GETTY REALTY CORP /MD/ - Annual Report: 2010 (Form 10-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010


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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

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 þ

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 þ

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 þ 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 þ	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 þ

The aggregate market value of common stock held by non-affiliates (22,494,667 shares of common stock) of the Company was $504,105,487 as of June 30, 2010.

The registrant had outstanding 33,394,155 shares of common stock as of March 16, 2011.

DOCUMENTS INCORPORATED BY REFERENCE


DOCUMENT		PART OF FORM 10-K
Selected Portions of Definitive Proxy Statement for the 2010 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, 2010 pursuant to Regulation 14A.		III

TABLE OF CONTENTS


Item		Description	Page
		Cautionary Note Regarding Forward-Looking Statements		2

		PART I

	1	Business		3
	1A	Risk Factors		7
	1B	Unresolved Staff Comments		21
	2	Properties		22
	3	Legal Proceedings		24

		PART II

	5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		28
	6	Selected Financial Data		30
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
	7A	Quantitative and Qualitative Disclosures About Market Risk		50
	8	Financial Statements and Supplementary Data		52
	9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		83
	9A	Controls and Procedures		83
	9B	Other Information		83

		PART III

	10	Directors, Executive Officers and Corporate Governance		84
	11	Executive Compensation		85
	12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		85
	13	Certain Relationships and Related Transactions, and Director Independence		85
	14	Principal Accountant Fees and Services		85

		PART IV

	15	Exhibits and Financial Statement Schedules		86

		Signatures		108
		Exhibit Index		109
EX-21
EX-23
EX-31.I.1
EX-31.I.2
EX-32.1
EX-32.2

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, but are not limited to, statements regarding: our primary tenant, Marketing, and the Marketing Leases included in “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — 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; the impact of Lukoil’s transfer of its ownership interest in Marketing on Marketing’s ability or willingness to perform its rental, environmental and other obligations under the Marketing Leases; the reasonableness of and assumptions regarding our accounting estimates, judgments, assumptions and beliefs; our beliefs regarding Marketing and its operations, including our belief that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities; our ability to predict if, or when, the Marketing Leases will be modified, what composition of properties, if any, may be removed from the Marketing Leases as part of any such modification; what the terms of any agreement for modification of the Marketing Leases may be or what our recourse will be if the Marketing Leases are modified or terminated; our belief that it is not probable that we will not collect all the rent due related to the properties we identified as being most likely to be removed from the Marketing Leases; our exposure and liability due to and our estimates and assumptions regarding our environmental liabilities and remediation costs; our estimates and assumptions regarding the Marketing Environmental Liabilities and other environmental remediation costs; our belief that our accruals for environmental and litigation matters were appropriate; compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters; the probable outcome of litigation or regulatory actions and its impact on us; our expected recoveries from underground storage tank funds; our expectations regarding the indemnification obligations of the Company and others; future acquisitions and financing opportunities and their impact on our financial performance; 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 expectation as to our continued compliance with the financial covenants in our Credit Agreement and our Term Loan Agreement; our ability to re-let properties at market rents or sell properties and our ability to maintain our federal tax status as a real estate investment trust (“REIT”).

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 this and our other filings with the 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 risks include, but are not limited to risks associated with: material dependence on Marketing as a tenant; the transfer of Lukoil’s ownership interest in Marketing; the possibility that Marketing may not perform its rental, environmental or other obligations under the Marketing Leases; the possibility that Marketing may file for bankruptcy protection and seek to reorganize or liquidate its business; the impact of Marketing’s announced restructuring of its business; the modification or termination of the Marketing Leases; our inability to provide access to financial information about Marketing; the uncertainty of our estimates, judgments and assumptions associated with our accounting policies and methods; costs of completing environmental remediation and of compliance with environmental legislation and regulations; our ability to acquire or develop new properties; potential future acquisitions; owning and leasing real estate generally; adverse developments in general business, economic or political conditions; performance of our tenants of their lease obligations, tenant non-renewal and our ability to re-let or sell vacant properties; our dependence on external sources of capital; generalized credit market dislocations and contraction of available credit; our business operations generating sufficient cash for distributions or debt service; changes in interest rates and our ability to manage or mitigate this risk effectively; expenses not covered by insurance; potential exposure related to pending lawsuits and claims; owning real estate primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; substantially all of our tenants depending on the same industry for their revenues; 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; our potential inability to pay dividends; changes to our dividend policy; changes in market conditions; adverse affect of inflation; the loss of a member or members of our management team; and terrorist attacks and other acts of violence and war.

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

Recent Developments

Transfer of Ownership Interest in Marketing

On February 28, 2011, OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies, transferred its ownership interest in Getty Petroleum Marketing Inc. (“Marketing”), our largest tenant, to Cambridge Petroleum Holding Inc. (“Cambridge”). We have commenced discussions with the new owners and management of Marketing; however, we cannot predict the impact the transfer of Marketing may have on our business. For information regarding factors that could adversely affect us relating to Marketing and the Marketing Leases (as defined below), see “Item 1A. Risk Factors”. For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.)

Acquisition

As part of our overall growth strategy, we regularly review acquisition and financing opportunities to acquire additional properties, and we expect to continue to pursue acquisitions that we believe will benefit our financial performance. In January 2011, we acquired fee or leasehold title to 59 Mobil branded gasoline stations and convenience store properties for $111.3 million in a sale/leaseback and loan transaction with CPD NY Energy Corp. (“CPD NY”), a subsidiary of Chestnut Petroleum Dist. Inc. This transaction was financed entirely with borrowings under our existing $175.0 million amended and restated senior unsecured credit agreement (the “Credit Agreement”).

Public Stock Offering

In the first quarter of 2011, we completed a public stock offering of 3,450,000 shares of our common stock. Substantially all of the aggregate $91,753,000 net proceeds from the offering were used to repay a portion of the outstanding balance under the Credit Agreement and the remainder was used for general corporate purposes.

The History of Our Company

Getty Realty Corp., a Maryland corporation, is the leading publicly-traded real estate investment trust (“REIT”) in the United States specializing in the ownership, leasing and financing of retail motor fuel and convenience store properties and petroleum distribution terminals. Our properties are located primarily in the Northeast and the Mid-Atlantic regions in the United States. We own or lease properties in New York, Massachusetts, New Jersey, Pennsylvania, Connecticut, Maryland, Virginia, New Hampshire, Maine, Rhode Island, Texas, North Carolina, Delaware, Hawaii, California, Florida, Ohio, Arkansas, Illinois, North Dakota and Vermont.

Our founders started the business in 1955 with the ownership of one gasoline service station in New York City and combined real estate ownership, leasing and management with service station operation and petroleum distribution. We held our initial public offering in 1971 under the name Power Test Corp. 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 leading 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. 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. Marketing was acquired by a U.S. subsidiary of Lukoil in December 2000. On February 28, 2011, Lukoil transferred its ownership interest in Marketing to Cambridge. In connection with Lukoil’s acquisition of Marketing, we renegotiated our long-term unitary triple-net lease (the “Master Lease”) with Marketing. As of December 31, 2010, we leased approximately 78% of our 1,052 owned and leased properties on a long-term triple-net lease basis to Marketing. Marketing 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 subtenants that either operate their gas stations, convenience stores, automotive repair services or other businesses at our properties or are petroleum distributors who may operate our properties directly and/or sublet our properties to the operators.

Company Operations

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 have 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 has represented an important driver behind the industry’s growth.

As of December 31, 2010, we owned 907 properties and leased 145 properties. Nine of the properties we own are petroleum distribution terminals. As of December 31, 2010, Marketing leased from us 808 properties under the Master Lease and 9 properties under supplemental leases (collectively with the Master Lease, the “Marketing Leases”). Our typical property is used as a retail motor fuel outlet and convenience store, and is located on between one-half and three quarters of an acre of land in a metropolitan area. The properties that we have been acquiring since 2007 are generally located on larger parcels of land. 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 or exit ramps. 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. These tenants are responsible for managing the operations conducted at these properties and for the payment of taxes, maintenance, repair, insurance and other operating expenses related to our properties. Our tenants’ financial results are largely dependent on the performance of the petroleum marketing industry, which is highly competitive and subject to volatility. In those instances where we determine that the best use for a property is no longer as a retail motor fuel outlet, we will seek an alternative tenant or buyer for the property. We lease or sublet approximately 20 of our properties for such uses as fast food restaurants, automobile sales and other retail purposes.

We are self-administered and self-managed by our management team, which has extensive experience in owning, leasing and managing retail motor fuel and convenience store properties. 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 sector of the real estate industry in which we operate 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 continue to compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment funds and private institutional investors. We generally have long-term leases with our tenants. Generally, we seek leases with our tenants that have an initial term of 15 years and include provisions for rental increases during the term of the lease. As of December 31, 2010, our average lease term, weighted by the number of underlying properties, was in excess of 14.9 years, with an average of 5.8 years remaining, excluding renewal options. Retail motor fuel properties are an integral component of the transportation infrastructure. Stability within the retail motor fuel and convenience store industry is driven by highly inelastic demand for petroleum products and day-to-day consumer goods and fast foods, which supports our tenants.

Revenues from rental properties included in continuing operations for the year ended December 31, 2010 were $88.3 million which is comprised of $86.9 million of lease payments received and $1.4 million of “Rental Revenue Adjustments” consisting of deferred rental income recognized due to the straight-line method of accounting for the leases with Marketing and certain of our other tenants, amortization of above-market and below-market rent for acquired in-place leases and income recognized for direct financing leases. In 2010, we received lease payments from Marketing aggregating approximately $60.3 million, or 69%, of the $86.9 million lease payments received included in continuing operations. Our financial results 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 on retail petroleum marketing margins from the sale of refined petroleum products and rental income from its subtenants. Marketing’s subtenants either operate their gas stations, convenience stores, automotive repair services or other businesses at our properties or are petroleum distributors who may operate our properties directly and/or sublet our properties to the operators. Since a substantial portion of our revenues are

derived from the Marketing Leases, any factor that adversely affects Marketing’s ability to meet its obligations under the Marketing Leases may have a material adverse effect on our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price. (For information regarding factors that could adversely affect us relating to our lessees, including our primary tenant, Marketing, see “Item 1A. Risk Factors”. For additional information regarding the portion of our financial results that are attributable to Marketing, see Note 11 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” For additional information regarding Marketing and the Marketing Leases (as defined below), see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”).

The Master Lease has an initial term expiring in December 2015, and provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. If Marketing elects to exercise any renewal option, Marketing is required to notify us of such election one year in advance of the commencement of the renewal term. The Master Lease is a unitary lease and, therefore, Marketing’s exercise of any renewal option can only be for all of the properties subject of the Master Lease. 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 believe that as of March 16, 2011, Marketing was not operating any of the nine terminals it leases from us and had removed, or has scheduled removal of the underground gasoline storage tanks and related equipment at approximately 140 of our retail properties, and we also believe that most of these properties are either vacant or provide negative or marginal contribution to Marketing’s results.

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.

Acquisition Strategy and Activity

As part of our overall growth strategy, we regularly review acquisition and financing opportunities to acquire additional properties, and we expect to continue to pursue acquisitions that we believe will benefit our financial performance. We review such opportunities on an ongoing basis and may have one or more potential acquisitions under consideration at any point in time, which may be at varying stages of the negotiation and due diligence review process. 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. Since May 2003, we have acquired approximately 270 properties in various states in transactions valued at approximately $319 million. These acquisitions have ranged in size from a portfolio comprised of 18 properties with an aggregate value of approximately $13 million up to a portfolio comprised of 59 properties with an aggregate value of approximately $111 million. In addition, from time to time we acquire individual properties when opportunities arise including through the exercise of purchase options for leased locations or in conjunction with tax-free exchanges.

In January 2011, we acquired fee or leasehold title to 59 Mobil-branded gasoline station and convenience store properties and also took a security interest in six other Mobil-branded gasoline stations and convenience store properties in a sale/leaseback and loan transaction with CPD NY. Our total investment in the transaction was $111.3 million, which was financed entirely with borrowings under our Credit Agreement. Of our aggregate investment, $92.9 million was made by way of sale/leaseback and $18.4 million was made by way of a secured, self-amortizing loan having a 10-year term (the “CPD Loan”). The properties were acquired or financed in a simultaneous transaction among ExxonMobil, CPD NY and us whereby CPD NY acquired a portfolio of 65 gasoline station and convenience stores from ExxonMobil and simultaneously completed a sale/leaseback of 59 of the acquired properties with us. The lease between us, as lessor, and CPD NY, as lessee, governing the properties is a unitary triple-net lease agreement (the “CPD Lease”), with an initial term of 15 years, and options for up to three successive renewal terms of ten years each. The CPD Lease requires CPD NY to pay a

fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due to third party landlords pursuant to the terms of third party leases. The Rent is scheduled to increase on the third anniversary of the date of the CPD Lease and on every third anniversary thereafter. As a triple-net lessee, CPD NY is required to pay all amounts pertaining to the properties subject to the CPD Lease, including environmental expenses, taxes, assessments, licenses and permit fees, charges for public utilities and all governmental charges. Net rent payments under the CPD Lease together with interest earned on the CPD Loan are expected to aggregate approximately $10.2 million in calendar year 2011.

In September 2009, we acquired the real estate assets of 36 Exxon-branded gasoline stations and convenience store properties for $49.0 million in a triple-net sale/leaseback transaction with White Oak Petroleum LLC (“White Oak”). This transaction was financed with $24.5 million of borrowings under our Credit Agreement and $24.5 million of indebtedness under a new $25.0 million term loan agreement with TD Bank, N.A. (the “Term Loan Agreement” or “Term Loan”).

In March 2007, we acquired 59 convenience store and retail motor fuel properties in ten states for approximately $79.3 million from various subsidiaries of FF-TSY Holding Company II, LLC (the successor to Trustreet Properties, Inc.) (“Trustreet”), a subsidiary of General Electric Capital Corporation. This transaction was financed with funds drawn under our Credit Agreement. We subsequently acquired five additional properties from Trustreet for approximately $5.2 million. The aggregate cost of these acquisitions, including transaction costs, was approximately $84.5 million.

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 either regulatory or contractual closure (“Closure”) in an efficient and economical manner. Generally, upon achieving Closure at each 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, 2010, we have regulatory approval for remediation action plans in place for 227 (94%) of the 241 properties for which we continue to retain remediation responsibility and the remaining 14 (6%) were in the assessment

phase. In addition, we have nominal post-closure compliance obligations at 29 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 them under the terms of our leases and various other agreements. 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 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 or stock price.

For additional information please refer to “Item 1A. Risk Factors” and to “General — 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 March 16, 2011, we had twenty 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 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.

Our financial results are materially dependent on the performance of Marketing. In the event that Marketing does not perform its rental, environmental or other obligations under the Marketing Leases, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price could be materially adversely affected. The financial performance of Marketing has deteriorated in recent years.

Our financial results are materially dependent upon the ability of Marketing to meet its rental, environmental and other obligations under the Marketing Leases. A substantial portion of our revenues (66% for the year ended December 31, 2010) are derived from the Marketing Leases. Accordingly, any factor that adversely affects Marketing’s ability to meet its rental, environmental and other obligations under the Marketing Leases may have a material adverse effect on our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price. For additional information regarding the portion of our financial results that are attributable to Marketing, see Note 11 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.”

As of the date of this Form 10-K, we have not yet received Marketing’s unaudited consolidated financial statements for the year ended December 2010. For the year ended December 31, 2009, Marketing reported a significant loss, continuing a trend of reporting large losses in recent years. Based on the interim reports we have received through 2010, Marketing’s significant losses have continued. As a result of Marketing’s significant losses, including the losses reported to us subsequent to Marketing’s reorganization in 2009 (discussed in more detail below) and the cumulative impact of those losses on Marketing’s financial position as of September 30, 2010, we continue to believe that Marketing likely does not have the ability to generate cash flows from its business operations sufficient to meet its rental, environmental and other obligations under the terms of the Marketing Leases unless Marketing shows significant improvement in its financial results, reduces the number of properties under the Marketing Leases, or receives additional capital or credit support. There can be no assurance that Marketing will be successful in any of these efforts. It is also possible that the deterioration of Marketing’s financial condition may continue or that Marketing may file bankruptcy and seek to reorganize or liquidate its business. It is possible that Marketing may aggressively pursue seeking a modification of the Marketing Leases, including, removal of properties from the Marketing Leases, or a reduction in the rental payments owed by Marketing under the Marketing Lease.

As of December 31, 2010, the net carrying value of the deferred rent receivable attributable to the Marketing Leases was $21.2 million and the aggregate Marketing Environmental Liabilities (as defined below), net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay but have not accrued range between $13 million and $20 million. The actual amount of the Marketing Environmental Liabilities may differ from our estimated range and we can provide no assurance as to the accuracy of our estimate. Although our 2010 financial statements were not affected by the transfer of Lukoil’s ownership interest in Marketing to Cambridge, our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that we may be required to increase or decrease the deferred rent reserve, record additional impairment charges related to the properties, or accrue for Marketing Environmental Liabilities as a result of changes in our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases that affect the amounts reported in our financial statements. It is possible also that as a result of material adjustments to the amounts recorded for certain of our assets and liabilities that we may not be in compliance with the financial covenants in our Credit Agreement or Term Loan Agreement.

If Marketing does not meet its rental, environmental and other obligations under the Marketing Leases, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.

Lukoil transferred its ownership interest in Marketing. We cannot predict what impact such transfer will have on Marketing’s ability or willingness to perform its rental, environmental and other obligations under the Master Lease and on our business.

On February 28, 2011, Lukoil, one of the largest integrated Russian oil companies, transferred its ownership interest in Marketing to Cambridge. We are not privy to the terms and conditions pertaining to this transaction between Lukoil and Cambridge. In connection with the transfer, we do not know what type or amount of consideration, if any, was paid or is payable by Lukoil or its subsidiaries to Cambridge, or by Cambridge to Lukoil or its subsidiaries. We do not know if there are any ongoing contractual or business relationships between Lukoil or its subsidiaries or affiliates and Cambridge or its subsidiaries or affiliates, including Marketing. We have commenced discussions with the new owners and management of Marketing, however, we cannot predict the impact the transfer of Marketing may have on our business.

While Lukoil had provided capital to Marketing in the past, there can be no assurance that Cambridge will provide financial support or will have the capacity to provide capital or financial support to Marketing in the future. It is possible that Marketing may file for bankruptcy protection and seek to reorganize or liquidate its business. It is also possible that Marketing may take other actions such as aggressively seeking to modify the terms of the Marketing Leases. We cannot predict what impact Lukoil’s transfer of its ownership interest to Cambridge will have on Marketing’s ability and willingness to perform its rental, environmental and other obligations under the Marketing Leases. If Marketing does not meet its rental, environmental and other obligations under the Marketing Leases, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected. It is possible that we may be required to increase or decrease the deferred rent receivable reserve, record additional impairment charges related to our properties, or accrue for environmental liabilities as a result of the potential or actual filing for bankruptcy protection by Marketing or any potential or actual modification or termination of the Marketing Leases. It is possible that as a result of material adjustments to the amounts recorded for certain of our assets and liabilities that we may not be in compliance with the financial covenants in our Credit Agreement or Term Loan Agreement.

We cannot predict what impact Marketing’s restructuring, dispute with Bionol and other changes in its business model will have on us.

In November 2009, Marketing announced a restructuring of its business. Marketing disclosed that the restructuring included the sale of all assets unrelated to the properties it leases from us, the elimination of parent-guaranteed debt, and steps to reduce operating costs. Although Marketing’s press release stated that its restructuring included the sale of all assets unrelated to the properties it leases from us, we have concluded, based on the press releases related to the Marketing/Bionol contract dispute described below, that Marketing’s restructuring did not include the sale of all assets unrelated to the properties it leases from us. Marketing sold certain assets unrelated to the properties it leases from us to its affiliates, LUKOIL Pan Americas LLC and LUKOIL North America LLC. We believe that Marketing retained other assets, liabilities and business matters unrelated to the properties it leases from us. As part of the restructuring, Marketing paid off debt which had been guaranteed or held by Lukoil with proceeds from the sale of assets to Lukoil affiliates.

In June 2010, Marketing and Bionol Clearfield LLC (“Bionol”) each issued press releases regarding a significant contractual dispute between them. Bionol owns and operates an ethanol plant in Pennsylvania. Bionol and Marketing entered into a five-year contract under which Marketing agreed to purchase substantially all of the ethanol production from the Bionol plant, at formula-based prices. Bionol stated that Marketing breached the contract by not paying the agreed-upon price for the ethanol. According to Bionol’s press release, the cumulative gross purchase commitment under the contract could be on the order of one billion dollars. Marketing stated in its press release that it continues to pay Bionol millions of dollars each month for the ethanol, withholding only the amount of the purchase price in dispute and that it has filed for arbitration to resolve the dispute. Among other items related to this matter, we do not know: (i) the accuracy of the statements made by Marketing and Bionol when made or if such statements reflect the current status of the dispute; (ii) the cumulative or projected amount of the purchase price in dispute and how Marketing has accounted for the ethanol contract in its financial statements; or (iii) how the formula-based price compares to the market price of ethanol. We cannot predict how the ultimate resolution of this matter may impact Marketing’s long-term financial performance and its ability to meet its rental, environmental and other obligations to us as they become due under the terms of the Marketing Leases.

We cannot predict what impact Marketing’s restructuring, dispute with Bionol or other changes in its business model will have on us. If Marketing does not meet its rental, environmental and other obligations under the Marketing Leases, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.

If it becomes probable that Marketing will not pay its environmental obligations, or if we change our assumptions for environmental liabilities related to the Marketing Leases we would be in default of our Credit Agreement or Term Loan Agreement, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price could be materially adversely affected.

at six of the terminals we lease to Marketing. If Marketing fails to pay the Marketing Environmental Liabilities, we may ultimately be responsible to pay for Marketing Environmental Liabilities as the property owner. We do not maintain pollution legal liability insurance to protect us from potential future claims for Marketing Environmental Liabilities. We will be required to accrue for Marketing Environmental Liabilities if we determine that it is probable that Marketing will not meet its environmental obligations and we can reasonably estimate the amount of the Marketing Environmental Liabilities for which we will be responsible to pay, or if our assumptions regarding the ultimate allocation methods or share of responsibility that we used to allocate environmental liabilities changes. However, we continue to believe that it is not probable that Marketing will not pay for substantially all of the Marketing Environmental Liabilities. Accordingly, we have not accrued for the Marketing Environmental Liabilities. Nonetheless, we have determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by us) would be material to us if we were required to accrue for all of the Marketing Environmental Liabilities since as a result of such accrual, we would not be in compliance with the existing financial covenants in our Credit Agreement and our Term Loan Agreement. Such non-compliance would result in an event of default under the Credit Agreement and the Term Loan Agreement which, if not waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of all of our indebtedness under such agreements. It is possible that we may change our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, we may be required to accrue for Marketing Environmental Liabilities. If we determine that it is probable that Marketing will not meet the Marketing Environmental Liabilities and we accrue for such liabilities, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.

We estimate that, the aggregate Marketing Environmental Liabilities, net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay range between $13 million and $20 million, of which between $6 million and $9 million relate to the properties that we identified as the basis for our estimate of the deferred rent receivable reserve. Since we generally do not have access to certain site specific information available to Marketing, which is the party responsible for paying and managing its environmental remediation expenses at our properties, our estimates were developed in large part by review of the limited publically available information gathered through electronic databases and freedom of information requests and assumptions we made based on that data and on our own experiences with environmental remediation matters. The actual amounts of the ranges estimated above may differ materially from our estimates and we can provide no assurance as to the accuracy of these estimates.

If the Marketing Leases are modified significantly or terminated, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price could be materially adversely affected.

From time to time when it was owned by Lukoil, we held discussions with representatives of Marketing regarding potential modifications to the Marketing Leases. These discussions did not result in a common understanding with Marketing that would form a basis for modification of the Marketing Leases. We have recently initiated discussions with the new owners and management of Marketing, subsequent to Lukoil’s transfer of its ownership interest in Marketing to Cambridge. It is possible that the new management of Marketing may aggressively seek to modify the terms of the Marketing Leases or seek to remove a substantial number of properties from the Marketing Leases. We intend to continue to pursue the removal of individual properties from the Marketing Leases, and we remain open to removal of groups of properties; however, there is no agreement in place providing for removal of properties from the Marketing Leases. If Marketing ultimately determines that its business strategy is to exit all or a portion of the properties it leases from us, 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; what composition of properties, if any, may be removed from the Marketing Leases as part of any such modification; or what the terms of any agreement for modification of the Marketing Leases may be. We also cannot accurately predict what actions Marketing may take, and what our recourse may be, whether the Marketing Leases are modified or not. We may be required to increase or decrease the deferred rent receivable reserve, record additional impairment charges related to our properties, or accrue for environmental liabilities as a result of the potential or actual modification or termination of the Marketing Leases.

March 16, 2011, Marketing was not operating any of the nine terminals it leases from us and had removed, or has scheduled removal of, the underground gasoline storage tanks and related equipment at approximately 140 of our retail properties and we also believe that most of these properties are either vacant or provide negative contribution to Marketing’s results. In those instances where we determine that the best use for a property is no longer as a retail motor fuel outlet, at the appropriate time we will seek an alternative tenant or buyer for such property. With respect to properties that are vacant or have had underground gasoline storage tanks and related equipment removed, it may be more difficult or costly to re-let or sell such properties as gas stations because of capital costs or possible zoning or permitting rights that are required and that may have lapsed during the period since gasoline was last sold at the property.

We intend either to re-let or sell any properties that are removed from the Marketing Leases, whether such removal arises consensually by negotiation or as a result of default by Marketing, and reinvest any realized sales proceeds in new properties. We intend to offer properties removed from the Marketing Leases to replacement tenants or buyers individually, or in groups of properties, or by seeking a single tenant for the entire portfolio of properties subject to the Marketing Leases. 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. If the Marketing Leases are significantly modified or terminated, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.

Although we periodically receive and review the unaudited financial statements and other financial information from Marketing, this information is not publicly available to investors. You will not have access to financial information about Marketing provided to us by Marketing to allow you to independently assess Marketing’s financial condition or its ability to satisfy its rental, environmental and other obligations under the Marketing Leases.

We periodically receive and review Marketing’s unaudited financial statements and other financial information that we receive from Marketing pursuant to the terms of the Marketing Leases. However, the financial statements and other financial information are not publicly available to investors and Marketing contends that the terms of the Marketing Leases prohibit us from including the financial statements and other financial information in our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q or in our Annual Reports to Shareholders. The Marketing Leases provide that Marketing’s financial information which is not publicly available shall be delivered to us within one hundred fifty days after the end of each fiscal year. As of the date of this Form 10-K, we have not yet received Marketing’s unaudited consolidated financial statements for the year ended December 31, 2010. The financial statements and other financial information that we receive from Marketing is unaudited and neither we, nor our auditors, have been involved with its preparation and as a result have no assurance as to its correctness or completeness. You will not have access to financial statements and other financial information about Marketing provided to us by Marketing to allow you to independently assess Marketing’s financial condition or its ability to satisfy its rental, environmental and other obligations under the Marketing Leases, which may put your investment in us at greater risk of loss.

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. Estimates, judgments and assumptions underlying our consolidated financial statements include, but are not limited to, deferred rent receivable, income under direct financing leases, recoveries from state UST funds, environmental remediation costs, real estate including impairment charges related to the reduction in market value of our 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.

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 and leases with our other tenants. As of December 31, 2010, the

net carrying value of the deferred rent receivable attributable to the Marketing Leases was $21.2 million and the aggregate Marketing Environmental Liabilities, net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay but not have accrued range between $13 million and $20 million. The actual amount of the Marketing Environmental Liabilities may differ from our estimated range and we can provide no assurance as to the accuracy of our estimate. Although our 2010 financial statements were not affected by the transfer of Lukoil’s ownership interest in Marketing to Cambridge, our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plans, strategies, operating results and its capital resources. It is possible that we may be required to increase or decrease our deferred rent receivable reserve, record additional impairment charges related to our properties, or accrue for Marketing Environmental Liabilities as a result of changes in our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases that affect the amounts reported in our financial statements. It is possible that as a result of material adjustments to the amounts recorded for certain of our assets and liabilities that we may not be in compliance with the financial covenants in our Credit Agreement or Term Loan Agreement.

If our judgments, assumptions and allocations prove to be incorrect, or if circumstances change, our business, financial condition, revenues, operating expense, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected. (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”.)

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. These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is possible that the operating performance of these properties may decline after we acquire them, they may not perform as expected and, if financed using debt or new equity issuances, may result in shareholder dilution. Our acquisitions of new properties will also expose us to the liabilities of those properties, some of which we may not be aware of at the time of acquisition. We face competition in pursuing these acquisitions and we may not succeed in leasing newly developed or acquired properties at rents sufficient to cover their costs of acquisition or development and operations. Newly acquired properties may require significant management attention that would otherwise be devoted to our ongoing business. We may not succeed in consummating desired acquisitions or in completing developments on time or within our budget. Consequences arising from or in connection with any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

While we seek to grow through accretive acquisitions, acquisitions of properties may be dilutive and may not produce the returns that we expect and we may not be able to successfully integrate acquired properties into our portfolio or manage our growth effectively, which could have a material adverse effect on our results of operations, financial condition and growth prospects.

One or more acquisition of properties may initially be dilutive to our net income, and acquired properties may not perform as we expect or produce the returns that we anticipate (including, without limitation, as a result of tenant bankruptcies, tenant concessions, our inability to collect rents and higher than anticipated operating expenses). Further, we may not successfully integrate one or more of these property acquisitions into our existing portfolio without operating disruptions or unanticipated costs. Additionally, as we increase the size of our portfolio, we may not be able to adapt our management, administrative, accounting and operational systems, or hire and retain sufficient operational staff to integrate acquired properties into our portfolio or manage any future acquisitions of properties without operating disruptions or unanticipated costs. Moreover, the continued growth of our portfolio will require increased investment in management personnel, professional fees, other personnel, financial and management systems and controls and facilities, which will result in additional operating expenses. Under the circumstances described above, our results of operations, financial condition and growth prospects may be materially and adversely affected.

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 selling or 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 due to natural disasters or other causes,

•		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 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 prior years. Among other effects, adverse economic conditions could depress real estate values, impact our ability to re-let or sell our properties and have an 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 or stock price.

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

We derive substantially all of our revenues from leasing, primarily on a triple-net basis, 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, such as disruption in the supply of petroleum or a decrease in the demand for conventional motor fuels due to conservation, technological advancements in petroleum-fueled motor vehicles, or an increase in the use of alternative fuel vehicles, or “green technology” could also have a material adverse effect on our business, financial condition and results of operations liquidity, ability to pay dividends or stock price. The success of participants in the petroleum marketing industry depends upon the sale of refined petroleum products at margins in excess of fixed and variable expenses. The petroleum marketing industry is highly competitive and volatile. Petroleum products are commodities, the prices of which depend on numerous factors that affect supply and demand. The prices paid by our tenants and other petroleum marketers for products are affected by global, national and regional factors. A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of our tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline was to decline significantly. We cannot be certain how these factors will affect petroleum product prices or supply in the future, or how in particular they will affect our 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, default or bankruptcy 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 governing renewal or re-letting of 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 we are able to charge. In addition to the risk of disruption in rent receipts, we are subject to the risk of incurring real estate taxes, maintenance, environmental and other expenses at vacant properties.

The financial distress, default or bankruptcy of our tenants may also lead to protracted and expensive processes for retaking control of our properties than would otherwise be the case, including, eviction or other legal proceedings related to or resulting from the tenant’s default. These risks are greater with respect to certain of our tenants who lease multiple properties from us, such as Marketing. It is possible that Marketing may file for bankruptcy protection and seek to reorganize or liquidate its business. (For additional information regarding the portion of our financial results that are attributable to Marketing, see Note 11 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” 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 — Marketing and the Marketing Leases”.) If a tenant files for bankruptcy protection it is possible that we would recover substantially less than the full value of our claims against the tenant.

If our tenants do not perform their lease obligations; or we are unable to renew existing leases and promptly recapture and re-let or sell vacant locations; or if lease terms upon renewal or re-letting are 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, default or bankruptcy; then 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 incur significant operating costs as a result of environmental laws and regulations which costs could significantly rise and reduce our profitability.

We are subject to numerous existing 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 Marketing and the Marketing Leases see “Item 3. Legal Proceedings”, “Environmental Matters” and “General — 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 them under the terms of our leases and various other agreements. 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.

As of December 31, 2010, we had accrued $10.9 million as management’s best estimate of the net fair value of reasonably estimable environmental remediation costs which was comprised of $14.9 million of estimated environmental obligations and liabilities offset by $4.0 million of estimated recoveries from state UST remediation funds, net of allowance. 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. Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and reasonably estimable. 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.

We have not accrued for approximately $1.0 million in costs 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 on that basis we tendered the matter to Marketing for defense and indemnification, but Marketing denied its liability for claims and its responsibility to defend and indemnify us. We were sued by the current property owner and filed third party claims against Marketing for indemnification. The property owner’s claim for reimbursement of costs incurred and our claim for indemnification from Marketing were actively litigated leading to a trial held before a judge. The trial court issued its decision in August 2009 under which the company and Marketing were held jointly and severally responsible to the current property owner for the costs incurred by the owner to remove USTs and remediate contamination at the site, but, as between the company and Marketing, Marketing was held accountable for such costs under the indemnification provisions of the Master Lease. Marketing has appealed the decision; however, we believe the probability that the trial court decision will be reversed or remanded and that Marketing will not ultimately be held responsible for the clean-up costs incurred by the current property owner is remote.

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 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 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, such as those arising from leaking USTs and releases of motor fuel into the environment, and toxic tort claims. The ultimate resolution of certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. Our ultimate liabilities resulting from 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 or stock price. For additional information with respect to pending environmental lawsuits and claims and environmental remediation costs and estimates see “Item 3. Legal Proceedings” and “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 3 and 5 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements” each of which is incorporated by reference herein.

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 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 or stock price.

We are in a competitive business.

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

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

We regularly interact with counterparties in various industries. The types of counterparties most common to our transactions and agreements include, but are not limited to, landlords, tenants, vendors and lenders. 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 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 do not maintain pollution legal liability insurance to protect the Company from potential future claims for environmental contamination, including the environmental liabilities that are the responsibility of our tenants. 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 coverages are or will be sufficient to cover actual losses incurred. The destruction of, or significant damage to, or significant liabilities arising out of conditions at, our properties due to an uninsured 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 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 would not be allowed a deduction for distributions to shareholders in computing our taxable income and will again be subject to federal income tax at regular corporate rates, we could be subject to the federal alternative minimum tax, we could 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 shareholders 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, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of all of our indebtedness under our Credit Agreement and Term Loan Agreement which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

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

We are dependent on external sources of capital to maintain our status as a REIT and must distribute to our 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. Other sources of capital may significantly increase our interest rate risk or adversely impact how we manage our interest rate risk. We cannot accurately predict how periods of illiquidity in the credit markets will impact our access to or cost of capital. In addition, 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, covenants and limitations imposed under our Credit Agreement and our Term Loan Agreement and the market price of our common stock.

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. We may not be able to refinance our outstanding debt under the Credit Agreement when due in March 2012 or under the Term Loan when due in September 2012, which could have a material adverse effect on us.

Our ability to meet the financial and other covenants relating to our Credit Agreement and our Term Loan 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, we may not be in compliance with the financial covenants in our Credit Agreement and our Term Loan 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 described in more detail above) would be material to us if we were required to accrue for all of the Marketing Environmental Liabilities since as a result of such accrual, we would not be in compliance with the existing financial covenants in our Credit Agreement and our Term Loan 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 — 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 or our Term Loan Agreement, there can be no assurance that our lenders would waive such non-compliance. An event of default if not cured or waived would increase by 2.0% the interest rate we pay under our Credit Agreement. A default under our Credit Agreement or our Term Loan Agreement, if not cured or waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of all of our indebtedness under such agreements. We may be unable to fulfill our commitments to complete pending acquisitions and incur monetary losses or damage our reputation if we cannot draw sufficient funds against the Credit Agreement. This could have a material adverse affect on our business, financial condition, results of operations, liquidity, ability to pay dividends 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 continued throughout 2010 and into the beginning of 2011. 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 at elevated levels. These factors are precipitating generalized credit market dislocations and a significant contraction in available credit. As a result, it is more 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 could have negative effects on our business such as (i) we could have difficulty in acquiring or developing properties, which would adversely affect our business strategy, (ii) our liquidity could be adversely affected, (iii) we may be unable to repay or refinance our indebtedness or (iv) we may need to make higher interest and principal payments or sell some of our assets on unfavorable terms to fund our liquidity needs. These negative effects may cause other material adverse effects on our business, financial condition, results of operations, ability to pay dividends 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.

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

We are exposed to interest rate risk, primarily as a result of our $175.0 million Credit Agreement and our $25.0 million Term Loan Agreement. Borrowings under our Credit Agreement and our Term Loan 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 our Term Loan Agreement. 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 which expires in June 2011 with respect to a portion of our variable rate debt outstanding under our Credit Agreement and our Term Loan agreement. We are, and will be, exposed to interest rate risk to the extent that our aggregate borrowings floating at market rates exceed the $45.0 million notional amount of the Swap Agreement. We will be fully exposed to interest rate risk on our aggregate borrowings floating at market rates upon expiration of the Swap Agreement in June 2011 unless we enter into another swap agreement. 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. 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. (For additional information with respect to interest rate risk, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risks”.)

We may be unable to pay dividends.

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 at the level historically paid, if at all. (For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.) In particular, our Credit Agreement and our Term Loan Agreement prohibit 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.

We may change the dividend policy of our common stock in the future.

The decision to declare and pay dividends on our common stock in the future, as well as the timing, amount and composition of any such future dividends, will be at the sole discretion of our Board of Directors and will depend on such factors as the Board of Directors deems relevant and the dividend paid may vary from expected amounts. No assurance can be given that our financial performance in the future will permit our payment of any dividends at the level historically paid, if at all. (For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.) Any change in our dividend policy could adversely affect our business and the market price of our common stock. A recent Internal Revenue Service (“IRS”) revenue procedure allows us to satisfy the REIT income distribution requirement by distributing up to 90% of our dividends on our common stock in shares of our common stock in lieu of paying dividends entirely in cash. Although we reserve the right to utilize this procedure in the future, we currently have no intent to do so. In the event that we pay a portion of a dividend in shares of our common stock, taxable U.S. shareholders would be required to pay tax on the entire amount of the dividend, including the portion paid in shares of common stock, in which case such shareholders might have to pay the tax using cash from other sources. If a U.S. shareholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to non-U.S. shareholders, we may be required to withhold U.S. tax with respect to such dividend, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our shareholders sell shares of our common stock in order to pay taxes owed on dividends, such sales would put downward pressure on the market price of our common stock.

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

As with other publicly traded securities, the market price of our publicly traded common stock depends on various market conditions, which may change from time-to-time. Among the market conditions that may affect the market price of our publicly traded common stock are the following:

	•		our financial condition and performance and that of our significant tenants, including Marketing (for additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.);

	•		the market’s perception of our growth potential and potential future earnings;

	•		the reputation of REITs generally and the reputation of REITs with portfolios similar to us;

	•		the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies);

	•		an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for publicly traded securities;

	•		the extent of institutional investor interest in us; and

	•		general economic and financial market conditions.

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

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT for federal income tax purposes. Unless exempted by our board of directors, no person may actually or constructively own more than 5% (by value or number of shares, whichever is more restrictive) of the outstanding shares of our common stock or the outstanding shares of any class or series of our preferred stock, which may inhibit large investors from desiring to purchase our stock. This restriction may have the effect of delaying, deferring, or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price for our common stock or otherwise be in the best interest of our stockholders.

Maryland law may discourage a third party from acquiring us.

We are subject to the provisions of Maryland Business Combination Act (the “Business Combination Act”) which prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for 5 (five) years after the most recent date on which the interested stockholder becomes an interested

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

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

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

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 or stock price. Except for the employment agreement with our President and Chief Executive Officer, David Driscoll, we do not have employment agreements with any of our executives.

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

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

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

Terrorist attacks or other acts of violence or war could affect our business or the businesses of our tenants 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 or stock price.


Item 1B.		Unresolved Staff Comments

NONE

Item 2. Properties

Nearly all of our properties are leased or sublet to petroleum 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 managing the operations conducted at these properties and for the payment of taxes, maintenance, repair, insurance and other operating expenses relating to our properties. In those instances where we determine that the best use for a property is no longer as a retail motor fuel outlet, we will seek an alternative tenant or buyer for the property. We lease or sublet approximately 20 of our properties under similar lease terms primarily for uses such as fast food restaurants, automobile sales and other retail purposes.

The following table summarizes the geographic distribution of our properties at December 31, 2010. 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 5,800 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		OTHER		MARKETING		OTHER		PROPERTIES		OF TOTAL
	AS TENANT (1)		TENANTS		AS TENANT		TENANTS		BY STATE		PROPERTIES
New York (2)		233		33		55		6		327		31.0	%
Massachusetts		127		1		17		—		145		13.8
New Jersey		106		6		18		6		136		12.9
Pennsylvania		103		7		1		4		115		10.9
Connecticut		60		27		12		11		110		10.4
Maryland		4		40		—		2		46		4.4
New Hampshire		25		3		3		—		31		2.9
Virginia		3		24		3		1		31		2.9
Maine		18		1		2		—		21		2.0
Rhode Island		15		1		2		—		18		1.7
Texas		—		17		—		—		17		1.6
Hawaii		—		10		—		—		10		1.0
North Carolina		—		10		—		—		10		1.0
California		—		8		—		1		9		0.9
Delaware		8		—		1		—		9		0.9
Florida		—		6		—		—		6		0.6
Ohio		—		4		—		—		4		0.4
Arkansas		—		3		—		—		3		0.3
Illinois		—		2		—		—		2		0.2
North Dakota		—		1		—		—		1		0.1
Vermont		1		—		—		—		1		0.1

Total		703		204		114		31		1,052		100.0	%


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

(2)		Excludes 45 fee owned and 14 leased properties acquired in January 2011 which are leased to a single tenant.

The properties that we lease from third-parties have a remaining lease term, including renewal option terms, averaging over 11 years. The following table sets forth information regarding lease expirations, including renewal and extension option terms, for properties that we lease from third parties:


			PERCENT
	NUMBER OF		OF TOTAL			PERCENT
	LEASES		LEASED			OF TOTAL
CALENDAR YEAR	EXPIRING		PROPERTIES			PROPERTIES

2011		9		6.21	%		0.86	%
2012		13		8.96			1.24
2013		4		2.76			0.38
2014		3		2.07			0.28
2015		7		4.83			0.66

Subtotal		36		24.83			3.42
Thereafter		109		75.17			10.36

Total		145		100.00	%		13.78	%

We have rights-of-first refusal to purchase or lease 114 of the properties we lease from third-parties. Approximately 65% of the properties we lease from third-parties are subject to automatic renewal or extension options.

For the year ended December 31, 2010 we received $86.9 million of lease payments with respect to 1,062 average rental properties held during the year or an average annual rent received of approximately $82,000 per rental property. For the year ended December 31, 2009 we received $82.8 million of lease payments with respect to 1,061 average rental properties held during the year or an average annual rent received of approximately $78,000 per rental property.

Rental unit expirations and the annualized contracted rent as of December 31, 2010 are as follows (in thousands, except for the number of rental units data):


			ANNUALIZED CONTRACTUAL RENT (a)
	NUMBER OF								PERCENTAGE
	RENTAL								OF TOTAL
	UNITS				OTHER				ANNUALIZED
CALENDAR YEAR	EXPIRING (b)		MARKETING		TENANTS		TOTAL		RENT

2011		23	$	929	$	289	$	1,218		1.42	%
2012		35		1,723		575		2,298		2.67
2013		16		640		904		1,544		1.80
2014		22		729		1,440		2,169		2.52
2015		776		56,174		281		56,455		65.65
2016		4		—		332		332		0.39
2017		4		—		452		452		0.53
2018		9		—		1,156		1,156		1.34
2019		56		—		5,287		5,287		6.15
2020		32		—		3,810		3,810		4.43
Thereafter		81		—		11,269		11,269		13.10

Total		1,058	$	60,195	$	25,795	$	85,990		100.00	%


(a)		Represents the monthly contractual rent due from tenants under existing leases as of December 31, 2010 multiplied by 12. This amount excludes real estate tax reimbursements which are billed to the tenant when paid.

(b)		Rental units include properties subdivided into multiple premises with separate tenants. Rental units also include individual properties comprising a single “premises” as such term is defined under a unitary master lease related to such properties. With respect to a unitary master lease that includes properties that we lease from third parties, the expiration dates for rental units refers to the dates that the leases with the third parties expire and upon which date our tenant must vacate those properties, not the expiration date of the unitary master lease itself.

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 808 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 provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. If Marketing elects to exercise any renewal option, Marketing is required to notify us of such one year in advance of the commencement of the renewal term. The Master Lease is a unitary lease and, therefore, Marketing’s exercise of any renewal option can only be exercised for all of the properties subject of the Master Lease. 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 March 16, 2011, Marketing was not operating any of the nine terminals it leases from us and had removed, or has scheduled removal of the gasoline tanks and related equipment at approximately 140 of our retail properties and we also believe that most of these properties are either vacant or provide negative or marginal contribution to Marketing’s results. (For additional information regarding the portion of our financial results that are attributable to Marketing, see Note 11 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.” For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — 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 rental, environmental and other 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, 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, 2010 and 2009 in connection with this indemnification agreement. Under the Master Lease, we continue to have additional ongoing environmental remediation obligations at 186 scheduled sites and our agreements with Marketing provide that Marketing otherwise remains liable for all environmental matters. (For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.)

Item 3. Legal Proceedings

The Company is engaged in a number of legal proceedings, many of which we consider to be routine and incidental to our business. The following is a description of material legal proceedings, including those involving private parties and governmental authorities under federal, state and local laws regulating the discharge of materials into the environment. We are vigorously defending all of the legal proceedings involving the Company, including each of the legal proceedings matters listed below.

In September 2004, the State of New York commenced an action against us United Gas Corp., and Costa Gas Station, Inc., The Ingraham Bedell Corporation, Exxon Mobil Corporation, Shell Oil Company, Shell Oil Products Company, Motiva Enterprises, LLC, and related parties, in New York Supreme Court in Albany County seeking recovery for reimbursement of investigation and remediation costs claimed to have been incurred by the New York Environmental Protection and Spill Compensation Fund relating to contamination it alleges emanated from various retail motor fuel properties located in the

same vicinity in Uniondale, N.Y., including a site formerly owned by the Company and at which a petroleum release and cleanup occurred. The complaint also seeks future costs for remediation, as well as interest and penalties. We have served an answer to the complaint denying responsibility. Discovery in this case is ongoing.

In October 2007, the Company received a demand from the State of New York to pay 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. We responded to the State’s demand and denied responsibility for reimbursement of such costs. In August 2010, the State commenced a lawsuit in New York Supreme Court, Albany County against us, Bryant Taconic Corp. and related parties seeking damages under the New York Navigation Law. The Company has interposed an answer asserting numerous affirmative defenses. Discovery in this case is ongoing.

In September 2008, we received a directive and notice of violation from the NJDEP calling for a remedial investigation and cleanup, to be conducted by us and Gary and Barbara Galliker, individually and trading Millstone Auto Service, Auto Tech, and other named parties, of petroleum-related contamination found at a retail motor fuel property located in Millstone Township, New Jersey. We did not own or lease this property, but did supply gas to the operator of this property in 1985 and 1986. We responded to the NJDEP, denying liability, and we also 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 (the “Spin-Off Agreement”). Marketing has denied responsibility for this matter. In November 2009, the NJDEP issued an Administrative Order and Notice of Civil Administrative Penalty Assessment (the “Order and Assessment”) to the Company, Marketing and Gary and Barbara Galliker, individually and trading as Millstone Auto Service. Both Marketing and the Company have filed requests for a hearing to contest the allegations of the Order and Assessment. The hearing request was granted in February 2010, but the date of the hearing has not yet been scheduled. (For additional information regarding Marketing and the Marketing Leases (as defined below), see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.)

In November 2009, an action was commenced by the State of New York in the Supreme Court, Albany County, seeking the recovery of costs incurred in remediating alleged petroleum contamination down gradient of a gasoline station formerly owned by us, and gasoline stations that were allegedly owned or operated by other named defendants, including M&A Realty, Inc., Gas Land Petroleum, Inc., and Mid-Valley Oil Company. The Company answered the complaint, denying liability and asserting affirmative defenses and cross claims against co-defendants. The Company has also tendered the matter to M&A Realty Inc. for defense and indemnification as relates to discharges of petroleum that were reported on or after July of 1994 at the site which is the subject of allegations against the Company. This site was leased by the Company to M & A Realty Inc. in 1994 and sold to M & A Realty Inc. in 2002. M&A Realty Inc. demanded defense and indemnity from the Company for contamination at this site as of 1994. The State of New York has also commenced a separate but related action in the Supreme Court, Albany County, against the Company and M&A Realty, Inc. seeking recovery of costs for clean-up of petroleum contamination at the site of the gas station which is the subject of allegations against the Company and M&A Realty, Inc. in the first action. The Company answered the complaint, denying liability and asserting affirmative defenses and cross claims against M&A Realty, Inc. The Company also tendered the matter to M&A Realty, Inc. for indemnity on the same basis as in the first action, and M&A Realty, Inc. likewise has demanded defense and indemnity from the Company on the same basis as it put forth in the first action. Discovery in these cases is ongoing.

MTBE Litigation

During 2010, the Company was defending 53 lawsuits brought on behalf of private and public water providers and governmental agencies located in Connecticut, Florida, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia, and West Virginia. A majority of these cases were among the more than one hundred cases that were transferred from various state and federal courts throughout the country and consolidated in the United States District Court for the Southern District of New York for coordinated Multi-District Litigation (“MDL”) proceedings. The balance of these cases against us were pending in the Supreme Court of New York, Nassau County. All of the cases against the Company alleged (and, as described below with respect to one remaining case, continue to allege) various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) as the basis for claims seeking compensatory and punitive damages. The cases named us as a defendant along with approximately fifty petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE, including Irving Oil Corporation, Mobil Oil Corporation, Sunoco, Inc., Texaco, Inc., Tosco Corporation, Unocal Corporation, Valero Energy Corporation, Marathon Oil Company, Shell Oil Company, Giant Yorktown, Inc., BP Amoco Chemical Company, Inc., Atlantic Richfield Company, Coastal Oil New

England, Inc., Chevron Texaco Corporation, Amerada Hess Corp., Chevron U.S.A., Inc., CITGO Petroleum Corporation, ConocoPhillips Company, Exxon Mobil Corporation, Getty Petroleum Marketing, Inc., and Gulf Oil Limited Partnership. During the quarter ended March 31, 2010, the Company reached agreements to settle two plaintiff classes covering 52 of the 53 pending cases. A settlement payment of $1,250,000 was made during the third quarter of 2010 covering 27 cases and a settlement payment of $475,000 was made during the first quarter of 2011 covering 25 cases. Presently the Company remains a defendant in one MTBE case involving multiple locations throughout the State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP. This case is still in discovery stages.

We have tendered all of our MTBE cases for defense and indemnification to Marketing and its insurers under the Spin-Off Agreement and the Master Lease. Marketing has rejected this tender. We have provided a litigation reserve as to the remaining MDL case pending against us, however, there remains uncertainty as to the accuracy of the allegations in this MTBE case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from Marketing, and the aggregate possible amount of damages for which we might be held liable.

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

The Directive provided, among other things, that the recipients thereof must conduct an assessment of the natural resources that have been injured by the discharges into the Lower Passaic River and must 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. 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 May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties comprising a Cooperating Parties Group (“CPG”) (many of whom also named in the Directive) who have collectively agreed to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. The Company is a party to the AOC and is a member of the CPG. 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, and is scheduled to be completed in or about 2014. 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 through various state agencies brought suit in the Superior Court of New Jersey, Law Division, against certain parties to the Directive, Occidental Chemical Corporation, Tierra Solutions, Inc., Maxus Energy Corporation and related entities which the State alleges are responsible for various categories of past and future damages resulting from discharges of hazardous substances to the Passaic River by a manufacturing facility

located on Lister Avenue in Newark, NJ. In February 2009, certain of these defendants filed third-party complaints against approximately 300 additional parties, including the Company and other members of the CPG, seeking contribution for such parties’ proportionate share of response costs, cleanup and removal costs, and other damages, based on their relative contribution to pollution of the Passaic River and adjacent bodies of water. The Company has answered the complaint, denying responsibility for any discharges of hazardous substances released into the Passaic River. The litigation is still in a pre-trial stage with a significant amount of discovery remaining, particularly as to third-parties.

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. The Company and Chevron/Texaco are engaged in discussions regarding the Company’s demands for indemnification, and, to facilitate said discussions, in October 2009 entered into a Tolling/Standstill Agreement which tolls all claims by and among the Company and Chevron/Texaco that relate to the various Lower Passaic River matters from May 8, 2007, until either party terminates such Tolling/Standstill Agreement.

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.

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 23,000 beneficial holders of our common stock as of March 16, 2011, of which approximately 1,300 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, 2010 and 2009 was as follows:


					CASH
	PRICE RANGE				DIVIDENDS
QUARTER ENDED	HIGH		LOW		PER SHARE
March 31, 2009	$	21.87	$	13.25	$	.4700
June 30, 2009		20.99		16.36		.4700
September 30, 2009		26.32		18.61		.4750
December 31, 2009		25.63		21.50		.4750
March 31, 2010		24.68		20.76		.4750
June 30, 2010		25.59		15.52		.4750
September 30, 2010		27.27		21.30		.4800
December 31, 2010		32.20		26.33		.4800

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: National Retail Properties, 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.


	12/31/2005		12/31/2006		12/31/2007		12/31/2008		12/31/2009		12/31/2010
Getty Realty Corp.		100.00		125.09		115.51		101.05		123.96		173.66
Standard &Poors 500		100.00		113.62		117.63		72.36		89.33		100.75
Peer Group		100.00		131.83		117.33		88.18		118.17		152.56

Assumes $100 invested at the close of trading 12/04 in Getty Realty Corp. common stock, Standard &Poors 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,
	2010			2009(a)			2008			2007 (b)			2006
OPERATING DATA:
Revenues from rental properties	$	88,332		$	84,416		$	82,654		$	78,852		$	72,126
Earnings before income taxes and discontinued operations		50,107			41,653			38,716			27,500	(c)		40,642
Income tax benefit (d)		—			—			—			—			700

Earnings from continuing operations		50,107			41,653			38,716			27,500			41,342
Earnings from discontinued operations		1,593			5,396			3,094			6,394	(c)		1,383

Net earnings		51,700			47,049			41,810			33,894			42,725
Diluted earnings per common share:
Earnings from continuing operations		1.79			1.68			1.56			1.11			1.67
Net earnings		1.85			1.90			1.69			1.37			1.73
Diluted weighted-average common shares outstanding		27,953			24,767			24,767			24,769			24,752
Cash dividends declared per share		1.91			1.89			1.87			1.85			1.82
FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATION (e):
Net earnings		51,700			47,049			41,810			33,894			42,725
Depreciation and amortization of real estate assets		9,738			11,027			11,875			9,794			7,883
Gains on dispositions of real estate		(1,705	)		(5,467	)		(2,787	)		(6,179	)		(1,581	)

Funds from operations		59,733			52,609			50,898			37,509			49,027
Revenue Recognition Adjustments		(1,487	)		(2,065	)		(2,593	)		(4,159	)		(3,010	)
Allowance for deferred rental revenue		—			—			—			10,494			—
Impairment charges		—			1,135			—			—			—
Income tax benefit (d)		—			—			—			—			(700	)

Adjusted funds from operations		58,246			51,679			48,305			43,844			45,317
BALANCE SHEET DATA (AT END OF YEAR):
Real estate before accumulated depreciation and amortization	$	504,587		$	503,874		$	473,567		$	474,254		$	383,558
Total assets		427,144			432,872			387,813			396,911			310,922
Debt		64,890			175,570			130,250			132,500			45,194
Shareholders’ equity		314,935			207,669			205,897			212,178			225,575
NUMBER OF PROPERTIES:
Owned		907			910			878			880			836
Leased		145			161			182			203			216

Total properties		1,052			1,071			1,060			1,083			1,052


(a)		Includes (from the date of the acquisition) the effect of the $49.0 million acquisition of the real estate assets and improvements of 36 convenience store properties from White Oak Petroleum LLC which were acquired on September 25, 2009.

(b)		Includes (from the date of the acquisition) the effect of the $84.5 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.

(c)		Includes the effect of a $10.5 million non-cash deferred rent receivable reserve, $10.2 million of which is included in earnings from continuing operations and $0.3 million of which is included in earnings from discontinued operations, based on the deferred rent receivable related to certain properties under leases with our primary tenant, Getty Petroleum Marketing, Inc. (For additional information regarding Marketing and the Marketing Leases, see “Item 7. Management’s


		Discussion and Analysis of Financial Condition and Results of Operations — General — Marketing and the Marketing Leases”.)

(d)		The year ended 2006 includes an income tax benefit 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.

(e)		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 and AFFO are helpful to investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance. FFO excludes various items 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 typically include the impact of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases and income recognized from direct financing leases on its recognition of revenue from rental properties (collectively the “Revenue Recognition Adjustments”), as offset by the impact of related collection reserves. GAAP net earnings and FFO from time to time may also include impairment charges and/or income tax benefits. 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 (or an average) basis rather than when the payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. Income from direct financing leases is recognized over the lease term using the effective interest method which produces a constant periodic rate of return on the net investment in the leased property. Impairment of long-lived assets represents charges taken to write-down real estate assets to fair value estimated when events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. In prior periods, income tax benefits have been 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 (see note (d) above).

		Management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less Revenue Recognition Adjustments, impairment charges and income tax benefit. In management’s view, AFFO provides a more accurate depiction than FFO of our fundamental operating performance related to: (i) the impact of scheduled rent increases from operating leases; (ii) the rental revenue from acquired in-place leases; (iii) the impact of rent due from direct financing leases; (iv) our rental operating expenses (exclusive of impairment charges); and (v) 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.

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 2; 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, leasing and financing 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 managing the operations conducted at these properties and for the payment of taxes, maintenance, repair, insurance and other operating expenses relating to our properties. Our tenants’ financial results are largely dependent on the performance of the petroleum marketing industry, which is highly competitive and subject to volatility. In those instances where we determine that the best use for a property is no longer as a retail motor fuel outlet, we will seek an alternative tenant or buyer for the property. We lease or sublet approximately twenty of our properties for uses such as fast food restaurants, automobile sales and other retail purposes. (See “Item 1. Business — Real Estate Business” and “Item 2. Properties” for additional information regarding our real estate business and our properties.) (For information regarding factors that could adversely affect us relating to our lessees, including our primary tenant, Getty Petroleum Marketing Inc., see “Item 1A. Risk Factors”.)

Marketing and the Marketing Leases

As of December 31, 2010, Marketing leased from us 808 properties under the Master Lease and nine properties under the Supplemental Leases. The Master Lease has an initial term expiring in December 2015, and provides Marketing with three renewal options of ten years each and a final renewal option of three years and ten months extending to 2049. If Marketing elects to exercise any renewal option, Marketing is required to notify us of such one year in advance of the commencement of the renewal term. The Master Lease is a unitary lease and, therefore, Marketing’s exercise of any renewal option can only be for all of the properties subject of the Master Lease. 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 believe that as of March 16, 2011, Marketing was not operating any of the nine terminals it leases from us and had removed, or has scheduled removal of the gasoline tanks and related equipment at approximately 140 of our retail properties and we also believe that most of these properties are either vacant or provide negative or marginal contribution to Marketing’s results.

On February 28, 2011 OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies transferred its ownership interest in Getty Petroleum Marketing Inc. (“Marketing”), our largest tenant, to Cambridge Petroleum Holding Inc. (“Cambridge”). We are not privy to the terms and conditions pertaining to this transaction between Lukoil and Cambridge. In connection with the transfer, we do not know what type or amount of consideration, if any, was paid or is payable by Lukoil or its subsidiaries to Cambridge, or by Cambridge to Lukoil or its subsidiaries. We do not know whether there are any ongoing contractual or business relationships between Lukoil or its subsidiaries or affiliates and Cambridge or its subsidiaries or affiliates, including Marketing.

While we did not believe that Lukoil would allow Marketing to fail to meet its obligations under the Marketing Leases, there can be no assurance that additional capital investment or financial support will be made available to Marketing by Cambridge or others in the future and it is possible that Marketing may file for bankruptcy protection and seek to reorganize or liquidate its business. It is also possible that Marketing may take other actions such as aggressively seeking to modify the

terms of the Marketing Leases. While we have commenced discussions with the new owners and management of Marketing, we cannot predict the impact the transfer of Marketing may have on our business.

Our financial results 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 on retail petroleum marketing margins from the sale of refined petroleum products and rental income from its subtenants. Marketing’s subtenants either operate their gas stations, convenience stores, automotive repair services or other businesses at our properties or are petroleum distributors who may operate our properties directly and/or sublet our properties to the operators. Since a substantial portion of our revenues (66% for the year ended December 31, 2010) are derived from the Marketing Leases, any factor that adversely affects Marketing’s ability to meet its rental, environmental and other obligations under the Marketing Leases may have a material adverse effect on our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price. (For additional information regarding the portion of our financial results that are attributable to Marketing, see Note 11 in “Item 8. Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements.”)

As of the date of this Form 10-K, we have not yet received Marketing’s unaudited consolidated financial statements for the year ended December 2010. For the year ended December 31, 2009, Marketing reported a significant loss, continuing a trend of reporting large losses in recent years. Based on the interim reports we have received through 2010, Marketing’s significant losses have continued. Based on our review of Marketing’s financial statements, we continue to believe that Marketing likely does not have the ability to generate cash flows from its business operations sufficient to meet its rental, environmental and other obligations under the terms of the Marketing Leases unless Marketing shows significant improvement in its financial results, reduces the number of properties under the Marketing Leases, or receives additional capital or credit support. There can be no assurance that Marketing will be successful in any of these efforts. It is possible that the deterioration of Marketing’s financial condition may continue or that Marketing may file bankruptcy and seek to reorganize or liquidate its business. We cannot predict what impact Lukoil’s transfer of its ownership interest to Cambridge will have on Marketing’s ability and willingness to perform its rental, environmental and other obligations under the Marketing Leases.

As of December 31, 2010, the net carrying value of the deferred rent receivable attributable to the Marketing Leases was $21.2 million and the aggregate Marketing Environmental Liabilities (as defined below), net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay but have not accrued range between $13 million and $20 million. The actual amount of the Marketing Environmental Liabilities may differ from our estimated range and we can provide no assurance as to the accuracy of our estimate. Although our 2010 financial statements were not affected by the transfer of Lukoil’s ownership interest in Marketing to Cambridge, our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that we may be required to increase or decrease the deferred rent reserve, record additional impairment charges related to the properties, or accrue for Marketing Environmental Liabilities as a result of changes in our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases that affect the amounts reported in our financial statements. It is also possible that as a result of material adjustments to the amounts recorded for certain of our assets and liabilities that we may not be in compliance with the financial covenants in our Credit Agreement or Term Loan Agreement.

In June 2010, Marketing and Bionol each issued press releases regarding a significant contractual dispute between them. Bionol owns and operates an ethanol plant in Pennsylvania. Bionol and Marketing entered into a five-year contract under which Marketing agreed to purchase substantially all of the ethanol production from the Bionol plant, at formula-based prices. Bionol stated that Marketing breached the contract by not paying the agreed-upon price for the ethanol. According to Bionol’s press release, the cumulative gross purchase commitment under the contract could be on the order of one billion dollars.

Marketing stated in its press release that it continues to pay Bionol millions of dollars each month for the ethanol, withholding only the amount of the purchase price in dispute and that it has filed for arbitration to resolve the dispute. Among other items related to this matter, we do not know: (i) the accuracy of the statements made by Marketing and Bionol when made or if such statements reflect the current status of the dispute; (ii) the cumulative or projected amount of the purchase price in dispute and how Marketing has accounted for the ethanol contract in its financial statements; or (iii) how the formula-based price compares to the market price of ethanol. We cannot predict how the ultimate resolution of this matter may impact Marketing’s long-term financial performance and its ability to meet its rental, environmental and other obligations to us as they become due under the terms of the Marketing Leases.

We cannot predict what impact Marketing’s restructuring, dispute with Bionol and other changes in its business model or impact on its business will have on us. If Marketing should fail to meet its rental, environmental and other obligations to us, such default could lead to a protracted and expensive process for retaking control of our properties as a result of which, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected. 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 properties subject to the Marketing Leases.

From time to time when it was owned by Lukoil, we held discussions with representatives of Marketing regarding potential modifications to the Marketing Leases. These discussions did not result in a common understanding with Marketing that would form a basis for modification of the Marketing Leases. While we have recently initiated discussions with the new owners and management of Marketing, subsequent to Lukoil’s transfer of its ownership interests in Marketing to Cambridge, we do not at this time know what Marketing’s business strategy under its new ownership is or how it may change in the future. We intend to continue to pursue the removal of individual properties from the Marketing Leases, and we remain open to removal of groups of properties; however, there is no agreement in place providing for removal of properties from the Marketing Leases. If Marketing ultimately determines that its business strategy is to exit all or a portion of the properties it leases from us, 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; what composition of properties, if any, may be removed from the Marketing Leases as part of any such modification; or what the terms of any agreement for modification of the Marketing Leases may be. We also cannot accurately predict what actions Marketing may take, and what our recourse may be, whether the Marketing Leases are modified or not. We may be required to increase or decrease the deferred rent receivable reserve, record additional impairment charges related to our properties, or accrue for environmental liabilities as a result of the potential or actual modification or termination of the Marketing Leases.

We intend either to re-let or sell any properties removed from the Marketing Leases, whether such removal arises consensually by negotiation or as a result of default by Marketing, and reinvest any realized sales proceeds in new properties. We intend to offer properties removed from the Marketing Leases to replacement tenants or buyers individually, or 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.

As permitted under the terms of the Marketing Leases, Marketing generally can, subject to any contrary terms under applicable third party leases, use each property for any lawful purpose, or for no purpose whatsoever. We believe that as of March 16, 2011, Marketing was not operating any of the nine terminals it leases from us and had removed, or has scheduled removal of, underground gasoline storage tanks and related equipment at approximately 140 of our retail properties and we also believe that most of these properties are either vacant or provide negative or marginal contribution to Marketing’s results. In those instances where we determine that the best use for a property is no longer as a retail motor fuel outlet, at the appropriate time we will seek an alternative tenant or buyer for such property. With respect to properties that are vacant or have had underground gasoline storage tanks and related equipment removed, it may be more difficult or costly to re-let or sell such properties as gas stations because of capital costs or possible zoning or permitting rights that are required and that may have lapsed during the period since gasoline was last sold at the property. Conversely, it may be easier to re-let or sell properties where underground gasoline storage tanks and related equipment have been removed if the property will not be used as a retail motor fuel outlet or if environmental contamination has been remediated.

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 (or an average) basis rather than when payment contractually is due. We record 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 sheets. 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 quarterly basis and such assessments and assumptions are subject to change.

Based in part on our decision to remain open to negotiate with Marketing for a modification of the Marketing Leases, and our belief that the Marketing Leases will be modified prior to the expiration of the current lease term, we believe that it is probable that we would not collect all of the rent due related to properties we identified as being the most likely to be removed from the Marketing Leases. As of December 31, 2010 and December 31, 2009, the net carrying value of the deferred rent receivable attributable to the Marketing leases was $21.2 million and $22.8 million, respectively, which was comprised of a gross deferred rent receivable of $29.4 million and $32.2 million, respectively, partially offset by a valuation reserve of $8.2 million and $9.4 million, respectively. The valuation reserves were estimated based on the deferred rent receivable attributable to properties identified by us as being the most likely to be removed from the Marketing Leases. We have not provided deferred rent receivable reserves related to the remaining properties subject to the Marketing Leases since, based on our assessments and assumptions as of December 31, 2010, we continued to believe that it was probable that we would collect the deferred rent receivables related to those remaining properties and that Lukoil would not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. It is possible that the deterioration of Marketing’s financial condition may continue, that Marketing may file bankruptcy and seek to reorganize or liquidate its business, or that Marketing may aggressively pursue seeking a modification of the Marketing Leases, including, removal of either a group of or individual properties from the Marketing Leases, or a reduction in the rental payments owed by Marketing under the Marketing Lease. Our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that we may change our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, we may be required to increase or decrease our deferred rent receivable reserve or provide deferred rent receivable reserves related to the remaining properties subject to 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 Marketing Leases and various other agreements with us relating to Marketing’s business and the properties it leases from us (collectively the “Marketing Environmental Liabilities”). However, we continue to have ongoing environmental remediation obligations at 186 retail sites and for certain pre-existing conditions at six of the terminals we lease to Marketing. If Marketing fails to pay the Marketing Environmental Liabilities, we may ultimately be responsible to pay for Marketing Environmental Liabilities as the property owner. We do not maintain pollution legal liability insurance to protect from potential future claims for Marketing Environmental Liabilities. We will be required to accrue for Marketing Environmental Liabilities if we determine that it is probable that Marketing will not meet its environmental obligations and we can reasonably estimate the amount of the Marketing Environmental Liabilities for which we will be responsible to pay, or if our assumptions regarding the ultimate allocation methods or share of responsibility that we used to allocate environmental liabilities changes. However, as of December 31, 2010 we continued to believe that it was not probable that Marketing would not pay for substantially all of the Marketing Environmental Liabilities since we believed that Lukoil would not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. Accordingly, we did not accrue for the Marketing Environmental Liabilities as of December 31, 2010 or December 31, 2009. Nonetheless, we have determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by us) would be material to us if we were required to accrue for all of the Marketing Environmental Liabilities since as a result of such accrual, we would not be in compliance with the existing financial covenants in our $175.0 million amended and restated senior unsecured revolving Credit Agreement expiring in March 2012 (the “Credit Agreement”) and our $25.0 million three-year term loan agreement expiring in September 2012 (the “Term Loan Agreement”). Such non-compliance would result in an event of default under the Credit Agreement and the Term Loan Agreement which, if not waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our indebtedness under the Credit Agreement and the Term Loan Agreement. Our estimates, judgments, assumptions and beliefs

regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that we may change our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, we may be required to accrue for the Marketing Environmental Liabilities.

We estimate that as of December 31, 2010, the aggregate Marketing Environmental Liabilities, net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay range between $13 million and $20 million, of which between $6 million to $9 million relate to the properties that we identified as the basis for our estimate of the deferred rent receivable reserve. Although we do not have a common understanding with Marketing that would form a basis for modification of the Marketing Leases, if the Marketing Leases are modified to remove any composition of properties, it is not our intention to assume Marketing’s Environmental Liabilities related to the properties that are so removed without adequate consideration from Marketing. Since we generally do not have access to certain site specific information available to Marketing, which is the party responsible for paying and managing its environmental remediation expenses at our properties, our estimates were developed in large part by review of the limited publically available information gathered through electronic databases and freedom of information requests and assumptions we made based on that data and on our own experiences with environmental remediation matters. The actual amounts of the ranges estimated above may differ from our estimates and we can provide no assurance as to the accuracy of these estimates.

Should our assessments, assumptions and beliefs made effective as of December 31, 2010, prove to be incorrect or if circumstances change, the conclusions reached by us may change relating to (i) whether any or what combination of the properties subject to the Marketing Leases are likely to be removed from the Marketing Leases; (ii) recoverability of the deferred rent receivable for some or all of the properties subject to the Marketing Leases; (iii) potential impairment of the properties subject to the Marketing Leases; 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. Our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. Accordingly, it is possible that we may be required to increase or decrease the deferred rent receivable reserve, record additional impairment charges related to the properties subject of the Marketing Leases, or accrue for Marketing Environmental Liabilities as a result of the potential or actual bankruptcy filing by Marketing or as a result of the potential or actual modification of the Marketing Leases or other factors, 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 and our Term Loan Agreement.

We cannot provide any assurance that Marketing will continue to meet its rental, environmental or other obligations under the Marketing Leases. In the event that Marketing does 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 rental, environmental or other obligations and we accrue for certain of such liabilities; if we are unable to promptly re-let or sell the properties upon recapture from 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 or stock price may be materially adversely affected.

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 and AFFO are helpful to investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, our fundamental operating performance. FFO excludes various items 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 typically include the impact of the “Revenue Recognition Adjustments” comprised of deferred rental revenue (straight-line rental revenue), the net amortization of above-market and below-market leases, and income recognized from direct financing leases on our recognition of revenues from rental properties, as offset by the impact of related collection reserves. GAAP net earnings and FFO from time to time may also include impairment charges and/or income tax benefits. 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 (or an average) basis rather than when payment is contractually due. The present value of the difference between the fair market rent and the contractual rent for in-place leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases. Income from direct financing leases is recognized over the lease term using the effective interest method which produces a constant periodic rate of return on the net investment in the leased property. Impairment of long-lived assets represents charges taken to write-down real estate assets to fair value estimated when events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. In prior periods, income tax benefits have been 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.

Management pays particular attention to AFFO, a supplemental non-GAAP performance measure that we define as FFO less Revenue Recognition Adjustments, impairment charges and income tax benefit. In management’s view, AFFO provides a more accurate depiction than FFO of our fundamental operating performance related to: (i) the impact of scheduled rent increases under these leases; (ii) the rental revenue earned from acquired in-place leases; (iii) the impact of rent due from direct financing leases, (iv) our rental operating expenses (exclusive of impairment charges); and (v) 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, earnings from continuing operations and FFO for 2007 were reduced by all or substantially all of the $10.5 million non-cash deferred rent receivable reserve recorded as of December 31, 2007 for certain properties leased to Marketing under the Marketing Leases. (See “— General — Marketing and the Marketing Leases” above for additional information.) If the applicable amount of the non-cash deferred rent receivable reserve were added to our 2007 net earnings, earnings 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 $37.7 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 $1.1 million and for 2007 would have decreased by $3.7 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 deferred rent receivable 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		27,500		10,153		37,653
Funds from operations		37,509		10,494		48,003

2010 and 2009 Acquisitions

In 2010, we purchased three properties.

On September 25, 2009, we acquired the real estate assets and improvements of 36 gasoline stations and convenience store properties located primarily in Prince George’s County Maryland for $49.0 million from White Oak Petroleum LLC (“White Oak”) for cash with $24.5 million draw under our existing Credit Agreement and $24.5 provided by the three-year Term Loan Agreement entered into on that date.

The real estate assets were acquired in a simultaneous transaction among ExxonMobil, White Oak and us, whereby White Oak acquired the real estate assets and the related businesses from ExxonMobil and simultaneously completed a sale/leaseback of the real estate assets of all 36 properties with us. We entered into a unitary triple-net lease for the real estate assets with White Oak which has an initial term of 20 years and provides White Oak with options for three renewal terms of ten years each extending to 2059. The unitary triple-net lease provides for annual rent escalations of 2¹/2% per year. White Oak is responsible to pay for all existing and future environmental liabilities related to the properties.

In 2009 we also exercised our fixed price purchase option for one leased property and purchased three properties.

RESULTS OF OPERATIONS

Year ended December 31, 2010 compared to year ended December 31, 2009

Revenues from rental properties included in continuing operations were $88.3 million for the year ended December 31, 2010, as compared to $84.4 million for the year ended December 31, 2009. We received approximately $60.3 million and $60.6 million in rent for the years ended December 31, 2010 and December 31, 2009, respectively, from properties leased to Marketing under the Marketing Leases. We also received rent of $26.6 million and $21.8 million for the years ended December 31, 2010 and 2009, respectively, from other tenants. The increase in rent received for the year ended December 31, 2010 was primarily due to rental income from properties we acquired from, and leased back to, White Oak in September 2009 and, to a lesser extent, due to rent escalations, partially offset by the effect of dispositions of real estate and lease expirations. In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually due or received during the periods presented. As a result, revenues from rental properties include Revenue Recognition Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, net amortization of above-market and below-market leases and recognition of rental income under a direct financing lease using the effective interest rate method which produces a constant periodic rate of return on the net investment in the leased property. Rental revenue includes Revenue Recognition Adjustments which increased rental revenue by $1.4 million for the year ended December 31, 2010 and $2.0 million for the year ended December 31, 2009.

Rental property expenses included in continuing operations, which are primarily comprised of rent expense and real estate and other state and local taxes, were $10.1 million for the year ended December 31, 2010 as compared to $10.7 million for the year ended December 31, 2009. The decrease in rental property expenses is due to a reduction in rent expense caused by a decrease in the number of leased properties sublet to tenants due to third party lease expirations as compared to the prior year.

Environmental expenses, net of estimated recoveries from underground storage tank (“UST” or ”USTs”) funds included in continuing operations for the year ended December 31, 2010 decreased by $3.4 million, to $5.4 million, as compared to $8.8 million for the year ended December 31, 2009. The decrease in net environmental expenses for the year ended December 31, 2010 was primarily due to a lower provision for litigation loss reserves and legal fees which decreased by $2.1 million for 2010, and a lower provision for estimated environmental remediation costs which decreased by an aggregate $1.2 million to $2.7 million for the year ended December 31, 2010, as compared to $3.9 million for the year ended December 31, 2009. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period as compared to prior periods.

General and administrative expenses were $8.2 million for the year ended December 31,2010 as compared to $6.8 million recorded for the year ended December 31, 2009. The increase in general and administrative expenses was principally due to higher employee compensation and benefit expenses and provisions for doubtful accounts.

Depreciation and amortization expense included in continuing operations for 2010 was $9.7 million for the year ended December 31, 2010, as compared to $10.8 million for the year ended December 31, 2009. The decrease was primarily due to the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate partially offset by depreciation charges related to properties acquired.

The $1.1 million of impairment charges recorded in the year ended December 31, 2009 was attributable to general reductions in real estate valuations and, in certain cases, the removal or scheduled removal of underground storage tanks by Marketing. There were no impairment charges recorded for the year ended December 31, 2010.

As a result, total operating expenses decreased by approximately $4.8 million for the year ended December 31, 2010, as compared to the year ended December 31, 2009.

Other income, net, included in income from continuing operations was $0.3 million for the year ended December 31, 2010, as compared to $0.6 million for the year ended December 31, 2009. Gains from dispositions of real estate included in discontinued operations were $1.7 million for the year ended December 31, 2010 and $5.3 million for the year ended December 31, 2009. For the year ended December 31, 2010, there were five property dispositions, including four properties that were mutually agreed by the Company and Marketing to be removed from the Marketing Leases prior to the expirations of the current term of the Master Lease. For the year ended December 31, 2009, there were eight property dispositions, including four properties that were mutually agreed by the Company and Marketing to be removed from the Marketing Leases prior to the expirations of the current term of the Master Lease. Other income, net and gains on disposition of real estate vary from period to period and accordingly, undue reliance should not be placed on the magnitude or the directions of change in reported gains for one period as compared to prior periods.

Interest expense was $5.1 million for each of 2010 and 2009. While there was no significant change in interest expense recorded for the year ended December 31, 2010 as compared to the prior year period, the weighted average interest rate on borrowings outstanding increased due to changes in the relative amounts of debt outstanding under our Credit Agreement and Term Loan, (each described in “Liquidity and Capital Resources” below) and average borrowings outstanding for the year ended December 31, 2010 were less than average borrowings outstanding for the year ended December 31, 2009. The lower average borrowings outstanding was principally due to the repayment of a portion of the outstanding balance of our Credit Agreement with a portion of the $108.2 million net proceeds from a public stock offering of 5.2 million shares of our common stock during the second quarter of 2010, partially offset by $49.0 million borrowed in September 2009 under our Term Loan and our Credit Agreement which was used to finance the acquisition of properties.

The operating results and gains from certain dispositions of real estate sold in 2010 and 2009 are reclassified as discontinued operations. The operating results of such properties for the year ended December 31, 2009 has also been reclassified to discontinued operations to conform to the 2010 presentation. Earnings from discontinued operations decreased by $3.8 million to $1.6 million for the year ended December 31, 2010, as compared to $5.4 million for the year ended December 31, 2009. The decrease was primarily due to lower gains on dispositions of real estate. Gains on disposition of real estate vary from period to period and accordingly, undue reliance should not be placed on the magnitude or the directions of change in reported gains for one period as compared to prior periods.

As a result, earnings from continuing operations were $50.1 million for the year ended December 31, 2010, as compared to $41.7 million for the year ended December 31, 2009 and net earnings increased by $4.7 million to $51.7 million for the year ended December 31, 2010, as compared to $47.0 million for the year ended December 31, 2009.

For the year ended December 31, 2010, FFO increased by $7.1 million to $59.7 million, as compared to $52.6 million for the year ended December 31, 2009, and AFFO increased by $6.5 million to $58.2 million, as compared to $51.7 million for the prior year. The increase in FFO for the year ended December 31, 2010 was primarily due to the changes in net earnings but excludes a $1.3 million decrease in depreciation and amortization expense and a $3.8 million decrease in gains on dispositions of real estate. The increase in AFFO for the year ended December 31, 2010 also excludes $1.1 million of impairment charges recorded in 2009 and a $0.6 million decrease in Rental Revenue Adjustments which cause our reported revenues from rental properties to vary from the amount of rent payments contractually due or received by us during the periods presented (which are included in net earnings and FFO but are excluded from AFFO).

The calculations of net earnings per share, FFO per share, and AFFO per share for the year ended December 31, 2010 were impacted by an increase in the weighted average number of shares outstanding as a result of the issuance of 5.2 million shares of common stock in May 2010. The weighted average number of shares outstanding used in our per share calculations increased by 3.2 million shares, or 12.9%, for the year ended December 31, 2010, as compared to the year ended December 31, 2009. Accordingly, the percentage or direction of the changes in net earnings, FFO and AFFO discussed above may differ from the changes in the related per share amounts. Diluted earnings per share decreased by $0.05 per share for the year ended December 31, 2010 to $1.85 per share as compared to $1.90 per share for the year ended December 31, 2009. Diluted FFO per share increased by $0.02 per share for the year ended December 31, 2010 to $2.14 per share, as compared to $2.12 per share for the year ended December 31, 2009. Diluted AFFO per share decreased by $0.01 per share for the year ended December 31, 2010 to $2.08 per share, as compared to $2.09 per share for the year ended December 31, 2009.

Year ended December 31, 2009 compared to year ended December 31, 2008

Revenues from rental properties included in continuing operations were $84.4 million for the year ended December 31, 2009, as compared to $82.7 million for the year ended December 31, 2008. We received approximately $60.6 million and $60.0 million for the years ended December 31, 2009 and 2008, respectively, from properties leased to Marketing under the Marketing Leases. We also received rent of $21.8 million and $20.1 million for the years ended December 31, 2009 and 2008, respectively, from other tenants. The increase in rent received was primarily due to rent escalations, and rental income from properties acquired, partially offset by the effect of lease expirations. In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually due or received during the periods presented. As a result, revenues from rental properties include Revenue Recognition Adjustments comprised of non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, net amortization of above-market and below-market leases and recognition of rental income recorded under a direct financing lease using the effective interest rate method which produces a constant periodic rate of return on the net investment in the leased property. Rental revenue includes Revenue Recognition Adjustments which increased rental revenue by $2.0 million for the year ended December 31, 2009 and by $2.5 million for the year ended December 31, 2008.

Rental property expenses included in continuing operations, which are primarily comprised of rent expense and real estate and other state and local taxes, were $10.7 million for the year ended December 31, 2009, as compared to $11.4 million for the year ended December 31, 2008. The decrease in rental property expenses is due to a reduction in rent expense incurred as a result of third party lease expirations as compared to the prior year.

Environmental expenses, net of estimated recoveries from state underground storage tank funds included in continuing operations for the year ended December 31, 2009 were $8.8 million, as compared to $7.3 million for 2008. The increase was due to a $2.2 million net increase in environmental related litigation reserves, which was partially offset by a reduction in legal fees of $0.3 million and a reduction in estimated environmental remediation costs of $0.7 million. The increase in environmental litigation reserves was principally attributed to settlement of 27 MTBE cases in which we were named a defendant. See Environmental Matters — Environmental Litigation below for additional information related to our defense of MTBE cases. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period as compared to prior periods.

General and administrative expenses for 2009 were $6.8 million, which was comparable to 2008.

Depreciation and amortization expense included in continuing operations for 2009 was $10.8 million, as compared to $11.7 million for 2008. The decrease was primarily due to the effect of assets becoming fully depreciated, lease terminations and property dispositions partially offset by depreciation charges related to properties acquired.

As a result, total operating expenses increased by approximately $1.0 million for 2009 as compared to 2008.

Other income, net, included in income from continuing operations increased by $0.2 million to $0.6 million for 2009, as compared to $0.4 million for 2008. Gains on dispositions of real estate included in discontinued operations were $5.3 million for 2009 as compared to $2.4 million for 2008. Gains on dispositions of real estate in 2009 increased by an aggregate of $2.7 million to $5.5 million, as compared to $2.8 million for the prior year. For 2009, there were eight property dispositions and two partial land takings under eminent domain. For 2008, there were eleven property dispositions and four partial land takings under eminent domain. Property dispositions for 2009 and 2008 include four and seven properties, respectively, that were mutually agreed to be removed from the Marketing Leases prior to their scheduled lease expiration. Other income, net and gains on disposition of real estate vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported gains for one period as compared to prior periods.

Interest expense was $5.1 million for 2009, as compared to $7.0 million for 2008. The decrease was due to lower average interest rates in 2009 on our floating rate borrowings, partially offset by increased average borrowings outstanding relating to the acquisition of properties in the third quarter of 2009.

The operating results and gains from certain dispositions of real estate sold in 2010 and 2009 are reclassified as discontinued operations. The operating results of such properties for the year ended December 31, 2008 has also been reclassified to discontinued operations to conform to the 2010 and 2009 presentation. Earnings from discontinued operations increased by $2.3 million to $5.4 million for the year ended December 31, 2009, as compared to $3.1 million for the year ended December 31, 2008. The decrease was primarily due to lower gains on dispositions of real estate. Gains on disposition of real estate vary from period to period and accordingly, undue reliance should not be placed on the magnitude or the directions of change in reported gains for one period as compared to prior periods.

As a result, net earnings were $47.0 million for 2009, as compared to $41.8 million for 2008, an increase of 12.4%, or $5.2 million. Earnings from continuing operations were $41.7 million for 2009, as compared to $38.7 million for 2008, an increase of 7.8%, or $3.0 million. For the same period, FFO increased by 3.3% to $52.6 million, as compared to $50.9 million for prior year period and AFFO increased by 7.0%, or $3.4 million, to $51.7 million, as compared to $48.3 million for 2008. The increase in FFO for 2009 was primarily due to the changes in net earnings described above but excludes a $0.9 million decrease in depreciation and amortization expense and a $2.7 million increase in gains on dispositions of real estate. The increase in AFFO for 2009 also excludes a $0.5 million reduction in Rental Revenue Adjustments which cause our reported revenues from rental properties to vary from the amount of rent payments contractually due or received by us during the periods presented, and a $1.1 million impairment charge recorded in 2009 (which are included in net earnings and FFO but are excluded from AFFO).

Diluted earnings per share were $1.90 per share for 2009, an increase of $0.21 per share, as compared to $1.69 per share for 2008. Diluted FFO per share for 2009 was $2.12 per share, an increase of $0.06 per share, as compared to 2008. Diluted AFFO per share for 2009 was $2.09 per share, an increase of $0.14 per share, as compared to 2008.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are the cash flows from our operations, funds available under our revolving Credit Agreement that expires in March 2012, described below, 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 existing Credit Agreement and available cash and cash equivalents. Net cash flow provided by operating activities reported on our consolidated statement of cash flows for 2010, 2009 and 2008 were $56.9 million, $52.5 million and $47.6 million, respectively. It is possible that our business operations or liquidity may be adversely affected by Marketing and the Marketing Leases discussed in “General — Marketing and the Marketing Leases” above and as a result we may be in default of our Credit Agreement or Term Loan Agreement which if such default was not cured or waived would prohibit us from drawing funds against the Credit Agreement. We may be required to enter into alternative loan agreements, sell assets or issue additional equity at unfavorable terms if we do not have access to funds under our Credit Agreement.

We cannot accurately predict how periods of illiquidity in the credit markets may impact our access to capital and the costs associated with any additional borrowings. 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, we may not be able to refinance our outstanding debt when due, which could have a material adverse effect on us.

During the second quarter of 2010, we completed a public stock offering of 5.2 million shares of our common stock. The $108.2 million net proceeds from the offering was used in part to repay a portion of the outstanding balance under our Credit Agreement, described below, and the remainder was used for general corporate purposes. During the first quarter of 2011, we completed a public stock offering of 3.5 million shares of our common stock. Substantially all of the $91.8 million net proceeds from the offering was used to repay a portion of the outstanding balance under our Credit Agreement and the remainder was used for general corporate purposes.

We are party to 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 2012. As of December 31, 2010, borrowings under the Credit Agreement were $41.3 million bearing interest at a rate of 1.31% per annum. We had $133.7 million available under the terms of the Credit Agreement as of December 31, 2010. 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, 2010, the applicable margin will remain at 0.0% for base rate borrowings and 1.0% for LIBOR rate borrowings.

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 financial covenants such as those requiring us to maintain minimum tangible net worth, leverage ratios and coverage ratios which may limit our ability to incur debt or pay dividends. The Credit Agreement contains customary events of default, including change of control, failure to maintain REIT status and a material adverse effect on our business, assets, prospects or condition. Any event of default, if not cured or waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our indebtedness under our Credit Agreement, an inability to draw additional funds from the Credit Agreement and could also give rise to an event of default and consequent acceleration of our indebtedness under our Term Loan Agreement. Additionally, in such an event, we may be required to enter into alternative loan agreements, sell assets or issue additional equity at unfavorable terms if we do not have access to funds under our Credit Agreement.

Subject to the terms of the Credit Agreement, and continued compliance with the covenants therein, we have the option, subject to approval by the Bank Syndicate, increase the amount of the credit facility available pursuant to the Credit Agreement by $125.0 million to $300.0 million. We do not expect to exercise our option to increase the amount of the Credit Agreement. In addition, 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 Agreement. No assurance can be given that such approval from the Bank Syndicate will be obtained on terms acceptable to us, if at all. We are considering amending the

existing Credit Agreement or entering into a new revolving credit agreement. There can be no assurance that we will be able to amend the existing Credit Agreement or enter into a new revolving credit agreement on favorable terms, if at all.

We are party to 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 LIBOR based loan agreements 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. We will be fully exposed to interest rate risk on our aggregate borrowings floating at market rates upon expiration of the Swap Agreement unless we enter into another swap agreement.

In order to partially finance the acquisition of 36 properties in September 2009, we entered into a $25.0 million three-year Term Loan Agreement with TD Bank (the “Term Loan Agreement” or “Term Loan”) which expires in September 2012. As of December 31, 2010, borrowings under the Term Loan Agreement were $23.6 million bearing interest at a rate of 3.5% per annum. The Term Loan Agreement provides for annual reductions of $0.8 million in the principal balance with a $22.2 million balloon payment due at maturity. The Term Loan Agreement bears interest at a rate equal to a thirty day LIBOR rate (subject to a floor of 0.4%) plus a margin of 3.1%. The Term Loan Agreement contains customary terms and conditions, including financial covenants such as those requiring us to maintain minimum tangible net worth, leverage ratios and coverage ratios and other covenants which may limit our ability to incur debt or pay dividends. The Term Loan Agreement contains customary events of default, including change of control, failure to maintain REIT status or a material adverse effect on our business, assets, prospects or condition. Any event of default, if not cured or waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our indebtedness under the Term Loan Agreement.

Since we generally lease our properties on a triple-net basis, we do not incur significant capital expenditures other than those related to acquisitions. As part of our overall business strategy, we regularly review opportunities to acquire additional properties and we expect to continue to pursue acquisitions that we believe will benefit our financial performance. Capital expenditures, including acquisitions, for 2010, 2009 and 2008 amounted to $4.7 million, $55.3 million and $6.6 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 cannot accurately predict how periods of illiquidity in the credit markets may 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 $52.3 million, $46.8 million and $46.3 million for 2010, 2009 and 2008, respectively, and were paid on a quarterly basis during each of those years. We presently intend to pay common stock dividends of $0.48 per share each quarter ($1.92 per share, or $64.4 million, on an annual basis including dividends on 3.5 million common shares issued during the first quarter of 2011 and dividend equivalents paid on outstanding restricted stock units), and commenced doing so with the quarterly dividend declared in August 2010. Due to the developments related to Marketing and the Marketing Leases discussed in “General -Marketing and the Marketing Leases” above, there can be no assurance that we will be able to continue to pay dividends at the rate of $0.48 per share per quarter, if at all.

CONTRACTUAL OBLIGATIONS

Our significant contractual obligations and commitments are comprised of borrowings under the Credit Agreement and the Term Loan 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 90% of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and commitments as of December 31, 2010 are summarized below (in thousands):


										THREE			MORE
				LESS			ONE-TO			TO			THAN
				THAN-			THREE			FIVE			FIVE
	TOTAL			ONE YEAR			YEARS			YEARS			YEARS
Operating leases	$	20,373		$	6,193		$	7,984		$	3,863		$	2,333
Borrowing under the Credit Agreement (a)		41,300			—			41,300			—			—
Borrowings under the Term Loan Agreement (a)		23,590			780			22,810			—			—
Estimated environmental remediation expenditures (b)		14,874			4,980			5,812			2,068			2,014
Estimated recoveries from state underground storage tank funds (b)		(3,966	)		(1,393	)		(1,508	)		(718	)		(347	)

Estimated net environmental remediation expenditures (b)		10,908			3,587			4,304			1,350			1,667

Total	$	96,171		$	10,560		$	76,398		$	5,213		$	4,000


(a)		Excludes related interest payments. (See “— Liquidity and Capital Resources” above and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for additional information.)

(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 managing the operations conducted at these properties and 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 $13.0 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 — 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 accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. 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 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, income under direct financing leases, 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.

As of December 31, 2010, the net carrying value of the deferred rent receivable attributable to the Marketing Leases was $21.2 million and the aggregate Marketing Environmental Liabilities, net of expected recoveries from underground storage tank funds, for which we may ultimately be responsible to pay but have not accrued range between $13 million and $20 million. The actual amount of the Marketing Environmental Liabilities may differ from our estimated range and we can provide no assurance as to the accuracy of our estimate. Although our 2010 financial statements were not affected by the transfer of Lukoil’s ownership interest in Marketing to Cambridge, our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as we develop a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that we may be required to increase or decrease the deferred rent reserve, record additional impairment charges related to the properties, or accrue for Marketing Environmental Liabilities as a result of changes in our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases that affect the amounts reported in our financial statements. It is also possible that as a result of material adjustments to the amounts recorded for certain of our assets and liabilities that we may not be in compliance with the financial covenants in our Credit Agreement or Term Loan Agreement. (See “— General —Marketing and the Marketing Leases” above for additional information.)

Our accounting policies are described in Note 1 of Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data — 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 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 $27.4 million recorded as of December 31, 2010 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 $8.2 million reserve as of December 31, 2010 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 specifically provided is effectively recognized in subsequent periods when payment is due under the contractual payment terms. (See Marketing and the Marketing Leases in “— General — Marketing and the Marketing Leases” above for additional information.)

Direct Financing Lease — Income under direct financing leases is included in revenues from rental properties and is recognized over the lease term using the effective interest rate method which produces a constant periodic rate of return on the net investment in the leased property. Net investment in direct financing lease represents the investment in leased assets accounted for as a direct financing lease. The investment is reduced by the receipt of lease payments, net of interest income earned and amortized over the life of the lease.

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 material adjustments to the amounts recorded for environmental litigation accruals, environmental remediation liabilities and related assets. (See “— General — Marketing and the Marketing Leases” above for additional information.) We may ultimately be responsible to 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 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 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.

Recent Accounting Developments and Amendments to the Accounting Standards Codification — In September 2006, the FASB amended the accounting standards related to fair value measurements of assets and liabilities (the “Fair Value Measurements Amendment”). The Fair Value Measurements Amendment generally applies whenever other standards require assets or liabilities to be measured at fair value. The Fair Value Measurements Amendment was effective in fiscal years beginning after November 15, 2007. The FASB subsequently delayed the effective date of the Fair Value Measurements Amendment by one year for nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis to fiscal years beginning after November 15, 2008. The adoption of the Fair Value Measurements Amendment in January 2008 and the adoption of the provisions of the Fair Value Measurements Amendment for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis in January 2009 did not have a material impact on our financial position and results of operations.

In December 2007, the FASB amended the accounting standards related to business combinations (the “Business Combinations Amendment”), affecting 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. The Business Combinations Amendment 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 did not result in a write-off of acquisition related transactions costs associated with transactions not yet consummated.

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 either regulatory or contractual closure (“Closure”). 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, 2010, we have regulatory approval for remediation action plans in place at 227 (94%) of the 241 properties at which we continue to retain remediation responsibility and the remaining 14 properties (6%) were in the assessment phase. In addition, we have nominal post-closure compliance obligations at 29 properties where we have received “no further action” letters.

It is possible that our assumptions regarding the ultimate allocation methods or 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 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 or stock price. (See “— General —Marketing and the Marketing Leases” above for additional information.)

We have also agreed to provide limited environmental indemnification to Marketing, capped at $4.25 million, for certain pre-existing conditions at six of the terminals we own and lease to Marketing. Under the indemnification agreement, Marketing is required to pay (and has paid) the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing shares 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, 2010 and December 31, 2009 in connection with this indemnification agreement. Under the Master Lease, we continue to have additional ongoing environmental remediation obligations at 186 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 rental, environmental and other 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 or 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. If Marketing fails to pay them, we may ultimately be responsible to pay for environmental liabilities as the property owner. 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 and we can reasonably estimate the amount of the Marketing Environmental Liabilities for which we will be responsible to pay.

Based on our assessment of Marketing’s financial condition and our assumption that Lukoil would not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases and certain other factors, including but not limited to those described above, we believed effective as of December 31, 2010 and prior thereto that it was 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. It is possible that we may change our estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, we may be required to accrue for the Marketing Environmental Liabilities.

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 our analysis of information currently available to us described in more detail above) (the “Marketing Environmental Liabilities”) would be material to us if we were required to accrue for all of the Marketing Environmental Liabilities since as a result of such accrual, we would not be in compliance with the existing financial covenants in our Credit Agreement and our Term Loan Agreement. Such non-compliance would result in an event of default under the Credit Agreement and our Term Loan Agreement which, if not waived, would prohibit us from drawing funds against the Credit Agreement and could result in the acceleration of our indebtedness under the Credit Agreement and the Term Loan Agreement. (See “— General —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.

to $2.7 million, $3.9 million and $4.6 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 gross expenses aggregating $5.1 million before recoveries from UST funds. Accordingly, the environmental accrual as of December 31, 2010 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, 2010 was then further increased by $0.8 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 $1.8 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, 2010 would have increased by $0.2 million and $0.1 million, respectively, for an aggregate 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, 2010 would not have changed significantly if these changes in the assumptions were made effective December 31, 2009.

In view of the uncertainties associated with environmental expenditures, contingencies concerning 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 —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 or stock price.

We cannot accurately 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 accurately 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, 2010 and December 31, 2009, we had accrued $3.3 million and $3.8 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation accruals. Matters related to the Lower Passaic River and certain MTBE multi-district litigation cases, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. See “Item 3. Legal Proceedings” for additional information with respect these and other pending environmental lawsuits and claims.

The Lower Passaic River

In September 2003, we received a directive (the “Directive”) from 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 Directive calls for an assessment of the natural resources that have been injured by the discharges into the Lower Passaic River and 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. There has been no material activity with respect to the NJDEP Directive since early after its issuance. The 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. Effective May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties comprising a Cooperating Parties Group (“CPG”) (many of whom also named in the Directive) who have collectively agreed to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. We are a party to the AOC and a member of the CPG. 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, and is scheduled to be completed in or about 2014. 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.

We believe that ChevronTexaco is contractually obligated to indemnify us, pursuant to an indemnification agreement for most, if not all of the conditions at the property identified by the NJDEP and the EPA. 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. (See “Item 3. Legal Proceedings” for additional information with respect to claims relates to the Lower Passaic River matter.)

MTBE Litigation

During 2010, we were defending against 53 lawsuits brought by or on behalf of private and public water providers and governmental agencies. These cases alleged(and, as described below with respect to one remaining case, continue to allege) various theories of liability due to contamination of groundwater with MTBE as the basis for claims seeking compensatory and punitive damages, and name as defendant approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. During the quarter ended March 31, 2010, the Company reached agreements to settle two plaintiff classes covering 52 cases of the 53 pending cases. A settlement payment of $1,250,000 was made during the third quarter of 2010 covering 27 cases and a settlement payment of $475,000 was made during the first quarter of 2011 covering 25 cases. Presently, we remain a defendant in one MTBE case involving multiple locations throughout the State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP.

In the years ended December 31, 2009 and 2010, we provided litigation reserves aggregating $2.5 million relating to the MTBE cases. However, we are still unable to estimate with certainty our liability for the case involving the State of New Jersey as there remains uncertainty as to the accuracy of the allegations in this case as they relate to us, our defenses to the claims, our rights to indemnification or contribution from Marketing, and the aggregate possible amount of damages for which we may be held liable. (See “Item 3. Legal Proceedings” for additional information with respect to the MTBE litigation.)

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Prior to April 2006, when we entered into the 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.

We are exposed to interest rate risk, primarily as a result of our $175.0 million Credit Agreement and our $25.0 million Term Loan Agreement. We use borrowings under the Credit Agreement to finance acquisitions and for general corporate purposes. We used borrowings under the Term Loan Agreement to partially finance an acquisition in September 2009. Total borrowings outstanding as of December 31, 2010 under the Credit Agreement and the Term Loan Agreement were $41.3 million and $23.6 million, respectively, bearing interest at a weighted-average rate of 1.8% per annum, or a weighted-average effective rate of 3.1% including the impact of the Swap Agreement discussed below. The weighted-average effective rate is based on (i) $41.3 million of LIBOR rate borrowings outstanding under the Credit Agreement floating at market rates plus a margin of 1.00%, (ii) $23.6 million of LIBOR based borrowings outstanding under the Term Loan Agreement floating at

market rates (subject to a 30 day LIBOR floor of 0.4%) plus a margin of 3.1% and (iii) the impact of the Swap Agreement effectively fixing at 5.44% the LIBOR component on $45.0 million of floating rate debt. Our Credit Agreement, which expires in March 2012, 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, 2010, the applicable margin will remain at 0.0% for base rate borrowings and 1.00% for LIBOR rate borrowings. It is possible that our business operations or liquidity may be adversely affected by Marketing and the Marketing Leases discussed in “General - Marketing and the Marketing Leases” above and as a result we may be in default of our Credit Agreement or Term Loan Agreement which if such default was not cured or waived would prohibit us from drawing funds against the Credit Agreement. An event of default if not cured or waived would increase by 2.0% the interest rate we pay under our Credit Agreement. We may be required to enter into alternative loan agreements, sell assets or issue additional equity at unfavorable terms if we do not have access to funds under our Credit Agreement.

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, 2010 has decreased significantly, as compared to December 31, 2009 primarily as a result of repayment of $110.7 million of floating interest rate debt. Subsequent to December 31, 2010 we borrowed an additional $111.3 million under the Credit Agreement to finance the transaction with CPD NY and repaid approximately $92.3 of the borrowings then outstanding under the Credit Agreement with funds primarily received from the proceeds of a 3.5 million share common stock offering. (For additional information regarding these subsequent events, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Recent Developments”.)Our interest rate risk may materially change in the future if we increase our borrowings under the Credit Agreement, seek other sources of debt or equity capital or refinance our outstanding debt.

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 loan agreements 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, we are, and will be, exposed to interest rate risk to the extent that our aggregate borrowings floating at market rates exceed the $45.0 million notional amount of the Swap Agreement. As of December 31, 2010, our aggregate borrowings floating at market rates exceeded the notional amount of the Swap Agreement by $19.9 million. We have not determined if we will enter into other swap agreements either before or after the expiration of the Swap Agreement in June 2011. It is possible that we may significantly change how we manage our interest rate risk in the near future due to, among other factors, the acquisition of properties or seeking other sources of capital.

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. 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.

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 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 aggregate average outstanding borrowings under the Credit Agreement and the Term Loan Agreement projected at $84.3 million for 2011, an increase in market interest rates of 0.5% for 2011 would decrease our 2011 net income and cash flows by $0.3 million. This amount was determined by calculating the effect of a hypothetical interest rate change on our aggregate borrowings floating at market rates that is not covered by our $45.0 million interest rate Swap Agreement through the June 2011 and the full amount of such borrowings after the expiration of the Swap Agreement, and assumes that the $42.1 million average outstanding borrowings under the Credit Agreement during the fourth quarter of 2010 plus $19.0 million representing the net incremental borrowings under the Credit Agreement related to the subsequent events discussed above plus the $23.2 million average scheduled outstanding borrowings for 2011 under the Term Loan Agreement is indicative of our future average borrowings for 2011 before considering additional borrowings required for future acquisitions or repayment of outstanding borrowings from proceeds of future equity offerings. The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Credit Agreement, with decreases in the outstanding amount under our Term Loan Agreement and with increases or decreases in amounts outstanding under borrowing agreements entered into with interest rates floating at market rates.

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

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, 2010, 2009 and 2008		53
Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008		53
Consolidated Balance Sheets as of December 31, 2010 and 2009		54
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008		55
Notes to Consolidated Financial Statements (including the supplementary financial information contained in Note 9 “Quarterly Financial Data”)		56
Report of Independent Registered Public Accounting Firm		82

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


	YEAR ENDED DECEMBER 31,
	2010			2009			2008
Revenues from rental properties	$	88,332		$	84,416		$	82,654
Operating expenses:
Rental property expenses		10,128			10,689			11,443
Impairment charges		—			1,135			—
Environmental expenses, net		5,427			8,811			7,306
General and administrative expenses		8,178			6,849			6,831
Depreciation and amortization expense		9,731			10,773			11,727

Total operating expenses		33,464			38,257			37,307

Operating income		54,868			46,159			45,347
Other income, net		289			585			403
Interest expense		(5,050	)		(5,091	)		(7,034	)

Earnings from continuing operations		50,107			41,653			38,716
Discontinued operations:
Earnings (loss) from operating activities		(112	)		70			696
Gains on dispositions of real estate		1,705			5,326			2,398

Earnings from discontinued operations		1,593			5,396			3,094

Net earnings	$	51,700		$	47,049		$	41,810


Basic and diluted earnings per common share:
Earnings from continuing operations	$	1.79		$	1.68		$	1.56
Earnings from discontinued operations	$	.06		$	.22		$	.12
Net earnings	$	1.85		$	1.90		$	1.69

Weighted average shares outstanding:
Basic		27,950			24,766			24,766
Stock options		3			1			1

Diluted		27,953			24,767			24,767

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

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	YEAR ENDED DECEMBER 31,
	2010		2009		2008
Net earnings	$	51,700	$	47,049	$	41,810
Other comprehensive gain (loss):
Net unrealized gain (loss) on interest rate swap		1,840		1,303		(1,997	)

Comprehensive Income	$	53,540	$	48,352	$	39,813

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

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	DECEMBER 31,
	2010			2009
ASSETS:
Real Estate:
Land	$	253,413		$	252,083
Buildings and improvements		251,174			251,791

		504,587			503,874
Less — accumulated depreciation and amortization		(144,217	)		(136,669	)

Real estate, net		360,370			367,205
Net investment in direct financing lease		20,540			19,156
Deferred rent receivable (net of allowance of $8,170 at December 31, 2010 and $9,389 at December 31, 2009)		27,385			27,481
Cash and cash equivalents		6,122			3,050
Recoveries from state underground storage tank funds, net		3,966			3,882
Mortgages and accounts receivable, net		1,796			2,402
Prepaid expenses and other assets		6,965			9,696

Total assets	$	427,144		$	432,872


LIABILITIES AND SHAREHOLDERS’ EQUITY:
Borrowings under credit line	$	41,300		$	151,200
Term loan		23,590			24,370
Environmental remediation costs		14,874			16,527
Dividends payable		14,432			11,805
Accounts payable and accrued expenses		18,013			21,301

Total liabilities		112,209			225,203

Commitments and contingencies (notes 2, 3, 5 and 6)		—			—
Shareholders’ equity:
Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 29,944,155 at December 31, 2010 and 24,766,376 at December 31, 2009		299			248
Paid-in capital		368,093			259,459
Dividends paid in excess of earnings		(52,304	)		(49,045	)
Accumulated other comprehensive loss		(1,153	)		(2,993	)

Total shareholders’ equity		314,935			207,669

Total liabilities and shareholders’ equity	$	427,144		$	432,872

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

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	YEAR ENDED DECEMBER 31,
	2010			2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	51,700		$	47,049		$	41,810
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization expense		9,738			11,027			11,875
Impairment charges		—			1,135			—
Gain from dispositions of real estate		(1,705	)		(5,467	)		(2,787	)
Deferred rental revenue, net of allowance		96			(763	)		(1,803	)
Amortization of above-market and below-market leases		(1,260	)		(1,217	)		(790	)
Amortization of investment in direct financing lease		(323	)		(85	)		—
Accretion expense		775			884			956
Stock-based employee compensation expense		480			390			326
Changes in assets and liabilities:
Recoveries from state underground storage tank funds, net		291			724			827
Accounts receivable		448			(724	)		(5	)
Prepaid expenses and other assets		(483	)		339			423
Environmental remediation costs		(2,803	)		(2,400	)		(2,217	)
Accounts payable and accrued expenses		(31	)		1,640			(1,031	)

Net cash flow provided by operating activities		56,923			52,532			47,584

CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures		(4,725	)		(55,317	)		(6,579	)
Proceeds from dispositions of real estate		2,858			6,939			5,295
(Increase) decrease in cash held for property acquisitions		2,665			(1,623	)		2,397
Collection of mortgages receivable, net		158			(145	)		(55	)

Net cash flow provided by (used in) investing activities		956			(50,146	)		1,058

CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments) borrowings under credit agreement, net		(109,900	)		20,950			(2,250	)
(Repayments) borrowings under term loan agreement, net		(780	)		24,370			—
Cash dividends paid		(52,332	)		(46,834	)		(46,294	)
Net proceeds from issuance of common stock		108,205			—			9

Net cash flow used in financing activities		(54,807	)		(1,514	)		(48,535	)

Net increase in cash and cash equivalents		3,072			872			107
Cash and cash equivalents at beginning of period		3,050			2,178			2,071

Cash and cash equivalents at end of year	$	6,122		$	3,050		$	2,178

Supplemental disclosures of cash flow information
Cash paid (refunded)during the year for:
Interest	$	4,863		$	5,046		$	6,728
Income taxes, net		365			467			708
Recoveries from state underground storage tank funds		(1,250	)		(1,411	)		(1,511	)
Environmental remediation costs		5,917			6,154			6,542

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

GETTY REALTY CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries (the “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 intercompany accounts and transactions have been eliminated.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In 2009, the Financial Accounting Standards Board (“FASB”) established the Accounting Standards Codification, as amended (the “ASC”), as the sole reference source of authoritative accounting principles recognized by the FASB to be applied by non-governmental entities in the preparation of financial statements in conformity with GAAP. The Company adopted the codification during the quarter ended September 30, 2009 which had no impact on the Company’s financial position, results of operations or cash flows.

Use of Estimates, Judgments and Assumptions: The financial statements have been prepared in conformity with GAAP, which requires the Company’s management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the 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, net investment in direct financing lease, 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 2010, 2009 and 2008 are reclassified as discontinued operations. The operating results for the years ended 2009 and 2008 of such properties sold in 2010 have also been reclassified to discontinued operations to conform to the 2010 presentation. Discontinued operations for the year ended December 31, 2010, 2009 and 2008 are primarily comprised of gains or losses from property dispositions. The revenue from rental properties and expenses related to these properties are insignificant for the each of the three years ended December 31, 2010, 2009 and 2008.

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 16 to 25 years for buildings and improvements, or the term of the lease if shorter. Leasehold interests, 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 3 (three) months or less to be cash equivalents.

Deferred Rent Receivable and Revenue Recognition: The Company earns rental income under operating and direct financing leases with tenants. Minimum lease payments from operating leases are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on the consolidated balance sheet. 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. 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 above-market and below-market leases at the time properties are acquired is amortized into revenue from rental properties over the remaining lives of the in-place leases.

Direct Financing Lease: Income under a direct financing lease is included in revenues from rental properties and is recognized over the lease term using the effective interest rate method which produces a constant periodic rate of return on the net investment in the leased property. Net investment in direct financing lease represents the investment in leased assets accounted for as a direct financing lease. The investment in direct financing lease is increased for interest income earned and amortized over the life of the lease and reduced by the receipt of lease payments.

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 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 ended on January 1, 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 are included in the consolidated statements of comprehensive income and 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 gives effect, utilizing the two-class method, to the potential dilution from the issuance of common shares in settlement of restricted stock units (“RSUs” or “RSU”) which provide for non-forfeitable dividend equivalents equal to the dividends declared per common share. Basic earnings per common share is computed by dividing net earnings less dividend equivalents attributable to RSUs by the weighted-average number of common shares outstanding during the year. Diluted earnings per common share also gives effect to the potential dilution from the exercise of stock options utilizing the treasury stock method. (in thousands).


	Year ended December 31,
	2010			2009			2008
Earnings from continuing operations	$	50,107		$	41,653		$	38,716
Less dividend equivalents attributable to restricted stock units outstanding		(228	)		(162	)		(117	)

Earnings from continuing operations attributable to common shareholders used for basic earnings per share calculation		49,879			41,491			38,599
Discontinued operations		1,593			5,396			3,094

Net earnings attributable to common shareholders used for basic earnings per share calculation	$	51,472		$	46,887		$	41,693


Weighted-average number of common shares outstanding:
Basic		27,950			24,766			24,766
Stock options		3			1			1

Diluted		27,953			24,767			24,767


Restricted stock units outstanding at the end of the period		123			86			62

Stock-Based Compensation: Compensation cost for the Company’s stock-based compensation plans using the fair value method was $480,000, $390,000 and $326,000 for the years ended December 31, 2010, 2009 and 2008, 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.

Recent Accounting Developments and Amendments to the Accounting Standards Codification: In September 2006, the FASB amended the accounting standards related to fair value measurements of assets and liabilities (the “Fair Value Measurements Amendment”). The Fair Value Measurements Amendment generally applies whenever other standards require assets or liabilities to be measured at fair value. The Fair Value Measurements Amendment was effective in fiscal years beginning after November 15, 2007. Subsequently, the FASB delayed the effective date of the Fair Value Measurements Amendment 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 the Fair Value Measurements Amendment in January 2008 and the adoption of the provisions of the Fair Value Measurements Amendment for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis in January 2009 did not have a material impact on the Company’s financial position and results of operations.

In December 2007, the FASB amended the accounting standards related to business combinations (the “Business Combinations Amendment”) affecting 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. The Business Combinations Amendment 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 the Business Combinations Amendment by the Company in January 2009 did not result in a write-off of acquisition related transactions costs associated with transactions not yet consummated.

The FASB amended the accounting standards related to determining earnings per share (the “Earnings Per Share Amendment”). Due to the adoption of the “Earnings Per Share Amendment” effective as of January 1, 2009 and retrospectively applied to the years ended 2008 and 2007, basic earnings per common share gives effect, utilizing the two-class method, to the potential dilution from the issuance of common shares in settlement of restricted stock units (“RSUs” or “RSU”) which provide for non-forfeitable dividend equivalents equal to the dividends declared per common share. The adoption of the “Earnings Per Share Amendment” did not have a material impact in the determination of earnings per common share for the years ended December 31, 2010, 2009 and 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 managing the operations conducted at these properties and for the payment of taxes, maintenance, repair, insurance and other operating expenses related to these properties. In those instances where the Company determines that the best use for a property is no longer as a retail motor fuel outlet, the Company will seek an alternative tenant or buyer for the property. The Company leases or subleases approximately twenty of its properties for 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 owns or leases properties in New York, Connecticut, Massachusetts, New Jersey, Delaware, Maine, Maryland, New Hampshire, Pennsylvania, Rhode Island, Virginia, Vermont, Texas, North Carolina, Hawaii, California, Florida, Ohio, Arkansas, Illinois, and North Dakota.

As of December 31, 2010, Getty Petroleum Marketing Inc. (“Marketing”) leased from the Company, 817 properties. Eight hundred eight of the properties are leased to Marketing under a unitary master lease (the “Master Lease”) and nine properties are leased under supplemental leases (collectively with the Master Lease, the “Marketing Leases”). The Master Lease has an initial term of 15 years commencing December 9, 2000, and 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). If Marketing elects to exercise any renewal option, Marketing is required to notify us of such one year in advance of the commencement of the renewal term. The Master Lease is a unitary lease and, therefore, Marketing’s exercise of any renewal option can only be for all of the properties subject of the Master Lease. The supplemental leases have initial terms of varying expiration dates. The Marketing Leases include provisions for 2.0% annual rent escalations. (See note 11 for additional information regarding the portion of the Company’s financial results that are attributable to Marketing. See note 3 for additional information regarding contingencies related to Marketing and the Marketing Leases).

The Company estimates that Marketing makes annual real estate tax payments for properties leased under the Marketing Leases of approximately $13,000,000. 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 Company’s consolidated financial statements.

Revenues from rental properties included in continuing operations for the years ended December 31, 2010, 2009 and 2008 were $88,332,000, $84,416,000 and $82,654,000, respectively, of which $60,276,000, $60,615,000 and $60,047,000, respectively, were received from Marketing under the Marketing Leases and $26,609,000, $21,776,000 and $20,070,000, respectively, were received from other tenants. Rent received and rental property expenses include $1,849,000, $2,236,000 and $2,113,000 for the years ended December 31, 2010, 2009 and 2008, respectively, for real estate taxes paid by the Company which were reimbursed by Marketing and other tenants. In accordance with GAAP, the Company recognizes rental revenue in amounts which vary from the amount of rent contractually due or received during the periods presented. As a result, revenues from rental properties include non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line (or an average) basis over the current lease term, net amortization of above-market and below-market leases and recognition of rental income recorded under a direct financing lease using the effective interest method which produces a constant periodic rate of return on the net investment in the leased property (the “Revenue Recognition Adjustments”). Revenues from rental properties included in continuing operations which increased rental

revenue by $1,447,000, $2,025,000 and $2,537,000 for the years ended December 31, 2010, 2009 and 2008, respectively, include Revenue Recognition Adjustments respectively (See footnote 3 for additional information related to the Marketing Leases and the reserve.)

The components of the $20,540,000 net investment in direct financing lease as of December 31, 2010, are minimum lease payments receivable of $77,971,000 plus unguaranteed estimated residual value of $2,013,000 less unearned income of $59,444,000.

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, 2010, are as follows (in thousands)(See footnote 3 for additional information related to the Marketing Leases and the reserve):



							DIRECT
YEAR ENDING	OPERATING LEASES						FINANCING
DECEMBER 31,	MARKETING		OTHER TENANTS		SUBTOTAL		LEASE		TOTAL(a)
2011	$	59,680	$	22,679	$	82,359	$	3,308	$	85,667
2012		59,587		22,742		82,329		3,391		85,720
2013		59,643		22,264		81,907		3,478		85,385
2014		60,279		21,497		81,776		3,566		85,342
2015		56,698		20,788		77,486		3,655		81,141
Thereafter		—		146,054		146,054		60,573		206,627

(a) Includes $54,594,000 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 $7,007,000, $7,323,000 and $8,100,000 for the years ended December 31, 2010, 2009 and 2008, respectively, and is included in rental property expenses using the straight-line method. Rent received under subleases for the years ended December 31, 2010, 2009 and 2008 was $11,868,000, $12,760,000 and $13,986,000, 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. The leased properties have a remaining lease term averaging over eleven years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows: 2011 — $6,193,000, 2012 — $4,589,000, 2013 — $3,395,000, 2014 — $2,456,000, 2015 — $1,407,000 and $2,333,000 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, if any, with high credit quality institutions. Temporary cash investments, if any, are currently held in an overnight bank time deposit with JPMorgan Chase Bank, N.A.

As of December 31, 2010, the Company leased 817, or 78% of its 1,052 properties, on a long-term triple-net basis to Marketing. (See note 2 for additional information). The Company’s financial results 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 on retail petroleum marketing margins from the sale of refined petroleum products and rental income from its subtenants. Marketing’s subtenants either operate their gas stations, convenience stores, automotive repair services or other businesses at the Company’s properties or are petroleum distributors who may operate the Company’s properties directly and/or sublet the Company’s properties to the operators. Since a substantial portion of the Company’s revenues (66% for the year December 31, 2010), are derived from the Marketing Leases, any factor that adversely affects Marketing’s ability to meet its obligations under the Marketing Leases may have a material adverse effect on the Company’s business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price. (See note 11 for additional information regarding the portion of the Company’s financial results that are attributable to Marketing.)

The Company has not yet received Marketing’s unaudited consolidated financial statements for the year ended December 31, 2010. For the year ended December 31, 2009, Marketing reported a significant loss, continuing a trend of reporting large

losses in recent years. As a result of Marketing’s significant losses, including Marketing’s losses reported to the Company subsequent to Marketing’s reorganization in 2009 (discussed in more detail below) and the cumulative impact of those losses on Marketing’s financial position as of September 30, 2010, the Company continues to believe that Marketing likely does not have the ability to generate cash flows from its business operations sufficient to meet its obligations as they come due in the ordinary course under the terms of the Marketing Leases unless Marketing shows significant improvement in its financial results, reduces the number of properties under the Marketing Leases, or receives additional capital or credit support. There can be no assurance that Marketing will be successful in any of these efforts. It is possible that the deterioration of Marketing’s financial condition may continue or that Marketing may file bankruptcy and seek to reorganize or liquidate its business. It is also possible that Marketing may aggressively pursue seeking a modification of the Marketing Leases, including, removal of properties from the Marketing Leases, or a reduction in the rental payments owed by Marketing under the Marketing Lease. If Marketing does not meet its rental, environmental or other obligations under the Marketing Leases to the Company, such default could lead to a protracted and expensive process for retaking control of the Company’s properties. In addition to the risk of disruption in rent receipts, the Company is subject to the risk of incurring real estate taxes, maintenance, environmental and other expenses at properties subject to the Marketing Leases.

On February 28, 2011, OAO LUKoil (“Lukoil”), one of the largest integrated Russian oil companies, transferred its ownership interest in Marketing to Cambridge Petroleum Holding Inc. (“Cambridge”). The Company is not privy to the terms and conditions pertaining to this transaction between Lukoil and Cambridge. In connection with the transfer, the Company does not know what type or amount of consideration, if any, was paid or is payable by Lukoil or its subsidiaries to Cambridge or by Cambridge to Lukoil or its subsidiaries. The Company does not know if there are any ongoing contractual or business relationships between Lukoil or its subsidiaries or affiliates and Cambridge or its subsidiaries or affiliates. The Company has commenced discussions with the new owners and management of Marketing; however, it cannot predict the impact Lukoil’s transfer of its ownership interest in of Marking may have on the Company. While Lukoil had provided capital to Marketing in the past, there can be no assurance that Cambridge will provide financial support or will have the capacity to provide capital or financial support to Marketing in the future. The Company cannot predict what impact Lukoil’s transfer of its ownership interest to Cambridge will have on Marketing’s ability and willingness to perform its rental, environmental and other obligations under the Marketing Leases.

In the fourth quarter of 2009, Marketing announced a restructuring of its business. Marketing disclosed that the restructuring included the sale of all assets unrelated to the properties it leases from the Company, the elimination of parent-guaranteed debt, and steps to reduce operating costs. Although Marketing’s press release stated that its restructuring included the sale of all assets unrelated to the properties it leases from the Company, the Company has concluded, based on the press releases related to the Marketing/Bionol contract dispute described below, that Marketing’s restructuring did not include the sale of all assets unrelated to the properties it leases from the Company. Marketing sold certain assets unrelated to the properties it leases from the Company to its affiliates, LUKOIL Pan Americas LLC and LUKOIL North America LLC. The Company believes that Marketing retained other assets, liabilities and business matters unrelated to the properties it leases from the Company. As part of the restructuring, Marketing paid off debt which had been guaranteed or held by Lukoil with proceeds from the sale of assets to Lukoil affiliates. The Company cannot predict what impact Marketing’s restructuring, dispute with Bionol and other changes in its business model or impact on its business will have on the Company.

In June 2010, Marketing and Bionol Clearfield LLC (“Bionol”) each issued press releases regarding a contractual dispute between them. Bionol owns and operates an ethanol plant in Pennsylvania. Bionol and Marketing entered into a five-year contract under which Marketing agreed to purchase substantially all of the ethanol production from the Bionol plant, at formula-based prices. Bionol stated that Marketing breached the contract by not paying the agreed-upon price for the ethanol. According to Bionol’s press release, the cumulative gross purchase commitment under the contract could be on the order of one billion dollars. Marketing stated in its press release that it continues to pay Bionol millions of dollars each month for the ethanol, withholding only the amount of the purchase price in dispute and that it has filed for arbitration to resolve the dispute. Among other things related to this matter, the Company does not know: (i) the accuracy of the statements made by Marketing and Bionol when made or if such statements reflect the current status of the dispute; (ii) the cumulative or projected amount of the purchase price in dispute and how Marketing has accounted for the ethanol contract in its financial statements; or (iii) how the formula-based price compares to the market price of ethanol. The Company cannot predict with any certainty how the ultimate resolution of this matter may impact Marketing’s long-term financial performance and its ability to meet its obligations to the Company as they become due under the terms of the Marketing Leases.

From time to time when it was owned by Lukoil, the Company held discussions with representatives of Marketing regarding potential modifications to the Marketing Leases. These discussions did not result in a common understanding with Marketing that would form a basis for modification of the Marketing Leases. While we have recently initiated discussions with the new owners and management of Marketing, the Company at this time does not know what Marketing’s business strategy under its new ownership is or how it may change in the future. It is possible that Marketing may aggressively seek to modify the terms of the Marketing Leases or seek to remove a substantial number of properties from the Marketing Leases. The Company intends to continue to pursue the removal of individual properties from the Marketing Leases, and it remains open to removal of groups of properties; however, there is no agreement in place providing for removal of properties from the Marketing Leases. If Marketing ultimately determines that its business strategy is to exit all or a portion of the properties it leases from the Company, 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; what composition of properties, if any, may be removed from the Marketing Leases as part of any such modification; or what the terms of any agreement for modification of the Marketing Leases may be. The Company also cannot accurately predict what actions Marketing may take, and what the Company’s recourse may be, whether the Marketing Leases are modified or not. The Company may be required to increase or decrease the deferred rent receivable reserve, record additional impairment charges related to our properties, or accrue for environmental liabilities as a result of the potential or actual modification or termination of the Marketing Leases.

As permitted under the terms of the Marketing Leases, Marketing generally can, subject to any contrary terms under applicable third party leases, use each property for any lawful purpose, or for no purpose whatsoever. The Company believes that as of March 16, 2011, Marketing was not operating any of the nine terminals it leases from the Company and had removed, or has scheduled removal of, underground gasoline storage tanks and related equipment at approximately 140 of the Company’s retail properties and the Company also believes that most of these properties are either vacant or provide negative or marginal contribution to Marketing’s results. In those instances where the Company determines that the best use for a property is no longer as a retail motor fuel outlet, at the appropriate time the Company will seek an alternative tenant or buyer for such property. With respect to properties that are vacant or have had underground gasoline storage tanks and related equipment removed, it may be more difficult or costly to re-let or sell such properties as gas stations because of capital costs or possible zoning or permitting rights that are required and that may have lapsed during the period since gasoline was last sold at the property. Conversely, it may be easier to re-let or sell properties where underground gasoline storage tanks and related equipment have been removed if the property will not be used as a retail motor fuel outlet or if environmental contamination has been remediated.

The Company intends either to re-let or sell any properties removed from the Marketing Leases, whether such removal arises consensually by negotiation or as a result of default by Marketing, and reinvest any realized sales proceeds in new properties. The Company intends to offer any properties removed from the Marketing Leases to replacement tenants or buyers individually, or 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.

Based in part on the Company’s decision to remain open to negotiate with Marketing for a modification of the Marketing Leases, and its belief that the Marketing Leases will be modified prior to the expiration of the current lease term, the Company believes that it is probable that it will not collect all of the rent due related to properties the Company identified as being the most likely to be removed from the Marketing Leases. As of December 31, 2010 and 2009, the net carrying value of the deferred rent receivable attributable to the Marketing leases was $21,221,000 and $22,801,000, respectively, which was comprised of a gross deferred rent receivable of $29,391,000 and $32,190,000, respectively, partially offset by a valuation reserve of $8,170,000 and $9,389,000, respectively. The valuation reserves were estimated based on the deferred rent receivable attributable to properties identified by the Company as being the most likely to be removed from the Marketing Leases. The Company has not provided deferred rent receivable reserves related to the remaining properties subject to the Marketing Leases since, based on its assessments and assumptions as of December 31, 2010, the Company continued to believe that it was probable that it will collect the deferred rent receivable related to those remaining properties and that Lukoil will not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. It is possible that Marketing may aggressively pursue seeking a modification of the Marketing Leases

including removal of properties from the Marketing Leases or a reduction in the rental payments owed by Marketing under the Marketing Lease. The Company’s estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as it develops a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that the Company may change its estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, the Company may be required to increase or decrease its deferred rent receivable reserve or provide deferred rent receivable reserves related to the remaining properties subject to the Marketing Leases.

The Company has performed an impairment analysis of the carrying amount of the properties subject to the Marketing Leases from time to time in accordance with GAAP when indicators of impairment exist. During the year ended December 31, 2009, the Company reduced the estimated useful lives of certain long-lived assets for properties subject to the Marketing Leases resulting in accelerating the depreciation expense recorded for those assets. The impact to depreciation expense due to adjusting the estimated lives for certain long-lived assets beginning with the year ended December 31, 2009 was not material. During the year ended December 31, 2009, the Company reduced the carrying amount to fair value, and recorded impairment charges aggregating $1,135,000, for certain properties leased to Marketing where the carrying amount of the property exceeded the estimated undiscounted cash flows expected to be received during the assumed holding period and the estimated net sales value expected to be received at disposition. The impairment charges were attributable to general reductions in real estate valuations and, in certain cases, by the removal or scheduled removal of underground storage tanks by Marketing. The fair value of real estate is estimated based on the price that would be received to sell the property in an orderly transaction between marketplace participants at the measurement date, net of disposal costs. The valuation techniques that the Company used included discounted cash flow analysis, an income capitalization approach on prevailing or earnings multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring the fair value of a property, all of which are based on assumptions that are classified within Level 3 of the fair value hierarchy.

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 Marketing Leases and various other agreements with the Company relating to Marketing’s business and the properties it leases from the Company (collectively the “Marketing Environmental Liabilities”). However, the Company continues to have ongoing environmental remediation obligations at 186 retail sites and for certain pre-existing conditions at six of the terminals the Company leases to Marketing. If Marketing fails to pay the Marketing Environmental Liabilities, the Company may ultimately be responsible to pay for Marketing Environmental Liabilities as the property owner. The Company does not maintain pollution legal liability insurance to protect it from potential future claims for Marketing Environmental Liabilities. 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 environmental obligations and the Company can reasonably estimate the amount of the Marketing Environmental Liabilities for which it will be responsible to pay, or if the Company’s assumptions regarding the ultimate allocation methods or share of responsibility that it used to allocate environmental liabilities changes. However, as of December 31, 2010 the Company continued to believe that it was not probable that Marketing would not pay for substantially all of the Marketing Environmental Liabilities since the Company believed that Lukoil would not allow Marketing to fail to perform its rental, environmental and other obligations under the Marketing Leases. Accordingly, the Company did not accrue for the Marketing Environmental Liabilities as of December 31, 2010 or 2009. Nonetheless, the Company has determined that the aggregate amount of the Marketing Environmental Liabilities (as estimated by the Company) would be material to the Company if it was required to accrue for all of the Marketing Environmental Liabilities since as a result of such accrual, the Company would not be in compliance with the existing financial covenants in its Credit Agreement and its Term Loan Agreement. Such non-compliance would result in an event of default pursuant to each agreement which, if not waived, would prohibit the Company from drawing funds against the Credit Agreement and could result in the acceleration of the Company’s indebtedness under the Company’s restated senior unsecured revolving credit agreement expiring in March 2012 (the “Credit Agreement”) and the Company’s $25.0 million three-year term loan agreement expiring in September 2012 (the “Term Loan Agreement” or “Term Loan”). The Company’s estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as the Company develops a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that the Company may change its estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases, and accordingly, the Company may be required to accrue for the Marketing Environmental Liabilities.

Should the Company’s assessments, assumptions and beliefs made effective as of December 31, 2010 prove to be incorrect, or if circumstances change, the conclusions reached by the Company relating to the following may change (i) whether any or what combination of the properties subject to the Marketing Leases are likely to be removed from the Marketing Leases, (ii) recoverability of the deferred rent receivable for some or all of the properties subject to the Marketing Leases, (iii) potential impairment of the properties subject to the Marketing Leases 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. Accordingly, it is possible that the Company may be required to (i) increase or decrease the deferred rent receivable reserve related to the properties subject to the Marketing Leases, (ii) record an additional impairment charge related to the properties subject to the Marketing Leases, 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 filing for bankruptcy protection by Marketing or as a result of the potential or actual modification of the Marketing Leases or other factors, which may result in material adjustments to the amounts recorded for these assets and liabilities, and as a result of which, the Company may not be in compliance with the financial covenants in its Credit Agreement and its Term Loan Agreement.

The Company cannot provide any assurance that Marketing will continue to meet its rental, environmental or other obligations under the Marketing Leases. In the event that Marketing does 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 rental, environmental or other obligations and the Company accrues for certain of such liabilities; if the Company is unable to promptly re-let or sell the properties upon recapture from 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 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, 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 required to pay (and has paid) the first $1,500,000 of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing and the Company 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, 2010 and 2009 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 the Company’s petroleum marketing business was spun-off to our shareholders in March 1997 (the “Spin-Off”). As of December 31, 2010 and December 31, 2009, the Company had accrued $3,273,000 and $3,790,000, respectively, for certain of these matters which it believes were appropriate based on information then currently available. It is possible that the Company’s assumptions regarding, among other items, the ultimate resolution of and/or the Company’s ultimate share of responsibility for these matters may change, which may result in the Company providing or adjusting its accruals for these matters.

In September 2003, the Company received a directive (the “Directive”) from the State of New Jersey Department of Environmental Protection (the “NJDEP”) notifying the Company that it is one of approximately 66 potentially responsible parties for natural resource damages resulting from discharges of hazardous substances into the Lower Passaic River. The Directive calls for an assessment of the natural resources that have been injured by the discharges into the Lower Passaic River and interim compensatory restoration for the injured natural resources. There has been no material activity with respect to the NJDEP Directive since early after its issuance. The 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. Effective May 2007, the United States Environmental Protection Agency (“EPA”) entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with over 70 parties comprising a Cooperating Parties Group (“CPG”) (many of whom also named in the Directive) who have collectively agreed to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the Lower Passaic River. The Company is a party to the AOC and is a member of the CPG. 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, and is scheduled to be completed in or about 2014. 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.

In a related action, in December 2005, the State of New Jersey through various state agencies brought suit against certain companies which the State alleges are responsible for various categories of past and future damages resulting from discharges of hazardous substances to the Passaic River. In February 2009, certain of these defendants filed third-party complaints against approximately 300 additional parties, including the Company, seeking contribution for such parties’ proportionate share of response costs, cleanup, and other damages, based on their relative contribution to pollution of the Passaic River and adjacent bodies of water. The Company believes that ChevronTexaco is contractually obligated to indemnify the Company, pursuant to an indemnification 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.

During 2010, the Company was defending against 53 lawsuits brought by or on behalf of private and public water providers and governmental agencies. These cases alleged (and, as described below with respect to one remaining case, continue to allege) various theories of liability due to contamination of groundwater with methyl tertiary butyl ether (a fuel derived from methanol, commonly referred to as “MTBE”) as the basis for claims seeking compensatory and punitive damages, and name as defendant approximately 50 petroleum refiners, manufacturers, distributors and retailers of MTBE, or gasoline containing MTBE. During the quarter ended March 31, 2010, the Company reached agreements to settle two plaintiff classes covering 52 of the 53 pending cases. A settlement payment of $1,250,000 was made during the third quarter of 2010 covering 27 cases and settlement payment of $475,000 was made during the first quarter of 2011 covering 25 cases. Presently, the Company remains a defendant in one MTBE case involving multiple locations throughout the State of New Jersey brought by various governmental agencies of the State of New Jersey, including the NJDEP.

In 2010 and 2009, the Company provided litigation reserves aggregating $2,500,000 relating to the MTBE cases. However, the Company is still unable to estimate with certainty its liability for the case involving the State of New Jersey as there remains uncertainty as to the accuracy of the allegations in this case as they relate to it, the Company’s defenses to the claims, its rights to indemnification or contribution from Marketing, and the aggregate possible amount of damages for which the Company may be held liable.

The ultimate resolution of the matters related to the Lower Passaic River and the MTBE litigation discussed above could cause a material adverse effect on the Company’s business, financial condition, results of operations, liquidity, ability to pay dividends 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, 2010 and December 31, 2009, the Company’s consolidated balance sheets included, in accounts payable and accrued expenses, $278,000 and $292,000, 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, 2009 and 2008 include, in general and administrative expenses, a charge of $25,000 and a credit of $72,000, 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 distribute at least ninety percent of its “earnings and profits” (as defined in the Internal Revenue Code) 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, TERM LOAN AGREEMENT AND INTEREST RATE SWAP AGREEMENT

The Company is a party to 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 was scheduled to expire in March 2011; however, subsequent to December 31, 2010, the maturity date was extended by an additional year to March 2012. As of December 31, 2010, borrowings under the Credit Agreement were $41,300,000, bearing interest at a rate of 1.31% per annum. The Company had $133,700,000 available under the terms of the Credit Agreement as of December 31, 2010. 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, 2010, the applicable margin will remain at 0.0% for base rate borrowings and 1.00% for LIBOR rate borrowings.

Subject to the terms of the Credit Agreement and continued compliance with the covenants therein, the Company has the option, subject to approval by the Bank Syndicate, to 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. In addition, 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. 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 financial covenants such as those requiring the Company to maintain minimum tangible net worth, leverage ratios and coverage ratios and other covenants which may limit the Company’s ability to incur debt or pay dividends. The Credit Agreement contains customary events of default, including change of control, failure to maintain REIT status or a material adverse effect on the Company’s business, assets, prospects or condition. Any event of default, if not cured or waived, would prohibit the Company from drawing funds against the Credit Agreement and could result in the acceleration of the Company’s indebtedness under the Credit Agreement and could also give rise to an event of default and consequent acceleration of the Company’s indebtedness under its Term Loan Agreement described below.

On September 25, 2009, the Company entered into a $25,000,000 three-year Term Loan Agreement with TD Bank (the “Term Loan Agreement” or “Term Loan”) which expires in September 2012. As of December 31, 2010, borrowings under the Term Loan Agreement were $23,590,000 bearing interest at a rate of 3.5% per annum. The Term Loan Agreement provides for annual reductions of $780,000 in the principal balance with a $22,160,000 balloon payment due at maturity. The Term Loan Agreement bears interest at a rate equal to a thirty day LIBOR rate (subject to a floor of 0.4%) plus a margin of 3.1%. The Term Loan Agreement contains customary terms and conditions, including financial covenants such as those requiring the Company to maintain minimum tangible net worth, leverage ratios and coverage ratios and other covenants which may limit the Company’s ability to incur debt or pay dividends. The Term Loan Agreement contains customary events of default, including change of control, failure to maintain REIT status or a material adverse effect on the Company’s business, assets, prospects or condition. Any event of default, if not cured or waived, could result in the acceleration of the Company’s indebtedness under the Term Loan Agreement and could also give rise to an event of default and would prohibit the Company from drawing funds against the Credit Agreement and could result in the acceleration of the Company’s indebtedness under its Credit Agreement.

The aggregate maturity of the Company’s outstanding debt is as follows: 2011 — $780,000, and 2012 — $64,110,000.

The Company is a party to a $45,000,000 LIBOR based interest rate swap, 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 Company’s LIBOR based loan agreements. 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, 2010 and December 31, 2009, 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 2010, 2009 or 2008 representing the hedge’s ineffectiveness. At December 31, 2010 and 2009, the Company’s consolidated balance sheets include, in accounts payable and accrued expenses, an obligation for the fair value of the Swap Agreement of $1,153,000 and $2,993,000, respectively. For the year end December 31, 2010, 2009 and 2008, the Company has recorded, in accumulated other comprehensive loss in the Company’s consolidated balance sheets, a gain of $1,840,000, $1,303,000, and a loss of $1,997,000, respectively, from the change in the fair value of the Swap Agreement obligation related to the effective portion of the interest rate contract. The accumulated comprehensive loss of $1,153,000 recorded as of December 31, 2010 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 since it is expected that the Company’s LIBOR based borrowings will be refinanced with variable interest rate debt at their maturity.

The fair value of the Swap Agreement obligation was $1,153,000 as of December 31, 2010, 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 borrowings outstanding under the Credit Agreement was $40,400,000 as of December 31, 2010. The fair value of the borrowings outstanding under the Term Loan Agreement was $23,700,000 as of December 31, 2010. The fair value of the projected average borrowings outstanding under the Credit Agreement and the borrowings outstanding under the Term Loan Agreement were 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 or borrowings outstanding, which are based on unobservable “Level 3 inputs”. As of December 31, 2010, 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.

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 either regulatory or contractual closure (“Closure”). 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 817 properties leased to Marketing as of December 31, 2010, the Company has agreed to pay all costs relating to, and to indemnify Marketing for, certain environmental liabilities and obligations at 186 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 is 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 or stock price. (See note 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. Environmental accruals are based on estimates which are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and reasonably estimable. As of December 31, 2010, the Company had regulatory approval for remediation action plans in place for 227 (94%) of the 241 properties for which it continues to retain environmental responsibility and the remaining 14 properties (6%) remain in the assessment phase. In addition, the Company has nominal post-closure compliance obligations at 29 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 estimated environmental remediation cost and accretion expense included in environmental expenses in the Company’s consolidated statements of operations aggregated $2,738,000, $3,922,000 and $4,590,000 for 2010, 2009 and 2008, respectively, which amounts were net of changes in estimated recoveries from state UST remediation funds. In addition to estimated environmental remediation costs, environmental expenses also include project management fees, legal fees and provisions for environmental litigation loss reserves.

As of December 31, 2010, 2009, 2008 and 2007, the Company had accrued $14,874,000, $16,527,000, $17,660,000 and $18,523,000, respectively, as management’s best estimate of the fair value of reasonably estimable environmental remediation costs. As of December 31, 2010, 2009, 2008 and 2007, the Company had also recorded $3,966,000, $3,882,000, $4,223,000 and $4,652,000, 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 $12,645,000, $13,437,000 and $13,871,000 as of December 31, 2009, 2008 and 2007, respectively, were subsequently accreted for the change in present value due to the passage of time and, accordingly, $775,000, $884,000, and $956,000 of net accretion expense was recorded for the years ended December 31, 2010, 2009 and 2008, 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 note 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 or stock price.

6. INCOME TAXES

Net cash paid for income taxes for the years ended December 31, 2010, 2009 and 2008 of $365,000, $467,000, and $708,000, 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 $50,563,000, $47,349,000, and $40,906,000 for the years ended December 31, 2010, 2009 and 2008, respectively. The federal tax attributes of the common dividends for the years ended December 31, 2010, 2009 and 2008 were: ordinary income of 97.5%, 100.0%, and 87.4%; capital gain distributions of 0.4%, 0.0%, and 1.2% and non-taxable distributions of 2.1%, 0.0%, and 11.4%, 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 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. Tax returns filed for the years 2007, 2008 and 2009, and tax returns which will be filed for the year ended 2010, remain open to examination by federal and state tax jurisdictions under the respective statute of limitations. In 2006 the Company eliminated the amount it had 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, 2010, 2009 and 2008 is as follows (in thousands, except per share amounts):


							DIVIDEND			ACCUMULATED
							PAID			OTHER
	COMMON STOCK				PAID-IN		IN EXCESS			COMPREHENSIVE
	SHARES		AMOUNT		CAPITAL		OF EARNINGS			LOSS			TOTAL

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 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	)		(4,296	)		205,897
Net earnings								47,049						47,049
Dividends — $1.89 per share								(46,970	)					(46,970	)
Stock-based compensation						390								390
Net unrealized gain on interest rate swap											1,303			1,303

BALANCE, DECEMBER 31, 2009		24,766		248		259,459		(49,045	)		(2,993	)		207,669
Net earnings								51,700						51,700
Dividends — $1.91 per share								(54,959	)					(54,959	)
Stock-based compensation		1				480								480
Stock options exercised		2												—
Proceeds from issuance of common stock		5,175		51		108,154								108,205
Net unrealized gain on interest rate swap											1,840			1,840

BALANCE, DECEMBER 31, 2010		29,944	$	299	$	368,093		($52,304	)	$	(1,153	)	$	314,935

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, 2010, 2009, 2008 and 2007.

During the second quarter of 2010, the Company completed a public stock offering of 5,175,000 shares of the Company’s common stock. The $108,205,000 net proceeds from the issuance of common stock (after related transaction costs of $522,000) was used in part to repay a portion of the outstanding balance under the Credit Agreement and the remainder was used for general corporate purposes.

In the first quarter of 2011, the Company completed a public stock offering of 3,450,000 shares of the Company’s common stock, of which 3,000,000 shares were issued in January 2011 and 450,000 shares, representing the underwriter’s over-allotment, were issued in February 2011. Substantially all of the aggregate $91,753,000 net proceeds from the issuance of common stock (after related transaction costs of $500,000) was used to repay a portion of the outstanding balance under the Company’s Credit Agreement and the remainder was used for general corporate purposes.

8. EMPLOYEE BENEFIT PLANS

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 37,600, 23,600, and 23,800 restricted stock units (“RSUs”) and dividend equivalents in 2010, 2009 and 2008, respectively. RSUs granted before 2009 provide for settlement upon

termination of employment with the Company or termination of service from the Board of Directors and RSUs granted in 2009 and thereafter upon the earlier of 10 (ten) years after grant or termination. On the settlement date each vested RSU will have a value equal to one share of common stock and may be settled, at the sole discretion of the Compensation Committee, in cash or by the issuance of one share of common stock. The RSUs do not provide voting or other shareholder rights unless and until the RSU is settled for a share of common stock. The RSUs vest starting one year from the date of grant, on a cumulative basis at the annual rate of twenty percent of the total number of RSUs covered by the award. The dividend equivalents represent the value of the dividends paid per common share multiplied by the number of RSUs covered by the award. For the years ended December 31, 2010, 2009 and 2008, dividend equivalents aggregating approximately $228,000, $162,000 and $117,000, respectively, were charged against retained earnings when common stock dividends were declared.

The following is a schedule of the activity relating to the restricted stock units outstanding:


	NUMBER OF			FAIR VALUE
	RSUs					AVERAGE
	OUTSTANDING			AMOUNT		PER RSU
RSUs OUTSTANDING AT DECEMBER 31, 2007		39,200
Granted		23,800		$	639,000	$	26.86
Settled (a)		(400	)
Cancelled		(600	)

RSUs OUTSTANDING AT DECEMBER, 2008		62,000
Granted		23,600		$	393,000	$	16.64

RSUs OUTSTANDING AT DECEMBER 31, 2009		85,600
Granted		37,600		$	864,000	$	22.97

RSUs OUTSTANDING AT DECEMBER 31, 2010		123,200


(a)		The intrinsic value of the 400 RSUs settled in 2008 was $7,000.

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 fair value of the grants is recognized as compensation expense ratably over the five-year vesting period of the RSUs. Compensation expense related to RSUs for the years ended December 31, 2010, 2009 and 2008 was $466,000, $382,000 and $313,000, respectively, and is included in general and administrative expense in the accompanying consolidated statements of operations. As of December 31, 2010, there was $1,379,000 of unrecognized compensation cost related to RSUs granted under the 2004 Plan which cost is expected to be recognized over a weighted average period of approximately 2.9 years. The aggregate intrinsic value of the 123,200 outstanding RSUs and the 45,400 vested RSUs as of December 31, 2010 was $3,854,000 and $1,420,000, respectively.

The following is a schedule of the vesting activity relating to the restricted stock units outstanding:


	NUMBER
	OF RSUs			FAIR
	VESTED			VALUE

RSUs VESTED AT DECEMBER 31, 2007		9,960
Vested		7,840		$	213,000
Settled		(400	)

RSUs VESTED AT DECEMBER 31, 2008		17,400
Vested		12,400		$	335,000

RSUs VESTED AT DECEMBER 31, 2009		29,800
Vested		15,600		$	379,000

RSUs VESTED AT DECEMBER 31, 2010		45,400

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 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 $220,000, $159,000 and $151,000 for the years ended December 31, 2010, 2009 and 2008, respectively. These amounts are included in general and administrative expense in the accompanying consolidated statements of operations.

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. The total intrinsic value of the 5,250 and 500 options exercised during the years ended December 31, 2010 and 2008 was $76,000 and $5,000, respectively. As of December 31, 2010, there were 7,000 and 5,000 options outstanding which were exercisable at prices of $18.30 and $27.68 with a remaining contractual life of two and seven years, respectively. As of December 31, 2010, the aggregate intrinsic value of the 12,000 options outstanding was $109,000.

9. QUARTERLY FINANCIAL DATA

The following is a summary of the quarterly results of operations for the years ended December 31, 2010 and 2009 (unaudited as to quarterly information) (in thousands, except per share amounts):


	THREE MONTHS ENDED								YEAR ENDED
YEAR ENDED DECEMBER 31, 2010	MARCH 31,		JUNE 30,		SEPTEMBER 30,		DECEMBER 31,		DECEMBER 31,
Revenues from rental properties	$	22,449	$	21,734	$	21,981	$	22,168	$	88,332
Earnings from continuing operations		11,575		12,590		13,532		12,410		50,107
Net earnings		11,905		13,959		13,351		12,485		51,700
Diluted earnings per common share:
Earnings from continuing operations		.47		.46		.45		.41		1.79
Net earnings		.48		.51		.45		.41		1.85


	THREE MONTHS ENDED								YEAR ENDED
YEAR ENDED DECEMBER 31, 2009 (a)	MARCH 31,		JUNE 30,		SEPTEMBER 30,		DECEMBER 31,		DECEMBER 31,
Revenues from rental properties	$	20,622	$	20,529	$	20,754	$	22,511	$	84,416
Earnings from continuing operations		9,597		10,547		10,668		10,841		41,653
Net earnings		9,928		13,605		12,185		11,331		47,049
Diluted earnings per common share:
Earnings from continuing operations		.39		.43		.43		.44		1.68
Net earnings		.40		.55		.49		.46		1.90


(a)		Includes the effect of the $49.0 million acquisition of gasoline stations and convenience store properties from White Oak Petroleum LLC from its inception on September 25, 2009 through December 31, 2009.

10. PROPERTY ACQUISITIONS

In 2010, the Company purchased three properties. In addition to the acquisition of 36 properties from White Oak Petroleum LLC (“White Oak”), described in more detail below, in 2009 the Company also exercised its fixed purchase price option for one property and purchased three properties. In 2008, the Company exercised its fixed price purchase option for three leased properties and purchased six properties.

Acquisition of thirty-six properties from White Oak

On September 25, 2009, the Company acquired the real estate assets of 36 gasoline station and convenience store properties located primarily in Prince George’s County, Maryland for $49,000,000 in a sale/leaseback transaction with White Oak. The Company financed this transaction with $24,500,000 of borrowings under the Company’s existing Credit Agreement and $24,500,000 of indebtedness under the Term Loan Agreement entered into on that date.

The real estate assets were acquired in a simultaneous transaction among ExxonMobil, White Oak, and the Company, whereby White Oak acquired the properties and related businesses from ExxonMobil and simultaneously completed a sale/leaseback of the real estate of all 36 properties with the Company. The unitary triple-net lease for the properties between White Oak and the Company has an initial term of 20 years and provides White Oak with options for three renewal terms of ten years each extending to 2059. The unitary triple-net lease provides for 2¹/2% annual rent escalations. White Oak is responsible for all existing and future environmental conditions at the properties.

The purchase price has been allocated among the assets acquired based on the estimates of fair value. The Company estimated the fair value of acquired tangible assets (consisting of land, buildings and equipment) “as if vacant.” Based on these estimates, the Company allocated $29,929,000 of the purchase price to land, which is accounted for as an operating lease, and $19,071,000 to buildings and equipment, which is accounted for as a direct financing lease.

The following unaudited pro forma condensed consolidated financial information has been prepared utilizing the historical financial statements of Getty Realty Corp. and the effect of additional revenue and expenses from the properties acquired assuming that the acquisitions had occurred as of the beginning of each of the years presented, after giving effect to certain adjustments including (a) rental income adjustments resulting from the straight-lining of scheduled rent increases and (b) rental income adjustments resulting from the recognition of revenue under direct financing leases over the lease term using the effective interest rate method which produces a constant periodic rate of return on the net investment in the leased property. The following information also gives effect to the additional interest expense resulting from the assumed increase in borrowing outstanding drawn under the Credit Agreement and borrowings outstanding provided by the Term Loan Agreement to fund the acquisition.

The unaudited pro forma condensed financial information, presented below, is not indicative of the results of operations that would have been achieved had the acquisition from White Oak reflected herein been consummated on the dates indicated or that will be achieved in the future.


	Year Ended December 31,
(in thousands)	2009		2008

Revenue from rental properties	$	89,372	$	89,370


Net earnings	$	50,930	$	45,885


Basic and diluted net earnings per common share	$	2.06	$	1.85

The selected financial data of White Oak, LLC as of December 31, 2010 and for the year then ended and as of December 31, 2009 and for the period then ended, which has been prepared by White Oak’s management, is provided below.


	Year / Period Ended December 31,
	2010			2009(a)

(in thousands)
Operating Data (for the year / period ended December 31):
Gross sales	$	169,237		$	44,198
Gross profit		5,971			1,082
Net loss		(383	)		(1,382	)

Balance Sheet Data (at December 31):
Current assets		5,398			4,251
Noncurrent assets		53,559			54,841
Current liabilities		5,776			7,442
Noncurrent liabilities		53,883			51,968


(a)		Operating data from its inception on September 26, 2009 through December 31, 2009.

11. SUPPLEMENTAL CONDENSED COMBINING FINANCIAL INFORMATION

Condensed combining financial information as of December 31, 2010 and 2009 and for the three year period ended December 31, 2010 has been derived from the Company’s books and records and is provided below to illustrate, for

informational purposes only, the net contribution to the Company’s financial results that are realized from the leasing operations of properties leased to Marketing (which represents approximately 78% of the Company’s properties as of December 31, 2010) and from properties leased to other tenants. The condensed combining financial information set forth below presents the results of operations, net assets, and cash flows of the Company, related to Marketing, the Company’s other tenants and the Company’s corporate functions necessary to arrive at the information for the Company on a combined basis. The assets, liabilities, lease agreements and other leasing operations attributable to the Marketing Leases and other tenant leases are not segregated in legal entities. However, the Company generally maintains its books and records in site specific detail and has classified the operating results which are clearly applicable to each owned or leased property as attributable to Marketing or to the Company’s other tenants or to non-operating corporate functions. The condensed combining financial information has been prepared by the Company using certain assumptions, judgments and allocations. Each of the Company’s properties were classified as attributable to Marketing, other tenants or corporate for all periods presented based on the property’s use as of December 31, 2010 or the property’s use immediately prior to its disposition or third party lease expiration.

Environmental remediation expenses have been attributed to Marketing or other tenants on a site specific basis and environmental related litigation expenses and professional fees have been attributed to Marketing or other tenants based on the pro rata share of specifically identifiable environmental expenses for the three year period ended December 31, 2010. 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 either regulatory or contractual closure (“Closure”). 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. Of the 817 properties leased to Marketing as of December 31, 2010, the Company has agreed to pay all costs relating to, and to indemnify Marketing for, certain environmental liabilities and obligations at 186 retail properties that have not achieved Closure and are scheduled in the Master Lease. (See note 5 for additional information.)

The heading “Corporate” in the statements below includes assets, liabilities, income and expenses attributed to general and administrative functions, financing activities and parent or subsidiary level income taxes, capital taxes or franchise taxes which were not incurred on behalf of the Company’s leasing operations and are not reasonably allocable to Marketing or other tenants. With respect to general and administrative expenses, the Company has attributed those expenses clearly applicable to Marketing and other tenants. The Company considered various methods of allocating to Marketing and other tenants amounts included under the heading “Corporate” and determined that none of the methods resulted in a reasonable allocation of such amounts or an allocation of such amounts that more clearly summarizes the net contribution to the Company’s financial results realized from the leasing operations of properties leased to Marketing and of properties leased to other tenants. Moreover, the Company determined that each of the allocation methods it considered resulted in a presentation of these amounts that would make it more difficult to understand the clearly identifiable results from its leasing operations attributable to Marketing and other tenants. The Company believes that the segregated presentation of assets, liabilities, income and expenses attributed to general and administrative functions, financing activities and parent or subsidiary level income taxes, capital taxes or franchise taxes provides the most meaningful presentation of these amounts since changes in these amounts are not fully correlated to changes in the Company’s leasing activities.

While the Company believes these assumptions, judgments and allocations are reasonable, the condensed combining financial information is not intended to reflect what the net results would have been had assets, liabilities, lease agreements and other operations attributable to Marketing or its other tenants had been conducted through stand-alone entities during any of the periods presented.

The condensed combining statement of operations of Getty Realty Corp. for the year ended December 31, 2010 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
Revenues from rental properties	$	58,656		$	29,676		$	—		$	88,332
Operating expenses:
Rental property expenses		(7,046	)		(2,604	)		(478	)		(10,128	)
Environmental expenses, net		(5,300	)		(127	)		—			(5,427	)
General and administrative expenses		(146	)		(135	)		(7,897	)		(8,178	)
Depreciation and amortization expense		(4,223	)		(5,471	)		(37	)		(9,731	)

Total operating expenses		(16,715	)		(8,337	)		(8,412	)		(33,464	)

Operating income (loss)		41,941			21,339			(8,412	)		54,868
Other income, net		—			—			289			289
Interest expense		—			—			(5,050	)		(5,050	)

Earnings (loss) from continuing operations		41,941			21,339			(13,173	)		50,107
Discontinued operations:
Loss from operating activities		(106	)		(6	)		—			(112	)
Gains on dispositions of real estate		1,685			20			—			1,705

Earnings from discontinued operations		1,579			14			—			1,593

Net earnings (loss)	$	43,520		$	21,353		$	(13,173	)	$	51,700

The condensed combining statement of operations of Getty Realty Corp. for the year ended December 31, 2009 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
Revenues from rental properties	$	60,476		$	23,940		$	—		$	84,416
Operating expenses:
Rental property expenses		(6,925	)		(3,204	)		(560	)		(10,689	)
Impairment Charges		(1,135	)		—			—			(1,135	)
Environmental expenses, net		(8,610	)		(201	)		—			(8,811	)
General and administrative expenses		(280	)		(231	)		(6,338	)		(6,849	)
Depreciation and amortization expense		(5,554	)		(5,148	)		(71	)		(10,773	)

Total operating expenses		(22,504	)		(8,784	)		(6,969	)		(38,257	)

Operating income (loss)		37,972			15,156			(6,969	)		46,159
Other income, net		153			(12	)		444			585
Interest expense		—			—			(5,091	)		(5,091	)

Earnings (loss) from continuing operations		38,125			15,144			(11,616	)		41,653
Discontinued operations:
Earnings (loss) from operating activities		181			(111	)		—			70
Gains on dispositions of real estate		4,591			735			—			5,326

Earnings from discontinued operations		4,772			624			—			5,396

Net earnings (loss)	$	42,897		$	15,768		$	(11,616	)	$	47,049

The condensed combining statement of operations of Getty Realty Corp. for the year ended December 31, 2008 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
Revenues from rental properties	$	60,526		$	22,128		$	—		$	82,654
Operating expenses:
Rental property expenses		(6,938	)		(3,904	)		(601	)		(11,443	)
Environmental expenses, net		(7,126	)		(180	)		—			(7,306	)
General and administrative expenses		(686	)		(193	)		(5,952	)		(6,831	)
Depreciation and amortization expense		(6,749	)		(4,939	)		(39	)		(11,727	)

Total operating expenses		(21,499	)		(9,216	)		(6,592	)		(37,307	)

Operating income (loss)		39,027			12,912			(6,592	)		45,347
Other income, net		599			(210	)		14			403
Interest expense		—			—			(7,034	)		(7,034	)

Earnings (loss) from continuing operations		39,626			12,702			(13,612	)		38,716
Discontinued operations:
Earnings from operating activities		527			169			—			696
Gains on dispositions of real estate		697			1,701			—			2,398

Earnings from discontinued operations		1,224			1,870			—			3,094

Net earnings (loss)	$	40,850		$	14,572		$	(13,612	)	$	41,810

The condensed combining balance sheet of Getty Realty Corp. as of December 31, 2010 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
ASSETS:
Real Estate:
Land	$	137,151		$	116,262		$	—		$	253,413
Buildings and improvements		152,570			98,233			371			251,174

		289,721			214,495			371			504,587
Less — accumulated depreciation and amortization		(118,784	)		(25,241	)		(192	)		(144,217	)

Real estate, net		170,937			189,254			179			360,370
Net investment in direct financing lease		—			20,540			—			20,540
Deferred rent receivable, net		21,221			6,164			—			27,385
Cash and cash equivalents		—			—			6,122			6,122
Recoveries from state underground storage tank funds, net		3,874			92			—			3,966
Mortgages and accounts receivable, net		13			509			1,274			1,796
Prepaid expenses and other assets		—			3,444			3,521			6,965

Total assets		196,045			220,003			11,096			427,144


LIABILITIES:
Borrowings under credit line		—			—			41,300			41,300
Term loan		—			—			23,590			23,590
Environmental remediation costs		13,841			1,033			—			14,874
Dividends payable		—			—			14,432			14,432
Accounts payable and accrued expenses		962			6,953			10,098			18,013

Total liabilities		14,803			7,986			89,420			112,209


Net assets (liabilities)	$	181,242		$	212,017		$	(78,324	)	$	314,935

The condensed combining balance sheet of Getty Realty Corp. as of December 31, 2009 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
ASSETS:
Real Estate:
Land	$	137,887		$	114,196		$	—		$	252,083
Buildings and improvements		154,345			97,171			275			251,791

		292,232			211,367			275			503,874
Less — accumulated depreciation and amortization		(116,128	)		(20,386	)		(155	)		(136,669	)

Real estate, net		176,104			190,981			120			367,205
Net investment in direct financing lease		—			19,156			—			19,156
Deferred rent receivable, net		22,801			4,680			—			27,481
Cash and cash equivalents		—			—			3,050			3,050
Recoveries from state underground storage tank funds, net		3,784			98			—			3,882
Mortgages and accounts receivable, net		—			970			1,432			2,402
Prepaid expenses and other assets		—			4,052			5,644			9,696

Total assets		202,689			219,937			10,246			432,872


LIABILITIES:
Borrowings under credit line		—			—			151,200			151,200
Term loan		—			—			24,370			24,370
Environmental remediation costs		16,055			472			—			16,527
Dividends payable		—			—			11,805			11,805
Accounts payable and accrued expenses		920			8,643			11,738			21,301

Total liabilities		16,975			9,115			199,113			225,203


Net assets (liabilities)	$	185,714		$	210,822		$	(188,867	)	$	207,669

The condensed combining statement of cash flows of Getty Realty Corp. for the year ended December 31, 2010 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	43,520		$	21,353		$	(13,173	)	$	51,700
Adjustments to reconcile net earnings (loss) to net cash flow provided by operating activities:
Depreciation and amortization expense		4,229			5,472			37			9,738
Impairment charges		—			—			—			—
Gain from dispositions of real estate		(1,685	)		(20	)		—			(1,705	)
Deferred rental revenue		1,580			(1,484	)		—			96
Amortization of above-market and below-market leases		—			(1,260	)		—			(1,260	)
Amortization of investment in direct financing lease		—			(323	)		—			(323	)
Accretion expense		758			17			—			775
Stock-based employee compensation expense		—			—			480			480
Changes in assets and liabilities:
Recoveries from state underground storage tank funds, net		276			15			—			291
Mortgages and accounts receivable, net		(13	)		461			—			448
Prepaid expenses and other assets		—			59			(542	)		(483	)
Environmental remediation costs		(3,338	)		535			—			(2,803	)
Accounts payable and accrued expenses		42			(273	)		200			(31	)

Net cash flow provided by (used in) operating activities		45,369			24,552			(12,998	)		56,923


CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures		—			(4,629	)		(96	)		(4,725	)
Proceeds from dispositions of real estate		2,623			235			—			2,858
Decrease in cash held for property acquisitions		—			—			2,665			2,665
Collection (issuance) of mortgages receivable, net		—			—			158			158

Net cash flow provided by (used in) investing activities		2,623			(4,394	)		2,727			956


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under credit agreement, net		—			—			(109,900	)		(109,900	)
Repayments under term loan agreement, net		—			—			(780	)		(780	)
Cash dividends paid		—			—			(52,332	)		(52,332	)
Net proceeds from issuance of common stock		—			—			108,205			108,205
Cash consolidation- Corporate		(47,992	)		(20,158	)		68,150			—

Net cash flow (used in) provided by financing activities		(47,992	)		(20,158	)		13,343			(54,807	)


Net increase in cash and cash equivalents		—			—			3,072			3,072
Cash and cash equivalents at beginning of period		—			—			3,050			3,050

Cash and cash equivalents at end of year	$	—		$	—		$	6,122		$	6,122

The condensed combining statement of cash flows of Getty Realty Corp. for the year ended December 31, 2009 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	42,897		$	15,768		$	(11,616	)	$	47,049
Adjustments to reconcile net earnings (loss) to net cash flow provided by operating activities:
Depreciation and amortization expense		5,605			5,351			71			11,027
Impairment charges		1,135			—			—			1,135
Gain from dispositions of real estate		(4,744	)		(723	)		—			(5,467	)
Deferred rental revenue		99			(862	)		—			(763	)
Amortization of above-market and below-market leases		—			(1,217	)		—			(1,217	)
Amortization of investment in direct financing lease		—			(85	)		—			(85	)
Accretion expense		864			20			—			884
Stock-based employee compensation expense		—			—			390			390
Changes in assets and liabilities:
Recoveries from state underground storage tank funds, net		650			74			—			724
Mortgages and accounts receivable, net		7			(731	)		—			(724	)
Prepaid expenses and other assets		—			(47	)		386			339
Environmental remediation costs		(2,384	)		(16	)		—			(2,400	)
Accounts payable and accrued expenses		(232	)		305			1,567			1,640

Net cash flow provided by (used in) operating activities		43,897			17,837			(9,202	)		52,532


CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures		(483	)		(54,785	)		(49	)		(55,317	)
Proceeds from dispositions of real estate		5,701			1,238			—			6,939
Increase in cash held for property acquisitions		—			—			(1,623	)		(1,623	)
Collection (issuance) of mortgages receivable, net		—			—			(145	)		(145	)

Net cash flow provided by (used in) investing activities		5,218			(53,547	)		(1,817	)		(50,146	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under credit agreement, net		—			—			20,950			20,950
Borrowings under term loan agreement, net		—			—			24,370			24,370
Cash dividends paid		—			—			(46,834	)		(46,834	)
Cash consolidation — Corporate		(49,115	)		35,710			13,405			—

Net cash flow (used in) provided by financing activities		(49,115	)		35,710			11,891			(1,514	)


Net increase in cash and cash equivalents		—			—			872			872
Cash and cash equivalents at beginning of period		—			—			2,178			2,178

Cash and cash equivalents at end of year	$	—		$	—		$	3,050		$	3,050

The condensed combining statement of cash flows of Getty Realty Corp. for the year ended December 31, 2008 is as follows (in thousands):


	Getty
	Petroleum			Other
	Marketing			Tenants			Corporate			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	40,850		$	14,572		$	(13,612	)	$	41,810
Adjustments to reconcile net earnings (loss) to net cash flow provided by operating activities:
Depreciation and amortization expense		6,839			4,997			39			11,875
Gain from dispositions of real estate		(1,296	)		(1,491	)		—			(2,787	)
Deferred rental revenue		(539	)		(1,264	)		—			(1,803	)
Amortization of above-market and below-market leases		—			(790	)		—			(790	)
Accretion expense		934			22			—			956
Stock-based employee compensation expense		—			—			326			326
Changes in assets and liabilities:
Recoveries from state underground storage tank funds, net		691			136			—			827
Mortgages and accounts receivable, net		8			(13	)		—			(5	)
Prepaid expenses and other assets		—			12			411			423
Environmental remediation costs		(1,945	)		(272	)		—			(2,217	)
Accounts payable and accrued expenses		(222	)		382			(1,191	)		(1,031	)

Net cash flow provided by (used in) operating activities		45,320			16,291			(14,027	)		47,584


CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures		(1,233	)		(5,346	)		—			(6,579	)
Proceeds from dispositions of real estate		3,268			2,027			—			5,295
Increase in cash held for property acquisitions		—			—			2,397			2,397
Collection (issuance) of mortgages receivable, net		—			—			(55	)		(55	)

Net cash flow (used in) provided by investing activities		2,035			(3,319	)		2,342			1,058


CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under credit agreement, net		—			—			(2,250	)		(2,250	)
Cash dividends paid		—			—			(46,294	)		(46,294	)
Cash paid in settlement of restricted stock units		—			—			9			9
Cash consolidation — Corporate		(47,355	)		(12,972	)		60,327			—

Net cash flow (used in) provided by financing activities		(47,355	)		(12,972	)		11,792			(48,535	)


Net increase in cash and cash equivalents		—			—			107			107
Cash and cash equivalents at beginning of period		—			—			2,071			2,071

Cash and cash equivalents at end of year	$	—		$	—		$	2,178		$	2,178

12. SUBSEQUENT EVENTS

Acquisition: In January 2011, the Company acquired fee or leasehold title to 59 Mobil-branded gasoline station and convenience store properties and also took a security interest in six other Mobil-branded gasoline stations and convenience store properties in a sale/leaseback and loan transaction with CPD NY Energy Corp. (“CPD NY”), a subsidiary of Chestnut Petroleum Dist. Inc. The Company’s total investment in the transaction was $111.3 million, which was financed entirely with borrowings under the Company’s Credit Agreement.

The properties were acquired or financed in a simultaneous transaction among ExxonMobil, CPD NY and the Company whereby CPD NY acquired a portfolio of 65 gasoline station and convenience stores from ExxonMobil and simultaneously completed a sale/leaseback of 59 of the acquired properties with the Company. The lease between the Company, as lessor, and CPD NY, as lessee, governing the properties is a unitary triple-net lease agreement (the “CPD Lease”), with an initial term of 15 years, and options for up to three successive renewal terms of ten years each. The CPD Lease requires CPD NY to pay a fixed annual rent for the properties (the “Rent”), plus an amount equal to all rent due to third party landlords pursuant

to the terms of third party leases. The Rent is scheduled to increase on the third anniversary of the date of the CPD Lease and on every third anniversary thereafter. As a triple-net lessee, CPD NY is required to pay all amounts pertaining to the properties subject to the CPD Lease, including taxes, assessments, licenses and permit fees, charges for public utilities and all governmental charges. Partial funding to CPD NY for the transaction was also provided by the Company under a secured, self-amortizing loan having a 10-year term (the “CPD Loan”) Net rent payments under the CPD Lease together with interest earned on the CPD Loan are expected to aggregate approximately $10.2 million in calendar year 2011.

It is impractical to provide pro forma financial information showing the impact on the Company’s historical financial statements related to the acquisition since the initial accounting for the acquisitions in accordance with accounting standards codification 805-10 is incomplete at this time.

Public Stock Offering: In the first quarter of 2011, the Company completed a public stock offering of 3,450,000 shares of the Company’s common stock, of which 3,000,000 shares were issued in January 2011 and 450,000 shares, representing the underwriter’s over-allotment, were issued in February 2011. Substantially all of the aggregate $91,753,000 net proceeds from the issuance of common stock was used to repay a portion of the outstanding balance under the Credit Agreement and the remainder was used for general corporate purposes.

Transfer of Ownership Interest in Marketing: On February 28, 2011 Lukoil, one of the largest integrated Russian oil companies transferred its ownership interest in Marketing, our largest tenant, to Cambridge. The Company has commenced discussions with the new owners and management of Marketing; however, it cannot predict the impact the transfer of Marketing may have on the Company’s business.

As of December 31, 2010, the net carrying value of the deferred rent receivable attributable to the Marketing Leases was $21,221,000. Although the Company’s 2010 financial statements were not affected by the transfer of Lukoil’s ownership interest in Marketing to Cambridge, the Company’s estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases made effective December 31, 2010 are subject to reevaluation and possible change as the Company develops a greater understanding of factors relating to the new ownership and management of Marketing, Marketing’s business plan and strategies and its capital resources. It is possible that he Company may be required to increase or decrease the deferred rent reserve, record additional impairment charges related to the properties, or accrue for Marketing Environmental Liabilities as a result of changes in its estimates, judgments, assumptions and beliefs regarding Marketing and the Marketing Leases that affect the amounts reported in the Company’s financial statements. It is also possible that as a result of material adjustments to the amounts recorded for certain of the Company’s assets and liabilities that it may not be in compliance with the financial covenants in the Company’s Credit Agreement or Term Loan Agreement.

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, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010 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, 2010, 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 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 16, 2011

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 of 1934, as amended, 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 as of December 31, 2010.

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, 2010.

The effectiveness of our internal control over financial reporting as of December 31, 2010, 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.

Item 9B. Other Information

None.

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
David B. Driscoll		56	President, Chief Executive Officer and Director		2010
Leo Liebowitz		83	Director and Chairman of the Board		1971
Joshua Dicker		50	Vice President, General Counsel and Secretary		2008
Kevin C. Shea		51	Executive Vice President		2001
Thomas J. Stirnweis		52	Vice President, Treasurer and Chief Financial Officer		2001

Mr. Driscoll was appointed to the position of President of the Company, effective in April 2010. In addition, Mr. Driscoll was appointed as the Company’s Chief Executive Officer, effective May 2010. Mr. Driscoll is also a Director of the Company. Mr. Driscoll was a Managing Director at Morgan Joseph and Co. Inc. where he was a founding shareholder. Prior to his work at Morgan Joseph, Mr. Driscoll was a Managing Director for ING Barings, where he was Global Coordinator of the real estate practice and prior to ING Barings, Mr. Driscoll was the founder of the real estate group at Smith Barney, which he ran for more than a decade.

Mr. Liebowitz co-founded the Company in 1955 and served as Chief Executive Officer from 1985 until May 2010. 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. Liebowitz is also Chairman of the Company’s Board of Directors and will retain an active role in the Company through May 2013 at which time he intends to retire.

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

Mr. 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.

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

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

Item 11. Executive Compensation

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

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

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

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

There were no such relationships or transactions to report for the year ended December 31, 2010.

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.

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		87
Schedule II — Valuation and Qualifying Accounts and Reserves for the years ended December 31, 2010, 2009 and 2008		87
Schedule III — Real Estate and Accumulated Depreciation and Amortization as of December 31, 2010		88

(a)(3) Exhibits

Information in response to this Item is incorporated herein by reference to the Exhibit Index on page 109 of this Annual Report on Form 10-K.

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 16, 2011 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 16, 2011

GETTY REALTY CORP. and SUBSIDIARIES

SCHEDULE II — VALUATION and QUALIFYING ACCOUNTS and RESERVES

for the years ended December 31, 2010, 2009 and 2008

(in thousands)


	BALANCE AT						BALANCE
	BEGINNING						AT END
	OF YEAR		ADDITIONS		DEDUCTIONS		OF YEAR
December 31, 2010:
Allowance for deferred rent receivable	$	9,389	$	—	$	1,219	$	8,170
Allowance for mortgages and accounts receivable	$	135	$	226	$	—	$	361
Allowance for deposits held in escrow	$	377	$	—	$	—	$	377
Allowance for recoveries from state underground storage tank funds	$	650	$	—	$	—	$	650

December 31, 2009:
Allowance for deferred rent receivable	$	10,029	$	—	$	640	$	9,389
Allowance for mortgages and accounts receivable	$	100	$	120	$	85	$	135
Allowance for deposits held in escrow	$	377	$	—	$	—	$	377
Allowance for recoveries from state underground storage tank funds	$	650	$	—	$	—	$	650

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

GETTY REALTY CORP. and SUBSIDIARIES

SCHEDULE III — REAL ESTATE AND ACCUMULATED DEPRECIATION AND AMORTIZATION

As of December 31, 2010

(in thousands)

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


	2010			2009			2008
Investment in real estate:
Balance at beginning of year	$	503,874		$	473,567		$	474,254
Acquisitions and capital expenditures		3,664			36,246			6,540
Impairment		—			(1,135	)		—
Sales and condemnations		(1,819	)		(3,298	)		(3,939	)
Lease expirations		(1,132	)		(1,506	)		(3,288	)

Balance at end of year	$	504,587		$	503,874		$	473,567


Accumulated depreciation and amortization:
Balance at beginning of year	$	136,669		$	129,322		$	122,465
Depreciation and amortization expense		9,346			10,679			11,576
Sales and condemnations		(666	)		(1,826	)		(1,431	)
Lease expirations		(1,132	)		(1,506	)		(3,288	)

Balance at end of year	$	144,217		$	136,669		$	129,322

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


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
BROOKLYN, NY	$	282,104	$	301,052	$	176,292	$	406,864	$	583,156	$	380,561		1967
JAMAICA, NY		12,000		295,750		12,000		295,750		307,750		236,475		1970
REGO PARK, NY		33,745		281,380		23,000		292,125		315,125		261,199		1974
BROOKLYN, NY		74,808		125,120		30,694		169,234		199,928		166,113		1967
BRONX, NY		60,000		353,955		60,800		353,155		413,955		305,133		1965
CORONA, NY		114,247		300,172		112,800		301,619		414,419		245,295		1965
OCEANSIDE, NY		40,378		169,929		40,000		170,307		210,307		144,868		1970
BLUEPOINT, NY		96,163		118,524		96,068		118,619		214,687		118,158		1972
BRENTWOOD, NY		253,058		84,485		125,000		212,543		337,543		211,813		1968
BAY SHORE, NY		47,685		289,972				337,657		337,657		337,657		1969
WHITE PLAINS, NY				527,925		302,607		225,318		527,925		135,248		1972
PELHAM MANOR, NY		127,304		85,087		75,800		136,591		212,391		134,071		1972
BRONX, NY				309,235		176,558		132,677		309,235		92,746		1971
BRONX, NY				293,507				293,507		293,507		293,507		1972
BROOKLYN, NY				365,767				365,767		365,767		365,767		1970
POUGHKEEPSIE, NY		32,885		168,354		35,904		165,335		201,239		162,305		1971
WAPPINGERS FALLS, NY		114,185		159,162		111,785		161,562		273,347		158,741		1971
STONY POINT, NY		59,329		203,448		55,800		206,977		262,777		206,977		1971
KINGSTON, NY		29,010		159,986		12,721		176,275		188,996		175,375		1972
LAGRANGEVILLE, NY		129,133		101,140		64,626		165,647		230,273		165,049		1972
BRONX, NY		128,419		221,197		100,681		248,935		349,616		218,546		1972
STATEN ISLAND, NY		40,598		256,262		26,050		270,810		296,860		226,359		1973
BRONX, NY		141,322		141,909		86,800		196,431		283,231		192,721		1972
NEW YORK, NY		125,923		168,772		78,125		216,570		294,695		215,406		1972
MIDDLE VILLAGE, NY		130,684		73,741		89,960		114,465		204,425		112,103		1972
BROOKLYN, NY		100,000		254,503		66,890		287,613		354,503		261,144		1972
BROOKLYN, NY		135,693		91,946		100,035		127,604		227,639		114,148		1972
BROOKLYN, NY		147,795		228,379		103,815		272,359		376,174		249,080		1972
STATEN ISLAND, NY		101,033		371,591		75,650		396,974		472,624		324,405		1972
STATEN ISLAND, NY		25,000		325,918				350,918		350,918		350,918		1972
BRONX, NY		543,833		693,438		473,695		763,576		1,237,271		761,876		1970
BRONX, NY		90,176		183,197		40,176		233,197		273,373		213,494		1976
BRONX, NY		45,044		196,956		10,044		231,956		242,000		215,941		1976
BRONX, NY		128,049		315,917		83,849		360,117		443,966		298,182		1972
BRONX, NY		130,396		184,222		90,396		224,222		314,618		220,666		1972
BRONX, NY		118,025		290,298		73,025		335,298		408,323		306,680		1972
BRONX, NY		70,132		322,265		30,132		362,265		392,397		303,186		1972
BRONX, NY		78,168		450,267		65,680		462,755		528,435		401,874		1972
BRONX, NY		69,150		300,279		34,150		335,279		369,429		289,006		1972
YONKERS, NY		291,348		170,478		216,348		245,478		461,826		236,480		1972
SLEEPY HOLLOW, NY		280,825		102,486		129,744		253,567		383,311		249,725		1969
OLD BRIDGE, NJ		85,617		109,980		56,190		139,407		195,597		139,407		1972
BREWSTER, NY		117,603		78,076		72,403		123,276		195,679		120,392		1972
FLUSHING, NY		118,309		280,435		78,309		320,435		398,744		263,591		1973


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
BRONX, NY				278,517				278,517		278,517		261,528		1976
STATEN ISLAND, NY		173,667		133,198		113,369		193,496		306,865		186,432		1976
BRIARCLIFF MANOR, NY		652,213		103,753		501,687		254,279		755,966		252,578		1976
BRONX, NY		95,328		102,639		73,750		124,217		197,967		122,885		1976
BRONX, NY		88,865		193,679		63,315		219,229		282,544		218,914		1976
NEW YORK, NY		106,363		103,035		79,275		130,123		209,398		128,858		1976
NEW YORK, NY		146,159		407,286		43,461		509,984		553,445		431,343		1976
GLENDALE, NY		124,438		287,907		86,160		326,185		412,345		291,970		1976
OZONE PARK, NY		57,289		331,799		44,715		344,373		389,088		310,408		1976
LONG ISLAND CITY, NY		106,592		151,819		73,260		185,151		258,411		184,526		1976
RIDGE, NY		276,942		73,821		200,000		150,763		350,763		138,113		1977
NEW CITY, NY		180,979		100,597		109,025		172,551		281,576		172,386		1978
W. HAVERSTRAW, NY		194,181		38,141		140,000		92,322		232,322		90,798		1978
BROOKLYN, NY		74,928		250,382		44,957		280,353		325,310		235,518		1978
RONKONKOMA, NY		76,478		208,121		46,057		238,542		284,599		236,284		1978
STONY BROOK, NY		175,921		44,529		105,000		115,450		220,450		115,157		1978
MILLER PLACE, NY		110,000		103,160		66,000		147,160		213,160		146,858		1978
LAKE RONKONKOMA, NY		87,097		156,576		51,000		192,673		243,673		191,794		1978
E. PATCHOGUE, NY		57,049		210,390		34,213		233,226		267,439		233,226		1978
AMITYVILLE, NY		70,246		139,953		42,148		168,051		210,199		168,051		1978
BETHPAGE, NY		210,990		38,356		126,000		123,346		249,346		123,213		1978
HUNTINGTON STATION, NY		140,735		52,045		84,000		108,780		192,780		108,780		1978
BALDWIN, NY		101,952		106,328		61,552		146,728		208,280		127,618		1978
ELMONT, NY		388,848		114,933		231,000		272,781		503,781		246,521		1978
NORTH BABYLON, NY		91,888		117,066		59,059		149,895		208,954		149,029		1978
CENTRAL ISLIP, NY		103,183		151,449		61,435		193,197		254,632		193,197		1978
WHITE PLAINS, NY		120,393		67,315				187,708		187,708		187,708		1979
STATEN ISLAND, NY				222,525				222,525		222,525		222,525		1981
BROOKLYN, NY		116,328		232,254		75,000		273,582		348,582		269,208		1980
LONG ISLAND CITY, NY		191,420		390,783		116,554		465,649		582,203		374,139		1981
BAY SHORE, NY		156,382		123,032		85,854		193,560		279,414		192,923		1981
BRISTOL, CT		108,808		81,684		44,000		146,492		190,492		145,631		1982
CROMWELL, CT		70,017		183,119		24,000		229,136		253,136		229,136		1982
EAST HARTFORD, CT		208,004		60,493		84,000		184,497		268,497		184,497		1982
FRANKLIN, CT		50,904		168,470		20,232		199,142		219,374		198,997		1982
MANCHESTER, CT		65,590		156,628		64,750		157,468		222,218		157,331		1982
MERIDEN, CT		207,873		39,829		84,000		163,702		247,702		163,646		1982
NEW MILFORD, CT		113,947		121,174				235,121		235,121		235,121		1982
NORWALK, CT		257,308		128,940		104,000		282,248		386,248		281,997		1982
SOUTHINGTON, CT		115,750		158,561		70,750		203,561		274,311		203,189		1982
TERRYVILLE, CT		182,308		98,911		74,000		207,219		281,219		207,179		1982
TOLLAND, CT		107,902		100,178		44,000		164,080		208,080		163,042		1982
WATERFORD, CT		76,981		133,059				210,040		210,040		208,789		1982
WEST HAVEN, CT		185,138		48,619		74,000		159,757		233,757		158,911		1982


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
GRANBY, MA		58,804		232,477		24,000		267,281		291,281		228,899		1982
HADLEY, MA		119,276		68,748		36,080		151,944		188,024		149,726		1982
PITTSFIELD, MA		123,167		118,273		50,000		191,440		241,440		191,114		1982
SOUTH HADLEY, MA		232,445		54,351		90,000		196,796		286,796		194,200		1982
SPRINGFIELD, MA		139,373		239,713		50,000		329,086		379,086		273,794		1983
SPRINGFIELD, MA				239,087				239,087		239,087		204,303		1984
WESTFIELD, MA		123,323		96,093		50,000		169,416		219,416		167,631		1982
OSSINING, NY		140,992		104,761		97,527		148,226		245,753		145,058		1982
FREEHOLD, NJ		494,275		68,507		402,834		159,948		562,782		98,772		1978
LAKEWOOD, NJ		130,148		77,265		70,148		137,265		207,413		137,014		1978
NORTH PLAINFIELD, NJ		227,190		239,709		175,000		291,899		466,899		287,519		1978
SOUTH AMBOY, NJ		299,678		94,088		178,950		214,816		393,766		214,228		1978
GLEN HEAD, NY		234,395		192,295		102,645		324,045		426,690		324,045		1982
NEW ROCHELLE, NY		188,932		34,649		103,932		119,649		223,581		119,562		1982
ELMONT, NY		108,348		85,793		64,290		129,851		194,141		103,941		1982
MERIDEN, CT		126,188		106,805		72,344		160,649		232,993		160,649		1982
PLAINVILLE, CT		80,000		290,433				370,433		370,433		354,114		1983
FRANKLIN SQUARE, NY		152,572		121,756		137,315		137,013		274,328		102,543		1978
SEAFORD, NY		32,000		157,665				189,665		189,665		181,736		1978
BROOKLYN, NY		276,831		376,706		168,423		485,114		653,537		396,802		1978
NEW HAVEN, CT		1,412,860		56,420		898,470		570,810		1,469,280		322,933		1985
BRISTOL, CT		359,906						359,906		359,906		221,945		2004
BRISTOL, CT		1,594,129				1,036,184		557,945		1,594,129		137,628		2004
BRISTOL, CT		253,639				149,553		104,086		253,639		25,672		2004
BRISTOL, CT		365,028				237,268		127,760		365,028		31,512		2004
COBALT, CT		395,683						395,683		395,683		244,003		2004
DURHAM, CT		993,909						993,909		993,909		612,911		2004
ELLINGTON, CT		1,294,889				841,678		453,211		1,294,889		111,789		2004
ENFIELD, CT		259,881						259,881		259,881		188,540		2004
FARMINGTON, CT		466,271				303,076		163,195		466,271		40,256		2004
HARTFORD, CT		664,966				432,228		232,738		664,966		57,412		2004
HARTFORD, CT		570,898				371,084		199,814		570,898		49,290		2004
MERIDEN, CT		1,531,772				989,165		542,607		1,531,772		137,535		2004
MIDDLETOWN, CT		1,038,592				675,085		363,507		1,038,592		89,663		2004
NEW BRITAIN, CT		390,497				253,823		136,674		390,497		33,713		2004
NEWINGTON, CT		953,512				619,783		333,729		953,512		82,319		2004
NORTH HAVEN, CT		405,389				251,985		153,404		405,389		48,039		2004
PLAINVILLE, CT		544,503				353,927		190,576		544,503		47,009		2004
PLYMOUTH, CT		930,885				605,075		325,810		930,885		80,364		2004
SOUTH WINDHAM, CT		644,141		1,397,938		598,394		1,443,685		2,042,079		201,798		2004
SOUTH WINDSOR, CT		544,857				336,737		208,120		544,857		71,527		2004
SUFFIELD, CT		237,401		602,635		200,878		639,158		840,036		277,652		2004
VERNON, CT		1,434,223						1,434,223		1,434,223		884,436		2004
WALLINGFORD, CT		550,553				334,901		215,652		550,553		66,261		2004


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
WATERBURY, CT		804,040				516,387		287,653		804,040		77,694		2004
WATERBURY, CT		515,172				334,862		180,310		515,172		44,474		2004
WATERBURY, CT		468,469				304,505		163,964		468,469		40,447		2004
WATERTOWN, CT		924,586				566,986		357,600		924,586		127,607		2004
WETHERSFIELD, CT		446,610						446,610		446,610		430,749		2004
WEST HAVEN, CT		1,214,831				789,640		425,191		1,214,831		104,883		2004
WESTBROOK, CT		344,881						344,881		344,881		212,676		2004
WILLIMANTIC, CT		716,782				465,908		250,874		716,782		61,883		2004
WINDSOR, CT		1,042,081				669,804		372,277		1,042,081		302,484		2004
WINDSOR LOCKS, CT		1,433,330						1,433,330		1,433,330		883,887		2004
WINDSOR LOCKS, CT		360,664						360,664		360,664		88,967		2004
BLOOMFIELD, CT		141,452		54,786		90,000		106,238		196,238		105,206		1986
SIMSBURY, CT		317,704		144,637		206,700		255,641		462,341		201,142		1985
RIDGEFIELD, CT		535,140		33,590		347,900		220,830		568,730		130,129		1985
BRIDGEPORT, CT		349,500		56,209		227,600		178,109		405,709		118,789		1985
NORWALK, CT		510,760		209,820		332,200		388,380		720,580		276,668		1985
BRIDGEPORT, CT		313,400		20,303		204,100		129,603		333,703		76,623		1985
STAMFORD, CT		506,860		15,635		329,700		192,795		522,495		107,322		1985
BRIDGEPORT, CT		245,100		20,652		159,600		106,152		265,752		64,538		1985
BRIDGEPORT, CT		313,400		24,314		204,100		133,614		337,714		80,572		1985
BRIDGEPORT, CT		377,600		83,549		245,900		215,249		461,149		151,595		1985
BRIDGEPORT, CT		526,775		63,505		342,700		247,580		590,280		158,841		1985
BRIDGEPORT, CT		338,415		27,786		219,800		146,401		366,201		88,196		1985
NEW HAVEN, CT		538,400		176,230		350,600		364,030		714,630		273,261		1985
DARIEN, CT		667,180		26,061		434,300		258,941		693,241		146,164		1985
WESTPORT, CT		603,260		23,070		392,500		233,830		626,330		129,223		1985
STAMFORD, CT		603,260		112,305		392,500		323,065		715,565		220,035		1985
STAMFORD, CT		506,580		40,429		329,700		217,309		547,009		131,260		1985
STRATFORD, CT		301,300		70,735		196,200		175,835		372,035		124,931		1985
STRATFORD, CT		285,200		14,728		185,700		114,228		299,928		65,990		1985
CHESHIRE, CT		490,200		19,050		319,200		190,050		509,250		107,401		1985
MILFORD, CT		293,512		43,846		191,000		146,358		337,358		95,466		1985
FAIRFIELD, CT		430,000		13,631		280,000		163,631		443,631		90,266		1985
NORWALK, CT				619,018		401,996		217,022		619,018		47,799		1988
HARTFORD, CT		233,000		32,563		151,700		113,863		265,563		74,228		1985
NEW HAVEN, CT		217,000		23,889		141,300		99,589		240,889		62,572		1985
RIDGEFIELD, CT		401,630		47,610		166,861		282,379		449,240		278,895		1985
BRIDGEPORT, CT		346,442		16,990		230,000		133,432		363,432		132,588		1985
WILTON, CT		518,881		71,425		337,500		252,806		590,306		163,498		1985
MIDDLETOWN, CT		133,022		86,915		131,312		88,625		219,937		88,625		1987
EAST HARTFORD, CT		555,826		13,797		301,322		268,301		569,623		105,964		1991
WATERTOWN, CT		351,771		58,812		204,027		206,556		410,583		125,188		1992
AVON, CT		730,886				402,949		327,937		730,886		126,360		2002
WILMINGTON, DE		309,300		67,834		201,400		175,734		377,134		123,451		1985


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
ST. GEORGES, DE		442,014		218,906		324,725		336,195		660,920		306,132		1985
WILMINGTON, DE		313,400		103,748		204,100		213,048		417,148		153,604		1985
WILMINGTON, DE		381,700		156,704		248,600		289,804		538,404		225,473		1985
CLAYMONT, DE		237,200		30,878		151,700		116,378		268,078		76,928		1985
NEWARK, DE		405,800		35,844		264,300		177,344		441,644		108,557		1985
WILMINGTON, DE		446,000		33,323		290,400		188,923		479,323		113,717		1985
WILMINGTON, DE		337,500		21,971		219,800		139,671		359,471		82,617		1985
LEWISTON, ME		341,900		89,500		222,400		209,000		431,400		151,436		1985
PORTLAND, ME		325,400		42,652		211,900		156,152		368,052		101,295		1985
BIDDEFORD, ME		618,100		8,009		235,000		391,109		626,109		391,109		1985
SACO, ME		204,006		37,173		150,694		90,485		241,179		90,485		1986
SANFORD, ME		265,523		9,178		201,316		73,385		274,701		73,385		1986
WESTBROOK, ME		93,345		193,654		50,431		236,568		286,999		212,186		1986
WISCASSET, ME		156,587		33,455		90,837		99,205		190,042		99,205		1986
SOUTH PORTLAND, ME		180,689		84,980		110,689		154,980		265,669		154,980		1986
LEWISTON, ME		180,338		62,629		101,338		141,629		242,967		140,452		1986
N. WINDHAM, ME		161,365		53,923		86,365		128,923		215,288		128,923		1986
AUGUSTA, ME		482,859		68,242		276,678		274,423		551,101		82,491		1991
BELTSVILLE, MD		1,130,024				1,130,024				1,130,024				2009
BELTSVILLE, MD		730,521				730,521				730,521				2009
BELTSVILLE, MD		525,062				525,062				525,062				2009
BELTSVILLE, MD		1,050,123				1,050,123				1,050,123				2009
BLADENSBURG, MD		570,719				570,719				570,719				2009
BOWIE, MD		1,084,367				1,084,367				1,084,367				2009
CAPITOL HEIGHTS, MD		627,791				627,791				627,791				2009
CLINTON, MD		650,620				650,620				650,620				2009
COLLEGE PARK, MD		536,476				536,476				536,476				2009
COLLEGE PARK, MD		445,161				445,161				445,161				2009
DISTRICT HEIGHTS, MD		479,404				479,404				479,404				2009
DISTRICT HEIGHTS, MD		388,089				388,089				388,089				2009
FORESTVILLE, MD		1,038,709				1,038,709				1,038,709				2009
FORT WASHINGTON, MD		422,332				422,332				422,332				2009
GREENBELT, MD		1,152,853				1,152,853				1,152,853				2009
HYATTSVILLE, MD		490,819				490,819				490,819				2009
HYATTSVILLE, MD		593,548				593,548				593,548				2009
LANDOVER, MD		753,349				753,349				753,349				2009
LANDOVER, MD		662,034				662,034				662,034				2009
LANDOVER HILLS, MD		1,358,312				1,358,312				1,358,312				2009
LANDOVER HILLS, MD		456,575				456,575				456,575				2009
LANHAM, MD		821,836				821,836				821,836				2009
LAUREL, MD		2,522,579				2,522,579				2,522,579				2009
LAUREL, MD		1,415,384				1,415,384				1,415,384				2009
LAUREL, MD		1,529,528				1,529,528				1,529,528				2009
LAUREL, MD		1,266,997				1,266,997				1,266,997				2009


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
LAUREL, MD		1,209,925				1,209,925				1,209,925				2009
LAUREL, MD		696,278				696,278				696,278				2009
OXON HILL, MD		1,255,582				1,255,582				1,255,582				2009
RIVERDALE, MD		787,593				787,593				787,593				2009
RIVERDALE, MD		582,134				582,134				582,134				2009
SEAT PLEASANT, MD		467,990				467,990				467,990				2009
SUITLAND, MD		376,675				376,675				376,675				2009
SUITLAND, MD		673,449				673,449				673,449				2009
TEMPLE HILLS, MD		331,017				331,017				331,017				2009
UPPER MARLBORO, MD		844,665				844,665				844,665				2009
ACCOKEEK, MD		691,527				691,527				691,527				2010
BALTIMORE, MD		429,100		139,393		308,700		259,793		568,493		223,053		1985
RANDALLSTOWN, MD		590,600		33,594		384,600		239,594		624,194		140,028		1985
EMMITSBURG, MD		146,949		73,613		101,949		118,613		220,562		118,518		1986
MILFORD, MA				214,331				214,331		214,331		211,608		1985
AGAWAM, MA		209,555		63,621		136,000		137,176		273,176		101,789		1985
WESTFIELD, MA		289,580		38,615		188,400		139,795		328,195		90,908		1985
WEST ROXBURY, MA		490,200		23,134		319,200		194,134		513,334		109,483		1985
MAYNARD, MA		735,200		12,714		478,800		269,114		747,914		144,179		1985
GARDNER, MA		1,008,400		73,740		656,700		425,440		1,082,140		251,287		1985
STOUGHTON, MA		775,300		34,554		504,900		304,954		809,854		172,207		1985
ARLINGTON, MA		518,300		27,906		337,500		208,706		546,206		121,254		1985
METHUEN, MA		379,664		64,941		245,900		198,705		444,605		134,803		1985
BELMONT, MA		301,300		27,938		196,200		133,038		329,238		81,135		1985
RANDOLPH, MA		743,200		25,069		484,000		284,269		768,269		158,133		1985
ROCKLAND, MA		534,300		23,616		347,900		210,016		557,916		119,586		1985
WATERTOWN, MA		357,500		296,588		321,030		333,058		654,088		245,613		1985
WEYMOUTH, MA		643,297		36,516		418,600		261,213		679,813		149,559		1985
DEDHAM, MA		225,824		19,150		125,824		119,150		244,974		118,949		1987
HINGHAM, MA		352,606		22,484		242,520		132,570		375,090		132,196		1989
ASHLAND, MA		606,700		17,424		395,100		229,024		624,124		124,548		1985
WOBURN, MA		507,600		294,303		507,600		294,303		801,903		162,837		1985
BELMONT, MA		389,700		28,871		253,800		164,771		418,571		99,087		1985
HYDE PARK, MA		499,175		29,673		321,800		207,048		528,848		123,187		1985
EVERETT, MA		269,500		190,931		269,500		190,931		460,431		121,187		1985
PITTSFIELD, MA		281,200		51,100		183,100		149,200		332,300		149,200		1985
NORTH ATTLEBORO, MA		662,900		16,549		431,700		247,749		679,449		135,865		1985
WORCESTER, MA		497,642		67,806		321,800		243,648		565,448		160,113		1985
NEW BEDFORD, MA		522,300		18,274		340,100		200,474		540,574		112,299		1985
FALL RIVER, MA		859,800		24,423		559,900		324,323		884,223		178,845		1985
WORCESTER, MA		385,600		21,339		251,100		155,839		406,939		90,124		1985
WEBSTER, MA		1,012,400		67,645		659,300		420,745		1,080,045		247,877		1985
CLINTON, MA		586,600		52,725		382,000		257,325		639,325		157,073		1985
FOXBOROUGH, MA		426,593		34,403		325,000		135,996		460,996		133,026		1990


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
CLINTON, MA		385,600		95,698		251,100		230,198		481,298		163,560		1985
HYANNIS, MA		650,800		42,552		423,800		269,552		693,352		159,836		1985
HOLYOKE, MA		329,500		38,345		214,600		153,245		367,845		153,245		1985
NEWTON, MA		691,000		42,832		450,000		283,832		733,832		163,795		1985
FALMOUTH, MA		519,382		43,841		458,461		104,762		563,223		104,547		1988
METHUEN, MA		490,200		16,282		319,200		187,282		506,482		104,633		1985
ROCKLAND, MA		578,600		185,285		376,800		387,085		763,885		269,682		1985
FAIRHAVEN, MA		725,500		46,752		470,900		301,352		772,252		179,456		1985
BELLINGHAM, MA		734,189		132,725		476,200		390,714		866,914		267,465		1985
NEW BEDFORD, MA		482,275		95,553		293,000		284,828		577,828		206,338		1985
SEEKONK, MA		1,072,700		29,112		698,500		403,312		1,101,812		219,857		1985
WALPOLE, MA		449,900		20,586		293,000		177,486		470,486		99,914		1985
NORTH ANDOVER, MA		393,700		220,132		256,400		357,432		613,832		256,332		1985
LOWELL, MA		360,949		83,674		200,949		243,674		444,623		243,556		1985
AUBURN, MA		175,048		30,890		125,048		80,890		205,938		80,890		1986
METHUEN, MA		147,330		188,059		50,731		284,658		335,389		259,864		1986
BEVERLY, MA		275,000		150,741		175,000		250,741		425,741		230,400		1986
BILLERICA, MA		400,000		135,809		250,000		285,809		535,809		279,594		1986
HAVERHILL, MA		400,000		17,182		225,000		192,182		417,182		192,182		1986
CHATHAM, MA		275,000		197,302		175,000		297,302		472,302		260,714		1986
HARWICH, MA		225,000		12,044		150,000		87,044		237,044		85,248		1986
IPSWICH, MA		275,000		19,161		150,000		144,161		294,161		143,015		1986
LEOMINSTER, MA		185,040		49,592		85,040		149,592		234,632		147,990		1986
LOWELL, MA		375,000		175,969		250,000		300,969		550,969		265,105		1986
METHUEN, MA		300,000		50,861		150,000		200,861		350,861		200,219		1986
ORLEANS, MA		260,000		37,637		185,000		112,637		297,637		110,423		1986
PEABODY, MA		400,000		200,363		275,000		325,363		600,363		302,790		1986
QUINCY, MA		200,000		36,112		125,000		111,112		236,112		109,994		1986
REVERE, MA		250,000		193,854		150,000		293,854		443,854		293,788		1986
SALEM, MA		275,000		25,393		175,000		125,393		300,393		125,072		1986
TEWKSBURY, MA		125,000		90,338		75,000		140,338		215,338		140,338		1986
FALMOUTH, MA		150,000		322,942		75,000		397,942		472,942		349,290		1986
WEST YARMOUTH, MA		225,000		33,165		125,000		133,165		258,165		132,732		1986
WESTFORD, MA		275,000		196,493		175,000		296,493		471,493		261,089		1986
WOBURN, MA		350,000		45,681		200,000		195,681		395,681		195,167		1986
YARMOUTHPORT, MA		300,000		26,940		150,000		176,940		326,940		176,940		1986
BRIDGEWATER, MA		190,360		36,762		140,000		87,122		227,122		84,778		1987
WORCESTER, MA		476,102		174,233		309,466		340,869		650,335		340,869		1991
AUBURN, MA		369,306		27,792		240,049		157,049		397,098		66,103		1991
BARRE, MA		535,614		163,028		348,149		350,493		698,642		195,438		1991
WORCESTER, MA		275,866		11,674		179,313		108,227		287,540		41,283		1992
BROCKTON, MA		275,866		194,619		179,313		291,172		470,485		224,004		1991
CLINTON, MA		177,978		29,790		115,686		92,082		207,768		48,895		1992
WORCESTER, MA		167,745		275,852		167,745		275,852		443,597		186,315		1991


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
DUDLEY, MA		302,563		141,993		196,666		247,890		444,556		137,343		1991
FITCHBURG, MA		247,330		16,384		202,675		61,039		263,714		47,270		1991
FRANKLIN, MA		253,619		18,437		164,852		107,204		272,056		45,310		1988
WORCESTER, MA		342,608		11,101		222,695		131,014		353,709		47,300		1991
HYANNIS, MA		222,472		7,282		144,607		85,147		229,754		31,164		1991
LEOMINSTER, MA		195,776		177,454		127,254		245,976		373,230		174,654		1991
WORCESTER, MA		231,372		157,356		150,392		238,336		388,728		161,779		1991
NORTHBOROUGH, MA		404,900		18,353		263,185		160,068		423,253		60,769		1993
WEST BOYLSTON, MA		311,808		28,937		202,675		138,070		340,745		62,402		1991
WORCESTER, MA		186,877		33,510		121,470		98,917		220,387		53,533		1993
SOUTH YARMOUTH, MA		275,866		49,961		179,313		146,514		325,827		76,764		1991
STERLING, MA		476,102		165,998		309,466		332,634		642,100		190,655		1991
SUTTON, MA		714,159		187,355		464,203		437,311		901,514		240,378		1993
WORCESTER, MA		275,866		150,472		179,313		247,025		426,338		159,951		1991
FRAMINGHAM, MA		297,568		203,147		193,419		307,296		500,715		208,544		1992
UPTON, MA		428,498		24,611		278,524		174,585		453,109		70,293		1991
WESTBOROUGH, MA		311,808		205,994		202,675		315,127		517,802		212,800		1991
HARWICHPORT, MA		382,653		173,989		248,724		307,918		556,642		189,205		1991
WORCESTER, MA		547,283		205,733		355,734		397,282		753,016		235,235		1991
WORCESTER, MA		978,880		191,413		636,272		534,021		1,170,293		267,944		1991
FITCHBURG, MA		390,276		216,589		253,679		353,186		606,865		223,470		1992
WORCESTER, MA		146,832		140,589		95,441		191,980		287,421		136,050		1991
LEICESTER, MA		266,968		197,898		173,529		291,337		464,866		190,280		1991
NORTH GRAFTON, MA		244,720		35,136		159,068		120,788		279,856		60,870		1991
SOUTHBRIDGE, MA		249,169		62,205		161,960		149,414		311,374		88,122		1993
OXFORD, MA		293,664		9,098		190,882		111,880		302,762		40,616		1993
WORCESTER, MA		284,765		45,285		185,097		144,953		330,050		75,852		1991
ATHOL, MA		164,629		22,016		107,009		79,636		186,645		39,378		1991
FITCHBURG, MA		142,383		194,291		92,549		244,125		336,674		170,832		1992
WORCESTER, MA		271,417		183,331		176,421		278,327		454,748		186,099		1991
ORANGE, MA		301,102		4,015		75,000		230,117		305,117		230,117		1991
FRAMINGHAM, MA		400,449		22,280		260,294		162,435		422,729		65,226		1991
MILFORD, MA				262,436				262,436		262,436		240,508		1991
JONESBORO, AR		2,985,267				330,322		2,654,945		2,985,267		413,179		2007
BELLFLOWER, CA		1,369,511				910,252		459,259		1,369,511		92,374		2007
BENICIA, CA		2,223,362				1,057,519		1,165,843		2,223,362		244,901		2007
COACHELLA, CA		2,234,957				1,216,646		1,018,312		2,234,957		199,462		2007
EL CAJON, CA		1,292,114				779,828		512,286		1,292,114		91,012		2007
FILLMORE, CA		1,354,113				950,061		404,052		1,354,113		80,970		2007
HESPERIA, CA		1,643,449				849,352		794,097		1,643,449		147,128		2007
LA PALMA, CA		1,971,592				1,389,383		582,210		1,971,592		114,847		2007
POWAY, CA		1,439,021						1,439,021		1,439,021		245,287		2007
SAN DIMAS, CA		1,941,008				749,066		1,191,942		1,941,008		202,594		2007
HALEIWA, HI		1,521,648				1,058,124		463,524		1,521,648		114,903		2007


	Initial Cost		Cost									Date of
	of Leasehold		Capitalized	Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent			at Close of Period						Leasehold or
	Investment to		to Initial			Building and				Accumulated		Acquisition
Description	Company (1)		Investment	Land		Improvements		Total		Depreciation		Investment (1)
HONOLULU, HI		1,538,997			1,219,217		319,780		1,538,997		62,047		2007
HONOLULU, HI		1,768,878			1,192,216		576,662		1,768,878		103,024		2007
HONOLULU, HI		1,070,141			980,680		89,460		1,070,141		27,064		2007
HONOLULU, HI		9,210,707			8,193,984		1,016,724		9,210,707		187,852		2007
KANEOHE, HI		1,977,671			1,473,275		504,396		1,977,671		101,249		2007
KANEOHE, HI		1,363,901			821,691		542,210		1,363,901		112,830		2007
WAIANAE, HI		1,996,811			870,775		1,126,036		1,996,811		202,249		2007
WAIANAE, HI		1,520,144			648,273		871,871		1,520,144		155,798		2007
WAIPAHU, HI		2,458,592			945,327		1,513,264		2,458,592		259,471		2007
COTTAGE HILLS, IL		249,419			26,199		223,220		249,419		51,494		2007
FAIRVIEW HEIGHTS, IL		516,564			78,440		438,124		516,564		87,153		2007
BALTIMORE, MD		2,258,897			721,876		1,537,022		2,258,897		269,077		2007
BALTIMORE, MD		802,414					802,414		802,414		150,454		2007
ELLICOTT CITY, MD		895,049					895,049		895,049		176,655		2007
KERNERSVILLE, NC		296,770			72,777		223,994		296,770		42,986		2007
KERNERSVILLE, NC		638,633			338,386		300,247		638,633		67,365		2007
KERNERSVILLE, NC		608,441			250,505		357,936		608,441		76,631		2007
LEXINGTON, NC		204,139			43,311		160,828		204,139		37,718		2007
MADISON, NC		420,878			45,705		375,174		420,878		74,708		2007
NEW BERN, NC		349,946			190,389		159,557		349,946		41,764		2007
WALKERTOWN, NC		844,749			488,239		356,509		844,749		84,776		2007
WALNUT COVE, NC		1,140,945			513,565		627,380		1,140,945		148,530		2007
WINSTON SALEM, NC		696,397			251,987		444,410		696,397		104,310		2007
BELFIELD, ND		1,232,010			381,909		850,101		1,232,010		277,436		2007
ALLENSTOWN, NH		1,787,116			466,994		1,320,122		1,787,116		256,634		2007
BEDFORD, NH		2,301,297			1,271,171		1,030,126		2,301,297		220,549		2007
HOOKSETT, NH		1,561,628			823,915		737,712		1,561,628		248,366		2007
AUSTIN, TX		2,368,425			738,210		1,630,215		2,368,425		280,208		2007
AUSTIN, TX		462,233			274,300		187,933		462,233		45,644		2007
AUSTIN, TX		3,510,062			1,594,536		1,915,526		3,510,062		333,068		2007
BEDFORD, TX		353,047			112,953		240,094		353,047		62,571		2007
FT WORTH, TX		2,114,924			866,062		1,248,863		2,114,924		242,103		2007
HARKER HEIGHTS, TX		2,051,704			588,320		1,463,384		2,051,704		413,175		2007
HOUSTON, TX		1,688,904			223,664		1,465,240		1,688,904		238,945		2007
KELLER, TX		2,506,573			996,029		1,510,544		2,506,573		275,854		2007
LEWISVILLE, TX		493,734			109,925		383,809		493,734		65,585		2008
MIDLOTHIAN, TX		429,142			71,970		357,172		429,142		79,501		2007
N RICHLAND HILLS, TX		314,246			125,745		188,501		314,246		38,156		2007
SAN MARCOS, TX		1,953,653			250,739		1,702,914		1,953,653		286,027		2007
TEMPLE, TX		2,405,953			1,215,488		1,190,465		2,405,953		222,409		2007
THE COLONY, TX		4,395,696			337,083		4,058,613		4,395,696		643,154		2007
WACO, TX		3,884,407			894,356		2,990,051		3,884,407		561,577		2007
BROOKLAND, AR		1,467,809			149,218		1,318,591		1,467,809		169,326		2007
JONESBORO, AR		868,501			173,096		695,405		868,501		93,852		2007


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
MANCHESTER, NH		261,100		36,404		170,000		127,504		297,504		83,285		1985
DERRY, NH		417,988		16,295		157,988		276,295		434,283		276,295		1987
PLAISTOW, NH		300,406		110,031		244,694		165,743		410,437		165,743		1987
SOMERSWORTH, NH		180,800		60,497		117,700		123,597		241,297		84,514		1985
SALEM, NH		743,200		19,847		484,000		279,047		763,047		152,965		1985
LONDONDERRY, NH		703,100		31,092		457,900		276,292		734,192		156,895		1985
ROCHESTER, NH		939,100		12,337		600,000		351,437		951,437		187,540		1985
HAMPTON, NH		193,103		26,449		135,598		83,954		219,552		83,924		1986
MERRIMACK, NH		151,993		205,823		100,598		257,218		357,816		219,477		1986
NASHUA, NH		197,142		219,639		155,837		260,944		416,781		222,451		1986
PELHAM, NH		169,182		53,497		136,077		86,602		222,679		83,773		1986
PEMBROKE, NH		138,492		174,777		100,837		212,432		313,269		176,893		1986
ROCHESTER, NH		175,188		208,103		95,471		287,820		383,291		254,593		1986
SOMERSWORTH, NH		210,805		15,012		157,520		68,297		225,817		68,297		1986
EXETER, NH		113,285		149,265		65,000		197,550		262,550		195,490		1986
CANDIA, NH		130,000		184,004		80,000		234,004		314,004		232,911		1986
EPPING, NH		170,000		131,403		120,000		181,403		301,403		172,220		1986
EPSOM, NH		220,000		96,022		155,000		161,022		316,022		152,350		1986
MILFORD, NH		190,000		41,689		115,000		116,689		231,689		115,342		1986
PORTSMOUTH, NH		235,000		20,257		150,000		105,257		255,257		105,238		1986
PORTSMOUTH, NH		225,000		228,704		125,000		328,704		453,704		290,841		1986
SALEM, NH		450,000		47,484		350,000		147,484		497,484		145,562		1986
SEABROOK, NH		199,780		19,102		124,780		94,102		218,882		93,990		1986
MCAFEE, NJ		670,900		15,711		436,900		249,711		686,611		135,961		1985
HAMBURG, NJ		598,600		22,121		389,800		230,921		620,721		129,831		1985
WEST MILFORD, NJ		502,200		31,918		327,000		207,118		534,118		122,406		1985
LIVINGSTON, NJ		871,800		30,003		567,700		334,103		901,803		186,868		1985
TRENTON, NJ		373,600		9,572		243,300		139,872		383,172		76,895		1985
WILLINGBORO, NJ		425,800		29,928		277,300		178,428		455,728		106,654		1985
BAYONNE, NJ		341,500		18,947		222,400		138,047		360,447		80,483		1985
CRANFORD, NJ		342,666		29,222		222,400		149,488		371,888		91,652		1985
NUTLEY, NJ				512504.22		329248		183256.22		512504.22		53582		1986
TRENTON, NJ		466,100		13,987		303,500		176,587		480,087		97,841		1985
WALL TOWNSHIP, NJ		336,441		55,709		121,441		270,709		392,150		270,185		1986
UNION, NJ		490,200		41,361		319,200		212,361		531,561		127,829		1985
CRANBURY, NJ		606,700		31,467		395,100		243,067		638,167		140,795		1985
HILLSIDE, NJ		225,000		31,552		150,000		106,552		256,552		106,151		1987
SPOTSWOOD, NJ		466,675		69,036		303,500		232,211		535,711		153,595		1985
LONG BRANCH, NJ		514,300		22,951		334,900		202,351		537,251		115,642		1985
ELIZABETH, NJ		405,800		18,881		264,300		160,381		424,681		91,505		1985
BELLEVILLE, NJ		397,700		39,410		259,000		178,110		437,110		110,971		1985
NEPTUNE CITY, NJ		269,600				175,600		94,000		269,600		48,568		1985
BASKING RIDGE, NJ		362,172		32,960		200,000		195,132		395,132		145,492		1986
DEPTFORD, NJ		281,200		24,745		183,100		122,845		305,945		74,864		1985


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
CHERRY HILL, NJ		357,500		13,879		232,800		138,579		371,379		78,139		1985
SEWELL, NJ		551,912		48,485		355,712		244,685		600,397		149,856		1985
FLEMINGTON, NJ		546,742		17,494		346,342		217,894		564,236		120,714		1985
BLACKWOOD, NJ		401,700		36,736		261,600		176,836		438,436		109,122		1985
TRENTON, NJ		684,650		33,275		444,800		273,125		717,925		157,690		1985
LODI, NJ				1,037,440		587,823		449,617		1,037,440		189,201		1988
EAST ORANGE, NJ		421,508		37,977		272,100		187,385		459,485		116,558		1985
BELMAR, NJ		566,375		24,371		410,800		179,946		590,746		133,422		1985
MOORESTOWN, NJ		470,100		27,064		306,100		191,064		497,164		111,798		1985
SPRING LAKE, NJ		345,500		42,194		225,000		162,694		387,694		103,601		1985
HILLTOP, NJ		329,500		16,758		214,600		131,658		346,258		75,680		1985
CLIFTON, NJ		301,518		6,413		150,000		157,931		307,931		116,359		1987
FRANKLIN TWP., NJ		683,000		30,257		444,800		268,457		713,257		153,286		1985
FLEMINGTON, NJ		708,160		33,072		460,500		280,732		741,232		159,969		1985
CLEMENTON, NJ		562,500		27,581		366,300		223,781		590,081		128,831		1985
ASBURY PARK, NJ		418,966		18,038		272,100		164,904		437,004		94,483		1985
MIDLAND PARK, NJ		201,012		4,080		150,000		55,092		205,092		55,006		1989
PATERSON, NJ		619,548		16,765		402,900		233,413		636,313		129,035		1985
OCEAN CITY, NJ		843,700		113,162		549,400		407,462		956,862		265,218		1985
WHITING, NJ		447,199		3,519		167,090		283,628		450,718		283,281		1989
HILLSBOROUGH, NJ		237,122		7,729		100,000		144,851		244,851		78,578		1985
PRINCETON, NJ		703,100		40,615		457,900		285,815		743,715		167,303		1985
NEPTUNE, NJ		455,726		39,090		293,000		201,816		494,816		123,492		1985
NEWARK, NJ		3,086,592		164,432		2,005,800		1,245,224		3,251,024		725,441		1985
OAKHURST, NJ		225,608		46,405		100,608		171,405		272,013		171,405		1985
BELLEVILLE, NJ		215,468		38,163		149,237		104,394		253,631		103,845		1986
PINE HILL, NJ		190,568		39,918		115,568		114,918		230,486		114,918		1986
TUCKERTON, NJ		224,387		132,864		131,018		226,233		357,251		225,019		1987
WEST DEPTFORD, NJ		245,450		50,295		151,053		144,692		295,745		144,150		1987
ATCO, NJ		153,159		85,853		131,766		107,246		239,012		107,246		1987
SOMERVILLE, NJ		252,717		254,230		200,500		306,447		506,947		235,132		1987
CINNAMINSON, NJ		326,501		24,931		176,501		174,931		351,432		174,567		1987
RIDGEFIELD PARK, NJ		273,549				150,000		123,549		273,549		103,603		1997
BRICK, NJ		1,507,684				1,000,000		507,684		1,507,684		290,351		2000
LAKE HOPATCONG, NJ		1,305,034				800,000		505,034		1,305,034		339,295		2000
BERGENFIELD, NJ		381,590		36,271		300,000		117,861		417,861		117,348		1990
ORANGE, NJ		281,200		24,573		183,100		122,673		305,773		75,156		1985
BLOOMFIELD, NJ		695,000		21,021		371,400		344,621		716,021		344,621		1985
UNION, NJ		287,800				287,800				287,800				1985
SCOTCH PLAINS, NJ		331,063		14,455		214,600		130,918		345,518		75,384		1985
NUTLEY, NJ		433,800		48,677		282,500		199,977		482,477		126,850		1985
PLAINFIELD, NJ		470,100		29,975		306,100		193,975		500,075		114,568		1985
MOUNTAINSIDE, NJ		664,100		31,620		431,700		264,020		695,720		151,362		1985
WATCHUNG, NJ		449,900		20,339		293,000		177,239		470,239		101,024		1985


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
GREEN VILLAGE, NJ		277,900		44,471		127,900		194,471		322,371		193,783		1985
IRVINGTON, NJ		409,700		54,841		266,800		197,741		464,541		128,674		1985
JERSEY CITY, NJ		438,000		51,856		285,200		204,656		489,856		130,804		1985
BLOOMFIELD, NJ		441,900		32,951		287,800		187,051		474,851		112,463		1985
DOVER, NJ		606,700		30,153		395,100		241,753		636,853		139,238		1985
PARLIN, NJ		418,046		29,075		263,946		183,175		447,121		108,694		1985
UNION CITY, NJ		799,500		3,440		520,600		282,340		802,940		147,539		1985
COLONIA, NJ		253,100		3,395		164,800		91,695		256,495		49,018		1985
NORTH BERGEN, NJ		629,527		81,006		409,527		301,006		710,533		194,437		1985
WAYNE, NJ		490,200		21,766		319,200		192,766		511,966		110,117		1985
HASBROUCK HEIGHTS, NJ		639,648		19,648		416,000		243,296		659,296		135,297		1985
COLONIA, NJ		952,200		74,451		620,100		406,551		1,026,651		245,557		1985
OLD BRIDGE, NJ		319,521		24,445		204,621		139,345		343,966		83,712		1985
RIDGEWOOD, NJ		703,100		36,959		457,900		282,159		740,059		162,009		1985
HAWTHORNE, NJ		245,100		10,967		159,600		96,467		256,067		55,143		1985
WAYNE, NJ		474,100		42,926		308,700		208,326		517,026		128,307		1985
WASHINGTON TOWNSHIP, NJ		912,000		21,261		593,900		339,361		933,261		185,446		1985
PARAMUS, NJ		381,700		42,394		248,600		175,494		424,094		111,163		1985
JERSEY CITY, NJ		401,700		43,808		261,600		183,908		445,508		116,194		1985
FORT LEE, NJ		1,245,500		39,408		811,100		473,808		1,284,908		263,681		1985
AUDUBON, NJ		421,800		12,949		274,700		160,049		434,749		88,939		1985
TRENTON, NJ		337,500		69,461		219,800		187,161		406,961		130,142		1985
MAGNOLIA, NJ		329,500		26,488		214,600		141,388		355,988		85,854		1985
BEVERLY, NJ		470,100		24,003		306,100		188,003		494,103		108,434		1985
PISCATAWAY, NJ		269,200		28,232		175,300		122,132		297,432		76,748		1985
WEST ORANGE, NJ		799,500		34,733		520,600		313,633		834,233		178,832		1985
ROCKVILLE CENTRE, NY		350,325		315,779		201,400		464,704		666,104		383,398		1985
GLENDALE, NY		368,625		159,763		235,500		292,888		528,388		208,216		1985
BELLAIRE, NY		329,500		73,358		214,600		188,258		402,858		126,112		1985
BAYSIDE, NY		245,100		202,833		159,600		288,333		447,933		212,772		1985
YONKERS, NY		153,184		67,266		76,592		143,858		220,450		86,396		1987
DOBBS FERRY, NY		670,575		33,706		434,300		269,981		704,281		155,595		1985
NORTH MERRICK, NY		510,350		141,506		332,200		319,656		651,856		206,795		1985
GREAT NECK, NY		500,000		24,468		450,000		74,468		524,468		74,468		1985
GLEN HEAD, NY		462,468		45,355		300,900		206,923		507,823		128,859		1985
GARDEN CITY, NY		361,600		33,774		235,500		159,874		395,374		97,897		1985
HEWLETT, NY		490,200		85,618		319,200		256,618		575,818		147,430		1985
EAST HILLS, NY		241,613		21,070		241,613		21,070		262,683		20,738		1986
YONKERS, NY		111,300		80,000		65,000		126,300		191,300		126,033		1988
LEVITTOWN, NY		502,757		42,113		327,000		217,870		544,870		132,359		1985
LEVITTOWN, NY		546,400		113,057		355,800		303,657		659,457		192,181		1985
ST. ALBANS, NY		329,500		87,250		214,600		202,150		416,750		141,515		1985
RIDGEWOOD, NY		278,372		38,578		250,000		66,950		316,950		35,600		1986
BROOKLYN, NY		626,700		282,677		408,100		501,277		909,377		359,490		1985

100


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
BROOKLYN, NY		476,816		272,765		306,100		443,481		749,581		357,699		1985
SEAFORD, NY		325,400		83,257		211,900		196,757		408,657		115,664		1985
BAYSIDE, NY		470,100		246,576		306,100		410,576		716,676		285,770		1985
BAY SHORE, NY		188,900		26,286		123,000		92,186		215,186		59,981		1985
ELMONT, NY		360,056		90,633		224,156		226,533		450,689		134,712		1985
WHITE PLAINS, NY		258,600		60,120		164,800		153,920		318,720		106,702		1985
SCARSDALE, NY		257,100		102,632		167,400		192,332		359,732		138,883		1985
EASTCHESTER, NY		614,700		34,500		400,300		248,900		649,200		144,911		1985
NEW ROCHELLE, NY		337,500		51,741		219,800		169,441		389,241		108,677		1985
BROOKLYN, NY		421,800		270,436		274,700		417,536		692,236		301,985		1985
COMMACK, NY		321,400		25,659		209,300		137,759		347,059		83,578		1985
SAG HARBOR, NY		703,600		36,012		458,200		281,412		739,612		162,770		1985
EAST HAMPTON, NY		659,127		39,313		427,827		270,613		698,440		158,240		1985
MASTIC, NY		313,400		110,180		204,100		219,480		423,580		166,653		1985
BRONX, NY		390,200		329,357		251,100		468,457		719,557		345,618		1985
YONKERS, NY		1,020,400		61,875		664,500		417,775		1,082,275		243,822		1985
GLENVILLE, NY		343,723		98,299		219,800		222,222		442,022		158,348		1985
YONKERS, NY		202,826		42,877		144,000		101,703		245,703		95,422		1986
MINEOLA, NY		341,500		34,411		222,400		153,511		375,911		95,375		1985
ALBANY, NY		404,888		104,378		261,600		247,666		509,266		177,376		1985
LONG ISLAND CITY, NY		1,646,307		259,443		1,071,500		834,250		1,905,750		556,087		1985
RENSSELAER, NY		1,653,500		514,444		1,076,800		1,091,144		2,167,944		812,407		1985
RENSSELAER, NY		683,781				286,504		397,277		683,781		130,117		2004
PORT JEFFERSON, NY		387,478		63,743		245,753		205,468		451,221		137,488		1985
SALT POINT, NY				554,243		301,775		252,468		554,243		113,008		1987
ROTTERDAM, NY		140,600		100,399		91,600		149,399		240,999		119,988		1985
OSSINING, NY		231,100		44,049		149,200		125,949		275,149		84,276		1985
ELLENVILLE, NY		233,000		53,690		151,700		134,990		286,690		93,725		1985
CHATHAM, NY		349,133		131,805		225,000		255,938		480,938		189,458		1985
HYDE PARK, NY		253,100		12,015		139,100		126,015		265,115		126,015		1985
SHRUB OAK, NY		1,060,700		81,807		690,700		451,807		1,142,507		271,174		1985
NEW YORK, NY				229,435				229,435		229,435		229,435		1985
BROOKLYN, NY		237,100		125,067		154,400		207,767		362,167		145,648		1985
STATEN ISLAND, NY		301,300		288,603		196,200		393,703		589,903		301,485		1985
STATEN ISLAND, NY		357,904		39,588		230,300		167,192		397,492		106,724		1985
STATEN ISLAND, NY		349,500		176,590		227,600		298,490		526,090		215,579		1985
BRONX, NY		93,817		120,396		67,200		147,013		214,213		136,005		1985
BRONX, NY		104,130		360,410		90,000		374,540		464,540		341,940		1985
PELHAM MANOR, NY		136,791		78,987		75,000		140,778		215,778		139,349		1985
EAST MEADOW, NY		425,000		86,005		325,000		186,005		511,005		158,379		1986
STATEN ISLAND, NY		389,700		88,922		253,800		224,822		478,622		158,486		1985
MERRICK, NY		477,498		77,925		240,764		314,659		555,423		170,863		1987
MASSAPEQUA, NY		333,400		53,696		217,100		169,996		387,096		113,785		1985
TROY, NY		225,000		60,569		146,500		139,069		285,569		100,992		1985

101


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
BALDWIN, NY		290,923		5,007		151,280		144,650		295,930		89,771		1986
NEW YORK, NY				541,637				541,637		541,637		498,986		1986
MIDDLETOWN, NY		751,200		166,411		489,200		428,411		917,611		263,349		1985
OCEANSIDE, NY		313,400		88,863		204,100		198,163		402,263		119,273		1985
WANTAGH, NY		261,814		85,758		175,000		172,572		347,572		144,520		1985
NORTHPORT, NY		241,100		33,036		157,000		117,136		274,136		76,489		1985
BALLSTON, NY		160,000		134,021		110,000		184,021		294,021		181,975		1986
BALLSTON SPA, NY		210,000		105,073		100,000		215,073		315,073		212,669		1986
COLONIE, NY		245,150		28,322		120,150		153,322		273,472		151,166		1986
DELMAR, NY		150,000		42,478		70,000		122,478		192,478		120,044		1986
FORT EDWARD, NY		225,000		65,739		150,000		140,739		290,739		140,653		1986
QUEENSBURY, NY		225,000		105,592		165,000		165,592		330,592		165,210		1986
HALFMOON, NY		415,000		205,598		228,100		392,498		620,598		388,370		1986
HANCOCK, NY		100,000		109,470		50,000		159,470		209,470		157,398		1986
HYDE PARK, NY		300,000		59,198		175,000		184,198		359,198		184,012		1986
LATHAM, NY		275,000		68,160		150,000		193,160		343,160		189,717		1986
MALTA, NY		190,000		91,726		65,000		216,726		281,726		212,923		1986
MILLERTON, NY		175,000		123,063		100,000		198,063		298,063		197,525		1986
NEW WINDSOR, NY		150,000		94,791		75,000		169,791		244,791		164,520		1986
NISKAYUNA, NY		425,000		35,421		275,000		185,421		460,421		184,910		1986
PLEASANT VALLEY, NY		398,497		115,129		240,000		273,626		513,626		229,071		1986
QUEENSBURY, NY		215,255		65,245		140,255		140,245		280,500		136,775		1986
ROTTERDAM, NY		132,287		166,077		1		298,363		298,364		269,449		1995
SCHENECTADY, NY		225,000		298,103		150,000		373,103		523,103		370,244		1986
S. GLENS FALLS, NY		325,000		58,892		188,700		195,192		383,892		195,192		1986
ALBANY, NY		206,620		87,949		81,620		212,949		294,569		212,352		1986
NEWBURGH, NY		430,766		25,850		150,000		306,616		456,616		300,696		1989
JERICHO, NY				371,039				371,039		371,039		192,233		1998
RHINEBECK, NY		203,658				101,829		101,829		203,658		23,763		2007
PORT EWEN, NY		657,147				176,924		480,223		657,147		119,633		2007
CATSKILL, NY		404,988				354,365		50,623		404,988		8,100		2007
HUDSON, NY		303,741		126,379		151,871		278,249		430,120		147,575		1989
SAUGERTIES, NY		328,668		63,983		328,668		63,983		392,651		63,930		1988
QUARRYVILLE, NY		35,917		168,199		35,916		168,200		204,116		164,640		1988
MENANDS, NY		150,580		60,563		49,999		161,144		211,143		152,147		1988
BREWSTER, NY		302,564		44,393		142,564		204,393		346,957		202,098		1988
VALATIE, NY		165,590		394,981		90,829		469,742		560,571		443,863		1989
CAIRO, NY		191,928		142,895		46,650		288,173		334,823		282,126		1988
RED HOOK, NY				226,787				226,787		226,787		225,169		1991
WEST TAGHKANIC, NY		202,750		117,540		121,650		198,640		320,290		142,882		1986
RAVENA, NY				199,900				199,900		199,900		198,040		1991
SAYVILLE, NY		528,225				300,000		228,225		528,225		113,352		1998
WANTAGH, NY		640,680				370,200		270,480		640,680		134,335		1998
CENTRAL ISLIP, NY		572,244				357,500		214,744		572,244		106,547		1998

102


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
FLUSHING, NY		516,110				320,125		195,985		516,110		97,167		1998
NORTH LINDENHURST, NY		294866				192000		102866		294866		71924		1998
WYANDANCH, NY		415,414				279,500		135,914		415,414		84,162		1998
NEW ROCHELLE, NY		415,180				251,875		163,305		415,180		80,776		1998
FLORAL PARK, NY		616,700				356,400		260,300		616,700		129,152		1998
RIVERHEAD, NY		723,346				431,700		291,646		723,346		144,706		1998
AMHERST, NY		223,009				173,451		49,558		223,009		33,397		2000
BUFFALO, NY		312,426				150,888		161,538		312,426		85,826		2000
GRAND ISLAND, NY		350,849				247,348		103,501		350,849		63,395		2000
HAMBURG, NY		294,031				163,906		130,125		294,031		59,423		2000
LACKAWANNA, NY		250,030				129,870		120,160		250,030		65,727		2000
LEWISTON, NY		205,000				125,000		80,000		205,000		36,533		2000
TONAWANDA, NY		189,296				147,122		42,174		189,296		19,260		2000
TONAWANDA, NY		263,596		11,493		211,337		63,752		275,089		46,185		2000
WEST SENECA, NY		257,142				184,385		72,757		257,142		33,233		2000
WILLIAMSVILLE, NY		211,972				176,643		35,329		211,972		16,132		2000
ALFRED STATION , NY		714,108				414,108		300,000		714,108		58,000		2006
AVOCA, NY		935,543				634,543		301,000		935,543		58,000		2006
BATAVIA, NY		684,279				364,279		320,000		684,279		61,867		2006
BYRON, NY		969,117				669,117		300,000		969,117		58,000		2006
CASTILE, NY		307,196				132,196		175,000		307,196		33,833		2006
CHURCHVILLE, NY		1,011,381				601,381		410,000		1,011,381		79,267		2006
EAST PEMBROKE, NY		787,465				537,465		250,000		787,465		48,333		2006
FRIENDSHIP, NY		392,517				42,517		350,000		392,517		67,667		2006
NAPLES , NY		1,257,487				827,487		430,000		1,257,487		83,133		2006
ROCHESTER , NY		559,049				159,049		400,000		559,049		77,333		2006
PERRY , NY		1,443,847				1,043,847		400,000		1,443,847		77,333		2006
PRATTSBURG , NY		553,136				303,136		250,000		553,136		48,333		2006
SAVONA , NY		1,314,135				964,136		349,999		1,314,135		67,667		2006
WARSAW , NY		990,259				690,259		300,000		990,259		58,000		2006
WELLSVILLE, NY		247,281						247,281		247,281		47,807		2006
ROCHESTER , NY		823,031				273,031		550,000		823,031		106,757		2006
LAKEVILLE, NY		1,027,783				202,857		824,926		1,027,783		143,449		2008
GREIGSVILLE, NY		1,017,739				202,873		814,866		1,017,739		140,545		2008
ROCHESTER, NY		595,237				305,237		290,000		595,237		36,629		2008
PHILADELPHIA, PA		687,000		25,017		447,400		264,617		712,017		147,353		1985
PHILADELPHIA, PA		237,100		205,495		154,400		288,195		442,595		210,485		1985
ALLENTOWN, PA		357,500		76,385		232,800		201,085		433,885		127,529		1985
NORRISTOWN, PA		241,300		78,419		157,100		162,619		319,719		104,902		1985
BRYN MAWR, PA		221,000		59,832		143,900		136,932		280,832		97,619		1985
CONSHOHOCKEN, PA		261,100		77,885		170,000		168,985		338,985		122,328		1985
PHILADELPHIA, PA		281,200		34,285		183,100		132,385		315,485		83,957		1985
HUNTINGDON VALLEY, PA		421,800		36,439		274,700		183,539		458,239		112,152		1985
FEASTERVILLE, PA		510,200		160,144		332,200		338,144		670,344		237,645		1985

103


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
PHILADELPHIA, PA		285,200		65,498		185,700		164,998		350,698		116,709		1985
PHILADELPHIA, PA		289,300		50,010		188,400		150,910		339,310		101,382		1985
PHILADELPHIA, PA		405,800		221,269		264,300		362,769		627,069		266,870		1985
PHILADELPHIA, PA		417,800		210,406		272,100		356,106		628,206		243,518		1985
PHILADELPHIA, PA		369,600		276,720		240,700		405,620		646,320		307,989		1985
HATBORO, PA		285,200		61,979		185,700		161,479		347,179		112,889		1985
HAVERTOWN, PA		402,000		22,660		253,800		170,860		424,660		105,176		1985
MEDIA, PA		326,195		24,082		191,000		159,277		350,277		109,833		1985
PHILADELPHIA, PA		389,700		28,006		253,800		163,906		417,706		98,190		1985
PHILADELPHIA, PA		341,500		224,647		222,400		343,747		566,147		243,057		1985
ALDAN, PA		281,200		45,539		183,100		143,639		326,739		93,447		1985
BRISTOL, PA		430,500		82,981		280,000		233,481		513,481		160,982		1985
TREVOSE, PA		215,214		16,382		150,000		81,596		231,596		79,568		1987
HAVERTOWN, PA		265,200		24,500		172,700		117,000		289,700		71,335		1985
ABINGTON, PA		309,300		43,696		201,400		151,596		352,996		99,332		1985
HATBORO, PA		289,300		61,371		188,400		162,271		350,671		113,504		1985
CLIFTON HGTS., PA		428,201		63,403		256,400		235,204		491,604		168,159		1985
ALDAN, PA		433,800		21,152		282,500		172,452		454,952		99,142		1985
SHARON HILL, PA		411,057		39,574		266,800		183,831		450,631		114,764		1985
MEDIA, PA		474,100		5,055		308,700		170,455		479,155		90,513		1985
ROSLYN, PA		349,500		173,661		227,600		295,561		523,161		236,148		1985
CLIFTON HGTS, PA		213,000		46,824		138,700		121,124		259,824		85,172		1985
PHILADELPHIA, PA		369,600		273,642		240,700		402,542		643,242		319,856		1985
MORRISVILLE, PA		377,600		33,522		245,900		165,222		411,122		101,490		1985
PHILADELPHIA, PA		302,999		220,313		181,497		341,815		523,312		302,639		1985
PHOENIXVILLE, PA		413,800		17,561		269,500		161,861		431,361		92,117		1985
LANGHORNE, PA		122,202		69,328		50,000		141,530		191,530		102,275		1987
POTTSTOWN, PA		430,000		48,854		280,000		198,854		478,854		126,355		1985
BOYERTOWN, PA		233,000		5,373		151,700		86,673		238,373		47,379		1985
QUAKERTOWN, PA		379,111		89,812		243,300		225,623		468,923		162,646		1985
SOUDERTON, PA		381,700		172,170		248,600		305,270		553,870		217,289		1985
LANSDALE, PA		243,844		200,458		243,844		200,458		444,302		130,558		1985
FURLONG, PA		175,300		151,150		175,300		151,150		326,450		105,513		1985
DOYLESTOWN, PA		405,800		32,659		264,300		174,159		438,459		105,317		1985
NORRISTOWN, PA		175,300		120,786		175,300		120,786		296,086		74,779		1985
TRAPPE, PA		377,600		44,509		245,900		176,209		422,109		112,555		1985
PARADISE, PA		132,295		151,188		102,295		181,188		283,483		181,188		1986
LINWOOD, PA		171,518		22,371		102,968		90,921		193,889		90,613		1987
READING, PA		750,000		49,125				799,125		799,125		795,101		1989
ELKINS PARK, PA		275,171		17,524		200,000		92,695		292,695		92,020		1990
NEW OXFORD, PA		1,044,707		13,500		18,687		1,039,520		1,058,207		897,511		1996
GLEN ROCK, PA		20,442		166,633		20,442		166,633		187,075		152,918		1961
PHILADELPHIA, PA		1,251,534				813,997		437,537		1,251,534		22,556		2009
ALLISON PARK, PA		1,500,000				850,000		650,000		1,500,000		41,666		2010

104


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
NEW KENSINGTON		1,375,000				675,000		700,000		1,375,000		20,672		2010
NORTH KINGSTOWN, RI		211,835		25,971		89,135		148,671		237,806		148,649		1985
MIDDLETOWN, RI		306,710		16,364		176,710		146,364		323,074		145,909		1987
WARWICK, RI		376,563		39,933		205,889		210,607		416,496		209,505		1989
PROVIDENCE, RI		231,372		191,647		150,392		272,627		423,019		169,079		1991
EAST PROVIDENCE, RI		2,297,435		568,241		1,495,700		1,369,976		2,865,676		816,592		1985
ASHAWAY, RI		618,609				402,096		216,513		618,609		53,410		2004
EAST PROVIDENCE, RI		309,950		49,546		202,050		157,446		359,496		104,686		1985
PAWTUCKET, RI		212,775		161,188		118,860		255,103		373,963		251,683		1986
WARWICK, RI		434,752		24,730		266,800		192,682		459,482		123,615		1985
CRANSTON, RI		466,100		12,576		303,500		175,176		478,676		96,474		1985
PAWTUCKET, RI		207,100		2,990		154,400		55,690		210,090		44,519		1985
BARRINGTON, RI		490,200		213,866		319,200		384,866		704,066		298,850		1985
WARWICK, RI		253,100		34,400		164,800		122,700		287,500		78,834		1985
N. PROVIDENCE, RI		542,400		61,717		353,200		250,917		604,117		159,337		1985
EAST PROVIDENCE, RI		486,675		13,947		316,600		184,022		500,622		102,050		1985
WAKEFIELD, RI		413,800		39,616		269,500		183,916		453,416		109,369		1985
EPHRATA, PA		183,477		96,937		136,809		143,605		280,414		143,599		1990
DOUGLASSVILLE, PA		178,488		23,321		128,738		73,071		201,809		73,071		1990
POTTSVILLE, PA		162,402		82,769		43,471		201,700		245,171		196,779		1990
POTTSVILLE, PA		451,360		19,361		147,740		322,981		470,721		318,454		1990
LANCASTER, PA		208,677		24,347		78,254		154,770		233,024		154,770		1989
LANCASTER, PA		642,000		17,993		300,000		359,993		659,993		359,993		1989
HAMBURG, PA		219,280		75,745		130,423		164,602		295,025		164,602		1989
READING, PA		182,592		82,812		104,338		161,066		265,404		150,545		1989
MOUNTVILLE, PA		195,635		19,506		78,254		136,887		215,141		136,887		1989
EBENEZER, PA		147,058		88,474		68,804		166,728		235,532		152,007		1989
INTERCOURSE, PA		311,503		81,287		157,801		234,989		392,790		121,762		1989
REINHOLDS, PA		176,520		83,686		82,017		178,189		260,206		169,382		1989
COLUMBIA, PA		225,906		13,206		75,000		164,112		239,112		150,253		1989
OXFORD, PA		191,449		118,321		65,212		244,558		309,770		228,574		1989
EPHRATA, PA		208,604		52,826		30,000		231,430		261,430		186,366		1989
ROBESONIA, PA		225,913		102,802		70,000		258,715		328,715		248,079		1989
KENHORST, PA		143,466		94,592		65,212		172,846		238,058		172,846		1989
NEFFSVILLE, PA		234,761		45,637		91,296		189,102		280,398		188,312		1989
LEOLA, PA		262,890		102,007		131,189		233,708		364,897		136,687		1989
EPHRATA, PA		187,843		9,400		65,212		132,031		197,243		131,400		1989
RED LION, PA		221,719		29,788		52,169		199,338		251,507		199,338		1989
READING, PA		129,284		137,863		65,352		201,795		267,147		181,539		1989
ROTHSVILLE, PA		169,550		25,188		52,169		142,569		194,738		142,569		1989
HANOVER, PA		231,028		13,252		70,000		174,280		244,280		163,623		1989
HARRISBURG, PA		399,016		347,590		198,740		547,866		746,606		375,377		1989
ADAMSTOWN, PA		213,424		108,844		100,000		222,268		322,268		188,085		1989
LANCASTER, PA		308,964		83,443		104,338		288,069		392,407		277,504		1989

105


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
NEW HOLLAND, PA		313,015		106,839		143,465		276,389		419,854		260,505		1989
CHRISTIANA, PA		182,593		11,178		65,212		128,559		193,771		128,559		1989
WYOMISSING HILLS, PA		319,320		113,176		76,074		356,422		432,496		356,422		1989
LAURELDALE, PA		262,079		15,550		86,941		190,688		277,629		190,122		1989
REIFFTON, PA		338,250		5,295		43,470		300,075		343,545		300,075		1989
W.READING, PA		790,432		68,726		387,641		471,517		859,158		471,517		1989
ARENDTSVILLE, PA		173,759		101,020		32,603		242,176		274,779		226,418		1989
MOHNTON, PA		317,228		56,374		66,425		307,177		373,602		297,035		1989
MCCONNELLSBURG, PA		155,367		145,616		69,915		231,068		300,983		150,109		1989
CRESTLINE, OH		1,201,523				284,761		916,762		1,201,523		102,299		2008
MANSFIELD, OH		921,108				331,599		589,509		921,108		61,760		2008
MANSFIELD, OH		1,950,000				700,000		1,250,000		1,950,000		113,083		2009
MONROEVILLE, OH		2,580,000				485,000		2,095,000		2,580,000		145,425		2009
ROANOKE, VA		91,281		150,495				241,776		241,776		241,778		1990
RICHMOND, VA		120,818		167,895				288,713		288,713		288,713		1990
CHESAPEAKE, VA		1,184,759		32,132		604,983		611,908		1,216,891		184,806		1990
PORTSMOUTH, VA		562,255		17,106		221,610		357,751		579,361		355,347		1990
NORFOLK, VA		534,910		6,050		310,630		230,330		540,960		230,330		1990
ASHLAND, VA		839,997				839,997				839,997				2005
FARMVILLE, VA		1,226,505				621,505		605,000		1,226,505		139,150		2005
FREDERICKSBURG, VA		1,279,280				469,280		810,000		1,279,280		186,300		2005
FREDERICKSBURG, VA		1,715,914				995,914		720,000		1,715,914		165,600		2005
FREDERICKSBURG, VA		1,289,425				798,444		490,981		1,289,425		131,310		2005
FREDERICKSBURG, VA		3,623,228				2,828,228		795,000		3,623,228		182,850		2005
GLEN ALLEN, VA		1,036,585				411,585		625,000		1,036,585		143,750		2005
GLEN ALLEN, VA		1,077,402				322,402		755,000		1,077,402		173,650		2005
KING GEORGE, VA		293,638				293,638				293,638				2005
KING WILLIAM, VA		1,687,540				1,067,540		620,000		1,687,540		142,600		2005
MECHANICSVILLE, VA		1,124,769				504,769		620,000		1,124,769		142,600		2005
MECHANICSVILLE, VA		902,892				272,892		630,000		902,892		144,900		2005
MECHANICSVILLE, VA		1,476,043				876,043		600,000		1,476,043		138,000		2005
MECHANICSVILLE, VA		957,418				324,158		633,260		957,418		182,810		2005
MECHANICSVILLE, VA		193,088				193,088				193,088				2005
MECHANICSVILLE, VA		1,677,065				1,157,065		520,000		1,677,065		119,600		2005
MECHANICSVILLE, VA		1,042,870				222,870		820,000		1,042,870		188,600		2005
MONTPELIER, VA		2,480,686				1,725,686		755,000		2,480,686		173,650		2005
PETERSBURG, VA		1,441,374				816,374		625,000		1,441,374		143,750		2005
RICHMOND, VA		1,131,878				546,878		585,000		1,131,878		134,550		2005
RUTHER GLEN, VA		466,341				31,341		435,000		466,341		100,050		2005
SANDSTON, VA		721,651				101,651		620,000		721,651		142,600		2005
SPOTSYLVANIA, VA		1,290,239				490,239		800,000		1,290,239		184,000		2005
CHESAPEAKE, VA		1,026,115		7,149		407,026		626,238		1,033,264		625,208		1990
BENNINGTON, VT		309,300		154,480		201,400		262,380		463,780		175,902		1985
JACKSONVILLE, FL		559,514				296,434		263,080		559,514		120,137		2000

106


	Initial Cost		Cost										Date of
	of Leasehold		Capitalized		Gross Amount at Which Carried								Initial
	or Acquisition		Subsequent				at Close of Period						Leasehold or
	Investment to		to Initial				Building and				Accumulated		Acquisition
Description	Company (1)		Investment		Land		Improvements		Total		Depreciation		Investment (1)
JACKSONVILLE, FL		485,514				388,434		97,080		485,514		44,330		2000
JACKSONVILLE, FL		196,764				114,434		82,330		196,764		37,595		2000
JACKSONVILLE, FL		201,477				117,907		83,570		201,477		38,165		2000
JACKSONVILLE, FL		545,314				256,434		288,880		545,314		131,919		2000
ORLANDO, FL		867,515				401,435		466,080		867,515		212,840		2000
MISCELLANEOUS		12,456,106		12,760,842		7,587,781		17,629,167		25,216,948		16,594,654	VARIOUS

TOTAL	$	427,753,642	$	76,833,791	$	253,413,033	$	251,174,400	$	504,587,433	$	144,217,313


(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 $412,249,000 at December 31, 2010.

107

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 16, 2011

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/ David B. Driscoll	By:	/s/ Thomas J. Stirnweis
	David B. Driscoll		Thomas J. Stirnweis
	President, Chief Executive Officer and Director		Vice President, Treasurer and Chief Financial Officer
	(Principal Executive Officer)		(Principal Financial and Accounting Officer)
	March 16, 2011		March 16, 2011

By:	/s/ Leo Liebowitz	By:	/s/ Philip E. Coviello
	Leo Liebowitz		Philip E. Coviello
	Director and Chairman of the Board		Director
	March 16, 2011		March 16, 2011

By:	/s/ Milton Cooper	By:	/s/ Richard E. Montag
	Milton Cooper		Richard E. Montag
	Director		Director
	March 16, 2011		March 16, 2011

By:	/s/ Howard Safenowitz
	Howard Safenowitz
	Director
	March 16, 2011

108

EXHIBIT INDEX

GETTY REALTY CORP.
Annual Report on Form 10-K
for the year ended December 31, 2010


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/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.	Filed as Exhibit 3.2 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

3.3	By-Laws of Getty Realty Corp.	Filed as Exhibit 3.3 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

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

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

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

10.1*	Retirement and Profit Sharing Plan (amended and restated as of January 1, 2010), adopted by the Company on April 26, 2010.	Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 30, 2010 (File No. 001-13777) and incorporated herein by reference.

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.

109


EXHIBIT NO.	DESCRIPTION
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.	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (File No. 001-13777) and incorporated herein by reference.

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.	Filed as Exhibit 10.5 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

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

10.7*	Letter Agreement dated June 12, 2001 by and between Getty Realty Corp. and Thomas J. Stirnweis regarding compensation upon change in control.	Filed as Exhibit 10.7 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.8	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.	Filed as Exhibit 10.8 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.9	Form of Tax Sharing Agreement between Getty Petroleum Corp (now known as Getty. Properties Corp.) and Getty Petroleum Marketing Inc.	Filed as Exhibit 10.9 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.10	Consolidated, Amended and Restated Master Lease Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.	Filed as Exhibit 10.10 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.11	Environmental Indemnity Agreement dated November 2, 2000 between Getty Properties Corp. and Getty Petroleum Marketing Inc.	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (File No. 001-13777) and incorporated herein by reference.

10.12	Amended and Restated Trademark License Agreement, dated November 2, 2000, between Getty Properties Corp. and Getty Petroleum Marketing Inc.	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (File No. 001-13777) and incorporated herein by reference.

10.13	Trademark License Agreement, dated November 2, 2000, between Getty™ Corp. and Getty Petroleum Marketing Inc.	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (File No. 001-13777) and incorporated herein by reference.

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EXHIBIT NO.	DESCRIPTION
10.14*	2004 Getty Realty Corp. Omnibus Incentive Compensation Plan.	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (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.	Filed as Exhibit 10.15 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.16**	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*	Amendment to the 2004 Getty Realty Corp. Omnibus Incentive Compensation Plan dated December 31, 2008.	Filed as Exhibit 10.19 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.19*	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).	Filed as Exhibit 10.20 to Company’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-13777) and incorporated herein by reference.

10.20	Unitary Net Lease Agreement between GTY MD Leasing, Inc. and White Oak Petroleum LLC, dated as of September 25, 2009.	Filed as Exhibit 10.1 to Company’s Current Report on Form 8-K filed September 25, 2009 (File No. 001-13777) and incorporated herein by reference.

10.21	Loan Agreement among GTY MD Leasing, Inc., Getty Properties Corp., Getty Realty Corp., and TD Bank, dated as of September 25, 2009.	Filed as Exhibit 10.2 to Company’s Current Report on Form 8-K filed September 25, 2009 (File No. 001-13777) and incorporated herein by reference.

14	The Getty Realty Corp. Business Conduct Guidelines (Code of Ethics).	Filed as Exhibit 10.3 to Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2009 (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)

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EXHIBIT NO.	DESCRIPTION
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.

112