10-K 1 gty-10k_20181231.htm 10-K 2018 gty-10k_20181231.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-13777

 

GETTY REALTY CORP.

(Exact name of registrant as specified in its charter)

 

Maryland

11-3412575

(State or other jurisdiction of

incorporation or organization)

(I.R.S. employer

identification no.)

 

 

Two Jericho Plaza, Suite 110, Jericho, New York

11753-1681

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (516) 478-5400

Securities registered pursuant to Section 12(b) of the Act:

 

TITLE OF EACH CLASS

NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, $0.01 par value

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

 

Indicate by check mark 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.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

Emerging growth company

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.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

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

 

 

 

 


TABLE OF CONTENTS

 

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

 

 


 

Cautionary Note Regarding Forward-Looking Statements

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

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

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

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

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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.

 

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PART I

Item 1.    Business

Company Profile

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

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

Company Operations

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

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

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

Our Properties

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

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

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

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

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

Investment Strategy and Activity

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

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

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

Redevelopment Strategy and Activity

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

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

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

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

The History of Our Company

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

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

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

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

Major Tenants

As of December 31, 2018, we had three significant tenants by revenue:

 

We leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company.

 

We leased 77 convenience store and gasoline station properties pursuant to three separate unitary leases to Apro, LLC (d/b/a “United Oil”). In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively.

 

We leased 76 convenience store and gasoline station properties pursuant to two separate unitary leases to subsidiaries of Chestnut Petroleum Dist., Inc. (“Chestnut”). In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates.

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

Competition

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

Trademarks

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

Regulation

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

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

For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental

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

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

Additional Information

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

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

Item 1A.    Risk Factors

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

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

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

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

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

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

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

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

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

Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination and receive regulatory approval. In developing our liability for estimated environmental remediation obligations on a property by property basis, we consider, among other things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information available, currently available technologies

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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

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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

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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.

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

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

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

We may not be able to successfully implement our investment strategy.

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

We may acquire new properties and this may create risks.

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

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

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

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

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

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

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

We are subject to risks inherent in owning and leasing real estate.

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

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

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

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

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

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

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

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

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

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

Property taxes on our properties may increase without notice.

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

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

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

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

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

We are in a competitive business.

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

15


 

We are subject to losses that may not be covered by insurance.

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

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

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

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

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

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

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

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

16


 

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

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

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

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

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

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

Maryland law may discourage a third-party from acquiring us.

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

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

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

17


 

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

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

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

Our assets may be subject to impairment charges.

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

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

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

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

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

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

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

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

18


 

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

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

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

Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

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

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

19


 

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

 

 

 

Owned by

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:

 

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

%

 

20


 

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

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

 

CALENDAR YEAR

 

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

%

 

(a)

With respect to a unitary master lease that includes properties that we lease from third-parties, the expiration dates refer to the dates that the leases with the third-parties expire and upon which date our tenant must vacate those properties, not the expiration date of the unitary master lease itself.

(b)

Represents the monthly contractual rent due from tenants under existing leases as of December 31, 2018, multiplied by 12.

Item 3.    Legal Proceedings

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

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

21


 

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

MTBE Litigation – State of New Jersey

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

MTBE Litigation – State of Pennsylvania

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

22


 

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

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

MTBE Litigation – State of Maryland

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

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

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

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

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

23


 

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

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

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

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

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

24


 

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

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

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

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

Lukoil Americas Case

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

Item 4.    Mine Safety Disclosures

None.

25


 

PART II

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

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

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

Issuer Purchases of Equity Securities

None.

Sales of Unregistered Securities

None.

Stock Performance Graph

Comparison of Five-Year Cumulative Total Return*

 

Source: SNL Financial

 

 

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

 

 

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

 

*

Cumulative total return assumes reinvestment of dividends.

26


 

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

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

27


 

Item 6. Selected Financial Data

GETTY REALTY CORP. AND SUBSIDIARIES

SELECTED FINANCIAL DATA

(in thousands, except per share amounts and number of properties)

 

 

 

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

 

 

(a)

Includes (from the date of the acquisition) the effect of the $52.6 million acquisition of 30 properties in the E-Z Mart transaction on April 17, 2018, and the effect of the $17.4 million acquisition of six properties in the Applegreen transaction on August 1, 2018.

(b)

Includes (from the date of the acquisition) the effect of the $123.1 million acquisition of 49 properties in the Empire transaction on September 6, 2017, and the effect of the $68.7 million acquisition of 38 properties in the Applegreen transaction on October 3, 2017.

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(c)

Includes (from the date of the acquisition) the effect of the $214.5 million acquisition of 77 properties in the United Oil transaction on June 3, 2015.

(d)

Includes special dividends of $0.22 per share and $0.14 per share for the years ended December 31, 2015, and 2014, respectively.

(e)

During the fourth quarter of 2017, we revised our definition of AFFO. AFFO for the years ended December 31, 2017, 2016 and 2015, have been restated to conform to our revised definition. For additional information, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – General – Supplemental Non-GAAP Measures”.

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

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

General

Real Estate Investment Trust

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

Our Triple-Net Leases

Substantially all of our properties are leased on a triple-net basis primarily to petroleum distributors, convenience store retailers and, to a lesser extent, individual operators. Generally, our tenants supply fuel and either operate our properties directly or sublet our properties to operators who operate their convenience stores, gasoline stations, automotive repair service facilities or other businesses at our properties. Our triple-net tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced.

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

Our Properties

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

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

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

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

Investment Strategy and Activity

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

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

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

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

Redevelopment Strategy and Activity

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

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

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

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

Asset Impairment

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

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Supplemental Non-GAAP Measures

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

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

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

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

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

Results of Operations

Year ended December 31, 2018, compared to year ended December 31, 2017

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

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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.

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

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

Year ended December 31, 2017, compared to year ended December 31, 2016

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

35


 

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

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Net cash flow provided by operating activities

 

$

63,346

 

 

$

56,742

 

 

$

36,874

 

Net cash flow (used in)/provided by investing activities

 

 

(75,931

)

 

 

(206,217

)

 

 

12,980

 

Net cash flow provided by/(used in) financing activities

 

$

40,514

 

 

$

157,094

 

 

$

(41,011

)

 

Operating Activities

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

Investing Activities

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

Financing Activities

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

Credit Agreement

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

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

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

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

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

36


 

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

Senior Unsecured Notes

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

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

Debt Maturities

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

 

 

 

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

 

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

Equity Offering

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

ATM Program

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

In March 2018, we established a new at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting

37


 

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

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

Property Acquisitions and Capital Expenditures

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

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

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

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

Dividends

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

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

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

Contractual Obligations

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

38


 

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

 

 

 

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

 

 

(a)

For our Restated Credit Agreement, which bears interest at variable rates, future interest expense was calculated using the cost of borrowing as of December 31, 2018.

(b)

Estimated environmental remediation expenditures have been adjusted for inflation and discounted to present value.

(c)

The actual timing of funding of capital improvements is dependent on the timing of such capital improvement projects and the terms of our leases. Our commitments provide us with the option to either reimburse our tenants, or to offset rent when these capital expenditures are made.

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

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

Critical Accounting Policies and Estimates

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

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

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

Revenue Recognition

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

39


 

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

Direct Financing Leases

Income under direct financing leases is included in revenues from rental properties and is recognized over the lease terms using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties. The investments in direct financing leases represents the investments in leased assets accounted for as direct financing leases. The investments in direct financing leases are increased for interest income earned and amortized over the life of the leases and reduced by the receipt of lease payments.

Impairment of Long-Lived Assets

Real estate assets represent “long-lived” assets for accounting purposes. We review the recorded value of long-lived assets for impairment in value whenever any events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We may become aware of indicators of potentially impaired assets upon tenant or landlord lease renewals, upon receipt of notices of potential governmental takings and zoning issues, or upon other events that occur in the normal course of business that would cause us to review the operating results of the property. We believe our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts.

Environmental Remediation Obligations

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

Litigation

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

Income Taxes

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

40


 

Allocation of the Purchase Price of Properties Acquired

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

Environmental Matters

General

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

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

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

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

We anticipate that a majority of the USTs at properties previously leased to Marketing will be replaced over the next several years because these USTs are either at or near the end of their useful lives. For long-term, triple-net leases covering sites previously leased to Marketing, our tenants are responsible for the cost of removal and replacement of USTs and for remediation of contamination found during such UST removal and replacement, unless such contamination was found during the first 10 years of the lease term and also existed prior to commencement of the lease. In those cases, we are responsible for costs associated with the remediation of such

41


 

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

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

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

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

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

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

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

Our estimates are based upon facts that are known to us at this time and an assessment of the possible ultimate remedial action outcomes. It is possible that our assumptions, which form the basis of our estimates, regarding our ultimate environmental liabilities

42


 

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

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

Environmental Litigation

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

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

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

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

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

43


 

Item 8.    Financial Statements and Supplementary Data

GETTY REALTY CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND

SUPPLEMENTARY DATA

 

 

44


 

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

 

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.

 

45


 

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

 

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.

46


 

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

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

 

 

47


 

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid (refunded) during the period for:

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

$

20,790

 

 

$

16,435

 

 

$

15,707

 

Income taxes

 

 

244

 

 

 

(195

)

 

 

368

 

Environmental remediation obligations

 

 

9,891

 

 

 

12,944

 

 

 

17,633

 

Non-cash transactions

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared but not yet paid

 

 

14,495

 

 

 

12,846

 

 

 

9,742

 

Issuance of notes and mortgages receivable related to property

   dispositions

 

$

3,743

 

 

$

1,505

 

 

$

1,814

 

 

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


48


 

GETTY REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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

Use of Estimates, Judgments and Assumptions

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

Reclassifications

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

Real Estate

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

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

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

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

Depreciation and Amortization

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

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Direct Financing Leases

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

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

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

Notes and Mortgages Receivable

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

Cash and Cash Equivalents

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

Restricted Cash

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

Revenue Recognition and Deferred Rent Receivable

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

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

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

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

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

Impairment of Long-Lived Assets

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

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

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

Deferred Gain

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

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Fair Value of Financial Instruments

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

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

Environmental Remediation Obligations

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

Litigation

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

Income Taxes

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

New Accounting Pronouncements

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

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

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

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

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

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

NOTE 2. — LEASES

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

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

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

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

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

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

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

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

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

 

Year Ending

December 31,

 

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

 

 

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

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

Major Tenants

As of December 31, 2018, we had three significant tenants by revenue:

 

We leased 157 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global Partners LP (NYSE: GLP) (“Global”). In the aggregate, our leases with subsidiaries of Global represented 17% and 21% of our total revenues for the years ended December 31, 2018 and 2017, respectively. All of our unitary leases with subsidiaries of Global are guaranteed by the parent company.

 

We leased 77 convenience store and gasoline station properties pursuant to three separate unitary leases to Apro, LLC (d/b/a “United Oil”). In the aggregate, our leases with United Oil represented 13% and 15% of our total revenues for the years ended December 31, 2018 and 2017, respectively.

 

We leased 76 convenience store and gasoline station properties pursuant to two separate unitary leases to subsidiaries of Chestnut Petroleum Dist., Inc. (“Chestnut”). In the aggregate, our leases with subsidiaries of Chestnut represented 11% and 13% of our total revenues for the years ended December 31, 2018 and 2017, respectively. The largest of these unitary leases, covering 57 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates.

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Getty Petroleum Marketing Inc.

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

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

NOTE 3. — COMMITMENTS AND CONTINGENCIES

Credit Risk

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

Legal Proceedings

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

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

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

In May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for a 17-mile

55


 

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

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

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

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

By letter dated March 30, 2017, the EPA advised the recipients of the Notice that it would be entering into cash out settlements with 20 potentially responsible parties to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. The letter also stated that the EPA would begin a process for identifying other potentially responsible parties for negotiation of cash out settlements to resolve their alleged liability for the lower 8-mile remedial action that is the subject of the ROD. We were not included in the initial group of 20 parties identified by the EPA for cash out settlements. In January 2018, the EPA published a notice of its intent to enter into a final settlement agreement with 15 of the identified 20 parties to resolve their respective alleged liability for

56


 

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

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

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

MTBE Litigation – State of New Jersey

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

MTBE Litigation – State of Pennsylvania

On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania. The complaint names us and more than 50 other defendants, including petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of “defendants’ unfair and deceptive trade practices and acts in the marketing of MTBE and gasoline containing MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; public nuisance; negligence; trespass; and violation of consumer protection law.

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

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MTBE Litigation – State of Maryland

On December 17, 2017, the State of Maryland, by and through the Attorney General on behalf of the Maryland Department of Environment and the Maryland Department of Health (the “State of Maryland”), filed a complaint in the Circuit Court for Baltimore City related to alleged statewide MTBE contamination in Maryland. The complaint was served upon us on January 19, 2018. The complaint names us and more than 60 other defendants, including petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE. The complaint seeks compensation for natural resource damages and for injuries sustained as a result of the defendants’ unfair and deceptive trade practices in the marketing of MTBE and gasoline containing MTBE. The plaintiffs also seek to recover costs paid or incurred by the State of Maryland to detect, investigate, treat and remediate MTBE from public and private water wells and groundwater, punitive damages and the award of attorneys’ fees and litigation costs. The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design; strict liability – failure to warn; strict liability for abnormally dangerous activity; public nuisance; negligence; trespass; and violations of Titles 4, 7 and 9 of the Maryland Environmental Code.

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

Uniondale, New York Litigation

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

NOTE 4. — DEBT

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

 

 

 

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

 

Credit Agreement

On June 2, 2015, we entered into a $225,000,000 senior unsecured credit agreement (the “Credit Agreement”) with a group of banks led by Bank of America, N.A. (the “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”).

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

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

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

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

Senior Unsecured Notes

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

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

Covenants

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

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

Debt Maturities

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

 

 

 

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

 

 

 

(1)

The Revolving Facility matures in March 2022. Subject to the terms of the Restated Credit Agreement and our continued compliance with its provisions, we have the option to extend the term of the Revolving Facility for one additional year to March 2023.

NOTE 5. — ENVIRONMENTAL OBLIGATIONS

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

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

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

For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy. Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we have agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed

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

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

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

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

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

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

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

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

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

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

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

NOTE 6. — INCOME TAXES

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

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

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

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NOTE 7. — STOCKHOLDERS’ EQUITY

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

 

 

 

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.

Equity Offering

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

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ATM Program

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

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

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

Dividends

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

Dividend Reinvestment Plan

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

Stock-Based Compensation

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

NOTE 8. — EMPLOYEE BENEFIT PLANS

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

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

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

64


 

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

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

 

 

 

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

 

 

 

 

 

 

 

 

 

 

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:

 

 

 

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

 

 

 

 

 

 

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,

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

NOTE 9. — EARNINGS PER COMMON SHARE

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

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

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

 

 

 

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

 

 

NOTE 10. — FAIR VALUE MEASUREMENTS

Debt Instruments

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

Supplemental Retirement Plan

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

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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):

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

534

 

 

$

 

 

$

 

 

$

534

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation

 

$

 

 

$

534

 

 

$

 

 

$

534

 

 

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

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mutual funds

 

$

451

 

 

$

 

 

$

 

 

$

451

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred compensation

 

$

 

 

$

451

 

 

$

 

 

$

451

 

 

Real Estate Assets

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

NOTE 11. — DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

We report as discontinued operations properties which met the criteria to be accounted for as held for sale in accordance with GAAP as of June 30, 2014, and certain properties disposed of during the periods presented that were previously classified as held for sale as of June 30, 2014. All results of these discontinued operations are included in a separate component of income on the consolidated statements of operations under the caption discontinued operations.

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

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

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

Activity from discontinued operations was as follows (in thousands):

 

 

 

Year ended December 31,

 

 

 

2018

 

 

2017

 

 

2016

 

Total revenues

 

$

 

 

$

 

 

$

 

Impairments

 

 

(1,268

)

 

 

(1,042

)

 

 

(4,248

)

Changes in environmental estimates

 

 

564

 

 

 

3,169

 

 

 

3,010

 

Other operating income

 

 

 

 

 

11

 

 

 

2

 

Earnings (loss) from operating activities

 

 

(704

)

 

 

2,138

 

 

 

(1,236

)

(Loss) gains from dispositions of real estate

 

 

 

 

 

 

 

 

(178

)

Earnings (loss) from discontinued operations

 

$

(704

)

 

$

2,138

 

 

$

(1,414

)

 

67


 

NOTE 12. — QUARTERLY FINANCIAL DATA

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

 

 

 

Three Months Ended

 

Year Ended December 31, 2018

 

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

 

 

NOTE 13. — PROPERTY ACQUISITIONS

2018

During the year ended December 31, 2018, we acquired fee simple interests in 41 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $77,972,000.

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

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

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

2017

During the year ended December 31, 2017, we acquired fee simple interests in 103 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $214,000,000.

68


 

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

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

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

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

NOTE 14. — ACQUIRED INTANGIBLE ASSETS

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

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

69


 

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

 

As Lessor:

 

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

 

 

NOTE 15. — SUBSEQUENT EVENTS

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

70


 

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Getty Realty Corp.

Opinions on the Financial Statements and Internal Control over Financial Reporting

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

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

Basis for Opinions

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

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

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

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 27, 2019

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

71


 

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

None.

Item 9A.    Controls and Procedures

Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control Over Financial Reporting

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

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

Item 9B.    Other Information

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

72


 

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

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

 

Name

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

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

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

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

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

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

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

Item 11.    Executive Compensation

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

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

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

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

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

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

Item 14.    Principal Accountant Fees and Services

Information in response to this item is incorporated herein by reference to information under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement.

73


 

PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a) (1) Financial Statements

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

(a) (2) Financial Statement Schedules

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

 

(a) (3) Exhibits

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

Item 16.    Form 10-K Summary

None.

74


 

GETTY REALTY CORP. and SUBSIDIARIES

SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES

for the years ended December 31, 2018, 2017 and 2016

(in thousands)

 

 

 

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

 

 

75


 

GETTY REALTY CORP. and SUBSIDIARIES

SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

As of December 31, 2018

(in thousands)

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

 

 

 

2018

 

 

2017

 

 

2016

 

Investment in real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of year

 

$

970,964

 

 

$

782,166

 

 

$

783,233

 

Acquisitions and capital expenditures

 

 

84,069

 

 

 

205,598

 

 

 

19,097

 

Impairments

 

 

(7,950

)

 

 

(10,623

)

 

 

(13,590

)

Sales and condemnations

 

 

(3,091

)

 

 

(4,520

)

 

 

(6,379

)

Lease expirations/settlements

 

 

(886

)

 

 

(1,657

)

 

 

(195

)

Balance at end of year

 

$

1,043,106

 

 

$

970,964

 

 

$

782,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of year

 

$

133,353

 

 

$

120,576

 

 

$

107,370

 

Depreciation and amortization

 

 

20,549

 

 

 

17,018

 

 

 

16,629

 

Impairments

 

 

(1,780

)

 

 

(1,301

)

 

 

(776

)

Sales and condemnations

 

 

(530

)

 

 

(1,229

)

 

 

(2,559

)

Lease expirations/settlements

 

 

(901

)

 

 

(1,711

)

 

 

(88

)

Balance at end of year

 

$

150,691

 

 

$

133,353

 

 

$

120,576

 

 

76


 

 

 

 

 

 

 

 

 

 

 

Gross Amount at Which Carried

at Close of Period

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial Cost

of Leasehold

or Acquisition

Investment to

Company (1)

 

 

Cost

Capitalized

Subsequent

to Initial

Investment

 

 

Land

 

 

Building and

Improvements

 

 

Total

Cost

 

 

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

77


 

 

 

 

 

 

 

 

 

 

 

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

78


 

 

 

 

 

 

 

 

 

 

 

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

79


 

 

 

 

 

 

 

 

 

 

 

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

80


 

 

 

 

 

 

 

 

 

 

 

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

81


 

 

 

 

 

 

 

 

 

 

 

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

82


 

 

 

 

 

 

 

 

 

 

 

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

83


 

 

 

 

 

 

 

 

 

 

 

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

84


 

 

 

 

 

 

 

 

 

 

 

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

85


 

 

 

 

 

 

 

 

 

 

 

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

86


 

 

 

 

 

 

 

 

 

 

 

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

87


 

 

 

 

 

 

 

 

 

 

 

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

88


 

 

 

 

 

 

 

 

 

 

 

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

89


 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

1)

Initial cost of leasehold or acquisition investment to company represents the aggregate of the cost incurred during the year in which we purchased the property for owned properties or purchased a leasehold interest in leased properties. Cost capitalized subsequent to initial investment includes investments made in previously leased properties prior to their acquisition.

2)

Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets, which generally range from 16 to 25 years for buildings and improvements, or the term of the lease if shorter. Leasehold interests are amortized over the remaining term of the underlying lease.

3)

The aggregate cost for federal income tax purposes was approximately $1,046,120,000 at December 31, 2018.

90


 

GETTY REALTY CORP. and SUBSIDIARIES

SCHEDULE IV—MORTGAGE LOANS ON REAL ESTATE

As of December 31, 2018

(in thousands)

 

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

 

91


 

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

 

 

(a)

P & I = Principal and interest paid monthly.

(b)

I = Interest only paid monthly with principal deferred.

(c)

Note for funding of capital improvements.

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

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

 

 

2018

 

 

2017

 

 

2016

 

Balance at January 1,

 

$

32,366

 

 

$

32,737

 

 

$

48,455

 

Additions:

 

 

 

 

 

 

 

 

 

 

 

 

New mortgage loans

 

 

4,287

 

 

 

1,505

 

 

 

1,814

 

Deductions:

 

 

 

 

 

 

 

 

 

 

 

 

Loan repayments

 

 

(2,368

)

 

 

(1,227

)

 

 

(16,714

)

Collection of principal

 

 

(766

)

 

 

(649

)

 

 

(818

)

Balance at December 31,

 

$

33,519

 

 

$

32,366

 

 

$

32,737

 

 

92


 

EXHIBIT INDEX

GETTY REALTY CORP.

Annual Report on Form 10-K

for the year ended December 31, 2018

 

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.

93


 

Exhibit
Number

 

 

Description of Document

 

 

Location of Document

 

 

 

 

 

 

    10.7*

 

Form of restricted stock unit grant award under the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan, as amended.

 

Filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.8*

 

Amendment to the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan dated December 31, 2008.

 

Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.15*

 

Form of incentive restricted stock unit grant award under the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan, as amended.

 

Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2013 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.18*

 

Getty Realty Corp. Amended and Restated 2004 Omnibus Incentive Compensation Plan.

 

Filed as Exhibit 10.18 to the Company’s Annual Report on Form 10-K filed on March 16, 2015 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.20**

 

Credit Agreement, dated as of June 2, 2015, among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A. as Administrative Agent, Swing Line Lender, an L/C Issuer and as a Lender, and the other leaders party thereto.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.21**

 

Amended and Restated Note Purchase and Guarantee Agreement, dated as of June 2, 2015, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential Insurance Company of America, and the Prudential Retirement Insurance and Annuity Company.

 

Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2015 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.28

 

First Amendment, dated as of February 21, 2017, to Credit Agreement among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A. as Administrative Agent, Swing Line Lender, an L/C Issuer and as a Lender, and the other leaders party thereto.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2017 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.29**

 

Second Amended and Restated Note Purchase and Guarantee Agreement, dated as of February 21, 2017, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential Insurance Company of America (“Prudential”) and certain affiliates of Prudential.

 

Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2017 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.30**

 

Transaction Agreement between Empire Petroleum Partners, LLC and Getty Realty Corp., dated June 22, 2017.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 28, 2017 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.31

 

Distribution Agreement by and among Getty Realty Corp., J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, KeyBanc Capital Markets Inc., RBC Capital Markets, LLC, BTIG, LLC, Capital One Securities, Inc. and JMP Securities LLC, dated March 9, 2018.

 

Filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 9, 2016 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.32**

 

Amended and Restated Credit Agreement, dated as of March 23, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, Bank of America, N.A., as Administrative Agent and Swing Line Lender, each lender from time to time party thereto and each L/C Issuer from time to time party thereto.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2018 (File No. 001-13777) and incorporated herein by reference.

94


 

Exhibit
Number

 

 

Description of Document

 

 

Location of Document

 

 

 

 

 

 

    10.33**

 

Third Amended and Restated Note Purchase and Guarantee Agreement, dated as of June 21, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, the Prudential and certain affiliates of Prudential.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on July 26, 2018 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.34**

 

Note Purchase and Guarantee Agreement, dated as of June 21, 2018, among Getty Realty Corp., certain of its subsidiaries party thereto, Metropolitan Life Insurance Company (“MetLife”) and certain affiliates of MetLife.

 

Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on July 26, 2018 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    10.35*

 

Form of Indemnification Agreement between the Company and its directors.

 

Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on October 25, 2018 (File No. 001-13777) and incorporated herein by reference.

 

 

 

 

 

    21

 

Subsidiaries of the Company.

 

Filed herewith.

 

 

 

 

 

    23

 

Consent of Independent Registered Public Accounting Firm.

 

Filed herewith.

 

 

 

 

 

    31.1

 

Certification of Christopher J. Constant, President and Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

 

Filed herewith.

 

 

 

 

 

    31.2

 

Certification of Danion Fielding, Vice President, Chief Financial Officer and Treasurer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

 

Filed herewith.

 

 

 

 

 

    32.1

 

Certification of Christopher J. Constant, President and Chief Executive Officer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.

 

Filed herewith.

 

 

 

 

 

    32.2

 

Certification of Danion Fielding, Vice President, Chief Financial Officer and Treasurer, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. § 1350.

 

Filed herewith.

 

 

 

 

 

  101.INS

 

XBRL Instance Document

 

Filed herewith.

 

 

 

 

 

  101.SCH

 

XBRL Taxonomy Extension Schema

 

Filed herewith.

 

 

 

 

 

  101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase

 

Filed herewith.

 

 

 

 

 

  101.DEF

 

XBRL Taxonomy Extension Definition Linkbase

 

Filed herewith.

 

 

 

 

 

  101.LAB

 

XBRL Taxonomy Extension Label Linkbase

 

Filed herewith.

 

 

 

 

 

  101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase

 

Filed herewith.

 

*

Management contract or compensatory plan or arrangement.

**

Confidential treatment has been granted for certain portions of this Exhibit pursuant to Rule 24b-2 under the Exchange Act, which portions are omitted and filed separately with the SEC.

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

95


 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Getty Realty Corp.

(Registrant)

 

 

By:

/S/    DANION FIELDING      

 

Danion Fielding

 

Vice President, Chief Financial Officer and Treasurer

(Principal Financial Officer)

 

February 27, 2019

 

 

By:

/S/    EUGENE SHNAYDERMAN      

 

Eugene Shnayderman

 

Chief Accounting Officer and Controller

(Principal Accounting Officer)

 

February 27, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:

/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

 

 

 

96