GETTY REALTY CORP /MD/ - Annual Report: 2008 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

	OR

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

	COMMISSION FILE NUMBER 001-13777

	GETTY REALTY CORP.

	(Exact name of registrant as specified in its charter)


Maryland		11-3412575

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

125 Jericho Turnpike, Suite 103, Jericho, New York		11753

(Address of principal executive offices)		(Zip Code)

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

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


TITLE OF EACH CLASS		NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, $0.01 par value		New York Stock Exchange

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


	None

	(Title of Class)

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

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 o No x

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 x No o

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. o

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


Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

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

The aggregate market value of common stock held by non-affiliates (17,354,865 shares of common stock) of the Company was $250,083,605 as of June 30, 2008.

The registrant had outstanding 24,766,166 shares of common stock as of March 2, 2009.

DOCUMENTS INCORPORATED BY REFERENCE


DOCUMENT		PART OF FORM 10-K

Selected Portions of Definitive Proxy Statement for the 2009 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, 2008 pursuant to Regulation 14A.		III

TABLE OF CONTENTS


Item	Description	Page


	Cautionary Note Regarding Forward-Looking Statements	1

	PART I

1	Business	3
1A	Risk Factors	7
1B	Unresolved Staff Comments	17
2	Properties	18
3	Legal Proceedings	20
4	Submission of Matters to a Vote of Security Holders	24

	PART II

5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25
6	Selected Financial Data	27
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
7A	Quantitative and Qualitative Disclosures About Market Risk	44
8	Financial Statements and Supplementary Data	45
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65
9A	Controls and Procedures	65
9B	Other Information	65

	PART III

10	Directors, Executive Officers and Corporate Governance	66
11	Executive Compensation	66
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
13	Certain Relationships and Related Transactions, and Director Independence	67
14	Principal Accountant Fees and Services	67

	PART IV

15	Exhibits and Financial Statement Schedules	68

	Signatures	84
	Exhibit Index	85

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 Private Securities Litigation Reform Act of 1995. When we use the words “believes,” “expects,” “plans,” “projects,” “estimates,” “predicts” and similar expressions, we intend to identify forward-looking statements. (All capitalized and undefined terms used in this section shall have the same meanings hereafter defined below in this Annual Report on Form 10-K.) Examples of forward-looking statements include statements regarding the developments related to our primary tenant, Getty Petroleum Marketing Inc. (“Marketing”) which is a wholly owned subsidiary of OAO LUKoil (“Lukoil”), and the Marketing Leases (as defined below) included in “Item 1A. Risk Factors” and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Developments Related to Marketing and the Marketing Leases” and elsewhere in this Annual Report on Form 10-K; the impact of any modification or termination of the Marketing Leases on our business and ability to pay dividends or our stock price; our belief that Lukoil would not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases; our belief that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities (as defined below); our decision to attempt to negotiate with Marketing for a modification of the Marketing Leases which removes the Subject Properties (as defined below) or the Revised Subject Properties (as defined below) from the Marketing Leases; our ability to predict if or when the Marketing Leases will be modified or terminated, the terms of any such modification or termination or what actions Marketing and Lukoil will take and what our recourse will be whether the Marketing Leases are modified or terminated or not; our belief that it is probable that we will collect the deferred rent receivable related to the Remaining Properties (as defined below); our belief that no impairment charge is necessary for the Subject Properties or the additional properties included within the list of Revised Subject Properties; the expected effect of regulations on our long-term performance; our expected ability to maintain compliance with applicable regulations; our ability to renew expired leases; the adequacy of our current and anticipated cash flows from operations, borrowings under our credit agreement and available cash and cash equivalents; our ability to re-let properties at market rents or sell properties; our belief that we do not have a material liability for offers and sales of our securities made pursuant to registration statements that did not contain the financial statements or summarized financial data of Marketing; our expectations regarding future acquisitions; our ability to maintain our federal tax status as a real estate investment trust (“REIT”); the probable outcome of litigation or regulatory actions; our expected recoveries from underground storage tank funds; our exposure to environmental remediation costs; our estimates regarding remediation costs; our expectations as to the long-term effect of environmental liabilities on our business, financial condition; results of operations, liquidity, ability to pay dividends and stock price our exposure to interest rate fluctuations and the manner in which we expect to manage this exposure; the expected reduction in interest-rate risk resulting from our interest rate swap agreement and our expectation that we will not settle the interest rate swap agreement prior to its maturity; the expectation that the Credit Agreement (as defined below) will be refinanced with variable interest-rate debt at its maturity; our expectations regarding corporate level federal income taxes; the indemnification obligations of the Company and others; our assessment of the likelihood of future competition; our assessment as to the adequacy of our insurance coverage; our belief that Marketing had vacancies and/or removed the gasoline tanks and related equipment at what may be as much as 10% or more of the properties subject to the Marketing Leases; assumptions regarding the future applicability of accounting estimates, assumptions and policies; our intention to pay future dividends and the amounts thereof; and our beliefs about the reasonableness of our accounting estimates, judgments and assumptions.

These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and involve known and unknown risks (including the risks described below in “Item 1A. Risk Factors” and other risks that we describe from time to time in our other filings with the Securities and Exchange Commission (“SEC”)), uncertainties and other factors which may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by these forward- looking statements. These factors include, but are not limited to: risks associated with owning and leasing real estate generally; dependence on Marketing as a tenant and on rentals from companies engaged in the petroleum marketing and convenience store businesses; adverse developments in general business, economic or political conditions our unresolved SEC comment; competition for properties and tenants; risk of performance of our tenants of their lease obligations, tenant non-renewal and our ability to re-let or sell vacant properties; the effects of taxation and other regulations; potential litigation exposure; costs of completing environmental remediation and of compliance with environmental regulations; the exposure to counterparty risk; the risk of loss of our management

team; the impact of our electing to be treated as a REIT under the federal income tax laws, including subsequent failure to qualify as a REIT; risks associated with owning real estate primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; risks associated with potential future acquisitions; losses not covered by insurance; future dependence on external sources of capital; the risk that our business operations may not generate sufficient cash for distributions or debt service; our potential inability to pay dividends; and terrorist attacks and other acts of violence and war. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and/or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in this report 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. We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or circumstances or reflect the occurrence of unanticipated events.

PART I

Item 1. Business

Overview

Getty Realty Corp., a Maryland corporation, is the largest publicly-traded real estate investment trust (“REIT”) in the United States specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. As of December 31, 2008, we owned eight hundred seventy-eight properties and leased one hundred eighty-two additional properties. Our properties are located primarily in the Northeast and the Mid-Atlantic regions in the United States. The Company also owns or leases properties in Texas, North Carolina, Hawaii, California, Florida, Arkansas, Illinois, Ohio and North Dakota.

Nearly all of our properties are leased or sublet to distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services who are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual operations conducted at these properties. As of December 31, 2008, we leased approximately 82% of our owned and leased properties on a long-term basis to Getty Petroleum Marketing Inc. (“Marketing”). Marketing is wholly-owned by a subsidiary of OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies. Marketing operates the petroleum distribution terminals but typically does not itself directly operate the retail motor fuel and convenience store properties it leases from us. Rather, Marketing generally subleases our retail properties to distributors and retailers who are responsible for the actual operations at the locations and operate their convenience stores, automotive repair services or other businesses at our properties. (For information regarding factors that could adversely affect us relating to Marketing or our other lessees, see “Item 1A. Risk Factors”. For additional information regarding developments related to Marketing and the Marketing Leases (as defined below), see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

We are self-administered and self-managed by our experienced management team, which has over ninety-eight years of combined experience in owning, leasing and managing retail motor fuel and convenience store properties. Our executive officers are engaged exclusively in the day-to-day business of the Company. We administer nearly all management functions for our properties, including leasing, legal, data processing, finance and accounting. We have invested, and will continue to invest, in real estate and real estate related investments, such as mortgage loans, when appropriate opportunities arise.

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 actual service station operation and petroleum distribution. We held our initial public offering in 1971 under the name Power Test Corp. We acquired, from Texaco in 1985, 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. We became one of the largest independent owner/operators of petroleum marketing assets in the country, serving retail and wholesale customers through a distribution and marketing network of Getty® and other branded retail motor fuel and convenience store properties and petroleum distribution terminals.

Marketing was formed to facilitate the spin-off of our petroleum marketing business to our shareholders which was completed in 1997 (the “Spin-Off”). At that time, our shareholders received a tax-free dividend of one share of common stock of Marketing for each share of our common stock. Following the Spin-Off, Marketing held the assets and liabilities of our petroleum marketing operations and a portion of our home heating oil business, and we continued to operate primarily as a real estate company specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. We acquired Power Test Investors Limited Partnership (the “Partnership”) in 1998, thereby acquiring fee title to two hundred ninety-five properties we had previously leased from the Partnership and which the Partnership had acquired from Texaco in 1985. We later sold

the remaining portion of our home heating oil business. As a result, we are now exclusively engaged in the ownership, leasing and management of real estate assets, principally in the petroleum marketing industry.

Marketing was acquired by a U.S. subsidiary of Lukoil in December 2000. In connection with Lukoil’s acquisition of Marketing, we renegotiated our long-term unitary lease (the “Master Lease”) with Marketing. As of December 31, 2008, Marketing leased from us eight hundred fifty-four properties under the Master Lease and ten properties under supplemental leases (collectively with the Master Lease, the “Marketing Leases”). Eight hundred fifty-five of the properties leased to Marketing are retail motor fuel and convenience store properties and nine of the properties are petroleum distribution terminals. Seven hundred ten of the properties leased to Marketing are owned by us and one hundred fifty-four of the properties are leased by us from third parties. The Master Lease has an initial term expiring in December 2015, and generally provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. Each of the renewal options may be exercised only on an “all or nothing” basis. The supplemental leases have initial terms of varying expiration dates. The Marketing Leases are “triple-net” leases, pursuant to which Marketing is responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses. We have licensed the Getty® trademarks to Marketing on an exclusive basis in its marketing territory as of December 2000. We have also licensed the trademarks to Marketing on a non-exclusive basis outside that territory, subject to a gallonage-based royalty, although to date, Marketing has not used the trademark outside that territory. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. A REIT is a corporation, or a business trust that would otherwise be taxed as a corporation, which meets certain requirements of the Internal Revenue Code. The Internal Revenue Code permits a qualifying REIT to deduct dividends paid, thereby effectively eliminating corporate level federal income tax and making the REIT a pass-through vehicle for federal income tax purposes. To meet the applicable requirements of the Internal Revenue Code, a REIT must, among other things, invest substantially all of its assets in interests in real estate (including mortgages and other REITs) or cash and government securities, derive most of its income from rents from real property or interest on loans secured by mortgages on real property, and distribute to shareholders annually a substantial portion of its otherwise taxable income. As a REIT, we are required to distribute at least ninety percent of our taxable income to our shareholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed.

Real Estate Business

The operators of our properties are primarily distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services. Over the past decade, these lines of business have matured into a single industry as operators increased their emphasis on co-branded locations with multiple uses. The combination of petroleum product sales with other offerings, particularly convenience store products, has helped provide one-stop shopping for consumers and we believe represented a driving force behind the industry’s historical growth. In addition, approximately twenty of our properties are directly leased by us to others for other uses such as fast food restaurants, automobile sales and other retail purposes. In those instances where we determine that the highest and best use for our properties is no longer a retail motor fuel outlet, we will seek alternative tenants or buyers for such properties as opportunities arise.

Revenues from rental properties for the year ended December 31, 2008 were $81.2 million which is comprised of $78.6 million of lease payments received and $2.5 million of deferred rental income recognized due to the straight-line method of accounting for the leases with Marketing and certain of our other tenants and amortization of above-market and below-market rent for acquired in-place leases. In 2008, we received lease payments from Marketing aggregating approximately $60.3 million (or 77%) of the $78.6 million lease payments received. We are materially dependent upon the ability of Marketing to meet its rental, environmental and other obligations under the Marketing Leases. Marketing’s financial results depend largely on retail petroleum marketing margins and rental income from subtenants who operate our properties. As permitted under the terms of our leases with Marketing, Marketing can generally use each property for any lawful purpose, or for no purpose whatsoever. The petroleum marketing industry has been and continues to be volatile and highly competitive. Marketing has made all required

monthly rental payments under the Marketing Leases when due, although there is no assurance that it will continue to do so. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.) You can find more information about our revenues, profits and assets by referring to the financial statements and supplemental financial information in “Item 8. Financial Statements and Supplementary Data”.

As of December 31, 2008, we owned fee title to eight hundred sixty-nine retail motor fuel, convenience store and other retail properties and nine petroleum distribution terminals. We also leased one hundred eighty-two retail motor fuel, convenience store and other retail properties. Our typical property is used as a retail motor fuel and/or convenience store, and is located on between one-half and three quarters of an acre of land in a metropolitan area. Our properties are located primarily in the Northeast and the Mid-Atlantic regions in the United States. The Company also owns or leases properties in Texas, North Carolina, Hawaii, California, Florida, Arkansas, Illinois, Ohio and North Dakota. Approximately one-half of our retail motor fuel properties have repair bays (typically two or three bays per station) and nearly half have convenience stores, canopies or both. We lease four thousand square feet of office space at 125 Jericho Turnpike, Jericho, New York, which is used for our corporate headquarters.

We believe our network of retail motor fuel and convenience store properties and terminal properties across the Northeast 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. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrance and exit ramps. Furthermore, we believe that obtaining the permits necessary to operate a network of petroleum marketing properties such as ours would be a difficult, time consuming and costly process for any potential competitor. However, the real estate industry is highly competitive, and we compete for tenants with a large number of property owners. Our principal means of competition are rents charged in relation to the income producing potential of the location. In addition, we expect other major real estate investors with significant capital will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future.

As part of our overall growth 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. To the extent that our current sources of liquidity are not sufficient to fund such acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all.

Trademarks

We own the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States and have licensed the Getty® trademarks to Marketing on an exclusive basis in its marketing territory as of December 2000. We have also licensed the trademarks to Marketing on a non-exclusive basis outside that territory, subject to a gallonage-based royalty, although to date, Marketing has not used the trademark outside that territory. The trademark licenses with Marketing are coterminous with the Master Lease.

Regulation

We are subject to numerous existing 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, underground storage tanks (“UST” or “USTs”) and other equipment. Petroleum properties are governed by numerous federal, state and local environmental laws and regulations. These laws have included: (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate the soil and/or groundwater contamination pursuant to governmental order and directive, (ii) requirements to remove and replace USTs that have exceeded governmental-mandated age limitations and (iii) the requirement to

provide a certificate of financial responsibility with respect to claims relating to UST failures. Our tenants are directly responsible for compliance with various environmental laws and regulations as the operators of our properties.

We believe that we are in substantial compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters. Although we are unable to predict what legislation or regulations may be adopted in the future with respect to environmental protection and waste disposal, existing legislation and regulations have had no material adverse effect on our competitive position. (For additional information with respect to pending environmental lawsuits and claims see “Item 3. Legal Proceedings”.)

Environmental expenses are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting incurred in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental expenses where available. We enter into leases and various other agreements which allocate responsibility for known and unknown environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. In accordance with leases with certain tenants, we have agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure (“Closure”) in an efficient and economical manner. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. As of December 31, 2008, we have regulatory approval for remediation action plans in place for two hundred forty-nine (95%) of the two hundred sixty-two properties for which we continue to retain remediation responsibility and the remaining thirteen properties (5%) were in the assessment phase. In addition, we have nominal post-closure compliance obligations at twenty-four properties where we have received “no further action” letters.

Our tenants are directly responsible to pay for (i) remediation of environmental contamination they cause and compliance with various environmental laws and regulations as the operators of our properties, and (ii) environmental liabilities allocated to our tenants under the terms of our leases and various other agreements between our tenants and us. Generally, the liability for the retirement and decommissioning or removal of USTs and other equipment is the responsibility of our tenants. We are contingently liable for these obligations in the event that our tenants do not satisfy their responsibilities. A liability has not been accrued for obligations that are the responsibility of our tenants based on our tenants’ past histories of paying such obligations and/or our assessment of their respective financial abilities to pay their share of such costs. 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.

It is possible that our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities may change, which may result in adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. We will be required to accrue for environmental liabilities that we believe are allocable to others under various agreements if we determine that it is probable that the counter-party will not meet its environmental obligations. We may ultimately be responsible to directly pay for environmental liabilities as the property owner if the counterparty fails to pay them. The ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

For additional information please refer to “Item 1A. Risk Factors” and to “General – Developments Related to Marketing and the Marketing Leases,” “Liquidity and Capital Resources,” “Environmental Matters” and “Contractual Obligations” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which appear in Item 7. of this Annual Report on Form 10-K.

Personnel

As of February 1, 2009, we had sixteen employees.

Access to our filings with the Securities and Exchange Commission and Corporate Governance Documents

Our website address is www.gettyrealty.com. Our address, phone number and a list of our officers is available on our website. Our website contains a hyperlink to the EDGAR database of the Securities and Exchange Commission at www.sec.gov where you can access, free-of-charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to these reports as soon as reasonably practicable after such reports are filed. Our website also contains our business conduct guidelines, corporate governance guidelines and the charters of the Compensation, Nominating/Corporate Governance and Audit Committees of our Board of Directors. We also will provide copies of these reports and corporate governance documents free-of-charge upon request, addressed to Getty Realty Corp., 125 Jericho Turnpike, Suite 103, Jericho, NY 11753, Attn: Investor Relations. Information available on or accessible through our website shall not be deemed to be a part of this Annual Report on Form 10-K. You may read and copy any materials that we file with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330.

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 and/or stock price. An investment in our stock involves various risks, including those mentioned below and elsewhere this Annual Report on Form 10-K and those that are described from time to time in our other filings with the SEC.

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 related to owning properties used in the petroleum marketing industry, 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 re-letting properties on favorable terms or at all,

•	impairments in our ability to collect rent payments when due,

•	increases in interest rates and adverse changes in the availability, cost and terms of financing,

•	the potential for uninsured casualty and other losses,

•	the impact of present or future environmental legislation and compliance with environmental laws,

•	adverse changes in zoning laws and other regulations, and

•	acts of terrorism and war.

Each of these factors could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/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.

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. The general economic conditions in the United States are, and for an extended period of time may be, significantly less favorable than that of recent years. Among other effects, adverse economic conditions could depress real estate values, impact our ability to re-let or sell our properties and have and adverse effect on our tenants’ level of sales and financial performance generally. Our revenues are dependent on the economic success of our tenants and 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 and/or stock price.

Because our revenues are primarily dependent on the performance of Getty Petroleum Marketing Inc., our primary tenant, in the event that Marketing cannot or will not perform its rental, environmental and other obligations under the Marketing Leases, or if the Marketing Leases are modified significantly or terminated, or if it becomes probable that Marketing will not pay its environmental obligations, or if we change our assumptions for rental revenue or environmental liabilities related to the Marketing Leases, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price could be materially adversely affected. No assurance can be given that Marketing will have the ability to pay its debts or meet its rental, environmental or other obligations under the Marketing Leases.

Marketing’s financial results depend largely upon retail petroleum marketing margins from the sale of refined petroleum products at margins in excess of its fixed and variable expenses and rental income from its subtenants who operate their convenience stores, automotive repair service or other businesses at our properties. The petroleum marketing industry has been, and continues to be, volatile and highly competitive. A large, rapid increase in wholesale petroleum prices would adversely affect Marketing’s profitability and cash flow if the increased cost of petroleum products could not be passed on to Marketing’s customers or if the consumption of gasoline for automotive use were to decline significantly. Petroleum products are commodities, the prices of which depend on numerous factors that affect supply and demand. The prices paid by Marketing and other petroleum marketers for products are affected by global, national and regional factors. We cannot accurately predict how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect Marketing or our other tenants.

A substantial portion of our revenues (75% for the year ended December 31, 2008) are derived from the Marketing Leases. Accordingly, our revenues are dependent to a large degree on the economic performance of Marketing and of the petroleum marketing industry, and any factor that adversely affects Marketing, or our relationship with Marketing, may have a material adverse effect on our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price. Through March 2009, Marketing has made all required monthly rental payments under the Marketing Leases when due, although there is no assurance that it will continue to do so. Even though Marketing is wholly-owned by a subsidiary of Lukoil, and Lukoil has in prior periods provided credit enhancement and capital to Marketing, Lukoil is not a guarantor of the Marketing Leases and there can be no assurance that Lukoil is currently providing, or will provide, any credit enhancement or additional capital to Marketing.

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

during the current lease term. Our assessments and assumptions regarding the recoverability of the deferred rent receivable related to the properties subject to the Marketing Leases are reviewed on a regular basis and such assessments and assumptions are subject to change.

We have had periodic discussions with representatives of Marketing regarding potential modifications to the Marketing Leases and in 2007, during the course of such discussions, Marketing has proposed to (i) remove approximately 40% of the properties (“the Subject Properties”) from the Marketing Leases and eliminate payment of rent to us, and eliminate or reduce payment of operating expenses, with respect to the Subject Properties, and (ii) reduce the aggregate amount of rent payable to us for the approximately 60% of the properties that would remain under the Marketing Leases (the “Remaining Properties”). Representatives of Marketing have also indicated to us that they are considering significant changes to Marketing’s business model. In light of these developments, and the continued deterioration in Marketing’s annual financial performance (as discussed below), in March 2008 we decided to attempt to negotiate with Marketing for a modification of the Marketing Leases which removes the Subject Properties from the Marketing Leases. We have held periodic discussions with Marketing since March 2008 in our attempt to negotiate a modification of the Marketing Leases to remove the Subject Properties. Although we continue to remove individual locations from the Master Lease as mutually beneficial opportunities arise, there has been no agreement between us and Marketing on any principal terms that would be the basis for a definitive Master Lease modification agreement. If Marketing ultimately determines that its business strategy is to exit all of the properties it leases from us or to divest a composition of properties different from the properties comprising the Subject Properties, such as the revised list of properties provided to us by Marketing in the second quarter of 2008 which includes approximately 45% of the properties Marketing leases from us ( the “Revised Subject Properties”), it is our intention to cooperate with Marketing in accomplishing those objectives if we determine that it is prudent for us to do so. Any modification of the Marketing Leases that removes a significant number of properties from the Marketing Leases would likely significantly reduce the amount of rent we receive from Marketing and increase our operating expenses. We cannot accurately predict if, or when, the Marketing Leases will be modified or what the terms of any agreement may be if the Marketing Leases are modified. We also cannot accurately predict what actions Marketing and Lukoil may take, and what our recourse may be, whether the Marketing Leases are modified or not.

We intend either to re-let or sell any properties removed from the Marketing Leases and reinvest the realized sales proceeds in new properties. We intend to seek replacement tenants or buyers for properties removed from the Marketing Leases either individually, in groups of properties, or by seeking a single tenant for the entire portfolio of properties subject to the Marketing Leases. Although we are the fee or leasehold owner of the properties subject to the Marketing Leases and the owner of the Getty® brand and have prior experience with tenants who operate their gas stations, convenience stores, automotive repair services or other businesses at our properties; in the event that properties are removed from the Marketing Leases, we cannot accurately predict if, when, or on what terms, such properties could be re-let or sold.

Due to the previously disclosed deterioration in Marketing’s annual financial performance, in conjunction with our decision to attempt to negotiate with Marketing for a modification of the Marketing Leases to remove the Subject Properties, we have decided that we cannot reasonably assume that we will collect all of the rent due to us related to the Subject Properties for the remainder of the current lease terms. In reaching this conclusion, we relied on various indicators, including, but not limited to, the following financial results of Marketing through the year ended December 31, 2007: (i) Marketing’s significant operating losses, (ii) its negative cash flow from operating activities, (iii) its asset impairment charges for underperforming assets, and (iv) its negative earnings before interest, taxes, depreciation, amortization and rent payable to the Company. We have not received Marketing’s financial results for the year ended December 31, 2008 prior to the preparation of this Annual Report on Form 10-K.

rent receivable due from Marketing representing the full amount of the deferred rent receivable recorded related to the Subject Properties as of that date. We have not provided a deferred rent receivable reserve related to the Remaining Properties since, based on our assessments and assumptions, we continue to believe that it is probable that we will collect the deferred rent receivable related to the Remaining Properties of $22.9 million as of December 31, 2008 and that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases.

Marketing is directly responsible to pay for (i) remediation of environmental contamination it causes and compliance with various environmental laws and regulations as the operator of our properties, and (ii) known and unknown environmental liabilities allocated to Marketing under the terms of the Master Lease and various other agreements between Marketing and us relating to Marketing’s business and the properties subject to the Marketing Leases (collectively the “Marketing Environmental Liabilities”). We may ultimately be responsible to directly pay for Marketing Environmental Liabilities as the property owner if Marketing fails to pay them. Additionally, we will be required to accrue for Marketing Environmental Liabilities if we determine that it is probable that Marketing will not meet its obligations or if our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities changes as a result of the factors discussed above, or otherwise. However, we continue to believe that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities since we believe that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases and, accordingly, we did not accrue for the Marketing Environmental Liabilities as of December 31, 2008 or December 31, 2007. Nonetheless, we have determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by us based on our assumptions and analysis of information currently available to us) could be material to us if we were required to accrue for all of the Marketing Environmental Liabilities in the future since we believe that it is reasonably possible that as a result of such accrual, we may not be in compliance with the existing financial covenants in our Credit Agreement. Such non-compliance could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness under the Credit Agreement.

Should our assessments, assumptions and beliefs prove to be incorrect, or if circumstances change, the conclusions we reached may change relating to (i) whether some or all of the Subject or Remaining Properties are likely to be removed from the Marketing Leases (ii) recoverability of the deferred rent receivable for some or all of the Subject or Remaining Properties, (iii) potential impairment of the Subject or Remaining Properties, and (iv) Marketing’s ability to pay the Marketing Environmental Liabilities. We intend to regularly review our assumptions that affect the accounting for deferred rent receivable; long-lived assets; environmental litigation accruals; environmental remediation liabilities; and related recoveries from state underground storage tank funds, which may result in material adjustments to the amounts recorded for these assets and liabilities, and as a result of which, we may not be in compliance with the financial covenants in our Credit Agreement. Accordingly, we may be required to (i) reserve additional amounts of the deferred rent receivable related to the Remaining Properties, (ii) record an impairment charge related to the Subject or Remaining Properties, or (iii) accrue for Marketing Environment Liabilities as a result of the potential or actual modification of the Marketing Leases or other factors.

We cannot provide any assurance that Marketing will continue to pay its debts or meet its rental, environmental or other obligations under the Marketing Leases prior or subsequent to any potential modification to the Marketing Leases. In the event that Marketing cannot or will not perform its rental, environmental or other obligations under the Marketing Leases; if the Marketing Leases are modified significantly or terminated; if we determine that it is probable that Marketing will not meet its environmental obligations and we accrue for such liabilities; if we are unable to promptly re-let or sell the properties subject to the Marketing Leases; or if we change our assumptions that affect the accounting for rental revenue or Marketing Environmental Liabilities related to the Marketing Leases and various other agreements; our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price may be materially adversely affected.

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

We derive substantially all of our revenues from leasing, primarily on a triple-net basis, retail motor fuel and convenience store properties and petroleum distribution terminals to tenants in the petroleum marketing industry. Accordingly, our revenues will be dependent on the economic success of the petroleum marketing industry, and any factors that adversely affect that industry could also have a material adverse effect on our business, financial

condition and results of operations liquidity, ability to pay dividends and/or stock price. The success of participants in that industry depends upon the sale of refined petroleum products at margins in excess of fixed and variable expenses. A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of Marketing and our other tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline were to decline significantly. Petroleum products are commodities, the prices of which depend on numerous factors that affect the supply of and demand for petroleum products. The prices paid by Marketing and other petroleum marketers for products are affected by global, national and regional factors. We cannot be certain how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect Marketing or our other tenants.

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

We are subject to risks that financial distress or default of our existing 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 impact the reliability of our rent receipts. We are subject to risks that the terms of renewal or re-letting our properties (including the cost of required renovations, replacement of gasoline tanks and related equipment or environmental remediation) may be less favorable than current lease terms, or that the values of our properties that we sell may be adversely affected by unfavorable general economic conditions. Unfavorable general economic conditions may also negatively impact our ability to re-let 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 charged.

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 or default of our tenants may also lead to protracted, more complex, expensive or burdensome processes for retaking control of our properties than would otherwise be the case, including as a possible consequence of bankruptcy, 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, such as Marketing. (For additional information with respect to concentration of tenant risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

If our tenants do not perform their lease obligations, or we were unable to renew existing leases and promptly recapture and re-let or sell vacant locations; or if lease terms upon renewal or re-letting were less favorable than current lease terms, or if the values of properties that we sell are adversely affected by market conditions; or if we incur significant costs or disruption related to or resulting from tenant financial distress, bankruptcy or default; our cash flow could be significantly adversely affected.

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 develop, 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 have incurred, and may continue to incur, operating costs as a result of environmental laws and regulation, which could reduce our profitability.

The real estate business and the petroleum products industry are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment. Under certain environmental laws, a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances or petroleum products at, on, or under, such property, and may be

required to investigate and clean-up such contamination. Such laws typically impose liability and clean-up responsibility without regard to whether the owner or operator knew of or caused the presence of the contaminants, or the timing or cause of the contamination, and the liability under such laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. For example, liability may arise as a result of the historical use of a property or from the migration of contamination from adjacent or nearby properties. Any such contamination or liability may also reduce the value of the property. In addition, the owner or operator of a property may be subject to claims by third parties based on injury, damage and/or costs, including investigation and clean-up costs, resulting from environmental contamination present at or emanating from a property. The properties owned or controlled by us are leased primarily as retail motor fuel and convenience store properties, and therefore may contain, or may have contained, 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 may be 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-let or sell our properties on favorable terms, or at all.

For additional information with respect to pending environmental lawsuits and claims, environmental remediation costs and estimates, and developments related to Marketing and the Marketing Leases see “Item 3. Legal Proceedings”, “Environmental Matters” and “General – Developments Related to Marketing and the Marketing Leases” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 5 in “Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements” each of which is incorporated by reference herein.

We enter into leases and various other agreements which allocate responsibility for known and unknown environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. Our tenants are directly responsible to pay for (i) remediation of environmental contamination they cause and compliance with various environmental laws and regulations as the operators of our properties, and (ii) environmental liabilities allocated to our tenants under the terms of our leases and various other agreements between our tenants and us. Generally, the liability for the retirement and decommissioning or removal of USTs and other equipment is the responsibility of our tenants. We are contingently liable for these obligations in the event that our tenants do not satisfy their responsibilities. A liability has not been accrued for obligations that are the responsibility of our tenants based on our tenants’ past histories of paying such obligations and/or our assessment of their respective financial abilities to pay their share of such costs. However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the past will continue to do so.

We have not accrued for approximately $1.0 million in costs allegedly incurred by the current property owner in connection with removal of USTs and soil remediation at a property that was leased to and operated by Marketing. We believe that Marketing is responsible for such costs under the terms of the Master Lease, and have tendered the matter for defense and indemnification from Marketing, but Marketing had denied its liability for claims and its responsibility to defend against, and indemnify us, for the claim. We have filed third party claims against Marketing for indemnification in this matter, which claim is currently being actively litigated. It is reasonably possible that our assumption that Marketing will be ultimately responsible for the claim may change, which may result in our providing an accrual for this and other matters.

It is possible that our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities may change, which may result in adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. We will be required to accrue for environmental liabilities that we believe are allocable to others under various other agreements if we determine that it is probable that the counter-party will not meet its environmental obligations. We may ultimately be responsible to directly pay for environmental liabilities as the property owner if the counterparty fails to pay them.

We cannot predict what environmental legislation or regulations may be enacted in the future, or if or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict whether state 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.

As a result of the factors discussed above, or others, 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 and/or stock price.

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

We are subject to various lawsuits and claims, including litigation related to environmental matters, damages resulting from leaking USTs and toxic tort claims. The ultimate resolution of certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. Our ultimate liabilities resulting from such lawsuits and claims, if any, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. (For additional information with respect to pending lawsuits and claims see “Item 3. Legal Proceedings”.)

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. 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 payable to us (including under the Marketing Leases) than if our properties were more geographically diversified. Additionally, the rents on our properties may be subject to a greater risk of default than other properties in the event of adverse economic, political, or business developments or natural hazards that may affect the Northeast or Mid-Atlantic 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 and/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 charged in relation to the income producing potential of the location. In addition, we expect other major real estate investors, some with much greater resources than us, will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future.

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

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. Our most significant counterparties include, but are not limited to, Marketing as our primary tenant, the members of the Bank Syndicate that are counterparties to our Credit Agreement as our primary source of financing and JPMorgan Chase as the counterparty to our interest rate Swap Agreement. The default, insolvency or other inability of a significant counterparty to perform its obligations under an agreement or transaction, including, without limitation, as a result of the rejection of an agreement or transaction in bankruptcy proceedings, could have a material adverse effect on

us. (For additional information with respect to, and definitions of, the Bank Syndicate, the Credit Agreement and the Swap Agreement, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risks”.)

We may acquire or develop new properties, and this may create risks.

We may acquire or develop properties or acquire other real estate companies when we believe that an acquisition or development matches our business strategies. We may not succeed in consummating desired acquisitions or in completing developments on time or within our budget. We also may not succeed in leasing newly developed or acquired properties at rents sufficient to cover their costs of acquisition or development and operations.

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

Marketing, and other tenants, as the lessees of our properties, are required to provide insurance for such properties, including casualty, liability, fire and extended coverage in amounts and on other terms as set forth in our leases. We carry insurance against certain risks and in such amounts as we believe are customary for businesses of our kind. However, as the costs and availability of insurance change, we may decide not to be covered against certain losses (such as certain environmental liabilities, earthquakes, hurricanes, floods and civil 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. There is no assurance that our insurance against loss will be sufficient. The destruction of, or significant damage to, or significant liabilities arising out of conditions at, our properties due to an uninsured cause would result in an economic loss and could result in us losing both our investment in, and anticipated profits from, such properties. When a loss is insured, the coverage may be insufficient in amount or duration, or a lessee’s customers may be lost, such that the lessee cannot resume its business after the loss at prior levels or at all, resulting in reduced rent or a default under its lease. Any such loss relating to a large number of properties could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

Failure to qualify as a REIT under the federal income tax laws would have adverse consequences to our shareholders.

We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. We cannot, however, 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 will again be subject to federal income tax at regular corporate rates, we could be subject to the federal alternative minimum tax, we would be required to pay significant income taxes and we would have less money available for our operations and distributions to shareholders. This would likely have a significant adverse effect on the value of our securities. We could also be precluded from treatment as a REIT for four taxable years following the year in which we lost the qualification, and all distributions to stockholders would be taxable as regular corporate dividends to the extent of our current and accumulated earnings and profits. Loss of our REIT status would result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness under our Credit Agreement which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

In 2004, we received a comment letter from the Securities and Exchange Commission that contains one comment that remains unresolved.

One comment remains unresolved as part of a periodic review commenced in 2004 by the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) of our Annual Report on Form 10-K for the year ended December 31, 2003 pertaining to the SEC’s position that we must include the financial statements and summarized financial data of Marketing in our periodic filings, which Marketing contends is prohibited by the terms of the Master Lease. In June 2005, the SEC indicated that, unless we file Marketing’s financial statements and summarized financial data with our periodic reports: (i) it will not consider our Annual Reports on Forms 10-K for the years beginning with fiscal 2000 to be compliant; (ii) it will not consider us to be current in our reporting

requirements; (iii) it will not be in a position to declare effective any registration statements we may file for public offerings of our securities; and (iv) we should consider how the SEC’s conclusion impacts our ability to make offers and sales of our securities under existing registration statements and if we have a liability for such offers and sales made pursuant to registration statements that did not contain the financial statements of Marketing. We have had no communication with the SEC since 2005. We cannot accurately predict the consequences if we are ultimately unable to resolve this outstanding comment.

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

We are dependent on external sources of capital to maintain our status as a REIT and must distribute to our shareholders each year at least ninety percent of our net taxable income, excluding any net capital gain. Because of these distribution requirements, it is not likely that we will be able to fund all future capital needs, including acquisitions, from income from operations. Therefore, we will have to continue to rely on third-party sources of capital, which may or may not be available on favorable terms, or at all. As part of our overall growth 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. To the extent that our current sources of liquidity are not sufficient to fund such acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all. We cannot accurately predict how periods of illiquidity in the credit markets, such as current market conditions, will impact our access to or cost of capital. In addition, we may be unable to pursue public equity and debt offerings until we resolve with the SEC the outstanding comment regarding disclosure of Marketing’s financial information. Moreover, additional equity offerings may result in substantial dilution of shareholders’ interests, and additional debt financing may substantially increase our leverage. Our access to third-party sources of capital depends upon a number of factors including general market conditions, the market’s perception of our growth potential, our current and potential future earnings and cash distributions, limitations on future indebtedness imposed under our Credit Agreement and the market price of our common stock.

The United States credit markets are currently experiencing an unprecedented contraction. As a result of the tightening credit markets, we may not be able to obtain additional financing on favorable terms, or at all. If one or more of the financial institutions that supports our Credit Agreement fails, we may not be able to find a replacement, which would negatively impact our ability to borrow under our the Credit Agreement. In addition, if the current pressures on credit continue or worsen, we may not be able to refinance our outstanding debt when due in March 2011, which could have a material adverse effect on us. Subject to the terms of the Credit Agreement, we have the option to extend the term of the Credit Agreement for one additional year to March 2012.

Our ability to meet the financial and other covenants relating to our Credit Agreement may be dependent on the performance of our tenants, including Marketing. Should our assessments, assumptions and beliefs that affect our accounting prove to be incorrect, or if circumstances change, we may have to materially adjust the amounts recorded in our financial statements for certain assets and liabilities, and as a result of which, we may not be in compliance with the financial covenants in our Credit Agreement. We have determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by us based on our assumptions and analysis of information currently available to us) could be material to us if we were required to accrue for all of the Marketing Environmental Liabilities in the future since we believe that it is reasonably possible that as a result of such accrual, we may not be in compliance with the existing financial covenants in our Credit Agreement. (For additional information with respect to The Marketing Environmental Liabilities, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.) If we are not in compliance with one or more of our covenants which, if not complied with could result in an event of default under our Credit Agreement, there can be no assurance that our lenders would waive such non-compliance. A default under our Credit Agreement, if not cured or waived, whether due to a loss of our REIT status, a material adverse effect on our business, financial condition or prospects, a failure to comply with financial and certain other covenants in the Credit Agreement or otherwise, could result in the acceleration of all of our indebtedness under our Credit Agreement. This could have a material adverse affect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

The downturn in the credit markets has increased the cost of borrowing and has made financing difficult to obtain, which may negatively impact our business, and may have a material adverse effect on us. Lenders may require us to enter into more restrictive covenants relating to our operations

During 2007, the United States housing and residential lending markets began to experience accelerating default rates, declining real estate values and increasing backlog of housing supply. The residential sector issues quickly spread more broadly into the corporate, asset-backed and other credit and equity markets and the volatility and risk premiums in most credit and equity markets have increased dramatically, while liquidity has decreased. These issues have continued into 2008 and the beginning of 2009. Increasing concerns regarding the United States and world economic outlook, such as large asset write-downs at banks, volatility in oil prices, declining business and consumer confidence and increased unemployment and bankruptcy filings, are compounding these issues and risk premiums in most capital markets remain near historical all-time highs. These factors are precipitating generalized credit market dislocations and a significant contraction in available credit. As a result, it is becoming increasingly difficult to obtain cost-effective debt capital to finance new investment activity or to refinance maturing debt, and most lenders are imposing more stringent restrictions on the terms of credit. Any future credit agreements or loan documents we execute may contain additional or more restrictive covenants. The negative impact on the tightening of the credit markets and continuing credit and liquidity concerns may have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. Additionally, there is no assurance that the increased financing costs, financing with increasingly restrictive terms or the increase in risk premiums that are demanded by investors will not have a material adverse effect on us.

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 make distributions on our common stock, to pay our indebtedness, or to fund our other liquidity needs. We may not be able to repay or refinance existing indebtedness on favorable terms, which could force us to dispose of properties on disadvantageous terms (which may also result in losses) or accept financing on unfavorable terms.

Borrowings under our 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 Credit Agreement and a significant increase in interest rates could also make it more difficult to find alternative financing on desirable terms. We have entered into an interest rate swap agreement with a major financial institution with respect to a portion of our variable rate debt outstanding under our Credit Agreement. Although the agreement is intended to lessen the impact of rising interest rates, it also exposes us to the risk that the other party to the agreement will not perform, the agreement will be unenforceable and the underlying transactions will fail to qualify as a highly-effective cash flow hedge for accounting purposes. Further, there can be no assurance that the use of an interest rate swap will always be to our benefit. While the use of an interest rate swap agreement is intended to lessen the adverse impact of rising interest rates, it also conversely limits the positive impact that could be realized from falling interest rates with respect to the portion of our variable rate debt covered by the interest rate swap agreement.

We may be unable to pay dividends and our equity may not appreciate.

Under the Maryland General Corporation Law, our ability to pay dividends would be restricted if, after payment of the dividend, (1) we would not be able to pay indebtedness as it becomes due in the usual course of business or (2) our total assets would be less than the sum of our liabilities plus the amount that would be needed, if we were to be dissolved, to satisfy the rights of any shareholders with liquidation preferences. There currently are no shareholders with liquidation preferences. No assurance can be given that our financial performance in the future will permit our payment of any dividends. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.) In particular, our Credit Agreement prohibits the payments of dividends during certain events of default. 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.

The loss of certain members of our management team could adversely affect our business.

We depend upon the skills and experience of our executive officers. Loss of the services of any of them could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. We do not have employment agreements with any of our executives.

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. Because of the inherent uncertainty of the estimates, judgments and assumptions associated with these critical accounting policies, we cannot provide any assurance that we will not make subsequent significant adjustments to our consolidated financial statements including those included in this Form 10-K. Estimates, judgments and assumptions underlying our consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state UST funds, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses, income taxes payable and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. For example, we have made judgments regarding the level of environmental reserves and reserves for our deferred rent receivable relating to Marketing and the Marketing Leases. These judgments and assumptions may prove to be incorrect and our business, financial condition, revenues, operating expense, results of operations, liquidity, ability to pay dividends and/or stock price may be materially adversely affected if that is the case. (For information regarding our critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies”.)

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

Our financial statements are subject to the application of GAAP, which are periodically revised and/or expanded. The application of GAAP is also subject to varying interpretations over time. Accordingly, we are required to adopt new or revised accounting standards 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.

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

Terrorist attacks or armed conflicts could affect our business or the businesses of our tenants or of Marketing or its parent. The consequences of armed conflicts are unpredictable, and we may not be able to foresee events that could have 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 a continuation of, 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 and/or stock price.

Item 1B. Unresolved Staff Comments

June 2005, the SEC indicated that, unless we file Marketing’s financial statements and summarized financial data with our periodic reports: (i) it will not consider our Annual Reports on Forms 10-K for the years beginning with 2000 to be compliant; (ii) it will not consider us to be current in our reporting requirements; (iii) it will not be in a position to declare effective any registration statements we may file for public offerings of our securities; and (iv) we should consider how the SEC’s conclusion impacts our ability to make offers and sales of our securities under existing registration statements and if we have a liability for such offers and sales made pursuant to registration statements that did not contain the financial statements of Marketing.

We believe that the SEC’s position is based on their interpretation of certain provisions of their internal Financial Reporting Manual (formerly known as their Accounting Disclosure Rules and Practices Training Material), Staff Accounting Bulletin No. 71 and Rule 3-13 of Regulation S-X. We do not believe that any of this guidance is clearly applicable to our particular circumstances and we believe that, even if it were, we should be entitled to certain relief from compliance with such requirements. Marketing generally subleases our properties to independent, individual service station/convenience store operators (subtenants). Consequently, we believe that we, as the owner of these properties and the Getty® brand, could re-let these properties to the existing subtenants (except for those properties that are vacant) who operate their convenience stores, automotive repair services or other businesses at our properties, or to other new or replacement tenants, at market rents although we cannot accurately predict whether, when, or on what terms, such properties would be re-let or sold. The SEC did not accept our positions regarding the inclusion of Marketing’s financial statements in our filings. We have had no communication with the SEC since 2005 regarding the unresolved comment. We cannot accurately predict the consequences if we are unable to resolve this outstanding comment.

We do not believe that offers or sales of our securities made pursuant to existing registration statements that did not or do not contain the financial statements of Marketing constitute, by reason of such omission, a violation of the Securities Act of 1933, as amended, or the Exchange Act. Additionally, we believe that if there ultimately is a determination that such offers or sales, by reason of such omission, resulted in a violation of those securities laws, we would not have any material liability as a consequence of any such determination.

Item 2. Properties

The following table summarizes the geographic distribution of our properties at December 31, 2008. The table also identifies the number and location of properties we lease from third-parties and which Marketing leases from us under the Marketing Leases. In addition, we lease four thousand square feet of office space at 125 Jericho Turnpike, 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			PERCENT
	MARKETING AS TENANT (1)		OTHER TENANTS		MARKETING AS TENANT		OTHER TENANTS			PROPERTIES BY STATE			OF TOTAL PROPERTIES

New York		236		31		70		5			342			32.3	%
Massachusetts		127		1		23		—			151			14.2
New Jersey		106		9		24		5			144			13.6
Pennsylvania		107		5		3		4			119			11.3
Connecticut		59		29		16		9			113			10.7
Virginia		4		24		8		1			37			3.5
New Hampshire		25		3		3		—			31			2.9
Maine		17		1		3		1			22			2.1
Rhode Island		15		1		3		—			19			1.8
Texas		—		17		—		—			17			1.6
Delaware		9		1		1		—			11			1.0
North Carolina		—		11		—		—			11			1.0
Hawaii		—		10		—		—			10			0.9
Maryland		4		3		—		2			9			0.8
California		—		8		—		1			9			0.8
Florida		—		6		—		—			6			0.6
Arkansas		—		3		—		—			3			0.3
Illinois		—		2		—		—			2			0.2
Ohio		—		2		—		—			2			0.2
North Dakota		—		1		—		—			1			0.1
Vermont		1		—		—		—			1			0.1

Total		710		168		154		28			1,060			100.0	%


(1)	Includes nine terminal properties owned in New York, New Jersey, Connecticut and Rhode Island.

The properties that we lease have a remaining lease term, including renewal option terms, averaging over ten 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

2009		17		9.34	%		1.60	%
2010		9		4.95			0.85
2011		10		5.49			0.94
2012		13		7.14			1.23
2013		5		2.75			0.47

Subtotal		54		29.67			5.09
Thereafter		128		70.33			12.08

Total		182		100.0	%		17.17	%

We have rights-of-first refusal to purchase or lease one hundred forty-four of the properties we lease. Although there can be no assurance regarding any particular property, historically we generally have been successful in renewing or entering into new leases when lease terms expire. Approximately 65% of our leased properties are subject to automatic renewal or extension options.

In the opinion of our management, our owned and leased properties are adequately covered by casualty and liability insurance. In addition, we require our tenants to provide insurance for all properties they lease from us, including casualty, liability, fire and extended coverage in amounts and on other terms satisfactory to us. We have no plans for material improvements to any of our properties. However, our tenants frequently make improvements to the properties leased from us at their expense. We are not aware of any material liens or encumbrances on any of our properties.

We lease eight hundred fifty-five retail motor fuel and convenience store properties and nine petroleum distribution terminals to Marketing under the Marketing Leases. The Master Lease is a unitary lease and has an initial term expiring in 2015, and generally provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. Each of the renewal options may be exercised

only on an “all or nothing” basis. The Marketing Leases are “triple-net” leases, under which Marketing is responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses. As permitted under the terms of our leases with Marketing, Marketing can generally use each property for any lawful purpose, or for no purpose whatsoever. We believe that as of December 31, 2008, Marketing had vacancies and/or removed the gasoline tanks and related equipment at what may be as much as 10% or more of the properties subject to the Marketing Leases. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

If Marketing fails to pay rent, taxes or insurance premiums when due under the Marketing Leases and the failure is not cured by Marketing within a specified time after receipt of notice, we have the right to terminate the Marketing Leases and to exercise other customary remedies against Marketing. If Marketing fails to comply with any other obligation under the Master Lease after notice and opportunity to cure, we do not have the right to terminate the Master Lease. In the event of Marketing’s default where we do not have the right to terminate the Master Lease, our available remedies under the Master Lease are to seek to obtain an injunction or other equitable relief requiring Marketing to comply with its obligations under the Master Lease and to recover damages from Marketing resulting from the failure. If any lease we have with a third-party landlord for properties that we lease to Marketing is terminated as a result of our default and the default is not caused by Marketing, we have agreed to indemnify Marketing for its losses with respect to the termination. Marketing has the right-of-first refusal to purchase any property leased to Marketing under the Marketing Leases that we decide to sell.

We have also agreed to provide limited environmental indemnification to Marketing, capped at $4.25 million and expiring in 2010, for certain pre-existing conditions at six of the terminals we own and lease to Marketing. Under the agreement, Marketing is obligated to pay the first $1.5 million of costs and expenses incurred in connection with remediating any pre-existing terminal condition, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing is obligated to pay all additional costs and expenses over $10.0 million. We have accrued $0.3 million as of December 31, 2008 and 2007 in connection with this indemnification agreement. Under the Master Lease, we continue to have additional ongoing environmental remediation obligations for one hundred eighty-seven scheduled sites and our agreements with Marketing provide that Marketing otherwise remains liable for all environmental matters. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

Item 3. Legal Proceedings

In 1989, we were named as a defendant in a lawsuit by multiple owners of adjacent properties seeking compensatory and punitive damages for personal injury and property damages alleging that a leak of an underground storage tank occurred in November 1985 at one of our retail motor fuel properties. The action is still pending in New York Supreme Court, Suffolk County, remains in the pleadings stage and has remained dormant for more than twelve years.

In 1991, the State of New York brought an action in the New York State Supreme Court in Albany against our former heating oil subsidiary seeking reimbursement for cleanup costs claimed to have been incurred at a retail motor fuel property in connection with a gasoline release. The State is also seeking penalties plus interest. We answered the complaint by denying liability and also asserted cross-claims against another defendant. There had been no activity in this proceeding for approximately eight years prior to January 2002 when we received a letter from the State’s attorney indicating that the State intends to continue prosecuting the action. To date, we are not aware that the State has taken any additional actions in connection with this claim.

In 1997, an action was commenced in the New York Supreme Court in Schenectady, naming us as defendants, and seeking to recover monetary damages for personal injuries allegedly suffered from the release of petroleum and vapors from one of our retail motor fuel properties. This action has not been pursued by the plaintiff for more than ten years.

In 1997, representatives of the County of Lancaster, Pennsylvania contacted the Company regarding alleged petroleum contamination of property owned by the County adjoining a property owned by the Company. No litigation has been instituted as a result of this potential claim. Negotiations with the County have, however, have been ongoing since commencement of this action in an effort to reach an amicable resolution. In 2005, the County requested reimbursement of legal fees pursuant to an access agreement between the parties. A substantial portion of the fees remains in dispute.

In June 1999, an action was commenced against us in the New York Supreme Court in Richmond County seeking monetary damages for property damage alleged to have resulted from a petroleum release in connection with a tank removal by our contractor. After a number of years of inactivity by the plaintiff, in 2006 the plaintiff reactivated prosecution by filing for a preliminary conference. After a number of years of inactivity by the plaintiff, in 2006 the plaintiff reactivated prosecution of its case by filing for a preliminary conference. Discovery is ongoing.

In 2000, an action was commenced in New York Supreme Court in Nassau County against us by a prior landlord to recover damages arising out of a petroleum release and remediation thereof. The release dates back to 1979 and is listed as “closed” by the NYSDEC. The plaintiff has not pursued this case for more than seven years.

In December 2002, the State of New York commenced an action in the New York Supreme Court in Albany County against us and Marketing to recover costs claimed to have been expended by the State to investigate and remediate a petroleum release into the Ossining River commencing approximately in 1996. This case was settled against all defendants in June, 2008 in consideration for a payment of an aggregate amount, of which the Company, for ourselves and on behalf of Marketing (whom we had agreed to indemnify), paid $53,000.

In February 2003, an action was commenced against us, Marketing and others by the owners of an adjacent property in the Pennsylvania Court of Common Pleas in Lancaster County, asserting claims relating to a discharge of gasoline allegedly emanating from our property. In response to cross motions for summary judgment, the court denied our motion and granted plaintiff’s motion finding us liable for the petroleum contamination. Plaintiff’s counsel has also made demand for legal fees. The matter was settled by us, for ourselves and on behalf of Marketing and its subtenant, in July 2008 in consideration for a payment by the Company of $295,000.

In April 2003, we were named in a complaint seeking class action classification, filed in the New York Supreme Court in Dutchess County, NY, arising out of alleged contamination of ground water with methyl tertiary butyl ether (a fuel derived from methanol, which we refer to as “MTBE”). We served an answer that denied liability and asserted affirmative defenses. The plaintiffs have not responded to our answer and there has been no activity in the case since it was commenced.

In July 2005, the State of Rhode Island Department of Environmental Management (“RIDEM”) issued a Notice of Violation (“NOV”) against the Company and Marketing relating to a suspected petroleum release at a property that abuts property owned by us and leased to Marketing. The NOV was appealed by Marketing on behalf of it and the Company to RIDEM’s Administrative Adjudication Division. An evidentiary hearing on that appeal was held in May, 2008, leading to a final decision entered by RIDEM in October, 2008. The final decision dismissed the NOV entirely against Marketing but only partially against the Company, upholding certain state regulatory violations against one of our subsidiaries and ordering remediation actions and the payment of an administrative penalty. We have appealed RIDEM’s final decision to the Providence Superior Court.

In July 2003, we received a Request for Reimbursement from the State of Maine Department of Environmental Protection (“MDEP”) seeking reimbursement of costs claimed to have been incurred by it in connection with the remediation of contamination found at a retail motor fuel property, purportedly linked to numerous gasoline spills in the late 1980’s. We have denied liability for the claim and not received any data from the State responsive to our requests, the most recent of which was made in July, 2008, for evidence linking the subject contamination to our conduct.

In September 2003, we were notified by the New Jersey Department of Environmental Protection (the “NJDEP”) that we may be responsible for damages to natural resources (“NRDs”) by reason of a petroleum release at a retail motor fuel property formerly operated by us in Egg Harbor, NJ. We have remediated the resulting contamination at the property in accordance with a plan approved by the NJDEP and continue required sampling of monitoring wells

that were required to be installed. In addition, we have responded to the notice and met with the Department to determine whether, and to what extent, we may be responsible for NRDs regarding this property and our other properties formerly supplied by us with gasoline in New Jersey. Since our meeting with the NJDEP held shortly after receipt of the notification, we have had no communication with the NJDEP arising from this matter regarding NRDs.

From October 2003 through December 2008, we were made a party to fifty-four cases in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia, and West Virginia, brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately fifty petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. The accuracy of the allegations as they relate to us, our defenses to such claims, the aggregate possible amount of damages, and the method of allocating such amounts among the remaining defendants have not been determined. We have been dismissed from certain of the cases initially filed against us. Pursuant to consolidation procedures under federal law, the various MTBE cases have been transferred to the Federal District Court for the Southern District of New York for coordinated Multi-District Litigation proceedings. We are presently named as a defendant in fifty out of the approximately one hundred cases that are consolidated in the Multi-District Litigation. The Federal District Court has set apart for initial process four focus cases from the consolidated cases being heard. Three of these four focus cases name us as a defendant. One of the focus cases to which we are a party had been set for trial in September 2008. However, all of the named defendants in this first focus case, other than us and one other non-refiner defendant, entered into settlements with certain plaintiffs, which affected approximately twenty-seven of the cases to which we are a party, including one of the other initial focus cases. As a result of the multi-party settlement which affected two of the focus cases, the Court vacated the September 2008 trial date for the first focus case, and further scheduling of trial for the first focus case and one of the other focus cases to which we are a named defendant remains open at this time. As a result of this settlement, the Federal District Court designated an additional focus case for process. We are a named defendant in this new focus case. Trials in this case and in one of the original focus cases in which we have been named a defendant are scheduled for sometime in 2009. We participate in a joint defense group with the goal of sharing expert and other costs with the other defendants, and we also have separate counsel defending our interests. We are vigorously defending these matters.

In November 2003, we received a demand from the State of New York for reimbursement of cleanup and removal costs claimed to have been incurred by the New York Environmental Protection and Spill Compensation Fund regarding contamination it alleges emanated from one of our retail motor fuel properties in 1997. We have responded to the State’s demand and have denied responsibility for reimbursement of such costs. In September 2004, the State of New York commenced an action against us and others in New York Supreme Court in Albany County seeking recovery of such costs as well as additional costs and future costs for remediation and sampling, and interest and penalties. Discovery in this case is ongoing. We are vigorously defending this matter.

In July 2005, we received a demand from a property owner for reimbursement of cleanup and soil removal costs, at a former retail motor fuel property located in Brooklyn, New York formerly supplied by us with gasoline that the owner expects to incur in connection with the proposed development of its property. The owner claims that the costs will be reimbursable pursuant to an indemnity agreement that we entered into with the property owner. Although we have acknowledged responsibility for the contaminated soil, and have been engaged in the remediation of the same, we have denied responsibility for the full extent of the costs estimated to be incurred.

In October 2005, the State of New York commenced an action in the New York Supreme Court in Albany County against us and Marketing to recover costs claimed to have been funded by the State to remediate a petroleum release emanating from a property we acquired in 1999. The seller of the property to us, who is also party to the action, has agreed to defend and indemnify us (and Marketing) regarding the release and funds have been escrowed to cover the amount sought to be recovered. The parties in this action are engaged in discovery proceedings. No trial date has yet been established.

In December 2005, an action was commenced against us in the Superior Court in Providence, Rhode Island, by the owner of a pier that is adjacent to one of our terminals that is leased to Marketing seeking monetary damages of approximately $500,000 representing alleged costs related to the ownership and maintenance of the pier for the period from January 2003 through September 2005. We have been vigorously defending against this action.

Additionally, we tendered the matter to Marketing for indemnification and defense pursuant to the Master Lease. Marketing declined to accept our tender and has denied liability for the claim. In May, 2008 the US District Court (to which the case had been removed from state court) granted our motion for summary judgment against the plaintiff on all claims. The plaintiff has appealed this decision to the First Circuit Court of Appeals. We intend to pursue our claim against Marketing for indemnification.

In April 2006, we were added as a defendant in an action in the Superior Court of New Jersey, Middlesex County, filed by a property owner claiming damages against multiple defendants for remediation of contaminated soil. The basis for prosecuting the claim against us is corporate successor liability. The matter was settled in July 2008 in consideration for a payment by us of $600,000, which was made in the third quarter of 2008, plus an additional maximum contingent amount of $40,000 relating to possible future liability for certain third party claims.

In May 2006, we were advised (but not yet served) of a third party complaint filed in an action in the Superior Court of New Jersey, Essex County, against Getty Oil, Inc. and John Doe Corporations, filed by a property owner seeking to impose upon third parties (that may include a subsidiary of the Company) responsibility for damages it may suffer in the action for claims brought against it under federal environmental laws, the State’s Spill Act, the State’s Water Pollution Act and other theories of liability.

In November 2006, an action was commenced by the New Jersey Schools Corporation (“NJSC”) in the Superior Court of New Jersey, Union County seeking reimbursement for costs of approximately $1.0 million related to the removal of abandoned USTs and remediation of soil contamination at a retail motor fuel property that was acquired from us by eminent domain. Prior to the taking, the property was leased to and operated by Marketing. We tendered the matter to Marketing for defense and indemnification. Marketing has declined to accept the tender and has denied liability for the claim. We have filed a compulsory third party claim against Marketing seeking defense and indemnification. In July 2007, Marketing filed a claim against the Company seeking defense and indemnification. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

In May 2007, the Company’s subsidiary received a lease default notice from its sub-landlord pertaining to an alleged underpayment of rent by our subsidiary for a period of time exceeding fifteen years. In June 2007, the Company commenced an action against the sub-landlord seeking an injunction that would preclude the sub-landlord from taking any action to terminate its sublease with our subsidiary or collect the alleged underpayment of rent. The Court issued the injunction preventing termination of the sublease pending determination of the matter. Discovery is ongoing.

In July 2007, subsidiaries of the Company were notified of the commencement of three actions by the NJDEP seeking Natural Resource Damages (“NRDs”) arising out of petroleum releases at properties owned or leased by us. Answers to the complaints and discovery requests were filed by us in each of these cases. In September, 2008, we agreed with NJDEP to a stipulation of dismissal of one of the NRD cases, and in February, 2009, we agreed with NJDEP to a stipulation of dismissal of another of the NRD cases. In each of these stipulations of dismissal, the claims raised in the New Jersey State Court action were dismissed without prejudice to the NJDEP’s right to reassert the same claims in complaints brought in the Federal District Court to be heard in the Multi-District MTBE cases currently pending against us. The third action remains pending. We are favorably disposed to entering into a stipulation with the NJDEP with respect to the final NRD case on the same terms as the other two, and have been advised by the NJDEP that it intends to do so.

In October 2007, the Company received a demand from the State of New York to pay the costs allegedly arising from investigation and remediation of petroleum spills that occurred at a property formerly owned by us and taken by Eminent Domain by the State of New York in 1991. No formal legal action has yet been commenced by the State.

In August, 2008, we were notified by the New York Environmental Protection and Spill Compensation Fund (“NY Spill Fund”) that we and another party had been named as allegedly responsible for certain petroleum contamination discovered in 2007. The claimant in the matter is a property developer who alleges to have incurred approximately $434,000 in petroleum-related remediation costs as a result of contamination on its property which

allegedly derive from two reported spills: one dating back to 1995 at an adjacent site formerly owned by us, and the other occurring in 2006, at an adjacent site owned by the other respondent named in the action. In September 2008, the same claimant also commenced a lawsuit in the New York State Supreme Court against us and the other allegedly responsible party to recover damages based upon the same set of facts. We are vigorously defending the claims against us and have asserted cross claims against the other party.

In September 2008, we received a directive from the NJDEP calling for a remedial investigation and cleanup, by us and other named parties, of petroleum-related contamination found at a retail motor fuel and auto service property. We did not own or lease this property, but did supply gas to the operator of this property in 1985 and 1986. We have responded to the NJDEP and we have tendered the matter to Marketing for defense and indemnification under the Reorganization and Distribution Agreement between Getty Petroleum Corp. (n/k/a/ Getty Properties Corp.) and Marketing dated as of February 1, 1997. However, there can be no assurance that Marketing will accept responsibility for this matter. For additional information regarding developments related to Marketing and the Marketing Leases (as defined below), see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

Matters related to our 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 sixty-six potentially responsible parties for alleged NRDs resulting from discharges of hazardous substances along the lower Passaic River (the “Lower Passaic River”). The Directive alleged, inter alia, that the recipients thereof must conduct an assessment of the natural resources that have been injured by the discharges and implement interim compensatory restoration for the injured natural resources. NJDEP alleges that our liability arises from alleged discharges originating from our Newark, New Jersey Terminal site. Chevron/Texaco was also identified in the Directive. We responded to the Directive by asserting that we were not liable. There has been no material activity and/or communications by NJDEP with respect to the Directive since early after its issuance.

Effective June 22, 2004, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Order on Consent (“AOC”) with 31 parties (some of which are also named in the Directive) who agreed to fund a portion of the costs for EPA to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. 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. After being notified by the EPA that they considered us to be a potentially responsible party, we reserved our defenses to liability, became a party to an amended AOC, and joined the Cooperating Parties Group (“CPG”), which consists of the parties which had executed the initial AOC and other parties (including Chevron/Texaco). Pursuant to the amended AOC and subsequent amendments adding additional parties, the CPG has agreed to take over performance of the RI/FS from EPA. The RI/FS does not resolve liability issues for remedial work or restoration of, or compensation for, natural resource damages to the Lower Passaic River, which are not known at this time. As to such matters, separate proceedings or activities are currently ongoing.

In a related action, in December 2005, the State of New Jersey brought suit in the Superior Court of New Jersey, Law Division, against certain companies which the State alleges are responsible for pollution of the Passaic River from a former Diamond Alkali manufacturing plant and seeking recovery of alleged damages incurred and to be incurred on account of alleged discharges of hazardous substances to the Passaic River. On February 4, 2009, certain of these defendants filed third-party complaints against approximately three hundred additional parties, including us as well as the other members of the CPG, seeking contribution for a pro-rata share of response costs, cleanup and removal costs, and other damages.

We have made a demand upon Chevron/Texaco for indemnity under certain agreements between the Company 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. 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.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of security holders during the three months ended December 31, 2008.

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 11,000 shareholders of our common stock as of March 2, 2009, of which approximately 1,400 were holders of record. The price range of our common stock and cash dividends declared with respect to each share of common stock during the years ended December 31, 2008 and 2007 was as follows:


	PRICE RANGE				CASH DIVIDENDS
					CASH DIVIDENDS
PERIOD ENDED	HIGH		LOW		PER SHARE

March 31, 2007	$	32.10	$	27.80	$	.4550
June 30, 2007		30.33		26.17		.4650
September 30, 2007		28.72		23.80		.4650
December 31, 2007		29.23		25.21		.4650
March 31, 2008		28.58		13.33		.4650
June 30, 2008		19.04		14.34		.4650
September 30, 2008		23.12		13.12		.4700
December 31, 2008		22.40		13.35		.4700

For a discussion of potential limitations on our ability to pay future dividends see “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

We have chosen as our Peer Group the following companies: Commercial Net Lease Realty, Entertainment Properties Trust, Realty Income Corp. and Hospitality Properties Trust. We have chosen these companies as our Peer Group because a substantial segment of each of their businesses is owning and leasing commercial properties. We cannot assure you that our stock performance will continue in the future with the same or similar trends depicted in the graph above. We do not make or endorse any predictions as to future stock performance.

This 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.

(LINE GRAPH)


	2003		2004		2005		2006		2007		2008

Getty Realty Corp.		100.00		117.15		114.35		143.03		132.08		115.55
Standard & Poors 500		100.00		108.99		112.26		127.55		132.06		81.23
Peer Group		100.00		125.57		117.58		155.00		137.96		103.68

Assumes $100 invested at the close of trading on 12/03 in Getty Realty Corp. common stock, Standard & Poor’s 500, and Peer Group.


*	Cumulative total return assumes reinvestment of dividends.

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,

	2008			2007 (a)			2006			2005			2004

OPERATING DATA:
Revenues from rental properties	$	81,163		$	78,069		$	71,329		$	70,264		$	65,188
Earnings before income taxes and discontinued operations		39,162			28,110	(b)		41,228			43,211			38,525
Income tax benefit (c)		—			—			700			1,494			—

Earnings from continuing operations		39,162			28,110			41,928			44,705			38,525
Earnings from discontinued operations		2,648			5,784			797			743			827

Net earnings		41,810			33,894			42,725			45,448			39,352
Diluted earnings per common share:
Earnings from continuing operations		1.58			1.13			1.69			1.81			1.56
Net earnings		1.69			1.37			1.73			1.84			1.59
Diluted weighted-average common shares outstanding		24,774			24,787			24,759			24,729			24,721
Cash dividends declared per share		1.87			1.85			1.82			1.76			1.70
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATION (d):
Net earnings		41,810			33,894			42,725			45,448			39,352

Depreciation and amortization of real estate assets		11,875			9,794			7,883			8,113			7,490
Gains on dispositions of real estate		(2,787	)		(6,179	)		(1,581	)		(1,309	)		(618	)

Funds from operations		50,898			37,509			49,027			52,252			46,224
Deferred rental revenue (straight-line rent)		(1,803	)		(3,112	)		(3,010	)		(4,170	)		(4,464	)
Allowance for deferred rental revenue		—			10,494			—			—			—
Amortization of above-market and below-market leases		(790	)		(1,047	)		—			—			—
Income tax benefit (c)		—			—			(700	)		(1,494	)		—

Adjusted funds from operations		48,305			43,844			45,317			46,588			41,760
BALANCE SHEET DATA (AT END OF YEAR):
Real estate before accumulated depreciation and amortization	$	473,567		$	474,254		$	383,558		$	370,495		$	346,590
Total assets		387,813			396,911			310,922			301,468			292,088
Debt		130,250			132,500			45,194			34,224			24,509
Shareholders’ equity		205,957			212,178			225,575			227,883			225,503
NUMBER OF PROPERTIES:
Owned		878			880			836			814			795
Leased		182			203			216			241			250

Total properties		1,060			1,083			1,052			1,055			1,045


(a)	Includes (from the date of the acquisition) the effect of the $84.6 million acquisition of convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter of 2007.

(b)	Includes the effect of a $10.5 million non-cash reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 related to approximately 40% of the properties under leases with our primary tenant, Getty Petroleum Marketing, Inc. (For additional information regarding developments related to Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

(c)	The years ended 2006 and 2005 include income tax benefits recognized due to the elimination of, or reduction in, amounts accrued for uncertain tax positions related to being taxed as a C-corp. prior to our election to be


	taxed as a real estate investment trust (“REIT”) under the federal income tax laws in 2001. Income taxes have not had a significant impact on our earnings since we first elected to be treated as a REIT.

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

	We believe that FFO is helpful to investors in measuring our performance because FFO excludes various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance such as gains or losses from property dispositions and depreciation and amortization of real estate assets. In our case, however, GAAP net earnings and FFO include the significant impact of deferred rental revenue (straight-line rental revenue) and the net amortization of above-market and below-market leases on our recognition of revenue from rental properties, 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 the payment is due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. GAAP net earnings and FFO also include income tax benefits recognized due to the elimination of, or reduction in, amounts accrued for uncertain tax positions related to being taxed as a C-corp. rather than as a REIT prior to 2001 (see note (b) above). As a result, management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less straight-line rental revenue, net amortization of above-market and below-market leases and income tax benefit. In management’s view, AFFO provides a more accurate depiction than FFO of the impact of the scheduled rent increases under these leases, rental revenue from acquired in-place leases and our election to be treated as a REIT under the federal income tax laws beginning in 2001. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore should not be considered an alternative for GAAP net earnings or as a measure of liquidity.

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” on page 1; the risks and uncertainties described in “Item 1A. Risk Factors” the selected financial data in “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 and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least ninety percent of our taxable income to shareholders each year.

Retail Petroleum Marketing Business

We lease or sublet our properties primarily to distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services. These tenants are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual

operations conducted at these properties. In addition, approximately twenty of our properties are directly leased by us to others for other uses such as fast food restaurants, automobile sales and other retail purposes. In those instances where we determine that the highest and best use for our properties is no longer a retail motor fuel outlet, we will seek alternative tenants or buyers for such properties as opportunities arise. As of December 31, 2008, we leased eight hundred sixty-four of our one thousand sixty properties on a long-term basis to Getty Petroleum Marketing Inc. (“Marketing”). Eight hundred fifty-four of the properties are leased to Marketing under a unitary master lease (the “Master Lease”) with an initial term effective through December 2015 and supplemental leases for ten properties with initial terms of varying expiration dates (collectively with the Master Lease, the “Marketing Leases”). Marketing was spun-off to our shareholders as a separate publicly held company in March 1997 and, in December 2000; Marketing was acquired by a subsidiary of OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies.

Marketing’s financial results depend largely on retail petroleum marketing margins from the sale of refined petroleum products at margins in excess of its fixed and variable expenses and rental income from subtenants who operate their convenience stores, automotive repair service or other businesses at our properties. As permitted under the terms of our leases with Marketing, Marketing can generally use each property for any lawful purpose, or for no purpose whatsoever. The petroleum marketing industry has been and continues to be volatile and highly competitive. (For information regarding factors that could adversely affect us relating to Marketing, or our other lessees, see “Item 1A. Risk Factors”.)

Developments Related to Marketing and the Marketing Leases

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

We have had periodic discussions with representatives of Marketing regarding potential modifications to the Marketing Leases and, in 2007, during the course of such discussions, Marketing proposed to (i) remove approximately 40% of the properties (the “Subject Properties”) from the Marketing Leases and eliminate payment of rent to us, and eliminate or reduce payment of operating expenses, with respect to the Subject Properties, and (ii) reduce the aggregate amount of rent payable to us for the approximately 60% of the properties that would remain under the Marketing Leases (the “Remaining Properties”). Representatives of Marketing have also indicated to us that they are considering significant changes to Marketing’s business model. In light of these developments and the continued deterioration in Marketing’s annual financial performance (as discussed below), in March 2008, we decided to attempt to negotiate with Marketing for a modification of the Marketing Leases which removes the Subject Properties from the Marketing Leases. We have held periodic discussions with Marketing since March 2008 in our attempt to negotiate a modification of the Marketing Leases to remove the Subject Properties. Although we continue to remove individual locations from the Master Lease as mutually beneficial opportunities arise, there has

been no agreement between us and Marketing on any principal terms that would be the basis for a definitive Master Lease modification agreement. If Marketing ultimately determines that its business strategy is to exit all of the properties it leases from us or to divest a composition of properties different from the properties comprising the Subject Properties, such as the revised list of properties provided to us by Marketing in the second quarter of 2008 which includes approximately 45% of the properties Marketing leases from us (the “Revised Subject Properties”), it is our intention to cooperate with Marketing in accomplishing those objectives if we determine that it is prudent for us to do so. Any modification of the Marketing Leases that removes a significant number of properties from the Marketing Leases would likely significantly reduce the amount of rent we receive from Marketing and increase our operating expenses. We cannot accurately predict if, or when, the Marketing Leases will be modified or what the terms of any agreement may be if the Marketing Leases are modified. We also cannot accurately predict what actions Marketing and Lukoil may take, and what our recourse may be, whether the Marketing Leases are modified or not.

We intend either to re-let or sell any properties removed from the Marketing Leases and reinvest the realized sales proceeds in new properties. We intend to seek replacement tenants or buyers for properties removed from the Marketing Leases either individually, in groups of properties, or by seeking a single tenant for the entire portfolio of properties subject to the Marketing Leases. Although we are the fee or leasehold owner of the properties subject to the Marketing Leases and the owner of the Getty® brand and have prior experience with tenants who operate their gas stations, convenience stores, automotive repair services or other businesses at our properties; in the event that the properties are removed from the Marketing Leases, we cannot accurately predict if, when, or on what terms, such properties could be re-let or sold.

We recorded a reserve of $10.5 million in 2007 representing the full amount of the deferred rent receivable recorded related to the Subject Properties as of December 31, 2007. Providing the $10.5 million non-cash deferred rent receivable reserve reduced our net earnings and our funds from operations for 2007 but did not impact our cash flow from operating activities or adjusted funds from operations since the impact of the straight-line method of accounting is not included in our determination of adjusted funds from operations. (For additional information regarding funds from operations and adjusted funds from operations, which are non-GAAP measures, see “— General — Supplemental Non-GAAP Measures” below.) As of December 31, 2008 we had a reserve of $10.0 million for the deferred rent receivable due from Marketing representing the full amount of the deferred rent receivable recorded related to the Subject Properties as of that date. We have not provided a deferred rent receivable reserve related to the Remaining Properties since, based on our assessments and assumptions, we continue to believe that it is probable that we will collect the deferred rent receivable related to the Remaining Properties of $20.5 million as of December 31, 2008 and that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. We anticipate that the rental revenue for the Remaining Properties will continue to be recognized on a straight-line basis. As required by the straight-line method of accounting, beginning with the first quarter of 2008, the rental revenue for the Subject Properties was, and for future periods, is expected to be, effectively recognized when payment is due under the contractual payment terms. Although we have adjusted the estimated useful lives of certain long-lived assets for the Subject Properties, we believe that no impairment charge was necessary for the Subject Properties as of December 31, 2008 or 2007 pursuant to the provisions of Statement of Financial Accounting Standards No. 144. The impact to depreciation expense due to adjusting the estimated lives for certain long-lived assets beginning with the year ended December 31, 2008 was not material.

agreements between Marketing and us relating to Marketing’s business and the properties subject to the Marketing Leases (collectively the “Marketing Environmental Liabilities”). We may ultimately be responsible to directly pay for Marketing Environmental Liabilities as the property owner if Marketing fails to pay them. Additionally, we will be required to accrue for Marketing Environmental Liabilities if we determine that it is probable that Marketing will not meet its obligations or if our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities changes as a result of the factors discussed above, or otherwise. However, we continue to believe that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities since we believe that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases and, accordingly, we did not accrue for the Marketing Environmental Liabilities as of December 31, 2008 or December 31, 2007. Nonetheless, we have determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by us based on our assumptions and analysis of information currently available to us) could be material to us if we were required to accrue for all of the Marketing Environmental Liabilities in the future since we believe that it is reasonably possible that as a result of such accrual, we may not be in compliance with the existing financial covenants in our Credit Agreement. Such non-compliance could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness under the Credit Agreement.

Should our assessments, assumptions and beliefs prove to be incorrect, or if circumstances change, the conclusions we reached may change relating to (i) whether some or all of the Subject or Remaining Properties are likely to be removed from the Marketing Leases (ii) recoverability of the deferred rent receivable for some or all of the Subject or Remaining Properties, (iii) potential impairment of the Subject or Remaining Properties, and (iv) Marketing’s ability to pay the Marketing Environmental Liabilities. We intend to regularly review our assumptions that affect the accounting for deferred rent receivable; long-lived assets; environmental litigation accruals; environmental remediation liabilities; and related recoveries from state underground storage tank funds, which may result in material adjustments to the amounts recorded for these assets and liabilities, and as a result of which, we may not be in compliance with the financial covenants in our Credit Agreement. Accordingly, we may be required to (i) reserve additional amounts of the deferred rent receivable related to the Remaining Properties, (ii) record an impairment charge related to the Subject or Remaining Properties, or (iii) accrue for Marketing Environmental Liabilities as a result of the potential or actual modification of the Marketing Leases or other factors.

We cannot provide any assurance that Marketing will continue to pay its debts or meet its rental, environmental or other obligations under the Marketing Leases prior or subsequent to any potential modification of the Marketing Leases. In the event that Marketing cannot or will not perform its rental, environmental or other obligations under the Marketing Leases; if the Marketing Leases are modified significantly or terminated; if we determine that it is probable that Marketing will not meet its environmental obligations and we accrue for such liabilities; if we are unable to promptly re-let or sell the properties subject to the Marketing Leases; or, if we change our assumptions that affect the accounting for rental revenue or Marketing Environmental Liabilities related to the Marketing Leases and various other agreements; our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price may be materially adversely affected.

Unresolved Staff Comments

One comment remains unresolved as part of a periodic review commenced in 2004 by the Division of Corporation Finance of the SEC of our Annual Report on Form 10-K for the year ended December 31, 2003 pertaining to the SEC’s position that we must include the financial statements and summarized financial data of Marketing in our periodic filings, which Marketing contends is prohibited by the terms of the Master Lease. In June 2005, the SEC indicated that, unless we file Marketing’s financial statements and summarized financial data with our periodic reports: (i) it will not consider our Annual Reports on Forms 10-K for the years beginning with 2000 to be compliant; (ii) it will not consider us to be current in our reporting requirements; (iii) it will not be in a position to declare effective any registration statements we may file for public offerings of our securities; and (iv) we should consider how the SEC’s conclusion impacts our ability to make offers and sales of our securities under existing registration statements and if we have a liability for such offers and sales made pursuant to registration statements that did not contain the financial statements of Marketing.

applicable to our particular circumstances and we believe that, even if it were, we should be entitled to certain relief from compliance with such requirements. Marketing generally subleases our properties to independent, individual service station/convenience store operators (subtenants). Consequently, we believe that we, as the owner of these properties and the Getty® brand, could re-let these properties to the existing subtenants (except for those properties that are vacant) who operate their convenience stores, automotive repair services or other businesses at our properties, or to other new or replacement tenants, at market rents although we cannot accurately predict if, when, or on what terms, such properties would be re-let or sold. The SEC did not accept our positions regarding the inclusion of Marketing’s financial statements in our filings. We have had no communication with the SEC since 2005 regarding the unresolved comment. We cannot accurately predict the consequences if we are ultimately unable to resolve this outstanding comment.

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 and generating cash sufficient to make required distributions to shareholders of at least ninety percent of our taxable income each year. In addition to measurements defined by accounting principles generally accepted in the United States of America (“GAAP”), our management also focuses on funds from operations available to common shareholders (“FFO”) and adjusted funds from operations available to common shareholders (“AFFO”) to measure our performance. FFO is generally considered to be an appropriate supplemental non-GAAP measure of the performance of REITs. FFO is defined by the National Association of Real Estate Investment Trusts as net earnings before depreciation and amortization of real estate assets, gains or losses on dispositions of real estate, (including such non-FFO items reported in discontinued operations), extraordinary items and cumulative effect of accounting change. Other REITs may use definitions of FFO and/or AFFO that are different than ours and; accordingly, may not be comparable.

We believe that FFO is helpful to investors in measuring our performance because FFO excludes various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance such as gains or losses from property dispositions and depreciation and amortization of real estate assets. In our case, however, GAAP net earnings and FFO include the significant impact of deferred rental revenue (straight-line rental revenue) and the net amortization of above-market and below-market leases on our recognition of revenues from rental properties, 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 are recognized on a straight-line basis rather than when payment is due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. GAAP net earnings and FFO also include income tax benefits recognized due to the elimination of, or a net reduction in, amounts accrued for uncertain tax positions related to being taxed as a C-corp., rather than as a REIT, prior to 2001. As a result, management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less straight-line rental revenue, net amortization of above-market and below-market leases and income tax benefit. In management’s view, AFFO provides a more accurate depiction than FFO of the impact of scheduled rent increases under these leases, rental revenue from acquired in-place leases and our election to be treated as a REIT under the federal income tax laws beginning in 2001. Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity. For a reconciliation of FFO and AFFO, see “Item 6. Selected Financial Data”.

Net earnings, earning from continuing operations and FFO for 2007 were reduced by all or substantially all of the non-cash $10.5 million reserve for the deferred rent receivable recorded as of December 31, 2007 for approximately 40% of the properties leased to Marketing under the Marketing Leases. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.) If the applicable amount of the non-cash reserve were added to our 2007 net earnings, earning from continuing operations and FFO; net earnings would have been $44.4 million, or $1.79 per share, for the year ended December 31, 2007; earnings from continuing operations would have been $38.4 million for the year ended December 31, 2007; and FFO would have been $48.0 million, or $1.94 per share, for the year ended December 31, 2007. Accordingly, as compared to the respective prior year periods; net earnings for 2008 would have decreased by $2.6 million and for 2007 would have increased by $1.7 million; earnings from continuing operations for 2008 would have increased by $0.8 million and for 2007 would have decreased by $3.5 million; and FFO for 2008 would have increased by $2.9 million and for

2007 would have decreased by $1.0 million. We believe that these supplemental non-GAAP measures for 2007 are important to assist in the analysis of our performance for 2008 as compared to 2007 and 2007 as compared to 2006, exclusive of the impact of the non-cash reserve on our results of operations and are reconciled below (in thousands):


	Non- adjusted		Reserve		As Adjusted

Net earnings	$	33,894	$	10,494	$	44,388
Earnings from continuing operations		28,110		10,312		38,422
Funds from operations		37,509		10,494		48,003

2007 and 2008 Acquisitions

Effective March 31, 2007, we acquired fifty-nine convenience store and retail motor fuel properties in ten states from various subsidiaries of FF-TSY Holding Company II, LLC (the successor to Trustreet Properties, Inc.) (“Trustreet”), a subsidiary of General Electric Capital Corporation, for cash with funds drawn under our credit facility. Effective April 23, 2007, we acquired five additional properties from Trustreet. The aggregate cost of the acquisitions, including transaction costs, was approximately $84.5 million. Substantially all of the properties are triple-net leased to tenants who previously leased the properties from the seller. The leases generally provide that the tenants are responsible for substantially all existing and future environmental conditions at the properties. In addition, in 2007, we exercised our fixed price purchase option for seven leased properties, purchased two properties and redeveloped one property by purchasing land adjacent to it and building a new convenience store on the existing site. In 2008 we exercised our fixed price purchase option for three leased properties and purchased six properties.

RESULTS OF OPERATIONS

Year ended December 31, 2008 compared to year ended December 31, 2007

Revenues from rental properties increased by $3.1 million to $81.2 million for the year ended December 31, 2008, as compared to $78.1 million for 2007. We received approximately $60.4 million for 2008, and $59.7 million for 2007, from properties leased to Marketing under the Marketing Leases. We also received rent of $18.2 million for 2008 and $14.8 million for 2007 from other tenants. The increase in rent received was primarily due to rent from properties acquired in March 2007, and rent escalations, partially offset by the effect of dispositions of real estate. In addition, revenues from rental properties include deferred rental revenue of $1.7 million for 2008, as compared to $2.6 million for 2007, recorded as required by GAAP, related to fixed rent increases scheduled under certain leases with our tenants. The aggregate minimum rent due over the current term of these leases are recognized on a straight-line basis rather than when payment is due. Revenues from rental properties also include $0.8 million and $1.0 million of net amortization of above-market and below-market leases primarily related to the properties acquired in 2007. 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.

Rental property expenses, which are primarily comprised of rent expense and real estate and other state and local taxes, were $9.4 million for 2008, as compared to $9.3 million for 2007. Increases in real estate and other state and local taxes were partially offset by the decrease in rent expense which was principally due to the reduction in the number of leased locations compared to the prior year.

Environmental expenses, net of estimated recoveries from state underground storage tank (“UST” or “USTs”) funds for 2008 were $7.4 million, as compared to $8.2 million for 2007. The decrease was primarily due to a $0.5 million decrease in change in net estimated environmental costs, and a $0.4 million net decrease in environmental related litigation reserves and legal fees as compared to the prior year period.

General and administrative expenses for 2008 were $6.8 million, as compared to $6.7 million recorded for 2007. The increase in general and administrative expenses was due to $0.5 million of higher professional fees associated with previously disclosed potential modification of the Marketing Leases which was partially offset by a $0.2 million reduction in insurance loss reserves and a $0.3 million reduction in employee related expenses. The insurance loss reserves were established under our self funded insurance program that was terminated in 1997. Employee related expenses recorded in 2007 include the payment of severance in connection with the resignation of Mr. Andy Smith, the former President and Chief Legal Officer of the Company.

Allowance for deferred rent receivable reported in continuing operations and discontinued operations were $10.3 million and $0.2 million, respectively, for the year ended December 31, 2007. The non-cash allowance was provided in 2007 since we could no longer reasonably assume that we will collect all of the rent due to us related to approximately 40% of the properties leased to Marketing for the remainder of the current terms of the Marketing Leases. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

Depreciation and amortization expense for 2008 was $11.8 million, as compared to $9.6 million for 2007. The increase was primarily due to properties acquired in 2007 and the acceleration of depreciation expense resulting from the reduction in the estimated useful lives of certain assets which may be removed from the unitary lease with Marketing, which increases were partially offset by the effect of dispositions of real estate and lease expirations.

As a result, total operating expenses decreased by approximately $8.7 million for 2008 as compared to 2007.

Other income, net, substantially all of which is comprised of certain gains from dispositions of real estate and leasehold interests, decreased by $1.5 million to $0.4 million for 2008, as compared to $1.9 million for 2007. Gains on dispositions of real estate from discontinued operations were $2.4 million for 2008 as compared to $4.6 million for 2007. Gain on dispositions of real estate in 2008 decreased by an aggregate of $3.4 million to $2.8 million, as compared to $6.2 million for the prior year. For 2008, there were eleven property dispositions and four partial land takings under eminent domain. For 2007, there were thirteen property dispositions, a partial land taking under eminent domain and an increase in the awards for two takings that occurred in prior years. Property dispositions for 2008 and 2007 include seven and six properties, respectively, that were mutually agreed to be removed from the Marketing Leases prior to their scheduled lease expiration.

Interest expense was $7.0 million for 2008, as compared to $7.8 million for 2007. The decrease was due to reduction in interest rates, partially offset by increased average borrowings outstanding used to finance the acquisition of properties in 2007.

As a result, net earnings were $41.8 million for 2008, as compared to $33.9 million for 2007, an increase of 23.4%, or $7.9 million. Earnings from continuing operations were $39.2 million for 2008, as compared to $28.1 million for 2007, an increase of 39.3%, or $11.1 million. For the same period, FFO increased by 35.7% to $50.9 million, as compared to $37.5 million for prior year period and AFFO increased by 10.2%, or $4.5 million, to $48.3 million, as compared to $43.8 million for 2007. The increase in FFO for 2008 was primarily due to the changes in net earnings described above but excludes a $2.1 million increase in depreciation and amortization expense and a $3.4 million decrease in gains on dispositions of real estate. The increase in AFFO for 2008 also excludes a $1.3 million decrease in deferred rental revenue, a $.03 million decrease in net amortization of above-market and below-market leases and a $10.5 million allowance for deferred rent receivable recorded in 2007 (which are included in net earnings and FFO but are excluded from AFFO).

Diluted earnings per share were $1.69 per share for 2008, an increase of $0.32 per share, as compared to $1.37 per share for 2007. Diluted FFO per share for 2008 was $2.05 per share, an increase of $0.54 per share, as compared to 2007. Diluted AFFO per share for 2008 was $1.95 per share, an increase of $0.18 per share, as compared to 2007.

Year ended December 31, 2007 compared to year ended December 31, 2006

          Revenues from rental properties increased by $6.8 million to $78.1 million for the year ended December 31, 2007, as compared to $71.3 million for 2006. We received approximately $59.7 million for 2007, and $59.5 million for 2006, from properties leased to Marketing under the Marketing Leases. We also received rent of $14.8 million for 2007 and $8.9 million for 2006 from other tenants. The increase in rent received was primarily due to rent from properties acquired in March 2007 and February 2006, and rent escalations, partially offset by the effect of dispositions of real estate. In addition, revenues from rental properties include deferred rental revenue of $2.6 million for 2007, as compared to $3.0 million for 2006, recorded as required by GAAP, related to fixed rent increases scheduled under certain leases with our tenants. The aggregate minimum rent due over the current term of these leases are recognized on a straight-line basis rather than when payment is due. Revenues from rental properties also include $1.0 million of net amortization of above-market and below-market leases related to the properties acquired in 2007. The present value of the difference between the fair market rent and the contractual rent for in-

34

place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases.

          Rental property expenses, which are primarily comprised of rent expense and real estate and other state and local taxes, were $9.3 million for 2007, as compared to $9.6 million for 2006. The decrease in rent expense was principally due to the reduction in the number of leased locations compared to the prior year.

          Environmental expenses, net of estimated recoveries from state UST funds for 2007 were $8.2 million, as compared to $5.4 million for 2006. The increase was primarily due to a $1.9 million increase in change in net estimated environmental costs, and a $0.8 million increase in environmental related litigation expenses and legal fees as compared to the prior year period. The increase in the net change in estimated environmental costs was due to the increase in project scope or duration and related cost forecasts at a limited number of properties, including one site that we have agreed to remediate as part of a legal settlement with the State of New York and regulator mandated project changes at other sites. The increase in environmental related litigation expenses was due to $0.5 million of higher legal fees and $0.3 million of higher litigation loss reserves.

          General and administrative expenses for 2007 were $6.7 million, as compared to $5.6 million recorded for 2006. The increase in general and administrative expenses was principally due to $0.5 million of higher employee related expenses, $0.2 million of higher professional fees and a charge of $0.1 million to insurance loss reserves recorded in 2007, as compared to a credit of $0.3 million recorded in 2006. The insurance loss reserves were established under our self funded insurance program that was terminated in 1997. Employee related expenses increased primarily due to the payment of severance in 2007 in connection with the resignation of Mr. Andy Smith, the former President and Chief Legal Officer of the Company.

          Allowance for deferred rent receivable reported in continuing operations and discontinued operations were $10.3 million and $0.2 million, respectively, for the quarter and year ended December 31, 2007. The non-cash allowance was provided since we can no longer reasonably assume that we will collect all of the rent due to us related to approximately 40% of the properties leased to Marketing for the remainder of the current terms of the Marketing Leases. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

          Depreciation and amortization expense for 2007 was $9.6 million, as compared to $7.8 million for 2006. The increase was primarily due to properties acquired in 2007 and 2006, offset by the effect of dispositions of real estate and lease expirations.

          As a result, total operating expenses increased by approximately $15.7 million for 2007 as compared to 2006.

          Other income, net, substantially all of which is comprised of certain gains from dispositions of real estate and leasehold interests, was $1.9 million for 2007 and 2006. Gains on dispositions of real estate from discontinued operations were $4.6 million for 2007. Gain on dispositions of real estate in 2007 increased by an aggregate of $4.6 million to $6.2 million, as compared to $1.6 million for the prior year. For 2007, there were thirteen property dispositions, including six properties that were mutually agreed to be removed from the Marketing Leases prior to their scheduled lease expiration, a partial land taking under eminent domain and an increase in the awards for two takings that occurred in prior years, as compared to seven property dispositions, a total property taking and seven partial land takings recorded in the prior year period.

          Interest expense was $7.8 million for 2007, as compared to $3.5 million for 2006. The increase was primarily due to increased borrowings used to finance the acquisition of properties in 2007 and 2006.

          The income tax benefit of $0.7 million recorded in 2006 was recognized due to the elimination of the accrual for uncertain tax positions since management believes that the uncertainties regarding these exposures have been resolved or that it is no longer likely that the exposure will result in a liability upon review. However, the ultimate resolution of these matters may have a significant impact on our results of operations for any single fiscal year or interim period.

35

          As a result, net earnings were $33.9 million for 2007, as compared to $42.7 million for 2006, a decrease of 20.7%, or $8.8 million. Earnings from continuing operations were $28.1 million for 2007, as compared to $41.9 million for 2006, a decrease of 33.0%, or $13.8 million. For the same period, FFO decreased by 23.5% to $37.5 million, as compared to $49.0 million for prior year period and AFFO decreased by 3.3%, or $1.5 million, to $43.8 million, as compared to $45.3 million for 2006. The decrease in FFO for 2007 was primarily due to the changes in net earnings described above but excludes a $1.9 million increase in depreciation and amortization expense and a $4.6 million increase in gains on dispositions of real estate. The decrease in AFFO for 2007 also excludes a $0.7 million decrease in income tax benefit, a $0.1 million decrease in deferred rental revenue, a $1.0 million increase in net amortization of above-market and below-market leases and a $10.5 million allowance for deferred rent receivable recorded in 2007 (which are included in net earnings and FFO but are excluded from AFFO).

          Diluted earnings per share were $1.37 per share for 2007, a decrease of $0.36 per share, as compared to $1.73 per share for 2006. Diluted FFO per share for 2007 was $1.51 per share, a decrease of $0.47 per share, as compared to 2006. Diluted AFFO per share for 2007 was $1.77 per share, a decrease of $0.06 per share, as compared to 2006.

LIQUIDITY AND CAPITAL RESOURCES

          Our principal sources of liquidity are the cash flows from our business, funds available under a revolving credit agreement that expires in 2011 and available cash and cash equivalents. Management believes that our operating cash needs for the next twelve months can be met by cash flows from operations, borrowings under our credit agreement and available cash and cash equivalents.

          The current disruption in the credit markets and the resulting impact on the availability of funding generally may limit our access to one or more funding sources. In addition, we expect that the costs associated with any additional borrowings we may undertake may be adversely impacted, as compared to such costs prior to the disruption of the credit markets. The United States credit markets are currently experiencing an unprecedented contraction. As a result of the tightening credit markets, we may not be able to obtain additional financing on favorable terms, or at all. If one or more of the financial institutions that supports our credit agreement fails, we may not be able to find a replacement, which would negatively impact our ability to borrow under our credit agreement. In addition, if the current pressures on credit continue or worsen, we may not be able to refinance our outstanding debt when due, which could have a material adverse effect on us.

          We have a $175.0 million amended and restated senior unsecured revolving credit agreement (the “Credit Agreement”) with a group of domestic commercial banks led by JPMorgan Chase Bank, N.A. (the “Bank Syndicate”) which expires in March 2011. The Credit Agreement does not provide for scheduled reductions in the principal balance prior to its maturity. The Credit Agreement permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.0% or 0.25% or a LIBOR rate plus a margin of 1.0%, 1.25% or 1.5%. The applicable margin is based on our leverage ratio at the end of the prior calendar quarter, as defined in the Credit Agreement, and is adjusted effective mid-quarter when our quarterly financial results are reported to the Bank Syndicate. Based on our leverage ratio as of December 31, 2008, the applicable margin is 0.0% for base rate borrowings and will increase to 1.25% in the first quarter of 2009 for our LIBOR rate borrowings.

          Subject to the terms of the Credit Agreement, we have the option to extend the term of the Credit Agreement for one additional year to March 2012 and/or, subject to approval by the Bank Syndicate, increase the amount of the credit facility available pursuant to the Credit Agreement by $125,000,000 to $300,000,000. We do not expect to exercise our option to increase the amount of the Credit Agreement at this time. In addition, based on the current lack of liquidity in the credit markets, we believe that we would need to renegotiate certain terms in the Credit Agreement in order to obtain approval from the Bank Syndicate to increase the amount of the credit facility at this time. No assurance can be given that such approval from the Bank Syndicate will be obtained on terms acceptable to us, if at all. The annual commitment fee on the unused Credit Agreement ranges from 0.10% to 0.20% based on the average amount of borrowings outstanding. The Credit Agreement contains customary terms and conditions, including customary financial covenants such as leverage and coverage ratios and other customary covenants, including limitations on our ability to incur debt and pay dividends and maintenance of tangible net worth, and events of default, including change of control and failure to maintain REIT status. A material adverse effect on our business, assets, prospects or condition, financial or otherwise, would also result in an event of default. Any event of

36

default, if not cured or waived, could result in the acceleration of all of our indebtedness under our Credit Agreement.

          We entered into a $45.0 million LIBOR based interest rate swap agreement with JPMorgan Chase Bank, N.A. as the counterparty (the “Swap Agreement”), effective through June 30, 2011. The Swap Agreement is intended to hedge our current exposure to market interest rate risk by effectively fixing, at 5.44%, the LIBOR component of the interest rate determined under our existing Credit Agreement or future exposure to variable interest rate risk due to borrowing arrangements that may be entered into prior to the expiration of the Swap Agreement. As a result of the Swap Agreement, as of December 31, 2008, $45.0 million of our LIBOR based borrowings under the Credit Agreement bear interest at an effective rate of 6.44%.

          Total borrowings outstanding under the Credit Agreement at December 31, 2008 were $130.3 million, bearing interest at a weighted-average effective rate of 3.8% per annum. The weighted-average effective rate is based on $85.3 million of LIBOR rate borrowings floating at market rates plus a margin of 1.0% and $45.0 million of LIBOR rate borrowings effectively fixed at 5.44% by the Swap Agreement plus a margin of 1.0%. We had $44.7 million available under the terms of the Credit Agreement as of December 31, 2008.

          Since we generally lease our properties on a triple-net basis, we do not incur significant capital expenditures other than those related to acquisitions. Capital expenditures, including acquisitions, for 2008, 2007 and 2006 amounted to $6.6 million, $90.6 million and $15.5 million, respectively. To the extent that our current sources of liquidity are not sufficient to fund capital expenditures and acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all. We may be unable to pursue public debt or equity offerings until we resolve with the SEC the outstanding comment regarding disclosure of Marketing’s financial information. We cannot accurately predict how periods of illiquidity in the credit markets, such as current market conditions, will impact our access to capital.

          As part of our overall growth 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. To the extent that our current sources of liquidity are not sufficient to fund such acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all. We cannot accurately predict how periods of illiquidity in the credit markets, such as current market conditions, will impact our access to capital.

          We elected to be treated as a REIT under the federal income tax laws with the year beginning January 1, 2001. As a REIT, we are required, among other things, to distribute at least ninety percent of our taxable income to shareholders each year. Payment of dividends is subject to market conditions, our financial condition and other factors, and therefore cannot be assured. In particular, our Credit Agreement prohibits the payment of dividends during certain events of default. Dividends paid to our shareholders aggregated $46.3 million, $45.7 million and $44.8 million for 2008, 2007 and 2006, respectively, and were paid on a quarterly basis during each of those years. We presently intend to pay common stock dividends of $0.47 per share each quarter ($1.88 per share, or $46.7 million, on an annual basis), and commenced doing so with the quarterly dividend declared in May 2008. Due to the developments related to Marketing and the Marketing Leases discussed above, there is no assurance that we will be able to continue to pay dividends at the rate of $0.47 per share per quarter, if at all.

CONTRACTUAL OBLIGATIONS

          Our significant contractual obligations and commitments are comprised of borrowings under the Credit Agreement, operating lease payments due to landlords and estimated environmental remediation expenditures, net of estimated recoveries from state UST funds. In addition, as a REIT we are required to pay dividends equal to at least

37

ninety percent of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and commitments as of December 31, 2008 are summarized below (in thousands):

TOTAL

LESS
THAN ONE
YEAR

ONE TO
THREE
YEARS

THREE TO
FIVE
YEARS

MORE
THAN
FIVE
YEARS

Operating leases

$

26,620

$

7,338

$

10,571

$

5,235

$

3,476

Borrowing under the Credit Agreement (a)

130,250

—

130,250

—

—

Estimated environmental remediation expenditures (b)

17,660

6,946

6,411

2,480

1,823

Estimated recoveries from state underground storage tank funds (b)

(4,223

)

(1,368

)

(1,479

)

(844

)

(532

)

Estimated net environmental remediation expenditures (b)

13,437

5,578

4,932

1,636

1,291

Total

$

170,307

$

12,916

$

145,753

$

6,871

$

4,767

(a)

Excludes related interest payments. (See “— Liquidity and Capital Resources” above and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for additional information.) Subject to the terms of the Credit Agreement, we have the option to extend the term of the Credit Agreement to March 2012.

(b)

Estimated environmental remediation expenditures and estimated recoveries from state UST funds have been adjusted for inflation and discounted to present value.

          Generally, the leases with our tenants are “triple-net” leases, with the tenant responsible for the payment of taxes, maintenance, repair, insurance, environmental remediation and other operating expenses. We estimate that Marketing makes annual real estate tax payments for properties leased under the Marketing Leases of approximately $12.3 million and makes additional payments for other operating expenses related to our properties, including environmental remediation costs other than those liabilities that were retained by us. These costs are not reflected in our consolidated financial statements. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

          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 Annual Report on Form 10-K include the accounts of Getty Realty Corp. and our wholly-owned subsidiaries. The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in its financial statements. Although we have made our best estimates, judgments and assumptions regarding future uncertainties relating to the information included in our 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, deferred rent receivable, recoveries from state underground storage tank funds, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses, income taxes, allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed and exposure to paying an earnings and profits deficiency dividend. The information included in our 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 of Notes to Consolidated Financial Statements. We believe the following are our critical accounting policies:

          Revenue recognition — We earn revenue primarily from operating leases with Marketing and other tenants. We recognize income under the Master Lease with Marketing, and with other tenants, on the straight-line method, which effectively recognizes contractual lease payments evenly over the current term of the leases. The present value of the

38

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 of $26.7 million recorded as of December 31, 2008 will be collected when the payment is due, in accordance with the annual rent escalations provided for in the leases. Historically our tenants have generally made rent payments when due. However, we may be required to reverse, or provide reserves for, or adjust our $10.0 million reserve as of December 31, 2008 for, a portion of the recorded deferred rent receivable if it becomes apparent that a property may be disposed of before the end of the current lease term or if circumstances indicate that the tenant may not make all of its contractual lease payments when due during the current term of the lease. The straight-line method requires that rental income related to those properties for which a reserve was provided is effectively recognized in subsequent periods when payment is due under the contractual payment terms. (See developments related to Marketing and the Marketing Leases in “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

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

          Income taxes — Our financial results generally do not reflect provisions for current or deferred federal income taxes since 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 rental property expenses.

          Environmental costs and recoveries from state UST funds — We provide for the estimated fair value of future environmental remediation costs when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made (see “— Environmental Matters” below for additional information). Environmental liabilities and related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. 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. Recoveries of environmental costs from state UST remediation funds, with respect to past and future spending, are accrued as income, net of allowance for collection risk, based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable. A critical assumption in accruing for these recoveries is that the state 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 the counter-party 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 adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.) We may ultimately be responsible to directly pay for environmental liabilities as the property owner if Marketing or our other tenants or other counter-parties 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

39

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 reserves, including certain environmental litigation (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 best estimate of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for the liability.

          New Accounting Pronouncements — In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets and liabilities. SFAS 157 generally applies whenever other standards require assets or liabilities to be measured at fair value. SFAS 157 is effective in fiscal years beginning after November 15, 2007. FASB Staff Position (“FSP”) No. 152, “Effective Date of FASB Statement No. 157”, (“FSP 152”) delayed the effective date of FASB No. 157 by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a non recurring basis to fiscal years beginning after November 15, 2008. The adoption of SFAS 157 in January 2008 has not had a material impact on our financial position and results of operations. We do not believe that the adoption of the provisions of SFAS 157 for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a non recurring basis will have a material impact on our financial position and results of operations.

          In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements at fair value the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination. SFAS 141(R) requires that acquisition costs, which could be material to our future financial results, will be expensed rather than included as part of the basis of the acquisition. The adoption of this standard by us on January 1, 2009 will not result in a write-off of acquisition related transactions costs associated with transactions not yet consummated. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

ENVIRONMENTAL MATTERS

General

          We are subject to numerous existing 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. Our tenants are directly responsible for compliance with various environmental laws and regulations as the operators of our properties. Environmental expenses are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting incurred in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental expenses where available.

          We enter into leases and various other agreements which allocate responsibility for known and unknown environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. In accordance with the leases with certain of our tenants, we have agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure (“Closure”) in an efficient and economical manner. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. As of December 31, 2008, we have regulatory approval for remediation action plans in place for two hundred forty-nine (95%) of the two hundred sixty-two properties for which we continue to retain remediation responsibility and the remaining thirteen properties (5%) were in the assessment phase. In addition, we have nominal post-closure compliance obligations at twenty-four properties where we have received “no further action” letters.

40

          Our tenants are directly responsible to pay for (i) remediation of environmental contamination they cause and compliance with various environmental laws and regulations as the operators of our properties, and (ii) environmental liabilities allocated to our tenants under the terms of our leases and various other agreements between our tenants and us. Generally, the liability for the retirement and decommissioning or removal of USTs and other equipment is the responsibility of our tenants. We are contingently liable for these obligations in the event that our tenants do not satisfy their responsibilities. A liability has not been accrued for obligations that are the responsibility of our tenants based on our tenants’ past histories of paying such obligations and/or our assessment of their respective financial abilities to pay their share of such costs. 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.

          It is possible that our assumptions regarding the ultimate allocation methods and share of responsibility that we used to allocate environmental liabilities may change, which may result in adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. We will be required to accrue for environmental liabilities that we believe are allocable to others under various other agreements if we determine that it is probable that the counter-party will not meet its environmental obligations. We may ultimately be responsible to directly pay for environmental liabilities as the property owner if the counter-party fails to pay them. The ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

          We have not accrued for approximately $1.0 million in costs allegedly incurred by the current property owner in connection with removal of USTs and soil remediation at a property that was leased to and operated by Marketing. We believe that Marketing is responsible for such costs under the terms of the Master Lease and have tendered the matter for defense and indemnification from Marketing, but Marketing has denied its liability for the claim and its responsibility to defend against, and indemnify us for, the claim. We have filed third party claims against Marketing for indemnification in this matter, which claims is currently being actively litigated. Trial is anticipated to be scheduled for the first quarter of 2009. It is reasonably possible that our assumption that Marketing will be ultimately responsible for the claim may change, which may result in our providing an accrual for this and other matters.

          We have also agreed to provide limited environmental indemnification to Marketing, capped at $4.25 million and expiring in 2010, for certain pre-existing conditions at six of the terminals we own and lease to Marketing. Under the indemnification agreement, Marketing is obligated to pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing is obligated to pay all additional costs and expenses over $10.0 million. We have accrued $0.3 million as of December 31, 2008 and 2007 in connection with this indemnification agreement. Under the Master Lease, we continue to have additional ongoing environmental remediation obligations for one hundred eighty-seven scheduled sites.

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

41

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

          We have determined that the aggregate amount of the environmental liabilities attributable to Marketing related to our properties (as estimated by us based on our assumptions and analysis of information currently available to us) (the “Marketing Environmental Liabilities”) could be material to us if we were required to accrue for all of the Marketing Environmental Liabilities in the future since we believe that it is reasonably possible that as a result of such accrual, we may not be in compliance with the existing financial covenants in our Credit Agreement. Such non-compliance could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness under the Credit Agreement. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.)

          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. Environmental liabilities and related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. The environmental remediation liability is estimated based on the level and impact of contamination at each property and other factors described herein. The accrued liability is the aggregate of the best estimate for the fair value of cost for each component of the liability. Recoveries of environmental costs from state UST remediation funds, with respect to both past and future environmental spending, are accrued at fair value as an offset to environmental expense, net of allowance for collection risk, based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable.

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

          As of December 31, 2008, we had accrued $13.5 million as management’s best estimate of the net fair value of reasonably estimable environmental remediation costs which is comprised of $17.7 million of estimated environmental obligations and liabilities offset by $4.2 million of estimated recoveries from state UST remediation funds, net of allowance. Environmental expenditures, net of recoveries from UST funds, were $5.0 million, $4.7 million and $3.0 million, respectively, for 2008, 2007 and 2006. For 2008, 2007 and 2006, the net change in estimated remediation cost and accretion expense included in our consolidated statements of operations amounted to $4.7 million, $5.1 million and $3.2 million, respectively, which amounts were net of probable recoveries from state UST remediation funds.

          Environmental liabilities and related assets are currently measured at fair value based on their expected future cash flows which have been adjusted for inflation and discounted to present value. We also use probability weighted alternative cash flow forecasts to determine fair value. We assumed a 50% probability factor that the actual environmental expenses will exceed engineering estimates for an amount assumed to equal one year of net expenses aggregating $4.9 million. Accordingly, the environmental accrual as of December 31, 2008 was increased by $1.9 million, net of assumed recoveries and before inflation and present value discount adjustments. The resulting net environmental accrual as of December 31, 2008 was then further increased by $0.9 million for the assumed impact of inflation using an inflation rate of 2.75%. Assuming a credit-adjusted risk-free discount rate of 7.0%, we then reduced the net environmental accrual, as previously adjusted, by a $1.9 million discount to present value. Had we assumed an inflation rate that was 0.5% higher and a discount rate that was 0.5% lower, net environmental liabilities as of December 31, 2008 would have increased by $0.2 million and $0.1 million, respectively, for an aggregate

42

increase in the net environmental accrual of $0.3 million. However, the aggregate net change in environmental estimates expense recorded during the year ended December 31, 2008 would not have changed significantly if these changes in the assumptions were made effective December 31, 2007.

          In view of the uncertainties associated with environmental expenditures, contingencies concerning the developments related to Marketing and the Marketing Leases and contingencies related to other parties, however, we believe it is possible that the fair value of future actual net expenditures could be substantially higher than these estimates. (See “— General — Developments related to Marketing and the Marketing Leases” above for additional information.) Adjustments to accrued liabilities for environmental remediation costs will be reflected in our financial statements as they become probable and a reasonable estimate of fair value can be made. Future environmental costs could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/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.

Environmental litigation

          We are subject to various legal proceedings and claims which arise in the ordinary course of our business. In addition, we have retained responsibility for certain legal proceedings and claims relating to the petroleum marketing business that were identified at the time of the Spin-Off. As of December 31, 2008 and 2007, we had accrued $1.7 million and $2.6 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. (For additional information with respect to pending environmental lawsuits and claims see “Item 3. Legal Proceedings”.)

          In September 2003, we were notified by the State of New Jersey Department of Environmental Protection (the “NJDEP”) that we are one of approximately sixty-six potentially responsible parties for natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The definitive list of potentially responsible parties and their actual responsibility for the alleged damages, the aggregate cost to remediate the Lower Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially responsible parties have not been determined. In September 2004, we received a General Notice Letter from the United States Environmental Protection Agency (the “EPA”) (the “EPA Notice”), advising us that we may be a potentially responsible party for costs of remediating certain conditions resulting from discharges of hazardous substances into the Lower Passaic River. ChevronTexaco received the same EPA Notice regarding those same conditions. In a related action, in December 2005, the State of New Jersey brought suit against certain companies which the State alleges are responsible for pollution of the Passaic River from a former Diamond Alkali manufacturing plant. In February 2009, certain of these defendants filed third-party complaints against approximately 300 additional parties, including us, seeking contribution for a pro-rata share of response costs, cleanup and removal costs, and other damages. Additionally, we believe that ChevronTexaco is contractually obligated to indemnify us, pursuant to an indemnification agreement for most of the conditions at the property identified by the NJDEP and the EPA; accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time.

          From October 2003 through December 31, 2008, we were notified that we were made party to fifty-four cases in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia and West Virginia brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (“MTBE”) as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately fifty petroleum refiners,

43

manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. At this time, we have been dismissed from certain of the cases initially filed against us. A significant number of the named defendants other than us have entered into settlements with certain plaintiffs, which affected approximately twenty-seven of the cases to which we are a party. The accuracy of the allegations as they relate to us, our defenses to such claims, the aggregate amount of possible damages, and the method of allocating such amounts among the remaining defendants have not been determined. Accordingly, our ultimate legal and financial liability, if any, cannot be estimated with any certainty at this time.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

          Prior to April 2006, when we entered into the a Swap Agreement with JPMorgan Chase, N.A. (the “Swap Agreement”), we had not used derivative financial or commodity instruments for trading, speculative or any other purpose, and had not entered into any instruments to hedge our exposure to interest rate risk. We do not have any foreign operations, and are therefore not exposed to foreign currency exchange rate risks.

          We are exposed to interest rate risk, primarily as a result of our $175.0 million Credit Agreement. Our Credit Agreement, which expires in March 2011, permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.0% or 0.25% or a LIBOR rate plus a margin of 1.0%, 1.25% or 1.5%. The applicable margin is based on our leverage ratio at the end of the prior calendar quarter, as defined in the Credit Agreement, and is adjusted effective mid-quarter when our quarterly financial results are reported to the Bank Syndicate. Based on our leverage ratio as of December 31, 2008, the applicable margin is 0.0% for base rate borrowings and will increase to 1.25% in the first quarter of 2009 for our LIBOR rate borrowings.

          Total borrowings outstanding under the Credit Agreement at December 31, 2008 were $130.3 million, bearing interest at a weighted-average rate of 3.3% per annum, or a weighted-average effective rate of 3.8% including the impact of the Swap Agreement discussed below. The weighted-average effective rate is based on $85.3 million of LIBOR rate borrowings floating at market rates plus a margin of 1.0% and $45.0 million of LIBOR rate borrowings effectively fixed at 5.44% by the Swap Agreement plus a margin of 1.0%. We use borrowings under the Credit Agreement to finance acquisitions and for general corporate purposes.

          We manage our exposure to interest rate risk by minimizing, to the extent feasible, our overall borrowing and monitoring available financing alternatives. Our interest rate risk as of December 31, 2008 has not increased significantly, as compared to December 31, 2007. We entered into a $45.0 million LIBOR based interest rate Swap Agreement, effective through June 30, 2011, to manage a portion of our interest rate risk. The Swap Agreement is intended to hedge $45.0 million of our current exposure to variable interest rate risk by effectively fixing, at 5.44%, the LIBOR component of the interest rate determined under our existing Credit Agreement or future exposure to variable interest rate risk due to borrowing arrangements that may be entered into prior to the expiration of the Swap Agreement. As a result of the Swap Agreement, as of December 31, 2008, $45.0 million of our LIBOR based borrowings under the Credit Agreement bear interest at an effective rate of 6.44%. As a result, we are, and will be, exposed to interest rate risk to the extent that our borrowings exceed the $45.0 million notional amount of the Swap Agreement. As of December 31, 2008, our borrowings exceeded the notional amount of the Swap Agreement by $85.3 million. We do not foresee any significant changes in how we manage our interest rate risk in the near future.

          We entered into the $45.0 million notional five year interest rate Swap Agreement, designated and qualifying as a cash flow hedge to reduce our exposure to the variability in future cash flows attributable to changes in the LIBOR rate. Our primary objective when undertaking hedging transactions and derivative positions is to reduce our variable interest rate risk by effectively fixing a portion of the interest rate for existing debt and anticipated refinancing transactions. This in turn, reduces the risks that the variability of cash flows imposes on variable rate debt. Our strategy protects us against future increases in interest rates. Although the Swap Agreement is intended to lessen the impact of rising interest rates, it also exposes us to the risk that the other party to the agreement will not perform, the agreement will be unenforceable and the underlying transactions will fail to qualify as a highly-effective cash flow hedge for accounting purposes.

          In the event that we were to settle the Swap Agreement prior to its maturity, if the corresponding LIBOR swap rate for the remaining term of the Swap Agreement is below the 5.44% fixed strike rate at the time we settle the

44

Swap Agreement, we would be required to make a payment to the Swap Agreement counter-party; if the corresponding LIBOR swap rate is above the fixed strike rate at the time we settle the Swap Agreement, we would receive a payment from the Swap Agreement counter-party. The amount that we would either pay or receive would equal the present value of the basis point differential between the fixed strike rate and the corresponding LIBOR swap rate at the time we settle the Swap Agreement.

          Based on our average outstanding borrowings under the Credit Agreement projected at $133.6 million for 2009, an increase in market interest rates of 0.5% for 2009 would decrease our 2009 net income and cash flows by $0.4 million. This amount was determined by calculating the effect of a hypothetical interest rate change on our Credit Agreement borrowings that is not covered by our $45.0 million interest rate Swap Agreement and assumes that the $133.6 million average outstanding borrowings during the fourth quarter of 2008 is indicative of our future average borrowings for 2009 before considering additional borrowings required for future acquisitions. 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 Credit Agreement.

          In order to minimize our exposure to credit risk associated with financial instruments, we place our temporary cash investments with high-credit-quality institutions. Temporary cash investments, if any, are held in an overnight bank time deposit with JPMorgan Chase Bank, N.A.

Item 8. Financial Statements and Supplementary Data

GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

(PAGES)

Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006

46

Consolidated Statements of Comprehensive Income for the years ended December 31, 2008, 2007 and 2006

46

Consolidated Balance Sheets as of December 31, 2008 and 2007

47

Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006

48

Notes to Consolidated Financial Statements (including the supplementary financial information contained in Note 9 “Quarterly Financial Data”)

49

Report of Independent Registered Public Accounting Firm

64

45

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

YEAR ENDED DECEMBER 31,

2008

2007

2006

Revenues from rental properties

$

81,163

$

78,069

$

71,329

Operating expenses:

Rental property expenses

9,390

9,301

9,619

Environmental expenses, net

7,374

8,190

5,418

General and administrative expenses

6,831

6,669

5,607

Allowance for deferred rent receivable

—

10,312

—

Depreciation and amortization expense

11,784

9,647

7,785

Total expenses

35,379

44,119

28,429

Operating income

45,784

33,950

42,900

Other income, net

412

1,920

1,855

Interest expense

(7,034

)

(7,760

)

(3,527

)

Earnings before income taxes and discontinued operations

39,162

28,110

41,228

Income tax benefit

—

—

700

Earnings from continuing operations

39,162

28,110

41,928

Discontinued operations:

Earnings from operating activities

259

1,216

793

Gains on dispositions of real estate

2,389

4,568

4

Earnings from discontinued operations

2,648

5,784

797

Net earnings

$

41,810

$

33,894

$

42,725

Basic earnings per common share:

Earnings from continuing operations

$

1.58

$

1.14

$

1.70

Earnings from discontinued operations

$

.11

$

.23

$

.03

Net earnings

$

1.69

$

1.37

$

1.73

Diluted earnings per common share:

Earnings from continuing operations

$

1.58

$

1.13

$

1.69

Earnings from discontinued operations

$

.11

$

.23

$

.03

Net earnings

$

1.69

$

1.37

$

1.73

Weighted average shares outstanding:

Basic

24,766

24,765

24,735

Stock options and restricted stock units

8

22

24

Diluted

24,774

24,787

24,759

Dividends declared per share

$

1.87

$

1.85

$

1.82

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

YEAR ENDED DECEMBER 31,

2008

2007

2006

Net earnings

$

41,810

$

33,894

$

42,725

Other comprehensive loss:

Net unrealized loss on interest rate swap

(1,997

)

(1,478

)

(821

)

Comprehensive Income

$

39,813

$

32,416

$

41,904

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

46

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

DECEMBER 31,

2008

2007

ASSETS:

Real Estate:

Land

$

221,540

$

222,194

Buildings and improvements

252,027

252,060

473,567

474,254

Less — accumulated depreciation and amortization

(129,322

)

(122,465

)

Real estate, net

344,245

351,789

Deferred rent receivable (net of allowance of $10,029 at December 31, 2008 and $10,494 at December 31, 2007)

26,718

24,915

Cash and cash equivalents

2,178

2,071

Recoveries from state underground storage tank funds, net

4,223

4,652

Mortgages and accounts receivable, net

1,533

1,473

Prepaid expenses and other assets

8,916

12,011

Total assets

$

387,813

$

396,911

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Debt

$

130,250

$

132,500

Environmental remediation costs

17,660

18,523

Dividends payable

11,669

11,534

Accounts payable and accrued expenses

22,337

22,176

Total liabilities

181,916

184,733

Commitments and contingencies (notes 2, 3, 5 and 6)

Shareholders’ equity:

Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 24,766,166 at December 31, 2008 and 24,765,065 at December 31, 2007

248

248

Paid-in capital

259,069

258,734

Dividends paid in excess of earnings

(49,124

)

(44,505

)

Accumulated other comprehensive loss

(4,296

)

(2,299

)

Total shareholders’ equity

205,897

212,178

Total liabilities and shareholders’ equity

$

387,813

$

396,911

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

47

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

YEAR ENDED DECEMBER 31,

2008

2007

2006

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$

41,810

$

33,894

$

42,725

Adjustments to reconcile net earnings to net cash flow provided by operating activities:

Depreciation and amortization expense

11,875

9,794

7,883

Gain on dispositions of real estate

(2,787

)

(6,179

)

(1,581

)

Deferred rental revenue

(1,803

)

(3,112

)

(3,010

)

Allowance for deferred rent receivable

—

10,494

—

Amortization of above-market and below-market leases

(790

)

(1,047

)

—

Accretion expense

956

974

923

Stock-based employee compensation expense

326

492

186

Changes in assets and liabilities:

Recoveries from state underground storage tank funds, net

827

(379

)

772

Mortgages and accounts receivable, net

(5

)

44

(172

)

Prepaid expenses and other assets

423

(130

)

170

Environmental remediation costs

(2,217

)

(80

)

(1,425

)

Accounts payable and accrued expenses

(1,031

)

(249

)

545

Accrued income taxes

—

—

(700

)

Net cash flow provided by operating activities

47,584

44,516

46,316

CASH FLOWS FROM INVESTING ACTIVITIES:

Property acquisitions and capital expenditures

(6,579

)

(90,636

)

(15,538

)

Proceeds from dispositions of real estate

5,295

8,420

2,462

(Increase) decrease in cash held for property acquisitions

2,397

(2,079

)

(465

)

Collection (issuance) of mortgages receivable, net

(55

)

267

326

Net cash flow provided by (used in) investing activities

1,058

(84,028

)

(13,215

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings (repayments) under credit agreement, net

(2,250

)

87,500

11,000

Cash dividends paid

(46,294

)

(45,650

)

(44,819

)

Credit agreement origination costs

—

(863

)

—

Cash paid in settlement of restricted stock units

—

(405

)

—

Repayment of mortgages payable, net

—

(194

)

(30

)

Proceeds from exercise of stock options

9

—

696

Net cash flow provided by (used in) financing activities

(48,535

)

40,388

(33,153

)

Net increase (decrease) in cash and cash equivalents

107

876

(52

)

Cash and cash equivalents at beginning of year

2,071

1,195

1,247

Cash and cash equivalents at end of year

$

2,178

$

2,071

$

1,195

Supplemental disclosures of cash flow information Cash paid (refunded) during the year for:

Interest

$

6,728

$

7,021

$

2,638

Income taxes, net

708

488

576

Recoveries from state underground storage tank funds

(1,511

)

(1,644

)

(2,128

)

Environmental remediation costs

6,542

6,314

5,132

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

48

GETTY REALTY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries (the “Company”). The Company is a real estate investment trust (“REIT”) specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. The Company manages and evaluates its operations as a single segment. All significant inter-company accounts and transactions have been eliminated.

          Use of Estimates, Judgments and Assumptions: The financial statements have been prepared in conformity with GAAP, which requires the Company’s management to make its best estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. While all available information has been considered, actual results could differ from those estimates, judgments and assumptions. Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state underground storage tank (“UST” or “USTs”) funds, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed.

          Discontinued Operations: The operating results and gains from certain dispositions of real estate sold in 2008 and 2007 have been reclassified as discontinued operations. The results of such properties for the years ended 2007 and 2006 have been reclassified to discontinued operations to conform to the 2008 presentation. Discontinued operations for the year ended December 31, 2008 and 2007 are primarily comprised of gains from property dispositions. The revenue from rental properties and expenses related to the operations of these properties are insignificant for the each of the three years ended December 31, 2008, 2007 and 2006.

          Real Estate: Real estate assets are stated at cost less accumulated depreciation and amortization. Upon acquisition of real estate operating properties and leasehold interests, the Company estimates the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place leases and tenant relationships) and assumed debt. Based on these estimates, the Company allocates the purchase price to the applicable assets and liabilities. When real estate assets are sold or retired, the cost and related accumulated depreciation and amortization is eliminated from the respective accounts and any gain or loss is credited or charged to income. Expenditures for maintenance and repairs are charged to income when incurred.

          Depreciation and amortization: Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets, which generally range from sixteen to twenty-five years for buildings and improvements, or the term of the lease if shorter. Leasehold interests, capitalized above-market and below-market leases, in-place leases and tenant relationships are amortized over the remaining term of the underlying lease.

          Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of: Assets are written down to fair value (determined on a nonrecurring basis using a discounted cash flow method and significant unobservable inputs) 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. The Company reviews and adjusts as necessary its depreciation estimates and method when long-lived assets are tested for recoverability. Assets held for disposal are written down to fair value less disposition costs.

          Cash and Cash Equivalents: The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

          Deferred Rent Receivable and Revenue Recognition: The Company earns rental income under operating leases with tenants. Minimum lease rentals and lease termination payments are recognized on a straight-line basis over the

49

term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on the consolidated balance sheet. Lease termination fees are recognized as rental income when earned upon the termination of a tenant’s lease and relinquishment of space in which the Company has no further obligation to the tenant. 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. The Company provides reserves for a portion of the recorded deferred rent receivable if circumstances indicate that a property may be disposed of before the end of the current lease term or if it is not reasonable to assume that the tenant will not make all of its contractual lease payments when due during the current term of the lease. The straight-line method requires that rental income related to those properties for which a reserve was provided is effectively recognized in subsequent periods when payment is due under the contractual payment terms.

          Environmental Remediation Costs and Recoveries from State UST Funds, Net: The estimated future costs for known environmental remediation requirements are accrued when it is probable that a liability has been incurred, including legal obligations associated with the retirement of tangible long-lived assets if the asset retirement obligation results from the normal operation of those assets and a reasonable estimate of fair value can be made. The environmental remediation liability is estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of the best estimate of the fair value of cost for each component of the liability. Recoveries of environmental costs from state UST remediation funds, with respect to both past and future environmental spending, are accrued at fair value as an offset to environmental expense, net of allowance for collection risk, based on estimated recovery rates developed from prior experience with the funds when such recoveries are considered probable. Environmental liabilities and related assets are currently measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value. The Company will accrue for environmental liabilities that it believes are allocable to other potentially responsible parties if it becomes probable that the other parties will not pay their environmental obligations.

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

          Income Taxes: The Company and its subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, the Company elected to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Internal Revenue Code. If the Company sells any property within ten years after its REIT election that is not exchanged for a like-kind property, it will be taxed on the built-in gain realized from such sale at the highest corporate rate. This ten-year built-in gain tax period will end in 2011.

          Interest Expense and Interest Rate Swap Agreement: In April 2006 the Company entered into an interest rate swap agreement with JPMorgan Chase Bank, N.A. as the counterparty, designated and qualifying as a cash flow hedge, to reduce its variable interest rate risk by effectively fixing a portion of the interest rate for existing debt and anticipated refinancing transactions. The Company has not entered into financial instruments for trading or speculative purposes. The fair value of the derivative is reflected on the consolidated balance sheet and will be reclassified as a component of interest expense over the remaining term of the interest rate swap agreement since the Company does not expect to settle the interest rate swap prior to its maturity. The fair value of the interest rate swap obligation is based upon the estimated amounts the Company would receive or pay to terminate the contract and is determined using an interest rate market pricing model. Changes in the fair value of the agreement would be recorded in the consolidated statements of operations if the agreement was not an effective cash flow hedge for accounting purposes.

          Earnings per Common Share: Basic earnings per common share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the year. Diluted earnings per common share also

50

gives effect to the potential dilution from the exercise of stock options and the issuance of common shares in settlement of restricted stock units utilizing the treasury stock method. For the year ended December 31, 2008, the assumed exercise of stock options utilizing the treasury stock method would have been anti-dilutive and therefore was not assumed for purposes of computing diluted earnings per common share.

          Stock-Based Compensation: Compensation cost for the Company’s stock-based compensation plans using the fair value method was $326,000, $492,000 and $186,000 for the years ended 2008, 2007 and 2006, respectively, and is included in general and administrative expense. The impact of the accounting for stock-based compensation is, and is expected to be, immaterial to the Company’s financial position and results of operations.

          New Accounting Pronouncements: In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 provides guidance for using fair value to measure assets and liabilities. SFAS 157 generally applies whenever other standards require assets or liabilities to be measured at fair value. SFAS 157 is effective in fiscal years beginning after November 15, 2007. Staff Position (“FSP”) No. 152, “Effective Date of FASB Statement No. 157”, (“FSP 152”) delayed the effective date of FASB No. 157 by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis to fiscal years beginning after November 15, 2008. The adoption of SFAS 157 in January 2008 has not had a material impact on the Company’s financial position and results of operations. The Company does not believe that the adoption of the provisions of SFAS 157 for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis will have a material impact on the Company’s financial position and results of operations.

          In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements at fair value the identifiable assets acquired, liabilities assumed, any non-controlling interest in the acquiree and goodwill acquired in a business combination. SFAS 141(R) requires that acquisition costs, which could be material to the Company’s future financial results, will be expensed rather than included as part of the basis of the acquisition. The adoption of this standard by the Company on January 1, 2009 will not result in a write-off of acquisition related transactions costs associated with transactions not yet consummated. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

2. LEASES

          The Company leases or sublets its properties primarily to distributors and retailers engaged in the sale of gasoline and other motor fuel products, convenience store products and automotive repair services who are responsible for the payment of taxes, maintenance, repair, insurance and other operating expenses and for managing the actual operations conducted at these properties. In addition, approximately twenty of the Company’s properties are directly leased by the Company to others for other uses such as fast food restaurants, automobile sales and other retail purposes. The Company’s properties are primarily located in the Northeast and Mid-Atlantic regions of the United States. The Company also owns or leases properties in Texas, North Carolina, Hawaii, California, Florida, Arkansas, Illinois, North Dakota and Ohio.

          As of December 31, 2008, Getty Petroleum Marketing Inc. (“Marketing”) leased from the Company, eight hundred sixty-four properties. Substantially all of the properties are leased to Marketing under a unitary master lease (the “Master Lease”) except for ten properties which are leased under supplemental leases (collectively the “Marketing Leases”). As of December 31, 2008, the Marketing Leases included eight hundred fifty-five retail motor fuel and convenience store properties and nine distribution terminals, seven hundred ten of the properties are owned by the Company and one hundred fifty-four of the properties are leased by the Company from third parties. The Master Lease has an initial term of fifteen years commencing December 9, 2000, and generally provides Marketing with options for three renewal terms of ten years each and a final renewal option of three years and ten months extending to 2049 (or such shorter initial or renewal term as the underlying lease may provide). The Marketing Leases include provisions for 2% annual rent escalations. The Master Lease is a unitary lease and, accordingly, Marketing’s exercise of renewal options must be on an “all or nothing” basis. The supplemental leases have initial terms of varying expiration dates. As permitted under the terms of the Company’s leases with Marketing, Marketing

51

can generally use each property for any lawful purpose, or for no purpose whatsoever. (See footnote 3 for contingencies related to Marketing and the Marketing Leases for additional information.)

          The Company estimates that Marketing makes annual real estate tax payments for properties leased under the Marketing Leases of approximately $12.3 million. Marketing also makes additional payments for other operating expenses related to these properties, including environmental remediation costs other than those liabilities that were retained by the Company. These costs, which have been assumed by Marketing under the terms of the Marketing Leases, are not reflected in the consolidated financial statements.

          Revenues from rental properties for the years ended December 31, 2008, 2007 and 2006 were $81,163,000, $78,069,000 and $71,329,000, respectively, of which $60,440,000, $59,669,000 and $59,482,000, respectively, were received from Marketing under the Marketing Leases. In addition, revenues from rental properties for the years ended December 31, 2008, 2007 and 2006 include $2,537,000, 3,605,000 and $2,982,000, respectively, of deferred rental revenue accrued due to recognition of rental revenue on a straight-line basis and amortization of above-market and below-market leases. In the fourth quarter and year ended December 31, 2007, the Company provided a non-cash $10.5 million reserve for a portion of the deferred rent receivable recorded as of December 31, 2007 related to the Marketing Leases. (See footnote 3 for additional information related to the Marketing Leases and the reserve.)

          Future contractual minimum annual rentals receivable from Marketing under the Marketing Leases and from other tenants, which have terms in excess of one year as of December 31, 2008, are as follows (in thousands. See footnote 3 for additional information related to the Marketing Leases and the reserve):

YEAR ENDING DECEMBER 31,

MARKETING

OTHER
TENANTS

TOTAL (a)

2009

60,003

18,938

78,941

2010

59,968

18,722

78,690

2011

60,086

18,769

78,855

2012

60,402

18,588

78,990

2013

60,508

18,006

78,514

Thereafter

118,946

121,683

240,629

(a) Includes $78,441,000 of future minimum annual rentals receivable under subleases.

          Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to $8,100,000, $8,337,000 and $8,685,000 for the years ended December 31, 2008, 2007 and 2006, respectively, and is included in rental property expenses using the straight-line method. Rent received under subleases for the years ended December 31, 2008, 2007 and 2006 was $13,986,000, $14,145,000 and $14,646,000, respectively.

          The Company has obligations to lessors under non-cancelable operating leases which have terms (excluding renewal term options) in excess of one year, principally for gasoline stations and convenience stores. Substantially all of these leases contain renewal options and rent escalation clauses. The leased properties have a remaining lease term averaging over ten years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows: 2009 — $7,338,000, 2010 — $5,971,000, 2011 — $4,600,000, 2012 — $3,197,000, 2013 — $2,038,000 and $3,476,000 thereafter.

3. COMMITMENTS AND CONTINGENCIES

          In order to minimize the Company’s exposure to credit risk associated with financial instruments, the Company places its temporary cash investments with high credit quality institutions. Temporary cash investments, if any, are held in an overnight bank time deposit with JPMorgan Chase Bank, N.A.

          As of December 31, the Company leased eight hundred sixty-four of its one thousand sixty properties on a long-term triple-net basis to Marketing under the Marketing Leases (see footnote 2 for additional information). A substantial portion of the Company’s revenues (75% for the year ended December 31, 2008), are derived from the Marketing Leases. Accordingly, the Company’s revenues are dependent to a large degree on the economic performance of Marketing and of the petroleum marketing industry, and any factor that adversely affects Marketing,

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or the Company’s relationship with Marketing, may have a material adverse effect on the Company’s business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price. Marketing operated substantially all of the Company’s petroleum marketing businesses when it was spun-off to the Company’s shareholders as a separate publicly held company in March 1997 (the “Spin-Off”). In December 2000, Marketing was acquired by a subsidiary of OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies. Even though Marketing is a wholly-owned subsidiary of Lukoil and Lukoil has in prior periods provided credit enhancement and capital to Marketing, Lukoil is not a guarantor of the Marketing Leases and there can be no assurance that Lukoil is currently providing, or will provide, any credit enhancement or additional capital to Marketing. The Company’s financial results depend largely on rental income from Marketing, and to a lesser extent on rental income from other tenants and; therefore, are materially dependent upon the ability of Marketing to meet its rental, environmental and other obligations under the Marketing Leases. Marketing’s financial results depend largely on retail petroleum marketing margins and rental income from its sub-tenants who operate their respective convenience stores, automotive repair services or other businesses at the Company’s properties. The petroleum marketing industry has been and continues to be volatile and highly competitive. Marketing has made all required monthly rental payments under the Marketing Leases when due through March 2009, although there is no assurance that it will continue to do so.

          The Company has had periodic discussions with representatives of Marketing regarding potential modifications to the Marketing Leases and, in 2007, during the course of such discussions, Marketing proposed to (i) remove approximately 40% of the properties (the “Subject Properties”) from the Marketing Leases and eliminate payment of rent to the Company, and eliminate or reduce payment of operating expenses, with respect to the Subject Properties, and (ii) reduce the aggregate amount of rent payable to the Company for the approximately 60% of the properties that would remain under the Marketing Leases (the “Remaining Properties”). Representatives of Marketing have also indicated to the Company that they are considering significant changes to Marketing’s business model. In light of these developments and the continued deterioration in Marketing’s annual financial performance, in March 2008, the Company had decided to attempt to negotiate with Marketing for a modification of the Marketing Leases which removes the Subject Properties from the Marketing Leases. The Company has held periodic discussions with Marketing since March 2008 in its attempt to negotiate a modification of the Marketing Leases to remove the Subject Properties. Although the Company continues to remove individual locations from the Master Lease as mutually beneficial opportunities arise, there has been no agreement between the Company and Marketing on any principal terms that would be the basis for a definitive Master Lease modification agreement. If Marketing ultimately determines that its business strategy is to exit all of the properties it leases from the Company or to divest a composition of properties different from the properties comprising the Subject Properties, such as the revised list of properties provided to the Company by Marketing in the second quarter of 2008 which includes approximately 45% of the properties Marketing leases from the Company (the “Revised Subject Properties”), it is the Company’s intention to cooperate with Marketing in accomplishing those objectives if the Company determines that it is prudent for it to do so. Any modification of the Marketing Leases that removes a significant number of properties from the Marketing Leases would likely significantly reduce the amount of rent the Company receives from Marketing and increase the Company’s operating expenses. The Company cannot accurately predict if, or when, the Marketing Leases will be modified or what the terms of any agreement may be if the Marketing Leases are modified. The Company also cannot accurately predict what actions Marketing and Lukoil may take, and what the Company’s recourse may be, whether the Marketing Leases are modified or not.

          The Company intends either to re-let or sell any properties removed from the Marketing Leases and reinvest the realized sales proceeds in new properties. The Company intends to seek replacement tenants or buyers for properties removed from the Marketing Leases either individually, in groups of properties, or by seeking a single tenant for the entire portfolio of properties subject to the Marketing Leases. Although the Company is the fee or leasehold owner of the properties subject to the Marketing Leases and the owner of the Getty® brand and has prior experience with tenants who operate their convenience stores, automotive repair services or other businesses at its properties; in the event that properties are removed from the Marketing Leases, the Company cannot accurately predict if, when, or on what terms, such properties could be re-let or sold.

          Due to the previously disclosed deterioration in Marketing’s annual financial performance, in conjunction with the Company’s decision to attempt to negotiate with Marketing for a modification of the Marketing Leases to remove the Subject Properties, the Company has decided that it cannot reasonably assume that it will collect all of the rent due to the Company related to the Subject Properties for the remainder of the current lease terms. In

53

reaching this conclusion, the Company relied on various indicators, including, but not limited to, the following financial results of Marketing through the year ended December 31, 2007: (i) Marketing’s significant operating losses, (ii) its negative cash flow from operating activities, (iii) its asset impairment charges for underperforming assets, and (iv) its negative earnings before interest, taxes, depreciation, amortization and rent payable to the Company. The Company has not received Marketing’s financial results for the year ended December 31, 2008 prior to the preparation of this Annual Report on Form 10-K.

          The Company recorded a reserve of $10,494,000 in 2007 representing the full amount of the deferred rent receivable recorded related to the Subject Properties as of December 31, 2007. Providing the non-cash deferred rent receivable reserve reduced the Company’s net earnings but did not impact the Company’s cash flow from operating activities for 2007. As of December 31, 2008, the Company had a reserve of $10,029,000 for the deferred rent receivable due from Marketing representing the full amount of the deferred rent receivable recorded related to the Subject Properties as of that date. The Company has not provided a deferred rent receivable reserve related to the Remaining Properties since, based on the Company’s assessments and assumptions, the Company continues to believe that it is probable that it will collect the deferred rent receivable related to the Remaining Properties of $22,900,000 as of December 31, 2008 and that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. The Company anticipates that the rental revenue for the Remaining Properties will continue to be recognized on a straight-line basis. As required by the straight-line method of accounting, beginning with the first quarter of 2008, the rental revenue for the Subject Properties was, and for future periods is expected to be, effectively recognized when payment is due under the contractual payment terms. Although the Company has adjusted the estimated useful lives of certain long-lived assets for the Subject Properties, the Company believes that no impairment charge was necessary for the Subject Properties as of December 31, 2008 or December 31, 2007 pursuant to the provisions of Statement of Financial Accounting Standards No. 144. The impact to depreciation expense due to adjusting the estimated lives for certain long-lived assets beginning with the year ended December 31, 2008 was not material.

          Marketing is directly responsible to pay for (i) remediation of environmental contamination it causes and compliance with various environmental laws and regulations as the operator of the Company’s properties, and (ii) known and unknown environmental liabilities allocated to Marketing under the terms of the Master Lease and various other agreements between Marketing and the Company relating to Marketing’s business and the properties subject to the Marketing Leases (collectively the “Marketing Environmental Liabilities”). The Company may ultimately be responsible to directly pay for Marketing Environmental Liabilities as the property owner if Marketing fails to pay them. Additionally, the Company will be required to accrue for Marketing Environmental Liabilities if the Company determines that it is probable that Marketing will not meet its obligations or if the Company’s assumptions regarding the ultimate allocation methods and share of responsibility that it used to allocate environmental liabilities changes as a result of the factors discussed above, or otherwise. However, the Company continues to believe that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities since the Company believes that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases and, accordingly, the Company did not accrue for the Marketing Environmental Liabilities as of December 31, 2008 or 2007. Nonetheless, the Company has determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by the Company based on its assumptions and analysis of information currently available to it) could be material to the Company if it was required to accrue for all of the Marketing Environmental Liabilities in the future since the Company believes that it is reasonably possible that as a result of such accrual, the Company may not be in compliance with the existing financial covenants in its Credit Agreement. Such non-compliance could result in an event of default which, if not cured or waived, could result in the acceleration of all of the Company’s indebtedness under the Credit Agreement.

          Should the Company’s assessments, assumptions and beliefs prove to be incorrect, or if circumstances change, the conclusions reached by the Company may change relating to (i) whether some or all of the Subject or Remaining Properties are likely to be removed from the Marketing Leases (ii) recoverability of the deferred rent receivable for some or all of the Subject or Remaining Properties, (iii) potential impairment of the Subject or Remaining Properties and, (iv) Marketing’s ability to pay the Marketing Environmental Liabilities. The Company intends to regularly review its assumptions that affect the accounting for deferred rent receivable; long-lived assets; environmental litigation accruals; environmental remediation liabilities; and related recoveries from state underground storage tank funds, which may result in material adjustments to the amounts recorded for these assets and liabilities, and as a

54

result of which, the Company may not be in compliance with the financial covenants in its Credit Agreement. Accordingly, the Company may be required to (i) reserve additional amounts of the deferred rent receivable related to the Remaining Properties, (ii) record an impairment charge related to the Subject or Remaining Properties, or (iii) accrue for Marketing Environmental Liabilities that the Company believes are allocable to Marketing under the Marketing Leases and various other agreements as a result of the potential or actual modification of the Marketing Leases or other factors.

          The Company cannot provide any assurance that Marketing will continue to pay its debts or meet its rental, environmental or other obligations under the Marketing Leases prior or subsequent to any potential modification of the Marketing Leases. In the event that Marketing cannot or will not perform its rental, environmental or other obligations under the Marketing Leases; if the Marketing Leases are modified significantly or terminated; if the Company determines that it is probable that Marketing will not meet its environmental obligations and the Company accrues for such liabilities; if the Company is unable to promptly re-let or sell the properties subject to the Marketing Leases; or, if the Company changes its assumptions that affect the accounting for rental revenue or Marketing Environmental Liabilities related to the Marketing Leases and various other agreements; the Company’s business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends and/or stock price may be materially adversely affected.

          The Company has also agreed to provide limited environmental indemnification to Marketing, capped at $4,250,000 and expiring in 2010, for certain pre-existing conditions at six of the terminals which are owned by the Company and leased to Marketing. Under the agreement, Marketing is obligated to pay the first $1,500,000 of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing and the Company will share equally the next $8,500,000 of those costs and expenses and Marketing is obligated to pay all additional costs and expenses over $10,000,000. The Company has accrued $300,000 as of December 31, 2008 and 2007 in connection with this indemnification agreement.

          The Company is subject to various legal proceedings and claims which arise in the ordinary course of its business. In addition, the Company has retained responsibility for certain legal proceedings and claims relating to the petroleum marketing business that were identified at the time of the Spin-Off. As of December 31, 2008 and 2007, the Company had accrued $1,671,000 and $2,575,000, respectively, for certain of these matters which it believes were appropriate based on information then currently available. The Company has not accrued for approximately $950,000 in costs allegedly incurred by the current property owner in connection with removal of underground storage tanks (“USTs” or “UST”) and soil remediation at a property that had been leased to and operated by Marketing. The Company believes Marketing is responsible for such costs under the terms of the Master Lease and tendered the matter for defense and indemnification from Marketing, but Marketing has denied its liability for the claim and its responsibility to defend against and indemnify the Company for the claim. The Company has filed a third party claim against Marketing for indemnification in this matter, which claim is currently being actively litigated. Trial is anticipated to be scheduled for the first quarter of 2009. It is possible that the Company’s assumption that Marketing will be ultimately responsible for this claim may change, which may result in the Company providing an accrual for this and other matters.

          In September 2003, the Company was notified by the State of New Jersey Department of Environmental Protection (“NJDEP”) that the Company is one of approximately sixty-six potentially responsible parties for natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The definitive list of potentially responsible parties and their actual responsibility for the alleged damages, the aggregate cost to remediate the Lower Passaic River, the amount of natural resource damages and the method of allocating such amounts among the potentially responsible parties have not been determined. In September 2004, the Company received a General Notice Letter from the United States Environmental Protection Agency (the “EPA”) (the “EPA Notice”), advising the Company that it may be a potentially responsible party for costs of remediating certain conditions resulting from discharges of hazardous substances into the Lower Passaic River. ChevronTexaco received the same EPA Notice regarding those same conditions. In a related action, in December 2005, the State of New Jersey brought suit against certain companies which the State alleges are responsible for pollution of the Passaic River from a former Diamond Alkali manufacturing plant. In February 2009, certain of these defendants filed third-party complaints against approximately 300 additional parties, including the Company, seeking contribution for a pro-rata share of response costs, cleanup and removal costs, and other damages. The Company believes that ChevronTexaco is contractually obligated to indemnify the Company, pursuant to an indemnification

55

agreement, for most if not all of the conditions at the property identified by the NJDEP and the EPA. Accordingly, the ultimate legal and financial liability of the Company, if any, cannot be estimated with any certainty at this time.

          From October 2003 through December 31, 2008, the Company was notified that the Company was made party to fifty-four cases in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia and West Virginia brought by local water providers or governmental agencies. These cases allege various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (“MTBE”) as the basis for claims seeking compensatory and punitive damages. Each case names as defendants approximately fifty petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. At this time, the Company has been dismissed from certain of the cases initially filed against it. A significant number of the named defendants other than the Company have entered into settlements with certain plaintiffs, which affected approximately twenty-seven of the cases to which the Company is a party. The accuracy of the allegations as they relate to the Company, the Company’s defenses to such claims, the aggregate amount of possible damages and the method of allocating such amounts among the remaining defendants have not been determined. Accordingly, the ultimate legal and financial liability of the Company, if any, cannot be estimated with any certainty at this time. The ultimate resolution of these matters could cause a material adverse effect on the Company’s business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

          Prior to the Spin-Off, the Company was self-insured for workers’ compensation, general liability and vehicle liability up to predetermined amounts above which third-party insurance applies. As of December 31, 2008 and 2007, the Company’s consolidated balance sheets included, in accounts payable and accrued expenses, $290,000 and $310,000, respectively, relating to self-insurance obligations. The Company estimates its loss reserves for claims, including claims incurred but not reported, by utilizing actuarial valuations provided annually by its insurance carriers. The Company is required to deposit funds for substantially all of these loss reserves with its insurance carriers, and may be entitled to refunds of amounts previously funded, as the claims are evaluated on an annual basis. The Company’s consolidated statements of operations for the years ended December 31, 2008, 2007 and 2006 include, in general and administrative expenses, charges (credits) of $(72,000), $81,000 and ($301,000), respectively, for self-insurance loss reserve adjustments. Since the Spin-Off, the Company has maintained insurance coverage subject to certain deductibles.

          In order to qualify as a REIT, among other items, the Company must pay out substantially all of its “earnings and profits” (as defined in the Internal Revenue Code) in cash distributions to shareholders each year. Should the Internal Revenue Service successfully assert that the Company’s earnings and profits were greater than the amounts distributed, the Company may fail to qualify as a REIT; however, the Company may avoid losing its REIT status by paying a deficiency dividend to eliminate any remaining earnings and profits. The Company may have to borrow money or sell assets to pay such a deficiency dividend.

4. CREDIT AGREEMENT

          As of December 31, 2008, borrowings under the Credit Agreement, described below, were $130,250,000, bearing interest at a weighted-average effective rate of 3.8% per annum. The weighted-average effective rate is based on $85,250,000 of LIBOR rate borrowings floating at market rates plus a margin of 1.0% and $45,000,000 of LIBOR rate borrowings effectively fixed at 5.44% by an interest rate Swap Agreement, described below, plus a margin of 1.0%. The Company has a $175,000,000 amended and restated senior unsecured revolving credit agreement (the “Credit Agreement”) with a group of domestic commercial banks led by JPMorgan Chase Bank, N.A. (the “Bank Syndicate”) which expires in March 2011. The Credit Agreement does not provide for scheduled reductions in the principal balance prior to its maturity. The Credit Agreement permits borrowings at an interest rate equal to the sum of a base rate plus a margin of 0.0% or 0.25% or a LIBOR rate plus a margin of 1.0%, 1.25% or 1.5%. The applicable margin is based on the Company’s leverage ratio at the end of the prior calendar quarter, as defined in the Credit Agreement, and is adjusted effective mid-quarter when the Company’s quarterly financial results are reported to the Bank Syndicate. Based on the Company’s leverage ratio as of December 31, 2008, the applicable margin is 0.0% for base rate borrowings and will increase to 1.25% in the first quarter of 2009 for LIBOR rate borrowings.

56

          Subject to the terms of the Credit Agreement, the Company has the option to extend the term of the credit agreement for one additional year to March 2012 and/or, subject to approval by the Bank Syndicate, increase the amount of the credit facility available pursuant to the Credit Agreement by $125,000,000 to $300,000,000. The Company does not expect to exercise its option to increase the amount of the Credit Agreement at this time. In addition, based on the current lack of liquidity in the credit markets, the Company believes that it would need to renegotiate certain terms in the Credit Agreement in order to obtain approval from the Bank Syndicate to increase the amount of the credit facility at this time. No assurance can be given that such approval from the Bank Syndicate will be obtained on terms acceptable to the Company, if at all. The annual commitment fee on the unused Credit Agreement ranges from 0.10% to 0.20% based on the amount of borrowings. The Credit Agreement contains customary terms and conditions, including customary financial covenants such as leverage and coverage ratios and other customary covenants, including limitations on the Company’s ability to incur debt, pay dividends and maintenance of tangible net worth, and events of default, including change of control and failure to maintain REIT status. A material adverse effect on the Company’s business, assets, prospects or condition, financial or otherwise, would also result in an event of default. Any event of default, if not cured or waived, could result in the acceleration of all of the Company’s indebtedness under the Credit Agreement.

          The Company entered into a $45,000,000 LIBOR based interest rate swap agreement with JPMorgan Chase Bank, N.A. as the counterparty, effective through June 30, 2011 (the “Swap Agreement”). The Swap Agreement is intended to effectively fix, at 5.44%, the LIBOR component of the interest rate determined under the Credit Agreement. As a result of the Swap Agreement, as of December 31, 2008, $45,000,000 of the Company’s LIBOR based borrowings under the Credit Agreement bear interest at an effective rate of 6.44%.

          The Company entered into the Swap Agreement with JPMorgan Chase Bank, N.A., designated and qualifying as a cash flow hedge, to reduce its exposure to the variability in future cash flows attributable to changes in the LIBOR rate. The Company’s primary objective when undertaking the hedging transaction and derivative position was to reduce its variable interest rate risk by effectively fixing a portion of the interest rate for existing debt and anticipated refinancing transactions. The Company determined, as of the Swap Agreement’s inception and as of December 31, 2008 and 2007, that the derivative used in the hedging transaction is highly effective in offsetting changes in cash flows associated with the hedged item and that no gain or loss was required to be recognized in earnings during 2008 or 2007 representing the hedge’s ineffectiveness. At December 31, 2008 and, 2007, the Company’s consolidated balance sheets include, in accounts payable and accrued expenses, an obligation for the fair value of the Swap Agreement of $4,296,000 and $2,299,000, respectively. For the years ended December 31, 2008, 2007 and 2006, the Company has recorded a loss in the fair value of the Swap Agreement related to the effective portion of the interest rate contract totaling $1,997,000, $1,478,000 and $821,000, respectively, in accumulated other comprehensive loss in the Company’s consolidated balance sheet. The accumulated comprehensive loss will be recognized as an increase in interest expense as quarterly payments are made to the counter-party over the remaining term of the Swap Agreement (of which approximately $1,862,000 is expected to be reclassified within the next twelve months) since it is expected that the Credit Agreement will be refinanced with variable interest rate debt at its maturity.

          The fair value of the Swap Agreement is $4,296,000 as of December 31, 2008 determined using (i) a discounted cash flow analysis on the expected cash flows of the Swap Agreement, which is based on market data obtained from sources independent of the Company consisting of interest rates and yield curves that are observable at commonly quoted intervals and are defined by GAAP as “Level 2” inputs in the “Fair Value Hierarchy”, and (ii) credit valuation adjustments, which are based on unobservable “Level 3” inputs. The fair value of the $133,577,000 projected borrowings outstanding under the Credit Agreement is $122,751,000 as of December 31, 2008 determined using a discounted cash flow technique that incorporates a market interest yield curve, “Level 2 inputs”, with adjustments for duration, optionality, risk profile and projected average borrowings outstanding, which are based on unobservable “Level 3 inputs”. As of December 31, 2008, accordingly, the Company classified its valuation of the Swap Agreement in its entirety within Level 2 of the Fair Value Hierarchy since the credit valuation adjustments are not significant to the overall valuation of the Swap Agreement and its valuation of the borrowings outstanding under the Credit Agreement in its entirety within Level 3 of the Fair Value Hierarchy.

57

5. ENVIRONMENTAL EXPENSES

          The Company is subject to numerous existing 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 expenses are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting incurred in connection with contaminated properties. The Company seeks reimbursement from state UST remediation funds related to these environmental expenses where available.

          The Company enters into leases and various other agreements which allocate responsibility for known and unknown environmental liabilities by establishing the percentage and method of allocating responsibility between the parties. In accordance with the leases with certain tenants, the Company has agreed to bring the leased properties with known environmental contamination to within applicable standards and to regulatory or contractual closure (“Closure”) in an efficient and economical manner. Generally, upon achieving Closure at each individual property, the Company’s environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of the Company’s tenant. Generally the liability for the retirement and decommissioning or removal of USTs and other equipment is the responsibility of the Company’s tenants. The Company is contingently liable for these obligations in the event that the tenants do not satisfy their responsibilities. A liability has not been accrued for obligations that are the responsibility of the Company’s tenants based on the tenants’ history of paying such obligations and/or the Company’s assessment of their financial ability to pay their share of such costs. However, there can be no assurance that the Company’s assessments are correct or that the Company’s tenants who have paid their obligations in the past will continue to do so.

          Of the eight hundred sixty-four properties leased to Marketing as of December 31, 2008, the Company has agreed to pay all costs relating to, and to indemnify Marketing for, certain environmental liabilities and obligations at one hundred eighty-seven retail properties that have not achieved Closure and are scheduled in the Master Lease. The Company will continue to seek reimbursement from state UST remediation funds related to these environmental expenditures where available.

          It is possible that the Company’s assumptions regarding the ultimate allocation method and share of responsibility that it used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. The Company will be required to accrue for environmental liabilities that the Company believes are allocable to others under various other agreements if the Company determines that it is probable that the counter-party will not meet its environmental obligations. The ultimate resolution of these matters could cause a material adverse effect on the Company’s business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. (See footnote 3 for contingencies related to Marketing and the Marketing Leases for additional information.)

          The estimated future costs for known environmental remediation requirements are accrued when it is probable that a liability has been incurred and a reasonable estimate of fair value can be made. The environmental remediation liability is estimated based on the level and impact of contamination at each property. The accrued liability is the aggregate of the best estimate of the fair value of cost for each component of the liability. Recoveries of environmental costs from state UST remediation funds, with respect to both past and future environmental spending, are accrued at fair value as an offset to environmental expense, net of allowance for collection risk, based on estimated recovery rates developed from prior experience with the funds when such recoveries are considered probable.

          Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination. In developing the Company’s liability for probable and reasonably estimable environmental remediation costs, on a property by property basis, the Company considers among other things, enacted laws and regulations, assessments of contamination and surrounding geology, quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as these

58

contingencies become more clearly defined and reasonably estimable. As of December 31, 2008, the Company had regulatory approval for remediation action plans in place for two hundred forty-nine (95%) of the two hundred sixty-two properties for which it continues to retain environmental responsibility and the remaining thirteen properties (5%) remain in the assessment phase. In addition, the Company has nominal post-closure compliance obligations at twenty-four properties where it has received “no further action” letters.

          Environmental remediation liabilities and related assets are measured at fair value based on their expected future cash flows which have been adjusted for inflation and discounted to present value. The net change in estimated remediation cost and accretion expense included in environmental expenses in the Company’s consolidated statements of operations aggregated $4,656,000, $5,136,000 and $3,202,000 for 2008, 2007 and 2006, respectively, which amounts were net of changes in estimated recoveries from state UST remediation funds. In addition to net change in estimated remediation costs, environmental expenses also include project management fees, legal fees and provisions for environmental litigation loss reserves.

          As of December 31, 2008, 2007, 2006 and 2005, the Company had accrued $17,660,000, $18,523,000, $17,201,000 and $17,350,000 respectively, as management’s best estimate of the fair value of reasonably estimable environmental remediation costs. As of December 31, 2008, 2007, 2006 and 2005, the Company had also recorded $4,223,000, $4,652,000, $3,845,000 and $4,264,000, respectively, as management’s best estimate for recoveries from state UST remediation funds, net of allowance, related to environmental obligations and liabilities. The net environmental liabilities of $13,871,000, $13,356,000 and $13,086,000 as of December 31, 2007, 2006 and 2005, respectively, were subsequently accreted for the change in present value due to the passage of time and, accordingly, $956,000, $974,000 and $923,000 of net accretion expense was recorded for the years ended December 31, 2008, 2007 and 2006, respectively, substantially all of which is included in environmental expenses.

          In view of the uncertainties associated with environmental expenditures, contingencies related to Marketing and the Marketing Leases and contingencies related to other parties, however, the Company believes it is possible that the fair value of future actual net expenditures could be substantially higher than amounts currently recorded by the Company. (See footnote 3 for contingencies related to Marketing and the Marketing Leases for additional information.) Adjustments to accrued liabilities for environmental remediation costs will be reflected in the Company’s financial statements as they become probable and a reasonable estimate of fair value can be made. Future environmental expenses could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

6. INCOME TAXES

          Net cash paid for income taxes for the years ended December 31, 2008, 2007 and 2006 of $708,000, $488,000 and $576,000, respectively, includes amounts related to state and local income taxes for jurisdictions that do not follow the federal tax rules, which are provided for in rental property expenses in the Company’s consolidated statements of operations.

          Earnings and profits (as defined in the Internal Revenue Code) is used to determine the tax attributes of dividends paid to stockholders and will differ from income reported for financial statement 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 financial statement purposes. Earnings and profits were $40,906,000, $41,147,000 and $39,486,000 for the years ended December 31, 2008, 2007 and 2006, respectively. The federal tax attributes of the common dividends for the years ended December 31, 2008, 2007 and 2006 were: ordinary income of 87.4%, 90.3% and 88.0%; capital gain distributions of 1.2%, 0.0% and 0.02% and non-taxable distributions of 11.4%, 9.7% and 11.8%, respectively.

          In order to qualify as a REIT, among other items, the Company must pay out substantially all of its earnings and profits in cash distributions to shareholders each year. Should the Internal Revenue Service successfully assert that the Company’s earnings and profits were greater than the amount distributed, the Company may fail to qualify as a REIT; however, the Company may avoid losing its REIT status by paying a deficiency dividend to eliminate any remaining earnings and profits. The Company may have to borrow money or sell assets to pay such a deficiency dividend. The Company accrues for this and certain other tax matters when appropriate based on information

59

currently available. 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. Accordingly, an income tax benefit of $700,000 was recorded in the third quarter of 2006, due to the elimination of the amount accrued for uncertain tax positions since the Company believes that the uncertainties regarding these exposures have been resolved or that it is no longer likely that the exposure will result in a liability upon review. However, the ultimate resolution of these matters may have a significant impact on the results of operations for any single fiscal year or interim period.

7. SHAREHOLDERS’ EQUITY

          A summary of the changes in shareholders’ equity for the years ended December 31, 2008, 2007 and 2006 is as follows (in thousands, except per share amounts):

COMMON STOCK

PAID-IN
CAPITAL

DIVIDENDS
PAID
IN EXCESS
OF EARNINGS

ACCUMULATED
OTHER
COMPREHENSIVE
LOSS

SHARES

AMOUNT

TOTAL

BALANCE,
DECEMBER 31, 2005

24,717

$

247

$

257,766

$

(30,130

)

$

—

$

227,883

Net earnings

42,725

42,725

Dividends — $1.82 per common share

(45,094

)

(45,094

)

Stock-based compensation

186

186

Net unrealized loss on interest rate swap

(821

)

(821

)

Stock options exercised

48

1

695

696

BALANCE,
DECEMBER 31, 2006

24,765

248

258,647

(32,499

)

(821

)

225,575

Net earnings

33,894

33,894

Dividends — $1.85 per common share

(45,900

)

(45,900

)

Stock-based compensation

87

87

Net unrealized loss on interest rate swap

(1,478

)

(1,478

)

BALANCE,
DECEMBER 31, 2007

24,765

248

258,734

(44,505

)

(2,299

)

212,178

Net earnings

41,810

41,810

Dividends — $1.87 per common share

(46,429

)

(46,429

)

Stock-based compensation

1

326

326

Stock options exercised

9

9

Net unrealized loss on interest rate swap

(1,997

)

(1,997

)

BALANCE,
DECEMBER 31, 2008

24,766

$

248

$

259,069

$

(49,124

) (a)

$

(4,296

)

$

205,897

(a)

Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends.

          The Company is authorized to issue 20,000,000 shares of preferred stock, par value $.01 per share, for issuance in series, of which none were issued as of December 31, 2008, 2007, 2006 and 2005.

8. SEVERANCE AGREEMENT AND EMPLOYEE BENEFIT PLANS

          General and administrative expenses include a provision of $447,000 recorded in the quarter ended December 31, 2007 primarily due to the payment of severance and the accelerated vesting of 14,250 restricted stock units which were unvested and scheduled to vest five years from the date of each grant in conjunction with the resignation of Mr. Andy Smith, the former President and Chief Legal Officer of the Company.

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

60

may make voluntary contributions and the Company has elected to match an amount equal to fifty percent of such contributions but in no event more than three percent of the employee’s eligible compensation. Under the Supplemental Plan, a participating executive may receive an amount equal to ten percent of eligible compensation, reduced by the amount of any contributions allocated to such executive under the Retirement Plan. Contributions, net of forfeitures, under the retirement plans approximated $151,000, $100,000 and $139,000 for the years ended December 31, 2008, 2007 and 2006, respectively. These amounts are included in the accompanying consolidated statements of operations.

          The Getty Realty Corp. 2004 Omnibus Incentive Compensation Plan (the “2004 Plan”) provides for the grant of restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments and stock awards to all employees and members of the Board of Directors. The 2004 Plan authorizes the Company to grant awards with respect to an aggregate of 1,000,000 shares of common stock through 2014. The aggregate maximum number of shares of common stock that may be subject to awards granted under the 2004 Plan during any calendar year is 80,000.

          The Company awarded to employees and directors 23,800, 17,550 and 12,550 restricted stock units (“RSUs”) and dividend equivalents in 2008, 2007 and 2006, respectively. The RSUs are settled subsequent to the termination of employment with the Company. On the settlement date each RSU will have a value equal to one share of common stock and may be settled, at the sole discretion of the Compensation Committee, in cash or by the issuance of one share of common stock. In 2008, the Company settled 1,000 RSUs by issuing 400 shares of common stock with an intrinsic value of $7,000 net of employee tax withholdings and cancelling 600 RSUs that were not vested. In 2007, the Compensation Committee elected to settle 14,250 RSUs in cash for $405,000. The RSUs do not provide voting or other shareholder rights unless and until the RSU is settled for a share of common stock. The 62,000 RSUs outstanding as of December 31, 2008 vest starting one year from the date of grant, on a cumulative basis at the annual rate of twenty percent of the total number of RSUs covered by the award. The dividend equivalents represent the value of the dividends paid per common share multiplied by the number of RSUs covered by the award.

          The fair values of the RSUs were determined based on the closing market price of the Company’s stock on the date of grant. The average fair values of the RSUs granted in 2008, 2007, and 2006 were estimated at $26.86, $28.78, and $28.80 per unit on the date of grant with an aggregate fair value estimated at $639,000, $505,000 and $361,000, respectively. The fair value of the grants is recognized as compensation expense ratably over the five year vesting period of the RSUs. As of December 31, 2008, there was $971,000 of total unrecognized compensation cost related to RSUs granted under the 2004 Plan.

          The fair value of the 7,840, 19,330 and 3,320 RSUs which vested during the years ended December 31, 2008, 2007 and 2006 was $213,000, $523,000 and $88,000, respectively. The aggregate intrinsic value of the 62,000 outstanding RSUs and the 17,400 vested RSUs as of December 31, 2008 was $1,306,000 and $366,000, respectively. For the years ended December 31, 2008, 2007 and 2006, dividend equivalents aggregating approximately $88,000, $85,000 and $65,000, respectively, were charged against retained earnings when common stock dividends were declared.

          The Company has a stock option plan (the “Stock Option Plan”). The Company’s authorization to grant options to purchase shares of the Company’s common stock under the Stock Option Plan expired in January 2008. No options were granted in 2008. Stock options vest starting one year from the date of grant, on a cumulative basis at the annual rate of twenty-five percent of the total number of options covered by the award. As of December 31, 2008, there was $10,000 of unrecognized compensation cost related to non-vested options granted in May 2007 under the Stock Option Plan with an estimated fair value of $18,000, or $3.51 per option. The total fair value of the options vested during the years ended December 31, 2008 and 2006 was $4,000 and $8,000, respectively. As of December 31, 2008, there were 1,750, 10,500 and 5,000 options outstanding which were exercisable at prices of $16.15, $18.30 and $27.68 with a remaining contractual life of three, four and nine years, respectively.

61

          The following is a schedule of stock option prices and activity relating to the Stock Option Plan:

YEAR ENDED DECEMBER 31,

2008

2007

2006

NUMBER
OF SHARES

WEIGHTED-
AVERAGE
EXERCISE
PRICE

WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
TERM

AGGREGATE
INTRINSIC
VALUE
(IN THOUSANDS)

NUMBER
OF SHARES

WEIGHTED-
AVERAGE
EXERCISE
PRICE

NUMBER
OF SHARES

WEIGHTED-
AVERAGE
EXERCISE
PRICE

Outstanding at beginning of year

17,750

$

20.73

12,750

$

18.00

84,378

$

19.48

Issued

—

—

5,000

27.68

—

—

Exercised (a)

(500

)

18.30

—

—

(71,628

)

19.74

Cancelled

—

—

—

—

—

—

Outstanding at end of year

17,250

$

20.80

5.3

$

4

17,750

$

20.73

12,750

$

18.00

Exercisable at end of year (b)

13,500

$

18.89

4.8

$

29

12,750

$

18.00

12,750

$

18.00

(a)

The total intrinsic value of the options exercised during the years ended December 31, 2008 and 2006 was $5,000 and $704,000, respectively.

(b)

The options vested during the years ended December 31, 2008 and 2006 was 1,250 and 14,875, respectively. No options vested during the year ended December 31, 2007.

9. QUARTERLY FINANCIAL DATA

          The following is a summary of the quarterly results of operations for the years ended December 31, 2008 and 2007 (unaudited as to quarterly information) (in thousands, except per share amounts):

THREE MONTHS ENDED

YEAR ENDED
DECEMBER 31,

YEAR ENDED DECEMBER 31, 2008

MARCH 31,

JUNE 30,

SEPTEMBER 30,

DECEMBER 31,

Revenues from rental properties

$

20,242

$

20,187

$

20,328

$

20,406

$

81,163

Earnings from continuing operations

10,832

9,361

10,011

8,958

39,162

Net earnings

11,371

10,635

10,489

9,315

41,810

Diluted earnings per common share:

Earnings from continuing operations

.44

.38

.40

.36

1.58

Net earnings

.46

.43

.42

.38

1.69

THREE MONTHS ENDED

YEAR ENDED
DECEMBER 31,

YEAR ENDED DECEMBER 31, 2007 (a)

MARCH 31,

JUNE 30,

SEPTEMBER 30,

DECEMBER 31,

Revenues from rental properties

$

17,713

$

20,248

$

20,000

$

20,108

$

78,069

Earnings (loss) from continuing operations (b)(c)

10,194

8,507

9,907

(498

)

28,110

Net earnings (b)(c)

10,437

10,024

12,846

587

33,894

Diluted earnings (loss) per common share:

Earnings (loss) from continuing
operations (b)(c)

.41

.34

.40

(.02

)

1.13

Net earnings (b)(c)

.42

.40

.52

.02

1.37

(a)

Includes (from the date of the acquisition) the effect of the $84.6 million acquisition of convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter of 2007 (See footnote 10 for additional information).

(b)

The quarter ended December 31, 2007 includes the effect of a $10.5 million non-cash reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 related to approximately 40% of the properties under leases with Marketing, (See footnote 3 for additional information).

(c)

The quarter ended December 31, 2007 includes a net expense of $447,000 related to Mr. Andy Smith’s resignation (See footnote 8 for additional information).

62

10. PROPERTY ACQUISITIONS

          On February 28, 2006, the Company completed the acquisition of eighteen retail motor fuel and convenience store properties located in Western New York for approximately $13,389,000. Simultaneous with the closing on the acquisition, the Company entered into a triple-net lease with a single tenant for all of the properties. The lease provides for annual rentals at a competitive rate and provides for escalations thereafter. The lease has an initial term of fifteen years and provides the tenant options for three renewal terms of five years each. The lease also provides that the tenant is responsible for all existing and future environmental conditions at the properties.

          Effective March 31, 2007, the Company acquired fifty-nine convenience store and retail motor fuel properties in ten states for approximately $79,335,000 from various subsidiaries of FF-TSY Holding Company II, LLC (the successor to Trustreet Properties, Inc.) (“Trustreet”), a subsidiary of General Electric Capital Corporation, for cash with funds drawn under its Credit Agreement. Effective April 23, 2007, the Company acquired five additional properties from Trustreet for approximately $5,200,000. The aggregate cost of the acquisitions, including $1,131,000 of transaction costs, is approximately $84,535,000. Substantially all of the properties are triple-net-leased to tenants who previously leased the properties from the seller. The leases generally provide that the tenants are responsible for substantially all existing and future environmental conditions at the properties.

          The purchase price has been allocated between assets, liabilities and intangible assets based on the estimates of fair value. The Company estimated 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 and in-place leases). Based on these estimates, the Company allocated $89,908,000, $5,351,000 and $10,724,000 of the purchase price to acquired tangible assets; identified intangible assets; and identified intangible liabilities, respectively.

          The following unaudited pro forma condensed consolidated financial information has been prepared utilizing the historical financial statements of Getty Realty Corp. and the historical financial information of the properties acquired in 2007 which was derived from the consolidated books and records of Trustreet. The unaudited pro forma condensed consolidated financial information assumes that the acquisitions had occurred as of the beginning of each of the periods presented, after giving effect to certain adjustments including (a) rental income adjustments resulting from (i) the straight-lining of scheduled rent increases and (ii) the net amortization of the intangible assets relating to above-market leases and intangible liabilities relating to below-market leases over the remaining lease terms which average eleven years and (b) depreciation and amortization adjustments resulting from (i) the depreciation of real estate assets over their useful lives which average seventeen years and (ii) the amortization of intangible assets relating to leases in place over the remaining lease terms. The following unaudited pro forma condensed consolidated financial information also gives effect to the additional interest expense resulting from the assumed increase in borrowing outstanding drawn under the Credit Agreement to fund the acquisition.

          The unaudited pro forma condensed financial information the years ended December 31, 2007 and 2006 is not indicative of the results of operations that would have been achieved had the acquisition from Trustreet reflected herein been consummated on the dates indicated or that will be achieved in the future and is as follows (in thousands, except per share amounts):

2007

2006

Revenues from rental properties

$

81,344

$

81,724

Net earnings

$

34,348

$

43,900

Net earnings per share

Basic

$

1.39

$

1.77

Diluted

$

1.39

$

1.77

          In 2007, the Company also exercised its fixed price purchase option for seven leased properties, purchased two properties and redeveloped one property by purchasing land adjacent to it and building a new convenience store on the existing site. In 2008, the Company exercised its fixed price purchase option for three leased properties and purchased six properties.

63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Getty Realty Corp.:

          In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income and cash flows present fairly, in all material respects, the financial position of Getty Realty Corp. and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, 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, 2008 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these 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 the Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

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

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

/s/ PricewaterhouseCoopers LLP

New York, New York

March 2, 2009

64

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

          None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

          The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s 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 the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

          As required by the Exchange Act Rule 13a-15(b), the Company has carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2008.

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 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, 2008.

          The effectiveness of our internal control over financial reporting as of December 31, 2008, 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”.

          There have been no changes in the Company’s internal control over financial reporting during the latest fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

NYSE Certifications

          On June 16, 2008, in accordance with Section 303A.12 of the Listed Company Manual of the New York Stock Exchange, our Chief Executive Officer certified to the New York Stock Exchange that he was not aware of any violation by our Company of New York Stock Exchange corporate governance listing standards as of that date. Further the Company files certifications by its Chief Executive Officer and Chief Financial Officer with the SEC, in accordance with the Sarbanes-Oxley Act of 2002. These certifications are filed as exhibits to this our Annual Report on Form 10-K.

Item 9B. Other Information

          None.

65

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 shareholders may recommend to 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

Leo Liebowitz

81

Chairman and Chief Executive Officer

1971

Kevin C. Shea

49

Executive Vice President

2001

Thomas J. Stirnweis

50

Vice President, Treasurer and Chief Financial Officer

2001

Joshua Dicker

48

General Counsel and Corporate Secretary

2008

          Mr. Liebowitz cofounded the Company in 1955 and has served as Chief Executive Officer since 1985. He was the President of the Company from May 1971 to May 2004. Mr. Liebowitz served as Chairman, Chief Executive Officer and a director of Marketing from October 1996 until December 2000. He is also a director of the Regional Banking Advisory Board of J.P. Morgan Chase & Co.

          Mr. Shea has been with the Company since 1984 and has served as Executive Vice President since May 2004. He was Vice President since January 2001 and Director of National Real Estate Development prior thereto.

          Mr. Stirnweis has been with the Company or Getty Petroleum Marketing Inc. since 1988 and has served as Vice President, Treasurer and Chief Financial Officer of the Company since May 2003. He joined the Company in January 2001 as Corporate Controller and Treasurer. Prior to joining the Company, Mr. Stirnweis was Manager of Financial Reporting and Analysis of Marketing.

          Mr. Dicker joined the Company in February 2008 as General Counsel and Corporate Secretary. Prior to joining Getty, he was a partner at the national law firm Arent Fox, LLP, resident in its New York City office, specializing in corporate and transactional matters.

          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.

66

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, 2008. 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.

67

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”.

(a)(2) Financial Statement Schedules

GETTY REALTY CORP.
INDEX TO FINANCIAL STATEMENT SCHEDULES
Item 15(a)(2)

PAGES

Report of Independent Registered Public Accounting Firm on Financial Statement Schedules

69

Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2008, 2007 and 2006

69

Schedule III - Real Estate and Accumulated Depreciation and Amortization as of December 31, 2008

70

(a)(3) Exhibits

Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 86 of this Form 10-K.

68

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Getty Realty Corp.:

          Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated March 2, 2009 appearing in Item 8 of this Annual Report on Form 10-K also included an audit of the financial statement schedules listed in Item 15(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

New York, New York
March 2, 2009

GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES
for the years ended December 31, 2008, 2007 and 2006
(in thousands)

BALANCE AT
BEGINNING
OF YEAR

ADDITIONS

DEDUCTIONS

BALANCE
AT END
OF YEAR

December 31, 2008:

Allowance for deferred rent receivable

$

10,494

$

—

$

465

$

10,029

Allowance for mortgages and accounts receivable

$

100

$

71

$

71

$

100

Allowance for deposits held in escrow

$

—

$

377

$

—

$

377

Allowance for recoveries from state underground storage tank funds

$

650

$

—

$

—

$

650

December 31, 2007:

Allowance for deferred rent receivable

$

—

$

10,494

$

—

$

10,494

Allowance for mortgages and accounts receivable

$

30

$

70

$

—

$

100

Allowance for recoveries from state underground storage tank funds

$

650

$

—

$

—

$

650

December 31, 2006:

Allowance for mortgages and accounts receivable

$

29

$

44

$

43

$

30

Allowance for recoveries from state underground storage tank funds

$

750

$

—

$

100

$

650

69

GETTY REALTY CORP. and SUBSIDIARIES
SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION
As of December 31, 2008
(in thousands)

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

2008

2007

2006

Investment in real estate:

Balance at beginning of year

$

474,254

$

383,558

$

370,495

Acquisitions

6,540

94,700

15,496

Capital expenditures

—

1,310

42

Sales and condemnations

(3,939

)

(3,464

)

(1,416

)

Lease terminations

(3,288

)

(1,850

)

(1,059

)

Balance at end of year

$

473,567

$

474,254

$

383,558

Accumulated depreciation and amortization:

Balance at beginning of year

$

122,465

$

116,089

$

109,800

Depreciation and amortization expense

11,576

9,448

7,883

Sales and condemnations

(1,431

)

(1,222

)

(535

)

Lease terminations

(3,288

)

(1,850

)

(1,059

)

Balance at end of year

$

129,322

$

122,465

$

116,089

          We are not aware of any material liens or encumbrances on any of our properties.

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

CEDAR PARK, TX

$

178,507

$

0

$

42,091

$

136,415

$

178,507

$

12,414

2007

ALBANY, NY

142,312

36,831

91,600

87,543

179,143

59,357

1985

SALISBURY, MA

119,698

59,615

80,598

98,715

179,313

89,410

1986

CARMEL, NY

20,419

158,943

20,750

158,612

179,362

154,391

1970

POTTSTOWN, PA

166,236

16,010

71,631

110,615

182,246

94,975

1989

LONG ISLAND CITY, NY

90,895

91,386

60,030

122,251

182,281

115,438

1972

BOILING SPRINGS, PA

14,792

167,641

14,792

167,641

182,433

151,310

1961

ARLINGTON, TX

182,460

0

30,425

152,035

182,460

17,212

2007

GREENVILLE, NY

77,153

105,325

77,152

105,326

182,478

99,023

1989

PIERMONT, NY

151,125

31,470

90,675

91,920

182,595

91,920

1978

SOUTH PORTLAND, ME

176,700

6,938

115,100

68,538

183,638

33,203

1985

AUBURN, ME

105,908

77,928

105,908

77,928

183,836

77,781

1986

KINGSTON, NY

68,341

115,961

44,379

139,923

184,302

136,199

1971

HOWELL, NJ

9,750

174,857

0

184,607

184,607

184,035

1978

PITTSFIELD, MA

97,153

87,874

40,000

145,027

185,027

144,983

1982

AGAWAM, MA

65,000

120,665

0

185,665

185,665

183,366

1982

IPSWICH, MA

138,918

46,831

95,718

90,031

185,749

87,034

1986

GETTYSBURG, PA

157,602

28,530

67,602

118,530

186,132

117,939

1986

ATHOL, MA

164,629

22,016

107,009

79,636

186,645

33,779

1991

GLEN ROCK, PA

20,442

166,633

20,442

166,633

187,075

145,128

1961

WHITE PLAINS, NY

120,393

67,315

0

187,708

187,708

187,708

1979

HADLEY, MA

119,276

68,748

36,080

151,944

188,024

147,948

1982

KINGSTON, NY

29,010

159,986

12,721

176,275

188,996

167,892

1972

TONAWANDA, NY

189,296

0

147,122

42,174

189,296

15,886

2000

SEAFORD, NY

32,000

157,665

0

189,665

189,665

162,443

1978

WISCASSET, ME

156,587

33,455

90,837

99,205

190,042

99,205

1986

BRISTOL, CT

108,808

81,684

44,000

146,492

190,492

142,705

1982

YONKERS, NY

111,300

80,000

65,000

126,300

191,300

116,522

1988

LANGHORNE, PA

122,202

69,328

50,000

141,530

191,530

96,391

1987

DELMAR, NY

150,000

42,478

70,000

122,478

192,478

118,294

1986

HUNTINGTON STATION, NY

140,735

52,045

84,000

108,780

192,780

108,416

1978

MECHANICSVILLE, VA

0

193,088

193,088

0

193,088

0

2005

70

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

CHRISTIANA, PA

182,593

11,178

65,212

128,559

193,771

128,559

1989

LINWOOD, PA

171,518

22,371

102,968

90,921

193,889

89,412

1987

OZONE PARK, NY

0

193,968

0

193,968

193,968

193,968

1986

ELMONT, NY

108,348

85,793

64,290

129,851

194,141

96,559

1982

ROTHSVILLE, PA

169,550

25,188

52,169

142,569

194,738

142,569

1989

OLD BRIDGE, NJ

85,617

109,980

56,190

139,407

195,597

138,339

1972

BREWSTER, NY

117,603

78,076

72,403

123,276

195,679

116,856

1972

BLOOMFIELD, CT

141,452

54,786

90,000

106,238

196,238

102,146

1986

JACKSONVILLE, FL

196,764

0

114,434

82,330

196,764

31,009

2000

EPHRATA, PA

187,843

9,400

65,212

132,031

197,243

131,124

1989

BRONX, NY

95,328

102,639

73,750

124,217

197,967

118,171

1976

RAVENA, NY

0

199,900

0

199,900

199,900

193,108

1991

BROOKLYN, NY

74,808

125,120

30,694

169,234

199,928

164,543

1967

POUGHKEEPSIE, NY

32,885

168,354

35,904

165,335

201,239

158,649

1971

JACKSONVILLE, FL

201,477

0

117,907

83,570

201,477

31,479

2000

DOUGLASSVILLE, PA

178,488

23,321

128,738

73,071

201,809

73,071

1990

CATSKILL, NY

104,447

99,076

203,523

0

203,523

0

1989

RHINEBECK, NY

203,658

0

101,829

101,829

203,658

9,505

2007

QUARRYVILLE, NY

35,917

168,199

35,916

168,200

204,116

161,348

1988

LEXINGTON, NC

204,139

0

43,311

160,828

204,139

17,602

2007

EXETER, NH

160,000

44,343

105,000

99,343

204,343

83,837

1986

MIDDLE VILLAGE, NY

130,684

73,741

89,960

114,465

204,425

108,299

1972

LEWISTON, NY

205,000

0

125,000

80,000

205,000

30,133

2000

MIDLAND PARK, NJ

201,012

4,080

150,000

55,092

205,092

49,668

1989

AUBURN, MA

175,048

30,890

125,048

80,890

205,938

80,639

1986

LAKEWOOD, NJ

130,148

77,265

70,148

137,265

207,413

136,702

1978

CLINTON, MA

177,978

29,790

115,686

92,082

207,768

43,245

1992

TOLLAND, CT

107,902

100,178

44,000

164,080

208,080

161,058

1982

BALDWIN, NY

101,952

106,328

61,552

146,728

208,280

112,964

1978

NORTH BABYLON, NY

91,888

117,066

59,059

149,895

208,954

147,091

1978

NEW YORK, NY

106,363

103,035

79,275

130,123

209,398

126,852

1976

HANCOCK, NY

100,000

109,470

50,000

159,470

209,470

155,229

1986

WATERFORD, CT

76,981

133,059

0

210,040

210,040

202,481

1982

AMITYVILLE, NY

70,246

139,953

42,148

168,051

210,199

168,051

1978

OCEANSIDE, NY

40,378

169,929

40,000

170,307

210,307

137,354

1970

MENANDS, NY

150,580

60,563

49,999

161,144

211,143

147,689

1988

WILLIAMSVILLE, NY

211,972

0

176,643

35,329

211,972

13,306

2000

PELHAM MANOR, NY

127,304

85,087

75,800

136,591

212,391

126,720

1972

MILLER PLACE, NY

110,000

103,160

66,000

147,160

213,160

145,331

1978

BRONX, NY

93,817

120,396

67,200

147,013

214,213

124,497

1985

MILFORD, MA

0

214,331

0

214,331

214,331

173,037

1985

BLUEPOINT, NY

96,163

118,524

96,068

118,619

214,687

114,006

1972

MOUNTVILLE, PA

195,635

19,506

78,254

136,887

215,141

136,887

1989

BAY SHORE, NY

188,900

26,286

123,000

92,186

215,186

53,485

1985

N. WINDHAM, ME

161,365

53,923

86,365

128,923

215,288

128,884

1986

TEWKSBURY, MA

125,000

90,338

75,000

140,338

215,338

134,274

1986

STRATFORD, NJ

215,597

0

0

215,597

215,597

206,617

1995

PELHAM MANOR, NY

136,791

78,987

75,000

140,778

215,778

137,650

1985

SEABROOK, NH

199,780

19,102

124,780

94,102

218,882

93,844

1986

FRANKLIN, CT

50,904

168,470

20,232

199,142

219,374

198,201

1982

WESTFIELD, MA

123,323

96,093

50,000

169,416

219,416

166,343

1982

HAMPTON, NH

193,103

26,449

135,598

83,954

219,552

83,589

1986

MIDDLETOWN, CT

133,022

86,915

131,312

88,625

219,937

88,625

1987

WORCESTER, MA

186,877

33,510

121,470

98,917

220,387

47,387

1993

STONY BROOK, NY

175,921

44,529

105,000

115,450

220,450

114,507

1978

YONKERS, NY

153,184

67,266

76,592

143,858

220,450

78,260

1987

EMMITSBURG, MD

146,949

73,613

101,949

118,613

220,562

118,392

1986

MANCHESTER, CT

65,590

156,628

64,750

157,468

222,218

156,833

1982

STATEN ISLAND, NY

0

222,525

0

222,525

222,525

222,525

1981

PELHAM, NH

169,182

53,497

136,077

86,602

222,679

80,417

1986

AMHERST, NY

223,009

0

173,451

49,558

223,009

29,860

2000

NEW ROCHELLE, NY

188,932

34,649

103,932

119,649

223,581

119,017

1982

71

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

SOMERSWORTH, NH

210,805

15,012

157,520

68,297

225,817

68,169

1986

RED HOOK, NY

0

226,787

0

226,787

226,787

220,274

1991

BRIDGEWATER, MA

190,360

36,762

140,000

87,122

227,122

81,814

1987

BROOKLYN, NY

135,693

91,946

100,035

127,604

227,639

107,679

1972

NEW YORK, NY

0

229,435

0

229,435

229,435

229,433

1985

HYANNIS, MA

222,472

7,282

144,607

85,147

229,754

24,909

1991

LAGRANGEVILLE, NY

129,133

101,140

64,626

165,647

230,273

163,995

1972

PINE HILL, NJ

190,568

39,918

115,568

114,918

230,486

112,628

1986

TREVOSE, PA

215,214

16,382

150,000

81,596

231,596

71,123

1987

MILFORD, NH

190,000

41,689

115,000

116,689

231,689

112,700

1986

W. HAVERSTRAW, NY

194,181

38,141

140,000

92,322

232,322

87,313

1978

MERIDEN, CT

126,188

106,805

72,344

160,649

232,993

155,320

1982

LANCASTER, PA

208,677

24,347

78,254

154,770

233,024

154,770

1989

WEST HAVEN, CT

185,138

48,619

74,000

159,757

233,757

157,837

1982

LEOMINSTER, MA

185,040

49,592

85,040

149,592

234,632

147,070

1986

PELHAM, NH

0

234,915

0

234,915

234,915

140,743

1996

NEW MILFORD, CT

113,947

121,174

0

235,121

235,121

231,921

1982

EBENEZER, PA

147,058

88,474

68,804

166,728

235,532

144,565

1989

STOUGHTON, MA

0

235,794

0

235,794

235,794

200,384

1990

QUINCY, MA

200,000

36,112

125,000

111,112

236,112

109,396

1986

HARWICH, MA

225,000

12,044

150,000

87,044

237,044

84,250

1986

NORTH KINGSTOWN, RI

211,835

25,971

89,135

148,671

237,806

147,346

1985

KENHORST, PA

143,466

94,592

65,212

172,846

238,058

154,465

1989

BOYERTOWN, PA

233,000

5,373

151,700

86,673

238,373

40,875

1985

ATCO, NJ

153,159

85,853

131,766

107,246

239,012

107,063

1987

SPRINGFIELD, MA

0

239,087

0

239,087

239,087

183,746

1984

COLUMBIA, PA

225,906

13,206

75,000

164,112

239,112

139,513

1989

PAWTUCKET, RI

237,100

2,990

154,400

85,690

240,090

39,103

1985

NEW HAVEN, CT

217,000

23,889

141,300

99,589

240,889

55,976

1985

ROTTERDAM, NY

140,600

100,399

91,600

149,399

240,999

112,696

1985

SACO, ME

204,006

37,173

150,694

90,485

241,179

90,385

1986

SOMERSWORTH, NH

180,800

60,497

117,700

123,597

241,297

72,820

1985

PITTSFIELD, MA

123,167

118,273

50,000

191,440

241,440

190,690

1982

BRONX, NY

45,044

196,956

10,044

231,956

242,000

202,976

1976

LEWISTON, ME

180,338

62,629

101,338

141,629

242,967

139,558

1986

LAKE RONKONKOMA, NY

87,097

156,576

51,000

192,673

243,673

189,671

1978

HANOVER, PA

231,028

13,252

70,000

174,280

244,280

155,369

1989

NEW WINDSOR, NY

150,000

94,791

75,000

169,791

244,791

157,978

1986

HILLSBOROUGH, NJ

237,122

7,729

100,000

144,851

244,851

67,608

1985

DEDHAM, MA

225,824

19,150

125,824

119,150

244,974

118,859

1987

POTTSVILLE, PA

162,402

82,769

43,471

201,700

245,171

188,055

1990

YONKERS, NY

202,826

42,877

144,000

101,703

245,703

86,111

1986

OSSINING, NY

140,992

104,761

97,527

148,226

245,753

141,908

1982

WELLSVILLE, NY

247,281

0

0

247,281

247,281

28,025

2006

MERIDEN, CT

207,873

39,829

84,000

163,702

247,702

162,841

1982

BETHPAGE, NY

210,990

38,356

126,000

123,346

249,346

122,757

1978

COTTAGE HILLS, IL

249,419

0

26,199

223,220

249,419

24,030

2007

LACKAWANNA, NY

250,030

0

129,870

120,160

250,030

56,548

2000

RED LION, PA

221,719

29,788

52,169

199,338

251,507

197,653

1989

BETHLEHEM, PA

208,677

42,927

130,423

121,181

251,604

118,994

1989

CROMWELL, CT

70,017

183,119

24,000

229,136

253,136

229,136

1982

BELLEVILLE, NJ

215,468

38,163

149,237

104,394

253,631

103,157

1986

BRISTOL, CT

253,639

0

149,553

104,086

253,639

17,346

2004

CENTRAL ISLIP, NY

103,183

151,449

61,435

193,197

254,632

193,197

1978

PORTSMOUTH, NH

235,000

20,257

150,000

105,257

255,257

104,984

1986

HAWTHORNE, NJ

245,100

10,967

159,600

96,467

256,067

48,303

1985

COLONIA, NJ

253,100

3,395

164,800

91,695

256,495

41,954

1985

HILLSIDE, NJ

225,000

31,552

150,000

106,552

256,552

105,238

1987

S. WEYMOUTH, MA

211,891

44,893

256,784

0

256,784

0

1985

WEST SENECA, NY

257,142

0

184,385

72,757

257,142

27,411

2000

WEST YARMOUTH, MA

225,000

33,165

125,000

133,165

258,165

132,212

1986

72

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

LONG ISLAND CITY, NY

106,592

151,819

73,260

185,151

258,411

156,275

1976

CLIFTON HGTS, PA

213,000

46,824

138,700

121,124

259,824

77,026

1985

ENFIELD, CT

259,881

0

0

259,881

259,881

127,392

2004

SHREWSBURY, PA

132,993

126,898

52,832

207,059

259,891

176,046

1989

REINHOLDS, PA

176,520

83,686

82,017

178,189

260,206

153,485

1989

EPHRATA, PA

208,604

52,826

30,000

231,430

261,430

173,272

1989

MILFORD, MA

0

262,436

0

262,436

262,436

192,695

1991

EXETER, NH

113,285

149,265

65,000

197,550

262,550

188,505

1986

EAST HILLS, NY

241,613

21,070

241,613

21,070

262,683

20,248

1986

STONY POINT, NY

59,329

203,448

55,800

206,977

262,777

199,852

1971

HYDE PARK, NY

253,100

12,015

139,100

126,015

265,115

109,042

1985

READING, PA

182,592

82,812

104,338

161,066

265,404

144,701

1989

HARTFORD, CT

233,000

32,563

151,700

113,863

265,563

65,422

1985

SOUTH PORTLAND, ME

180,689

84,980

110,689

154,980

265,669

154,980

1986

BRIDGEPORT, CT

245,100

20,652

159,600

106,152

265,752

56,447

1985

READING, PA

129,284

137,863

65,352

201,795

267,147

167,329

1989

E. PATCHOGUE, NY

57,049

210,390

34,213

233,226

267,439

231,219

1978

CLAYMONT, DE

237,200

30,878

151,700

116,378

268,078

69,812

1985

EAST HARTFORD, CT

208,004

60,493

84,000

184,497

268,497

184,155

1982

NEPTUNE CITY, NJ

269,600

0

175,600

94,000

269,600

41,048

1985

OAKHURST, NJ

225,608

46,405

100,608

171,405

272,013

169,702

1985

FRANKLIN, MA

253,619

18,437

164,852

107,204

272,056

37,758

1988

AGAWAM, MA

209,555

63,621

136,000

137,176

273,176

93,909

1985

WAPPINGERS FALLS, NY

114,185

159,162

111,785

161,562

273,347

154,655

1971

BRONX, NY

90,176

183,197

40,176

233,197

273,373

201,037

1976

COLONIE, NY

245,150

28,322

120,150

153,322

273,472

149,666

1986

RIDGEFIELD PARK, NJ

273,549

0

150,000

123,549

273,549

88,159

1997

NORTHPORT, NY

241,100

33,036

157,000

117,136

274,136

69,360

1985

SOUTHINGTON, CT

115,750

158,561

70,750

203,561

274,311

202,983

1982

FRANKLIN SQUARE, NY

152,572

121,756

137,315

137,013

274,328

94,541

1978

SANFORD, ME

265,523

9,178

201,316

73,385

274,701

73,385

1986

ARENDTSVILLE, PA

173,759

101,020

32,603

242,176

274,779

219,328

1989

OSSINING, NY

231,100

44,049

149,200

125,949

275,149

75,785

1985

WILMINGTON, DE

242,800

32,615

158,100

117,315

275,415

69,602

1985

LAURELDALE, PA

262,079

15,550

86,941

190,688

277,629

188,178

1989

BRONX, NY

0

278,517

0

278,517

278,517

224,698

1976

BAY SHORE, NY

156,382

123,032

85,854

193,560

279,414

189,628

1981

NORTH GRAFTON, MA

244,720

35,136

159,068

120,788

279,856

51,708

1991

NEFFSVILLE, PA

234,761

45,637

91,296

189,102

280,398

185,596

1989

EPHRATA, PA

183,477

96,937

136,809

143,605

280,414

121,045

1990

QUEENSBURY, NY

215,255

65,245

140,255

140,245

280,500

134,653

1986

BRYN MAWR, PA

221,000

59,832

143,900

136,932

280,832

89,510

1985

TERRYVILLE, CT

182,308

98,911

74,000

207,219

281,219

207,051

1982

NEW CITY, NY

180,979

100,597

109,025

172,551

281,576

171,798

1978

MALTA, NY

190,000

91,726

65,000

216,726

281,726

209,422

1986

BRONX, NY

88,865

193,679

63,315

219,229

282,544

217,432

1976

BRONX, NY

141,322

141,909

86,800

196,431

283,231

186,116

1972

PARADISE, PA

132,295

151,188

102,295

181,188

283,483

140,177

1986

RONKONKOMA, NY

76,478

208,121

46,057

238,542

284,599

233,393

1978

TROY, NY

225,000

60,569

146,500

139,069

285,569

85,229

1985

ELLENVILLE, NY

233,000

53,690

151,700

134,990

286,690

85,391

1985

SOUTH HADLEY, MA

232,445

54,351

90,000

196,796

286,796

191,723

1982

WESTBROOK, ME

93,345

193,654

50,431

236,568

286,999

192,936

1986

WORCESTER, MA

146,832

140,589

95,441

191,980

287,421

115,861

1991

WARWICK, RI

253,100

34,400

164,800

122,700

287,500

70,531

1985

WORCESTER, MA

275,866

11,674

179,313

108,227

287,540

33,559

1992

UNION, NJ

287,800

0

287,800

0

287,800

0

1985

RICHMOND, VA

120,818

167,895

0

288,713

288,713

264,641

1990

HAVERTOWN, PA

265,200

24,500

172,700

117,000

289,700

62,451

1985

FORT EDWARD, NY

225,000

65,739

150,000

140,739

290,739

137,351

1986

GRANBY, MA

58,804

232,477

24,000

267,281

291,281

204,923

1982

73

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

ELKINS PARK, PA

275,171

17,524

200,000

92,695

292,695

91,156

1990

BRONX, NY

0

293,507

0

293,507

293,507

293,507

1972

KING GEORGE, VA

0

293,638

293,638

0

293,638

0

2005

BALLSTON, NY

160,000

134,021

110,000

184,021

294,021

180,833

1986

HAMBURG, NY

294,031

0

163,906

130,125

294,031

49,013

2000

IPSWICH, MA

275,000

19,161

150,000

144,161

294,161

142,410

1986

ALBANY, NY

206,620

87,949

81,620

212,949

294,569

206,450

1986

NEW YORK, NY

125,923

168,772

78,125

216,570

294,695

213,843

1972

HAMBURG, PA

219,280

75,745

130,423

164,602

295,025

154,329

1989

WEST DEPTFORD, NJ

245,450

50,295

151,053

144,692

295,745

142,590

1987

BALDWIN, NY

290,923

5,007

151,280

144,650

295,930

62,219

1986

NORRISTOWN, PA

175,300

120,786

175,300

120,786

296,086

66,625

1985

KERNERSVILLE, NC

296,770

0

72,777

223,994

296,770

20,060

2007

STATEN ISLAND, NY

40,598

256,262

26,050

270,810

296,860

201,194

1973

PISCATAWAY, NJ

269,200

28,232

175,300

122,132

297,432

68,358

1985

ROANOKE, VA

91,281

206,221

0

297,502

297,502

229,390

1990

MANCHESTER, NH

261,100

36,404

170,000

127,504

297,504

68,448

1985

ORLEANS, MA

260,000

37,637

185,000

112,637

297,637

108,503

1986

MILLERTON, NY

175,000

123,063

100,000

198,063

298,063

185,327

1986

ROTTERDAM, NY

132,287

166,077

0

298,364

298,364

246,286

1995

STRATFORD, CT

285,200

14,728

185,700

114,228

299,928

57,536

1985

SALEM, MA

275,000

25,393

175,000

125,393

300,393

123,970

1986

MCCONNELLSBURG, PA

155,367

145,616

69,915

231,068

300,983

132,501

1989

EPPING, NH

170,000

131,403

120,000

181,403

301,403

162,869

1986

STATEN ISLAND, NY

0

301,713

0

301,713

301,713

233,997

1978

OXFORD, MA

293,664

9,098

190,882

111,880

302,762

32,247

1993

ORANGE, NJ

281,200

24,573

183,100

122,673

305,773

66,891

1985

DEPTFORD, NJ

281,200

24,745

183,100

122,845

305,945

66,308

1985

STATEN ISLAND, NY

173,667

133,198

113,369

193,496

306,865

179,987

1976

CASTILE, NY

307,196

0

132,196

175,000

307,196

19,833

2006

JAMAICA, NY

12,000

295,750

12,000

295,750

307,750

205,240

1970

CLIFTON, NJ

301,518

6,413

150,000

157,931

307,931

105,862

1987

BRONX, NY

0

309,235

176,558

132,677

309,235

71,647

1971

OXFORD, PA

191,449

118,321

65,212

244,558

309,770

217,909

1989

SOUTHBRIDGE, MA

249,169

62,205

161,960

149,414

311,374

80,091

1993

BUFFALO, NY

312,426

0

150,888

161,538

312,426

73,384

2000

PEMBROKE, NH

138,492

174,777

100,837

212,432

313,269

156,678

1986

CANDIA, NH

130,000

184,004

80,000

234,004

314,004

229,159

1986

N RICHLAND HILLS, TX

314,246

0

125,745

188,501

314,246

17,806

2007

BRONX, NY

130,396

184,222

90,396

224,222

314,618

207,544

1972

BALLSTON SPA, NY

210,000

105,073

100,000

215,073

315,073

210,459

1986

REGO PARK, NY

33,745

281,380

23,000

292,125

315,125

236,798

1974

PHILADELPHIA, PA

281,200

34,285

183,100

132,385

315,485

75,319

1985

EPSOM, NH

220,000

96,022

155,000

161,022

316,022

145,638

1986

TONAWANDA, NY

304,762

11,493

211,337

104,918

316,255

39,521

2000

RIDGEWOOD, NY

278,372

38,578

250,000

66,950

316,950

25,068

1986

WHITE PLAINS, NY

258,600

60,120

164,800

153,920

318,720

94,842

1985

NORRISTOWN, PA

241,300

78,419

157,100

162,619

319,719

90,430

1985

WEST TAGHKANIC, NY

202,750

117,540

121,650

198,640

320,290

135,096

1986

CATSKILL, NY

321,446

0

125,000

196,446

321,446

45,230

2004

ADAMSTOWN, PA

213,424

108,844

100,000

222,268

322,268

168,733

1989

GREEN VILLAGE, NJ

277,900

44,471

127,900

194,471

322,371

191,202

1985

MIDDLETOWN, RI

306,710

16,364

176,710

146,364

323,074

145,343

1987

BROOKLYN, NY

74,928

250,382

44,957

280,353

325,310

209,144

1978

SOUTH YARMOUTH, MA

275,866

49,961

179,313

146,514

325,827

65,103

1991

FURLONG, PA

175,300

151,150

175,300

151,150

326,450

97,131

1985

ALDAN, PA

281,200

45,539

183,100

143,639

326,739

84,049

1985

YARMOUTHPORT, MA

300,000

26,940

150,000

176,940

326,940

176,940

1986

FITCHBURG, MA

311,808

16,384

202,675

125,517

328,192

40,798

1991

WESTFIELD, MA

289,580

38,615

188,400

139,795

328,195

82,366

1985

ROBESONIA, PA

225,913

102,802

70,000

258,715

328,715

224,809

1989

74

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

BELMONT, MA

301,300

27,938

196,200

133,038

329,238

71,941

1985

WORCESTER, MA

284,765

45,285

185,097

144,953

330,050

67,168

1991

QUEENSBURY, NY

225,000

105,592

165,000

165,592

330,592

160,273

1986

PITTSFIELD, MA

281,200

51,100

183,100

149,200

332,300

121,888

1985

BRIDGEPORT, CT

313,400

20,303

204,100

129,603

333,703

67,230

1985

CAIRO, NY

191,928

142,895

46,650

288,173

334,823

279,210

1988

METHUEN, MA

147,330

188,059

50,731

284,658

335,389

239,946

1986

FITCHBURG, MA

142,383

194,291

92,549

244,125

336,674

144,755

1992

MILFORD, CT

293,512

43,846

191,000

146,358

337,358

85,956

1985

BRENTWOOD, NY

253,058

84,485

125,000

212,543

337,543

205,657

1968

BAY SHORE, NY

47,685

289,972

0

337,657

337,657

336,713

1969

BRIDGEPORT, CT

313,400

24,314

204,100

133,614

337,714

70,985

1985

CONSHOHOCKEN, PA

261,100

77,885

170,000

168,985

338,985

110,753

1985

PHILADELPHIA, PA

289,300

50,010

188,400

150,910

339,310

92,167

1985

WEST BOYLSTON, MA

311,808

28,937

202,675

138,070

340,745

52,841

1991

NORTH LINDENHURST, NY

341,530

0

192,000

149,530

341,530

62,218

1998

LATHAM, NY

275,000

68,160

150,000

193,160

343,160

187,787

1986

REIFFTON, PA

338,250

5,295

43,470

300,075

343,545

300,075

1989

OLD BRIDGE, NJ

319,521

24,445

204,621

139,345

343,966

74,086

1985

WESTBROOK, CT

344,881

0

0

344,881

344,881

143,700

2004

SCOTCH PLAINS, NJ

331,063

14,455

214,600

130,918

345,518

65,909

1985

HILLTOP, NJ

329,500

16,758

214,600

131,658

346,258

65,932

1985

BREWSTER, NY

302,564

44,393

142,564

204,393

346,957

200,406

1988

COMMACK, NY

321,400

25,659

209,300

137,759

347,059

74,227

1985

HATBORO, PA

285,200

61,979

185,700

161,479

347,179

104,001

1985

WANTAGH, NY

261,814

85,758

175,000

172,572

347,572

124,605

1985

BROOKLYN, NY

116,328

232,254

75,000

273,582

348,582

197,062

1980

BRONX, NY

128,419

221,197

100,681

248,935

349,616

200,262

1972

NEW BERN, NC

349,946

0

190,389

159,557

349,946

19,490

2007

IRVINGTON, NJ

271,200

79,011

176,600

173,611

350,211

116,726

1985

MEDIA, PA

326,195

24,082

191,000

159,277

350,277

101,463

1985

HATBORO, PA

289,300

61,371

188,400

162,271

350,671

103,093

1985

PHILADELPHIA, PA

285,200

65,498

185,700

164,998

350,698

105,438

1985

RIDGE, NY

276,942

73,821

200,000

150,763

350,763

125,987

1977

GRAND ISLAND, NY

350,849

0

247,348

103,501

350,849

55,756

2000

METHUEN, MA

300,000

50,861

150,000

200,861

350,861

199,115

1986

CINNAMINSON, NJ

326,501

24,931

176,501

174,931

351,432

172,960

1987

ABINGTON, PA

309,300

43,696

201,400

151,596

352,996

88,995

1985

BEDFORD, TX

353,047

0

112,953

240,094

353,047

29,199

2007

WORCESTER, MA

342,608

11,101

222,695

131,014

353,709

37,328

1991

BROOKLYN, NY

100,000

254,503

66,890

287,613

354,503

240,968

1972

MAGNOLIA, NJ

329,500

26,488

214,600

141,388

355,988

76,662

1985

TUCKERTON, NJ

224,387

132,864

131,018

226,233

357,251

222,358

1987

MERRIMACK, NH

151,993

205,823

100,598

257,218

357,816

198,323

1986

HYDE PARK, NY

300,000

59,198

175,000

184,198

359,198

180,659

1986

WILMINGTON, DE

337,500

21,971

219,800

139,671

359,471

72,609

1985

EAST PROVIDENCE, RI

309,950

49,546

202,050

157,446

359,496

93,763

1985

SCARSDALE, NY

257,100

102,632

167,400

192,332

359,732

125,659

1985

BRISTOL, CT

359,906

0

0

359,906

359,906

149,963

2004

BAYONNE, NJ

341,500

18,947

222,400

138,047

360,447

70,535

1985

WINDSOR LOCKS, CT

360,664

0

0

360,664

360,664

60,113

2004

BROOKLYN, NY

237,100

125,067

154,400

207,767

362,167

125,486

1985

BRIDGEPORT, CT

346,442

16,990

230,000

133,432

363,432

131,730

1985

LEOLA, PA

262,890

102,007

131,189

233,708

364,897

105,602

1989

BRISTOL, CT

365,028

0

237,268

127,760

365,028

21,292

2004

BROOKLYN, NY

0

365,767

0

365,767

365,767

337,789

1970

BRIDGEPORT, CT

338,415

27,786

219,800

146,401

366,201

77,714

1985

HOLYOKE, MA

329,500

38,345

214,600

153,245

367,845

145,091

1985

PORTLAND, ME

325,400

42,652

211,900

156,152

368,052

82,597

1985

BRONX, NY

69,150

300,279

34,150

335,279

369,429

256,816

1972

75

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Accumulated
Depreciation

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

PLAINVILLE, CT

80,000

290,433

0

370,433

370,433

322,526

1983

CHERRY HILL, NJ

357,500

13,879

232,800

138,579

371,379

67,609

1985

CRANFORD, NJ

342,666

29,222

222,400

149,488

371,888

81,200

1985

STRATFORD, CT

301,300

70,735

196,200

175,835

372,035

112,470

1985

LEOMINSTER, MA

195,776

177,454

127,254

245,976

373,230

149,460

1991

MOHNTON, PA

317,228

56,374

66,425

307,177

373,602

291,371

1989

PAWTUCKET, RI

212,775

161,188

118,860

255,103

373,963

226,580

1986

HINGHAM, MA

352,606

22,484

242,520

132,570

375,090

130,995

1989

MINEOLA, NY

341,500

34,411

222,400

153,511

375,911

85,135

1985

BROOKLYN, NY

147,795

228,379

103,815

272,359

376,174

233,292

1972

STATEN ISLAND, NY

25,000

351,829

0

376,829

376,829

302,382

1972

WILMINGTON, DE

309,300

67,834

201,400

175,734

377,134

106,915

1985

SPRINGFIELD, MA

139,373

239,713

50,000

329,086

379,086

247,702

1983

TRENTON, NJ

373,600

9,572

243,300

139,872

383,172

65,722

1985

SLEEPY HOLLOW, NY

280,825

102,486

129,744

253,567

383,311

245,574

1969

S. GLENS FALLS, NY

325,000

58,892

188,700

195,192

383,892

195,192

1986

NORWALK, CT

257,308

128,940

104,000

282,248

386,248

281,503

1982

MASSAPEQUA, NY

333,400

53,696

217,100

169,996

387,096

103,834

1985

SPRING LAKE, NJ

345,500

42,194

225,000

162,694

387,694

90,468

1985

ROCHESTER, NH

179,717

208,103

100,000

287,820

387,820

233,623

1986

WORCESTER, MA

231,372

157,356

150,392

238,336

388,728

138,067

1991

OZONE PARK, NY

57,289

331,799

44,715

344,373

389,088

289,034

1976

NEW ROCHELLE, NY

337,500

51,741

219,800

169,441

389,241

96,058

1985

NEW BRITAIN, CT

390,497

0

253,823

136,674

390,497

22,779

2004

WALL TOWNSHIP, NJ

336,441

55,709

121,441

270,709

392,150

266,566

1986

BRONX, NY

70,132

322,265

30,132

362,265

392,397

272,357

1972

LANCASTER, PA

308,964

83,443

104,338

288,069

392,407

271,636

1989

FRIENDSHIP, NY

392,517

0

42,517

350,000

392,517

39,667

2006

SAUGERTIES, NY

328,668

63,983

328,668

63,983

392,651

60,624

1988

INTERCOURSE, PA

311,503

81,287

157,801

234,989

392,790

100,787

1989

SOUTH AMBOY, NJ

299,678

94,088

178,950

214,816

393,766

213,268

1978

BASKING RIDGE, NJ

362,172

32,960

200,000

195,132

395,132

131,994

1986

GARDEN CITY, NY

361,600

33,774

235,500

159,874

395,374

87,489

1985

WOBURN, MA

350,000

45,681

200,000

195,681

395,681

193,825

1986

COBALT, CT

395,683

0

0

395,683

395,683

164,867

2004

AUBURN, MA

369,306

27,792

240,049

157,049

397,098

54,077

1991

STATEN ISLAND, NY

357,904

39,588

230,300

167,192

397,492

95,569

1985

FLUSHING, NY

118,309

280,435

78,309

320,435

398,744

232,913

1973

OCEANSIDE, NY

313,400

88,863

204,100

198,163

402,263

102,139

1985

BELLAIRE, NY

329,500

73,358

214,600

188,258

402,858

111,531

1985

CATSKILL, NY

404,988

0

354,365

50,623

404,988

4,050

2007

NORTH HAVEN, CT

405,389

0

251,985

153,404

405,389

32,459

2004

BRIDGEPORT, CT

349,500

56,209

227,600

178,109

405,709

107,742

1985

WORCESTER, MA

385,600

21,339

251,100

155,839

406,939

79,050

1985

TRENTON, NJ

337,500

69,461

219,800

187,161

406,961

120,564

1985

WILMINGTON, DE

369,600

38,077

240,700

166,977

407,677

93,054

1985

BRONX, NY

118,025

290,298

73,025

335,298

408,323

282,534

1972

SEAFORD, NY

325,400

83,257

211,900

196,757

408,657

99,029

1985

WATERTOWN, CT

351,771

58,812

204,027

206,556

410,583

109,570

1992

MORRISVILLE, PA

377,600

33,522

245,900

165,222

411,122

90,191

1985

GLENDALE, NY

124,438

287,907

86,160

326,185

412,345

270,940

1976

JERICHO, NY

0

412,536

0

412,536

412,536

270,549

1998

BRONX, NY

60,000

353,955

60,800

353,155

413,955

277,239

1965

CORONA, NY

114,247

300,172

112,800

301,619

414,419

215,843

1965

NEW ROCHELLE, NY

415,180

0

251,875

163,305

415,180

67,712

1998

WARWICK, RI

376,563

39,933

205,889

210,607

416,496

208,671

1989

ST. ALBANS, NY

329,500

87,250

214,600

202,150

416,750

128,829

1985

NASHUA, NH

197,142

219,639

155,837

260,944

416,781

198,380

1986

WILMINGTON, DE

313,400

103,748

204,100

213,048

417,148

138,441

1985

HAVERHILL, MA

400,000

17,182

225,000

192,182

417,182

191,937

1986

PHILADELPHIA, PA

389,700

28,006

253,800

163,906

417,706

87,019

1985

76

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

BERGENFIELD, NJ

381,590

36,271

300,000

117,861

417,861

114,909

1990

PLAISTOW, NH

300,406

117,924

244,694

173,636

418,330

163,605

1987

BELMONT, MA

389,700

28,871

253,800

164,771

418,571

87,317

1985

NEW HOLLAND, PA

313,015

106,839

143,465

276,389

419,854

251,559

1989

MADISON, NC

420,878

0

45,705

375,174

420,878

34,864

2007

TRAPPE, PA

377,600

44,509

245,900

176,209

422,109

101,796

1985

FRAMINGHAM, MA

400,449

22,280

260,294

162,435

422,729

53,269

1991

TAYLORSVILLE, NC

422,809

0

134,188

288,621

422,809

28,316

2007

PROVIDENCE, RI

231,372

191,647

150,392

272,627

423,019

140,229

1991

NORTHBOROUGH, MA

404,900

18,353

263,185

160,068

423,253

48,522

1993

MASTIC, NY

313,400

110,180

204,100

219,480

423,580

157,909

1985

PARAMUS, NJ

381,700

42,394

248,600

175,494

424,094

100,322

1985

HAVERTOWN, PA

402,000

22,660

253,800

170,860

424,660

94,304

1985

ELIZABETH, NJ

405,800

18,881

264,300

160,381

424,681

79,555

1985

BEVERLY, MA

275,000

150,741

175,000

250,741

425,741

213,799

1986

WORCESTER, MA

275,866

150,472

179,313

247,025

426,338

135,122

1991

GLEN HEAD, NY

234,395

192,295

102,645

324,045

426,690

324,045

1982

MIDLOTHIAN, TX

429,142

0

71,970

357,172

429,142

37,101

2007

HUDSON, NY

303,741

126,379

151,871

278,249

430,120

133,493

1989

PHOENIXVILLE, PA

413,800

17,561

269,500

161,861

431,361

80,398

1985

LEWISTON, ME

341,900

89,500

222,400

209,000

431,400

141,051

1985

WYOMISSING HILLS, PA

319,320

113,176

76,074

356,422

432,496

334,171

1989

ALLENTOWN, PA

357,500

76,385

232,800

201,085

433,885

110,532

1985

DERRY, NH

417,988

16,295

157,988

276,295

434,283

275,733

1987

AUDUBON, NJ

421,800

12,949

274,700

160,049

434,749

76,937

1985

ASBURY PARK, NJ

418,966

18,038

272,100

164,904

437,004

82,827

1985

BELLEVILLE, NJ

397,700

39,410

259,000

178,110

437,110

98,955

1985

BLACKWOOD, NJ

401,700

36,736

261,600

176,836

438,436

97,885

1985

DOYLESTOWN, PA

405,800

32,659

264,300

174,159

438,459

93,290

1985

NEWARK, DE

405,800

35,844

264,300

177,344

441,644

96,555

1985

GLENVILLE, NY

343,723

98,299

219,800

222,222

442,022

144,438

1985

PHILADELPHIA, PA

237,100

205,495

154,400

288,195

442,595

182,411

1985

WORCESTER, MA

167,745

275,852

167,745

275,852

443,597

156,796

1991

FAIRFIELD, CT

430,000

13,631

280,000

163,631

443,631

77,554

1985

WEST CHESTER, PA

421,800

21,935

274,700

169,035

443,735

85,817

1985

REVERE, MA

250,000

193,854

150,000

293,854

443,854

249,800

1986

BRONX, NY

128,049

315,917

83,849

360,117

443,966

263,315

1972

LANSDALE, PA

243,844

200,458

243,844

200,458

444,302

117,725

1985

DUDLEY, MA

302,563

141,993

196,666

247,890

444,556

111,855

1991

METHUEN, MA

379,664

64,941

245,900

198,705

444,605

122,989

1985

LOWELL, MA

360,949

83,674

200,949

243,674

444,623

243,406

1985

JERSEY CITY, NJ

401,700

43,808

261,600

183,908

445,508

104,788

1985

WETHERSFIELD, CT

446,610

0

0

446,610

446,610

186,088

2004

BAYSIDE, NY

245,100

202,833

159,600

288,333

447,933

186,278

1985

RIDGEFIELD, CT

401,630

47,610

166,861

282,379

449,240

276,351

1985

SHARON HILL, PA

411,057

39,574

266,800

183,831

450,631

102,910

1985

ELMONT, NY

360,056

90,633

224,156

226,533

450,689

115,598

1985

WHITING, NJ

447,199

3,519

167,090

283,628

450,718

282,841

1989

PORT JEFFERSON, NY

387,478

63,743

245,753

205,468

451,221

124,739

1985

UPTON, MA

428,498

24,611

278,524

174,585

453,109

57,819

1991

WYANDANCH, NY

453,131

0

279,500

173,631

453,131

72,197

1998

WAKEFIELD, RI

413,800

39,616

269,500

183,916

453,416

94,885

1985

PORTSMOUTH, NH

225,000

228,704

125,000

328,704

453,704

264,433

1986

WORCESTER, MA

271,417

183,331

176,421

278,327

454,748

157,381

1991

ALDAN, PA

433,800

21,152

282,500

172,452

454,952

86,068

1985

WILLINGBORO, NJ

425,800

29,928

277,300

178,428

455,728

94,774

1985

NEWBURGH, NY

430,766

25,850

150,000

306,616

456,616

297,464

1989

HUNTINGDON VALLEY, PA

421,800

36,439

274,700

183,539

458,239

99,269

1985

WARWICK, RI

434,752

24,730

266,800

192,682

459,482

112,033

1985

EAST ORANGE, NJ

421,508

37,977

272,100

187,385

459,485

104,384

1985

NISKAYUNA, NY

425,000

35,421

275,000

185,421

460,421

180,531

1986

77

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

EVERETT, MA

269,500

190,931

269,500

190,931

460,431

109,593

1985

FOXBOROUGH, MA

426,593

34,403

325,000

135,996

460,996

129,994

1990

BRIDGEPORT, CT

377,600

83,549

245,900

215,249

461,149

141,059

1985

YONKERS, NY

291,348

170,478

216,348

245,478

461,826

225,565

1972

AUSTIN, TX

462,233

0

274,300

187,933

462,233

21,300

2007

SIMSBURY, CT

317,704

144,637

206,700

255,641

462,341

186,794

1985

BENNINGTON, VT

309,300

154,480

201,400

262,380

463,780

150,558

1985

BRONX, NY

104,130

360,410

90,000

374,540

464,540

308,097

1985

IRVINGTON, NJ

409,700

54,841

266,800

197,741

464,541

117,015

1985

LEICESTER, MA

266,968

197,898

173,529

291,337

464,866

159,423

1991

FARMINGTON, CT

466,271

0

303,076

163,195

466,271

27,200

2004

RUTHER GLEN, VA

0

466,341

31,341

435,000

466,341

65,250

2005

NORTH PLAINFIELD, NJ

227,190

239,709

175,000

291,899

466,899

283,378

1978

WATERBURY, CT

468,469

0

304,505

163,964

468,469

27,329

2004

QUAKERTOWN, PA

379,111

89,812

243,300

225,623

468,923

146,056

1985

WATCHUNG, NJ

449,900

20,339

293,000

177,239

470,239

87,508

1985

BROCKTON, MA

275,866

194,619

179,313

291,172

470,485

167,439

1991

WALPOLE, MA

449,900

20,586

293,000

177,486

470,486

85,658

1985

POTTSVILLE, PA

451,360

19,361

147,740

322,981

470,721

316,077

1990

PARLIN, NJ

441,900

29,075

287,800

183,175

470,975

95,855

1985

WESTFORD, MA

275,000

196,493

175,000

296,493

471,493

240,656

1986

CHATHAM, MA

275,000

197,302

175,000

297,302

472,302

239,173

1986

STATEN ISLAND, NY

101,033

371,591

75,650

396,974

472,624

283,688

1972

FALMOUTH, MA

150,000

322,942

75,000

397,942

472,942

314,094

1986

BLOOMFIELD, NJ

441,900

32,951

287,800

187,051

474,851

99,723

1985

STATEN ISLAND, NY

389,700

88,922

253,800

224,822

478,622

145,297

1985

CRANSTON, RI

466,100

12,576

303,500

175,176

478,676

83,092

1985

POTTSTOWN, PA

430,000

48,854

280,000

198,854

478,854

113,801

1985

MEDIA, PA

474,100

5,055

308,700

170,455

479,155

77,281

1985

WILMINGTON, DE

446,000

33,323

290,400

188,923

479,323

100,322

1985

TRENTON, NJ

466,100

13,987

303,500

176,587

480,087

84,289

1985

ORANGE, MA

476,102

4,015

250,000

230,117

480,117

213,118

1991

CHATHAM, NY

349,133

131,805

225,000

255,938

480,938

175,146

1985

CLINTON, MA

385,600

95,698

251,100

230,198

481,298

151,538

1985

NUTLEY, NJ

433,800

48,677

282,500

199,977

482,477

113,522

1985

JACKSONVILLE, FL

485,514

0

388,434

97,080

485,514

36,564

2000

JERSEY CITY, NJ

438,000

51,856

285,200

204,656

489,856

116,246

1985

CLIFTON HGTS., PA

428,201

63,403

256,400

235,204

491,604

155,624

1985

LEWISVILLE, TX

493,734

0

109,925

383,809

493,734

19,703

2008

BEVERLY, NJ

470,100

24,003

306,100

188,003

494,103

93,921

1985

NEPTUNE, NJ

455,726

39,090

293,000

201,816

494,816

108,946

1985

MOORESTOWN, NJ

470,100

27,064

306,100

191,064

497,164

98,571

1985

SALEM, NH

450,000

47,484

350,000

147,484

497,484

141,589

1986

PLAINFIELD, NJ

470,100

29,975

306,100

193,975

500,075

99,062

1985

EAST PROVIDENCE, RI

486,675

13,947

316,600

184,022

500,622

87,766

1985

FRAMINGHAM, MA

297,568

203,147

193,419

307,296

500,715

178,557

1992

ELMONT, NY

388,848

114,933

231,000

272,781

503,781

239,255

1978

METHUEN, MA

490,200

16,282

319,200

187,282

506,482

90,885

1985

SOMERVILLE, NJ

252,717

254,230

200,500

306,447

506,947

199,530

1987

GLEN HEAD, NY

462,468

45,355

300,900

206,923

507,823

115,455

1985

CHESHIRE, CT

490,200

19,050

319,200

190,050

509,250

93,563

1985

ALBANY, NY

404,888

104,378

261,600

247,666

509,266

164,570

1985

EAST MEADOW, NY

425,000

86,005

325,000

186,005

511,005

149,325

1986

WAYNE, NJ

490,200

21,766

319,200

192,766

511,966

95,698

1985

NUTLEY, NJ

0

512,504

329,248

183,256

512,504

20,321

1986

WEST ROXBURY, MA

490,200

23,134

319,200

194,134

513,334

94,193

1985

BRISTOL, PA

430,500

82,981

280,000

233,481

513,481

144,493

1985

PLEASANT VALLEY, NY

398,497

115,129

240,000

273,626

513,626

216,045

1986

WATERBURY, CT

515,172

0

334,862

180,310

515,172

30,050

2004

FLUSHING, NY

516,110

0

320,125

195,985

516,110

81,489

1998

FAIRVIEW HEIGHTS, IL

516,564

0

78,440

438,124

516,564

40,671

2007

78

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

WAYNE, NJ

474,100

42,926

308,700

208,326

517,026

114,819

1985

WESTBOROUGH, MA

311,808

205,994

202,675

315,127

517,802

181,224

1991

STAMFORD, CT

506,860

15,635

329,700

192,795

522,495

92,202

1985

SCHENECTADY, NY

225,000

298,103

150,000

373,103

523,103

368,360

1986

ROSLYN, PA

349,500

173,661

227,600

295,561

523,161

219,133

1985

PHILADELPHIA, PA

302,999

220,313

181,497

341,815

523,312

283,719

1985

GREAT NECK, NY

500,000

24,468

450,000

74,468

524,468

74,391

1985

STATEN ISLAND, NY

349,500

176,590

227,600

298,490

526,090

188,027

1985

HANOVER, PA

108,435

417,763

108,435

417,763

526,198

411,692

1958

WHITE PLAINS, NY

0

527,925

302,607

225,318

527,925

119,172

1972

SAYVILLE, NY

528,225

0

300,000

228,225

528,225

95,094

1998

GLENDALE, NY

368,625

159,763

235,500

292,888

528,388

180,701

1985

BRONX, NY

78,168

450,267

65,680

462,755

528,435

354,837

1972

HYDE PARK, MA

499,175

29,673

321,800

207,048

528,848

108,740

1985

UNION, NJ

490,200

41,361

319,200

212,361

531,561

112,345

1985

WEST MILFORD, NJ

502,200

31,918

327,000

207,118

534,118

108,346

1985

SPOTSWOOD, NJ

466,675

69,036

303,500

232,211

535,711

139,777

1985

BILLERICA, MA

400,000

135,809

250,000

285,809

535,809

271,481

1986

LONG BRANCH, NJ

514,300

22,951

334,900

202,351

537,251

101,290

1985

WILMINGTON, DE

381,700

156,704

248,600

289,804

538,404

178,103

1985

NEW BEDFORD, MA

522,300

18,274

340,100

200,474

540,574

96,436

1985

NORFOLK, VA

534,910

6,050

310,630

230,330

540,960

230,330

1990

PLAINVILLE, CT

544,503

0

353,927

190,576

544,503

31,763

2004

SOUTH WINDSOR, CT

544,857

0

336,737

208,120

544,857

55,038

2004

LEVITTOWN, NY

502,757

42,113

327,000

217,870

544,870

117,361

1985

JACKSONVILLE, FL

545,314

0

256,434

288,880

545,314

108,809

2000

ARLINGTON, MA

518,300

27,906

337,500

208,706

546,206

106,607

1985

STAMFORD, CT

506,580

40,429

329,700

217,309

547,009

115,058

1985

WALLINGFORD, CT

550,553

0

334,901

215,652

550,553

44,771

2004

LOWELL, MA

375,000

175,969

250,000

300,969

550,969

244,168

1986

PRATTSBURG, NY

553,136

0

303,136

250,000

553,136

28,333

2006

NEW YORK, NY

146,159

407,286

43,461

509,984

553,445

389,146

1976

SOUDERTON, PA

381,700

172,170

248,600

305,270

553,870

194,906

1985

SALT POINT, NY

0

554,243

301,775

252,468

554,243

93,244

1987

MERRICK, NY

477,498

77,925

240,764

314,659

555,423

143,579

1987

HARWICHPORT, MA

382,653

173,989

248,724

307,918

556,642

158,168

1991

ROCKLAND, MA

534,300

23,616

347,900

210,016

557,916

104,115

1985

ROCHESTER, NY

559,049

0

159,049

400,000

559,049

45,333

2006

JACKSONVILLE, FL

559,514

0

296,434

263,080

559,514

99,091

2000

VALATIE, NY

165,590

394,981

90,829

469,742

560,571

410,011

1989

FREEHOLD, NJ

494,275

68,507

402,834

159,948

562,782

90,408

1978

FALMOUTH, MA

519,382

43,841

458,461

104,762

563,223

103,923

1988

FLEMINGTON, NJ

546,742

17,494

346,342

217,894

564,236

103,347

1985

WORCESTER, MA

497,642

67,806

321,800

243,648

565,448

145,995

1985

PHILADELPHIA, PA

341,500

224,647

222,400

343,747

566,147

213,105

1985

RIDGEFIELD, CT

535,140

33,590

347,900

220,830

568,730

114,126

1985

EAST HARTFORD, CT

555,826

13,797

301,322

268,301

569,623

79,332

1991

HARTFORD, CT

570,898

0

371,084

199,814

570,898

33,304

2004

CENTRAL ISLIP, NY

572,244

0

357,500

214,744

572,244

89,367

1998

HEWLETT, NY

490,200

85,618

319,200

256,618

575,818

125,647

1985

NEW BEDFORD, MA

482,275

95,553

293,000

284,828

577,828

190,436

1985

PORTSMOUTH, VA

562,255

17,106

221,610

357,751

579,361

353,473

1990

LONG ISLAND CITY, NY

191,420

390,783

116,554

465,649

582,203

330,427

1981

BROOKLYN, NY

282,104

301,052

176,292

406,864

583,156

363,404

1967

STATEN ISLAND, NY

301,300

288,603

196,200

393,703

589,903

265,024

1985

CLEMENTON, NJ

562,500

27,581

366,300

223,781

590,081

112,687

1985

BRIDGEPORT, CT

526,775

63,505

342,700

247,580

590,280

142,201

1985

WILTON, CT

518,881

71,425

337,500

252,806

590,306

145,308

1985

ROCHESTER, NY

595,237

0

305,237

290,000

595,237

9,157

2008

PEABODY, MA

400,000

200,363

275,000

325,363

600,363

283,709

1986

SEWELL, NJ

551,912

48,485

355,712

244,685

600,397

130,610

1985

79

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

N. PROVIDENCE, RI

542,400

61,717

353,200

250,917

604,117

143,693

1985

NEW YORK, NY

0

605,891

0

605,891

605,891

443,005

1986

FITCHBURG, MA

390,276

216,589

253,679

353,186

606,865

187,140

1992

KERNERSVILLE, NC

608,441

0

250,505

357,936

608,441

35,761

2007

NORTH ANDOVER, MA

393,700

220,132

256,400

357,432

613,832

223,589

1985

FLORAL PARK, NY

616,700

0

356,400

260,300

616,700

108,328

1998

ASHAWAY, RI

618,609

0

402,096

216,513

618,609

36,088

2004

NORWALK, CT

0

619,018

401,996

217,022

619,018

24,661

1988

HALFMOON, NY

415,000

205,598

228,100

392,498

620,598

383,236

1986

HAMBURG, NJ

598,600

22,121

389,800

230,921

620,721

112,487

1985

ASHLAND, MA

606,700

17,424

395,100

229,024

624,124

106,153

1985

RANDALLSTOWN, MD

590,600

33,594

384,600

239,594

624,194

123,548

1985

WESTPORT, CT

603,260

23,070

392,500

233,830

626,330

111,073

1985

PHILADELPHIA, PA

405,800

221,269

264,300

362,769

627,069

243,263

1985

PHILADELPHIA, PA

417,800

210,406

272,100

356,106

628,206

209,874

1985

PATERSON, NJ

619,548

16,765

402,900

233,413

636,313

111,062

1985

DOVER, NJ

606,700

30,153

395,100

241,753

636,853

120,840

1985

CRANBURY, NJ

606,700

31,467

395,100

243,067

638,167

122,575

1985

KERNERSVILLE, NC

638,633

0

338,386

300,247

638,633

31,437

2007

CLINTON, MA

586,600

52,725

382,000

257,325

639,325

138,047

1985

WANTAGH, NY

640,680

0

370,200

270,480

640,680

112,697

1998

STERLING, MA

476,102

165,998

309,466

332,634

642,100

157,235

1991

PHILADELPHIA, PA

369,600

273,642

240,700

402,542

643,242

291,682

1985

PHILADELPHIA, PA

369,600

276,720

240,700

405,620

646,320

275,273

1985

EASTCHESTER, NY

614,700

34,500

400,300

248,900

649,200

126,891

1985

BALTIMORE, MD

474,100

176,067

308,700

341,467

650,167

201,170

1985

WORCESTER, MA

476,102

174,233

309,466

340,869

650,335

332,336

1991

NORTH MERRICK, NY

510,350

141,506

332,200

319,656

651,856

183,150

1985

BELMAR, NJ

630,800

22,371

410,800

242,371

653,171

117,831

1985

BROOKLYN, NY

276,831

376,706

168,423

485,114

653,537

357,052

1978

WATERTOWN, MA

357,500

296,588

321,030

333,058

654,088

213,660

1985

PORT EWEN, NY

657,147

0

176,924

480,223

657,147

47,853

2007

HASBROUCK HEIGHTS, NJ

639,648

19,648

416,000

243,296

659,296

115,788

1985

LEVITTOWN, NY

546,400

113,057

355,800

303,657

659,457

162,557

1985

LANCASTER, PA

642,000

17,993

300,000

359,993

659,993

359,993

1989

HARTFORD, CT

664,966

0

432,228

232,738

664,966

38,792

2004

ROCKVILLE CENTRE, NY

350,325

315,779

201,400

464,704

666,104

352,076

1985

FEASTERVILLE, PA

510,200

160,144

332,200

338,144

670,344

215,694

1985

NORTH ATTLEBORO, MA

662,900

16,549

431,700

247,749

679,449

116,320

1985

WEYMOUTH, MA

643,297

36,516

418,600

261,213

679,813

129,700

1985

RENSSELAER, NY

683,781

0

286,504

397,277

683,781

87,339

2004

BATAVIA, NY

684,279

0

364,279

320,000

684,279

36,267

2006

MCAFEE, NJ

670,900

15,711

436,900

249,711

686,611

116,230

1985

BROOKLYN, NY

421,800

270,436

274,700

417,536

692,236

266,711

1985

DARIEN, CT

667,180

26,061

434,300

258,941

693,241

126,796

1985

HYANNIS, MA

650,800

42,552

423,800

269,552

693,352

141,554

1985

MOUNTAINSIDE, NJ

664,100

31,620

431,700

264,020

695,720

130,274

1985

WINSTON SALEM, NC

696,397

0

251,987

444,410

696,397

48,678

2007

EAST HAMPTON, NY

659,127

39,313

427,827

270,613

698,440

137,463

1985

BARRE, MA

535,614

163,028

348,149

350,493

698,642

160,830

1991

BARRINGTON, RI

490,200

213,866

319,200

384,866

704,066

266,871

1985

DOBBS FERRY, NY

670,575

33,706

434,300

269,981

704,281

135,250

1985

NORTH BERGEN, NJ

629,527

81,006

409,527

301,006

710,533

173,873

1985

PHILADELPHIA, PA

687,000

25,017

447,400

264,617

712,017

127,431

1985

FRANKLIN TWP., NJ

683,000

30,257

444,800

268,457

713,257

133,770

1985

ALFRED STATION, NY

714,108

0

414,108

300,000

714,108

34,000

2006

NEW HAVEN, CT

538,400

176,230

350,600

364,030

714,630

258,057

1985

STAMFORD, CT

603,260

112,305

392,500

323,065

715,565

201,191

1985

BLOOMFIELD, NJ

695,000

21,021

371,400

344,621

716,021

230,898

1985

BAYSIDE, NY

470,100

246,576

306,100

410,576

716,676

248,075

1985

WILLIMANTIC, CT

716,782

0

465,908

250,874

716,782

41,813

2004

80

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

TRENTON, NJ

684,650

33,275

444,800

273,125

717,925

137,961

1985

BRONX, NY

390,200

329,357

251,100

468,457

719,557

296,590

1985

NORWALK, CT

510,760

209,820

332,200

388,380

720,580

239,435

1985

ST. GEORGES, DE

498,200

222,596

324,725

396,071

720,796

293,151

1985

SANDSTON, VA

0

721,651

101,651

620,000

721,651

93,000

2005

RIVERHEAD, NY

723,346

0

431,700

291,646

723,346

121,374

1998

AVON, CT

730,886

0

402,949

327,937

730,886

96,628

2002

BIDDEFORD, ME

723,100

8,009

340,000

391,109

731,109

325,049

1985

NEWTON, MA

691,000

42,832

450,000

283,832

733,832

141,538

1985

LONDONDERRY, NH

703,100

31,092

457,900

276,292

734,192

136,026

1985

SAG HARBOR, NY

703,600

36,012

458,200

281,412

739,612

143,094

1985

RIDGEWOOD, NJ

703,100

36,959

457,900

282,159

740,059

140,211

1985

FLEMINGTON, NJ

708,160

33,072

460,500

280,732

741,232

137,084

1985

PRINCETON, NJ

703,100

40,615

457,900

285,815

743,715

146,858

1985

HARRISBURG, PA

399,016

347,590

198,740

547,866

746,606

344,802

1989

MAYNARD, MA

735,200

12,714

478,800

269,114

747,914

122,939

1985

BROOKLYN, NY

476,816

272,765

306,100

443,481

749,581

281,823

1985

WORCESTER, MA

547,283

205,733

355,734

397,282

753,016

195,499

1991

BRIARCLIFF MANOR, NY

652,213

103,753

501,687

254,279

755,966

231,839

1976

SALEM, NH

743,200

19,847

484,000

279,047

763,047

130,478

1985

ROCKLAND, MA

578,600

185,285

376,800

387,085

763,885

234,817

1985

RANDOLPH, MA

743,200

25,069

484,000

284,269

768,269

136,189

1985

FAIRHAVEN, MA

725,500

48,828

470,900

303,428

774,328

158,477

1985

EAST PEMBROKE, NY

787,465

0

537,465

250,000

787,465

28,333

2006

READING, PA

750,000

49,125

0

799,125

799,125

789,901

1989

WOBURN, MA

507,600

294,303

507,600

294,303

801,903

140,533

1985

BALTIMORE, MD

802,414

0

0

802,414

802,414

70,212

2007

UNION CITY, NJ

799,500

3,440

520,600

282,340

802,940

125,227

1985

WATERBURY, CT

804,040

0

516,387

287,653

804,040

52,496

2004

STOUGHTON, MA

775,300

34,554

504,900

304,954

809,854

148,890

1985

ROCHESTER, NY

823,031

0

273,031

550,000

823,031

63,358

2006

WEST ORANGE, NJ

799,500

34,733

520,600

313,633

834,233

156,456

1985

ASHLAND, VA

0

839,997

839,997

0

839,997

0

2005

SUFFIELD, CT

237,401

602,635

200,878

639,158

840,036

187,636

2004

WALKERTOWN, NC

844,749

0

488,239

356,509

844,749

39,562

2007

W.READING, PA

790,432

68,726

387,641

471,517

859,158

465,075

1989

BELLINGHAM, MA

734,189

132,725

476,200

390,714

866,914

239,279

1985

ORLANDO, FL

867,515

0

401,435

466,080

867,515

175,554

2000

JONESBORO, AR

868,501

0

173,096

695,405

868,501

31,284

2007

FALL RIVER, MA

859,800

24,423

559,900

324,323

884,223

153,018

1985

ELLICOTT CITY, MD

895,049

(0

)

0

895,049

895,049

82,439

2007

SUTTON, MA

714,159

187,355

464,203

437,311

901,514

200,066

1993

LIVINGSTON, NJ

871,800

30,003

567,700

334,103

901,803

161,144

1985

MECHANICSVILLE, VA

0

902,892

272,892

630,000

902,892

94,500

2005

BROOKLYN, NY

626,700

282,677

408,100

501,277

909,377

320,294

1985

CHESAPEAKE, VA

883,685

26,247

325,508

584,424

909,932

579,208

1990

MIDDLETOWN, NY

751,200

166,411

489,200

428,411

917,611

225,350

1985

MANSFIELD, OH

921,108

0

331,599

589,509

921,108

6,862

2008

WATERTOWN, CT

924,586

0

566,986

357,600

924,586

94,466

2004

PLYMOUTH, CT

930,885

0

605,075

325,810

930,885

54,300

2004

WASHINGTON TOWNSHIP, NJ

912,000

21,261

593,900

339,361

933,261

159,158

1985

AVOCA, NY

935,543

0

634,543

301,000

935,543

34,000

2006

NEWINGTON, CT

953,512

0

619,783

333,729

953,512

55,621

2004

OCEAN CITY, NJ

843,700

113,162

549,400

407,462

956,862

240,926

1985

MECHANICSVILLE, VA

0

957,418

324,158

633,260

957,418

134,666

2005

BYRON, NY

969,117

0

669,117

300,000

969,117

34,000

2006

ROCHESTER, NH

972,200

12,775

633,100

351,875

984,975

159,658

1985

WARSAW, NY

990,259

0

690,259

300,000

990,259

34,000

2006

DURHAM, CT

993,909

0

0

993,909

993,909

414,129

2004

CHURCHVILLE, NY

1,011,381

0

601,381

410,000

1,011,381

46,467

2006

GREIGSVILLE, NY

1,017,739

0

202,873

814,866

1,017,739

38,307

2008

81

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

COLONIA, NJ

952,200

74,451

620,100

406,551

1,026,651

216,295

1985

LAKEVILLE, NY

1,027,783

0

202,857

824,926

1,027,783

39,197

2008

CHESAPEAKE, VA

1,026,115

7,149

407,026

626,238

1,033,264

624,636

1990

GLEN ALLEN, VA

0

1,036,585

411,585

625,000

1,036,585

93,750

2005

LODI, NJ

0

1,037,440

587,823

449,617

1,037,440

151,871

1988

MIDDLETOWN, CT

1,038,592

0

675,085

363,507

1,038,592

60,583

2004

WINDSOR, CT

1,042,081

0

669,804

372,277

1,042,081

155,117

2004

MECHANICSVILLE, VA

0

1,042,870

222,870

820,000

1,042,870

123,000

2005

NEW OXFORD, PA

1,044,707

13,500

18,687

1,039,520

1,058,207

791,323

1996

HONOLULU, HI

1,070,141

0

980,680

89,460

1,070,141

12,630

2007

GLEN ALLEN, VA

0

1,077,402

322,402

755,000

1,077,402

113,250

2005

WEBSTER, MA

1,012,400

67,645

659,300

420,745

1,080,045

218,323

1985

GARDNER, MA

1,008,400

73,740

656,700

425,440

1,082,140

217,211

1985

YONKERS, NY

1,020,400

61,875

664,500

417,775

1,082,275

212,485

1985

SEEKONK, MA

1,072,700

29,112

698,500

403,312

1,101,812

187,535

1985

MECHANICSVILLE, VA

0

1,124,769

504,769

620,000

1,124,769

93,000

2005

RICHMOND, VA

0

1,131,878

546,878

585,000

1,131,878

87,750

2005

WALNUT COVE, NC

1,140,945

0

513,565

627,380

1,140,945

69,314

2007

SHRUB OAK, NY

1,060,700

81,807

690,700

451,807

1,142,507

238,435

1985

WORCESTER, MA

978,880

191,413

636,272

534,021

1,170,293

217,313

1991

CRESTLINE, OH

1,201,523

0

284,761

916,762

1,201,523

11,367

2008

WEST HAVEN, CT

1,214,831

0

789,640

425,191

1,214,831

70,867

2004

CHESAPEAKE, VA

1,184,759

32,132

604,983

611,908

1,216,891

132,131

1990

FARMVILLE, VA

0

1,226,505

621,505

605,000

1,226,505

90,750

2005

BELFIELD, ND

1,232,010

0

381,909

850,101

1,232,010

129,470

2007

BRONX, NY

543,833

693,438

473,695

763,576

1,237,271

752,658

1970

NAPLES, NY

1,257,487

0

827,487

430,000

1,257,487

48,733

2006

FREDERICKSBURG, VA

0

1,279,280

469,280

810,000

1,279,280

121,500

2005

FORT LEE, NJ

1,245,500

39,408

811,100

473,808

1,284,908

227,313

1985

FREDERICKSBURG, VA

0

1,289,425

798,444

490,981

1,289,425

94,004

2005

SPOTSYLVANIA, VA

0

1,290,239

490,239

800,000

1,290,239

120,000

2005

EL CAJON, CA

1,292,114

0

779,828

512,286

1,292,114

42,472

2007

ELLINGTON, CT

1,294,889

0

841,678

453,211

1,294,889

75,533

2004

LAKE HOPATCONG, NJ

1,305,034

0

800,000

505,034

1,305,034

303,226

2000

SAVONA, NY

1,314,135

0

964,136

349,999

1,314,135

39,667

2006

FILLMORE, CA

1,354,113

0

950,061

404,052

1,354,113

37,786

2007

KANEOHE, HI

1,363,901

0

821,691

542,210

1,363,901

52,654

2007

BELLFLOWER, CA

1,369,511

0

910,252

459,259

1,369,511

43,108

2007

WINDSOR LOCKS, CT

1,433,330

0

0

1,433,330

1,433,330

597,221

2004

VERNON, CT

1,434,223

0

0

1,434,223

1,434,223

597,592

2004

POWAY, CA

1,439,021

(0

)

0

1,439,021

1,439,021

114,467

2007

PETERSBURG, VA

0

1,441,374

816,374

625,000

1,441,374

93,750

2005

PERRY, NY

1,443,847

0

1,043,847

400,000

1,443,847

45,333

2006

BROOKLAND, AR

1,467,809

0

149,218

1,318,591

1,467,809

56,442

2007

NEW HAVEN, CT

1,412,860

56,420

898,470

570,810

1,469,280

281,917

1985

MECHANICSVILLE, VA

0

1,476,043

876,043

600,000

1,476,043

90,000

2005

BRICK, NJ

1,507,684

0

1,000,000

507,684

1,507,684

247,725

2000

WAIANAE, HI

1,520,144

0

648,273

871,871

1,520,144

72,706

2007

HALEIWA, HI

1,521,648

0

1,058,124

463,524

1,521,648

53,621

2007

MERIDEN, CT

1,531,772

0

989,165

542,607

1,531,772

92,929

2004

HONOLULU, HI

1,538,997

0

1,219,217

319,780

1,538,997

28,955

2007

HOOKSETT, NH

1,561,628

0

823,915

737,712

1,561,628

115,904

2007

BRISTOL, CT

1,594,129

0

1,036,184

557,945

1,594,129

92,992

2004

HESPERIA, CA

1,643,449

0

849,352

794,097

1,643,449

68,660

2007

MECHANICSVILLE, VA

0

1,677,065

1,157,065

520,000

1,677,065

78,000

2005

KING WILLIAM, VA

0

1,687,540

1,067,540

620,000

1,687,540

93,000

2005

HOUSTON, TX

1,688,904

0

223,664

1,465,240

1,688,904

111,373

2007

FREDERICKSBURG, VA

0

1,715,914

995,914

720,000

1,715,914

108,000

2005

HONOLULU, HI

1,768,878

0

1,192,216

576,662

1,768,878

48,078

2007

ALLENSTOWN, NH

1,787,116

0

466,994

1,320,122

1,787,116

119,762

2007

LONG ISLAND CITY, NY

1,646,307

259,443

1,071,500

834,250

1,905,750

507,752

1985

82

Initial Cost
of Leasehold
or Acquisition
Investment to
Company (1)

Cost
Capitalized
Subsequent
to Initial
Investment

Gross Amount at Which Carried
at Close of Period

Date of Initial
Leasehold or
Acquisition
Investment (1)

Description

Land

Building and
Improvements

Total

Accumulated
Depreciation

SAN DIMAS, CA

1,941,008

0

749,066

1,191,942

1,941,008

94,544

2007

SAN MARCOS, TX

1,953,653

0

250,739

1,702,914

1,953,653

133,479

2007

LA PALMA, CA

1,971,592

0

1,389,383

582,210

1,971,592

53,595

2007

KANEOHE, HI

1,977,671

0

1,473,275

504,396

1,977,671

47,249

2007

WAIANAE, HI

1,996,811

0

870,775

1,126,036

1,996,811

94,383

2007

SOUTH WINDHAM, CT

644,141

1,397,938

598,394

1,443,685

2,042,079

86,304

2004

HARKER HEIGHTS, TX

2,051,704

0

588,320

1,463,384

2,051,704

192,815

2007

FT WORTH, TX

2,114,924

0

866,062

1,248,863

2,114,924

112,417

2007

RENSSELAER, NY

1,653,500

514,444

1,076,800

1,091,144

2,167,944

766,271

1985

BENICIA, CA

2,223,362

0

1,057,519

1,165,843

2,223,362

114,287

2007

COACHELLA, CA

2,234,957

0

1,216,646

1,018,312

2,234,957

93,082

2007

BALTIMORE, MD

2,258,897

0

721,876

1,537,022

2,258,897

125,569

2007

BEDFORD, NH

2,301,297

0

1,271,171

1,030,126

2,301,297

102,923

2007

AUSTIN, TX

2,368,425

0

738,210

1,630,215

2,368,425

130,764

2007

TEMPLE, TX

2,405,953

0

1,215,488

1,190,465

2,405,953

103,791

2007

WAIPAHU, HI

2,458,592

0

945,327

1,513,264

2,458,592

121,087

2007

MONTPELIER, VA

0

2,480,686

1,725,686

755,000

2,480,686

113,250

2005

KELLER, TX

2,506,573

0

996,029

1,510,544

2,506,573

128,732

2007

EAST PROVIDENCE, RI

2,297,435

568,241

1,495,700

1,369,976

2,865,676

666,885

1985

JONESBORO, AR

2,985,267

0

330,322

2,654,945

2,985,267

192,817

2007

NEWARK, NJ

3,086,592

164,432

2,005,800

1,245,224

3,251,024

637,621

1985

AUSTIN, TX

3,510,062

0

1,594,536

1,915,526

3,510,062

155,432

2007

FREDERICKSBURG, VA

0

3,623,228

2,828,228

795,000

3,623,228

119,250

2005

WACO, TX

3,884,407

0

894,356

2,990,051

3,884,407

262,069

2007

THE COLONY, TX

4,395,696

0

337,083

4,058,613

4,395,696

300,138

2007

HONOLULU, HI

9,210,707

0

8,193,984

1,016,724

9,210,707

87,664

2007

MISCELLANEOUS INVESTMENTS

10,879,528

12,876,458

6,453,867

17,302,118

23,755,986

15,868,528

0

$

364,207,264

$

109,360,132

$

221,540,125

$

252,027,271

$

473,567,396

$

129,322,033

(1)

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

(2)

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

(3)

The aggregate cost for federal income tax purposes was approximately $372,183,000 at December 31, 2008.

83

SIGNATURES

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

Getty Realty Corp.

(Registrant)

By:

/s/ Thomas J. Stirnweis

Thomas J. Stirnweis,

Vice President, Treasurer and

Chief Financial Officer

March 2, 2009

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

By:

/s/ Leo Liebowitz

By:

/s/ Thomas J. Stirnweis

Leo Liebowitz

Thomas J. Stirnweis

Chairman, Chief Executive Officer and Director

Vice President, Treasurer and Chief Financial Officer

(Principal Executive Officer)

(Principal Financial and Accounting Officer)

March 2, 2009

March 2, 2009

By:

/s/ Milton Cooper

By:

/s/ Philip E. Coviello

Milton Cooper

Philip E. Coviello

Director

Director

March 2, 2009

March 2, 2009

By:

/s/ David Driscoll

By:

/s/ Howard Safenowitz

David Driscoll

Howard Safenowitz

Director

Director

March 2, 2009

March 2, 2009

84

EXHIBIT INDEX

GETTY REALTY CORP.
Annual Report on Form 10-K
for the year ended December 31, 2008

EXHIBIT NO.

DESCRIPTION

2.1

Agreement and Plan of Reorganization and Merger, dated as of December 16, 1997 (the “Merger Agreement”) by and among Getty Realty Corp., Power Test Investors Limited Partnership and CLS General Partnership Corp.

Filed as Exhibit 2.1 to Company’s Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix A To the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference.

3.1

Articles of Incorporation of Getty Realty Holding Corp. (“Holdings”), now known as Getty Realty Corp., filed December 23, 1997.

Filed as Exhibit 3.1 to Company’s Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix D to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference.

3.2

Articles Supplementary to Articles of Incorporation of Holdings, filed January 21, 1998.

(a)

3.3

By-Laws of Getty Realty Corp.

(a)

3.4

Articles of Amendment of Holdings, changing its name to Getty Realty Corp., filed January 30, 1998.

(a)

3.5

Amendment to Articles of Incorporation of Holdings, filed August 1, 2001.

(a)

4.1

Dividend Reinvestment/Stock Purchase Plan.

Filed under the heading “Description of Plan” on pages 4 through 17 to Company’s Registration Statement on Form S-3D, filed on April 22, 2004 (File No.333-114730) and incorporated herein by reference.

10.1*

Retirement and Profit Sharing Plan (amended and restated as of January 1, 2002), adopted by the Company on September 3, 2002.

(a)

10.2*

1998 Stock Option Plan, effective as of January 30, 1998.

Filed as Exhibit 10.1 to Company’s Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix H to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference.

10.3**

Asset Purchase Agreement among Power Test Corp. (now known as Getty Properties Corp.), Texaco Inc., Getty Oil Company and Getty Refining and Marketing Company, dated as of December 21, 1984.

(a)

10.4

Assignment of Trademark Registrations

Filed as Exhibit 10.4 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2007 (File No. 001-13777) and incorporated herein by reference.

85

10.5*

Form of Indemnification Agreement between the Company and its directors.

(a)

10.6*

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).

(a)

10.7*

Letter Agreement dated June 12, 2001 by and between Getty Realty Corp. and Thomas J. Stirnweis regarding compensation upon change in control.

(a)

10.8

Form of Reorganization and Distribution Agreement between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. dated as of February 1, 1997.

(a)

10.9

Form of Tax Sharing Agreement between Getty Petroleum Corp (now known as Getty. Properties Corp.) and Getty Petroleum Marketing Inc.

(a)

10.10

Consolidated, Amended and Restated Master Lease Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.

(a)

10.11

Environmental Indemnity Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.

(a)

10.12

Amended and Restated Trademark License Agreement, dated November 2, 2000, between Getty Properties Corp. and Getty Petroleum Marketing Inc.

(a)

10.13

Trademark License Agreement, dated November 2, 2000, between Getty™ Corp. and Getty Petroleum Marketing Inc.

(a)

10.14*

2004 Getty Realty Corp. Omnibus Incentive Compensation Plan.

Filed as Appendix B to the Definitive Proxy Statement of Getty Realty Corp., filed April 9, 2004 (File No. 001-13777) and incorporated herein by reference.

10.15*

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

(a)

10.16**

Contract for Sale and Purchase between Getty Properties Corp. and various subsidiaries of Trustreet Properties, Inc. dated as of February 6, 2007.

Filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-13777) and incorporated herein by reference.

86

10.17

Senior Unsecured Credit Agreement dated as of March 27, 2007 with J. P. Morgan Securities Inc., as sole bookrunner and sole lead arranger, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.

Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2007 (File No. 001-13777) and incorporated herein by reference.

10.18*

Severance Agreement and General Release by and between Getty Realty Corp. and Andrew M. Smith effective October 31, 2007 and dated November 13, 2007.

Filed as Exhibit 10.22 to the Company’s Current Report on Form 8-K filed November 14, 2007 (File No. 001-13777) and incorporated herein by reference.

10.19*

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

(a)

10.20*

Amendment dated December 31, 2008 to Letter Agreement dated June 12, 2001 by and between Getty Realty Corp. and Thomas J. Stirnweis regarding compensation upon change of control. (See Exhibit 10.7).

(a)

14

The Getty Realty Corp. Business Conduct Guidelines (Code of Ethics).

Filed as Exhibit 14 to Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-13777) and incorporated herein by reference.

21

Subsidiaries of the Company.

(a)

23

Consent of Independent Registered Public Accounting Firm.

(a)

31(i).1

Rule 13a-14(a) Certification of Chief Financial Officer.

(b)

31(i).2

Rule 13a-14(a) Certification of Chief Executive Officer.

(b)

32.1

Section 1350 Certification of Chief Executive Officer.

(b)

32.2

Section 1350 Certification of Chief Financial Officer.

(b)

(a)

Filed herewith

(b)

Furnished herewith. These certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. Section. 1350, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

*

Management contract or compensatory plan or arrangement.

**

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.

87


	TOTAL			LESS THAN ONE YEAR			ONE TO THREE YEARS			THREE TO FIVE YEARS			MORE THAN FIVE YEARS

Operating leases	$	26,620		$	7,338		$	10,571		$	5,235		$	3,476
Borrowing under the Credit Agreement (a)		130,250			—			130,250			—			—
Estimated environmental remediation expenditures (b)		17,660			6,946			6,411			2,480			1,823
Estimated recoveries from state underground storage tank funds (b)		(4,223	)		(1,368	)		(1,479	)		(844	)		(532	)

Estimated net environmental remediation expenditures (b)		13,437			5,578			4,932			1,636			1,291

Total	$	170,307		$	12,916		$	145,753		$	6,871		$	4,767


(a)	Excludes related interest payments. (See “— Liquidity and Capital Resources” above and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for additional information.) Subject to the terms of the Credit Agreement, we have the option to extend the term of the Credit Agreement to March 2012.

(b)	Estimated environmental remediation expenditures and estimated recoveries from state UST funds have been adjusted for inflation and discounted to present value.


		(PAGES)


Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006		46
Consolidated Statements of Comprehensive Income for the years ended December 31, 2008, 2007 and 2006		46
Consolidated Balance Sheets as of December 31, 2008 and 2007		47
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		48
Notes to Consolidated Financial Statements (including the supplementary financial information contained in Note 9 “Quarterly Financial Data”)		49
Report of Independent Registered Public Accounting Firm		64


	YEAR ENDED DECEMBER 31,

	2008			2007			2006

Revenues from rental properties	$	81,163		$	78,069		$	71,329
Operating expenses:
Rental property expenses		9,390			9,301			9,619
Environmental expenses, net		7,374			8,190			5,418
General and administrative expenses		6,831			6,669			5,607
Allowance for deferred rent receivable		—			10,312			—
Depreciation and amortization expense		11,784			9,647			7,785

Total expenses		35,379			44,119			28,429

Operating income		45,784			33,950			42,900
Other income, net		412			1,920			1,855
Interest expense		(7,034	)		(7,760	)		(3,527	)

Earnings before income taxes and discontinued operations		39,162			28,110			41,228
Income tax benefit		—			—			700

Earnings from continuing operations		39,162			28,110			41,928
Discontinued operations:
Earnings from operating activities		259			1,216			793
Gains on dispositions of real estate		2,389			4,568			4

Earnings from discontinued operations		2,648			5,784			797

Net earnings	$	41,810		$	33,894		$	42,725

Basic earnings per common share:
Earnings from continuing operations	$	1.58		$	1.14		$	1.70
Earnings from discontinued operations	$	.11		$	.23		$	.03
Net earnings	$	1.69		$	1.37		$	1.73
Diluted earnings per common share:
Earnings from continuing operations	$	1.58		$	1.13		$	1.69
Earnings from discontinued operations	$	.11		$	.23		$	.03
Net earnings	$	1.69		$	1.37		$	1.73
Weighted average shares outstanding:
Basic		24,766			24,765			24,735
Stock options and restricted stock units		8			22			24

Diluted		24,774			24,787			24,759

Dividends declared per share	$	1.87		$	1.85		$	1.82


	DECEMBER 31,

	2008			2007

ASSETS:
Real Estate:
Land	$	221,540		$	222,194
Buildings and improvements		252,027			252,060

		473,567			474,254
Less — accumulated depreciation and amortization		(129,322	)		(122,465	)

Real estate, net		344,245			351,789
Deferred rent receivable (net of allowance of $10,029 at December 31, 2008 and $10,494 at December 31, 2007)		26,718			24,915
Cash and cash equivalents		2,178			2,071
Recoveries from state underground storage tank funds, net		4,223			4,652
Mortgages and accounts receivable, net		1,533			1,473
Prepaid expenses and other assets		8,916			12,011

Total assets	$	387,813		$	396,911

LIABILITIES AND SHAREHOLDERS’ EQUITY:
Debt	$	130,250		$	132,500
Environmental remediation costs		17,660			18,523
Dividends payable		11,669			11,534
Accounts payable and accrued expenses		22,337			22,176

Total liabilities		181,916			184,733

Commitments and contingencies (notes 2, 3, 5 and 6)
Shareholders’ equity:
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 24,766,166 at December 31, 2008 and 24,765,065 at December 31, 2007		248			248
Paid-in capital		259,069			258,734
Dividends paid in excess of earnings		(49,124	)		(44,505	)
Accumulated other comprehensive loss		(4,296	)		(2,299	)

Total shareholders’ equity		205,897			212,178

Total liabilities and shareholders’ equity	$	387,813		$	396,911


YEAR ENDING DECEMBER 31,	MARKETING		OTHER TENANTS		TOTAL (a)

2009		60,003		18,938		78,941
2010		59,968		18,722		78,690
2011		60,086		18,769		78,855
2012		60,402		18,588		78,990
2013		60,508		18,006		78,514
Thereafter		118,946		121,683		240,629


	COMMON STOCK				PAID-IN CAPITAL			DIVIDENDS PAID IN EXCESS OF EARNINGS			ACCUMULATED OTHER COMPREHENSIVE LOSS

	SHARES		AMOUNT										TOTAL

BALANCE, DECEMBER 31, 2005		24,717	$	247	$	257,766	$	(30,130	)	$	—		$	227,883

Net earnings								42,725						42,725
Dividends — $1.82 per common share								(45,094	)					(45,094	)
Stock-based compensation						186								186
Net unrealized loss on interest rate swap											(821	)		(821	)
Stock options exercised		48		1		695								696

BALANCE, DECEMBER 31, 2006		24,765		248		258,647		(32,499	)		(821	)		225,575

Net earnings								33,894						33,894
Dividends — $1.85 per common share								(45,900	)					(45,900	)
Stock-based compensation						87								87
Net unrealized loss on interest rate swap											(1,478	)		(1,478	)

BALANCE, DECEMBER 31, 2007		24,765		248		258,734		(44,505	)		(2,299	)		212,178

Net earnings								41,810						41,810
Dividends — $1.87 per common share								(46,429	)					(46,429	)
Stock-based compensation		1				326								326
Stock options exercised						9								9
Net unrealized loss on interest rate swap											(1,997	)		(1,997	)

BALANCE, DECEMBER 31, 2008		24,766	$	248	$	259,069	$	(49,124	) (a)	$	(4,296	)	$	205,897


(a)	Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends.


(a)	The total intrinsic value of the options exercised during the years ended December 31, 2008 and 2006 was $5,000 and $704,000, respectively.

(b)	The options vested during the years ended December 31, 2008 and 2006 was 1,250 and 14,875, respectively. No options vested during the year ended December 31, 2007.


	THREE MONTHS ENDED
										YEAR ENDED DECEMBER 31,
YEAR ENDED DECEMBER 31, 2008	MARCH 31,		JUNE 30,		SEPTEMBER 30,		DECEMBER 31,			YEAR ENDED DECEMBER 31,

Revenues from rental properties	$	20,242	$	20,187	$	20,328	$	20,406		$	81,163
Earnings from continuing operations		10,832		9,361		10,011		8,958			39,162
Net earnings		11,371		10,635		10,489		9,315			41,810
Diluted earnings per common share:
Earnings from continuing operations		.44		.38		.40		.36			1.58
Net earnings		.46		.43		.42		.38			1.69

		THREE MONTHS ENDED
										YEAR ENDED DECEMBER 31,
YEAR ENDED DECEMBER 31, 2007 (a)	MARCH 31,		JUNE 30,		SEPTEMBER 30,		DECEMBER 31,			YEAR ENDED DECEMBER 31,

Revenues from rental properties	$	17,713	$	20,248	$	20,000	$	20,108		$	78,069
Earnings (loss) from continuing operations (b)(c)		10,194		8,507		9,907		(498	)		28,110
Net earnings (b)(c)		10,437		10,024		12,846		587			33,894
Diluted earnings (loss) per common share:
Earnings (loss) from continuing operations (b)(c)		.41		.34		.40		(.02	)		1.13
Net earnings (b)(c)		.42		.40		.52		.02			1.37


(a)	Includes (from the date of the acquisition) the effect of the $84.6 million acquisition of convenience stores and gas station properties from FF-TSY Holding Company II LLC (successor to Trustreet Properties, Inc.) which was substantially completed by the end of the first quarter of 2007 (See footnote 10 for additional information).

(b)	The quarter ended December 31, 2007 includes the effect of a $10.5 million non-cash reserve for the full amount of the deferred rent receivable recorded as of December 31, 2007 related to approximately 40% of the properties under leases with Marketing, (See footnote 3 for additional information).

(c)	The quarter ended December 31, 2007 includes a net expense of $447,000 related to Mr. Andy Smith’s resignation (See footnote 8 for additional information).


NAME	AGE	POSITION	OFFICER SINCE

Leo Liebowitz	81	Chairman and Chief Executive Officer	1971
Kevin C. Shea	49	Executive Vice President	2001
Thomas J. Stirnweis	50	Vice President, Treasurer and Chief Financial Officer	2001
Joshua Dicker	48	General Counsel and Corporate Secretary	2008


	(a)(1) Financial Statements

	Information in response to this Item is included in “Item 8. Financial Statements and Supplementary Data”.

	(a)(2) Financial Statement Schedules


		PAGES

Report of Independent Registered Public Accounting Firm on Financial Statement Schedules		69
Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2008, 2007 and 2006		69
Schedule III - Real Estate and Accumulated Depreciation and Amortization as of December 31, 2008		70


	(a)(3) Exhibits

	Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 86 of this Form 10-K.


	BALANCE AT BEGINNING OF YEAR		ADDITIONS		DEDUCTIONS		BALANCE AT END OF YEAR

December 31, 2008:
Allowance for deferred rent receivable	$	10,494	$	—	$	465	$	10,029
Allowance for mortgages and accounts receivable	$	100	$	71	$	71	$	100
Allowance for deposits held in escrow	$	—	$	377	$	—	$	377
Allowance for recoveries from state underground storage tank funds	$	650	$	—	$	—	$	650
December 31, 2007:
Allowance for deferred rent receivable	$	—	$	10,494	$	—	$	10,494
Allowance for mortgages and accounts receivable	$	30	$	70	$	—	$	100
Allowance for recoveries from state underground storage tank funds	$	650	$	—	$	—	$	650
December 31, 2006:
Allowance for mortgages and accounts receivable	$	29	$	44	$	43	$	30
Allowance for recoveries from state underground storage tank funds	$	750	$	—	$	100	$	650


	Initial Cost of Leasehold or Acquisition Investment to Company (1)		Cost Capitalized Subsequent to Initial Investment		Gross Amount at Which Carried at Close of Period						Accumulated Depreciation		Date of Initial Leasehold or Acquisition Investment (1)

Description					Land		Building and Improvements		Total


CEDAR PARK, TX	$	178,507	$	0	$	42,091	$	136,415	$	178,507	$	12,414	2007
ALBANY, NY		142,312		36,831		91,600		87,543		179,143		59,357	1985
SALISBURY, MA		119,698		59,615		80,598		98,715		179,313		89,410	1986
CARMEL, NY		20,419		158,943		20,750		158,612		179,362		154,391	1970
POTTSTOWN, PA		166,236		16,010		71,631		110,615		182,246		94,975	1989
LONG ISLAND CITY, NY		90,895		91,386		60,030		122,251		182,281		115,438	1972
BOILING SPRINGS, PA		14,792		167,641		14,792		167,641		182,433		151,310	1961
ARLINGTON, TX		182,460		0		30,425		152,035		182,460		17,212	2007
GREENVILLE, NY		77,153		105,325		77,152		105,326		182,478		99,023	1989
PIERMONT, NY		151,125		31,470		90,675		91,920		182,595		91,920	1978
SOUTH PORTLAND, ME		176,700		6,938		115,100		68,538		183,638		33,203	1985
AUBURN, ME		105,908		77,928		105,908		77,928		183,836		77,781	1986
KINGSTON, NY		68,341		115,961		44,379		139,923		184,302		136,199	1971
HOWELL, NJ		9,750		174,857		0		184,607		184,607		184,035	1978
PITTSFIELD, MA		97,153		87,874		40,000		145,027		185,027		144,983	1982
AGAWAM, MA		65,000		120,665		0		185,665		185,665		183,366	1982
IPSWICH, MA		138,918		46,831		95,718		90,031		185,749		87,034	1986
GETTYSBURG, PA		157,602		28,530		67,602		118,530		186,132		117,939	1986
ATHOL, MA		164,629		22,016		107,009		79,636		186,645		33,779	1991
GLEN ROCK, PA		20,442		166,633		20,442		166,633		187,075		145,128	1961
WHITE PLAINS, NY		120,393		67,315		0		187,708		187,708		187,708	1979
HADLEY, MA		119,276		68,748		36,080		151,944		188,024		147,948	1982
KINGSTON, NY		29,010		159,986		12,721		176,275		188,996		167,892	1972
TONAWANDA, NY		189,296		0		147,122		42,174		189,296		15,886	2000
SEAFORD, NY		32,000		157,665		0		189,665		189,665		162,443	1978
WISCASSET, ME		156,587		33,455		90,837		99,205		190,042		99,205	1986
BRISTOL, CT		108,808		81,684		44,000		146,492		190,492		142,705	1982
YONKERS, NY		111,300		80,000		65,000		126,300		191,300		116,522	1988
LANGHORNE, PA		122,202		69,328		50,000		141,530		191,530		96,391	1987
DELMAR, NY		150,000		42,478		70,000		122,478		192,478		118,294	1986
HUNTINGTON STATION, NY		140,735		52,045		84,000		108,780		192,780		108,416	1978
MECHANICSVILLE, VA		0		193,088		193,088		0		193,088		0	2005


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

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

(3)	The aggregate cost for federal income tax purposes was approximately $372,183,000 at December 31, 2008.


	Getty Realty Corp.
	(Registrant)

	By:	/s/ Thomas J. Stirnweis

		Thomas J. Stirnweis,
		Vice President, Treasurer and
		Chief Financial Officer
		March 2, 2009


By:	/s/ Leo Liebowitz	By:	/s/ Thomas J. Stirnweis

Leo Liebowitz		Thomas J. Stirnweis
Chairman, Chief Executive Officer and Director		Vice President, Treasurer and Chief Financial Officer
(Principal Executive Officer)		(Principal Financial and Accounting Officer)
March 2, 2009		March 2, 2009

By:	/s/ Milton Cooper	By:	/s/ Philip E. Coviello

Milton Cooper		Philip E. Coviello
Director		Director
March 2, 2009		March 2, 2009

By:	/s/ David Driscoll	By:	/s/ Howard Safenowitz

David Driscoll		Howard Safenowitz
Director		Director
March 2, 2009		March 2, 2009


EXHIBIT NO.		DESCRIPTION

	2.1	Agreement and Plan of Reorganization and Merger, dated as of December 16, 1997 (the “Merger Agreement”) by and among Getty Realty Corp., Power Test Investors Limited Partnership and CLS General Partnership Corp.	Filed as Exhibit 2.1 to Company’s Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix A To the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference.

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

	3.2	Articles Supplementary to Articles of Incorporation of Holdings, filed January 21, 1998.	(a)

	3.3	By-Laws of Getty Realty Corp.	(a)

	3.4	Articles of Amendment of Holdings, changing its name to Getty Realty Corp., filed January 30, 1998.	(a)

	3.5	Amendment to Articles of Incorporation of Holdings, filed August 1, 2001.	(a)

	4.1	Dividend Reinvestment/Stock Purchase Plan.	Filed under the heading “Description of Plan” on pages 4 through 17 to Company’s Registration Statement on Form S-3D, filed on April 22, 2004 (File No.333-114730) and incorporated herein by reference.

	10.1*	Retirement and Profit Sharing Plan (amended and restated as of January 1, 2002), adopted by the Company on September 3, 2002.	(a)

	10.2*	1998 Stock Option Plan, effective as of January 30, 1998.	Filed as Exhibit 10.1 to Company’s Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix H to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference.

	10.3**	Asset Purchase Agreement among Power Test Corp. (now known as Getty Properties Corp.), Texaco Inc., Getty Oil Company and Getty Refining and Marketing Company, dated as of December 21, 1984.	(a)

	10.4	Assignment of Trademark Registrations	Filed as Exhibit 10.4 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2007 (File No. 001-13777) and incorporated herein by reference.


10.5*	Form of Indemnification Agreement between the Company and its directors.	(a)

10.6*	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).	(a)

10.7*	Letter Agreement dated June 12, 2001 by and between Getty Realty Corp. and Thomas J. Stirnweis regarding compensation upon change in control.	(a)

10.8	Form of Reorganization and Distribution Agreement between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. dated as of February 1, 1997.	(a)

10.9	Form of Tax Sharing Agreement between Getty Petroleum Corp (now known as Getty. Properties Corp.) and Getty Petroleum Marketing Inc.	(a)

10.10	Consolidated, Amended and Restated Master Lease Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.	(a)

10.11	Environmental Indemnity Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.	(a)

10.12	Amended and Restated Trademark License Agreement, dated November 2, 2000, between Getty Properties Corp. and Getty Petroleum Marketing Inc.	(a)

10.13	Trademark License Agreement, dated November 2, 2000, between Getty™ Corp. and Getty Petroleum Marketing Inc.	(a)

10.14*	2004 Getty Realty Corp. Omnibus Incentive Compensation Plan.	Filed as Appendix B to the Definitive Proxy Statement of Getty Realty Corp., filed April 9, 2004 (File No. 001-13777) and incorporated herein by reference.

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

10.16**	Contract for Sale and Purchase between Getty Properties Corp. and various subsidiaries of Trustreet Properties, Inc. dated as of February 6, 2007.	Filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 (File No. 001-13777) and incorporated herein by reference.


10.17	Senior Unsecured Credit Agreement dated as of March 27, 2007 with J. P. Morgan Securities Inc., as sole bookrunner and sole lead arranger, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.	Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2007 (File No. 001-13777) and incorporated herein by reference.

10.18*	Severance Agreement and General Release by and between Getty Realty Corp. and Andrew M. Smith effective October 31, 2007 and dated November 13, 2007.	Filed as Exhibit 10.22 to the Company’s Current Report on Form 8-K filed November 14, 2007 (File No. 001-13777) and incorporated herein by reference.

10.19*	Amendment to the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan dated December 31, 2008.	(a)

10.20*	Amendment dated December 31, 2008 to Letter Agreement dated June 12, 2001 by and between Getty Realty Corp. and Thomas J. Stirnweis regarding compensation upon change of control. (See Exhibit 10.7).	(a)

14	The Getty Realty Corp. Business Conduct Guidelines (Code of Ethics).	Filed as Exhibit 14 to Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-13777) and incorporated herein by reference.

21	Subsidiaries of the Company.	(a)

23	Consent of Independent Registered Public Accounting Firm.	(a)

31(i).1	Rule 13a-14(a) Certification of Chief Financial Officer.	(b)

31(i).2	Rule 13a-14(a) Certification of Chief Executive Officer.	(b)

32.1	Section 1350 Certification of Chief Executive Officer.	(b)

32.2	Section 1350 Certification of Chief Financial Officer.	(b)



(a)	Filed herewith

(b)	Furnished herewith. These certifications are being furnished solely to accompany the Report pursuant to 18 U.S.C. Section. 1350, and are not being filed for purposes of Section 18 of the Exchange Act, and are not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

*	Management contract or compensatory plan or arrangement.

**	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.