
Greenwood Village, CO		4,077		-		2,889		1,188		4,077		246	2015
Highlands Ranch, CO		4,356		-		2,921		1,435		4,356		318	2015
Jefferson, CO		1,785		-		1,388		397		1,785		36	2017
Lakewood, CO		2,349		-		1,541		808		2,349		170	2015
Littleton, CO		4,139		-		2,272		1,867		4,139		413	2015
Lone Tree, CO		6,612		-		5,125		1,487		6,612		344	2015
Longmont, CO		3,619		-		2,315		1,304		3,619		302	2015
Louisville, CO		6,605		-		5,228		1,377		6,605		313	2015
Morrison, CO		5,081		-		3,018		2,063		5,081		472	2015
Superior, CO		3,748		-		2,477		1,271		3,748		281	2015
Thornton, CO		5,003		-		2,722		2,281		5,003		505	2015
Westminster, CO		1,457		-		752		705		1,457		152	2015
Wheat Ridge, CO		6,151		-		4,201		1,950		6,151		445	2015
Avon, CT		731		50		403		378		781		279	2002
Bridgeport, CT		59		380		24		415		439		251	1982
Bridgeport, CT		313		298		204		407		611		225	1985
Bridgeport, CT		350		330		228		452		680		268	1985
Bridgeport, CT		377		391		246		522		768		326	1985
Bristol, CT		1,594		-		1,036		558		1,594		316	2004
Brookfield, CT		58		432		20		470		490		305	1985
Darien, CT		667		285		434		518		952		424	1985
Durham, CT		994		-		-		994		994		994	2004
East Hartford, CT		208		224		54		378		432		262	1982
Ellington, CT		1,295		-		842		453		1,295		257	2004

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Farmington, CT		466		-			303		163		466		92	2004
Franklin, CT		51		447			20		478		498		312	1982
Hamden, CT		645		-			527		118		645		1	2018
Hartford, CT		665		-			432		233		665		132	2004
Manchester, CT		110		323			50		383		433		206	1987
Meriden, CT		208		341			84		465		549		289	1982
Meriden, CT		1,532		-			989		543		1,532		312	2004
Middletown, CT		133		735			131		737		868		349	1987
New Haven, CT		217		297			141		373		514		196	1985
New Haven, CT		539		219			351		407		758		333	1985
New Haven, CT		1,413		(323	)		569		521		1,090		208	1985
Newington, CT		954		-			620		334		954		189	2004
North Haven, CT		90		669			365		394		759		192	1982
North Haven, CT, CT		405		-			252		153		405		95	2004
Norwalk, CT		511		46			332		225		557		195	1985
Norwalk, CT		-		941			402		539		941		270	1988
Norwich, CT		107		323			44		386		430		226	1982
Old Greenwich, CT		-		1,219			620		599		1,219		277	1969
Plymouth, CT		931		-			605		326		931		185	2004
Ridgefield, CT		402		304			167		539		706		378	1985
South Windham, CT		644		1,398			598		1,444		2,042		664	2004
South Windsor, CT		545		-			337		208		545		130	2004
Stamford, CT		507		16			330		193		523		164	1985
Stamford, CT		604		98			393		309		702		233	1985
Stamford, CT		507		453			330		630		960		357	1985
Suffield, CT		237		603			201		639		840		505	2004
Vernon, CT		1,434		-			-		1,434		1,434		1,434	2004
Wallingford, CT		551		-			335		216		551		138	2004
Waterbury, CT		469		-			305		164		469		93	2004
Waterbury, CT		515		-			335		180		515		102	2004
Waterbury, CT		804		-			516		288		804		167	2004
Watertown, CT		352		59			204		207		411		168	1992
Watertown, CT		925		-			567		358		925		225	2004
West Haven, CT		185		322			74		433		507		269	1982
West Haven, CT		1,215		-			790		425		1,215		241	2004
Westport, CT		604		12			393		223		616		189	1985
Wethersfield, CT		447		-			-		447		447		447	2004
Willimantic, CT		717		-			466		251		717		142	2004
Wilton, CT		519		214			338		395		733		295	1985
Windsor Locks, CT		1,031		-			670		361		1,031		204	2004
Windsor Locks, CT		1,434		1,400			1,055		1,779		2,834		1,484	2004
Washington, DC		848		-			418		430		848		121	2013
Washington, DC		941		-			664		277		941		90	2013
Nassau, FL		1,963		-			570		1,393		1,963		102	2017
Nassau, FL		2,137		-			382		1,755		2,137		129	2017
Nassau, FL		2,894		-			2,056		838		2,894		71	2017
Orlando, FL		867		34			401		500		901		378	2000
Houston, GA		1,724		-			1,312		412		1,724		37	2017

					Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Richmond, GA		3,150		-		286		2,864		3,150		236	2017
Haleiwa, HI		1,522		-		1,058		464		1,522		325	2007
Honolulu, HI		1,071		30		981		120		1,101		82	2007
Honolulu, HI		1,539		-		1,219		320		1,539		184	2007
Honolulu, HI		1,769		-		1,192		577		1,769		310	2007
Honolulu, HI		9,211		-		8,194		1,017		9,211		562	2007
Kaneohe, HI		1,364		-		822		542		1,364		329	2007
Kaneohe, HI		1,977		165		1,473		669		2,142		360	2007
Waianae, HI		1,520		-		648		872		1,520		469	2007
Waianae, HI		1,997		-		871		1,126		1,997		609	2007
Waipahu, HI		2,458		-		945		1,513		2,458		789	2007
Prospect Heights, IL		1,547		-		698		849		1,547		28	2018
Bossier, LA		2,181		-		1,333		848		2,181		71	2017
Lake Charles, LA		1,069		-		620		449		1,069		18	2018
Lake Charles, LA		1,468		-		1,002		466		1,468		17	2018
Sulphur, LA		777		-		375		402		777		18	2018
Arlington, MA		519		27		338		208		546		178	1985
Auburn, MA		-		535		388		147		535		51	1996
Auburn, MA		600		-		600		-		600		-	2011
Auburn, MA		625		-		625		-		625		-	2011
Auburn, MA		370		305		240		435		675		245	1991
Auburn, MA		725		-		725		-		725		-	2011
Auburn, MA		800		-		-		800		800		605	2011
Barre, MA		536		12		348		200		548		127	1991
Bedford, MA		1,350		-		1,350		-		1,350		-	2011
Bellingham, MA		734		73		476		331		807		289	1985
Belmont, MA		390		29		254		165		419		143	1985
Bradford, MA		650		-		650		-		650		-	2011
Burlington, MA		600		-		600		-		600		-	2011
Burlington, MA		1,250		-		1,250		-		1,250		-	2011
Chelmsford, MA		715		-		-		715		715		325	2012
Dracut, MA		450		-		450		-		450		-	2011
Falmouth, MA		414		2,320		458		2,276		2,734		64	1988
Fitchburg, MA		390		33		254		169		423		118	1992
Foxborough, MA		427		98		325		200		525		151	1990
Framingham, MA		400		23		260		163		423		111	1991
Gardner, MA		550		-		550		-		550		-	2011
Gardner, MA		1,009		327		657		679		1,336		494	1985
Gardners, MA		787		-		638		149		787		42	2014
Hingham, MA		353		111		243		221		464		169	1989
Hyde Park, MA		500		168		322		346		668		235	1985
Leominster, MA		571		-		199		372		571		131	2012
Littleton, MA		1,357		-		759		598		1,357		45	2017
Lowell, MA		361		90		201		250		451		247	1985
Lowell, MA		-		631		429		202		631		69	1996
Lynn, MA		400		-		400		-		400		-	2011
Lynn, MA		850		-		850		-		850		-	2011
Marlborough, MA		550		-		550		-		550		-	2011

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Maynard, MA		736		98			479		355		834		258	1985
Melrose, MA		600		-			600		-		600		-	2011
Methuen, MA		300		134			150		284		434		234	1986
Methuen, MA		380		64			246		198		444		176	1985
Methuen, MA		490		98			319		269		588		192	1985
Methuen, MA		650		-			650		-		650		-	2011
Newton, MA		691		98			450		339		789		300	1985
Peabody, MA		400		18			252		166		418		166	1986
Peabody, MA		550		-			550		-		550		-	2011
Peabody, MA		650		-			650		-		650		-	2011
Randolph, MA		573		238			430		381		811		267	1985
Revere, MA		1,300		-			1,300		-		1,300		-	2011
Rockland, MA		579		45			377		247		624		214	1985
Salem, MA		600		-			600		-		600		-	2011
Seekonk, MA		1,073		(373	)		576		124		700		59	1985
Shrewsbury, MA		400		-			400		-		400		-	2011
Shrewsbury, MA		450		-			450		-		450		-	2011
Sterling, MA		476		2			309		169		478		107	1991
Sutton, MA		714		57			464		307		771		214	1993
Tewksbury, MA		125		545			75		595		670		267	1986
Tewksbury, MA		1,200		-			1,200		-		1,200		-	2011
Upton, MA		429		114			279		264		543		154	1991
Wakefield, MA		900		-			900		-		900		-	2011
Walpole, MA		450		92			293		249		542		174	1985
Watertown, MA		358		209			321		246		567		171	1985
Webster, MA		1,012		711			659		1,064		1,723		622	1985
West Roxbury, MA		490		105			319		276		595		212	1985
Westborough, MA		450		-			450		-		450		-	2011
Wilmington, MA		600		-			600		-		600		-	2011
Wilmington, MA		1,300		-			1,300		-		1,300		-	2011
Woburn, MA		350		64			200		214		414		204	1986
Woburn, MA		508		394			508		394		902		292	1985
Worcester, MA		400		-			400		-		400		-	2011
Worcester, MA		500		-			500		-		500		-	2011
Worcester, MA		550		-			550		-		550		-	2011
Worcester, MA		548		10			356		202		558		130	1991
Worcester, MA		498		383			322		559		881		329	1985
Worcester, MA		978		8			636		350		986		222	1991
Worchester, MA		196		812			-		1,008		1,008		29	2017
Accokeek, MD		692		-			692		-		692		-	2010
Baltimore, MD		802		-			-		802		802		473	2007
Baltimore, MD		2,259		-			722		1,537		2,259		814	2007
Beltsville, MD		525		-			525		-		525		-	2009
Beltsville, MD		731		-			731		-		731		-	2009
Beltsville, MD		1,050		-			1,050		-		1,050		-	2009
Beltsville, MD		1,130		-			1,130		-		1,130		-	2009
Bladensburg, MD		571		-			571		-		571		-	2009
Bowie, MD		1,084		-			1,084		-		1,084		-	2009

					Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Capitol Heights, MD		628		-		628		-		628		-	2009
Clinton, MD		651		-		651		-		651		-	2009
College Park, MD		445		-		445		-		445		-	2009
College Park, MD		536		-		536		-		536		-	2009
District Heights, MD		479		-		479		-		479		-	2009
Ellicott City, MD		895		-		-		895		895		555	2007
Forestville, MD		1,039		-		1,039		-		1,039		-	2009
Fort Washington, MD		422		-		422		-		422		-	2009
Greenbelt, MD		1,153		-		1,153		-		1,153		-	2009
Hyattsville, MD		491		-		491		-		491		-	2009
Hyattsville, MD		594		-		594		-		594		-	2009
Landover, MD		662		-		662		-		662		-	2009
Landover, MD		753		-		753		-		753		-	2009
Landover Hills, MD		457		-		457		-		457		-	2009
Landover Hills, MD		1,358		-		1,358		-		1,358		-	2009
Lanham, MD		822		-		822		-		822		-	2009
Laurel, MD		696		-		696		-		696		-	2009
Laurel, MD		1,210		-		1,210		-		1,210		-	2009
Laurel, MD		1,267		-		1,267		-		1,267		-	2009
Laurel, MD		1,415		-		1,415		-		1,415		-	2009
Laurel, MD		1,530		-		1,530		-		1,530		-	2009
Laurel, MD		2,523		-		2,523		-		2,523		-	2009
Oxon Hill, MD		1,256		-		1,256		-		1,256		-	2009
Riverdale, MD		582		-		582		-		582		-	2009
Seat Pleasant, MD		468		-		468		-		468		-	2009
Suitland, MD		673		-		673		-		673		-	2009
Upper Marlboro, MD		845		-		845		-		845		-	2009
Biddeford, ME		618		8		235		391		626		391	1985
Lewiston, ME		342		188		222		308		530		229	1985
Davidson, NC		1,776		-		301		1,475		1,776		79	2017
Fayetteville, NC		986		-		509		477		986		19	2018
Kernersville, NC		449		-		338		111		449		105	2007
New Bern, NC		350		83		190		243		433		168	2007
Belfield, ND		1,232		-		382		850		1,232		753	2007
Allenstown, NH		1,787		-		467		1,320		1,787		759	2007
Concord, NH		675		-		675		-		675		-	2011
Concord, NH		900		-		900		-		900		-	2011
Derry, NH		418		17		158		277		435		276	1987
Derry, NH		950		-		950		-		950		-	2011
Dover, NH		650		-		650		-		650		-	2011
Dover, NH		1,200		-		1,200		-		1,200		-	2011
Goffstown, NH		1,737		-		697		1,040		1,737		457	2012
Hooksett, NH		1,562		-		824		738		1,562		671	2007
Kingston, NH		1,500		-		1,500		-		1,500		-	2011
Londonderry, NH		703		30		458		275		733		235	1985
Londonderry, NH		1,100		-		1,100		-		1,100		-	2011
Manchester, NH		550		-		550		-		550		-	2011
Nashua, NH		500		-		500		-		500		-	2011

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Nashua, NH		550		-			550		-		550		-	2011
Nashua, NH		750		-			750		-		750		-	2011
Nashua, NH		825		-			825		-		825		-	2011
Nashua, NH		1,132		-			780		352		1,132		33	2017
Nashua, NH		1,750		-			1,750		-		1,750		-	2011
Northwood, NH		500		-			500		-		500		-	2011
Pelham, NH		-		730			317		413		730		120	1996
Plaistow, NH		300		101			245		156		401		156	1987
Portsmouth, NH		525		-			525		-		525		-	2011
Raymond, NH		550		-			550		-		550		-	2011
Rochester, NH		700		-			700		-		700		-	2011
Rochester, NH		939		12			600		351		951		296	1985
Rochester, NH		1,400		-			1,400		-		1,400		-	2011
Rochester, NH		1,600		-			1,600		-		1,600		-	2011
Salem, NH		743		20			484		279		763		236	1985
Salem, NH		450		871			350		971		1,321		122	1986
Basking Ridge, NJ		363		284			200		447		647		278	1986
Bergenfield, NJ		381		323			300		404		704		225	1990
Brick, NJ		1,508		229			1,000		737		1,737		509	2000
Colonia, NJ		719		(299	)		72		348		420		282	1985
Elizabeth, NJ		406		33			227		212		439		188	1985
Flemington, NJ		709		(252	)		168		289		457		120	1985
Flemington, NJ		547		17			346		218		564		185	1985
Fort Lee, NJ		1,245		365			811		799		1,610		538	1985
Franklin Twp, NJ		684		169			445		408		853		352	1985
Freehold, NJ		495		533			95		933		1,028		170	1978
Hasbrouck Heights, NJ		640		483			416		707		1,123		449	1985
Hillsborough, NJ		238		182			100		320		420		245	1985
Lake Hopatcong, NJ		1,305		-			800		505		1,305		436	2000
Livingston, NJ		872		292			568		596		1,164		391	1985
Long Branch, NJ		515		439			335		619		954		323	1985
Mcafee, NJ		671		448			437		682		1,119		342	1985
Midland Park, NJ		201		309			150		360		510		208	1989
Mountainside, NJ		664		(197	)		134		333		467		152	1985
North Bergen, NJ		630		147			410		367		777		296	1985
North Plainfield, NJ		227		544			175		596		771		448	1978
Paramus, NJ		382		81			249		214		463		150	1985
Parlin, NJ		418		159			203		374		577		158	1985
Paterson, NJ		619		17			403		233		636		198	1985
Ridgewood, NJ		703		398			458		643		1,101		395	1985
Trenton, NJ		1,303		-			1,146		157		1,303		58	2012
Union, NJ		437		214			239		412		651		192	1985
Washington Township, NJ		912		334			594		652		1,246		394	1985
Watchung, NJ		449		114			226		337		563		140	1985
West Orange, NJ		800		409			521		688		1,209		475	1985
Bernalillo, NM		1,829		-			1,382		447		1,829		37	2017
Bernalillo, NM		2,308		-			1,830		478		2,308		43	2017
Bernalillo, NM		2,322		-			1,796		526		2,322		45	2017

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Bernalillo, NM		3,682		-			3,141		541		3,682		48	2017
Dona Ana, NM		1,842		-			1,374		468		1,842		40	2017
Fernley, NV		1,665		-			221		1,444		1,665		366	2015
Alfred Station, NY		714		-			414		300		714		154	2006
Amherst, NY		223		246			173		296		469		141	2000
Astoria, NY		1,684		-			1,105		579		1,684		188	2013
Avoca, NY		936		(1	)		635		300		935		154	2006
Batavia, NY		684		-			364		320		684		164	2006
Bay Shore, NY		157		355			86		426		512		286	1981
Bayside, NY		470		254			306		418		724		227	1985
Brewster, NY		789		-			789		-		789		-	2011
Briarcliff Manor, NY		652		553			502		703		1,205		515	1976
Bronx, NY		423		-			423		-		423		-	2013
Bronx, NY		390		54			251		193		444		171	1985
Bronx, NY		877		-			877		-		877		-	2013
Bronx, NY		884		-			884		-		884		-	2013
Bronx, NY		953		-			953		-		953		-	2013
Bronx, NY		1,049		-			485		564		1,049		184	2013
Bronx, NY		1,910		-			1,349		561		1,910		191	2013
Bronx, NY		2,408		-			1,712		696		2,408		214	2013
Bronxville, NY		1,232		-			1,232		-		1,232		-	2011
Brooklyn, NY		100		345			67		378		445		227	1972
Brooklyn, NY		75		382			31		426		457		264	1967
Brooklyn, NY		282		271			176		377		553		361	1967
Brooklyn, NY		148		437			104		481		585		294	1972
Brooklyn, NY		237		372			154		455		609		233	1985
Brooklyn, NY		476		320			306		490		796		316	1985
Brooklyn, NY		422		383			275		530		805		322	1985
Brooklyn, NY		627		313			408		532		940		342	1985
Buffalo, NY		313		241			151		403		554		228	2000
Byron, NY		969		-			669		300		969		154	2006
Chester, NY		1,158		-			1,158		-		1,158		-	2011
Churchville, NY		1,012		-			602		410		1,012		210	2006
Corona, NY		115		300			113		302		415		302	1965
Corona, NY		2,543		-			1,903		640		2,543		200	2013
Cortland Manor, NY		1,872		-			1,872		-		1,872		-	2011
Dobbs Ferry, NY		670		34			434		270		704		232	1985
Dobbs Ferry, NY		1,345		-			1,345		-		1,345		-	2011
East Hampton, NY		660		39			428		271		699		233	1985
East Pembroke, NY		787		-			537		250		787		128	2006
Eastchester, NY		1,724		993			2,302		415		2,717		45	2011
Elmont, NY		389		319			231		477		708		333	1978
Elmsford, NY		-		948			581		367		948		244	1971
Elmsford, NY		1,453		-			1,453		-		1,453		-	2011
Fishkill, NY		1,793		-			1,793		-		1,793		-	2011
Floral Park, NY		616		170			356		430		786		275	1998
Flushing, NY		516		241			320		437		757		258	1998
Flushing, NY		1,936		-			1,413		523		1,936		170	2013

					Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Flushing, NY		1,947		-		1,405		542		1,947		162	2013
Flushing, NY		2,478		-		1,801		677		2,478		203	2013
Forrest Hills, NY		1,273		-		1,273		-		1,273		-	2013
Franklin Square, NY		153		331		137		347		484		195	1978
Garden City, NY		362		242		236		368		604		210	1985
Garnerville, NY		1,508		-		1,508		-		1,508		-	2011
Glen Head, NY		235		216		103		348		451		348	1982
Glen Head, NY		463		282		301		444		745		275	1985
Great Neck, NY		500		252		450		302		752		166	1985
Hartsdale, NY		1,626		-		1,626		-		1,626		-	2011
Hawthorne, NY		2,084		-		2,084		-		2,084		-	2011
Hopewell Junction, NY		1,163		-		1,163		-		1,163		-	2011
Huntington Station, NY		141		284		84		341		425		202	1978
Hyde Park, NY		990		-		990		-		990		-	2011
Katonah, NY		1,084		-		1,084		-		1,084		-	2011
Lakeville, NY		1,028		-		203		825		1,028		537	2008
Levittown, NY		503		42		327		218		545		189	1985
Levittown, NY		547		86		356		277		633		231	1985
Long Island City, NY		2,717		-		1,183		1,534		2,717		416	2013
Mamaroneck, NY		1,429		-		1,429		-		1,429		-	2011
Massapequa, NY		333		285		217		401		618		228	1985
Mastic, NY		313		110		204		219		423		202	1985
Middletown, NY		719		-		719		-		719		-	2011
Middletown, NY		751		274		489		536		1,025		348	1985
Middletown, NY		1,281		-		1,281		-		1,281		-	2011
Millwood, NY		1,448		-		1,448		-		1,448		-	2011
Mount Kisco, NY		1,907		-		1,907		-		1,907		-	2011
Mount Vernon, NY		985		-		985		-		985		-	2011
Nanuet, NY		2,316		-		2,316		-		2,316		-	2011
Naples, NY		1,257		-		827		430		1,257		221	2006
New Paltz, NY		971		-		971		-		971		-	2011
New Rochelle, NY		189		358		104		443		547		240	1982
New Rochelle, NY		1,887		-		1,887		-		1,887		-	2011
New Windsor, NY		1,084		-		1,084		-		1,084		-	2011
New York, NY		126		399		78		447		525		309	1972
Newburgh, NY		527		-		527		-		527		-	2011
Newburgh, NY		1,192		-		1,192		-		1,192		-	2011
Niskayuna, NY		425		35		275		185		460		185	1986
North Andover, NY		393		33		256		170		426		148	1985
Ossining, NY		231		198		117		312		429		171	1985
Ozone Park, NY		58		365		45		378		423		228	1976
Peekskill, NY		2,207		-		2,207		-		2,207		-	2011
Pelham, NY		1,035		-		1,035		-		1,035		-	2011
Pelham Manor, NY		137		307		75		369		444		230	1985
Perry, NY		1,444		-		1,044		400		1,444		205	2006
Pleasant Valley, NY		398		62		240		220		460		209	1986
Port Chester, NY		941		-		-		941		941		443	2011
Port Chester, NY		1,015		-		1,015		-		1,015		-	2011

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Port Jefferson, NY		185		3,080			246		3,019		3,265		14	1985
Poughkeepsie, NY		591		-			591		-		591		-	2011
Poughkeepsie, NY		1,020		-			1,020		-		1,020		-	2011
Poughkeepsie, NY		1,232		(32	)		1,200		-		1,200		-	2011
Poughkeepsie, NY		1,340		(60	)		1,280		-		1,280		-	2011
Poughkeepsie, NY		1,306		-			1,306		-		1,306		-	2011
Poughkeepsie, NY		1,355		-			1,355		-		1,355		-	2011
Prattsburgh, NY		553		-			303		250		553		128	2006
Rego Park, NY		2,783		-			2,104		679		2,783		213	2013
Riverhead, NY		724		-			432		292		724		241	1998
Rockaway Park, NY		1,605		-			1,605		-		1,605		-	2013
Rockville Centre, NY		350		66			201		215		416		197	1985
Rye, NY		872		-			872		-		872		-	2011
Sag Harbor, NY		704		35			458		281		739		241	1985
Sayville, NY		344		246			300		290		590		134	1998
Scarsdale, NY		1,301		-			1,301		-		1,301		-	2011
Shrub Oak, NY		1,061		368			691		738		1,429		511	1985
Sleepy Hollow, NY		281		301			130		452		582		392	1969
Spring Valley, NY		749		-			749		-		749		-	2011
St. Albans, NY		330		106			215		221		436		183	1985
Staten Island, NY		390		89			254		225		479		203	1985
Staten Island, NY		301		323			196		428		624		263	1985
Staten Island, NY		350		290			228		412		640		244	1985
Stony Brook, NY		176		281			105		352		457		210	1978
Tarrytown, NY		956		-			956		-		956		-	2011
Tuchahoe, NY		1,650		-			1,650		-		1,650		-	2011
Wantagh, NY		640		-			370		270		640		219	1998
Wappingers Falls, NY		452		-			-		452		452		323	2011
Wappingers Falls, NY		1,488		-			1,488		-		1,488		-	2011
Warsaw, NY		990		-			690		300		990		154	2006
Warwick, NY		1,049		-			1,049		-		1,049		-	2011
West Nyack, NY		936		-			936		-		936		-	2011
White Plains, NY		-		569			303		266		569		204	1972
White Plains, NY		1,458		-			1,458		-		1,458		-	2011
Yaphank, NY		-		798			375		423		798		182	1993
Yonkers, NY		-		588			-		588		588		345	1970
Yonkers, NY		-		944			684		260		944		114	1990
Yonkers, NY		1,021		63			665		419		1,084		361	1985
Yonkers, NY		291		1,050			216		1,125		1,341		542	1972
Yonkers, NY		1,907		-			1,907		-		1,907		-	2011
Yorktown Heights, NY		1,700		-			-		1,700		1,700		274	2013
Yorktown Heights, NY		2,365		-			2,365		-		2,365		-	2011
Clermont, OH		1,045		-			362		683		1,045		64	2017
Crestline, OH		1,202		-			285		917		1,202		463	2008
Mansfield, OH		922		-			332		590		922		280	2008
Mansfield, OH		1,950		-			700		1,250		1,950		587	2009
Monroeville, OH		2,580		-			485		2,095		2,580		970	2009
Summit, OH		1,530		-			385		1,145		1,530		95	2017

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Oklahoma City, OK		868		-			371		497		868		19	2018
Oklahoma City, OK		1,182		-			587		595		1,182		22	2018
Oklahoma City, OK		1,311		-			625		686		1,311		24	2018
Banks, OR		498		-			498		-		498		-	2015
Estacada, OR		646		-			84		562		646		109	2015
Marion, OR		543		-			296		247		543		29	2017
Marion, OR		956		-			456		500		956		50	2017
Pendleton, OR		766		-			122		644		766		138	2015
Portland, OR		4,416		-			3,368		1,048		4,416		213	2015
Salem, OR		1,071		-			399		672		1,071		174	2015
Salem, OR		1,350		-			521		829		1,350		172	2015
Salem, OR		1,408		-			524		884		1,408		190	2015
Salem, OR		4,215		-			3,182		1,033		4,215		226	2015
Salem, OR		4,614		-			3,517		1,097		4,614		225	2015
Springfield, OR		1,398		-			796		602		1,398		152	2015
Yamhill, OR		2,867		-			394		2,473		2,867		192	2017
Allison Park, PA		1,500		-			850		650		1,500		444	2010
Harrisburg, PA		399		213			199		413		612		329	1989
Lancaster, PA		642		18			300		360		660		360	1989
New Kensington, PA		1,375		-			675		700		1,375		269	2010
Philadelphia, PA		405		175			264		316		580		263	1985
Philadelphia, PA		1,252		-			814		438		1,252		177	2009
Phoenixville, PA		385		89			76		398		474		27	1985
Pottsville, PA, PA		452		1			148		305		453		304	1990
Reading, PA		750		49			-		799		799		799	1989
Barrington, RI		490		180			319		351		670		266	1985
East Providence,, RI		2,298		(1,855	)		14		429		443		74	1985
N. Providence, RI		543		158			353		348		701		255	1985
Columbia, SC		1,995		-			1,130		865		1,995		21	2018
Columbia, SC		2,109		-			1,120		989		2,109		23	2018
Columbia, SC		2,531		-			1,612		919		2,531		21	2018
Johns Island, SC		2,561		-			1,885		676		2,561		6	2018
Kershaw, SC		2,082		-			1,166		916		2,082		68	2017
Kershaw, SC		2,177		-			974		1,203		2,177		84	2017
Lexington, SC		412		-			145		267		412		19	2017
Lexington, SC		633		-			309		324		633		24	2017
Lexington, SC		694		-			172		522		694		41	2017
Lexington, SC		720		-			219		501		720		35	2017
Lexington, SC		816		-			336		480		816		27	2017
Lexington, SC		973		-			582		391		973		30	2017
Lexington, SC		1,036		-			434		602		1,036		42	2017
Lexington, SC		1,056		-			432		624		1,056		47	2017
Lexington, SC		1,116		-			50		1,066		1,116		77	2017
Lexington, SC		1,436		-			472		964		1,436		70	2017
Lexington, SC		1,624		-			999		625		1,624		45	2017
Lexington, SC		1,644		-			1,283		361		1,644		27	2017
Lexington, SC		1,682		-			1,135		547		1,682		43	2017
Lexington, SC		1,712		-			1,410		302		1,712		19	2017

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Lexington, SC		1,729		-			1,268		461		1,729		39	2017
Lexington, SC		1,738		-			1,189		549		1,738		31	2017
Lexington, SC		1,901		-			1,021		880		1,901		73	2017
Lexington, SC		2,046		-			746		1,300		2,046		90	2017
Lexington, SC		2,179		-			1,476		703		2,179		50	2017
Lexington, SC		2,230		-			934		1,296		2,230		92	2017
Lexington, SC		2,603		-			1,869		734		2,603		19	2018
Lexington, SC		3,231		-			2,001		1,230		3,231		30	2018
Lexington, SC		3,234		-			1,198		2,036		3,234		45	2018
Lexington, SC		4,413		-			3,418		995		4,413		81	2017
Richland, SC		464		-			253		211		464		16	2017
Richland, SC		575		-			345		230		575		16	2017
Richland, SC		792		-			463		329		792		25	2017
Richland, SC		868		-			455		413		868		35	2017
Richland, SC		927		-			495		432		927		27	2017
Richland, SC		1,114		-			667		447		1,114		32	2017
Richland, SC		1,246		-			69		1,177		1,246		78	2017
Richland, SC		1,339		-			867		472		1,339		34	2017
Richland, SC		1,643		-			1,302		341		1,643		19	2017
Richland, SC		2,460		-			1,569		891		2,460		71	2017
Richland, SC		2,637		-			1,254		1,383		2,637		97	2017
Richland, SC		3,217		-			2,405		812		3,217		65	2017
Richland, SC		3,371		-			2,016		1,355		3,371		104	2017
Richland, SC		3,655		-			1,742		1,913		3,655		133	2017
Richland, SC		3,950		-			2,802		1,148		3,950		84	2017
Arlington, TX		789		-			414		375		789		15	2018
Arlington, TX		1,352		-			887		465		1,352		18	2018
Arlington, TX		1,560		-			1,008		552		1,560		20	2018
Arlington, TX		1,796		-			1,189		607		1,796		23	2018
Austin, TX		462		-			274		188		462		130	2007
Austin, TX		2,368		-			738		1,630		2,368		851	2007
Austin, TX		3,511		66			1,595		1,982		3,577		1,012	2007
Center, TX		2,073		-			1,482		591		2,073		24	2018
El Paso, TX		1,278		-			825		453		1,278		38	2017
El Paso, TX		1,425		-			1,098		327		1,425		29	2017
El Paso, TX		1,679		-			1,085		594		1,679		45	2017
El Paso, TX		1,816		-			1,413		403		1,816		35	2017
El Paso, TX		2,370		-			1,767		603		2,370		47	2017
El Paso, TX		3,168		-			2,153		1,015		3,168		80	2017
Ft Worth, TX		2,115		49			866		1,298		2,164		721	2007
Garland, TX		2,208		-			1,504		704		2,208		26	2018
Garland, TX		3,296		-			245		3,051		3,296		550	2014
Garland, TX		4,439		-			439		4,000		4,439		754	2014
Grand Prairie, TX		1,413		-			914		499		1,413		20	2018
Grand Prairie, TX		2,000		-			1,415		585		2,000		22	2018
Harker Heights, TX		2,051		(9	)		579		1,463		2,042		1,144	2007
Houston, TX		1,689		-			224		1,465		1,689		735	2007
Houston, TX		2,803		-			535		2,268		2,803		220	2016

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Keller, TX		2,507		-			996		1,511		2,507		827	2007
Lewisville, TX		494		-			110		384		494		239	2008
Linden, TX		2,160		-			1,514		646		2,160		25	2018
Longview, TX		1,660		-			1,239		421		1,660		16	2018
Mesquite, TX		1,687		-			1,093		594		1,687		23	2018
Midlothian, TX		429		-			72		357		429		229	2007
Nueces, TX		1,526		-			1,056		470		1,526		36	2017
Nueces, TX		2,162		-			1,729		433		2,162		37	2017
Nueces, TX		2,400		-			1,110		1,290		2,400		99	2017
Port Arthur, TX		2,648		-			505		2,143		2,648		215	2016
Rowlett, TX		1,284		-			840		444		1,284		16	2018
San Marcos, TX		1,954		-			251		1,703		1,954		874	2007
San Patricio, TX		3,138		-			2,687		451		3,138		39	2017
Temple, TX		2,405		(10	)		1,205		1,190		2,395		664	2007
Texarkana, TX		1,791		-			992		799		1,791		29	2018
Texarkana, TX		1,861		-			1,197		664		1,861		27	2018
Texarkana, TX		2,316		-			1,643		673		2,316		24	2018
The Colony, TX		4,396		-			337		4,059		4,396		1,992	2007
Travis, TX		1,711		-			1,364		347		1,711		31	2017
Waco, TX		3,884		-			894		2,990		3,884		1,674	2007
Wake Village, TX		1,637		-			685		952		1,637		34	2018
Watauga, TX		1,771		-			1,139		632		1,771		24	2018
Alexandria, VA		649		-			649		-		649		-	2013
Alexandria, VA		656		-			409		247		656		87	2013
Alexandria, VA		712		-			712		-		712		-	2013
Alexandria, VA		735		-			735		-		735		-	2013
Alexandria, VA		1,327		-			1,327		-		1,327		-	2013
Alexandria, VA		1,388		-			1,020		368		1,388		131	2013
Alexandria, VA		1,582		-			1,150		432		1,582		140	2013
Alexandria, VA		1,757		-			1,313		444		1,757		153	2013
Annandale, VA		1,718		-			1,718		-		1,718		-	2013
Arlington, VA		1,083		-			1,083		-		1,083		-	2013
Arlington, VA		1,464		-			1,085		379		1,464		126	2013
Arlington, VA		2,014		-			1,516		498		2,014		160	2013
Arlington, VA		2,062		-			1,603		459		2,062		146	2013
Ashland, VA		840		-			840		-		840		-	2005
Chesapeake, VA		779		(185	)		398		196		594		72	1990
Chesapeake, VA		1,004		110			385		729		1,114		667	1990
Fairfax, VA		1,825		-			1,190		635		1,825		204	2013
Fairfax, VA		2,078		-			1,365		713		2,078		197	2013
Fairfax, VA		3,348		-			2,351		997		3,348		302	2013
Fairfax, VA		4,454		-			3,370		1,084		4,454		328	2013
Farmville, VA		1,227		-			622		605		1,227		333	2005
Fredericksburg, VA		1,279		-			469		810		1,279		446	2005
Fredericksburg, VA		1,289		30			798		521		1,319		288	2005
Fredericksburg, VA		1,716		-			996		720		1,716		397	2005
Fredericksburg, VA		3,623		-			2,828		795		3,623		438	2005
Glen Allen, VA		1,037		-			412		625		1,037		344	2005

						Gross Amount at Which Carried at Close of Period
	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment			Land		Building and Improvements		Total Cost		Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)
Glen Allen, VA		1,077		-			322		755		1,077		416	2005
King William, VA		1,688		-			1,068		620		1,688		342	2005
Mechanicsville, VA		903		-			273		630		903		347	2005
Mechanicsville, VA		957		-			324		633		957		371	2005
Mechanicsville, VA		1,043		-			223		820		1,043		452	2005
Mechanicsville, VA		1,125		-			505		620		1,125		342	2005
Mechanicsville, VA		1,476		-			876		600		1,476		331	2005
Mechanicsville, VA		1,677		-			1,157		520		1,677		286	2005
Montpelier, VA		2,481		(114	)		1,612		755		2,367		416	2005
Norfolk, VA		535		(70	)		235		230		465		230	1990
Petersburg, VA		1,441		-			816		625		1,441		344	2005
Portsmouth, VA		563		33			222		374		596		366	1990
Richmond, VA		1,132		(41	)		506		585		1,091		322	2005
Ruther Glen, VA		466		-			31		435		466		240	2005
Sandston, VA		722		-			102		620		722		342	2005
Spotsylvania, VA		1,290		-			490		800		1,290		441	2005
Springfield, VA		4,257		-			2,969		1,288		4,257		386	2013
Auburn, WA		3,022		-			1,965		1,057		3,022		224	2015
Bellevue, WA		1,725		-			886		839		1,725		178	2015
Chehalis, WA		1,176		-			313		863		1,176		201	2015
Colfax, WA		4,800		-			3,611		1,189		4,800		253	2015
Federal Way, WA		4,218		-			2,973		1,245		4,218		284	2015
Fife, WA		1,181		-			414		767		1,181		176	2015
Kent, WA		2,900		-			2,066		834		2,900		192	2015
Monroe, WA		2,792		-			1,556		1,236		2,792		268	2015
Port Orchard, WA		2,019		-			161		1,858		2,019		337	2015
Puyallup, WA		831		-			172		659		831		162	2015
Puyallup, WA		2,035		-			465		1,570		2,035		327	2015
Puyallup, WA		4,050		-			2,394		1,656		4,050		430	2015
Renton, WA		1,485		-			952		533		1,485		153	2015
Seattle, WA		717		-			193		524		717		107	2015
Seattle, WA		1,884		-			1,223		661		1,884		135	2015
Silverdale, WA		2,178		-			1,217		961		2,178		220	2015
Snohomish, WA		955		-			955		-		955		-	2015
South Bend, WA		760		-			121		639		760		127	2015
Tacoma, WA		518		-			518		-		518		-	2015
Tacoma, WA		671		-			671		-		671		-	2015
Tenino, WA		937		-			219		718		937		144	2015
Vancouver, WA		1,214		-			163		1,051		1,214		191	2015
Wilbur, WA		629		-			153		476		629		106	2015
Miscellaneous		45,846		15,133			21,703		39,276		60,979		26,242	various
	$	978,973		64,133		$	631,185	$	411,921	$	1,043,106	$	150,691

Type of Loan/Borrower	Description	Location(s)	Interest Rate			Final Maturity Date	Periodic Payment Terms (a)	Prior Liens		Face Value at Inception		Amount of Principal Unpaid at Close of Period
Mortgage Loans:
Borrower A	Seller financing	East Islip, NY		9.0	%	11/2024	P & I		—	$	743	$	727
Borrower B	Seller financing	Middlesex, NJ		9.0	%	5/2021	P & I		—		255		229
Borrower C	Seller financing	Valley Cottage, NY		9.0	%	10/2020	P & I		—		431		381
Borrower D	Seller financing	Brooklyn, NY		8.0	%	6/2019	I(b)		—		2,000		2,000
Borrower E	Seller financing	Nyack, NY		9.0	%	9/2022	P & I		—		253		237
Borrower F	Seller financing	E. Patchogue, NY		9.0	%	8/2019	P & I		—		200		169
Borrower G	Seller financing	Baldwin, NY		9.0	%	9/2020	P & I		—		300		265
Borrower H	Seller financing	Norwalk, CT		9.0	%	4/2022	P & I		—		319		294
Borrower I	Seller financing	Stafford Springs, CT		9.0	%	1/2021	P & I		—		232		206
Borrower J	Seller financing	Waterbury, CT		9.0	%	2/2021	P & I		—		171		153
Borrower K	Seller financing	Great Barrington, MA		9.0	%	4/2021	P & I		—		58		52
Borrower L	Seller financing	Springfield, MA		9.0	%	7/2019	P & I		—		131		98
Borrower M	Seller financing	Westfield, MA		9.0	%	11/2021	P & I		—		303		277
Borrower N	Seller financing	Milford, CT		9.0	%	3/2025	P & I		—		398		392
Borrower O	Seller financing	Fairfield, CT		9.0	%	3/2025	P & I		—		390		385
Borrower P	Seller financing	Hartford, CT		9.0	%	3/2024	P & I		—		70		68
Borrower Q	Seller financing	Wilmington, DE		9.0	%	11/2020	P & I		—		84		74
Borrower R	Seller financing	Clinton, MA		9.0	%	3/2022	P & I		—		158		85
Borrower S	Seller financing	Fairhaven, MA		9.0	%	9/2020	P & I		—		458		403
Borrower T	Seller financing	New Bedford, MA		9.0	%	10/2021	P & I		—		363		330
Borrower U	Seller financing	Fitchburg, MA		9.0	%	10/2021	P & I		—		187		170
Borrower V	Seller financing	Worcester, MA		9.0	%	11/2021	P & I		—		237		216
Borrower W	Seller financing	S. Yarmouth, MA		9.0	%	1/2022	P & I		—		275		252
Borrower X	Seller financing	Harwich Port, MA		9.0	%	1/2022	P & I		—		293		268
Borrower Y	Seller financing	Southbridge, MA		9.0	%	3/2021	P & I		—		300		268
Borrower Z	Seller financing	Oxford, MA		9.0	%	3/2023	P & I		—		86		81
Borrower AA	Seller financing	Kernersville/Lexington, NC		8.0	%	7/2026	P & I		—		568		150
Borrower AB	Seller financing	Concord, NH		9.5	%	8/2028	P & I		—		210		148
Borrower AC	Seller financing	Pelham, NH		9.0	%	1/2023	P & I		—		73		68
Borrower AD	Seller financing	Bayonne, NJ		9.0	%	3/2020	P & I		—		308		266
Borrower AE	Seller financing	Spotswood, NJ		9.0	%	1/2020	P & I		—		306		263
Borrower AF	Seller financing	Belleville, NJ		9.0	%	3/2021	P & I		—		315		282
Borrower AG	Seller financing	Ridgefield, NJ		9.0	%	4/2021	P & I		—		172		154
Borrower AH	Seller financing	Irvington, NJ		9.0	%	7/2022	P & I		—		300		193
Borrower AI	Seller financing	Jersey City, NJ		9.5	%	7/2025	P & I		—		500		417
Borrower AJ	Seller financing	Colonia, NJ		9.0	%	7/2020	P & I		—		320		280
Borrower AK	Seller financing	Swedesboro, NJ		9.0	%	4/2021	P & I		—		77		69
Borrower AL	Seller financing	Piscataway, NJ		9.0	%	11/2020	P & I		—		121		71
Borrower AM	Seller financing	Glendale, NY		9.0	%	7/2025	P & I		—		525		502
Borrower AN	Seller financing	Seaford, NY		9.0	%	1/2020	P & I		—		488		419
Borrower AO	Seller financing	Elmont, NY		9.0	%	10/2021	P & I		—		450		364
Borrower AP	Seller financing	White Plains, NY		9.0	%	2/2021	P & I		—		444		396
Borrower AQ	Seller financing	Scarsdale, NY		9.0	%	11/2025	P & I		—		337		300
Borrower AR	Seller financing	Pleasant Valley, NY		9.0	%	9/2020	P & I		—		230		202
Borrower AS	Seller financing	Bronx, NY		9.0	%	12/2019	P & I		—		240		44
Borrower AT	Seller financing	Freeport, NY		9.0	%	5/2020	P & I		—		206		180
Borrower AU	Seller financing	Wantagh, NY		9.0	%	5/2022	P & I		—		455		382

Type of Loan/Borrower	Description	Location(s)	Interest Rate			Final Maturity Date	Periodic Payment Terms (a)	Prior Liens		Face Value at Inception		Amount of Principal Unpaid at Close of Period
Borrower AV	Seller financing	Colonie, NY		9.0	%	8/2023	P & I		—		143		136
Borrower AW	Seller financing	Latham, NY		9.0	%	1/2021	P & I		—		169		150
Borrower AX	Seller financing	Malta, NY		9.0	%	3/2023	P & I		—		572		539
Borrower AY	Seller financing	Newburgh, NY		9.0	%	9/2021	P & I		—		394		359
Borrower AZ	Seller financing	Coxsackie, NY		9.0	%	7/2021	P & I		—		153		138
Borrower BA	Seller financing	Brewster, NY		9.0	%	10/2022	P & I		—		554		518
Borrower BB	Seller financing	Cairo, NY		9.0	%	8/2023	P & I		—		113		107
Borrower BC	Seller financing	Central Islip, NY		9.0	%	6/2023	P & I		—		780		741
Borrower BD	Seller financing	Kenmore, NY		9.0	%	12/2020	P & I		—		74		66
Borrower BE	Seller financing	Rochester, NY		9.0	%	2/2025	P & I		—		174	171
Borrower BF	Seller financing	Savona, NY		9.0	%	2/2025	P & I		—		157	154
Borrower BG	Seller financing	Rochester, NY		9.0	%	10/2025	P & I		—		230	229
Borrower BH	Seller financing	Greigsville, NY		9.0	%	11/2025	P & I		—		200		200
Borrower BI	Seller financing	Horsham, PA		10.0	%	7/2024	P & I		—		237		117
Borrower BJ	Seller financing	Warwick, RI		9.0	%	8/2022	P & I		—		333		309
Borrower BK	Seller financing	Providence, RI		9.0	%	9/2021	P & I		—		184		167
Borrower BL	Seller financing	Warwick, RI		9.0	%	10/2021	P & I		—		357		325
Borrower BM	Seller financing	Cranston, RI		9.0	%	8/2022	P & I		—		153		142
Borrower BN	Seller financing	E. Providence, RI		9.0	%	2/2022	P & I		—		186		171
Borrower BO	Seller financing	York, PA		9.0	%	2/2021	P & I		—		102		91
Borrower BP	Seller financing	Ephrata, PA		9.0	%	10/2020	P & I		—		265		158
Borrower BQ	Seller financing	McConnellsburg, PA		9.0	%	1/2023	P & I		—		38		36
											20,908		18,254
Note receivable
	Purchase/leaseback	Various-NY		9.5	%	1/2021	I(b)				18,400		14,720
	Promissory Note	Various-CT		9.0	%	12/2028	(c)				—		545
Total (d)										$	39,308	$	33,519

(d) The aggregate cost for federal income tax purposes approximates the amount of principal unpaid.

We review payment status to identify performing versus non-performing loans. Interest income on performing loans is accrued as earned. A non-performing loan is placed on non-accrual status when it is probable that the borrower may be unable to meet interest payments as they become due. Generally, loans 90 days or more past due are placed on non-accrual status unless there is sufficient collateral to assure collectability of principal and interest. Upon the designation of non-accrual status, all unpaid accrued interest is reserved against through current income. Interest income on non-performing loans is generally recognized on a cash basis. The summarized changes in the carrying amount of mortgage loans are as follows:

The exhibits listed in this Exhibit Index which were filed or furnished with our 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission are available upon payment of a $25 fee per exhibit, upon request from us, by writing to Investor Relations addressed to Getty Realty Corp., Two Jericho Plaza, Suite 110, Jericho, NY 11753-1681. Our website address is www.gettyrealty.com. Our website contains a hyperlink to the EDGAR database of the Securities and Exchange Commission at www.sec.gov where you can access, free-of-charge, each exhibit that was filed or furnished with our 2018 Annual Report on Form 10-K.

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.

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.

Maryland	11-3412575
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

Two Jericho Plaza, Suite 110, Jericho, New York	11753-1681
(Address of principal executive offices)	(Zip Code)

TITLE OF EACH CLASS	NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, $0.01 par value	New York Stock Exchange

DOCUMENT	PART OF FORM 10-K
Selected Portions of Definitive Proxy Statement for the 2019 Annual Meeting of Stockholders (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, 2018, pursuant to Regulation 14A.	III

	12/31/2013		12/31/2014		12/31/2015		12/31/2016		12/31/2017		12/31/2018
Getty Realty Corp.		100.00		104.44		105.16		163.72		182.31		207.10
Standard & Poor's 500		100.00		113.69		115.26		129.05		157.22		150.33
Peer Group		100.00		125.75		135.20		163.84		169.03		191.04

	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Operating and capital leases	$	23,212	$	6,016	$	9,655	$	4,787	$	2,754
Credit agreement		120,000		—		—		120,000		—
Senior unsecured notes		325,000		—		100,000		75,000		150,000
Interest on debt (a)		114,381		22,597		40,112		24,441		27,231
Estimated environmental remediation expenditures (b)		59,821		8,509		18,607		8,762		23,943
Capital improvements (c)		7,621		106		—		315		7,200
Total	$	650,035	$	37,228	$	168,374	$	233,305	$	211,128


Large accelerated filer	☒			Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

Item	Description	Page
	Cautionary Note Regarding Forward-Looking Statements	3

	PART I

1	Business	5
1A	Risk Factors	8
1B	Unresolved Staff Comments	19
2	Properties	19
3	Legal Proceedings	21
4	Mine Safety Disclosures	25

	PART II

5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
6	Selected Financial Data	28
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
7A	Quantitative and Qualitative Disclosures About Market Risk	43
8	Financial Statements and Supplementary Data	44
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72
9A	Controls and Procedures	72
9B	Other Information	72

	PART III

10	Directors, Executive Officers and Corporate Governance	73
11	Executive Compensation	73
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	73
13	Certain Relationships and Related Transactions, and Director Independence	73
14	Principal Accountant Fees and Services	73

	PART IV

15	Exhibits and Financial Statement Schedules	74
16	Form 10-K Summary	74
	Exhibit Index	93
	Signatures	96

CALENDAR YEAR	Number of Leases Expiring		Percent of Total Leased Properties			Percent of Total Properties
2019		7		9.5	%		0.8	%
2020		6		8.1			0.6
2021		8		10.8			0.9
2022		4		5.4			0.4
2023		2		2.7			0.2
Subtotal		27		36.5			2.9
Thereafter		47		63.5			5.0
Total		74		100	%		7.9	%

CALENDAR YEAR	Number of Rental Properties (a)		Annualized Contractual Rent (b)		Percentage of Total Annualized Rent
Redevelopment		6	$	—		—
Vacant		9		—		—
2019		34		3,360		2.9	%
2020		37		4,700		4.0
2021		24		2,458		2.1
2022		36		3,046		2.6
2023		23		3,102		2.7
2024		22		2,576		2.2
2025		13		2,696		2.3
2026		77		12,912		11.0
2027		250		18,437		15.8
2028		44		7,017		6.0
Thereafter		358		56,524		48.4
Total		933	$	116,828		100.0	%

	Maturity Date	Interest Rate			December 31, 2018			December 31, 2017
Unsecured Revolving Credit Facility	March 2022		3.95	%	$	70,000		$	105,000
Unsecured Term Loan	March 2023		3.96	%		50,000			50,000
Series A Notes	February 2021		6.00	%		100,000			100,000
Series B Notes	June 2023		5.35	%		75,000			75,000
Series C Notes	February 2025		4.75	%		50,000			50,000
Series D Notes	June 2028		5.47	%		50,000			—
Series E Notes	June 2028		5.47	%		50,000			—
Total debt						445,000			380,000
Unamortized debt issuance costs, net						(3,364	)		(842	)
Total debt, net					$	441,636		$	379,158

	Page
Consolidated Balance Sheets as of December 31, 2018 and 2017	45
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016	46
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016	47
Notes to Consolidated Financial Statements	49
Report of Independent Registered Public Accounting Firm	71

Year Ending December 31,	Operating Leases		Direct Financing Leases		Total
2019	$	102,928	$	12,864	$	115,792
2020		102,693		13,156		115,849
2021		99,593		13,339		112,932
2022		99,184		13,420		112,604
2023		99,223		13,467		112,690
Thereafter	$	678,106	$	73,030	$	751,136

	Revolving Facility		Term Loan		Senior Unsecured Notes		Total
2019	$	—	$	—	$	—	$	-
2020		—		—		—		—
2021		—		—		100,000		100,000
2022 (1)		70,000		—		—		70,000
2023		—		50,000		75,000		125,000
Thereafter		—		—		150,000		150,000
Total	$	70,000	$	50,000	$	325,000	$	445,000

	Number of			Fair Value
	RSUs Outstanding			Amount		Average Per RSU
RSUs OUTSTANDING AT DECEMBER 31, 2015		400,375
Granted		86,600		$	1,593,400	$	18.40
Settled		(34,650	)		635,800		18.35
Cancelled		(22,550	)	$	415,400	$	18.42
RSUs OUTSTANDING AT DECEMBER 31, 2016		429,775
Granted		94,250		$	2,484,400	$	26.36
Settled		(51,770	)		1,306,300		25.23
Cancelled		(23,330	)	$	587,100	$	25.17
RSUs OUTSTANDING AT DECEMBER 31, 2017		448,925
Granted		124,650		$	3,106,400	$	24.92
Settled		—			—		—
Cancelled		—		$	—	$	—
RSUs OUTSTANDING AT DECEMBER 31, 2018		573,575

	Number of RSUs Vested			Fair Value
RSUs VESTED AT DECEMBER 31, 2015		202,344
Vested		54,125		$	1,379,600
Settled		(34,650	)	$	635,800
RSUs VESTED AT DECEMBER 31, 2016		221,819
Vested		55,336		$	1,502,900
Settled		(51,770	)	$	1,306,300
RSUs VESTED AT DECEMBER 31, 2017		225,385
Vested		63,635		$	1,871,500
Settled		—		$	—
RSUs VESTED AT DECEMBER 31, 2018		289,020

	Year ended December 31,
(in thousands):	2018			2017			2016
Earnings from continuing operations	$	48,410		$	45,048		$	39,825
Less dividend equivalents attributable to RSUs outstanding		(751	)		(567	)		(482	)
Earnings from continuing operations attributable to common stockholders		47,659			44,481			39,343
Earnings (loss) from discontinued operations		(704	)		2,138			(1,414	)
Less dividend equivalents attributable to RSUs outstanding		—			—			—
Earnings (loss) from discontinued operations attributable to common stockholders		(704	)		2,138			(1,414	)
Net earnings attributable to common stockholders used for basic and diluted earnings per share calculation	$	46,955		$	46,619		$	37,929
Weighted average common shares outstanding:
Basic		40,171			36,897			33,806
Incremental shares from stock-based compensation		20			—			—
Diluted		40,191			36,897			33,806
Basic earnings per common share	$	1.17		$	1.26		$	1.12
Diluted earnings per common share	$	1.17		$	1.26		$	1.12

	Level 1		Level 2		Level 3		Total
Assets:
Mutual funds	$	534	$	—	$	—	$	534
Liabilities:
Deferred compensation	$	—	$	534	$	—	$	534

	Three Months Ended
Year Ended December 31, 2018	March 31,		June 30,		September 30,		December 31,
Revenues from rental properties	$	28,284	$	29,022	$	29,570	$	29,452
Earnings from continuing operations		10,162		13,823		11,017		13,408
Net earnings	$	10,032	$	13,540	$	10,944	$	13,190
Diluted earnings per common share:
Earnings from continuing operations	$	0.25	$	0.34	$	0.27	$	0.33
Net earnings	$	0.25	$	0.33	$	0.27	$	0.32

Year Ended December 31, 2017	March 31,		June 30,		September 30,		December 31,
Revenues from rental properties	$	23,897	$	24,364	$	24,913	$	28,158
Earnings from continuing operations		7,716		14,551		9,460		13,321
Net earnings	$	9,704	$	15,106	$	9,340	$	13,036
Diluted earnings per common share:
Earnings from continuing operations	$	0.22	$	0.41	$	0.24	$	0.33
Net earnings	$	0.28	$	0.43	$	0.24	$	0.33

As Lessor:	Above-Market Leases		Below-Market Leases		In-Place Leases
Year ending December 31,
2019	$	158,000	$	2,142,000	$	2,994,000
2020		152,000		1,736,000		2,973,000
2021		144,000		1,562,000		2,954,000
2022		135,000		1,484,000		2,942,000
2023		135,000		1,393,000		2,940,000
Thereafter		1,330,000		13,197,000		23,739,000
	$	2,054,000	$	21,514,000	$	38,542,000

As Lessee:	Below-Market Leases
Year ending December 31,
2019	$	312,000
2020		222,000
2021		157,000
2022		127,000
2023		126,000
Thereafter		502,000
	$	1,446,000

Name	Age	Position	Officer Since
Christopher J. Constant	40	President, Chief Executive Officer and Director	2012
Mark J. Olear	54	Executive Vice President and Chief Operating Officer	2014
Joshua Dicker	58	Executive Vice President, General Counsel and Secretary	2008
Danion Fielding	47	Vice President, Chief Financial Officer and Treasurer	2016

	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
December 31, 2018:
Allowance for deferred rent receivable	$	—	$	—	$	—	$	—
Allowance for accounts receivable	$	1,840	$	480	$	226	$	2,094
December 31, 2017:
Allowance for deferred rent receivable	$	—	$	—	$	—	$	—
Allowance for accounts receivable	$	2,006	$	420	$	586	$	1,840
December 31, 2016:
Allowance for deferred rent receivable	$	—	$	—	$	—	$	—
Allowance for accounts receivable	$	2,634	$	855	$	1,483	$	2,006

Exhibit Number	Description of Document	Location of Document

3.1	Articles of Incorporation of Getty Realty Holding Corp. (“Holdings”), now known as Getty Realty Corp., filed December 23, 1997.	Annexed as Appendix D to the Joint Proxy/Prospectus that is a part of the Company’s Registration Statement on Form S-4 filed on January 12, 1998 (File No. 333- 44065) and incorporated herein by reference.

3.2	Articles Supplementary to Articles of Incorporation of Holdings, filed January 21, 1998.	Filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

3.3	By-Laws of Getty Realty Corp.	Filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on November 14, 2011 (File No. 001-13777) and incorporated herein by reference.

3.4	Articles of Amendment of Holdings, changing its name to Getty Realty Corp., filed January 30, 1998.	Filed as Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

3.5	Articles of Amendment of Holdings, filed August 1, 2001.	Filed as Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

3.6	Articles Supplementary to Articles of Incorporation of Holdings, filed October 25, 2017.	Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-13777) and incorporated herein by reference.

3.7	Amendment to By-Laws of Getty Realty Corp.	Filed herewith.

4.1	Dividend Reinvestment/Stock Purchase Plan.	Included under the heading “Description of Plan” on pages 5 through 18 of the Company’s Registration Statement on Form S-3D filed on April 22, 2004 (File No. 333-114730) and incorporated herein by reference.

10.1*	Retirement and Profit Sharing Plan (restated as of December 1, 2012).	Filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-13777) and incorporated herein by reference.

10.2*	1998 Stock Option Plan, effective as of January 30,1998.	Annexed as Appendix H to the Joint Proxy Statement/Prospectus that is a part of the Company’s Registration Statement on Form S-4 filed on January 12, 1998 (File No. 333-44065) and incorporated herein by reference.

10.4*	Amended and Restated Supplemental Retirement Plan for Executives of the Getty Realty Corp. and Participating Subsidiaries (adopted by the Company on December 16, 1997 and amended and restated effective January 1, 2009).	Filed as Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.6*	2004 Getty Realty Corp. Omnibus Incentive Compensation Plan.	Annexed as Appendix B. to the Company’s Definitive Proxy Statement filed on April 9, 2004 (File No. 001-13777) and incorporated herein by reference.

Getty Realty Corp. (Registrant)

By:	/S/ DANION FIELDING
	Danion Fielding
	Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
	February 27, 2019

By:	/S/ EUGENE SHNAYDERMAN
	Eugene Shnayderman
	Chief Accounting Officer and Controller (Principal Accounting Officer)
	February 27, 2019

By:	/S/ CHRISTOPHER J. CONSTANT	By:	/S/ MILTON COOPER
	Christopher J. Constant President, Chief Executive Officer and Director (Principal Executive Officer) February 27, 2019		Milton Cooper Director February 27, 2019

By:	/S/ PHILIP E. COVIELLO	By:	/S/ LEO LIEBOWITZ
	Philip E. Coviello Director February 27, 2019		Leo Liebowitz Director and Chairman of the Board February 27, 2019

By:	/S/ Mary Lou Malanoski	By:	/S/ RICHARD E. MONTAG
	Mary Lou Malanoski Director February 27, 2019		Richard E. Montag Director February 27, 2019

By:	/S/ HOWARD SAFENOWITZ
	Howard Safenowitz Director February 27, 2019