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What changed in GETTY REALTY CORP /MD/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of GETTY REALTY CORP /MD/'s 2023 and 2024 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 2024 report.

+693 added−315 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in GETTY REALTY CORP /MD/'s 2024 10-K

693 paragraphs added · 315 removed · 259 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSubstantially 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.
Biggest changeOur 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. For additional information regarding risks related to our tenants’ dependence on the performance of these industries, see “Item 1A.
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 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 in this Annual Report on Form 10-K. We continually assess and strive to enhance employee satisfaction and engagement.
Our triple-net lease tenants are directly responsible for compliance with environmental laws and regulations with respect to their operations at our properties. We believe that our properties are in substantial compliance with federal, state and local provisions pertaining to environmental matters.
Our triple-net lease tenants are directly responsible for compliance with environmental laws and regulations with respect to their operations at our properties. 7 We believe that our properties are in substantial compliance with federal, state and local provisions pertaining to environmental matters.
Securities and Exchange Commission (“SEC”). Our website also contains our business conduct guidelines (“Code of Ethics”), corporate governance guidelines and the charters of the Audit, Compensation and Nominating/Corporate Governance Committees of our Board of Directors.
Securities and Exchange Commission (“SEC”). 8 Our website also contains our business conduct guidelines (“Code of Ethics”), corporate governance guidelines and the charters of the Audit, Compensation and Nominating/Corporate Governance Committees of our Board of Directors.
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 regarding our environmental obligations, see Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
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 regarding our environmental obligations, see Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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.
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.
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 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.
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.
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 Annual Report on Form 10-K. Climate Change As an organization, we are committed to the protection of our assets, communities, and the environment.
Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, automotive parts retailer, or certain other freestanding retailers, including drive-thru quick service restaurants.
Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, or certain other freestanding retail uses, including drive thru quick service restaurants and automotive parts retailers.
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.
Our properties are located in 42 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.
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 also support and pay for external education classes and seminars requested by our employees, as well as higher-education tuition reimbursement 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.
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 1,118 properties as of December 31, 2024 are located in 42 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.
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.
With our landlord’s support, we attempt to construct a full picture of our environmental footprint, maximize diversion of recyclable waste in accordance with local regulations, and implement energy conservation measures as appropriate and feasible.
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.
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 Annual Report on Form 10-K.
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.
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 13, 2025, we had 29 employees.
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.
In 2024, our team participated in our second 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.
Item 1. Business Company Profile Getty Realty Corp. (“Getty Realty”) (NYSE: GTY), a Maryland corporation, is a publicly traded, net lease real estate investment trust (“REIT”) specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate.
Item 1. Business Company Profile Getty Realty Corp. (“Getty Realty,” “we,” “us,” “our” and the “Company”) (NYSE: GTY), a Maryland corporation, is a publicly traded, net lease real estate investment trust (“REIT”) specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate.
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 leasehold properties, and construction loans or other financing for the development of new-to-industry properties. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate.
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.
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, 2024, our weighted average remaining lease term, excluding renewal options, was 10.2 years.
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.
Over the last five years, we have acquired 296 properties for an aggregate purchase price of more than $1.0 billion, including single property and portfolio transactions located in various geographies and leased to a diverse set of tenants who operate across the convenience and automotive retail sectors.
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.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2024, we leased 1,114 of our properties to tenants under triple-net leases, including 921 properties leased under 50 separate unitary or master triple-net leases, and 193 properties leased under single unit triple-net leases.
As part of our commitment to Environmental, Social, and Governance matters, in 2022 we implemented our “Getty Green Loans” program to provide low-cost loans to our tenants for the express purpose of investing in environmental and sustainability projects.
Additionally, starting in 2022, we implemented our “Getty Green Loans” program to provide low-cost loans to our tenants for the express purpose of investing in environmental and sustainability projects.
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.
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.
Additional Information Our website address is www.gettyrealty.com. Information available on our website shall not be deemed to be a part of this Annual Report on Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K. Additional Information Our website address is www.gettyrealty.com. Information available on our website shall not be deemed to be a part of this Annual Report on Form 10-K.
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.
During the year ended December 31, 2024, we continued to grow and diversify our portfolio of convenience, automotive and other freestanding retail properties through acquisitions of existing properties and development funding advances for the construction of new-to-industry assets.
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.
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.
For additional information regarding risks related to our tenants’ dependence on the performance of the industry, see “Item 1A. Risk Factors – Significant number of our tenants depend on the same industry for their revenues” in this Form 10-K.
Risk Factors—Risks Related to Our Business and Operations—Significant number of our tenants depend on the same industry for their revenues” in this Annual Report on Form 10-K.
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.
We also matched individual contributions made by our team members to more than 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.
We primarily pursue sale leaseback transactions with existing and prospective tenants and will pursue other transactions, including forward commitments to acquire new-to-industry construction and the acquisition of assets with in-place leases, that result in us owning fee simple interests in our properties.
We primarily pursue sale leaseback transactions with existing and prospective tenants and will also provide forward commitments to acquire new-to-industry construction and acquire assets with in-place leases.
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.
We were able to accretively fund this investment activity through thoughtful capital markets execution that included a follow-on public equity offering, active use of our ATM Program, and the issuance of new senior unsecured notes.
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.
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.
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).
Capital Markets Activities During the year ended December 31, 2024, we raised $164.8 million of gross equity proceeds through the sale of 5.4 million common shares subject to forward sales agreements, including 4.0 million shares ($121.2 million of gross proceeds) in a follow-on public offering and 1.4 million shares ($43.6 million of gross proceeds) through our ATM Program.
We intend to make available on our website any future amendments or waivers to our Code of Ethics within four business days after any such amendments or waivers become effective.
We intend to make available on our website any future amendments or waivers to our Code of Ethics as required by rules of the SEC or NYSE.
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.
For additional information regarding our property acquisitions and dispositions, see Note 12 and Note 13 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on 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.
As a result of this investment activity, we added eight 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 (TX), Charlotte (NC), Houston (TX), and Richmond (VA).
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, 2024, we also had one property under redevelopment and three properties were vacant. Human Capital Resources As of December 31, 2024, we had 29 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.
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.
We believe that the redeveloped properties can be leased or sold at higher values than their prior use. Since the inception of our redevelopment program in 2015, we have completed 32 redevelopment and revenue-enhancing capital expenditure projects.
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.
Portfolio Activities During the year ended December 31, 2024, we invested $209.0 million in convenience and automotive retail properties, including the acquisition of 31 express tunnel car washes, 17 convenience stores, 19 automotive service centers, and four drive-thru quick service restaurants.
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.
During the year ended December 31, 2024, we also sold 31 properties that generated gross proceeds of $13.1 million and reduced our exposure to certain properties, tenants, and/or geographies that no longer met our long-term investment criteria, and completed the redevelopment of a legacy gasoline and repair station into a new fast casual restaurant.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 8 and Note 9 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. Our Properties As of December 31, 2024, our portfolio included 1,118 properties, of which we owned 1,085 properties and leased 33 properties from third-party landlords.
Removed
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).
Added
We also closed the private placement of $125.0 million of new senior unsecured notes, including (i) $50.0 million of 5.52% senior notes due September 2029 and (ii) $75.0 million of 5.70% senior notes due February 2032.
Removed
The properties we acquired included 26 express tunnel car washes, 13 automotive services centers, 12 convenience stores, and three drive-thru quick service restaurants.
Added
The new senior unsecured notes will be issued on February 25, 2025 and proceeds will be used to repay $50.0 million of senior unsecured notes that mature on February 25, 2025 and for general corporate purposes, including to fund investment activity. 5 For additional information regarding our equity issuance and notes private placement, see “Item 7.
Removed
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.
Added
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.
Removed
Financial Statements and Supplementary Data” in this Form 10-K.
Added
In addition, we made corporate donations to the Lawyers Alliance, a leading provider of legal services for charities and nonprofit organizations working to improve life in New York City, and the Springpoint Foundation, a nonprofit organization dedicated to enriching the lives of seniors by providing services and opportunities to stay connected, healthy and vibrant, and to age with deserved dignity.
Removed
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.
Added
Legal Proceedings” in this Annual Report on Form 10-K.
Removed
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.
Added
A comparison of actual energy consumption data at our corporate headquarters indicates we were able to decrease our electric and natural gas consumption on a year-over-year basis.
Removed
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.
Added
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.
Removed
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+11 added−16 removed152 unchanged
Biggest changeThe 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.
Biggest changeMoreover, general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties and the financial impact of any such outbreak could negatively impact our future compliance with the financial covenants of our various 14 borrowings, resulting in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our ability to make additional borrowings under our Credit Facility and pay dividends.
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.
Our most significant counterparties include, but are not limited to, the members of the bank syndicate related 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.
Finally, the “unsolicited takeovers” provisions of the MGCL permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain provisions that may have the effect of inhibiting a third-party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of our Company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then current market price or that stockholders may otherwise believe is in their best interests; however, on February 23, 2022, our Board of Directors adopted a resolution prohibiting us from electing to be subject to the classified board provisions of Section 3-803 of the MGCL, unless such election is first approved by the stockholders of the Corporation by the affirmative vote of at least a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors.
Finally, the “unsolicited takeovers” provisions of the MGCL permit our Board of Directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain provisions that may have the effect of inhibiting a third-party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of our Company under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then current market price or that stockholders may otherwise believe is in their best interests; however, on February 23, 2022, our Board of Directors adopted a resolution prohibiting us from electing to be subject to the classified board provisions of Section 3-803 of the MGCL, unless such election is first approved by the stockholders of the Corporation by the affirmative vote of at least a majority of the votes cast on the matter by stockholders entitled to vote generally in the election of directors. 22
Occupancy rates and rents at any particular redeveloped property may fail to meet our original expectations for reasons beyond our control, including changes in market and economic conditions and the development by competitors of competing properties. We could experience increased and unexpected costs or significant delays or abandonment of some or all of these redevelopment opportunities.
Occupancy rates and rents at any particular redeveloped property may fail to meet our original expectations for reasons beyond our control, including changes in market 18 and economic conditions and the development by competitors of competing properties. We could experience increased and unexpected costs or significant delays or abandonment of some or all of these redevelopment opportunities.
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.
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, 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.
Additionally, certain of our directors beneficially own more than 5% of 16 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.
As a result of the factors described above, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, stock price and ability to pay dividends. Future issuances of equity securities could dilute the interest of holders of our equity securities.
As a result of the factors described above, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, stock price and ability to pay dividends. 20 Future issuances of equity securities could dilute the interest of holders of our equity securities.
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.
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.
A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of our tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline was to decline significantly.
A large, rapid increase in wholesale petroleum prices would adversely affect the profitability and cash flows of our tenants if the increased cost of petroleum products could not be passed on to their customers or if automobile consumption of gasoline 11 was to decline significantly.
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.
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.
Substantially all of these 10-year (or, in certain cases, shorter) “look back” periods have now expired, therefore responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of these leases, is contractually allocated to our tenant.
All of these 10-year (or, in certain cases, shorter) “look back” periods have now expired, therefore responsibility for all newly discovered contamination, even if it relates to periods prior to commencement of these leases, is contractually allocated to our tenant.
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.
Our interest rate risk may materially change in the future if we increase our borrowings under the 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.
In the event that these relief provisions were not available, we could lose our REIT status under the Code. There is a risk of changes in the tax law applicable to real estate investment trusts.
In the event that these relief provisions were not available, we could lose our REIT status under the Code. 19 There is a risk of changes in the tax law applicable to real estate investment trusts.
We expect that settlement of any forward sale agreement will generally occur no later than the date specified in the particular forward sale agreement, which will be no earlier than three months or later than two years following the trade date of that forward sale agreement.
We expect that settlement of any forward sales agreement will generally occur no later than the date specified in the particular forward sales agreement, which will be no earlier than three months or later than two years following the trade date of that forward sale agreement.
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 that particular forward sale agreement is below the relevant forward sale price, in the case of cash settlement, we would be paid the difference in cash by the relevant Forward Purchaser under that particular forward sale agreement or, in the case of net share settlement, we would receive from 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 that particular forward sales agreement is below the relevant forward sales price, in the case of cash settlement, we would be paid the difference in cash by the relevant forward purchaser under that particular forward sales agreement or, in the case of net share settlement, we would receive from such forward purchaser a number of shares of our common stock having a value equal to the difference.
Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Code, because it is not entirely clear whether a forward sale agreement qualifies as a “securities futures contract,” the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain.
Although we believe that any amount received by us in exchange for our stock would qualify for the exemption under Section 1032 of the Code, because it is not entirely clear whether a forward sales agreement qualifies as a “securities futures contract,” the U.S. federal income tax treatment of any cash settlement payment we receive is uncertain.
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.
In addition to the risk of disruption in rent receipts, we are subject to the risk of incurring real estate taxes, maintenance, environmental and other expenses at vacant properties.
The forward sale price that we expect to receive upon physical settlement of a particular forward sale agreement will be subject to adjustment on a daily basis based on a floating interest rate factor equal to the overnight bank rate less a spread and will be decreased based on amounts related to expected dividends on shares of our common stock during the term of the applicable forward sale agreement.
The forward sales price that we expect to receive upon physical settlement of a particular forward sales agreement will be subject to adjustment on a daily basis based on a floating interest rate factor equal to the overnight bank rate less a spread and will be decreased based on amounts related to expected dividends on shares of our common stock during the term of the applicable forward sales agreement.
If we or a regulatory authority with jurisdiction over us institutes, or we consent to, a proceeding seeking a judgment in bankruptcy or insolvency or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or we or a regulatory authority with jurisdiction over us presents a petition for our winding-up or liquidation, or we consent to such a petition, any forward sale agreement that is then in effect will automatically terminate.
If we or a regulatory authority with jurisdiction over us institutes, or we consent to, a proceeding seeking a judgment in bankruptcy or insolvency or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or we or a regulatory authority with jurisdiction over us presents a petition for our winding-up or liquidation, or we consent to such a petition, any forward sales agreement that is then in effect will automatically terminate.
However, any forward sale agreement may be settled earlier than that specified date in whole or in part at our option. Subject to certain conditions, we have the right to elect physical, cash or net share settlement under each forward sale agreement. We intend to physically settle each forward sale agreement by delivery of shares of our common stock.
However, any forward sales agreement may be settled earlier than that specified date in whole or in part at our option. Subject to certain conditions, we have the right to elect physical, cash or net share settlement under each forward sales agreement. We intend to physically settle each forward sales agreement by delivery of shares of our common stock.
If any such forward sale agreement so terminates under these circumstances, we would not be obligated to deliver to the relevant Forward Purchaser any shares of common stock not previously delivered, and the relevant Forward Purchaser would be discharged from its obligation to pay the applicable forward sale price per share in respect of any shares of common stock not previously settled under the applicable forward sale agreement.
If any such forward sales agreement so terminates under these circumstances, we would not be obligated to deliver to the relevant forward purchaser any shares of common stock not previously delivered, and the relevant forward purchaser would be discharged from its obligation to pay the applicable forward sales price per share in respect of any shares of common stock not previously settled under the applicable forward sales agreement.
Therefore, to the extent that there are any shares of common stock with respect to which any forward sale agreement has not been settled at the time of the commencement of any such bankruptcy or insolvency proceedings, we would not receive the relevant forward sale price per share in respect of those shares of common stock.
Therefore, to the extent that there are any shares of common stock with respect to which any forward sales agreement has not been settled at the time of the commencement of any such bankruptcy or insolvency proceedings, we would not receive the relevant forward sales price per share in respect of those shares of common stock.
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).
If we enter into one or more forward sales agreements in connection with follow-on public equity offerings or our ATM Program, the relevant forward purchaser will have the right to accelerate its forward sales agreement (with respect to all or any portion of the transaction under such forward sales 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 sales 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 sales 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 sales agreement; or • certain other events of default or termination events occur, including, among others, any material misrepresentation made in connection with such forward sales agreement (each as more fully described in each forward sales agreement).
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.
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 sales agreement, irrespective of our capital needs, which would result in dilution to our earnings per share and return on equity.
A Forward Purchaser’s decision to exercise its right to accelerate the physical settlement of any forward sale agreement and require us to physically settle on a date specified by such Forward Purchaser will be made irrespective of our interests, including our need for capital.
A forward purchaser’s decision to exercise its right to accelerate the physical settlement of any forward sales agreement and require us to physically settle on a date specified by such forward purchaser will be made irrespective of our interests, including our need for capital.
Delivery of shares of our common stock upon physical settlement (or, if we elect net share settlement of a particular forward sale agreement, upon such settlement to the extent we are obligated to deliver shares of our common stock) will result in dilution to our earnings per share and return on equity.
Delivery of shares of our common stock upon physical settlement (or, if we elect net share settlement of a particular forward sales agreement, upon such settlement to the extent we are obligated to deliver shares of our common stock) will result in dilution to our earnings per share and return on equity.
If our accounting policies, methods, judgments, assumptions, estimates and allocations prove to be incorrect, or if circumstances change, our business, financial condition, revenues, operating expense, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.
If our accounting policies, methods, judgments, assumptions, estimates and allocations prove to be incorrect, or if circumstances change, our business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price may be materially adversely affected.
We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information of tenants and lease data.
We rely on information technology networks and systems, to process, transmit and store electronic information and to manage or support a variety of our business processes, including financial transactions and maintenance of records, which may include personal identifying information of tenants and lease data.
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 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 sales agreement is above the relevant forward sales price, in the case of cash settlement, we would pay the relevant forward purchaser under such forward sales 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.
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.
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.
In the event that we recognize a significant gain from the cash settlement of a forward sale agreement, we might not be able to satisfy the gross income requirements applicable to REITs under the Code.
In the event that we recognize a significant gain from the cash settlement of a forward sales agreement, we might not be able to satisfy the gross income requirements applicable to REITs under the Code.
We may change our dividend policy and the dividends we pay may be subject to significant volatility.
We may change our dividend policy and the dividends we pay may be subject to significant change.
If the overnight bank rate is less than the spread for a particular forward sale agreement on any day, the interest factor will result in a daily reduction of the applicable forward sale price.
If the overnight bank rate is less than the spread for a particular forward sales agreement on any day, the interest factor will result in a daily reduction of the applicable forward sales price.
No assurance can be given that our financial performance in the future will permit our payment of any dividends or that the amount of dividends we pay, if any, will not fluctuate significantly.
No assurance can be given that our financial performance in the future will permit our payment of any dividends or that the amount of dividends we pay, if any, will not change significantly.
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.
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 borrowings under our Credit Facility.
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.
In the future, we, directly or through our third-party service providers, may develop or use information technology systems or software that 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.
In addition to general risks applicable to us, our risks include, among others: our liability as a lessee for long-term lease obligations regardless of our revenues; deterioration in national, regional and local economic and real estate market conditions; potential changes in supply of, or demand for, rental properties similar to ours; competition for tenants and declining rental rates; difficulty in selling or re-leasing properties on favorable terms or at all; impairments in our ability to collect rent or other payments due to us when they are due; increases in interest rates and adverse changes in the availability, cost and terms of financing; uninsured property liability; the impact of present or future environmental legislation and compliance with environmental laws; adverse changes in zoning laws and other regulations; acts of terrorism and war; acts of God; the unforeseen impacts of climate change, compliance with any future laws or regulations designed to prevent or mitigate the impacts of climate change, and any material costs related thereto; the potential risk of functional obsolescence of properties over time the need to periodically renovate and repair our properties; and physical or weather-related damage to our properties.
In addition to general risks applicable to us, our risks include, among others: our liability as a lessee for long-term lease obligations regardless of our revenues; deterioration in national, regional and local economic and real estate market conditions; potential changes in supply of, or demand for, rental properties similar to ours; competition for tenants and declining rental rates; difficulty in selling or re-leasing properties on favorable terms or at all; impairments in our ability to collect rent or other payments due to us when they are due; high interest rates and adverse changes in the availability, cost and terms of financing; uninsured property liability; the impact of present or future environmental legislation and compliance with environmental laws; adverse changes in zoning laws and other regulations; acts of terrorism and war; natural disasters or other catastrophes; public health crises, such as pandemics and epidemics; the unforeseen impacts of climate change, compliance with any future laws or regulations designed to prevent or mitigate the impacts of climate change, and any material costs related thereto; the potential risk of functional obsolescence of properties over time the need to periodically renovate and repair our properties; and physical or weather-related damage to our properties.
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.
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. • 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. • Global political and economic uncertainties, including public health crises and geopolitical conflicts, and their related impact on macroeconomic conditions may adversely impact the market on which our common stock trades, our tenants’ businesses and the markets in which we operate, our operations and our results of operations. • 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. 9 • Our reliance on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
In the event of the loss of key management personnel or directors, or upon unexpected death, disability or retirement, we may not be able to find replacements with comparable skill, ability and industry expertise, which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
In the event of the loss of key management personnel or directors, or upon unexpected death, disability or retirement, we may not be able to attract, timely hire and retain key personnel with comparable skill, ability and industry expertise, which could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
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.
Our principal sources of liquidity include cash flows from operations, funds available under our Credit Facility, proceeds from the offering of new debt or equity securities, including the sale of our common stock under our ATM Program, and available cash and cash equivalents.
We are in a competitive business. The real estate industry is highly competitive. Where we own properties, we compete for tenants with a large number of real estate property owners and other companies that sublet properties. Our principal means of competition are rents we are able to charge in relation to the income producing potential of the location.
Where we own properties, we compete for tenants with a large number of real estate property owners and other companies that sublet properties. Our principal means of competition are rents we are able to charge in relation to the income producing potential of the location.
During 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.
During the years ended December 31, 2024 and 2023, we incurred $4.0 15 million and $5.2 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.
However, we may elect to cash settle or net share settle such forward sale agreement.
However, we may elect to cash settle or net share settle such forward sales agreement.
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.
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 change. • Forward sales agreements related to follow-on public equity offerings or 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 sales agreement that is in effect related to follow-on public equity offerings or 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.
The judgment regarding the existence of impairment indicators is based on Generally Accepted Accounting Principles (“GAAP”), and includes a variety of factors such as market conditions, the accumulation of asset retirement costs due to changes in estimates associated with our estimated environmental liabilities, the status of significant leases, the financial condition of major tenants, and other assumptions and factors that could affect the cash flow from or fair value of our properties.
Generally Accepted Accounting Principles (“GAAP”), and includes a variety of factors such as market conditions, the accumulation of asset retirement costs due to changes in estimates associated with our estimated environmental liabilities, the status of significant leases, the financial condition of major tenants, and other assumptions and factors that could affect the cash flow from or fair value of our properties.
The consequences of armed conflicts are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy.
The consequences of such conflicts are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. More generally, any of these events could cause consumer confidence and spending to decrease, result in an economic recession or increase volatility of the financial markets and economy of the United States and worldwide.
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).
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, 2024, 28.5% of our annual base rent is derived from four states (New York, Massachusetts, Maryland, and Connecticut).
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 Status as a REIT • The failure to qualify as a REIT under the federal income tax laws would have adverse consequences to our stockholders. • Uncertain tax matters may have a significant impact on the results of operations for any single fiscal year or interim period or may cause us to fail to qualify as a REIT. • The uncertainty regarding the U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sales agreement related to follow-on public equity offerings or 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.
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.
Additionally, geopolitical conflicts, such as terrorist attacks or other acts of violence or war (including the conflicts in Russia and Ukraine and the Middle East) and the related adverse impact on macroeconomic conditions as a result of such conflicts could negatively affect our business or the businesses of our tenants.
The failure of a major tenant or their default in their rental and other obligations to us is likely to have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. Inflation may adversely affect our financial condition and results of operations.
The failure of a major tenant or their default in their rental and other obligations to us is likely to have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. Our assets may be subject to impairment charges.
These attacks may directly or indirectly impact the physical facilities, networks or the business or the financial condition of us or those of our tenants, vendors or financial institutions with which we have a relationship or conduct business.
Such geopolitical conflicts may also directly or indirectly impact the physical facilities, networks or the business or the financial condition of us or those of our tenants, vendors or financial institutions with which we have a relationship or conduct business.
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.
As of December 31, 2024, we leased: • 148 properties in four separate unitary leases to subsidiaries of ARKO Corp. which represented, in the aggregate, 13% of our total revenues for the year ended December 31, 2024. • 128 properties in three separate unitary leases and two stand-alone leases to subsidiaries of Global Partners LP which represented, in the aggregate, 12% of our total revenues for the year ended December 31, 2024. • 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 9% of our total revenues for the year ended December 31, 2024.
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.
AI development or deployment practices by us or third-party providers could increase vulnerability to cybersecurity risks and require additional resources to implement heightened 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.
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.
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.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock. For additional information regarding internal controls over financial reporting, see “Report of Independent Registered Public Accounting Firm” in “Item 8.
However, as the costs and availability of insurance change, we may decide not to be covered against certain losses (such as certain environmental liabilities, earthquakes, hurricanes, floods and civil disorder) where, in the judgment of management, the insurance is not warranted due to cost or availability of coverage or the remoteness of perceived risk.
However, as the costs and availability of insurance change, we may decide not to be covered against certain losses, including losses resulting from such natural and man-made disasters or environmental liabilities where, in the judgment of management, the insurance is not warranted due to cost or availability of coverage or the remoteness of perceived risk.
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.
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 Annual Report on Form 10-K.
If we elect cash settlement or net share settlement with respect to all or a portion of the shares of common stock underlying a particular forward sale agreement, we expect the applicable Forward Purchaser (or an affiliate thereof) to purchase a number of shares of our common stock in secondary market transactions over an unwind period to: • return shares of our common stock to securities lenders in order to unwind such Forward Purchaser’s hedge (after taking into consideration any shares of our common stock to be delivered by us to such Forward Purchaser, in the case of net share settlement); and • if applicable, in the case of net share settlement, deliver shares of our common stock to us to the extent required in settlement of such forward sale agreement.
If we elect cash settlement or net share settlement with respect to all or a portion of the shares of common stock underlying a particular forward sales agreement, we expect the applicable forward purchaser (or an affiliate thereof) to purchase a number of shares of our common stock in secondary market transactions over an unwind period to: • return shares of our common stock to securities lenders in order to unwind such forward purchaser’s hedge (after taking into consideration any shares of our common stock to be delivered by us to such forward purchaser, in the case of net share settlement); and • if applicable, in the case of net share settlement, deliver shares of our common stock to us to the extent required in settlement of such forward sales agreement. 21 The purchase of shares of our common stock in connection with a forward purchaser or its affiliate unwinding such forward purchaser’s hedge positions could cause the price of shares of our common stock to increase over such time (or prevent a decrease over such time), thereby increasing the amount of cash we would owe to such forward purchaser (or decreasing the amount of cash that such forward purchaser would owe to us) upon a cash settlement of the relevant forward sales agreement or increasing the number of shares of our common stock we would deliver to such forward purchaser (or decreasing the number of shares of our common stock that such forward purchaser would deliver to us) upon net share settlement of the relevant forward sales agreement.
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.
In case of our bankruptcy or insolvency, any forward sales agreement related to follow-on public equity offerings or 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.
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.
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.
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.
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.
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.
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 Annual Report on Form 10-K. Business disruptions could have serious adverse consequences on our future revenue and financial condition and result in losses that may not be covered by insurance.
This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price.
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. Inflation may adversely affect our financial condition and results of operations.
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.
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.
For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy.
The ultimate resolution of these matters could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. 12 For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which in certain cases is partially borne by us) and remediation of any environmental contamination that arises during the term of their tenancy.
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.
This could have a material adverse effect on our business, financial condition, results of operation, liquidity, ability to pay dividends or stock price. 17 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 ATM Program.
Our tenants at properties previously leased to Marketing are in all cases contractually responsible for the cost of any remediation of contamination that results from their use and occupancy of our properties.
Our tenants at properties previously leased to Marketing are in all cases contractually responsible for the cost of any remediation of contamination that results from their use and occupancy of our 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.
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.
Borrowings under our Credit Facility bear interest at a variable rate and, accordingly, an increase in interest rates will increase the amount of interest we must pay under our Credit Facility. During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings.
The loss of certain members of our management team or Board of Directors could adversely affect our business or the market price of our common stock.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. The loss of certain members of our management team or Board of Directors could adversely affect our business or the market price of our common stock.
Each of the factors listed above could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. In addition, real estate investments are relatively illiquid, which means that our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited.
In addition, real estate investments are relatively illiquid, which means that our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited. We are in a competitive business. The real estate industry is highly competitive.
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.
The U.S. federal income tax treatment of the cash that we might receive from cash settlement of a forward sales agreement related to follow-on public equity offerings or our ATM Program is unclear and could jeopardize our ability to meet the REIT qualification requirements.
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.
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 Annual Report on Form 10-K.
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.
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.
The ultimate resolution of these matters could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
Such risks 10 may result, under certain market conditions, in variable revenue and reduced earnings and could have an adverse effect on our financial condition. Each of the factors listed above could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.
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.
We have previously entered into forward sales agreements and may in the future enter into additional forward sales agreements related to follow-on public equity offerings or our ATM Program, that subject us to certain risks.
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).
Global political and economic uncertainties, including public health crises, geopolitical conflicts, and their related impact on macroeconomic conditions may adversely impact the market on which our common stock trades, our tenants’ businesses and the markets in which we operate, our operations and our results of operations.
Furthermore, there are certain types of losses, such as losses resulting from wars, terrorism or certain acts of God, that generally are not insured because they are either uninsurable or not economically insurable. There is no assurance that the existing insurance coverages are or will be sufficient to cover actual losses incurred.
Furthermore, there are certain types of losses that are generally not insured because they are either uninsurable or not economically insurable.
We do not have any employment agreements with any of our executives.
As of December 31, 2024, we only employ 29 employees given our status as a REIT and have a cost-effective management structure. We do not have any employment agreements with any of our executives.
Removed
Risks Related to Our Status as a REIT • The failure to qualify as a REIT under the federal income tax laws would have adverse consequences to our stockholders.
Added
Our and our tenants’ operations could be subject to the impact of natural or man-made disasters or other business disruptions, which include, but are not limited to, earthquakes, hurricanes, typhoons, floods, water shortages, wildfires and fires, blizzards and other extreme weather conditions as well as power outages, telecommunications, transportation or infrastructure failure, cybersecurity incidents or physical security breaches related to such catastrophes, public health crises, such as pandemics and epidemics, and geopolitical conflicts, including acts of terrorism, war and civil disorder.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAdditionally, our failure to comply with applicable privacy, data security or protection or cyber security laws could adversely affect our business.” Management and Board Oversight Our Board of Directors actively considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risk to the Audit Committee.
Biggest changeManagement and Board Oversight Our Board of Directors actively considers cybersecurity risk as part of its risk oversight function and has delegated oversight of cybersecurity and other information technology risk to the Audit Committee. The Audit Committee is instrumental in overseeing the implementation of our cybersecurity risk management program by management.
The third party engaged by us to oversee and host its network was engaged, in part, because of its experience with information security and data protection and products designed to manage against information and data security breaches.
The third party engaged by us to oversee and host our network was engaged, in part, because of its experience with information security and data protection and products designed to manage against information and data security breaches.
In 2022, we engaged an outside consultant to conduct a comprehensive cybersecurity assessment, the methodology for which was based on information security frameworks and guidelines such as the National Institute of Standards and Technology (NIST), Center for Information Security (CIS), and ISO27001.
We previously engaged an outside consultant to conduct a comprehensive cybersecurity assessment, the methodology for which was based on information security frameworks and guidelines such as the National Institute of Standards and Technology (NIST), Center for Information Security (CIS), and ISO27001.
We utilize a commercially available third-party hosted cloud network environment with commercially available systems, software, tools and monitoring to provide security to protect its information and data and alert it to potential information security breaches.
We utilize a commercially available third-party hosted cloud network environment with commercially available systems, software, tools and monitoring to provide security to protect our information and data and alert us to potential information security breaches.
Item 1C. Cyber security Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Item 1C. Cyber security Risk Management and Strategy We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information. Our cybersecurity risk management program includes the implementation of a cybersecurity incident response plan.
Members of the Board of Directors are kept abreast of cybersecurity developments through presentations by our Chief Financial Officer or external experts as part of their ongoing education on issues impacting public companies.
The full Board of Directors also receives briefings from management on our cybersecurity risk management program. Members of the Board of Directors are kept abreast of cybersecurity developments through presentations by our Chief Financial Officer or external experts as part of their ongoing education on issues impacting public companies.
This does not imply that we meet or are in compliance with any particular technical standards, specifications, or requirements, only that we use the frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We design and assess our program based on industry standards to align closely with information security frameworks and guidelines. This does not imply that we meet or are in compliance with any particular technical standards, specifications, or requirements, only that we use the frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents are supervised by our management team. These efforts include briefings from internal security personnel, leveraging threat intelligence and information from governmental, public, and private sources, engagement with external consultants, and utilizing alerts and reports generated by our security tools within the IT environment.
These efforts include briefings from internal security personnel, leveraging threat intelligence and information from governmental, public, and private sources, engagement with external consultants, and utilizing alerts and reports generated by our security tools within the IT environment.
Our management team, including our Chief Financial Officer, and members of the Audit Committee play a pivotal role in assessing and managing material risks stemming from cybersecurity threats. The management team is primarily responsible for the oversight of our overall cybersecurity risk management program, and coordinates with our external cybersecurity consultants.
Our management team, including our Chief Financial Officer, and members of the Audit Committee play a pivotal role in assessing and managing material risks stemming from cybersecurity threats.
The Audit Committee is instrumental in overseeing the implementation of our cybersecurity risk management program by management. The Audit Committee receives detailed quarterly reports from management about our cybersecurity risks, and management provides timely updates to the Audit Committee about any significant cybersecurity incidents, as well as those with lesser impact potential if deemed appropriate to do so.
The Audit Committee receives detailed quarterly reports from management about our cybersecurity risks, and management provides timely updates to the Audit Committee about any significant cybersecurity incidents, as well as those with lesser impact potential if deemed appropriate to do so. The Audit Committee informs the full Board of Directors about its activities, including those related to cybersecurity.
Management reviewed the results of the assessment with the Audit Committee and, throughout 2023, engaged with consultants, auditors, and other third parties to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means. To date we had no cybersecurity incidents. For additional information, see “Item 1A.
Management reviewed the results of the assessment with the Audit Committee and worked with consultants, auditors, and other third parties to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means.
Risk Factors - We rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
Risk Factors—Risks Related to Our Business and Operations—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” in this Annual Report on Form 10-K.
Removed
Our cybersecurity risk management program includes the implementation of a cybersecurity incident response plan. 23 We design and assess our program based on industry standards to align closely with information security frameworks and guidelines.
Added
This plan was developed with support from our Audit Committee and in consultation with key stakeholders across our organization to ensure it accurately reflects their respective roles and responsibilities. The plan has been selectively disseminated throughout our organization to ensure appropriate coverage and to foster a cohesive and informed response to cybersecurity incidents.
Removed
The Audit Committee informs the full Board of Directors about its activities, including those related to cybersecurity. The full Board of Directors also receives briefings from management on our cybersecurity risk management program.
Added
While we have not experienced any cybersecurity incidents to date, the scope and impact of any future incidents cannot be predicted and there can be no assurance that our cybersecurity risk management program will be effective in preventing material cybersecurity incidents in the future. For additional information, see “Item 1A.
Added
The management team is primarily responsible for the oversight of our overall cybersecurity risk management program, and coordinates with our external cybersecurity consultants. 23 Efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents are supervised by our management team.

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 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.
Biggest changeOwned by Getty Realty Leased by Getty Realty Total Properties by State Percent of Total Properties New York 161 20 181 18.5 % Massachusetts 99 4 103 9.2 Texas 100 — 100 8.9 Connecticut 61 4 65 5.8 Virginia 55 1 56 5.0 South Carolina 55 — 55 4.9 North Carolina 50 — 50 4.5 New Hampshire 44 — 44 3.9 New Jersey 41 2 43 3.8 Maryland 40 2 42 3.8 Michigan 41 — 41 3.6 California 35 — 35 3.1 Washington State 30 — 30 2.7 Arizona 27 — 27 2.4 Ohio 25 — 25 2.2 Colorado 23 — 23 2.1 Pennsylvania 22 — 22 2.0 Nevada 19 — 19 1.7 Florida 18 — 18 1.6 Georgia 13 — 13 1.2 Oregon 13 — 13 1.2 Arkansas 12 — 12 1.1 Kentucky 12 — 12 1.1 Missouri 11 — 11 1.0 Hawaii 10 — 10 0.9 Kansas 9 — 9 0.8 Maine 7 — 7 0.6 Louisiana 6 — 6 0.5 Minnesota 6 — 6 0.5 New Mexico 5 — 5 0.4 Alabama 4 — 4 0.4 North Dakota 4 — 4 0.4 Oklahoma 4 — 4 0.4 Tennessee 4 — 4 0.4 Illinois 3 — 3 0.3 Mississippi 3 — 3 0.3 Vermont 3 — 3 0.3 Indiana 2 — 2 0.2 Rhode Island 2 — 2 0.2 Washington, D.C. 2 — 2 0.2 West Virginia 2 — 2 0.2 South Dakota 1 — 1 0.1 Wisconsin 1 — 1 0.1 Total 1,085 33 1,118 100.0 % 25 The properties that we lease from third parties have a remaining lease term, including renewal and extension option terms, averaging approximately 7.9 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, 2023.
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, 2024.
(b) Represents the monthly base rent due from tenants under existing leases as of December 31, 2023, multiplied by 12.
(b) Represents the monthly base rent due from tenants under existing leases as of December 31, 2024, 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 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.
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 2025 2 6.1 % 0.2 % 2026 4 12.1 0.4 2027 4 12.1 0.4 2028 1 3.0 0.0 2029 2 6.1 0.2 Subtotal 13 39.4 1.2 Thereafter 20 60.6 1.8 Total 33 100.0 % 3.0 % For the year ended December 31, 2024, revenues from rental properties, which includes base rental income, additional rental income, if any, and certain GAAP revenue recognition adjustments, were $198.7 million, an average of approximately $178 thousand per property given the 1,115 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.
For the year ended December 31, 2023, revenues from rental properties were $180.5 million, an average of $169 thousand per property given the 1,068 average rental properties held during the year.
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.
Rental property lease expirations and annualized base rent (“ABR”) as of December 31, 2024 are as follows (dollars in thousands): Number of Properties (a) ABR (b) Percentage of Total ABR 2025 9 $ 1,391 0.7 % 2026 22 2,986 1.5 2027 156 12,280 6.2 2028 49 8,674 4.4 2029 78 12,809 6.5 2030 48 5,663 2.9 2031 65 10,549 5.3 2032 138 18,207 9.2 2033 50 8,119 4.1 2034 90 14,593 7.4 Thereafter 409 102,569 51.8 Subtotal 1,114 $ 197,840 100.0 % Redevelopment 1 — — Vacant 3 — — Total 1,118 $ 197,840 100.0 % (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 allocator issued a final Allocation Recommendation Report in December 2020, which was based upon an allocation methodology approved by EPA that contains associated allocation shares for each of the parties invited to participate in the allocation, including Occidental - who the allocator concluded was responsible for more than 99% of the costs to implement the OU2 remedy.
Biggest changeOn 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 The allocator issued a final Allocation Recommendation Report in December 2020, which was based upon an allocation methodology approved by EPA that contains associated allocation shares for each of the parties invited to participate in the allocation, including Occidental - who the allocator concluded was responsible for more than 99% of the costs to implement 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 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”.
In May 2007, over 70 GNL recipients, including us, entered into an Administrative 27 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 the EPA has designated Operable Unit 4 or “OU4”.
In August 2017, the EPA appointed an independent third-party allocation expert to conduct a confidential allocation proceeding that would assign non-binding shares of responsibility to PRPs identified by EPA for cash out settlements. Most of the PRPs identified by EPA, including the Company, participated in the allocation process.
In August 2017, EPA appointed an independent third-party allocation expert to conduct a confidential allocation proceeding that would assign non-binding shares of responsibility to PRPs identified by EPA for cash out settlements. Most of the PRPs identified by EPA, including the Company, participated in the allocation process.
Occidental did not participate in the allocation proceedings, but filed a complaint on June 30, 2018, listing over 120 defendants, including us, in the United States District Court for the District of New Jersey seeking cost recovery and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act for response costs incurred and to be incurred relating to the LPRSA, including the investigation, design, and anticipated implementation of the OU2 remedy (the “Occidental Lawsuit”).
Occidental did not participate in the allocation proceedings, but on June 30, 2018, filed a complaint in the United States District Court for the District of New Jersey listing over 120 defendants, including us, seeking cost recovery and contribution under the Comprehensive Environmental Response, Compensation, and Liability Act for response costs incurred and to be incurred relating to the LPRSA, including the investigation, design, and anticipated implementation of the OU2 remedy (the “Occidental Lawsuit”).
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.
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, Occidental filed a motion to intervene in the CD Action 28 and subsequently filed voluminous comments objecting to the entry of the proposed CD.
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.
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 a Modified Consent Decree (“Modified CD”) with the Court on the same day, January 17, 2024.
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.
It is possible that losses related to these legal proceedings could exceed the amounts accrued as of December 31, 2024, 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.
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.
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 polychlorinated biphenyls at an estimated cost of $441. 0 million.
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.
If the District Court’s Order is overturned on appeal, 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.
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.
We are vigorously defending all of the legal proceedings against us, including each of the legal proceedings listed below. As of December 31, 2024, we had $0.1 million accrued, and as of December 31, 2023, we had no amounts accrued for certain of these matters which we believe were appropriate based on information then currently available.
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.
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 was in line with legal reserves we had previously established.
On December 16, 2022, the United States filed an action in the New Jersey District Court against the Settling Defendants which included lodging of the proposed CD to resolve claims against the Settling Parties for costs associated with cleaning up the LPRSA. This action (the “CD Action”) is subject to public comment and court approval.
On December 16, 2022, the United States filed an action in the New Jersey District Court against the Settling Defendants which included lodging of the proposed CD to resolve claims against the Settling Parties for costs associated with cleaning up the LPRSA (the “CD Action”).
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.
If the Modified CD remains in its currently approved form after the appeals process is exhausted, 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.
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.
Nevertheless, if the District Court’s Order is overturned or is not ultimately approved 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 proceedings pertaining to the LPRSA remains uncertain and subject to contingencies which cannot be predicted and an outcome which is 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.
Multiple defendants in the case have settled with the plaintiff. 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.
On December 4, 2020, the CPG submitted a Final Draft Interim Remedy Feasibility Study (“IR/FS”) to the EPA which identified various targeted dredge and cap alternatives for the upper 9-miles of the LPRSA.
In October 2018, the EPA issued a letter directing the CPG to prepare a streamlined feasibility study for just the upper 9-miles of the LPRSA. On December 4, 2020, the CPG submitted a Final Draft Interim Remedy Feasibility Study (“IR/FS”) to the EPA which identified various targeted dredge and cap alternatives for the upper 9-miles of the LPRSA.
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 previously transferred funds to an escrow account based on our share of the settlement contemplated by the Modified CD, however it is possible that circumstances may change and losses related to the Lower Passaic River proceedings could exceed the amounts we have funded. For additional information see “Item 7.
Removed
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.
Added
The discovery phase of the litigation has concluded, and the parties are engaged in summary judgment motion practice before the United States District Court for the Southern District of New York, following which additional pretrial motion practice is anticipated. Once all pretrial motions are concluded, the case is expected to be remanded to the Eastern District of Pennsylvania for trial.
Removed
In October 2018, the EPA issued a letter directing the CPG to prepare a streamlined feasibility study for just the upper 9-miles of the LPRSA based on an iterative approach using adaptive management strategies.
Added
On December 18, 2024, the Court issued an Order and Opinion granting the United States’ Motion to Enter the Modified CD finding the settlement procedurally sound, substantively fair and reasonable, and in furtherance of CERCLA’s goals.
Removed
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
On January 9, 2025, Nokia of America Corporation, an intervening party, filed a Notice of Appeal of the Order to the United States Court of Appeals for the Third Circuit. It is anticipated that Occidental will also file an appeal. The timeline for resolving all appeals to the Third Circuit remains inherently uncertain.
Removed
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.
Added
Depending on the number of appeals and the time required for briefing and deliberation, a decision by the Court of Appeals for the Third Circuit may extend into late 2025 or beyond.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor a discussion of potential limitations on our ability to pay future dividends see “Item 1A. Risk Factors – We may change our dividend policy and the dividends we pay may be subject to significant volatility” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.
Biggest changeFor a discussion of potential limitations on our ability to pay future dividends see “Item 1A. Risk Factors—Risks Related to Ownership of Our Securities—We may change our dividend policy and the dividends we pay may be subject to significant change” and “Item 7.
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.
We have chosen these companies as our 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.
Source: 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.
Source: SNL Financial. 30 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 41,283 beneficial holders of our common stock as of February 1, 2024, of which approximately 802 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 49,482 beneficial holders of our common stock as of January 31, 2025, of which approximately 776 were holders of record.
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.
Stock Performance Graph Comparison of Five-Year Cumulative Total Return* 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 12/31/2024 Getty Realty Corp. $ 100.00 $ 88.78 $ 108.99 $ 121.71 $ 111.13 $ 122.07 Standard & Poor's 500 100.00 116.26 147.52 118.84 147.64 182.05 Peer Group 100.00 90.53 119.33 101.64 109.09 123.10 Assumes $100 invested at the close of the last day of trading on the New York Stock Exchange on December 31, 2019, in Getty Realty Corp. common stock, Standard & Poor’s 500 and Peer Group. * Cumulative total return assumes reinvestment of dividends.
Removed
Issuer Purchases of Equity Securities None. Sales of Unregistered Securities None.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in this Annual Report on Form 10-K. Issuer Purchases of Equity Securities None. Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeA reconciliation of net earnings to FFO and AFFO is as follows (in thousands, except per share amounts): Year ended December 31, 2024 2023 2022 Net earnings $ 71,064 $ 60,151 $ 90,043 Depreciation and amortization of real estate assets 54,984 45,296 39,902 Gains on dispositions of real estate (6,038 ) (4,625 ) (16,423 ) Impairments 3,966 5,243 3,545 Funds from operations (FFO) 123,976 106,065 117,067 Revenue recognition adjustments Deferred rental revenue (straight-line rent) (7,129 ) (4,033 ) (3,458 ) Amortization of above and below market leases, net (427 ) (1,057 ) (1,184 ) Amortization of investments in direct financing leases 5,580 6,004 5,392 Amortization of lease incentives 284 1,098 1,198 Total revenue recognition adjustments (1,692 ) 2,012 1,948 Environmental Adjustments Accretion expense 407 585 1,259 Changes in environmental estimates (933 ) (302 ) (23,837 ) Environmental litigation accruals 125 — 279 Insurance reimbursements (95 ) (138 ) (85 ) Legal settlements and judgments (41 ) — — Total environmental adjustments (537 ) 145 (22,384 ) Other Adjustments Stock-based compensation expense 5,934 5,582 4,775 Amortization of debt issuance costs 2,253 1,211 946 (Recovery) allowance for credit loss on notes and mortgages receivable and direct financing leases (177 ) (189 ) 50 Loss on extinguishment of debt — 43 — Retirement and severance costs 1,036 939 85 Total other adjustments 9,046 7,586 5,856 Adjusted funds from operations (AFFO) $ 130,793 $ 115,808 $ 102,487 Basic per share amounts: Net earnings $ 1.26 $ 1.16 $ 1.88 FFO (a) 2.22 2.07 2.45 AFFO (a) 2.35 2.26 2.14 Diluted per share amounts: Net earnings $ 1.25 $ 1.15 $ 1.88 FFO (a) 2.21 2.06 2.44 AFFO (a) 2.34 2.25 2.14 Weighted average common shares outstanding: Basic 54,305 50,020 46,730 Diluted 54,552 50,216 46,838 (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.
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.
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) and certain other freestanding retail properties, including drive-thru quick service restaurants and automotive parts retailers.
See “Environmental Matters” below for additional information. Environmental liabilities net of related recoveries are measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value.
See “Environmental Matters” below for additional information. Environmental liabilities net of related recoveries are measured based on their expected future net cash flows which have been adjusted for inflation and discounted to present value.
We provide for litigation accruals, including certain litigation related to environmental matters (see “Environmental Litigation” below for additional information), when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made.
We provide for litigation accruals, including certain litigation related to environmental matters (see “Environmental Matters — Environmental Litigation” below for additional information), when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made.
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.
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.
Borrowings under the Term Loan bear interest at a rate equal to the greater of (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.
In light of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges in excess of the amount accrued with any certainty; however, we believe that it is possible that the fair value of future actual net expenditures could be substantially higher than amounts currently recorded by us.
In light of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges in excess of the amount accrued with any certainty; however, we believe that it is possible that the fair value of future actual net expenditures 44 could be substantially higher than amounts currently recorded by us.
Adjustments to accrued liabilities for environmental remediation obligations will be reflected in our consolidated financial statements as they become probable and a reasonable estimate of fair value can be made. Environmental Litigation We are subject to various legal proceedings and claims which arise in the ordinary course of our business.
Adjustments to accrued liabilities for environmental remediation obligations will be reflected on our consolidated financial statements as they become probable and a reasonable estimate of fair value can be made. Environmental Litigation We are subject to various legal proceedings and claims which arise in the ordinary course of our business.
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.
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.
The investments in direct financing leases represents the investments in leased assets accounted for as direct financing leases. The investments in direct financing leases are increased for interest income earned and amortized over the life of the leases and reduced by the receipt of lease payments. Impairment of Long-Lived Assets Real estate assets represent “long-lived” assets for accounting purposes.
The investments in direct financing leases represents the investments in leased assets accounted for as direct financing leases. The investments in direct financing leases are increased for interest income earned and amortized over the life of the leases and reduced by the receipt of lease payments. 41 Impairment of Long-Lived Assets Real estate assets represent “long-lived” assets for accounting purposes.
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.
We anticipate meeting our longer-term capital needs through cash flow from operations, funds available under our 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 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.
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.
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.
Impairment charges for the years ended December 31, 2024 and 2023 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.
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.
The Second Restated Credit Agreement provides for an unsecured revolving credit facility (the “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 Credit Facility.
The accrued liability is the aggregate of our estimate of the fair value 43 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.
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.
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.
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, 2024 and 2023, 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.
In connection with the Term Loan, we entered into interest rate swaps for a notional amount of $150.0 million to fix SOFR at 4.73% until maturity. Including the impact of the swaps, the effective interest rate on the Term Loan is 6.13% based on our consolidated total indebtedness to total asset value ratio as of December 31, 2023.
In connection with the Term Loan, we entered into interest rate swaps for a notional amount of $150.0 million to fix SOFR at 4.73% until maturity. Including the impact of the swaps, the effective interest rate on the Term Loan is 6.13% based on our consolidated total indebtedness to total asset value ratio as of December 31, 2024.
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.
We concluded that the forward sales 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 our own stock price and operations, and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock.
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.
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on 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, 2023.
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 increase in rental income was primarily due to additional base rental income from properties acquired during the years ended December 31, 2024 and 2023, 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.
To date, we have concluded that our forward sale agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares.
To date, we have concluded that our forward sales agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares.
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.
The Credit Facility matures on 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 Credit Facility.
Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included in our consolidated financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.
Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included on our consolidated financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.
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 regarding our environmental obligations, see Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
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 regarding our environmental obligations, see Note 6 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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 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.
With respect to AFFO, we further exclude the impact of (i) deferred rental revenue (straight-line rent), the net amortization of above-market and below-market leases, adjustments recorded for the recognition of rental income from direct financing leases, and the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”), (ii) environmental accretion expenses, environmental litigation accruals, insurance reimbursements, legal settlements and judgments, and changes in environmental remediation estimates (collectively, “Environmental Adjustments”), (iii) stock-based compensation expense, (iv) amortization of debt issuance costs and (v) other items, which may include allowances for credit losses on notes and mortgages receivable and direct financing leases, losses on extinguishment of debt, retirement and severance costs, and other items that do not impact our recurring cash flow and which are not indicative of our core operating performance.
With respect to AFFO, we further exclude the impact of (i) deferred rental revenue 33 (straight-line rent), the net amortization of intangible market lease assets and liabilities, adjustments recorded for the recognition of rental income from direct financing leases, and the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”), (ii) environmental accretion expenses, environmental litigation accruals, insurance reimbursements, legal settlements and judgments, and changes in environmental remediation estimates (collectively, “Environmental Adjustments”), (iii) stock-based compensation expense, (iv) amortization of debt issuance costs and (v) other items, which may include allowances for credit losses on notes and mortgages receivable and direct financing leases, losses on extinguishment of debt, retirement and severance costs, and other items that do not impact our recurring cash flow and which are not indicative of our core operating performance.
Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, automotive parts retailer, or certain other freestanding retailers, including drive-thru quick service restaurants.
Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, or certain other freestanding retail uses, including drive thru quick service restaurants and automotive parts retailers.
Allocation of the Purchase Price of Properties Acquired Upon acquisition of real estate and leasehold interests, we estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases, in-place leases and tenant relationships) and assumed debt.
Allocation of the Purchase Price of Properties Acquired Upon acquisition of real estate and leasehold interests, we estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, , intangible market lease assets and liabilities, in-place leases and tenant relationships) and assumed debt.
Risk Factors – We incur significant operating costs and, from time to time, may have significant liability accruals as a result of environmental laws and regulations, which costs and accruals could significantly increase, and reduce our profitability or have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price” in this Form 10-K.
Risk Factors —Risks Related to Our Business and Operations—We incur significant operating costs and, from time to time, may have significant liability accruals as a result of environmental laws and regulations, which costs and accruals could significantly increase, and reduce our profitability or have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price” in this Annual Report on Form 10-K.
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.
In addition, during the years ended December 31, 2024, 2023 and 2022, we recorded credits to environmental expenses aggregating $0.9 million, $0.3 million and $23.8 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.
The other senior unsecured notes outstanding under our first amended and restated note purchase and guarantee agreement with AIG (the “First Amended and Restated AIG Agreement”), including (i) $50.0 million of 3.52% Series G Guaranteed Senior Notes due September 12, 2029 (the “Series G Notes”) and (ii) $50.0 million of 3.43% Series J Guaranteed Senior Notes due November 25, 2030 (the “Series J Notes”), remain outstanding under the Second Amended and Restated AIG Agreement.
The other senior unsecured notes outstanding as of December 31, 2024 under our first amended and restated note purchase and guarantee agreement with AIG (the “First Amended and Restated AIG Agreement”), including (i) $50.0 million of 3.52% Series G Guaranteed Senior Notes due September 12, 2029 (the “Series G Notes”) and (ii) $50.0 million of 3.43% Series J Guaranteed Senior Notes due November 25, 2030 (the “Series J Notes”), remain outstanding under the Second Amended and Restated AIG Agreement.
As a result, revenues from rental properties include revenue recognition adjustments comprised of (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of above-market and below-market leases, (iii) recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties, and (iv) the amortization of deferred lease incentives.
As a result, revenues from rental properties include revenue recognition adjustments comprised of (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of intangible market lease assets and liabilities, (iii) recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties, and (iv) the amortization of deferred lease incentives.
The other senior unsecured notes outstanding under our first amended and restated note purchase and guarantee agreement with MassMutual (the “First Amended and Restated MassMutual Agreement”), including (i) $25.0 million of 3.52% Series H Guaranteed Senior Notes due September 12, 2029 (the “Series H Notes”) and (ii) $25.0 million of 3.43% Series K Guaranteed Senior Notes due November 25, 2030 (the “Series K Notes”), remain outstanding under the Second Amended and Restated MassMutual Agreement.
The other senior unsecured notes outstanding as of December 31, 2024 under our first amended and restated note purchase and guarantee agreement with MassMutual (the “First Amended and Restated MassMutual Agreement”), including (i) $25.0 million of 3.52% Series H Guaranteed Senior Notes due September 12, 2029 (the “Series H Notes”) and (ii) $25.0 million of 3.43% Series K Guaranteed Senior Notes due November 25, 2030 (the “Series K Notes”), remain outstanding under the Second Amended and Restated MassMutual Agreement.
We also evaluated whether the forward sale agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments.
We also evaluated whether the forward sales agreements meet the derivatives and hedging guidance scope exception to be accounted for as equity instruments.
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.
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.4 million, $0.6 million and $1.3 million of net accretion expense was recorded for the years ended December 31, 2024, 2023 and 2022, respectively, which is included in environmental expenses.
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.
Our Properties Our 1,118 properties are located in 42 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.
Equity Offering In February 2023, we completed a follow-on public offering of 3,450,000 shares of common stock in connection with forward sales agreements. During the year ended December 31, 2023, we settled all 3,450,000 shares and realized net proceeds of $112.1 million.
In February 2023, we completed a follow-on public offering of 3.5 million shares of common stock in connection with forward sales agreements. During the year ended December 31, 2023, we settled all 3.5 million shares and realized net proceeds of $112.1 million.
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 recorded impairment charges aggregating $2.4 million and $3.6 million for the years ended December 31, 2024 and 2023, respectively, for capitalized asset retirement costs. For additional information regarding risks related to our potential environmental exposure, see “Item 1A.
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.
ATM Program In February 2023, we established and, in February 2024, we amended, 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 forward sales agreements.
Term Loan In October 2023, we entered into a term loan credit agreement (the "Term Loan Agreement") that provides for a senior unsecured term loan (the "Term Loan") in an aggregate principal amount of $150.0 million. The Term Loan matures October 17, 2025, subject to one twelve-month extension exercisable at our option.
Term Loan In October 2023, we entered into a term loan credit agreement (the “Term Loan Agreement”) that provides for a senior unsecured term loan (the “Term Loan”) in an aggregate principal amount of $150.0 million. The Term Loan matures on October 17, 2025, subject 37 to one twelve-month extension exercisable at our option.
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.
Gains on Disposition of Real Estate The gains on dispositions of real estate were primarily the result of the sale of 31 and nine properties during the years ended December 31, 2024 and 2023, respectively.
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
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 Annual Report on Form 10-K.
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.
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 $100.2 million, $87.0 million and $78.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.
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.
As of December 31, 2024 we had $0.1 million accrued, and as of December 31, 2023, we had no amounts accrued, for certain of these matters which we believe were appropriate based on information then currently available.
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.
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, 2024, we had accrued a total of $20.9 million for our prospective environmental remediation obligations.
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.
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 or other financing for the development of new-to-industry 32 properties. Our investment strategy seeks to generate current income and benefit from long-term appreciation in the underlying value of our real estate.
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.
During the years ended December 31, 2024 and 2023, we increased the carrying values of certain of our properties by $2.7 million and $5.0 million, respectively, due to changes in estimated environmental remediation costs.
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.
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, 2024, our weighted average remaining lease term, excluding renewal options, was 10.2 years.
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”.
The information included on our consolidated financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined. Our accounting policies are described in Note 1 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
Revolving Credit Facility In October 2021, we entered into a second amended and restated credit agreement (as amended, the "Second Restated Credit Agreement").
Credit Facility In October 2021, we entered into a second amended and restated credit agreement (as amended, the “Second Restated Credit Agreement”).
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 use of forward sales agreements allow us to lock in a share price on the sale of shares at the time the forward sales agreements become effective, but defer receiving the proceeds from the sale of shares until a later date. To account for the forward sales agreements, we considered the accounting guidance governing financial instruments and derivatives.
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.
Capitalized asset retirement costs were $33.2 million (consisting of $25.0 million of known environmental liabilities and $8.2 million of reserves for future environmental liabilities) as of December 31, 2024, and $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.
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.
This accrual consisted of (a) $9.1 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) $11.8 million for future environmental liabilities related to preexisting unknown contamination.
The present value of the difference between the fair market rent and the contractual rent for above-market and below-market leases at the time properties are acquired is amortized into revenues from rental properties over the remaining terms of the in-place leases.
The present value of the difference between the fair market rent and the contractual rent for intangible market lease assets and liabilities at the time properties are acquired is amortized into revenues from rental properties over the remaining terms of the in-place leases.
The following discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements”; the sections in Part I entitled “Item 1A. Risk Factors”; and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data”.
The following discussion and analysis should be read in conjunction with the “Cautionary Note Regarding Forward-Looking Statements”; the sections in Part I entitled “Item 1A. Risk Factors”; and the consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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.
As of December 31, 2024, our portfolio included 1,118 properties, including 1,085 properties owned by us and 33 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.
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.
Depreciation and amortization expense related to capitalized asset retirement costs on our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, were $2.8 million, $3.0 million, and $3.7 million, respectively.
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.
The decrease in property costs was primarily due to a decrease in reimbursable real estate taxes and lower rent expense. Impairment Charges Impairment charges are recorded when the carrying value of a property is reduced to fair value.
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.
Accordingly, as of December 31, 2024, we had removed $24.2 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, 2024.
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.
Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps. As of December 31, 2024, we leased 1,114 of our properties to tenants under triple-net leases, including 921 properties leased under 50 separate unitary or master triple-net leases, and 193 properties leased under single unit triple-net leases.
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.
General and Administrative Expenses The increase in general and administrative expenses was primarily due to a $1.3 million increase in employee-related expenses, including $0.1 million of non-recurring retirement and severance costs and a $0.3 million increase in stock-based compensation, and a $0.2 million increase in legal and other professional fees.
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.
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.
Tenant reimbursements consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements.
Tenant reimbursements consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements. The decrease in tenant reimbursement income was driven by a decrease in reimbursable real estate taxes due from our tenants.
Borrowings under the Revolving Credit 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%, 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. 38 The per annum rate of the unused line fee on the undrawn funds under the Revolving Credit Facility is 0.15% to 0.25% based on our daily unused portion of the available Revolving Credit Facility.
Borrowings under the Credit Facility bear interest at a rate equal to the greater of (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.
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 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, Series Q Notes, Series R Notes, Series S Notes and Series T Notes are collectively referred to as the "Senior Unsecured Notes". 38 Debt Maturities The amounts outstanding under our 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 2024 2023 Credit Facility October 2025 5.71% $ 82,500 $ 10,000 Term Loan October 2025 6.13% 150,000 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-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% 125,000 125,000 Total debt 907,500 760,000 Unamortized debt issuance costs, net (a) (3,158 ) (5,266 ) Total debt, net $ 904,342 $ 754,734 (a) Unamortized debt issuance costs related to the Credit Facility were $0.6 million and $1.4 million as of December 31, 2024 and 2023, respectively, and are included in prepaid expenses and other assets on our consolidated balance sheets.
As of December 31, 2022, we had accrued a total of $23.2 million for our prospective environmental remediation obligations.
As of December 31, 2023, we had accrued a total of $22.4 million for our prospective environmental remediation obligations.
The other senior unsecured notes outstanding under the Fifth Amended and Restated Prudential Agreement, including (i) $50.0 million of 4.75% Series C Guaranteed Senior Notes due February 25, 2025 (the “Series C Notes”), (ii) $50.0 million of 5.47% Series D Guaranteed Senior Notes due June 21, 2028 (the “Series D Notes”), (iii) $50.0 million of 3.52% Series F Guaranteed Senior Notes due September 12, 2029 (the “Series F Notes”) and (iv) $100.0 million of 3.43% Series I Guaranteed Senior Notes due November 25, 2030 (the “Series I Notes”), remain outstanding under the Sixth Amended and Restated Prudential Agreement.
The other senior unsecured notes outstanding as of December 31, 2024 under the Sixth Amended and Restated Prudential Agreement, including (i) $50.0 million of 5.47% Series D Guaranteed Senior Notes due June 21, 2028 (the “Series D Notes”), (ii) $50.0 million of 3.52% Series F Guaranteed Senior Notes due September 12, 2029 (the “Series F Notes”), (iii) $100.0 million of 3.43% Series I Guaranteed Senior Notes due November 25, 2030 (the “Series I Notes”) and (iv) $80.0 million of 3.765% Series Q Guaranteed Senior Notes due January 20, 2033 (the “Series Q Notes”), remain outstanding under the Seventh Amended and Restated Prudential Agreement.
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.
For a discussion of our capital expenditures, see “Property Acquisitions and Capital Expenditures.” 36 We expect to meet our short-term liquidity requirements through cash flow from operations, funds available under our Credit Facility, proceeds from unfunded Senior Unsecured Notes, proceeds from the settlement of shares of common stock subject to forward sales agreements related to follow-on public equity offerings or our ATM Program, and available cash and cash equivalents.
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.
We use the treasury stock method to determine the dilution resulting from the forward sales agreements during the period of time prior to settlement. 39 ATM Direct Issuances During the years ended December 31, 2024 and 2023, no shares of common stock were issued under the ATM Program.
Investment Strategy and Activity As part of our strategy to grow and diversify our portfolio, we regularly review acquisition and financing opportunities to invest in additional convenience, automotive and other single tenant retail real estate.
As of December 31, 2024, we also had one property under redevelopment and three properties were vacant. Investment Strategy and Activity As part of our strategy to grow and diversify our portfolio, we regularly review acquisition and financing opportunities to invest in additional convenience, automotive and other single tenant retail real estate.
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.
Contractual Obligations Our significant contractual obligations and commitments, excluding extension options and unamortized debt issuance costs, as of December 31, 2024, were comprised of borrowings under the 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. 40 Generally, leases with our tenants are triple-net leases with the tenant responsible for the operations conducted at our properties and for the payment of taxes, maintenance, repair, insurance, environmental remediation, and other operating expenses.
For additional information regarding our property dispositions see Note 12 in “Item 8. Financial Statements and Supplementary Data” in this Form 10-K.
For additional information regarding our Term Loan, see Note 16 in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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.
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.
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.
Our cash flow activities for the years ended December 31, 2024 and 2023 are summarized as follows (in thousands): Year ended December 31, 2024 2023 $ Change Net cash flow provided by operating activities $ 130,504 $ 105,298 $ 25,206 Net cash flow used in investing activities (200,469 ) (310,705 ) 110,236 Net cash flow provided by financing activities 78,296 199,444 (121,148 ) Operating Activities The change in net cash flow provided by operating activities for the years ended December 31, 2024 and 2023 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.
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".
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.
Environmental Matters General We are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment.
Assumptions used are property and geographic specific and may include, among other things, capitalization rates, market rental rates, discount rates, EBITDA to rent coverage ratios and land comparables. 42 Environmental Matters General We are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment.
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.
Investing Activities The change in net cash flow used in investing activities for the year ended December 31, 2024, was primarily due to a decrease of $96.2 million in issuance of notes and mortgages receivable, an increase of $62.5 million in collection of notes and mortgages receivable, a decrease of $42.0 million in property acquisitions and a $6.9 million decrease in deposits for property acquisitions.
For additional information regarding risks related to our tenants’ dependence on the performance of the industry, see “Item 1A. Risk Factors – Significant number of our tenants depend on the same industry for their revenues” in this Form 10-K.
Risk Factors—Risks Related to Our Business and Operations—Significant number of our tenants depend on the same industry for their revenues” in this Annual Report on Form 10-K.
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.
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 the subset of our triple-net leases which cover properties previously leased to Getty Petroleum Marketing Inc.
Critical Accounting Policies and Estimates The consolidated financial statements included in this Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements.
Critical Accounting Policies and Estimates The consolidated financial statements included in this Annual Report on Form 10-K have been prepared in conformity with accounting principles generally accepted in the United States of America.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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.
Biggest changeQuantitative and Qualita tive Disclosures about Market Risk We are exposed to interest rate risk, primarily as a result of borrowings under our (A) 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, and (B) Term loan, 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.
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.
Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Credit 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 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.
Based on our outstanding borrowings under the Credit Facility of $82.5 million as of December 31, 2024, an increase in market interest rates of 1.0% for 2025 would decrease our 2025 net income and cash flows by approximately $0.8 million.
Risk Factors” in this Annual Report on Form 10-K for additional information. 46
Risk Factors” in this Annual Report on Form 10-K for additional information. 45 6Item 8. Financial Statemen ts and Supplementary Data GETTY REALTY CORP.
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In connection with the Term Loan, we entered into interest rate swaps for a notional amount of $150.0 million to fix SOFR at weighted average of 4.73% until maturity.
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Including the impact of the swaps, the effective interest rate on the Term Loan is 6.13% based on our consolidated total indebtedness to total asset value ratio as of December 31, 2024.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Consolidated Balance Sheets as of December 31, 2024 and 2023 47 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 48 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 49 Notes to Consolidated Financial Statements 50 Report of Independent Registered Public Accounting Firm 75 46 GETTY REALTY CORP.
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AND SUBSIDIARIES CONSOLIDATED B ALANCE SHEETS (in thousands, except share data) December 31, 2024 2023 ASSETS: Real Estate: Land $ 943,800 $ 867,884 Buildings and improvements 1,028,799 847,339 Lease intangible assets 171,129 142,345 Investment in direct financing leases, net 43,416 59,964 Construction in progress 96 426 Real estate held for use 2,187,240 1,917,958 Less accumulated depreciation and amortization ( 350,626 ) ( 307,623 ) Real estate held for use, net 1,836,614 1,610,335 Real estate held for sale, net 243 2,429 Real estate, net 1,836,857 1,612,764 Notes and mortgages receivable 29,454 112,008 Cash and cash equivalents 9,484 3,307 Restricted cash 4,133 1,979 Deferred rent receivable 61,553 54,424 Accounts receivable 2,509 5,012 Right-of-use assets - operating 12,368 14,571 Right-of-use assets - finance 107 174 Prepaid expenses and other assets 17,215 18,066 Total assets $ 1,973,680 $ 1,822,305 LIABILITIES AND STOCKHOLDERS’ EQUITY: Credit Facility $ 82,500 $ 10,000 Term Loan, net 148,951 72,692 Senior Unsecured Notes, net 673,511 673,406 Environmental remediation obligations 20,942 22,369 Dividends payable 26,541 24,850 Lease liability - operating 13,612 16,051 Lease liability - finance 330 595 Accounts payable and accrued liabilities 45,210 46,790 Total liabilities 1,011,597 866,753 Commitments and contingencies — — Stockholders’ equity: Preferred stock, $ 0.01 par value; 20,000,000 authorized; uniss ued — — Common stock, $ 0.01 par value; 100,000,000 shares authorized; 55,027,144 and 53,952,539 shares issued and outstanding, respectively 550 540 Accumulated other comprehensive income (loss) ( 1,864 ) ( 4,021 ) Additional paid-in capital 1,088,390 1,053,129 Dividends paid in excess of earnings ( 124,993 ) ( 94,096 ) Total stockholders’ equity 962,083 955,552 Total liabilities and stockholders’ equity $ 1,973,680 $ 1,822,305 The accompanying notes are an integral part of these consolidated financial statements. 47 GETTY REALTY CORP.
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AND SUBSIDIARIES CONSOLIDATED STATEM ENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share amounts) Year ended December 31, 2024 2023 2022 Revenues: Revenues from rental properties $ 198,669 $ 180,488 $ 163,889 Interest on notes and mortgages receivable 4,722 5,358 1,699 Total revenues 203,391 185,846 165,588 Operating expenses: Property costs 14,859 23,789 21,553 Impairments 3,966 5,243 3,545 Environmental 585 1,261 ( 20,902 ) General and administrative 25,265 23,735 20,621 Depreciation and amortization 54,984 45,296 39,902 Total operating expenses 99,659 99,324 64,719 Gains on dispositions of real estate 6,038 4,625 16,423 Operating income 109,770 91,147 117,292 Other income, net 566 574 413 Interest expense ( 39,272 ) ( 31,527 ) ( 27,662 ) Loss on extinguishment of debt — ( 43 ) — Net earnings $ 71,064 $ 60,151 $ 90,043 Basic earnings per common share: Net Earnings $ 1.26 $ 1.16 $ 1.88 Diluted earnings per common share: Net Earnings $ 1.25 $ 1.15 $ 1.88 Weighted average common shares outstanding: Basic 54,305 50,020 46,730 Diluted 54,552 50,216 46,838 Net earnings 71,064 60,151 90,043 Other comprehensive loss: Unrealized gain (loss) on cash flow hedges 2,688 ( 3,938 ) — Cash flow hedge income reclassified to interest expense ( 531 ) ( 83 ) — Total other comprehensive income (loss) 2,157 ( 4,021 ) — Comprehensive income $ 73,221 $ 56,130 $ 90,043 The accompanying notes are an integral part of these consolidated financial statements. 48 GETTY REALTY CORP.
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AND SUBSIDIARIES CONSOLIDATED STATEM ENTS OF CASH FLOWS (in thousands) Year ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 71,064 $ 60,151 $ 90,043 Adjustments to reconcile net earnings to net cash flow provided by operating activities: Depreciation and amortization expense 54,984 45,296 39,902 Impairment charges 3,966 5,243 3,545 Gains on dispositions of real estate ( 6,038 ) ( 4,625 ) ( 16,423 ) Loss on extinguishment of debt — 43 — Deferred rent receivable ( 7,129 ) ( 4,033 ) ( 3,458 ) (Recovery) allowance for credit loss on notes and mortgages receivable and direct financing leases ( 177 ) ( 189 ) 50 Amortization of intangible market lease assets and liabilities ( 143 ) 41 14 Amortization of investment in direct financing leases 5,580 6,004 5,392 Amortization of debt issuance costs 2,253 1,211 946 Accretion expense 407 585 1,259 Stock-based compensation expense 5,934 5,582 4,775 Changes in assets and liabilities: Accounts receivable 2,503 ( 1,098 ) ( 784 ) Prepaid expenses and other assets 1,493 ( 2,285 ) ( 1,965 ) Environmental remediation obligations ( 4,756 ) ( 6,157 ) ( 28,088 ) Accounts payable and accrued liabilities 563 ( 471 ) ( 2,122 ) Net cash flow provided by operating activities 130,504 105,298 93,086 CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisitions ( 290,070 ) ( 248,072 ) ( 137,275 ) Capital expenditures ( 878 ) ( 309 ) — Addition to construction in progress ( 1,090 ) ( 349 ) ( 56 ) Proceeds from dispositions of real estate 12,986 11,201 24,204 Deposits for property acquisitions ( 3,023 ) 3,930 ( 8,265 ) Issuance of notes and mortgages receivable ( 23,137 ) ( 119,268 ) ( 19,312 ) Collection of notes and mortgages receivable 104,743 42,162 1,648 Net cash flow used in investing activities ( 200,469 ) ( 310,705 ) ( 139,056 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings from Credit Facility 236,000 230,500 90,000 Repayments of Credit Facility ( 163,500 ) ( 290,500 ) ( 80,000 ) Proceeds from Senior Unsecured Notes — 125,000 100,000 Proceeds from Term Loan 75,000 75,000 — Repayments of Senior Unsecured Notes — ( 75,043 ) — Payments of finance lease liability ( 265 ) ( 297 ) ( 487 ) Payments of cash dividends ( 100,209 ) ( 86,964 ) ( 78,264 ) Payments of debt issuance costs ( 145 ) ( 2,932 ) ( 611 ) Security deposits received (refunded) 2,138 ( 547 ) 823 Payments in settlement of restricted stock units ( 1,282 ) ( 1,004 ) ( 496 ) Proceeds from issuance of common stock, net - equity offering ( 399 ) 112,128 — Proceeds from issuance of common stock, net - ATM Program 30,958 114,103 ( 207 ) Net cash flow provided by financing activities 78,296 199,444 30,758 Change in cash, cash equivalents and restricted cash 8,331 ( 5,963 ) ( 15,212 ) Cash, cash equivalents and restricted cash at beginning of year 5,286 11,249 26,461 Cash, cash equivalents and restricted cash at end of year $ 13,617 $ 5,286 $ 11,249 Year ended December 31, 2024 2023 2022 Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 38,161 $ 29,379 $ 26,526 Income taxes 352 677 557 Environmental remediation obligations 3,823 5,856 4,252 Non-cash transactions Dividends declared but not yet paid $ 26,541 $ 24,850 $ 20,576 Issuance of notes and mortgages receivable related to property dispositions — — 1,050 The accompanying notes are an integral part of these consolidated financial statements. 49 GETTY REALTY CORP.
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AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
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We do not distinguish our principal business or our operations on a geographical basis for purposes of measuring performance. We manage and evaluate our operations as a single segment. All significant intercompany accounts and transactions have been eliminated.
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Use of Estimates, Judgments and Assumptions The consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported.
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Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation costs, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed.
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Application of these estimates and assumptions requires exercise of judgment as to future uncertainties and, as a result, actual results could differ materially from these estimates. Reclassifications Certain prior year amounts have been reclassified to conform to current year presentation. Such reclassifications had no impact on previously reported net earnings.
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Real Estate Real estate assets are stated at cost less accumulated depreciation and amortization.
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For acquisitions of real estate we estimate the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, intangible market lease assets and liabilities, in-place leases and tenant relationships) and assumed debt.
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Based on these estimates, we allocate the estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
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Assumptions used are property and geographic specific and may include, among other things, capitalization rates, market rental rates, discount rates, EBITDA to rent coverage ratios, and land comparables. We expense transaction costs associated with business combinations in the period incurred. Acquisitions of real estate which do not meet the definition of a business are accounted for as asset acquisitions.
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The accounting model for asset acquisitions is similar to the accounting model for business combinations except that the acquisition costs are capitalized and allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. For additional information regarding property acquisitions, see Note 13 – Property Acquisitions.
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We capitalize direct costs, including costs such as construction costs and professional services, and indirect costs associated with the development and construction of real estate assets while substantive activities are ongoing to prepare the assets for their intended use.
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The capitalization period begins when development activities are underway and ends when it is determined that the asset is substantially complete and ready for its intended use. We evaluate the held for sale classification of our real estate as of the end of each quarter.
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Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell. When real estate assets are sold or retired, the cost and related accumulated depreciation and amortization is eliminated from the respective accounts and any gain or loss is credited or charged to income.
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We evaluate real estate sale transactions where we provide seller financing to determine sale and gain recognition in accordance with GAAP. Expenditures for maintenance and repairs are charged to income when incurred.
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Depreciation and Amortization Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets, which generally range from 16 to 25 years for buildings and improvements, or the term of the lease if shorter.
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Asset retirement costs are depreciated over the shorter of the remaining useful lives of USTs or 10 years for asset retirement costs related to environmental 50 remediation obligations, which costs are attributable to the group of assets identified at a property. Leasehold interests and in-place leases are amortized over the remaining term of the underlying lease.
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Direct Financing Leases Income under direct financing leases is included in revenues from rental properties and is recognized over the lease terms using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties.
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The investments in direct financing leases are increased for interest income earned and amortized over the life of the leases and reduced by the receipt of lease payments. We consider direct financing leases to be past-due or delinquent when a contractually required payment is not remitted in accordance with the provisions of the underlying agreement.
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On June 16, 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments (“ASU 2016-13”). The accounting standard became effective for us and was adopted on January 1, 2020. For additional information regarding our senior secured notes, see Note 2 in “Item 8.
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Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
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We review our direct financing leases each reporting period to determine whether there were any indicators that the value of our net investments in direct financing leases may be impaired and adjust the allowance for any estimated changes in the credit loss with the resulting change recorded through our consolidated statement of operations.
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When determining a possible impairment, we take into consideration the collectability of direct financing lease receivables for which a reserve would be required. In addition, we determine whether there has been a permanent decline in the current estimate of the residual value of the property. During the year ended December 31, 2024, one of our direct financing leases was modified.
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Upon modification, we reassessed the lease classification and determined that the lease meets the definition of an operating lease under ASC 842. Accordingly, we reclassified the amounts recorded as investment in direct financing leases immediately prior to the modification of $ 11.2 million to building and improvements on our consolidated balance sheets.
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When we enter into a contract to sell properties that are recorded as direct financing leases, we evaluate whether we believe that it is probable that the disposition will occur.
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If we determine that the disposition is probable and therefore the property’s holding period is reduced, we record an allowance for credit losses to reflect the change in the estimate of the undiscounted future rents. Accordingly, the net investment balance is written down to fair value.
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Notes and Mortgages Receivable Notes and mortgages receivable consists, in part, of loans originated by us in conjunction with property dispositions and funding provided to tenants in conjunction with property acquisitions and capital improvements. Notes and mortgages receivable are recorded at stated principal amounts.
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In accordance with ASU 2016-13 , we estimate our credit loss reserve for our notes and mortgages receivable using the weighted average remaining maturity (“WARM”) method, which has been identified as an acceptable loss-rate method for estimating credit loss reserves in the FASB Staff Q&A Topic 326, No. 1.
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The WARM method requires us to reference historic loan loss data across a comparable data set and apply such loss rate to our notes and mortgages portfolio over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. We applied the WARM method for our notes and mortgages portfolio, which share similar risk characteristics.
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Application of the WARM method to estimate a credit loss reserve requires significant judgment, including (i) the historical loan loss reference data, (ii) the expected timing and amount of loan repayments, and (iii) the current credit quality of our portfolio and our expectations of performance and market conditions over the relevant time period.
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To estimate the historic loan losses relevant to our portfolio, we used our historical loan performance since the launch of our loan origination business in 2013. As of December 31, 2024 and 2023, the allowance for credit losses on notes and mortgages receivable was $ 0.3 million and $ 0.2 million, respectively.
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We also originate construction loans and provide development financing for the construction of income-producing properties which we generally expect to purchase via sale-leaseback transactions at the end of the construction period. We have the option to purchase the properties at the end of such period.
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During the year ended December 31, 2024, we funded $ 10.6 million and, as of December 31, 2024, had outstanding $ 9.3 million of such construction loans and development financing.
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Our construction loans and development financing generally provide for funding only during the construction period, which is typically nine to twelve months, although our policy is to consider construction periods as long as 24 months. Funds are disbursed based on inspections in accordance with a schedule reflecting the completion of portions of the projects.
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We also review and inspect each property before disbursement of funds during the term of the construction loan. At the end of the construction period, the construction loans will be repaid with the proceeds from the sale of the properties.
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In addition, we may acquire real estate assets under construction from the tenant and commit to provide additional funding to our tenants during the construction period to complete the properties. These transactions do not meet the criteria for sale-leaseback accounting and are accounted for as finance receivables.
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Accordingly, initial investments and all subsequent fundings made during the construction period are recorded within notes and mortgages receivable on our consolidated balance sheets, and rental payments resulting from these investments are recorded within interest on notes and mortgages receivable on our consolidated statements of operations.
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At 51 the end of construction period, we will recognize the purchase of the assets, remove the finance receivables from our consolidated balance sheets, and begin to record rental income from the operating leases.
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During the year ended December 31, 2024, we funded $ 12.5 million of such investments and, as of December 31, 2024, had a total of $ 14.2 million of such investments outstanding and recorded in notes and mortgages receivable.
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Cash and Cash Equivalents We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Our cash and cash equivalents are held in the custody of financial institutions, and these balances, at times, may exceed federally insurable limits.
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Restricted Cash Restricted cash consists of cash that is contractually restricted or held in escrow pursuant to various agreements with counterparties. As of December 31, 2024 and 2023 , restricted cash of $ 4.1 million and $ 2.0 million, respectively, consisted of security deposits received from our tenants.
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Revenue Recognition and Deferred Rent Receivable We determine the proper amount of revenue to be recognized in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606).
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To determine the proper amount of revenue to be recognized , we perform the following steps: (i) identify the contract with the customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when (or as) a performance obligation is satisfied.
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Our primary source of revenue consists of revenue from rental properties and tenant reimbursements that is derived from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of December 31, 2024, 2023 and 2022.
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Lease payments from operating leases are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on our consolidated balance sheets.
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We review our accounts receivable, including its deferred rent receivable, related to base rents, straight-line rents, tenant reimbursements and other revenues for collectability.
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Our evaluation of collectability primarily consists of reviewing past due account balances and considers such factors as the credit quality of our tenant, historical trends of the tenant, changes in tenant payment terms, current economic trends, and other facts and circumstances related to the applicable tenants.
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In addition, with respect to tenants in bankruptcy, we estimate the probable recovery through bankruptcy claims. If a tenant’s accounts receivable balance is considered uncollectable, we will write off the related receivable balances and cease to recognize lease income, including straight-line rent unless cash is received.
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If the collectability assessment subsequently changes to probable, any difference between the lease income that would have been recognized if collectability had always been assessed as probable and the lease income recognized to date, is recognized as a current-period adjustment to revenues from rental properties.
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Our reported net earnings are directly affected by our estimate of the collectability of our accounts receivable. The present value of the difference between the fair market rent and the contractual rent for intangible market lease assets and liabilities at the time properties are acquired is amortized into revenues from rental properties over the remaining terms of the in-place leases.
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Lease termination fees are recognized as other income when earned upon the termination of a tenant’s lease and relinquishment of space in which we have no further obligation to the tenant.
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The sales of nonfinancial assets, such as real estate, are to be recognized when control of the asset transfers to the buyer, which will occur when the buyer has the ability to direct the use of or obtain substantially all of the remaining benefits from the asset.
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This generally occurs when the transaction closes and consideration is exchanged for control of the property. Impairment of Long-Lived Assets Assets are written down to fair value when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets.
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Assets held for disposal are written down to fair value less estimated disposition costs. The estimated fair value of real estate is based on the price that would be received from the sale of the property in an orderly transaction between market participants at the measurement date.
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In general, we consider multiple internal valuation techniques when measuring the fair value of a property, all of which are based on unobservable inputs and assumptions that are classified within Level 3 of the Fair Value Hierarchy.
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These assessments have a direct impact on our net income because recording an impairment loss results in an immediate negative adjustment to net income. The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future rental rates and operating expenses that could differ materially from actual results in future periods.
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Where properties held for use have been identified as having a potential for sale, additional judgments are required related to the determination as to the appropriate period over which the projected undiscounted cash flows should include the operating cash flows and the amount 52 included as the estimated residual value. This requires significant judgment.
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In some cases, the results of whether impairment is indicated are sensitive to changes in assumptions input into the estimates, including the holding period until expected sale. We recorded impairment charges aggregating $ 4.0 million, $ 5.2 million, and $ 3.5 million for the years ended December 31, 2024, 2023 and 2022 , respectively.
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Our estimated fair values, as they relate to property carrying values, were primarily based upon estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids, for which we do not have access to the unobservable inputs used to determine these estimated fair values, and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence and resulted in $ 1.6 million of impairments charges recognized during the year ended December 31, 2024.
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During the year ended December 31, 2024 , the remaining impairments of $ 2.4 million were due to the accumulation of asset retirement costs as a result of changes in estimates associated with our estimated environmental liabilities which increased the carrying values of certain properties in excess of their fair values.
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For the years ended December 31, 2024, 2023 and 2022 , impairment charges aggregating $ 0.8 million, $ 2.3 million and $ 1.1 million, respectively, were related to properties that were previously disposed of by us.
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Fair Value of Financial Instruments All of our financial instruments are reflected in the accompanying consolidated balance sheets at amounts which, in our estimation based upon an interpretation of available market information and valuation methodologies, reasonably approximate their fair values, except those separately disclosed in the notes below.
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The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates of fair value that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported using a hierarchy (the “Fair Value Hierarchy”) that prioritizes the inputs to valuation techniques used to measure the fair value.
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The Fair Value Hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
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The levels of the Fair Value Hierarchy are as follows: “Level 1” – inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date; “Level 2” – inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and “Level 3” – inputs that are unobservable.
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Certain types of assets and liabilities are recorded at fair value either on a recurring or non-recurring basis. Assets required or elected to be marked-to-market and reported at fair value every reporting period are valued on a recurring basis.
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Other assets not required to be recorded at fair value every period may be recorded at fair value if a specific provision or other impairment is recorded within the period to mark the carrying value of the asset to market as of the reporting date. Such assets are valued on a non-recurring basis.
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Environmental Remediation Obligations We record the fair value of a liability for an environmental remediation obligation as an asset and liability when there is a legal obligation associated with the retirement of a tangible long-lived asset and the liability can be reasonably estimated. Environmental remediation obligations are estimated based on the level and impact of contamination at each property.
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The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability. The accrued liability is net of estimated recoveries from state underground storage tanks (“UST”) remediation funds considering estimated recovery rates developed from prior experience with the funds.
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Net environmental liabilities are currently measured based on their expected future net cash flows which have been adjusted for inflation and discounted to present value. We accrue for environmental liabilities that we believe are allocable to other potentially responsible parties if it becomes probable that the other parties will not pay their environmental remediation obligations.
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Litigation Legal fees related to litigation are expensed as legal services are performed. We provide for litigation accruals, including certain litigation related to environmental matters, when it is probable that a liability has been incurred and a reasonable estimate of the liability can be made.

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Other GTY 10-K year-over-year comparisons