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What changed in GETTY REALTY CORP /MD/'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GETTY REALTY CORP /MD/'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+265 added−276 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-23)

Top changes in GETTY REALTY CORP /MD/'s 2023 10-K

265 paragraphs added · 276 removed · 220 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

42 edited+12 added−8 removed28 unchanged
Biggest changeFor additional information regarding our environmental obligations, see Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. As of December 31, 2022, we were also actively redeveloping three of our properties as new convenience stores or for alternative single tenant retail uses, and two of our properties were vacant.
Biggest changeSubstantially all of our tenants are also responsible for pre-existing environmental contamination that is discovered during their lease term, except contamination that was known at lease commencement, as to which we have established reserves. For additional information regarding our environmental obligations, see Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
We continue to look for opportunities within 8 our portfolio to redevelop properties for less environmentally sensitive uses and to support economic growth in communities where our properties are located. For additional information, see “Item 1A. Risk Factors” and “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
We continue to look for opportunities within our portfolio to redevelop properties for less environmentally sensitive uses and to support economic growth in communities where our properties are located. For additional information, see “Item 1A. Risk Factors” and “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
For additional information, see “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Climate Change As an organization, we are committed to the protection of our assets, communities, and the environment.
For additional information, see “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 7 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. Climate Change As an organization, we are committed to the protection of our assets, communities, and the environment.
Our compensation program is designed to attract and retain talent, and includes the employee benefit plans described in Note 8 “Employee Benefit Plan” included in Part II, Item 8 of this Annual Report on Form 10-K. We continually assess and strive to enhance employee satisfaction and engagement.
Our compensation program is designed to attract and retain talent, and includes the employee benefit plans described in Note 9 “Employee Benefit Plan” included in Part II, Item 8 of this Annual Report on Form 10-K. We continually assess and strive to enhance employee satisfaction and engagement.
Our properties are located in 38 states and Washington D.C. and includes a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords.
Our properties are located in 40 states and Washington D.C. and includes a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords.
During the year ended December 31, 2022, we invested $157.5 million across 52 properties, including the acquisition of fee simple interests in 40 properties for an aggregate purchase price of $137.3 million. The properties we acquired included nine convenience stores, 16 car wash properties, 14 automotive services centers and one drive-thru quick service restaurant.
During the year ended December 31, 2022, we invested $157.5 million across 52 properties, including the acquisition of fee simple interests in 40 properties for an aggregate purchase price of $137.3 million. The properties we acquired included nine convenience stores, 16 express tunnel car washes, 14 automotive services centers and one drive-thru quick service restaurant.
These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of December 31, 2022, our weighted average remaining lease term, excluding renewal options, was 8.8 years.
These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of December 31, 2023, our weighted average remaining lease term, excluding renewal options, was 8.9 years.
Redevelopment Strategy and Activity We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as new convenience stores or other single tenant retail uses, such as automotive parts, quick service restaurants, bank branches and specialty retail.
Redevelopment Strategy and Activity We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as new convenience stores or other single tenant convenience and automotive retail uses, such as automotive parts retailers, quick service restaurants, auto service centers, and bank branches.
With our landlord’s support, we will work to construct a full picture of our environmental footprint, maximize diversion of recyclable waste in accordance with local regulations, and implement energy conservation measures in our leased space as appropriate and feasible.
With our landlord’s support, we intend to construct a full picture of our environmental footprint, maximize diversion of recyclable waste in accordance with local regulations, and implement energy conservation measures in our leased space as appropriate and feasible.
As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed. Our company is headquartered in New York, New York and as of February 23, 2023, we had 32 employees.
As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders each year and would be subject to corporate level federal income taxes on any taxable income that is not distributed. Our company is headquartered in New York, New York and as of February 15, 2024, we had 32 employees.
We also support and pay for 6 external education classes and seminars requested by our employees if doing so will advance their work-related skills or professional development. We believe that our employees are fairly compensated, without regard to gender, race and ethnicity, and are routinely recognized for outstanding performance.
We also support and pay for external education classes and seminars requested by our employees if doing so advances their work-related skills or professional development. We believe that our employees are fairly compensated, without regard to gender, race and ethnicity, and are routinely recognized for outstanding performance.
We emphasize sustainability at our new corporate headquarters where we utilize energy efficient computer equipment, filtered water machines, and timed or sensor-controlled HVAC and lighting systems, among other sustainability practices. In 2022, we began tracking our environmental footprint within our leased corporate office space including monitoring monthly energy usage, recycling efforts, and waste disposal.
We emphasize sustainability at our corporate headquarters where we utilize energy efficient computer equipment, filtered water machines, and timed or sensor-controlled HVAC and lighting systems, among other sustainability practices. We are tracking our environmental footprint within our leased corporate office space including monitoring monthly energy usage, recycling efforts, and waste disposal.
Substantially all of our properties are leased to convenience store operators, petroleum distributors, car wash operators and other automotive-related and retail tenants. Our tenants either operate their business at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties that operate the businesses.
Substantially all of our properties are leased to convenience store operators, petroleum distributors, express tunnel car wash operators, and other automotive-related and retail tenants. Our tenants either operate their businesses at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties who operate the businesses.
Our 1,039 properties as of December 31, 2022 are located in 38 states and Washington, D.C., and our tenants operate under a variety of national and regional brands. We are internally managed by our management team, which has extensive experience acquiring, financing, developing and managing convenience, automotive and other single tenant retail real estate.
Our 1,093 properties as of December 31, 2023 are located in 40 states and Washington, D.C., and our tenants operate under a variety of national and regional brands. We are internally managed by our management team, which has extensive experience acquiring, financing, developing and managing convenience, automotive and other single tenant retail real estate.
Our portfolio includes convenience stores, car wash properties, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), automotive parts retailers, and certain other freestanding retail properties, including drive-thru quick service restaurants.
Our portfolio includes convenience stores, express tunnel car washes, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), and certain other freestanding retail properties, including drive-thru quick service restaurants and automotive parts retailers.
During the year ended December 31, 2022, we sold 24 properties that generated gross proceeds of approximately $26.0 million and reduced our exposure to certain property types, tenants, and geographies that no longer met our long-term investment criteria. For additional information regarding our property dispositions see Note 11 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Financial Statements and Supplementary Data” in this Form 10-K. During the year ended December 31, 2023, we sold nine properties that generated gross proceeds of approximately $12.0 million and reduced our exposure to certain properties, tenants, and/or geographies that no longer met our long-term investment criteria. For additional information regarding our property dispositions see Note 12 in “Item 8.
For additional information regarding our ATM Program see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 7 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
For additional information regarding our new term loan see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
In 2022, we implemented a permanent hybrid work schedule, allowing team members to work from home two days per week while maintaining COVID-related policies that support the overall health and wellness of our people and our office space. We appreciate the important role that our team and the Company play in the communities in which we live and operate.
We maintain a permanent hybrid work schedule, allowing team members to work from home two days per week and maintain other policies that support the overall health and wellness of our people and our office space. We appreciate the important role that our team and the Company play in the communities in which we live and operate.
We support individual volunteerism and provide team members with work schedule flexibility to support causes and organizations that are meaningful to them. In 2022, we implemented our Getty Gives program to facilitate volunteerism and charitable contributions in support of our communities and other causes meaningful to our team members.
We provide team members with work schedule flexibility and opportunities to support causes and organizations that are meaningful to them. We actively promote our Getty Gives program to facilitate volunteerism and charitable contributions in support of our communities and other causes meaningful to our team members.
For the year ended December 31, 2021, we spent $0.3 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities and transferred $0.4 million of construction-in-progress to buildings and improvements on our consolidated balance sheet.
For the year ended December 31, 2023, we incurred $0.2 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities and transferred $0.4 million of construction-in-progress to buildings and improvements on our consolidated balance sheets.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2022, we leased 1,034 of our properties to tenants under triple-net leases, including 866 properties leased under 37 separate unitary or master triple-net leases, and 168 properties leased under single unit triple-net leases.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2023, we leased 1,089 of our properties to tenants under triple-net leases, including 911 properties leased under 44 separate unitary or master triple-net leases, and 178 properties leased under single unit triple-net leases.
Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced.
Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for pre-existing environmental contamination occurring during the terms of their leases.
Our employees, many of whom have a long tenure with the Company, frequently express satisfaction with management and, in the opinion of management, our relations with our employees are good.
Our employees, many of whom have a long tenure with us, frequently express satisfaction with management and, in the opinion of our management, we have positive relations with our employees.
As discussed above, we also maintain a robust redevelopment program that repositions select properties within our portfolio to uses other than traditional gas stations, including modern convenience stores or alternative property uses such as automotive parts retailers, quick service restaurants, and multifamily residential buildings, among others.
As discussed above, we also maintain a robust redevelopment program that repositions select properties within our portfolio to uses other than traditional gas stations, including modern convenience stores or other single tenant retail uses, such as automotive parts, quick service restaurants, bank branches, and specialty retail, among others.
Our Properties As of December 31, 2022, our portfolio included 1,039 properties, of which we owned 997 properties and leased 42 properties from third-party landlords.
Our Properties As of December 31, 2023, our portfolio included 1,093 properties, of which we owned 1,056 properties and leased 37 properties from third-party landlords.
Our Business Conduct Guidelines and Employee Handbook govern our standards and policies with respect to our people, our partners, our health and safety, and our IT security.
We are dedicated to conducting our business consistent with the highest standards of business ethics. Our Business Conduct Guidelines and Employee Handbook govern our standards and policies with respect to our people, our partners, our health and safety, and our IT security.
Competition The single tenant net lease retail real estate sector in which we operate is highly competitive and we expect major investors with significant capital will continue to compete with us for attractive acquisition opportunities.
Competition The single tenant net lease retail real estate sector in which we operate is highly competitive and we expect major investors with significant capital will continue to compete with us for attractive acquisition opportunities. These competitors include publicly-traded and non-traded REITs, public and private investment funds, petroleum manufacturing, distributing and marketing companies, and other institutional and individual investors.
These competitors include publicly-traded and non-traded REITs, public and private investment funds, petroleum manufacturing, distributing and marketing companies, and other institutional and individual investors. 7 Trademarks We own the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States and we permit certain of our tenants to use the Getty® trademark at properties that they lease from us.
Trademarks We own the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States and we permit certain of our tenants to use the Getty® trademark at properties that they lease from us.
We also added four new tenants to our portfolio, expanded our relationships with several existing tenants, and added or increased exposure to a number of attractive metropolitan areas, including Austin, Charleston (SC), Charlotte, Las Vegas, and San Antonio. For additional information regarding our property acquisitions see Note 12 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
As a result of this investment activity, we added ten new tenants to our portfolio, expanded our relationships with several existing tenants, and added or increased exposure to a number of attractive metropolitan areas, including Atlanta, Charleston (SC), Jacksonville, Las Vegas, Phoenix, and Riverside (CA). For additional information regarding our property acquisitions see Note 13 in “Item 8.
Risk Factors” and “Liquidity and Capital Resources,” “Environmental Matters” and “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Under substantially all of our triple-net leases, contractual responsibility for remediation of all environmental contamination discovered during the term of the lease (including known and unknown contamination that existed prior to commencement of the lease) is the responsibility of our tenant. For additional information, see “Item 1A.
Under substantially all of our triple-net leases, contractual responsibility for remediation of all environmental contamination discovered during the term of the lease is the responsibility of our tenant.
During the year ended December 31, 2022, we continued to grow and diversify our investments in convenience, automotive and other freestanding retail properties through fee simple acquisitions and construction loan advances for new-to-industry developments.
During the year ended December 31, 2023, we invested more than $325.0 million, a record year for the Company, and continued to grow and diversify our portfolio of convenience, automotive and other freestanding retail properties through fee simple acquisitions and development funding advances for the construction of new-to-industry assets.
We are pleased that many of our tenants have already completed environmental and sustainability projects, including upgrading to LED lighting, installing energy efficient coolers and HVAC units, and, in select cases, installing electric vehicle (EV) charging stations at our properties.
As such, it is our tenants who control the environmental impact of their operations, including energy efficiency, water usage, and waste and recycling practices, and decide when and how to adopt environmentally sustainable practices and make related investments. 8 We are pleased that many of our tenants have already completed environmental and sustainability projects, including upgrading to LED lighting, installing energy efficient coolers and HVAC units, and, in select cases, installing electric vehicle (EV) charging stations at our properties.
The properties we acquired included 25 convenience stores, 17 car wash properties, 54 automotive services centers and one drive-thru quick service restaurant. We also advanced construction loans in the amount of $5.7 million, including accrued interest, for the development of three new-to-industry convenience stores. For additional information regarding our property acquisitions, see Note 12 in “Item 8.
We also advanced construction loans in the amount of $20.2 million, including accrued interest, for the development of 12 new-to-industry convenience stores. For additional information regarding our property acquisitions, see Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
We believe that the redeveloped properties can be leased or sold at higher values than their current use. During the years ended December 31, 2022 and 2021, rent commenced on two and five completed redevelopment projects, respectively, that were placed back into service in our net lease portfolio.
We believe that the redeveloped properties can be leased or sold at higher values than their prior use. During the year ended December 31, 2023, rent commenced on three completed redevelopments and increased rent commenced on two revenue enhancing capital expenditures (“capex”) projects for expanded convenience stores.
Financial Statements and Supplementary Data” in this Form 10-K. Over the last five years, we have acquired 239 properties, including single property and portfolio transactions located in various states, for an aggregate purchase price of $646.7 million.
Over the last five years, we have acquired 252 properties, including single property and portfolio transactions located in various geographies and leased to a diverse set of tenants who operate in across the convenience and automotive retail sectors, for an aggregate purchase price of $816.8 million.
Human Capital Resources As of December 31, 2022, we had 32 full-time employees, all of which are located in our New York office. We are dedicated to conducting our business consistent with the highest standards of business ethics.
As of December 31, 2023, we were also actively redeveloping two of our properties for alternative single tenant retail uses, and two of our properties were vacant. Human Capital Resources As of December 31, 2023, we had 32 full-time employees, all of which are located in our New York office.
As of December 31, 2022, we had three properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio, including one property for which we have signed a new lease and which will be transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured.
For the year ended December 31, 2022, we incurred $0.1 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities. 7 As of December 31, 2023, we had two properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio.
Proceeds from the notes funded at closing were used to repay all amounts then outstanding under our senior unsecured revolving credit facility and for general corporate purposes, including to fund investment activity.
The term loan matures October 17, 2025, with one twelve-month extension at our option, and the effective interest rate on the term loan was 6.1% as of December 31, 2023. Proceeds from the funding were used for general corporate purposes, including to repay amounts outstanding under our revolving credit facility and to fund investment activity.
We were also active raising capital to fund our investment activity through the issuance of new senior unsecured notes, and by entering into forward agreements to sell common shares through our at-the-market equity offering program.
We were able to accretively fund this investment activity through thoughtful capital markets execution that included our first common stock offering since 2017, active use of our at-the-market equity offering program, and a new unsecured term loan from a group of our existing lenders.
Since the inception of our redevelopment program in 2015, we have completed 26 redevelopment projects. For the year ended December 31, 2022, we spent $0.1 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities and transferred $36 thousand of construction-in-progress to buildings and improvements on our consolidated balance sheet.
During the year ended December 31, 2022, new rent commenced on two completed redevelopment projects. Since the inception of our redevelopment program in 2015, we have completed 31 redevelopment and revenue-enhancing capex projects.
Financial Statements and Supplementary Data” in this Form 10-K. 5 During the year ended December 31, 2022, we entered into forward sale agreements to sell an aggregate of 3.7 million shares of common stock for anticipated gross proceeds of $117.6 million through our at-the-market equity offering program. No shares were settled during the year ended December 31, 2022.
During the year ended December 31, 2023, we raised more than $144.0 million of gross equity proceeds through the sale of 4,499,500 common shares subject to forward sales agreements, including 3,450,000 shares ($112.1 million of net proceeds) in a follow-on public offering and 1,049,050 shares through our at-the-market equity offering program ($32.2 million of gross proceeds).
Removed
In addition, we advanced construction loans in the amount of $20.2 million, including accrued interest, for the development of 12 new-to-industry convenience stores and car wash properties. In total, convenience stores represented approximately 30% of our investment activity during the year, while other convenience and automotive retail properties made up the remaining 70% of our investments.
Added
During the year ended December 31, 2023, we acquired fee simple interests in 54 operating properties for $248.1 million (of which $211.7 million was invested in 2023 and $36.4 million represents development funding advances made prior to 2023).
Removed
In February 2022, we closed on the private placement of $225.0 million of new senior unsecured notes, including (i) $100.0 million of 3.45% notes that funded at closing and mature in February 2032, and (ii) $125.0 million of 3.65% notes that funded in January 2023 and mature in January 2033.
Added
The properties we acquired included 26 express tunnel car washes, 13 automotive services centers, 12 convenience stores, and three drive-thru quick service restaurants.
Removed
Proceeds from the delayed funding notes were used to prepay $75.0 million of 5.35% senior unsecured notes maturing in June 2023 and for general corporate purposes, including to fund investment activity. For additional information regarding our senior unsecured notes see “Item 7.
Added
In addition, we acquired fee simple interests in 14 under construction car wash properties for $44.8 million and committed to provide additional funding to complete these projects, and advanced incremental development funding totaling $70.7 million for the construction of these and 15 other new-to-industry express tunnel car washes, convenience stores, and auto service centers.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 4 in “Item 8.
Added
Financial Statements and Supplementary Data” in this Form 10-K.
Removed
We also launched a pro bono legal services program to benefit communities in need and provide opportunities for personal philanthropic fulfillment. We participate in annual performance reviews with our employees and hold periodic meetings with employees to gather feedback, discuss opportunities to participate in various professional development programs, and improve the overall employee experience.
Added
As of December 31, 2023, the 1,049,050 shares sold under our at-the-market equity offering program remained subject to forward equity agreements and we expect to settle these shares within 12 months of the respective agreement dates. For additional information regarding our equity issuance see “Item 7.
Removed
During the year ended December 31, 2022, we invested $157.5 million across 52 properties, including the acquisition of fee simple interests in 40 properties for an aggregate purchase price of $137.3 million. The properties we acquired included nine convenience stores, 16 car wash properties, 14 automotive services centers and one drive-thru quick service restaurant.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 8 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. In October 2023, we entered into a new senior unsecured term loan with a group of existing lenders for an aggregate principal amount of $150.0 million.
Removed
We also advanced construction loans in the amount of $20.2 million, including accrued interest, for the development of 12 new-to-industry convenience stores and car wash properties. During the year ended December 31, 2021, we invested $200.0 million across 100 properties, including the acquisition of fee simple interests in 97 properties for an aggregate purchase price of $194.3 million.
Added
An initial principal amount of $75.0 million was funded at closing, and an additional principal amount of 5 $75.0 million can be funded at our option any time on or prior to April 14, 2024.
Removed
As such, it is our tenants who control the environmental impact of their operations, including energy efficiency, water usage, and waste and recycling practices, and decide when and how to adopt environmentally sustainable practices and make related investments.
Added
In 2023, our team participated in our first company-wide community service event with Rethink Food where we worked alongside the Rethink Food team to transform surplus food into meals for distribution to underserved communities.
Added
In addition, we made corporate donations to RxArt, an organization that helps children heal through the extraordinary power of visual art, and Remember Me Rescue NY, a foster based animal rescue on Long Island, NY, and matched individual contributions made by our team members to over 20 different charitable organizations serving a wide range of causes. 6 We participate in annual performance reviews with our employees and hold periodic meetings with employees to gather feedback, discuss opportunities to participate in various professional development programs, and improve the overall employee experience.
Added
During the year ended December 31, 2023, we invested more than $325.0 million (net of previously funded amounts), including $211.7 million (net of previously funded amounts) for the acquisition of 54 operating properties, $44.8 million (plus a commitment to provide funding to complete the projects) for the acquisition of 14 under construction express tunnel car washes, and $70.7 million of incremental development funding advances for the construction of new-to-industry assets.
Added
In aggregate, we invested in more than 80 assets, including 52 express tunnel car washes, 15 auto service centers, 13 convenience stores, and three drive-thru quick service restaurants, while adding ten new tenants and two new states to our portfolio, and expanding our relationships with several existing tenants and our presence in certain high-growth metropolitan areas.
Added
Substantially all of our tenants are also responsible for pre-existing environmental contamination that is discovered during their lease term, except contamination that was known at lease commencement, as to which we have established reserves. For additional information, see “Item 1A. Risk Factors” and “Liquidity and Capital Resources,” “Environmental Matters” and “Contractual Obligations” in “Item 7.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

62 edited+8 added−27 removed176 unchanged
Biggest changeWe may be required to take similar impairment charges, which could affect the implementation of our current business strategy and have a material adverse effect on our financial condition and results of operations. 15 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.
Biggest changeDuring the years ended December 31, 2023 and 2022, we incurred $5.2 million and $3.5 million, respectively, of impairment charges. We may be required to take similar impairment charges, which could affect the implementation of our current business strategy and have a material adverse effect on our financial condition and results of operations.
Changes made by the TCJA and the CARES Act that could affect us and our shareholders include: 20 • temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026; • permanently eliminating the progressive corporate tax rate structure, with a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%; • permitting a deduction for certain pass-through business income, including dividends received by our shareholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will generally allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026; • reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%; • limiting our deduction for net operating losses to 80% of REIT taxable income (prior to the application of the dividends paid deduction) for taxable years beginning after December 31, 2020; • generally limiting the deduction for net business interest expense in excess of a specified percentage (50% for taxable years beginning in 2019 and 2020 and 30% for subsequent taxable years) of a business’s adjusted taxable income except for taxpayers that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system for certain property); and • eliminating the corporate alternative minimum tax.
Changes made by the TCJA and the CARES Act that could affect us and our shareholders include: • temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026; • permanently eliminating the progressive corporate tax rate structure, with a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%; • permitting a deduction for certain pass-through business income, including dividends received by our shareholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will generally allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026; • reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%; • limiting our deduction for net operating losses to 80% of REIT taxable income (prior to the application of the dividends paid deduction) for taxable years beginning after December 31, 2020; • generally limiting the deduction for net business interest expense in excess of a specified percentage (50% for taxable years beginning in 2019 and 2020 and 30% for subsequent taxable years) of a business’s adjusted taxable income except for taxpayers that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system for certain property); and • eliminating the corporate alternative minimum tax.
Among the market conditions that may affect the market price of our publicly traded common stock are the following: our financial condition and performance and that of our significant tenants; the market’s perception of our growth potential and potential future earnings; the reputation of REITs generally and the reputation of REITs with portfolios similar to us; the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); an increase in market interest rates, which may lead prospective investors to demand a higher distribution 21 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.
Among the market conditions that may affect the market price of our publicly traded common stock are the following: our financial condition and performance and that of our significant tenants; the market’s perception of our growth potential and potential future earnings; the reputation of REITs generally and the reputation of REITs with portfolios similar to us; the attractiveness of the securities of REITs in comparison to securities issued by other entities (including securities issued by other real estate companies); an increase in market interest rates, which may lead prospective investors to demand a higher distribution rate in relation to the price paid for publicly traded securities; the extent of institutional investor interest in us; and general economic and financial market conditions.
If the volume-weighted average price at which a particular Forward Purchaser (or its affiliate) is able to purchase (or is deemed able to purchase) shares during the applicable unwind period under a particular forward sale agreement is above the relevant forward sale price, in the case of cash settlement, we would pay the relevant Forward Purchaser under such forward sale agreement an amount in cash equal to the difference or, in the case of net share settlement, we would deliver to such Forward Purchaser a number of shares of our common stock having a value equal to the difference.
If the volume-weighted average price at which a particular Forward Purchaser (or its affiliate) is able to purchase (or is deemed able to purchase) shares during the applicable unwind period under a particular forward 22 sale agreement is above the relevant forward sale price, in the case of cash settlement, we would pay the relevant Forward Purchaser under such forward sale agreement an amount in cash equal to the difference or, in the case of net share settlement, we would deliver to such Forward Purchaser a number of shares of our common stock having a value equal to the difference.
If we enter into one or more forward sale agreements in connection with the ATM Program, the relevant Forward Purchaser (as defined in such forward sale agreement) will have the right to accelerate its forward sale agreement (with respect to all or any portion of the transaction under such forward sale agreement that the Forward Purchaser determines is affected by an event described below) and require us to physically settle on a date specified by such Forward Purchaser if: • in such Forward Purchaser’s good faith, commercially reasonable judgment, it or its affiliate (x) is unable to hedge its exposure under such forward sale agreement because an insufficient number of shares of our common stock have been made available for borrowing by securities lenders or (y) would incur a stock loan cost in excess of a specified threshold to hedge its exposure under such forward sale agreement; • we declare any dividend, issue or distribution on shares of our common stock (a) payable in cash in excess of specified amounts (unless it is an extraordinary dividend), (b) payable in securities of another company that we acquire or own (directly or indirectly) as a result of a spin-off or similar transaction, or (c) payable in any other type of securities (other than shares of our common stock), rights, warrants or other assets for payment at less than the prevailing market price; • certain ownership thresholds applicable to such Forward Purchaser and its affiliates are exceeded; • an event is announced that if consummated would result in a specified extraordinary event (including certain mergers or tender offers, as well as certain events involving our nationalization, or insolvency, or a delisting of shares of our common stock) or the occurrence of a change in law under such forward sale agreement; or • certain other events of default or termination events occur, including, among others, any material misrepresentation made in connection with such forward sale agreement (each as more fully described in each forward sale agreement).
If we enter into one or more forward sale agreements in connection with the at-the-market equity offering program, the relevant Forward Purchaser (as defined in such forward sale agreement) will have the right to accelerate its forward sale agreement (with respect to all or any portion of the transaction under such forward sale agreement that the Forward Purchaser determines is affected by an event described below) and require us to physically settle on a date specified by such Forward Purchaser if: • in such Forward Purchaser’s good faith, commercially reasonable judgment, it or its affiliate (x) is unable to hedge its exposure under such forward sale agreement because an insufficient number of shares of our common stock have been made available for borrowing by securities lenders or (y) would incur a stock loan cost in excess of a specified threshold to hedge its exposure under such forward sale agreement; • we declare any dividend, issue or distribution on shares of our common stock (a) payable in cash in excess of specified amounts (unless it is an extraordinary dividend), (b) payable in securities of another company that we acquire or own (directly or indirectly) as a result of a spin-off or similar transaction, or (c) payable in any other type of securities (other than shares of our common stock), rights, warrants or other assets for payment at less than the prevailing market price; • certain ownership thresholds applicable to such Forward Purchaser and its affiliates are exceeded; • an event is announced that if consummated would result in a specified extraordinary event (including certain mergers or tender offers, as well as certain events involving our nationalization, or insolvency, or a delisting of shares of our common stock) or the occurrence of a change in law under such forward sale agreement; or • certain other events of default or termination events occur, including, among others, any material misrepresentation made in connection with such forward sale agreement (each as more fully described in each forward sale agreement).
Our future success and ability to implement our business and investment strategy depends, in part, on our ability to attract and retain key management personnel and directors, and on the continued contributions of such persons, each of whom may be difficult to replace. As a REIT, we employ only 32 employees and have a cost-effective management structure.
Our future success and ability to implement our business and investment strategy depends, in part, on our ability to attract and retain key management personnel and directors, and on the continued contributions of such persons, each of whom may be difficult to 16 replace. As a REIT, we employ only 32 employees and have a cost-effective management structure.
Additionally, 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.
Additionally, 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 12 future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation.
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. Property taxes on our properties may increase without notice. Each of the properties we own or lease is subject to real property taxes.
This relative 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. Property taxes on our properties may increase without notice. Each of the properties we own or lease is subject to real property taxes.
Terrorist attacks also could be a factor resulting in, or which could exacerbate, an economic recession 14 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.
Terrorist attacks also could be a factor resulting in, or which could exacerbate, an economic recession in the United States or abroad. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
As a result, our estimates in respect of recoveries from state UST remediation funds could change, which could adversely affect our accruals for environmental remediation liabilities. Any changes to our estimates or our assumptions that form the basis of our estimates may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities.
As a result, our estimates in respect of recoveries from state UST remediation funds could change, which could adversely affect our accruals for environmental remediation liabilities. 13 Any changes to our estimates or our assumptions that form the basis of our estimates may result in our providing an accrual, or adjustments to the amounts recorded, for environmental remediation liabilities.
In addition, certain of the properties are on, adjacent to, or near properties 12 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.
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.
As our revenues are substantially dependent on the economic success of our tenants, any factors that adversely impact our tenants could also have a material adverse effect on our business, financial condition and results of operations, liquidity, ability to pay dividends or stock price.
As our revenues are substantially dependent on the economic success of our tenants, any factors that 14 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.
In such cases, we could be required to issue and deliver shares of shares of our common stock under the physical 22 settlement provisions of the applicable forward sale agreement, irrespective of our capital needs, which would result in dilution to our earnings per share and return on equity.
In such cases, we could be required to issue and deliver shares of shares of our common stock under the physical settlement provisions of the applicable forward sale agreement, irrespective of our capital needs, which would result in dilution to our earnings per share and return on equity.
Also, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings, which consist of borrowings under our Revolving Facility.
Also, during inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. Our exposure to increases in interest rates in the short term is limited to our variable-rate borrowings, which consist of borrowings under our revolving credit facility.
For any of the above-described reasons, 19 and others, we may determine to abandon opportunities that we have already begun to explore or with respect to which we have commenced redevelopment efforts and, as a result, we may fail to recover expenses already incurred.
For any of the above-described reasons, and others, we may determine to abandon opportunities that we have already begun to explore or with respect to which we have commenced redevelopment efforts and, as a result, we may fail to recover expenses already incurred.
Because of the concentration of our properties in those regions, in the event of adverse economic conditions in those regions, we would likely experience higher risk of default on payment of rent to us than if our properties were more geographically diversified.
Because of the relative concentration of our properties in those regions, in the event of adverse economic conditions in those regions, we would likely experience higher risk of default on payment of rent to us than if our properties were more geographically diversified.
Governments are continuing to focus on privacy, cybersecurity, data protection and data security and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way that is material to our business.
Governments are continuing to focus on privacy, cybersecurity, data protection, data security, and AI and it is possible that new privacy or data security laws will be passed or existing laws will be amended in a way that is material to our business.
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.
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 11 vacant properties.
For additional information regarding pending environmental lawsuits and claims, and environmental remediation obligations and estimates, see “Item 3. Legal Proceedings”, “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 3 and 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
For additional information regarding pending environmental lawsuits and claims, and environmental remediation obligations and estimates, see “Item 3. Legal Proceedings”, “Environmental Matters” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Notes 3 and 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period or may cause us to fail to qualify as a REIT. • The uncertainty regarding the U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sale agreement under our ATM Program could jeopardize our ability to meet the REIT qualification requirements. • A risk of changes in the tax law applicable to REITs. • U.S. federal tax reform legislation could affect REITs generally, our tenants, the markets in which we operate, the price of our common stock and our results of operations. • In 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.
Uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period or may cause us to fail to qualify as a REIT. • The uncertainty regarding the U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sale agreement under our at-the-market equity offering program could jeopardize our ability to meet the REIT qualification requirements. • A risk of changes in the tax law applicable to REITs. • U.S. federal tax reform legislation could affect REITs generally, our tenants, the markets in which we operate, the price of our common stock and our results of operations. • In 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.
Risks Related to Our Investment Strategy We may not be able to successfully implement our investment strategy. We may not be able to successfully implement our investment strategy. We cannot assure that our portfolio of properties will expand at all, or if it will expand at any specified rate or to any specified size.
We may not be able to successfully implement our investment strategy. We cannot assure that our portfolio of properties will expand at all, or if it will expand at any specified rate or to any specified size.
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 material 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.
These risks and uncertainties include, but are not limited to, the following: Risks Related to Our Business and Operations • The risks inherent in owning or leasing real estate. • The real estate industry is highly competitive. • Our future cash flow is dependent on the performance of our tenants of their lease obligations, renewal of existing leases and either re-leasing or selling our properties. • Significant number of our tenants depend on the same industry for their revenues. • It may be difficult for our investors to determine the creditworthiness of our tenants. • An increase in costs and liability accruals as a result of environmental laws and regulations could adversely affect our business. • We are defending pending lawsuits and claims that may subject us to material losses. • We may be subject to losses that may not be covered by insurance. • The concentration of a significant number of our properties in the Northeast and Mid-Atlantic regions of the United States, and adverse conditions in those regions, in particular, could negatively impact our operations. • Property taxes on our properties may increase without notice. • Our business operations may not generate sufficient cash for distributions or debt service. • Adverse developments in general business, economic or political conditions could have a material adverse effect on us. • 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 (including the escalating conflict between Russia and Ukraine and the related impact on macroeconomic conditions as a result of such conflict). • Our exposure to counterparty risk. 9 • Inflation may adversely affect our financial condition and results of operations. • Our assets may be subject to impairment charges. • Our accounting policies and methods require management to make estimates, judgments and assumptions about matters that are inherently uncertain. • Amendments to the Accounting Standards Codification made by the Financial Accounting Standards Board (the “FASB”) or changes in accounting standards may adversely affect our reported revenues, profitability or financial position. • If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results. • Our reliance on certain members of our management team or Board of Directors, the loss of any one of which could adversely affect our business or the market price of our common stock. • Our reliance on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business. • Our business, results of operations, and financial condition may be impacted by the continued presence of COVID-19.
These risks and uncertainties include, but are not limited to, the following: Risks Related to Our Business and Operations • The risks inherent in owning or leasing real estate. • The real estate industry is highly competitive. • Our future cash flow is dependent on the performance of our tenants of their lease obligations, renewal of existing leases and either re-leasing or selling our properties. • Significant number of our tenants depend on the same industry for their revenues. • It may be difficult for our investors to determine the creditworthiness of most of our tenants. • An increase in costs and liability accruals as a result of environmental laws and regulations could adversely affect our business. • We are defending pending lawsuits and claims that may subject us to material losses. • We may be subject to losses that may not be covered by insurance. • The relative concentration of a material number of our properties in the Northeast and Mid-Atlantic regions of the United States, and adverse conditions in those regions, in particular, could negatively impact our operations. • Property taxes on our properties may increase without notice. 9 • Our business operations may not generate sufficient cash for distributions or debt service. • Adverse developments in general business, economic or political conditions could have a material adverse effect on us. • 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 (including current geopolitical conflicts in Europe and the Middle East and the related impact on macroeconomic conditions as a result of such conflicts). • Our exposure to counterparty risk. • Inflation may adversely affect our financial condition and results of operations. • Our assets may be subject to impairment charges. • Our accounting policies and methods require management to make estimates, judgments and assumptions about matters that are inherently uncertain. • Amendments to the Accounting Standards Codification made by the Financial Accounting Standards Board (the “FASB”) or changes in accounting standards may adversely affect our reported revenues, profitability, or financial position. • If we fail to maintain effective internal controls over financial reporting, we may not be able to accurately and timely report our financial results. • Our reliance on certain members of our management team or Board of Directors, the loss of any one of which could adversely affect our business or the market price of our common stock. • Our reliance on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business. • Our business, results of operations, and financial condition may be impacted by current or future outbreaks of highly infectious or contagious diseases, including COVID-19.
If (i) our tenants do not perform their lease obligations, (ii) we are unable to renew existing leases and promptly recapture and re-lease or sell our properties, (iii) lease terms upon renewal or re-leasing are less favorable than current or historical lease terms, (iv) the values of properties that we sell are adversely affected by market conditions, or (v) we incur significant costs or disruption related to or resulting from tenant financial distress, default or bankruptcy, then our cash flow could be significantly adversely affected. 11 Significant number of our tenants depend on the same industry for their revenues.
If (i) our tenants do not perform their lease obligations, (ii) we are unable to renew existing leases and promptly recapture and re-lease or sell our properties, (iii) lease terms upon renewal or re-leasing are less favorable than current or historical lease terms, (iv) the values of properties that we sell are adversely affected by market conditions, or (v) we incur significant costs or disruption related to or resulting from tenant financial distress, default or bankruptcy, then our cash flow could be significantly adversely affected.
Risks Related to Ownership of Our Securities • Changes in market conditions could adversely affect the market price of our publicly traded common stock. • Changes in our dividend policy and the dividends we pay may be subject to significant volatility. • Our forward sale agreement under our ATM Program could result in substantial dilution to our earnings per share and return on equity or result in substantial cash payment obligations. • In case of our bankruptcy or insolvency, any forward sale agreement that is in effect under our ATM Program will automatically terminate, and we would not receive the expected proceeds. • Future issuances of equity securities could dilute the interest of holders of our equity securities. • Maryland law may discourage a third-party from acquiring us. 10 Risks Related to Our Business and Operations We are subject to risks inherent in owning and leasing real estate.
Risks Related to Ownership of Our Securities • Changes in market conditions could adversely affect the market price of our publicly traded common stock. 10 • Changes in our dividend policy and the dividends we pay may be subject to significant volatility. • Our forward sale agreements under our at-the-market equity offering program could result in substantial dilution to our earnings per share and return on equity or result in substantial cash payment obligations. • In case of our bankruptcy or insolvency, any forward sale agreement that is in effect under our at-the-market equity offering program will automatically terminate, and we would not receive the expected proceeds. • Future issuances of equity securities could dilute the interest of holders of our equity securities. • Maryland law may discourage a third-party from acquiring us.
In case of our bankruptcy or insolvency, any forward sale agreement under our ATM Program that is in effect will automatically terminate, and we would not receive the expected proceeds from any forward sales of shares of our common stock.
In case of our bankruptcy or insolvency, any forward sale agreement under our at-the-market equity offering program that is in effect will automatically terminate, and we would not receive the expected proceeds from any forward sales of shares of our common stock.
A significant portion of the properties we own and lease are located in the Northeast and Mid-Atlantic regions of the United States and, as of December 31, 2022, 34.4% of our annual base rent is derived from four states (New York, Massachusetts, Maryland, and Connecticut).
A significant portion of the properties we own and lease are located in the Northeast and Mid-Atlantic regions of the United States and, as of December 31, 2023, 32.0% of our annual base rent is derived from four states (New York, Massachusetts, Maryland, and Connecticut).
We derive significant portion of our revenues from leasing, primarily on a triple-net basis, and financing convenience store and gasoline station properties to tenants in the petroleum marketing industry.
Significant number of our tenants depend on the same industry for their revenues. We derive significant portion of our revenues from leasing, primarily on a triple-net basis, and financing convenience store and gasoline station properties to tenants in the petroleum marketing industry.
Under the terms of our leases covering properties previously leased to Marketing (substantially all of which commenced in 2012), we agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases).
(“Marketing”) (substantially all of which commenced in 2012), we agreed to be responsible for environmental contamination at the premises that was known at the time the lease commenced, and for environmental contamination which existed prior to commencement of the lease and is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases).
Risks Related to Financing Our Business • Our dependency on external sources of capital, which may or may not be available on favorable terms, or at all. • Interest rate risk and our ability to manage or mitigate this risk effectively. • Adverse effects by the transition from LIBOR.
Risks Related to Financing Our Business • Our dependency on external sources of capital, which may or may not be available on favorable terms, or at all. • Interest rate risk and our ability to manage or mitigate this risk effectively.
The extent to which the continued presence of COVID-19 impacts our business, operations and financial results is uncertain, and will depend on numerous evolving factors that we may not be able to accurately predict, including governmental, business, and individual actions taken in response to COVID-19 and the impact of those actions on global economic activity; the actions taken in response to economic disruption; the reduced economic activity, if not closures from time to time of our tenants’ facilities, may impact our tenants' businesses, financial condition and liquidity, and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; the financial impact of COVID-19 could negatively impact our future compliance with financial covenants of our Second Restated Credit Agreement and our senior unsecured notes and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Revolving Facility and pay dividends; and a deterioration in our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants’ efficient operations could adversely affect our operations and those of our tenants.
The extent to which COVID-19, or the future outbreak of other highly infectious or contagious diseases, impacts our business, operations and financial results is uncertain, and will depend on numerous evolving factors that we may not be able to accurately predict, including governmental, business, and individual actions taken in response to any such outbreak and the impact of those actions on global economic activity; the actions taken in response to economic disruption; the reduced economic activity, if not closures from time to time of our tenants’ facilities, may impact our tenants' businesses, financial condition and liquidity, and may cause one or more of our tenants to be unable to meet their obligations to us in full, or at all, or to otherwise seek modifications of such obligations; general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties; the financial impact of any such outbreak could negatively impact our future compliance with the financial covenants of our various borrowings and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our revolving credit facility and pay dividends; and a deterioration in our or our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants’ efficient operations could adversely affect our operations and those of our tenants. 17 Risks Related to Financing Our Business We are dependent on external sources of capital which may not be available on favorable terms, or at all.
Our access to third-party sources of capital depends upon a number of factors including general market conditions, the market’s perception of our growth potential, financial stability, our current and potential future earnings and cash distributions, covenants and limitations imposed under our Second Restated Credit Agreement and our senior unsecured notes, and the market price of our common stock.
Our access to third-party sources of capital depends upon a number of factors including general market conditions, the market’s perception of our growth potential, financial stability, our current and potential future earnings and cash distributions, covenants and limitations imposed under our credit and note purchase agreements, and the market price of our common stock.
We are subject to varying degrees of risk generally related to leasing and owning real estate, many of which are beyond our control.
Risks Related to Our Business and Operations 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.
We are subject to the provisions of the Maryland Business Combination Act (the “Business Combination Act”) which prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for five years after 23 the most recent date on which the interested stockholder becomes an interested stockholder.
Maryland law may discourage a third-party from acquiring us. We are subject to the provisions of the Maryland Business Combination Act (the “Business Combination Act”) which prohibits transactions between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder becomes an interested stockholder.
We may acquire properties when we believe that an acquisition matches our business and investment strategies. These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is possible that the operating performance of these properties may decline after we acquire them, or that they may not perform as expected.
These properties may have characteristics or deficiencies currently unknown to us that affect their value or revenue potential. It is possible that the operating performance of these properties may decline after we acquire them, or that they may not perform as expected.
Our most significant counterparties include, but are not limited to, the members of the bank syndicate related to our to our Second Restated Credit Agreement, the lenders that are the counterparties to our senior unsecured notes and our major tenants from whom we derive a significant amount of rental revenue.
Our most significant counterparties include, but are not limited to, the members of the bank syndicate related to our to our credit agreements, the lenders that are the counterparties to our note purchase agreements, and our major tenants from whom we derive a significant amount of rental revenue.
The Second Restated Credit Agreement and our senior unsecured notes contain customary financial covenants such as leverage, coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends.
The credit and note purchase agreements governing our borrowings contain customary financial covenants such as leverage, coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends.
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 Second Restated Credit Agreement. Borrowings under our Second Restated Credit Agreement bear interest at a floating rate.
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 revolving credit facility.
A significant increase in interest rates could also make it more difficult to find alternative financing on desirable terms. For additional information with respect to interest rate risk, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-K. We may be adversely affected by the transition from LIBOR.
A significant increase in interest rates could also make it more difficult to find alternative financing on desirable terms. For additional information with respect to interest rate risk, see “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in this Form 10-K. Risks Related to Our Investment Strategy We may not be able to successfully implement our investment strategy.
Each of the Second Restated Credit Agreement our senior unsecured notes contain customary financial covenants such as availability, leverage and coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends.
The credit and note purchase agreements governing our borrowings contain customary financial covenants such as availability, leverage and coverage ratios and minimum tangible net worth, as well as limitations on restricted payments, which may limit our ability to incur additional debt or pay dividends.
Our business, results of operations, and financial condition may be impacted by the continued presence of COVID-19 and such impact could be materially adverse. The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption.
Our business, results of operations, and financial condition may be impacted by current or future outbreak of other highly infectious or contagious diseases, including COVID-19, and such impact could be materially adverse. The global spread of COVID-19 created significant volatility, uncertainty, and economic disruption.
Any change in our dividend policy could adversely affect our business and the market price of our common stock. In addition, each of the Second Restated Credit Agreement and senior unsecured notes prohibit the payments of dividends during certain events of default.
Any change in our dividend policy could adversely affect our business and the market price of our common stock. In addition, the credit and note purchase agreements governing our borrowings prohibit the payments of dividends during certain events of default.
Our interest rate risk may materially change in the future if we increase our borrowings under the Second Restated Credit Agreement or amend our Second Restated Credit Agreement or our senior unsecured notes, seek other sources of debt or equity capital or refinance our outstanding indebtedness.
Our interest rate risk may materially change in the future if we increase our borrowings under the revolving credit facility, amend the credit and note purchase agreements governing our borrowings, seek other sources of debt or equity capital, or refinance our outstanding indebtedness.
As of December 31, 2022, we leased: • 150 properties in three separate unitary leases and two stand-alone leases to subsidiaries of Global which represented, in the aggregate, 16% of our total revenues for the years ended December 31, 2022 and 2021. • 128 properties in four separate unitary leases to subsidiaries of Arko which represented, in the aggregate, 14% of our total revenues for the years ended December 31, 2022 and 2021. • 78 properties in three separate unitary leases and one stand-alone lease to United Oil which, in the aggregate, represented 11% of our total revenues for the years ended December 31, 2022 and 2021.
As of December 31, 2023, we leased: • 150 properties in four separate unitary leases to subsidiaries of ARKO Corp. which represented, in the aggregate, 15% of our total revenues for the year ended December 31, 2023. • 150 properties in three separate unitary leases and two stand-alone leases to subsidiaries of Global Partners LP which represented, in the aggregate, 14% of our total revenues for the year ended December 31, 2023. • 77 properties in three separate unitary leases and one stand-alone lease to Apro, LLC (d/b/a United Oil) which, in the aggregate, represented 10% of our total revenues for the year ended December 31, 2023.
Higher acquisition and construction costs could adversely impact our net investments in real estate and expected yields on our development and redevelopment projects, which may make otherwise lucrative investment opportunities less profitable to us. As a result, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time.
Higher acquisition and construction costs could adversely impact our net investments in real estate and expected yields on our development and redevelopment projects, which may make otherwise lucrative investment opportunities less profitable to us.
The U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sale agreement under our ATM Program is unclear and could jeopardize our ability to meet the REIT qualification requirements.
The U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sale agreement under our at-the market equity offering program is unclear and could jeopardize our ability to meet the REIT qualification requirements. 19 In the event that we elect to settle any forward sale agreement for cash and the settlement price is below the applicable forward sale price, we would be entitled to receive a cash payment from the relevant Forward Purchaser.
Our accounting policies and methods are fundamental to how we record and report our financial position and results of operations.
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.
Sales of shares of our common stock under our ATM Program, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions and the trading price of our common stock.
The offering of new debt and equity securities will depend on a variety of factors to be determined by us, including among others, market conditions, prevailing interest rates, and the trading price of our common stock.
In addition, while certain elements of the 2017 Legislation do not impact us directly as a REIT, they could impact our tenants and the markets in which we operate in ways, both positive and negative, that are difficult to predict.
In addition, while certain elements of the 2017 Legislation do not impact us directly as a REIT, they could impact our tenants and the markets in which we operate in ways, both positive and negative, that are difficult to predict. 20 Prospective stockholders are urged to consult with their tax advisors with respect to the 2017 Legislation and any other regulatory or administrative developments and proposals and the potential effects thereof on an investment in our common stock.
Accordingly, an increase in interest rates will increase the amount of interest we must pay under our Second Restated Credit Agreement.
Borrowings under our revolving credit facility bear interest at a floating rate and, accordingly, an increase in interest rates will increase the amount of interest we must pay under our revolving credit facility.
If any of these directors cease to be a director of the Company and they or their estate sell a significant portion of such holdings into the public market, it could adversely affect the market price of our common stock. 16 We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
Additionally, certain of our directors beneficially own more than 5% of the outstanding shares of our common stock. If any of these directors cease to be a director of the Company and they or their estate sell a significant portion of such holdings into the public market, it could adversely affect the market price of our common stock.
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 negatively affect our business or the businesses of our tenants.
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 (including current geopolitical conflicts in Europe and Middle East and the related impact on macroeconomic conditions as a result of such conflicts).
If we are not in compliance with one or more of our covenants, which could result in an event of default under our Second Restated Credit Agreement or our senior unsecured notes, there can be no assurance that our lenders would waive such non-compliance.
Financial Statements and Supplementary Data” in this Form 10-K, the performance of our tenants, and the other risks described in this section. If we are not in compliance with one or more of our covenants, which could result in an event of default under these agreements, there can be no assurance that our lenders would waive such non-compliance.
Additionally, our failure to comply with applicable privacy, data security or protection or cyber security laws could adversely affect our business.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business. Additionally, our failure to comply with applicable privacy, data security or protection or cyber security laws could adversely affect our business.
Provisions contained in a forward sale agreement under our ATM Program could result in substantial dilution to our earnings per share and return on equity or result in substantial cash payment obligations.
Provisions contained in a forward sale agreement under our at-the-market equity offering program could result in substantial dilution to our earnings per share and return on equity or result in substantial cash payment obligations. 21 We have previously entered into forward sale agreements and may in the future enter into additional forward sale agreements, including under our at-the-market equity offering program, that subject us to certain risks.
Financial Statements and Supplementary Data” in this Form 10-K. We are subject to losses that may not be covered by insurance. We and our tenants carry insurance against certain risks and in such amounts as we believe are customary for businesses of our kind.
We and our tenants carry insurance against certain risks and in such amounts as we believe are customary for businesses of our kind.
Our ultimate liabilities resulting from the lawsuits and claims we face could cause a material adverse effect on our business, financial condition, 13 results of operations, liquidity, ability to pay dividends or stock price. For additional information with respect to certain pending lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8.
The ultimate resolution of certain matters cannot be predicted because considerable uncertainty exists both in terms of the probability of loss and the estimate of such loss. Our ultimate liabilities resulting from the lawsuits and claims we face could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
Moreover, our continued growth will require increased investment in management personnel, professional fees, other personnel, financial and management systems and controls and facilities, which will result in additional operating expenses. Under the circumstances described above, our results of operations, financial condition and growth prospects may be materially adversely affected. We expect to acquire new properties and this may create risks.
Under the circumstances described above, our results of operations, financial condition and growth prospects may be materially adversely affected. 18 We expect to acquire new properties and this may create risks. We may acquire properties when we believe that an acquisition matches our business and investment strategies.
This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price. Under our ATM Program, we may issue and sell shares of our common stock with an aggregate sales price of up to $250.0 million through a consortium of banks acting as agents.
This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price.
Our assets may be subject to impairment charges. We periodically evaluate our real estate investments and other assets for impairment indicators.
As a result, our financial condition, results of operations, and cash flows, as well as our ability to pay dividends, could be adversely affected over time. 15 Our assets may be subject to impairment charges. We periodically evaluate our real estate investments and other assets for impairment indicators.
Our ability to meet the terms of the agreements is dependent upon our continued ability to meet certain criteria, as further described in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K, the performance of our tenants and the other risks described in this section.
These agreements also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status. Our ability to meet the terms of the agreements is dependent upon our continued ability to meet certain criteria, as further described in Note 4 in “Item 8.
Our principal sources of liquidity are the cash flows from our operations, funds available under our Second Restated Credit Agreement, proceeds from the sale of shares of our common stock through offerings, from time to time, under our ATM Program, pursuant to which we may also sell shares of common stock under forward sale agreements, and available cash and cash equivalents.
Our principal sources of liquidity include cash flows from operations, funds available under our revolving credit facility, proceeds from the offering of new debt or equity securities, including the sale of our common stock under our at-the-market equity offering program, and available cash and cash equivalents.
Removed
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.
Added
Under the terms of our leases covering properties previously leased to Getty Petroleum Marketing Inc.
Removed
During the years ended December 31, 2022 and 2021, we incurred $3.5 million and $4.4 million, respectively, of impairment charges.
Added
For additional information with respect to certain pending lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. We are subject to losses that may not be covered by insurance.
Removed
Additionally, certain of our directors beneficially own more than 5% of the outstanding shares of our common stock.
Added
Terrorist attacks or other acts of violence or war (including current geopolitical conflicts in Europe and Middle East and the related impact on macroeconomic conditions as a result of such conflicts) could negatively affect our business or the businesses of our tenants.
Removed
The fluidity of this situation precludes any prediction as to the full adverse impact of COVID-19 . Nevertheless, the COVID-19 continues to present uncertainty and risk with respect to our performance, financial condition, results of operations, cash flows and performance.
Added
In the future, we directly or through our third-party provided information technology systems or software may incorporate artificial intelligence (“AI”) capabilities into our business. As with many innovations, AI presents risks, challenges, and unintended consequences that could affect its adoption, and therefore our business. AI algorithms and training methodologies may be flawed, ineffective or inadequate.
Removed
Moreover, many risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2022, should be interpreted as heightened risks as a result of the impact of COVID-19. Risks Related to Financing Our Business We are dependent on external sources of capital which may not be available on favorable terms, or at all.
Added
The rapid evolution of AI, particularly the anticipated government regulation of AI, could require significant resources for compliance, whether in the development, testing or maintenance of such systems or software.
Removed
In 2021, pursuant to the Second Restated Credit Agreement, we (i) extended the maturity date of the Revolving Facility from March 2022 to October 2025, (ii) reduced the interest rate for borrowings under the Revolving Facility and (iii) amended certain financial covenants and other provisions.
Added
AI development or deployment practices by us or third-party providers could result in incidents that could increase the resources we need to implement cybersecurity measures to protect the security of our data. These deficiencies and other failures of any potential AI systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.
Removed
The Second Restated Credit Agreement provides for the Revolving Facility in an aggregate principal amount of 17 $300.0 million and includes an accordion feature to increase the revolving commitments or add one or more tranches of term loans up to an additional aggregate amount not to exceed $300.0 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount and that no default or event of default shall have occurred and be continuing under the terms of the Revolving Facility.
Added
We have filed a registration statement with the SEC allowing us to offer, from time to time, an indefinite amount of equity and debt securities on an as-needed basis, including shares of our common stock under our at-the-market equity program.
Removed
As of December 31, 2022, we have also issued $625.0 million of senior unsecured notes. For additional information, see “Credit Agreement” and “Senior Unsecured Notes” in Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
Added
Moreover, our continued growth will require increased investment in management personnel, professional fees, other personnel, financial and management systems and controls and facilities, which will result in additional operating expenses.
Removed
The Second Restated Credit Agreement and our senior unsecured notes also contain customary events of default, including cross defaults to each other, change of control and failure to maintain REIT status (provided that the senior unsecured notes require a mandatory offer to prepay the notes upon a change in control in lieu of a change of control event of default).
Removed
Sales of shares of our common stock under our ATM Program may be made from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act of 1933, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOwned by Getty Realty Leased by Getty Realty Total Properties by State Percent of Total Properties New York 179 24 203 19.5 % Massachusetts 99 5 104 10.0 Texas 78 — 78 7.5 Connecticut 68 6 74 7.1 South Carolina 49 — 49 4.7 Virginia 48 1 49 4.7 New Jersey 43 4 47 4.5 New Hampshire 45 — 45 4.3 Maryland 40 2 42 4.0 Michigan 41 — 41 3.9 North Carolina 36 — 36 3.5 California 34 — 34 3.3 Washington State 31 — 31 3.0 Arizona 23 — 23 2.2 Colorado 23 — 23 2.2 Ohio 23 — 23 2.2 Pennsylvania 21 — 21 2.0 Nevada 14 — 14 1.3 Oregon 13 — 13 1.3 Arkansas 11 — 11 1.1 Hawaii 10 — 10 1.0 Kansas 8 — 8 0.8 Missouri 8 — 8 0.8 Maine 7 — 7 0.7 Kentucky 6 — 6 0.6 Georgia 5 — 5 0.5 New Mexico 5 — 5 0.5 Florida 4 — 4 0.4 Illinois 4 — 4 0.4 Louisiana 4 — 4 0.4 Oklahoma 4 — 4 0.4 Alabama 2 — 2 0.2 Indiana 2 — 2 0.2 Mississippi 2 — 2 0.2 Rhode Island 2 — 2 0.2 Washington, D.C. 2 — 2 0.2 Minnesota 1 — 1 0.1 North Dakota 1 — 1 0.1 Vermont 1 — 1 0.1 Total 997 42 1,039 100.0 % 25 The properties that we lease from third parties have a remaining lease term, including renewal and extension option terms, averaging approximately 8.0 years.
Biggest changeOwned by Getty Realty Leased by Getty Realty Total Properties by State Percent of Total Properties New York 181 21 202 18.5 % Massachusetts 99 4 103 9.4 Texas 82 — 82 7.5 Connecticut 70 6 76 7.0 South Carolina 54 — 54 4.9 Virginia 48 1 49 4.5 New Hampshire 44 — 44 4.0 New Jersey 41 3 44 4.0 North Carolina 44 — 44 4.0 Maryland 40 2 42 3.8 Michigan 41 — 41 3.7 California 35 — 35 3.2 Washington State 30 — 30 2.7 Arizona 27 — 27 2.5 Ohio 25 — 25 2.3 Colorado 23 — 23 2.1 Pennsylvania 22 — 22 2.0 Nevada 18 — 18 1.6 Oregon 13 — 13 1.2 Georgia 12 — 12 1.1 Arkansas 11 — 11 1.0 Florida 11 — 11 1.0 Hawaii 10 — 10 0.9 Kentucky 10 — 10 0.9 Kansas 9 — 9 0.8 Missouri 8 — 8 0.7 Maine 7 — 7 0.6 Louisiana 5 — 5 0.5 New Mexico 5 — 5 0.5 Alabama 4 — 4 0.4 Minnesota 4 — 4 0.4 Oklahoma 4 — 4 0.4 Illinois 3 — 3 0.3 Mississippi 3 — 3 0.3 Tennessee 3 — 3 0.3 Indiana 2 — 2 0.2 North Dakota 2 — 2 0.2 Rhode Island 2 — 2 0.2 Washington, D.C. 2 — 2 0.2 Vermont 1 — 1 0.1 West Virginia 1 — 1 0.1 Total 1,056 37 1,093 100.0 % 25 The properties that we lease from third parties have a remaining lease term, including renewal and extension option terms, averaging approximately 8.0 years.
Our insurance program is underwritten in view of primary insurance coverages which we require to be provided by most of our tenants for properties they lease from us, including in respect to casualty, liability, pollution legal liability, fire and extended coverage risks. 24 The following table summarizes the geographic distribution of our properties as of December 31, 2022.
Our insurance program is underwritten in view of primary insurance coverages which we require to be provided by most of our tenants for properties they lease from us, including in respect to casualty, liability, pollution legal liability, fire and extended coverage risks. 24 The following table summarizes the geographic distribution of our properties as of December 31, 2023.
Item 2. Properties Substantially all of our properties are leased on a triple-net basis to convenience store operators, petroleum distributors, car wash operators and other automotive-related and retail tenants. Our tenants are responsible for the operations conducted at our properties, including the payment of all taxes, maintenance, repair, insurance and other operating expenses.
Item 2. Properties Substantially all of our properties are leased on a triple-net basis to convenience store operators, petroleum distributors, express tunnel car wash operators and other automotive-related and retail tenants. Our tenants are responsible for the operations conducted at our properties, including the payment of all taxes, maintenance, repair, insurance and other operating expenses.
(b) Represents the monthly base rent due from tenants under existing leases as of December 31, 2022, multiplied by 12.
(b) Represents the monthly base rent due from tenants under existing leases as of December 31, 2023, multiplied by 12.
The following table sets forth information regarding lease expirations, including renewal and extension option terms, for properties that we lease from third parties: Number of Leases Expiring Percent of Total Leased Properties Percent of Total Properties 2023 3 7.2 % 0.3 % 2024 4 9.5 0.4 2025 2 4.8 0.2 2026 5 11.9 0.5 2027 4 9.5 0.4 Subtotal 18 42.9 1.8 Thereafter 24 57.1 2.3 Total 42 100.0 % 4.1 % For the year ended December 31, 2022, revenues from rental properties, which includes base rental income, additional rental income, if any, and certain GAAP revenue recognition adjustments, were $163.9 million, an average of approximately $160,000 per property given the 1,025 average rental properties held during the year.
The following table sets forth information regarding lease expirations, including renewal and extension option terms, for properties that we lease from third parties: Number of Leases Expiring Percent of Total Leased Properties Percent of Total Properties 2024 4 10.8 % 0.4 % 2025 2 5.4 0.2 2026 4 10.8 0.4 2027 4 10.8 0.4 2028 1 2.7 0.0 Subtotal 15 40.5 1.4 Thereafter 22 59.5 2.0 Total 37 100.0 % 3.4 % For the year ended December 31, 2023, revenues from rental properties, which includes base rental income, additional rental income, if any, and certain GAAP revenue recognition adjustments, were $180.5 million, an average of approximately $169 thousand per property given the 1,068 average rental properties held during the year.
For the year ended December 31, 2021, revenues from rental properties were $153.9 million, an average of $153,000 per property given the 1,004 average rental properties held during the year.
For the year ended December 31, 2022, revenues from rental properties were $163.9 million, an average of $160 thousand per property given the 1,025 average rental properties held during the year.
Rental property lease expirations and annualized base rent (“ABR”) as of December 31, 2022 are as follows (dollars in thousands): Number of Properties (a) ABR (b) Percentage of Total ABR 2023 25 $ 2,764 1.8 % 2024 17 1,791 1.2 2025 21 4,462 2.9 2026 68 13,614 8.8 2027 270 22,407 14.5 2028 45 7,975 5.2 2029 75 12,196 7.9 2030 46 5,494 3.6 2031 64 9,756 6.3 2032 138 17,770 11.5 Thereafter 265 55,862 36.3 Subtotal 1,034 $ 154,091 100.0 % Redevelopment 3 — — Vacant 2 — — Total 1,039 $ 154,091 100.0 % (a) With respect to a unitary master lease that includes properties that we lease from third-parties, the expiration dates refer to the dates that the leases with the third-parties expire and upon which date our tenant must vacate those properties, not the expiration date of the unitary master lease itself.
Rental property lease expirations and annualized base rent (“ABR”) as of December 31, 2023 are as follows (dollars in thousands): Number of Properties (a) ABR (b) Percentage of Total ABR 2024 17 $ 1,721 1.0 % 2025 18 3,747 2.2 2026 69 14,308 8.3 2027 269 22,878 13.2 2028 49 8,505 4.9 2029 74 12,271 7.1 2030 46 5,408 3.1 2031 64 9,933 5.7 2032 139 18,071 10.5 2033 50 7,614 4.4 Thereafter 294 68,390 39.6 Subtotal 1,089 $ 172,846 100.0 % Redevelopment 2 — — Vacant 2 — — Total 1,093 $ 172,846 100.0 % (a) With respect to a unitary master lease that includes properties that we lease from third-parties, the expiration dates refer to the dates that the leases with the third-parties expire and upon which date our tenant must vacate those properties, not the expiration date of the unitary master lease itself.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe EPA concluded that the Settling Parties, individually and collectively, were responsible for only a minor share of the response costs incurred and to be incurred at or in connection with implementing the OU2 and OU4 remedies for the entire 17-mile Lower Passaic River. 28 In December 2022, the EPA and the Settling Parties finalized their agreement in a proposed consent decree (“CD”), pursuant to which and without admitting liability, the Settling Parties agree to pay EPA the collective sum of $150 million in exchange for contribution protection from claims by non-settling PRPs (including Occidental) for the matters addressed in the CD and the issuance of a notice of completion by EPA of both the 2007 RI/FS AOC and the 10.9 AOC, upon completion of certain defined tasks in the CD.
Biggest changeIn December 2022, the EPA and the Settling Parties finalized their agreement in a proposed consent decree (“CD”), pursuant to which and without admitting liability, the Settling Parties agree to pay EPA the collective sum of $150.0 million in exchange for contribution protection from claims by non-settling PRPs (including Occidental) for the matters addressed in the CD and the issuance of a notice of completion by EPA of both the 2007 RI/FS AOC and the 10.9 AOC, upon completion of certain defined tasks in the CD.
EPA’s March 30, 2017 Letter also stated that other parties who did not discharge dioxins, furans or polychlorinated biphenyls (which are considered the COCs posing the greatest risk to the river) may also be eligible for cash out settlements, and that the EPA would begin a process for identifying such other PRPs for negotiation of future cash out settlements and to initiate negotiations with Occidental and other major PRPs for the implementation and funding of the OU2 remedy.
The EPA’s March 30, 2017 letter also stated that other parties who did not discharge dioxins, furans or polychlorinated biphenyls (which are considered the COCs posing the greatest risk to the river) may also be eligible for cash out settlements, and that the EPA would begin a process for identifying such other PRPs for negotiation of future cash out settlements and to initiate negotiations with Occidental and other major PRPs for the implementation and funding of the OU2 remedy.
In May 2007, over 70 GNL recipients, including us, entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with the EPA to perform a Remedial Investigation and Feasibility Study (“RI/FS”) for the LPRSA to address investigation and evaluation of alternative remedial actions with respect to alleged damages to the entire 17-mile LPRSA, which EPA has designated Operable Unit 4 or “OU4”.
In May 2007, over 70 GNL recipients, including us, entered into an Administrative Settlement Agreement and Order on Consent (“AOC”) with the EPA to perform a Remedial Investigation and Feasibility Study 27 (“RI/FS”) for the LPRSA to address investigation and evaluation of alternative remedial actions with respect to alleged damages to the entire 17-mile LPRSA, which the EPA has designated Operable Unit 4 or “OU4”.
On September 28, 2021, the EPA issued a Record of Decision (“ROD”) for the upper 9-mile IR/FS (“Upper 9-mile IR ROD”) consisting of dredging and capping to control sediment sources of dioxin and PCBs at an estimated cost of $441 million.
On September 28, 2021, the EPA issued a Record of Decision (“ROD”) for the upper 9-mile IR/FS (“Upper 9-mile IR ROD”) consisting of dredging and capping to control sediment sources of dioxin and PCBs at an estimated cost of $441. 0 million.
It is possible that losses related to these legal proceedings could exceed the amounts accrued as of December 31, 2022, and that such additional losses could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 26 MTBE Litigation – State of Pennsylvania On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania.
It is possible that losses related to these legal proceedings could exceed the amounts accrued as of December 31, 2023, and that such additional losses could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 26 MTBE Litigation – State of Pennsylvania On July 7, 2014, our subsidiary, Getty Properties Corp., was served with a complaint filed by the Commonwealth of Pennsylvania (the “State”) in the Court of Common Pleas, Philadelphia County relating to alleged statewide MTBE contamination in Pennsylvania.
Many of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). In 2015, the CPG submitted a draft RI/FS to EPA setting forth various alternatives 27 for remediating the LPRSA.
Many of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”). In 2015, the CPG submitted a draft RI/FS to the EPA setting forth various alternatives for remediating the LPRSA.
Nevertheless, if the proposed CD is not approved by the District Court in its current form, performance of the EPA’s selected remedies for the LPRSA may be subject to future negotiation, potential enforcement proceedings and/or possible litigation and, on this basis, our ultimate liability in the pending and possible future proceedings pertaining to the LPRSA remains uncertain and subject to contingencies which cannot be predicted and the outcome of which are not yet known.
Nevertheless, if the Modified CD is not approved by the District Court in its current form, performance of the EPA’s selected remedies for the LPRSA may be subject to future negotiation, potential enforcement proceedings and/or possible litigation and, on this basis, our ultimate liability in the pending and possible future proceedings pertaining to the LPRSA remains uncertain and subject to contingencies which cannot be predicted and the outcome of which are not yet known.
In the event the District Court does not approve the proposed CD, based on currently known facts and circumstances, including, among other factors, the EPA’s conclusion that we are individually and collectively with numerous other parties only responsible for a minor share of the response costs incurred or to be incurred in connection with the LPRSA, our relative participation in the costs related to the 2007 AOC and 10.9 AOC, our belief that there was not any use or discharge of dioxins, furans or polychlorinated biphenyls in connection with our former petroleum storage operations at our former Newark, New Jersey Terminal, and that there are numerous other parties who will likely bear the costs of remediation and/or damages, we do not believe that resolution of the Lower Passaic River proceedings as relates to us is reasonably likely to have a material impact on our results of operations.
If the District Court does not approve the Modified CD, then, based on currently known facts and circumstances, including, among other factors, the EPA’s conclusion that we are individually and collectively with numerous other parties only responsible for a minor share of the response costs incurred or to be incurred in connection with the LPRSA, our relative participation in the costs related to the 2007 AOC and 10.9 AOC, our belief that there was not any use or discharge of dioxins, furans or polychlorinated biphenyls in connection with our former petroleum storage operations at our former Newark, New Jersey Terminal, and that there are numerous other parties who will likely bear the costs of remediation and/or damages, we do not believe that resolution of the Lower Passaic River proceedings as relates to us is reasonably likely to have a material impact on our results of operations.
On February 14, 2018, defendants removed the case to the United States District Court for the District of Maryland. We are vigorously defending the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.
On February 14, 2018, defendants removed the case to the United States District Court for the District of Maryland. We are vigorously defending the claims made against us. Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies the outcome of which are not yet known.
In November 2015, plaintiffs filed a Second Amended Complaint naming additional defendants and adding factual allegations against the defendants. We joined with other defendants in the filing of a motion to dismiss the claims against us, which was granted in part and denied in part. We are vigorously defending the claims made against us.
In November 2015, plaintiffs filed a Second Amended Complaint naming additional defendants and adding factual allegations against the defendants. We joined with other defendants in the filing of a motion to dismiss the claims against us, which was granted in part and denied in part.
If the CD Action is approved in its current form, our alleged liability to the EPA as well as any non-settling parties, including Occidental, for the remediation of the entire 17-mile Lower Passaic River and its tributaries will be resolved.
If the Modified CD is approved in its current form, our alleged liability to the EPA and to any non-settling parties, including Occidental, for the remediation of the entire 17-mile Lower Passaic River and its tributaries will be resolved.
The Company has established an estimated legal reserve and transferred funds to an escrow account based on likelihoods reasonably known to us at this time, however it is possible that circumstances may change and losses related to the Lower Passaic River proceedings could exceed the amounts we have accrued. For additional information see “Item 7.
In prior years, we have established an estimated legal reserve and subsequently transferred funds to an escrow account based on likelihoods reasonably known to us at this time, however it is possible that circumstances may change and losses related to the Lower Passaic River proceedings could exceed the amounts we have accrued. For additional information see “Item 7.
We are vigorously defending all of the legal proceedings against us, including each of the legal proceedings listed below. As of December 31, 2022 and 2021, we had accrued $0.3 million and $1.9 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available.
We are vigorously defending all of the legal proceedings against us, including each of the legal proceedings listed below. As of December 31, 2023 we had no amounts accrued and, as of December 31, 2022, we had $0.3 million accrued for certain of these matters which we believe were appropriate based on information then currently available.
The complaint names us and more than 50 other defendants, including Exxon Mobil, BP, Chevron, Citgo, Gulf, Lukoil Americas, Getty Petroleum Marketing Inc., Marathon, Hess, Shell Oil, Texaco, Valero, as well as other smaller petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE who are alleged to have distributed, stored and sold MTBE gasoline in Pennsylvania.
The complaint names us and more than 50 other defendants, including Exxon Mobil, Atlantic Richfield Company, BP, Buckeye Refining Company, Chevron, Citgo, ConocoPhillips, Cumberland Farms, Energy Transfer Partners L.P., Gulf, Lukoil Americas, Getty Petroleum Marketing Inc., Marathon Oil, Hess, Pennzoil Company, Shell Oil, Sunoco, Texaco, Valero, as well as other petroleum manufacturers, refiners, transporters, distributors and retailers of MTBE or gasoline containing MTBE who are alleged to have manufactured, distributed, stored and sold MTBE gasoline in Pennsylvania.
On December 22, 2022, the EPA published a notice of lodging of the proposed CD in the Federal Register, opening a 45-day public comment period, which was subsequently extended to 90-days.
On December 22, 2022, the EPA published a notice of lodging of the proposed CD in the Federal Register, opening a 45-day public comment period, which was subsequently extended to 90-days. On December 23, 2022, 28 Occidental filed a motion to intervene in the CD Action, and subsequently filed voluminous comments objecting to the entry of the proposed CD.
All 85 Settling Parties contributed an agreed upon share of the settlement amount, which are subject to a confidentiality agreement. Our settlement contribution is in line with our legal reserves previously established and transferred to an escrow account based on likelihoods reasonably known to us at this time.
All 85 Settling Parties contributed to an escrow account agreed upon shares of the settlement amount, which are subject to a confidentiality agreement. Our settlement contribution is in line with our legal reserves previously established.
Our ultimate liability in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.
We continue to vigorously defend the claims made against us. Our ultimate liability in this proceeding is uncertain and subject to numerous contingencies, the outcome of which are not yet known.
Removed
On December 20, 2022, the parties filed an uncontested motion to stay the Occidental Lawsuit proceedings for six months while the court considers a proposed consent decree, discussed below, which, if approved, would bar the claims asserted against us for past and/or future response costs relating to the LPRSA, including the OU2 remedy.
Added
The discovery phase of the litigation is now closed, and active pretrial motion practice is ongoing. The State has filed a motion to remand the case to the Eastern District of Pennsylvania for trial, though a trial date is yet to be scheduled. Multiple defendants in the case have settled with the plaintiff.
Removed
On December 23, 2022, Occidental filed a motion to intervene in the CD Action contending that it intends to challenge the proposed CD and seek to preserve its contribution claims against the Settling Parties in the pending Occidental Lawsuit.
Added
On January 5, 2024, the Court entered an Order to Stay the Occidental Lawsuit pending the Court’s adjudication of a Motion to Enter the Modified Consent Decree filed by the United States on January 31, 2024, as discussed below.
Added
The EPA concluded that the Settling Parties, individually and collectively, were responsible for only a minor share of the response costs incurred and to be incurred at or in connection with implementing the OU2 and OU4 remedies for the entire 17-mile Lower Passaic River.
Added
On January 17, 2024, the United States informed the Court that it completed reviewing public comments, including those from Occidental, and found no reasons to consider the proposed CD as inappropriate, improper, or inadequate. Nevertheless, the United States decided that certain limited changes to the CD should be made prior to moving for approval thereof.
Added
These changes involved removing three parties and a modification to the United States' reservation of rights. The remaining 82 Settling Parties, including us, concurred with these changes, leading to the United States filing the Modified Consent Decree (“Modified CD”), with the Court on the same day, January 17, 2024.
Added
On January 31, 2024, the United States filed a copy of all public comments received on the proposed CD, its Response to the public comments and a Motion to Enter the Modified CD.
Added
The Motion to Enter the Modified CD and accompanying memorandum of law states that the United States has determined that the proposed settlement is reasonable, fair and consistent with the statutory purpose of CERCLA.
Added
The Court has issued an order requiring that responses to the Motion to Enter the Modified CD be filed by April 1, 2024, and any replies to these responses are due by May 1, 2024, prior to adjudication of the motion.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe have chosen as our Peer Group the following companies: Agree Realty Corporation, EPR Properties, Essential Properties Realty Trust, Four Corners Properties Trust, NETSTREIT Corp., and One Liberty Properties. We have chosen these companies as our Peer Group because a substantial segment of each of their businesses is owning and leasing single tenant net lease retail properties.
Biggest changeSource: SNL Financial. We have chosen as our Peer Group the following companies: Agree Realty Corporation, EPR Properties, Essential Properties Realty Trust, Four Corners Properties Trust, NETSTREIT Corp., and One Liberty Properties.
Item 5. Market for Registrant’s Common Equity, Related Stockholde r 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 40,505 beneficial holders of our common stock as of February 1, 2023, of which approximately 800 were holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholde r 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 41,283 beneficial holders of our common stock as of February 1, 2024, of which approximately 802 were holders of record.
Stock Performance Graph Comparison of Five-Year Cumulative Total Return* Source: SNL Financial 12/30/2017 12/31/2018 12/31/2019 12/29/2020 12/29/2021 12/30/2022 Getty Realty Corp. $ 100.00 $ 115.23 $ 141.12 $ 117.39 $ 142.03 $ 160.45 Standard & Poor's 500 100.00 97.76 120.56 146.45 191.04 155.59 Peer Group 100.00 110.99 146.50 117.99 158.25 136.92 Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2017, in Getty Realty Corp. common stock, Standard & Poor’s 500 and Peer Group. 30 * Cumulative total return assumes reinvestment of dividends.
Stock Performance Graph Comparison of Five-Year Cumulative Total Return* 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 Getty Realty Corp. $ 100.00 $ 116.82 $ 103.72 $ 127.32 $ 142.18 $ 129.83 Standard & Poor's 500 100.00 128.88 149.83 190.13 153.16 190.27 Peer Group 100.00 131.64 113.64 151.35 129.03 139.40 Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2018, in Getty Realty Corp. common stock, Standard & Poor’s 500 and Peer Group. * Cumulative total return assumes reinvestment of dividends.
We cannot assure you that our stock performance will continue in the future with the same or similar trends depicted in the performance graph above. We do not make or endorse any predictions as to future stock performance.
We do not make or endorse any predictions as to future stock performance.
Added
We have chosen these companies as our 30 Peer Group because a substantial segment of each of their businesses is to own and lease single tenant net lease retail properties. We cannot assure you that our stock performance will continue in the future with the same or similar trends depicted in the performance graph above.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA reconciliation of net earnings to FFO and AFFO is as follows (in thousands, except per share amounts): Year ended December 31, 2022 2021 2020 Net earnings $ 90,043 $ 62,860 $ 69,388 Depreciation and amortization of real estate assets 39,902 35,518 30,191 Gains on dispositions of real estate (16,423 ) (16,718 ) (4,548 ) Impairments 3,545 4,404 4,258 Funds from operations (FFO) 117,067 86,064 99,289 Revenue recognition adjustments Deferred rental revenue (straight-line rent) (3,458 ) (2,778 ) (2,903 ) Amortization of above and below market leases, net (1,184 ) (1,221 ) (1,438 ) Amortization of investments in direct financing leases 5,392 4,844 4,210 Amortization of lease incentives 1,198 1,119 1,026 Total revenue recognition adjustments 1,948 1,964 895 Environmental Adjustments Accretion expense 1,259 1,705 1,841 Changes in environmental estimates (23,837 ) (1,768 ) (3,135 ) Environmental litigation accruals 279 1,909 85 Insurance reimbursements (85 ) (92 ) (142 ) Legal settlements and judgments — (493 ) (21,300 ) Total environmental adjustments (22,384 ) 1,261 (22,651 ) Other Adjustments Stock-based compensation expense 4,775 3,997 3,130 Amortization of debt issuance costs 946 1,013 1,053 Allowance for credit loss on notes and mortgages receivable and direct financing leases 50 (132 ) 368 Loss on extinguishment of debt — — 1,233 Retirement and severance costs 85 800 — Total other adjustments 5,856 5,678 5,784 Adjusted funds from operations (AFFO) $ 102,487 $ 94,967 $ 83,317 Basic per share amounts: Net earnings $ 1.88 $ 1.37 $ 1.62 FFO (1) 2.45 1.88 2.32 AFFO (1) 2.14 2.08 1.94 Diluted per share amounts: Net earnings $ 1.88 $ 1.37 $ 1.62 FFO (1) 2.44 1.88 2.31 AFFO (1) 2.14 2.08 1.94 Weighted average common shares outstanding: Basic 46,730 44,782 42,040 Diluted 46,838 44,819 42,070 34 (1) Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts.
Biggest changeBy providing AFFO, we believe we are presenting information that assists analysts and investors in their assessment of our core operating performance, as well as the sustainability of our core operating performance with the sustainability of the core operating performance of other real estate companies. 34 A reconciliation of net earnings to FFO and AFFO is as follows (in thousands, except per share amounts): Year ended December 31, 2023 2022 2021 Net earnings $ 60,151 $ 90,043 $ 62,860 Depreciation and amortization of real estate assets 45,296 39,902 35,518 Gains on dispositions of real estate (4,625 ) (16,423 ) (16,718 ) Impairments 5,243 3,545 4,404 Funds from operations (FFO) 106,065 117,067 86,064 Revenue recognition adjustments Deferred rental revenue (straight-line rent) (4,033 ) (3,458 ) (2,778 ) Amortization of above and below market leases, net (1,057 ) (1,184 ) (1,221 ) Amortization of investments in direct financing leases 6,004 5,392 4,844 Amortization of lease incentives 1,098 1,198 1,119 Total revenue recognition adjustments 2,012 1,948 1,964 Environmental Adjustments Accretion expense 585 1,259 1,705 Changes in environmental estimates (302 ) (23,837 ) (1,768 ) Environmental litigation accruals — 279 1,909 Insurance reimbursements (138 ) (85 ) (92 ) Legal settlements and judgments — — (493 ) Total environmental adjustments 145 (22,384 ) 1,261 Other Adjustments Stock-based compensation expense 5,582 4,775 3,997 Amortization of debt issuance costs 1,211 946 1,013 Allowance for credit loss on notes and mortgages receivable and direct financing leases (189 ) 50 (132 ) Loss on extinguishment of debt 43 — — Retirement and severance costs 939 85 800 Total other adjustments 7,586 5,856 5,678 Adjusted funds from operations (AFFO) $ 115,808 $ 102,487 $ 94,967 Basic per share amounts: Net earnings $ 1.16 $ 1.88 $ 1.37 FFO (a) 2.07 2.45 1.88 AFFO (a) 2.26 2.14 2.08 Diluted per share amounts: Net earnings $ 1.15 $ 1.88 $ 1.37 FFO (a) 2.06 2.44 1.88 AFFO (a) 2.25 2.14 2.08 Weighted average common shares outstanding: Basic 50,020 46,730 44,782 Diluted 50,216 46,838 44,819 (a) Dividends paid and undistributed earnings allocated, if any, to unvested restricted stockholders are deducted from FFO and AFFO for the computation of the per share amounts.
Credit Agreement The Second Restated Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $300.0 and includes an accordion feature to increase the revolving commitments or add one or more tranches of term loans up to an additional aggregate amount not to exceed $300 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount and that no default or event of default shall have occurred and be continuing under the terms of the Revolving Facility.
The Second Restated Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $300.0 million and includes an accordion feature to increase the revolving commitments or add one or more tranches of term loans up to an additional aggregate amount not to exceed $300.0 million, subject to certain conditions, including one or more new or existing lenders agreeing to provide commitments for such increased amount and that no default or event of default shall have occurred and be continuing under the terms of the Revolving Credit Facility.
It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities.
It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities.
Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an alternative for GAAP net earnings or as a measure of liquidity. These measures should only be used to evaluate our performance in conjunction with corresponding GAAP measures.
Neither FFO nor AFFO represent cash generated from operating activities calculated in accordance with GAAP and therefore these measures should not be considered an 33 alternative for GAAP net earnings or as a measure of liquidity. These measures should only be used to evaluate our performance in conjunction with corresponding GAAP measures.
To achieve that goal, we seek to invest in well-located, freestanding properties 32 that support automobility and provide convenience and service to consumers in major markets across the country. A key element of our investment strategy is to invest in properties that will enhance our property type, tenant and geographic diversification.
To achieve that goal, we seek to invest in well-located, freestanding properties that support automobility and provide convenience and service to consumers in major markets across the country. A key element of our investment strategy is to invest in properties that will enhance our property type, tenant and geographic diversification.
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 41 indicate that our counterparty may not have the financial resources to pay its share of the costs.
We accrue environmental liabilities based on our share of responsibility as defined in our lease contracts with our tenants and under various other agreements with others or if circumstances indicate that our counterparty may not have the financial resources to pay its share of the costs.
This accrual consisted of (a) $10.8 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $12.4 million for future environmental liabilities related to preexisting unknown contamination.
This accrual consisted of (a) $10.8 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are 44 responsible, net of estimated recoveries and (b) $12.4 million for future environmental liabilities related to preexisting unknown contamination.
Our investment activities may also include purchase money financing with respect to properties we sell, real property loans relating to our leasehold properties and construction loans. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate.
Our investment activities may also include purchase money financing with respect to properties we sell, real property loans relating to our 32 leasehold properties and construction loans. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate.
We anticipate meeting our longer-term capital needs through cash flow from operations, funds available under our Revolving Facility, available cash and cash equivalents, proceeds from future real estate asset sales, and the future issuance of shares of common stock or debt securities.
We anticipate meeting our longer-term capital needs through cash flow from operations, funds available under our Revolving Credit Facility, available cash and cash equivalents, the future issuance of shares of common stock or debt securities, and proceeds from future real estate asset sales.
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.
A critical assumption in accruing for these recoveries is that the state UST 42 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.
Impairment charges for the years ended December 31, 2022 and 2021 were attributable to (i) the addition of asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values, (ii) reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and (iii) reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties.
Impairment charges for the years ended December 31, 2023 and 2022 were attributable to (i) the addition of asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values, (ii) reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties, and (iii) reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties.
Based on the expiration of the Lookback Periods, together with other factors which have significantly mitigated our potential liability for preexisting environmental obligations, including the absence of any contractual obligations relating to properties which have been sold, quantifiable trends associated with types and ages of USTs at issue, expectations regarding future UST replacements, and historical trends and expectations regarding discovery of preexisting unknown environmental contamination and/or attempted pursuit of the Company therefor, we concluded that there is no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties.
Based on the expiration of the Lookback Periods, together with other factors which have significantly mitigated our potential liability for preexisting environmental obligations, including the absence of any contractual obligations relating to properties which have been sold, quantifiable trends associated with types and ages of USTs at issue, expectations regarding future UST replacements, and historical trends and expectations regarding discovery of preexisting unknown environmental contamination and/or attempted pursuit of us therefor, we concluded that there is no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties.
Depreciation and Amortization Expenses The increase in depreciation and amortization expense was primarily due to additional depreciation and amortization from properties acquired during the years ended December 31, 2022 and 2021, partially offset by a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations and dispositions of real estate during the same period.
Depreciation and Amortization Expenses The increase in depreciation and amortization expense was primarily due to additional depreciation and amortization from properties acquired during the years ended December 31, 2023 and 2022, partially offset by a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations, and dispositions of real estate during the same period.
We use certain non-GAAP measures that are more fully described below under the caption “—Supplemental Non-GAAP Measures,” which we believe are appropriate supplemental non-GAAP measures of the performance of REITs used by our management, as well as REIT analysts. This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
We use certain non-GAAP measures that are more fully described below under the caption “—Supplemental Non-GAAP Measures,” which we believe are appropriate supplemental non-GAAP measures of the performance of REITs used by our management, as well as REIT analysts. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Substantially all of our properties are leased to convenience store operators, petroleum distributors, car wash operators and other automotive-related and retail tenants. Our tenants either operate their business at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties that operate the businesses.
Substantially all of our properties are leased to convenience store operators, petroleum distributors, express tunnel car wash operators and other automotive-related and retail tenants. Our tenants either operate their business at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties that operate the businesses.
Discussions of 2021 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
The increase in rental income was primarily due to additional base rental income from properties acquired during the years ended December 31, 2022 and 2021, as well as rent commencements from completed redevelopments and contractual rent increases for certain in-place leases, partially offset by dispositions of real estate during the same period.
The increase in rental income was primarily due to additional base rental income from properties acquired during the years ended December 31, 2023 and 2022, as well as rent commencements from completed redevelopments and contractual rent increases for certain in-place leases, partially offset by dispositions of real estate during the same period.
The use of a forward sale agreement allows us to lock in a share price on the sale of shares at the time the forward sales agreement becomes effective but defer receiving the proceeds from the sale of shares until a later date. To account for the forward sale agreements, we considered the accounting guidance governing financial instruments and derivatives.
The use of a forward sale agreement allows us to lock in a share price on the sale of shares at the time the forward sales agreement becomes effective, but defer receiving the proceeds from the sale of shares until a later date. To account for the forward sale agreements, we consider the accounting guidance governing financial instruments and derivatives.
The information included in our consolidated financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined. 40 Our accounting policies are described in Note 1 in “Item 8. Financial Statements and Supplementary Data”.
The information included in our consolidated financial statements that 41 is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined. Our accounting policies are described in Note 1 in “Item 8. Financial Statements and Supplementary Data”.
Payment of dividends is subject to market conditions, our financial condition, including but not limited to, our continued compliance with the provisions of the Second Restated Credit Agreement, our senior unsecured notes and other factors, and therefore is not assured.
Payment of dividends is subject to market conditions, our financial condition, including but not limited to, our continued compliance with the provisions of the Second Restated Credit Agreement, the Term Loan Agreement, our Senior Unsecured Notes and other factors, and therefore is not assured.
Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020, were $3.7 million, $4.0 million and $4.0 million, respectively.
Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, were $3.0 million, $3.7 million, and $4.0 million, respectively.
In addition, during the years ended December 31, 2022, 2021 and 2020, we recorded credits to environmental expenses aggregating $23.8 million, $1.8 million and $3.1 million, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.
In addition, during the years ended December 31, 2023, 2022 and 2021, we recorded credits to environmental expenses aggregating $0.3 million, $23.8 million and $1.8 million, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.
For additional information with respect to these and other pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. 44
For additional information with respect to these and other pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” and Note 3 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. 45
In February 2021, we established an at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $250.0 million through a consortium of banks acting as our sales agents or acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.
In February 2023, we established an at-the-market equity offering program (the “ATM Program”), pursuant to which we are able to issue and sell shares of our common stock with an aggregate sales price of up to $350.0 million through a consortium of banks acting as our sales agents or acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.
During the year ended December 31, 2022, we invested $157.5 million across 52 properties, including the acquisition of fee simple interests in 40 properties for an aggregate purchase price of $137.3 million. The properties we acquired included nine convenience stores, 16 car wash properties, 14 automotive services centers and one drive-thru quick service restaurant.
During the year ended December 31, 2022, we invested $157.5 million across 52 properties, including the acquisition of fee simple interests in 40 properties for an aggregate purchase price of $137.3 million. The properties we acquired included nine convenience stores, 16 express tunnel car washes, 14 automotive services centers and one drive-thru quick service restaurant.
These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of December 31, 2022, our weighted average remaining lease term, excluding renewal options, was 8.8 years.
These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of December 31, 2023, our weighted average remaining lease term, excluding renewal options, was 8.9 years.
Interest Expense The increase in interest expense was due to higher average borrowings and higher average interest rates for the year ended December 31, 2022, as compared to the year ended December 31, 2021. 36 Liquidity and Capital Resources General Our primary uses of liquidity include payments of operating expenses, interest on our outstanding debt and environmental remediation costs, distributions to shareholders, and future acquisitions and redevelopment projects.
Interest Expense The increase in interest expense was due to higher average borrowings and higher average interest rates for the year ended December 31, 2023, as compared to the year ended December 31, 2022. 37 Liquidity and Capital Resources General Our primary uses of liquidity include payments of operating expenses, interest on our outstanding debt, environmental remediation costs, distributions to shareholders, and future acquisitions and redevelopment projects.
Environmental liabilities are estimated net of recoveries of environmental costs from state UST remediation funds, with respect to past and future spending based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable.
Environmental liabilities are estimated net of recoveries of environmental costs from state underground storage tanks ("UST") remediation funds, with respect to past and future spending based on estimated recovery rates developed from our experience with the funds when such recoveries are considered probable.
We also evaluated whether the agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments.
We also evaluated whether the forward sale agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments.
During the years ended December 31, 2022 and 2021, we increased the carrying values of certain of our properties by $3.3 million and $3.0 million, respectively, due to changes in estimated environmental remediation costs.
During the years ended December 31, 2023 and 2022, we increased the carrying values of certain of our properties by $5.0 million and $3.3 million, respectively, due to changes in estimated environmental remediation costs.
We pay particular attention to AFFO which we believe provides the most useful depiction of the core operating performance of its portfolio.
We pay particular attention to AFFO which we believe provides the most useful depiction of the core operating performance of our portfolio.
Our Properties Our 1,039 properties are located in 38 states and Washington D.C. and include a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords.
Our Properties Our 1,093 properties are located in 40 states and Washington D.C. and include a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords.
Accordingly, we removed $23.5 million of unknown reserve liabilities which had previously been accrued for these properties. This resulted in a net credit of $22.2 million being recorded to environmental expense for the twelve months ended December 31, 2022.
Accordingly, we removed $23.5 million of unknown reserve liabilities which had previously been accrued for these properties which resulted in a net credit of $22.2 million being recorded to environmental expense for the year ended December 31, 2022.
We recorded impairment charges aggregating $2.5 million and $3.1 million for the years ended December 31, 2022 and 2021, respectively, for capitalized asset retirement costs. For additional information regarding risks related to our potential environmental exposure, see “Item 1A.
We recorded impairment charges aggregating $3.6 million and $2.5 million for the years ended December 31, 2023 and 2022, respectively, for capitalized asset retirement costs. For additional information regarding risks related to our potential environmental exposure, see “Item 1A.
We concluded that the agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides those related to the market for the Company’s own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to its own stock.
We concluded that the forward sale agreements are classifiable as equity contracts based on the following assessments: (i) none of the agreements’ exercise contingencies that are based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock.
Our portfolio is comprised of convenience stores, car wash properties, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), automotive parts retailers, and certain other freestanding retail properties, including drive-thru quick service restaurants.
Our portfolio is comprised of convenience stores, express tunnel car washes, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), automotive parts retailers, and certain other freestanding retail properties, including drive-thru quick service restaurants.
Accordingly, we believe it is appropriate at this time to maintain $11.1 million of unknown reserve liabilities for certain properties with respect to which the Lookback Periods have expired as of December 31, 2022.
Accordingly, we believe it is appropriate at this time to maintain $11.3 million of unknown reserve liabilities for certain properties with respect to which the Lookback Periods have expired as of December 31, 2023.
We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2022, we had accrued a total of $23.2 million for our prospective environmental remediation obligations.
We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of December 31, 2023, we had accrued a total of $22.4 million for our prospective environmental remediation obligations.
On June 21, 2018, we entered into a note purchase and guarantee agreement with MetLife and certain of its affiliates (collectively, "MetLife") (the “MetLife Agreement”) pursuant to which we issued $50.0 million of 5.47% Series E Guaranteed Senior Notes due June 21, 2028 (the “Series E Notes”) to MetLife. 38 The funded and outstanding Series B Notes, Series C Notes, Series D Notes, Series E Notes, Series F Note, Series G Notes, Series H Notes, Series I Notes, Series J Notes, Series K Notes, Series L Notes, Series M Notes and Series N Notes are collectively referred to the "senior unsecured notes".
In June 2018, we entered into a note purchase and guarantee agreement with MetLife and certain of its affiliates (collectively, "MetLife") (the “MetLife Agreement”) pursuant to which we issued $50.0 million of 5.47% Series E Guaranteed Senior Notes due June 21, 2028 (the “Series E Notes”) to MetLife. 39 The funded and outstanding Series C Notes, Series D Notes, Series E Notes, Series F Note, Series G Notes, Series H Notes, Series I Notes, Series J Notes, Series K Notes, Series L Notes, Series M Notes, Series N Notes, Series O Notes, Series P Notes, and Series Q Notes are collectively referred to as the "Senior Unsecured Notes".
We consider the potential dilution resulting from the forward sale agreements on the earnings per share calculations and use the treasury stock method to determine the dilution resulting from the forward sale agreements during the period of time prior to settlement. 39 ATM Direct Issuances During the year ended December 31, 2022, no shares of common stock were issued under the ATM Program.
We consider the potential dilution resulting from the forward sale agreements on the earnings per share calculations and use the treasury stock method to determine the dilution resulting from the forward sale agreements during the period of time prior to settlement. 40 ATM Direct Issuances During the years ended December 31, 2023 and 2022, no shares of common stock were issued under the ATM Program or the 2021 ATM Program.
Borrowings under the Revolving Facility bear interest at a rate equal to (i) the sum of a SOFR rate plus a SOFR adjustment of 0.10% plus a margin of 1.30% to 1.90% or (ii) the sum of a base rate plus a margin of 0.30% to 0.90% based on our consolidated total indebtedness to total asset value ratio at the end of each quarterly reporting period.
Borrowings under the Term Loan bear interest at a rate equal to (i) the sum of a SOFR rate plus a SOFR adjustment of 0.10% plus a margin of 1.30% to 1.90% or (ii) the sum of a base rate plus a margin of 0.30% to 0.90%, in each case with the margin based on our consolidated total indebtedness to total asset value ratio at the end of each quarterly reporting period.
Gains on Disposition of Real Estate The gains on dispositions of real estate were primarily the result of the sale of 24 and 16 properties during the years ended December 31, 2022 and 2021, respectively.
Gains on Disposition of Real Estate The gains on dispositions of real estate were primarily the result of the sale of nine and 24 properties during the years ended December 31, 2023 and 2022, respectively.
Contractual Obligations Our significant contractual obligations and commitments, excluding extension options and unamortized debt issuance costs, as of December 31, 2022, were comprised of borrowings under the Second Restated Credit Agreement, our senior unsecured notes, operating and finance lease payments due to landlords, estimated environmental remediation expenditures and our funding commitments for capital improvements at certain properties.
Contractual Obligations Our significant contractual obligations and commitments, excluding extension options and unamortized debt issuance costs, as of December 31, 2023, were comprised of borrowings under the Revolving Credit Facility, the Term Loan, our Senior Unsecured Notes, operating and finance lease payments due to landlords, estimated environmental remediation expenditures, and our funding commitments for capital improvements at certain properties.
In particular, the Second Restated Credit Agreement and our senior unsecured notes prohibit the payment of dividends during certain events of default. Regular quarterly dividends paid to our stockholders aggregated $78.3 million, $70.8 million and $62.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.
In particular, the Second Restated Credit Agreement, the Term Loan Agreement, and our Senior Unsecured Notes prohibit the payment of dividends during certain events of default. Regular quarterly dividends paid to our stockholders aggregated $87.0 million, $78.3 million and $70.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2022, our portfolio included 1,039 properties, including 997 properties owned by us and 42 properties that we leased from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders.
As of December 31, 2023, our portfolio included 1,093 properties, including 1,056 properties owned by us and 37 properties that we leased from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders.
ATM Forward Agreements During the year ended December 31, 2022, we entered into forward sale agreements to sell an aggregate of 3.7 million shares of common stock at an average gross offering price of $31.61 per share. No shares were settled during the year ended December 31, 2022.
ATM Forward Agreements During the year ended December 31, 2022, we entered into forward sale agreements to sell an aggregate of 3,721,000 shares of common stock under the 2021 ATM Program at an average gross offering price of $31.61 per share. No such shares were settled during the year ended December 31, 2022.
As of December 31, 2022 and 2021, we had accrued $0.3 million and $1.9 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available.
As of December 31, 2023 we had no amounts accrued, and as of December 31, 2022, we had accrued $0.3 million, for certain of these matters which we believe were appropriate based on information then currently available.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2022, we leased 1,034 of our properties to tenants under triple-net leases, including 866 properties leased under 37 separate unitary or master triple-net leases, and 168 properties leased under single unit triple-net leases.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2023, we leased 1,089 of our properties to tenants under triple-net leases, including 911 properties leased under 44 separate unitary or master triple-net leases, and 178 properties leased under single unit triple-net leases.
Substantially all of these Lookback Periods have now expired, therefore responsibility for all newly discovered contamination at these properties, even if it relates to periods prior to commencement of the lease or sale, is the contractual responsibility of our tenant or buyer as the case may be.
After expiration of the applicable Lookback Period, responsibility for all newly discovered contamination at these properties, even if it relates to periods prior to commencement of the lease or sale, is the contractual responsibility of our tenant or buyer as the case may be.
Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced.
Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for pre-existing environmental contamination occurring during the terms of their leases.
For the subset of our triple-net leases which cover properties previously leased to Marketing (substantially all of which commenced in 2012), the allocation of responsibility differs from our other triple-net leases as it relates to preexisting known and unknown contamination.
(“Marketing") (substantially all of which commenced in 2012), the allocation of responsibility differs from our other triple-net leases as it relates to preexisting known and unknown contamination.
Other REITs may use definitions of FFO and/or AFFO that are different than ours and, accordingly, may not be comparable. 33 We believe that FFO and AFFO are helpful to analysts and investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, the core operating performance of our portfolio.
We believe that FFO and AFFO are helpful to analysts and investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, the core operating performance of our portfolio.
Environmental Expenses The decrease in environmental expenses for the year ended December 31, 2022 was primarily due to a reduction in estimates related to unknown environmental liabilities. Specifically, during the year ended December 31, 2022, we concluded that there was no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties.
Specifically, during the year ended December 31, 2022, we concluded that there was no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties.
Financial Statements and Supplementary Data” in this Form 10-K. Redevelopment Strategy and Activity We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as new convenience stores or other single tenant retail uses, such as automotive parts, quick service restaurants, bank branches and specialty retail.
Redevelopment Strategy and Activity We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as modern convenience stores or other single tenant convenience and automotive retail uses, such as automotive parts retailers, quick service restaurants, auto service centers, and bank branches.
We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation (using a range of 2.0% to 2.75%), and then discount them to present value (using a range of 4.0% to 7.0%).
We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation and then discount them to present value.
Capitalized asset retirement costs were $33.2 million (consisting of $24.7 million of known environmental liabilities and $8.5 million of reserves for future environmental liabilities) as of December 31, 2022, and $39.7 million (consisting of $24.1 million of known environmental liabilities and $15.6 million of reserves for future environmental liabilities) as of December 31, 2021.
Capitalized asset retirement costs were $34.3 million (consisting of $25.8 million of known environmental liabilities and $8.5 million of reserves for future environmental liabilities) as of December 31, 2023, and $33.2 million (consisting of $24.7 million of known environmental liabilities and $8.5 million of reserves for future environmental liabilities) as of December 31, 2022.
In addition, for substantially all of our triple-net leases, our tenants are contractually responsible for known environmental contamination that existed at the commencement of the lease and for preexisting unknown environmental contamination that is discovered during the term of the lease.
In addition, for substantially all of our triple-net leases, our tenants are contractually responsible for known environmental contamination that existed at the commencement of the lease and for preexisting unknown environmental contamination that is discovered during the term of the lease. For the subset of our triple-net leases which cover properties previously leased to Getty Petroleum Marketing Inc.
As of December 31, 2021, we had accrued a total of $47.6 million for our prospective environmental remediation obligations.
As of December 31, 2022, we had accrued a total of $23.2 million for our prospective environmental remediation obligations.
Since the inception of our redevelopment program in 2015, we have completed 26 redevelopment projects. For the year ended December 31, 2022, we spent $0.1 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities and transferred $36 thousand of construction-in-progress to buildings and improvements on our consolidated balance sheet.
Since the inception of our redevelopment program in 2015, we have completed 31 redevelopment and revenue-enhancing capex projects. For the year ended December 31, 2023, we incurred $0.2 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities and transferred $0.4 million of construction-in-progress to buildings and improvements on our consolidated balance sheets.
The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability, net of estimated recoveries from state UST remediation funds considering estimated recovery rates developed from prior experience with the funds. 42 For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which is mainly the responsibility of our tenant but in certain cases partially paid for by us) and remediation of any environmental contamination that arises during the term of their tenancy.
For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which is mainly the responsibility of our tenant but in certain cases partially paid for by us) and remediation of any environmental contamination that arises during the term of their tenancy.
Interest on Notes and Mortgages Receivable The increase in interest on notes and mortgages receivable was primarily due to an increase in construction loan advances for the development of new-to-industry properties during the years ended December 31, 2022 and 2021, partially offset by collections of notes and mortgages receivable during the same period. 35 Property Costs Property costs are comprised of (i) property operating expenses, including rent expense, reimbursable and non-reimbursable real estate taxes and municipal charges, certain state and local taxes, and maintenance expenses, and (ii) leasing and redevelopment expenses, including professional fees, demolition costs, and redevelopment project cost write-offs, if any.
Interest on Notes and Mortgages Receivable The increase in interest on notes and mortgages receivable was primarily due to an increase in development funding advances for the construction of new-to-industry properties, as well as development funding rates, during the years ended December 31, 2023 and 2022, partially offset by collections of notes and mortgages receivable during the same period. 36 Property Costs The following table presents the results for property costs for the year ended December 31, 2023, as compared to the year ended December 31, 2022 (in thousands): Year ended December 31, 2023 2022 $ Change Property operating expenses $ 23,112 $ 20,843 $ 2,269 Leasing and redevelopment expenses 677 710 (33 ) Total property costs 23,789 21,553 2,236 Property costs are comprised of (i) property operating expenses, including rent expense, reimbursable and non-reimbursable real estate taxes and municipal charges, certain state and local taxes, and maintenance expenses, and (ii) leasing and redevelopment expenses, including professional fees, demolition costs, and redevelopment project cost write-offs, if any.
Financing Activities The change in net cash flow provided by financing activities for the year ended December 31, 2022, was primarily due to a decrease in proceeds from issuances of common stock of $92.5 million and an increase in dividends paid of $7.5 million, partially offset by an increase in net borrowings of $75.0 million.
Financing Activities The change in net cash flow provided by financing activities for the year ended December 31, 2023, was primarily due to an increase in proceeds from the issuance of common stock of $226.4 million, partially offset by an increase in net debt repayments of $45.0 million and an increase in dividends paid of $8.7 million.
ATM Program In March 2018, we established an at-the-market equity offering program (the “2018 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $125.0 million through a consortium of banks acting as agents. The 2018 ATM Program was terminated in January 2021.
ATM Program In February 2021, we established an at-the-market equity offering program (the “2021 ATM Program”), pursuant to which we were able to issue and sell shares of our common stock with an aggregate sales price of up to $250.0 million through a consortium of banks acting as agents or acting as forward sellers on behalf of any forward purchasers pursuant to a forward sale agreement.
Our cash flow activities for the years ended December 31, 2022 and 2021 are summarized as follows (in thousands): Year ended December 31, 2022 2021 $ Change Net cash flow provided by operating activities $ 93,086 $ 86,818 $ 6,268 Net cash flow used in investing activities (139,056 ) (169,732 ) 30,676 Net cash flow provided by financing activities 30,758 52,321 (21,563 ) Operating Activities The change in net cash flow provided by operating activities for the years ended December 31, 2022 and 2021 was primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above and the other changes in assets and liabilities as presented on our consolidated statements of cash flows.
Our cash flow activities for the years ended December 31, 2023 and 2022 are summarized as follows (in thousands): Year ended December 31, 2023 2022 $ Change Net cash flow provided by operating activities $ 105,298 $ 93,086 $ 12,212 Net cash flow used in investing activities (310,705 ) (139,056 ) (171,649 ) Net cash flow provided by financing activities 199,444 30,758 168,686 Operating Activities The change in net cash flow provided by operating activities for the years ended December 31, 2023 and 2022 was primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above and the other changes in assets and liabilities as presented on our consolidated statements of cash flows.
Investing Activities The change in net cash flow used in investing activities for the year ended December 31, 2022, was primarily due to a reduction in property acquisitions of $57.0 million, partially offset by an $11.6 million increase in deposits for property acquisitions, a $9.0 million decrease in collections of notes and mortgages receivable, and an increase of $5.8 million in issuance of notes and mortgages receivable.
Investing Activities The change in net cash flow used in investing activities for the year ended December 31, 2023, was primarily due to an increase in property acquisitions of $110.8 million and an increase of $100.0 million in issuance of notes and mortgages receivable, partially offset by a $40.6 million increase in collection of notes and mortgages receivable, a $13.0 million decrease in proceeds from dispositions of real estate, and a $12.2 million decrease in deposits for property acquisitions.
Debt Maturities The amounts outstanding under the Second Restated Credit Agreement and our senior unsecured notes, exclusive of extension options, are as follows (in thousands): Year ended December 31, Maturity Date Interest Rate 2022 2021 Revolving Facility October 2025 5.60% $ 70,000 $ 60,000 Series B Notes (a) June 2023 5.35% 75,000 75,000 Series C Notes February 2025 4.75% 50,000 50,000 Series D-E Notes June 2028 5.47% 100,000 100,000 Series F-G Notes September 2029 3.52% 125,000 125,000 Series I-K Notes November 2030 3.43% 175,000 175,000 Series L-N Notes February 2032 3.45% 100,000 — Total debt 695,000 585,000 Unamortized debt issuance costs, net (b) (3,545 ) (3,880 ) Total debt, net $ 691,455 $ 581,120 (a) Pursuant to the Sixth Amended and Restated Prudential Agreement, we issued $80,000 of 3.65% Series Q Notes due January 20, 2033 to Prudential in January 2023 and used a portion of the proceeds to repay in full the $75,000 of 5.35% Series B Notes due June 2, 2023.
Debt Maturities The amounts outstanding under our Revolving Credit Facility, Term Loan, and Senior Unsecured Notes, exclusive of extension options, are as follows (in thousands): Year ended December 31, Maturity Date Interest Rate 2023 2022 Revolving Credit Facility October 2025 5.60% $ 10,000 $ 70,000 Term Loan October 2025 6.13% 75,000 $ — Series B Notes June 2023 5.35% — 75,000 Series C Notes February 2025 4.75% 50,000 50,000 Series D-E Notes June 2028 5.47% 100,000 100,000 Series F-H Notes September 2029 3.52% 125,000 125,000 Series I-K Notes November 2030 3.43% 175,000 175,000 Series L-N Notes February 2032 3.45% 100,000 100,000 Series O-Q Notes January 2033 3.65% 125,000 — Total debt 760,000 695,000 Unamortized debt issuance costs, net (a) (5,266 ) (3,545 ) Total debt, net $ 754,734 $ 691,455 (a) Unamortized debt issuance costs related to the Revolving Credit Facility were $1,364 and $2,036 as of December 31, 2023 and 2022, respectively, and are included in prepaid expenses and other assets on our consolidated balance sheets.
The following amounts were deducted: Year ended December 31, 2022 2021 2020 FFO $ 2,734 $ 1,771 $ 1,939 AFFO 2,394 1,915 1,627 Results of Operations Year ended December 31, 2022, compared to year ended December 31, 2021 The following table presents select data and comparative results from the Company’s consolidated statements of operations for the year ended December 31, 2022, as compared to the year ended December 31, 2021 (in thousands): Year ended December 31, 2022 2021 $ Change Revenues: Revenues from rental properties $ 163,889 $ 153,886 $ 10,003 Interest on notes and mortgages receivable 1,699 1,522 177 Operating expenses: Property costs 21,553 22,048 (495 ) Impairments 3,545 4,404 (859 ) Environmental (20,902 ) 3,548 (24,450 ) General and administrative 20,621 20,151 470 Depreciation and amortization 39,902 35,518 4,384 Other items: Gains on dispositions of real estate 16,423 16,718 (295 ) Interest expense 27,662 24,672 2,990 Revenues from Rental Properties The following table presents the results for revenues from rental properties for the year ended December 31, 2022, as compared to the year ended December 31, 2021 (in thousands): Year ended December 31, 2022 2021 $ Change Rental income $ 149,098 $ 138,691 $ 10,407 Revenue recognition adjustments (1,948 ) (1,964 ) 16 Tenant reimbursement income 16,739 17,159 (420 ) Total revenues from rental properties 163,889 153,886 10,003 Rental income includes base rental income and additional rental income, if any, based on the aggregate volume of fuel sold at certain properties.
The following amounts were deducted: Year ended December 31, 2023 2022 2021 FFO $ 2,624 $ 2,734 $ 1,771 AFFO 2,865 2,394 1,915 35 Results of Operations Year ended December 31, 2023, compared to year ended December 31, 2022 The following table presents select data and comparative results from our consolidated statements of operations for the year ended December 31, 2023, as compared to the year ended December 31, 2022 (in thousands): Year ended December 31, 2023 2022 $ Change Revenues: Revenues from rental properties $ 180,488 $ 163,889 $ 16,599 Interest on notes and mortgages receivable 5,358 1,699 3,659 Operating expenses: Property costs 23,789 21,553 2,236 Impairments 5,243 3,545 1,698 Environmental 1,261 (20,902 ) 22,163 General and administrative 23,735 20,621 3,114 Depreciation and amortization 45,296 39,902 5,394 Other items: Gains on dispositions of real estate 4,625 16,423 (11,798 ) Interest expense 31,527 27,662 3,865 Revenues from Rental Properties The following table presents the results for revenues from rental properties for the year ended December 31, 2023, as compared to the year ended December 31, 2022 (in thousands): Year ended December 31, 2023 2022 $ Change Rental income $ 162,978 $ 149,098 $ 13,880 Revenue recognition adjustments (2,012 ) (1,948 ) (64 ) Tenant reimbursement income 19,522 16,739 2,783 Total revenues from rental properties 180,488 163,889 16,599 Rental income includes base rental income and additional rental income, if any, based on the aggregate volume of fuel sold at certain properties.
For a discussion of our capital expenditures, see “—Property Acquisitions and Capital Expenditures.” We expect to meet our short-term liquidity requirements through cash flow from operations, funds available under our Revolving Facility, proceeds from new senior unsecured notes that we closed in February 2022, but were not funded until January 2023, proceeds from the sale of shares of common stock pursuant to forward agreements under our ATM Program, and available cash and cash equivalents.
For a discussion of our capital expenditures, see “Property Acquisitions and Capital Expenditures.” We expect to meet our short-term liquidity requirements through cash flow from operations, funds available under our Revolving Credit Facility, undrawn funds available under our Term Loan, proceeds from the settlement of shares of common stock subject to forward sale agreements under our ATM program, and available cash and cash equivalents.
General and Administrative Expenses The increase in general and administrative expenses was primarily due to a $1.1 million increase in employee-related expenses, including a $0.8 million increase in stock-based compensation, partially offset by a $0.7 million reduction in non-recurring employee-related expenses and a $0.4 million decrease in legal and other professional fees.
General and Administrative Expenses The increase in general and administrative expenses was primarily due to a $2.4 million increase in employee-related expenses, including $0.9 million of non-recurring retirement and severance costs and a $0.8 million increase in stock-based compensation, a $0.4 million increase in legal and other professional fees, and a $0.2 million increase an office and information technology expenses.
During the year ended December 31, 2021, we did not enter into any forward sale agreements under the ATM Program. Dividends We elected to be treated as a REIT under the federal income tax laws with the year beginning January 1, 2001.
Dividends We elected to be treated as a REIT under the federal income tax laws with the year beginning January 1, 2001.
The Revolving Facility matures October 27, 2025, subject to two six-month extensions (for a total of 12 months) exercisable at our option.
The Revolving Credit Facility matures October 27, 2025, subject to two six-month extensions (for a total of 12 months) exercisable at our option. Our exercise of an extension option is subject to the absence of any default and our compliance with certain conditions, including the payment of extension fees to the lenders under the Revolving Credit Facility.
Our exercise of an extension option is subject to the absence of any default under the Second Restated Credit Agreement 37 and our compliance with certain conditions, including the payment of extension fees to the Lenders under the Revolving Facility and that no default or event of default shall have occurred and be continuing under the terms of the Revolving Facility.
Our exercise of the extension option is subject to the absence of any default and our compliance with certain conditions, including the payment of extension fees to the lenders under the Term Loan.
This accrual consisted of (a) $11.4 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $36.2 million for future environmental liabilities related to preexisting unknown contamination. 43 Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $1.3 million, $1.7 million and $1.8 million of net accretion expense was recorded for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in environmental expenses.
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.6 million, $1.3 million and $1.7 million of net accretion expense was recorded for the years ended December 31, 2023, 2022 and 2021, respectively, which is included in environmental expenses.
We believe that the redeveloped properties can be leased or sold at higher values than their current use. During the years ended December 31, 2022 and 2021, rent commenced on two and five completed redevelopment projects, respectively, that were placed back into service in our net lease portfolio.
We believe that the redeveloped properties can be leased or sold at higher values than their prior use. During the year ended December 31, 2023, rent commenced on three completed redevelopments and increased rent commenced on two revenue-enhancing capex projects for expanded convenience stores. During the year ended December 31, 2022, new rent commenced on two completed redevelopment projects.
Accordingly, we removed $23.5 million of unknown reserve liabilities which had previously been accrued for these properties. This resulted in a net credit of $22.2 million being recorded to environmental expense for the year ended December 31, 2022. In addition, during the year ended December 31, 2022, there was a decrease in environmental litigation accruals of $1.6 million.
Accordingly, as of December 31, 2022, we had removed $23.5 million of unknown reserve liabilities which had previously been accrued for these properties. There were no additional removals of unknown reserve liabilities for the year ended December 31, 2023.
As of December 31, 2022, we were in compliance with all of the material terms of our senior unsecured notes. For additional information regarding our senior secured notes, see Note 4 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
For additional information regarding our property dispositions see Note 12 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
As of December 31, 2022, we had three properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio, including one property for which we have signed a new lease and which will be transferred to redevelopment when the appropriate entitlements, permits and approvals have been secured.
For the year ended December 31, 2022, we incurred $0.1 million (net of write-offs) of construction-in-progress costs related to our redevelopment activities. As of December 31, 2023, we had two properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio.
We believe that conforming to this market practice for calculating AFFO improves the comparability of this measure of performance to other net lease REITs. FFO and AFFO are generally considered by analysts and investors to be appropriate supplemental non-GAAP measures of the performance of REITs.
In addition to measurements defined by GAAP, we also focus on Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) to measure our performance. FFO and AFFO are generally considered by analysts and investors to be appropriate supplemental non-GAAP measures of the performance of REITs.
Impairment Charges Impairment charges are recorded when the carrying value of a property is reduced to fair value.
The increase in property costs was primarily due to an increase in reimbursable real estate taxes, partially offset by lower rent expense and non-reimbursable real estate taxes. Impairment Charges Impairment charges are recorded when the carrying value of a property is reduced to fair value.
For additional information regarding our environmental obligations, see Note 5 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K. As of December 31, 2022, we were also actively redeveloping three of our properties as new convenience stores or for alternative single tenant retail uses, and two of our properties were vacant.
As of December 31, 2023, we were also actively redeveloping two of our properties for alternative single tenant retail uses, and two of our properties were vacant.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−4 removed1 unchanged
Biggest changeBorrowings under the Revolving Facility bear interest at a rate equal to (i) the sum of a SOFR rate plus a SOFR adjustment of 0.10% plus a margin of 1.30% to 1.90% or (ii) the sum of a base rate plus a margin of 0.30% to 0.90% based on our consolidated total indebtedness to total asset value ratio at the end of each quarterly reporting period.
Biggest changeQuantitative and Qualita tive Disclosures about Market Risk We are exposed to interest rate risk, primarily as a result of borrowings under our Revolving Credit Facility which bear interest at a rate equal to (i) the sum of a SOFR rate plus a SOFR adjustment of 0.10% plus a margin of 1.30% to 1.90%, or (ii) the sum of a base rate plus a margin of 0.30% to 0.90%, in each case with the margin based on our consolidated total indebtedness to total asset value ratio at the end of each quarterly reporting period.
Risk Factors” in this Annual Report on Form 10-K for additional information. 45
Risk Factors” in this Annual Report on Form 10-K for additional information. 46
Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Second Restated Credit Agreement and with increases or decreases in amounts outstanding under borrowing agreements entered into with interest rates floating at market rates.
Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Revolving Credit Facility and with increases or decreases in amounts outstanding under borrowing agreements entered into with interest rates floating at market rates.
Based on our outstanding borrowings under the Revolving Facility of $70.0 million for the year ended December 31, 2022, an increase in market interest rates of 1.0% for 2023 would decrease our 2023 net income and cash flows by approximately $0.7 million.
Based on our outstanding borrowings under the Revolving Credit Facility of $10.0 million as of December 31, 2023, an increase in market interest rates of 1.0% for 2023 would decrease our 2023 net income and cash flows by approximately $0.1 million.
Removed
Quantitative and Qualita tive Disclosures about Market Risk We are exposed to interest rate risk, primarily as a result of the Second Restated Credit Agreement which provides for the Revolving Facility in an aggregate principal amount of $300.0 million and includes an accordion feature to increase the revolving commitments or add one or more tranches of term loans up to an additional aggregate amount not to exceed $300.0 million.
Removed
We use borrowings under the Revolving Facility to finance acquisitions and for general corporate purposes. Borrowings outstanding at variable interest rates under the Revolving Facility as of December 31, 2022, were $70.0 million.
Removed
This amount was determined by calculating the effect of a hypothetical interest rate change on our borrowings floating at market rates and assumes that the $70.0 million outstanding borrowings under the Revolving Facility is indicative of our future average floating interest rate borrowings for 2023 before considering additional borrowings required for future acquisitions or repayment of outstanding borrowings from proceeds of future equity offerings.
Removed
The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings.

Other GTY 10-K year-over-year comparisons