Edgar Filing: GETTY REALTY CORP /MD/

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


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

	OR

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

	COMMISSION FILE NUMBER 001-13777

	GETTY REALTY CORP.

	(Exact name of registrant as specified in its charter)


Maryland		11-3412575

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

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

(Address of principal executive offices)		(Zip Code)

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

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


TITLE OF EACH CLASS		NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock, $0.01 par value		New York Stock Exchange

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


	None

	(Title of Class)

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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


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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE


DOCUMENT		PART OF FORM 10-K

Selected Portions of Definitive Proxy Statement for the 2009 Annual Meeting of Stockholders (the “Proxy Statement”), which will be filed by the registrant on or prior to 120 days following the end of the registrant’s year ended December 31, 2008 pursuant to Regulation 14A.		III

TABLE OF CONTENTS


Item	Description	Page


	Cautionary Note Regarding Forward-Looking Statements	1

	PART I

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

	PART II

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

	PART III

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

	PART IV

15	Exhibits and Financial Statement Schedules	68

	Signatures	84
	Exhibit Index	85

Cautionary Note Regarding Forward-Looking Statements

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

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

team; the impact of our electing to be treated as a REIT under the federal income tax laws, including subsequent failure to qualify as a REIT; risks associated with owning real estate primarily concentrated in the Northeast and Mid-Atlantic regions of the United States; risks associated with potential future acquisitions; losses not covered by insurance; future dependence on external sources of capital; the risk that our business operations may not generate sufficient cash for distributions or debt service; our potential inability to pay dividends; and terrorist attacks and other acts of violence and war. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and/or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in this report and those that are described from time to time in our other filings with the SEC.

You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or circumstances or reflect the occurrence of unanticipated events.

PART I

Item 1. Business

Overview

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

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

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

The History of Our Company

Our founders started the business in 1955 with the ownership of one gasoline service station in New York City and combined real estate ownership, leasing and management with actual service station operation and petroleum distribution. We held our initial public offering in 1971 under the name Power Test Corp. We acquired, from Texaco in 1985, the petroleum distribution and marketing assets of Getty Oil Company in the Northeast United States along with the Getty® name and trademark in connection with our real estate and the petroleum marketing business in the United States. We became one of the largest independent owner/operators of petroleum marketing assets in the country, serving retail and wholesale customers through a distribution and marketing network of Getty® and other branded retail motor fuel and convenience store properties and petroleum distribution terminals.

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

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

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

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

Real Estate Business

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

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

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

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

We believe our network of retail motor fuel and convenience store properties and terminal properties across the Northeast and the Mid-Atlantic regions of the United States is unique and that comparable networks of properties are not readily available for purchase or lease from other owners or landlords. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrance and exit ramps. Furthermore, we believe that obtaining the permits necessary to operate a network of petroleum marketing properties such as ours would be a difficult, time consuming and costly process for any potential competitor. However, the real estate industry is highly competitive, and we compete for tenants with a large number of property owners. Our principal means of competition are rents charged in relation to the income producing potential of the location. In addition, we expect other major real estate investors with significant capital will compete with us for attractive acquisition opportunities. These competitors include petroleum manufacturing, distributing and marketing companies, other REITs, investment banking firms and private institutional investors. This competition has increased prices for commercial properties and may impair our ability to make suitable property acquisitions on favorable terms in the future.

As part of our overall growth strategy we regularly review opportunities to acquire additional properties and we expect to continue to pursue acquisitions that we believe will benefit our financial performance. To the extent that our current sources of liquidity are not sufficient to fund such acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all.

Trademarks

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

Regulation

We are subject to numerous existing federal, state and local laws and regulations including matters related to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, underground storage tanks (“UST” or “USTs”) and other equipment. Petroleum properties are governed by numerous federal, state and local environmental laws and regulations. These laws have included: (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to remediate the soil and/or groundwater contamination pursuant to governmental order and directive, (ii) requirements to remove and replace USTs that have exceeded governmental-mandated age limitations and (iii) the requirement to

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

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

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

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

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

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

Personnel

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

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

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

Item 1A. Risk Factors

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

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

We are subject to varying degrees of risk generally related to leasing and owning real estate many of which are beyond our control. In addition to general risks related to owning properties used in the petroleum marketing industry, our risks include, among others:


•	our liability as a lessee for long-term lease obligations regardless of our revenues,

•	deterioration in national, regional and local economic and real estate market conditions,

•	potential changes in supply of, or demand for, rental properties similar to ours,

•	competition for tenants and declining rental rates,

•	difficulty in re-letting properties on favorable terms or at all,

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

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

•	the potential for uninsured casualty and other losses,

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

•	adverse changes in zoning laws and other regulations, and

•	acts of terrorism and war.

Each of these factors could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price. In addition, real estate investments are relatively

illiquid, which means that our ability to vary our portfolio of properties in response to changes in economic and other conditions may be limited.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We are subject to risks that financial distress or default of our existing tenants may lead to vacancy at our properties or disruption in rent receipts as a result of partial payment or nonpayment of rent or that expiring leases may not be renewed. Under unfavorable general economic conditions, there can be no assurance that our tenants’ level of sales and financial performance generally will not be adversely affected, which in turn, could impact the reliability of our rent receipts. We are subject to risks that the terms of renewal or re-letting our properties (including the cost of required renovations, replacement of gasoline tanks and related equipment or environmental remediation) may be less favorable than current lease terms, or that the values of our properties that we sell may be adversely affected by unfavorable general economic conditions. Unfavorable general economic conditions may also negatively impact our ability to re-let or sell our properties. Numerous properties compete with our properties in attracting tenants to lease space. The number of available or competitive properties in a particular area could have a material adverse effect on our ability to lease or sell our properties and on the rents charged.

In addition to the risk of disruption in rent receipts, we are subject to the risk of incurring real estate taxes, maintenance, environmental and other expenses at vacant properties. The financial distress or default of our tenants may also lead to protracted, more complex, expensive or burdensome processes for retaking control of our properties than would otherwise be the case, including as a possible consequence of bankruptcy, eviction or other legal proceedings related to or resulting from the tenant’s default. These risks are greater with respect to certain of our tenants who lease multiple properties from us, such as Marketing. (For additional information with respect to concentration of tenant risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — General — Developments Related to Marketing and the Marketing Leases”.)

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

Property taxes on our properties may increase without notice.

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

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

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

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

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

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

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

We cannot predict what environmental legislation or regulations may be enacted in the future, or if or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict whether state UST fund programs will be administered and funded in the future in a manner that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at historical recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of existing laws which may develop in the future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation.

As a result of the factors discussed above, or others, compliance with environmental laws and regulations could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

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

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

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

A significant portion of the properties we own and lease are located in the Northeast and Mid-Atlantic regions of the United States. Because of the concentration of our properties in those regions, in the event of adverse economic conditions in those regions, we would likely experience higher risk of default on payment of rent payable to us (including under the Marketing Leases) than if our properties were more geographically diversified. Additionally, the rents on our properties may be subject to a greater risk of default than other properties in the event of adverse economic, political, or business developments or natural hazards that may affect the Northeast or Mid-Atlantic United States and the ability of our lessees to make rent payments. This lack of geographical diversification could have a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends and/or stock price.

We are in a competitive business.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 1B. Unresolved Staff Comments

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

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

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

Item 2. Properties

The following table summarizes the geographic distribution of our properties at December 31, 2008. The table also identifies the number and location of properties we lease from third-parties and which Marketing leases from us under the Marketing Leases. In addition, we lease four thousand square feet of office space at 125 Jericho Turnpike, Jericho, New York, which is used for our corporate headquarters, which we believe will remain suitable and adequate for such purposes for the immediate future.


	OWNED BY GETTY REALTY				LEASED BY GETTY REALTY
									TOTAL			PERCENT
	MARKETING AS TENANT (1)		OTHER TENANTS		MARKETING AS TENANT		OTHER TENANTS			PROPERTIES BY STATE			OF TOTAL PROPERTIES

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

Total		710		168		154		28			1,060			100.0	%


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

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


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

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

Subtotal		54		29.67			5.09
Thereafter		128		70.33			12.08

Total		182		100.0	%		17.17	%

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

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

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

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

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

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

Item 3. Legal Proceedings

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In September 2003, we received a directive (the “Directive”) issued by the NJDEP under the New Jersey Spill Compensation and Control Act. The Directive indicated that we are one of approximately sixty-six potentially responsible parties for alleged NRDs resulting from discharges of hazardous substances along the lower Passaic River (the “Lower Passaic River”). The Directive alleged, inter alia, that the recipients thereof must conduct an assessment of the natural resources that have been injured by the discharges and implement interim compensatory restoration for the injured natural resources. NJDEP alleges that our liability arises from alleged discharges originating from our Newark, New Jersey Terminal site. Chevron/Texaco was also identified in the Directive. We responded to the Directive by asserting that we were not liable. There has been no material activity and/or communications by NJDEP with respect to the Directive since early after its issuance.

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

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

We have made a demand upon Chevron/Texaco for indemnity under certain agreements between the Company and Chevron/Texaco that allocate environmental liabilities for the Newark Terminal Site between the parties. In response, Chevron/Texaco has asserted that the proceedings and claims are still not yet developed enough to determine the extent to which indemnities apply. Our ultimate liability, if any, in the pending and possible future proceedings pertaining to the Lower Passaic River is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

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

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

PART II

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

Capital Stock

Our common stock is traded on the New York Stock Exchange (symbol: “GTY”). There were approximately 11,000 shareholders of our common stock as of March 2, 2009, of which approximately 1,400 were holders of record. The price range of our common stock and cash dividends declared with respect to each share of common stock during the years ended December 31, 2008 and 2007 was as follows:


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

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

For a discussion of potential limitations on our ability to pay future dividends see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.

Issuer Purchases of Equity Securities

None

Sales of Unregistered Securities

None

Stock Performance Graph

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

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

(LINE GRAPH)


	2003		2004		2005		2006		2007		2008

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

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


*	Cumulative total return assumes reinvestment of dividends.

Item 6. Selected Financial Data

GETTY REALTY CORP. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(in thousands, except per share amounts and number of properties)


	FOR THE YEARS ENDED DECEMBER 31,

	2008			2007 (a)			2006			2005			2004

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

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

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

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

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

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

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


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

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

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


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

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

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

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

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

GENERAL

Real Estate Investment Trust

We are a real estate investment trust (“REIT”) specializing in the ownership and leasing of retail motor fuel and convenience store properties and petroleum distribution terminals. We elected to be treated as a REIT under the federal income tax laws beginning January 1, 2001. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least ninety percent of our taxable income to shareholders each year.

Retail Petroleum Marketing Business

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

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

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

Developments Related to Marketing and the Marketing Leases

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

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

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

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

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

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

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

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

Unresolved Staff Comments

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

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

Supplemental Non-GAAP Measures

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

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

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

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


	Non- adjusted		Reserve		As Adjusted

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

2007 and 2008 Acquisitions

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

RESULTS OF OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

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

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

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

As part of our overall growth strategy, we regularly review opportunities to acquire additional properties and we expect to continue to pursue acquisitions that we believe will benefit our financial performance. To the extent that our current sources of liquidity are not sufficient to fund such acquisitions we will require other sources of capital, which may or may not be available on favorable terms or at all. We cannot accurately predict how periods of illiquidity in the credit markets, such as current market conditions, will impact our access to capital.

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

CONTRACTUAL OBLIGATIONS

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

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


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

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

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

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


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

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

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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The consolidated financial statements included in this Annual Report on Form 10-K include the accounts of Getty Realty Corp. and our wholly-owned subsidiaries. The preparation of financial statements in accordance with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in its financial statements. Although we have made our best estimates, judgments and assumptions regarding future uncertainties relating to the information included in our financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.

Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state underground storage tank funds, environmental remediation costs, real estate, depreciation and amortization, impairment of long-lived assets, litigation, accrued expenses, income taxes, allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed and exposure to paying an earnings and profits deficiency dividend. The information included in our financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined. Our accounting policies are described in Note 1 of Notes to Consolidated Financial Statements. We believe the following are our critical accounting policies:

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

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

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

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

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

loss. The ultimate liabilities resulting from such lawsuits and claims, if any, may be material to our results of operations in the period in which they are recognized.

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

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

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

ENVIRONMENTAL MATTERS

General

We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Our tenants are directly responsible for compliance with various environmental laws and regulations as the operators of our properties. Environmental expenses are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting incurred in connection with contaminated properties. We seek reimbursement from state UST remediation funds related to these environmental expenses where available.

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

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

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

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

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

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

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

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

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

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

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

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

We cannot predict what environmental legislation or regulations may be enacted in the future or how existing laws or regulations will be administered or interpreted with respect to products or activities to which they have not previously been applied. We cannot predict if state UST fund programs will be administered and funded in the future in a manner that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement at historical recovery rates under these programs. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies or stricter interpretation of existing laws, which may develop in the future, could have an adverse effect on our financial position, or that of our tenants, and could require substantial additional expenditures for future remediation.

Environmental litigation

We are subject to various legal proceedings and claims which arise in the ordinary course of our business. In addition, we have retained responsibility for certain legal proceedings and claims relating to the petroleum marketing business that were identified at the time of the Spin-Off. As of December 31, 2008 and 2007, we had accrued $1.7 million and $2.6 million, respectively, for certain of these matters which we believe were appropriate based on information then currently available. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in our providing an accrual, or adjustments to the amounts recorded, for environmental litigation accruals. (For additional information with respect to pending environmental lawsuits and claims see “Item 3. Legal Proceedings”.)

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

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

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

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

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

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

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

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

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

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

Based on our average outstanding borrowings under the Credit Agreement projected at $133.6 million for 2009, an increase in market interest rates of 0.5% for 2009 would decrease our 2009 net income and cash flows by $0.4 million. This amount was determined by calculating the effect of a hypothetical interest rate change on our Credit Agreement borrowings that is not covered by our $45.0 million interest rate Swap Agreement and assumes that the $133.6 million average outstanding borrowings during the fourth quarter of 2008 is indicative of our future average borrowings for 2009 before considering additional borrowings required for future acquisitions. The calculation also assumes that there are no other changes in our financial structure or the terms of our borrowings. Our exposure to fluctuations in interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our Credit Agreement.

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

Item 8. Financial Statements and Supplementary Data

GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA


		(PAGES)


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

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


	YEAR ENDED DECEMBER 31,

	2008			2007			2006

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

Total expenses		35,379			44,119			28,429

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

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

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

Earnings from discontinued operations		2,648			5,784			797

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

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

Diluted		24,774			24,787			24,759

Dividends declared per share	$	1.87		$	1.85		$	1.82

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


	YEAR ENDED DECEMBER 31,

	2008			2007			2006

Net earnings	$	41,810		$	33,894		$	42,725
Other comprehensive loss:
Net unrealized loss on interest rate swap		(1,997	)		(1,478	)		(821	)

Comprehensive Income	$	39,813		$	32,416		$	41,904

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

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


	DECEMBER 31,

	2008			2007

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

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

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

Total assets	$	387,813		$	396,911

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

Total liabilities		181,916			184,733

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

Total shareholders’ equity		205,897			212,178

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

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

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


	YEAR ENDED DECEMBER 31,

	2008			2007			2006

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	41,810		$	33,894		$	42,725
Adjustments to reconcile net earnings to net cash flow provided by operating activities:
Depreciation and amortization expense		11,875			9,794			7,883
Gain on dispositions of real estate		(2,787	)		(6,179	)		(1,581	)
Deferred rental revenue		(1,803	)		(3,112	)		(3,010	)
Allowance for deferred rent receivable		—			10,494			—
Amortization of above-market and below-market leases		(790	)		(1,047	)		—
Accretion expense		956			974			923
Stock-based employee compensation expense		326			492			186
Changes in assets and liabilities:
Recoveries from state underground storage tank funds, net		827			(379	)		772
Mortgages and accounts receivable, net		(5	)		44			(172	)
Prepaid expenses and other assets		423			(130	)		170
Environmental remediation costs		(2,217	)		(80	)		(1,425	)
Accounts payable and accrued expenses		(1,031	)		(249	)		545
Accrued income taxes		—			—			(700	)

Net cash flow provided by operating activities		47,584			44,516			46,316

CASH FLOWS FROM INVESTING ACTIVITIES:
Property acquisitions and capital expenditures		(6,579	)		(90,636	)		(15,538	)
Proceeds from dispositions of real estate		5,295			8,420			2,462
(Increase) decrease in cash held for property acquisitions		2,397			(2,079	)		(465	)
Collection (issuance) of mortgages receivable, net		(55	)		267			326

Net cash flow provided by (used in) investing activities		1,058			(84,028	)		(13,215	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under credit agreement, net		(2,250	)		87,500			11,000
Cash dividends paid		(46,294	)		(45,650	)		(44,819	)
Credit agreement origination costs		—			(863	)		—
Cash paid in settlement of restricted stock units		—			(405	)		—
Repayment of mortgages payable, net		—			(194	)		(30	)
Proceeds from exercise of stock options		9			—			696

Net cash flow provided by (used in) financing activities		(48,535	)		40,388			(33,153	)

Net increase (decrease) in cash and cash equivalents		107			876			(52	)
Cash and cash equivalents at beginning of year		2,071			1,195			1,247

Cash and cash equivalents at end of year	$	2,178		$	2,071		$	1,195

Supplemental disclosures of cash flow information Cash paid (refunded) during the year for:
Interest	$	6,728		$	7,021		$	2,638
Income taxes, net		708			488			576
Recoveries from state underground storage tank funds		(1,511	)		(1,644	)		(2,128	)
Environmental remediation costs		6,542			6,314			5,132

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

GETTY REALTY CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of: Assets are written down to fair value (determined on a nonrecurring basis using a discounted cash flow method and significant unobservable inputs) when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. The Company reviews and adjusts as necessary its depreciation estimates and method when long-lived assets are tested for recoverability. Assets held for disposal are written down to fair value less disposition costs.

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

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

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

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

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

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

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

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

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

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

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

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

2. LEASES

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

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

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

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

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

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


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

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

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

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

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

3. COMMITMENTS AND CONTINGENCIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

4. CREDIT AGREEMENT

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

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

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

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

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

5. ENVIRONMENTAL EXPENSES

The Company is subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment such as the remediation of known contamination and the retirement and decommissioning or removal of long-lived assets including buildings containing hazardous materials, USTs and other equipment. Environmental expenses are principally attributable to remediation costs which include installing, operating, maintaining and decommissioning remediation systems, monitoring contamination, and governmental agency reporting incurred in connection with contaminated properties. The Company seeks reimbursement from state UST remediation funds related to these environmental expenses where available.

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

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

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

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

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

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

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

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

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

6. INCOME TAXES

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

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

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

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

7. SHAREHOLDERS’ EQUITY

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


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

	SHARES		AMOUNT										TOTAL

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

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

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

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

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

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

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


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

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

8. SEVERANCE AGREEMENT AND EMPLOYEE BENEFIT PLANS

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

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

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

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

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

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

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

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

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


	YEAR ENDED DECEMBER 31,

	2008								2007			2006

		NUMBER OF SHARES			WEIGHTED- AVERAGE EXERCISE PRICE	WEIGHTED- AVERAGE REMAINING CONTRACTUAL TERM		AGGREGATE INTRINSIC VALUE (IN THOUSANDS)	NUMBER OF SHARES		WEIGHTED- AVERAGE EXERCISE PRICE	NUMBER OF SHARES			WEIGHTED- AVERAGE EXERCISE PRICE

Outstanding at beginning of year		17,750		$	20.73				12,750	$	18.00	84,378		$	19.48
Issued		—			—				5,000		27.68	—			—
Exercised (a)		(500	)		18.30				—		—	(71,628	)		19.74
Cancelled		—			—				—		—	—			—

Outstanding at end of year		17,250		$	20.80	5.3	$	4	17,750	$	20.73	12,750		$	18.00

Exercisable at end of year (b)		13,500		$	18.89	4.8	$	29	12,750	$	18.00	12,750		$	18.00


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

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

9. QUARTERLY FINANCIAL DATA

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


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

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

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

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


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

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

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

10. PROPERTY ACQUISITIONS

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

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

The purchase price has been allocated between assets, liabilities and intangible assets based on the estimates of fair value. The Company estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant” and identified intangible assets and liabilities (consisting of leasehold interests, above-market and below-market leases and in-place leases). Based on these estimates, the Company allocated $89,908,000, $5,351,000 and $10,724,000 of the purchase price to acquired tangible assets; identified intangible assets; and identified intangible liabilities, respectively.

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

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


	2007		2006

Revenues from rental properties	$	81,344	$	81,724

Net earnings	$	34,348	$	43,900

Net earnings per share
Basic	$	1.39	$	1.77
Diluted	$	1.39	$	1.77

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

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

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

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

/s/ PricewaterhouseCoopers LLP

New York, New York

March 2, 2009

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

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

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

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

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in Internal Control — Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2008.

The effectiveness of our internal control over financial reporting as of December 31, 2008, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in “Item 8. Financial Statements and Supplementary Data”.

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

NYSE Certifications

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

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

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


NAME	AGE	POSITION	OFFICER SINCE

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

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

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

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

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

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

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

Item 11. Executive Compensation

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

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

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

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

There were no such relationships or transactions to report for the year ended December 31, 2008. Information with respect to director independence is incorporated herein by reference to information under the heading “Directors’ Meetings, Committees and Executive Officers — Independence of Directors” in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

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

PART IV

Item 15. Exhibits and Financial Statement Schedules


	(a)(1) Financial Statements

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

	(a)(2) Financial Statement Schedules

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


		PAGES

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


	(a)(3) Exhibits

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors of Getty Realty Corp.:

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

/s/ PricewaterhouseCoopers LLP

New York, New York
March 2, 2009

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


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

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

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

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


	2008			2007			2006

Investment in real estate:
Balance at beginning of year	$	474,254		$	383,558		$	370,495
Acquisitions		6,540			94,700			15,496
Capital expenditures		—			1,310			42
Sales and condemnations		(3,939	)		(3,464	)		(1,416	)
Lease terminations		(3,288	)		(1,850	)		(1,059	)

Balance at end of year	$	473,567		$	474,254		$	383,558

Accumulated depreciation and amortization:
Balance at beginning of year	$	122,465		$	116,089		$	109,800
Depreciation and amortization expense		11,576			9,448			7,883
Sales and condemnations		(1,431	)		(1,222	)		(535	)
Lease terminations		(3,288	)		(1,850	)		(1,059	)

Balance at end of year	$	129,322		$	122,465		$	116,089

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


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

Description					Land		Building and Improvements		Total


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


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

Description					Land		Building and Improvements		Total


CHRISTIANA, PA		182,593		11,178		65,212		128,559		193,771		128,559	1989
LINWOOD, PA		171,518		22,371		102,968		90,921		193,889		89,412	1987
OZONE PARK, NY		0		193,968		0		193,968		193,968		193,968	1986
ELMONT, NY		108,348		85,793		64,290		129,851		194,141		96,559	1982
ROTHSVILLE, PA		169,550		25,188		52,169		142,569		194,738		142,569	1989
OLD BRIDGE, NJ		85,617		109,980		56,190		139,407		195,597		138,339	1972
BREWSTER, NY		117,603		78,076		72,403		123,276		195,679		116,856	1972
BLOOMFIELD, CT		141,452		54,786		90,000		106,238		196,238		102,146	1986
JACKSONVILLE, FL		196,764		0		114,434		82,330		196,764		31,009	2000
EPHRATA, PA		187,843		9,400		65,212		132,031		197,243		131,124	1989
BRONX, NY		95,328		102,639		73,750		124,217		197,967		118,171	1976
RAVENA, NY		0		199,900		0		199,900		199,900		193,108	1991
BROOKLYN, NY		74,808		125,120		30,694		169,234		199,928		164,543	1967
POUGHKEEPSIE, NY		32,885		168,354		35,904		165,335		201,239		158,649	1971
JACKSONVILLE, FL		201,477		0		117,907		83,570		201,477		31,479	2000
DOUGLASSVILLE, PA		178,488		23,321		128,738		73,071		201,809		73,071	1990
CATSKILL, NY		104,447		99,076		203,523		0		203,523		0	1989
RHINEBECK, NY		203,658		0		101,829		101,829		203,658		9,505	2007
QUARRYVILLE, NY		35,917		168,199		35,916		168,200		204,116		161,348	1988
LEXINGTON, NC		204,139		0		43,311		160,828		204,139		17,602	2007
EXETER, NH		160,000		44,343		105,000		99,343		204,343		83,837	1986
MIDDLE VILLAGE, NY		130,684		73,741		89,960		114,465		204,425		108,299	1972
LEWISTON, NY		205,000		0		125,000		80,000		205,000		30,133	2000
MIDLAND PARK, NJ		201,012		4,080		150,000		55,092		205,092		49,668	1989
AUBURN, MA		175,048		30,890		125,048		80,890		205,938		80,639	1986
LAKEWOOD, NJ		130,148		77,265		70,148		137,265		207,413		136,702	1978
CLINTON, MA		177,978		29,790		115,686		92,082		207,768		43,245	1992
TOLLAND, CT		107,902		100,178		44,000		164,080		208,080		161,058	1982
BALDWIN, NY		101,952		106,328		61,552		146,728		208,280		112,964	1978
NORTH BABYLON, NY		91,888		117,066		59,059		149,895		208,954		147,091	1978
NEW YORK, NY		106,363		103,035		79,275		130,123		209,398		126,852	1976
HANCOCK, NY		100,000		109,470		50,000		159,470		209,470		155,229	1986
WATERFORD, CT		76,981		133,059		0		210,040		210,040		202,481	1982
AMITYVILLE, NY		70,246		139,953		42,148		168,051		210,199		168,051	1978
OCEANSIDE, NY		40,378		169,929		40,000		170,307		210,307		137,354	1970
MENANDS, NY		150,580		60,563		49,999		161,144		211,143		147,689	1988
WILLIAMSVILLE, NY		211,972		0		176,643		35,329		211,972		13,306	2000
PELHAM MANOR, NY		127,304		85,087		75,800		136,591		212,391		126,720	1972
MILLER PLACE, NY		110,000		103,160		66,000		147,160		213,160		145,331	1978
BRONX, NY		93,817		120,396		67,200		147,013		214,213		124,497	1985
MILFORD, MA		0		214,331		0		214,331		214,331		173,037	1985
BLUEPOINT, NY		96,163		118,524		96,068		118,619		214,687		114,006	1972
MOUNTVILLE, PA		195,635		19,506		78,254		136,887		215,141		136,887	1989
BAY SHORE, NY		188,900		26,286		123,000		92,186		215,186		53,485	1985
N. WINDHAM, ME		161,365		53,923		86,365		128,923		215,288		128,884	1986
TEWKSBURY, MA		125,000		90,338		75,000		140,338		215,338		134,274	1986
STRATFORD, NJ		215,597		0		0		215,597		215,597		206,617	1995
PELHAM MANOR, NY		136,791		78,987		75,000		140,778		215,778		137,650	1985
SEABROOK, NH		199,780		19,102		124,780		94,102		218,882		93,844	1986
FRANKLIN, CT		50,904		168,470		20,232		199,142		219,374		198,201	1982
WESTFIELD, MA		123,323		96,093		50,000		169,416		219,416		166,343	1982
HAMPTON, NH		193,103		26,449		135,598		83,954		219,552		83,589	1986
MIDDLETOWN, CT		133,022		86,915		131,312		88,625		219,937		88,625	1987
WORCESTER, MA		186,877		33,510		121,470		98,917		220,387		47,387	1993
STONY BROOK, NY		175,921		44,529		105,000		115,450		220,450		114,507	1978
YONKERS, NY		153,184		67,266		76,592		143,858		220,450		78,260	1987
EMMITSBURG, MD		146,949		73,613		101,949		118,613		220,562		118,392	1986
MANCHESTER, CT		65,590		156,628		64,750		157,468		222,218		156,833	1982
STATEN ISLAND, NY		0		222,525		0		222,525		222,525		222,525	1981
PELHAM, NH		169,182		53,497		136,077		86,602		222,679		80,417	1986
AMHERST, NY		223,009		0		173,451		49,558		223,009		29,860	2000
NEW ROCHELLE, NY		188,932		34,649		103,932		119,649		223,581		119,017	1982


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

Description					Land		Building and Improvements		Total


SOMERSWORTH, NH		210,805		15,012		157,520		68,297		225,817		68,169	1986
RED HOOK, NY		0		226,787		0		226,787		226,787		220,274	1991
BRIDGEWATER, MA		190,360		36,762		140,000		87,122		227,122		81,814	1987
BROOKLYN, NY		135,693		91,946		100,035		127,604		227,639		107,679	1972
NEW YORK, NY		0		229,435		0		229,435		229,435		229,433	1985
HYANNIS, MA		222,472		7,282		144,607		85,147		229,754		24,909	1991
LAGRANGEVILLE, NY		129,133		101,140		64,626		165,647		230,273		163,995	1972
PINE HILL, NJ		190,568		39,918		115,568		114,918		230,486		112,628	1986
TREVOSE, PA		215,214		16,382		150,000		81,596		231,596		71,123	1987
MILFORD, NH		190,000		41,689		115,000		116,689		231,689		112,700	1986
W. HAVERSTRAW, NY		194,181		38,141		140,000		92,322		232,322		87,313	1978
MERIDEN, CT		126,188		106,805		72,344		160,649		232,993		155,320	1982
LANCASTER, PA		208,677		24,347		78,254		154,770		233,024		154,770	1989
WEST HAVEN, CT		185,138		48,619		74,000		159,757		233,757		157,837	1982
LEOMINSTER, MA		185,040		49,592		85,040		149,592		234,632		147,070	1986
PELHAM, NH		0		234,915		0		234,915		234,915		140,743	1996
NEW MILFORD, CT		113,947		121,174		0		235,121		235,121		231,921	1982
EBENEZER, PA		147,058		88,474		68,804		166,728		235,532		144,565	1989
STOUGHTON, MA		0		235,794		0		235,794		235,794		200,384	1990
QUINCY, MA		200,000		36,112		125,000		111,112		236,112		109,396	1986
HARWICH, MA		225,000		12,044		150,000		87,044		237,044		84,250	1986
NORTH KINGSTOWN, RI		211,835		25,971		89,135		148,671		237,806		147,346	1985
KENHORST, PA		143,466		94,592		65,212		172,846		238,058		154,465	1989
BOYERTOWN, PA		233,000		5,373		151,700		86,673		238,373		40,875	1985
ATCO, NJ		153,159		85,853		131,766		107,246		239,012		107,063	1987
SPRINGFIELD, MA		0		239,087		0		239,087		239,087		183,746	1984
COLUMBIA, PA		225,906		13,206		75,000		164,112		239,112		139,513	1989
PAWTUCKET, RI		237,100		2,990		154,400		85,690		240,090		39,103	1985
NEW HAVEN, CT		217,000		23,889		141,300		99,589		240,889		55,976	1985
ROTTERDAM, NY		140,600		100,399		91,600		149,399		240,999		112,696	1985
SACO, ME		204,006		37,173		150,694		90,485		241,179		90,385	1986
SOMERSWORTH, NH		180,800		60,497		117,700		123,597		241,297		72,820	1985
PITTSFIELD, MA		123,167		118,273		50,000		191,440		241,440		190,690	1982
BRONX, NY		45,044		196,956		10,044		231,956		242,000		202,976	1976
LEWISTON, ME		180,338		62,629		101,338		141,629		242,967		139,558	1986
LAKE RONKONKOMA, NY		87,097		156,576		51,000		192,673		243,673		189,671	1978
HANOVER, PA		231,028		13,252		70,000		174,280		244,280		155,369	1989
NEW WINDSOR, NY		150,000		94,791		75,000		169,791		244,791		157,978	1986
HILLSBOROUGH, NJ		237,122		7,729		100,000		144,851		244,851		67,608	1985
DEDHAM, MA		225,824		19,150		125,824		119,150		244,974		118,859	1987
POTTSVILLE, PA		162,402		82,769		43,471		201,700		245,171		188,055	1990
YONKERS, NY		202,826		42,877		144,000		101,703		245,703		86,111	1986
OSSINING, NY		140,992		104,761		97,527		148,226		245,753		141,908	1982
WELLSVILLE, NY		247,281		0		0		247,281		247,281		28,025	2006
MERIDEN, CT		207,873		39,829		84,000		163,702		247,702		162,841	1982
BETHPAGE, NY		210,990		38,356		126,000		123,346		249,346		122,757	1978
COTTAGE HILLS, IL		249,419		0		26,199		223,220		249,419		24,030	2007
LACKAWANNA, NY		250,030		0		129,870		120,160		250,030		56,548	2000
RED LION, PA		221,719		29,788		52,169		199,338		251,507		197,653	1989
BETHLEHEM, PA		208,677		42,927		130,423		121,181		251,604		118,994	1989
CROMWELL, CT		70,017		183,119		24,000		229,136		253,136		229,136	1982
BELLEVILLE, NJ		215,468		38,163		149,237		104,394		253,631		103,157	1986
BRISTOL, CT		253,639		0		149,553		104,086		253,639		17,346	2004
CENTRAL ISLIP, NY		103,183		151,449		61,435		193,197		254,632		193,197	1978
PORTSMOUTH, NH		235,000		20,257		150,000		105,257		255,257		104,984	1986
HAWTHORNE, NJ		245,100		10,967		159,600		96,467		256,067		48,303	1985
COLONIA, NJ		253,100		3,395		164,800		91,695		256,495		41,954	1985
HILLSIDE, NJ		225,000		31,552		150,000		106,552		256,552		105,238	1987
S. WEYMOUTH, MA		211,891		44,893		256,784		0		256,784		0	1985
WEST SENECA, NY		257,142		0		184,385		72,757		257,142		27,411	2000
WEST YARMOUTH, MA		225,000		33,165		125,000		133,165		258,165		132,212	1986


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

Description					Land		Building and Improvements		Total


LONG ISLAND CITY, NY		106,592		151,819		73,260		185,151		258,411		156,275	1976
CLIFTON HGTS, PA		213,000		46,824		138,700		121,124		259,824		77,026	1985
ENFIELD, CT		259,881		0		0		259,881		259,881		127,392	2004
SHREWSBURY, PA		132,993		126,898		52,832		207,059		259,891		176,046	1989
REINHOLDS, PA		176,520		83,686		82,017		178,189		260,206		153,485	1989
EPHRATA, PA		208,604		52,826		30,000		231,430		261,430		173,272	1989
MILFORD, MA		0		262,436		0		262,436		262,436		192,695	1991
EXETER, NH		113,285		149,265		65,000		197,550		262,550		188,505	1986
EAST HILLS, NY		241,613		21,070		241,613		21,070		262,683		20,248	1986
STONY POINT, NY		59,329		203,448		55,800		206,977		262,777		199,852	1971
HYDE PARK, NY		253,100		12,015		139,100		126,015		265,115		109,042	1985
READING, PA		182,592		82,812		104,338		161,066		265,404		144,701	1989
HARTFORD, CT		233,000		32,563		151,700		113,863		265,563		65,422	1985
SOUTH PORTLAND, ME		180,689		84,980		110,689		154,980		265,669		154,980	1986
BRIDGEPORT, CT		245,100		20,652		159,600		106,152		265,752		56,447	1985
READING, PA		129,284		137,863		65,352		201,795		267,147		167,329	1989
E. PATCHOGUE, NY		57,049		210,390		34,213		233,226		267,439		231,219	1978
CLAYMONT, DE		237,200		30,878		151,700		116,378		268,078		69,812	1985
EAST HARTFORD, CT		208,004		60,493		84,000		184,497		268,497		184,155	1982
NEPTUNE CITY, NJ		269,600		0		175,600		94,000		269,600		41,048	1985
OAKHURST, NJ		225,608		46,405		100,608		171,405		272,013		169,702	1985
FRANKLIN, MA		253,619		18,437		164,852		107,204		272,056		37,758	1988
AGAWAM, MA		209,555		63,621		136,000		137,176		273,176		93,909	1985
WAPPINGERS FALLS, NY		114,185		159,162		111,785		161,562		273,347		154,655	1971
BRONX, NY		90,176		183,197		40,176		233,197		273,373		201,037	1976
COLONIE, NY		245,150		28,322		120,150		153,322		273,472		149,666	1986
RIDGEFIELD PARK, NJ		273,549		0		150,000		123,549		273,549		88,159	1997
NORTHPORT, NY		241,100		33,036		157,000		117,136		274,136		69,360	1985
SOUTHINGTON, CT		115,750		158,561		70,750		203,561		274,311		202,983	1982
FRANKLIN SQUARE, NY		152,572		121,756		137,315		137,013		274,328		94,541	1978
SANFORD, ME		265,523		9,178		201,316		73,385		274,701		73,385	1986
ARENDTSVILLE, PA		173,759		101,020		32,603		242,176		274,779		219,328	1989
OSSINING, NY		231,100		44,049		149,200		125,949		275,149		75,785	1985
WILMINGTON, DE		242,800		32,615		158,100		117,315		275,415		69,602	1985
LAURELDALE, PA		262,079		15,550		86,941		190,688		277,629		188,178	1989
BRONX, NY		0		278,517		0		278,517		278,517		224,698	1976
BAY SHORE, NY		156,382		123,032		85,854		193,560		279,414		189,628	1981
NORTH GRAFTON, MA		244,720		35,136		159,068		120,788		279,856		51,708	1991
NEFFSVILLE, PA		234,761		45,637		91,296		189,102		280,398		185,596	1989
EPHRATA, PA		183,477		96,937		136,809		143,605		280,414		121,045	1990
QUEENSBURY, NY		215,255		65,245		140,255		140,245		280,500		134,653	1986
BRYN MAWR, PA		221,000		59,832		143,900		136,932		280,832		89,510	1985
TERRYVILLE, CT		182,308		98,911		74,000		207,219		281,219		207,051	1982
NEW CITY, NY		180,979		100,597		109,025		172,551		281,576		171,798	1978
MALTA, NY		190,000		91,726		65,000		216,726		281,726		209,422	1986
BRONX, NY		88,865		193,679		63,315		219,229		282,544		217,432	1976
BRONX, NY		141,322		141,909		86,800		196,431		283,231		186,116	1972
PARADISE, PA		132,295		151,188		102,295		181,188		283,483		140,177	1986
RONKONKOMA, NY		76,478		208,121		46,057		238,542		284,599		233,393	1978
TROY, NY		225,000		60,569		146,500		139,069		285,569		85,229	1985
ELLENVILLE, NY		233,000		53,690		151,700		134,990		286,690		85,391	1985
SOUTH HADLEY, MA		232,445		54,351		90,000		196,796		286,796		191,723	1982
WESTBROOK, ME		93,345		193,654		50,431		236,568		286,999		192,936	1986
WORCESTER, MA		146,832		140,589		95,441		191,980		287,421		115,861	1991
WARWICK, RI		253,100		34,400		164,800		122,700		287,500		70,531	1985
WORCESTER, MA		275,866		11,674		179,313		108,227		287,540		33,559	1992
UNION, NJ		287,800		0		287,800		0		287,800		0	1985
RICHMOND, VA		120,818		167,895		0		288,713		288,713		264,641	1990
HAVERTOWN, PA		265,200		24,500		172,700		117,000		289,700		62,451	1985
FORT EDWARD, NY		225,000		65,739		150,000		140,739		290,739		137,351	1986
GRANBY, MA		58,804		232,477		24,000		267,281		291,281		204,923	1982


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

Description					Land		Building and Improvements		Total


ELKINS PARK, PA		275,171		17,524		200,000		92,695		292,695		91,156	1990
BRONX, NY		0		293,507		0		293,507		293,507		293,507	1972
KING GEORGE, VA		0		293,638		293,638		0		293,638		0	2005
BALLSTON, NY		160,000		134,021		110,000		184,021		294,021		180,833	1986
HAMBURG, NY		294,031		0		163,906		130,125		294,031		49,013	2000
IPSWICH, MA		275,000		19,161		150,000		144,161		294,161		142,410	1986
ALBANY, NY		206,620		87,949		81,620		212,949		294,569		206,450	1986
NEW YORK, NY		125,923		168,772		78,125		216,570		294,695		213,843	1972
HAMBURG, PA		219,280		75,745		130,423		164,602		295,025		154,329	1989
WEST DEPTFORD, NJ		245,450		50,295		151,053		144,692		295,745		142,590	1987
BALDWIN, NY		290,923		5,007		151,280		144,650		295,930		62,219	1986
NORRISTOWN, PA		175,300		120,786		175,300		120,786		296,086		66,625	1985
KERNERSVILLE, NC		296,770		0		72,777		223,994		296,770		20,060	2007
STATEN ISLAND, NY		40,598		256,262		26,050		270,810		296,860		201,194	1973
PISCATAWAY, NJ		269,200		28,232		175,300		122,132		297,432		68,358	1985
ROANOKE, VA		91,281		206,221		0		297,502		297,502		229,390	1990
MANCHESTER, NH		261,100		36,404		170,000		127,504		297,504		68,448	1985
ORLEANS, MA		260,000		37,637		185,000		112,637		297,637		108,503	1986
MILLERTON, NY		175,000		123,063		100,000		198,063		298,063		185,327	1986
ROTTERDAM, NY		132,287		166,077		0		298,364		298,364		246,286	1995
STRATFORD, CT		285,200		14,728		185,700		114,228		299,928		57,536	1985
SALEM, MA		275,000		25,393		175,000		125,393		300,393		123,970	1986
MCCONNELLSBURG, PA		155,367		145,616		69,915		231,068		300,983		132,501	1989
EPPING, NH		170,000		131,403		120,000		181,403		301,403		162,869	1986
STATEN ISLAND, NY		0		301,713		0		301,713		301,713		233,997	1978
OXFORD, MA		293,664		9,098		190,882		111,880		302,762		32,247	1993
ORANGE, NJ		281,200		24,573		183,100		122,673		305,773		66,891	1985
DEPTFORD, NJ		281,200		24,745		183,100		122,845		305,945		66,308	1985
STATEN ISLAND, NY		173,667		133,198		113,369		193,496		306,865		179,987	1976
CASTILE, NY		307,196		0		132,196		175,000		307,196		19,833	2006
JAMAICA, NY		12,000		295,750		12,000		295,750		307,750		205,240	1970
CLIFTON, NJ		301,518		6,413		150,000		157,931		307,931		105,862	1987
BRONX, NY		0		309,235		176,558		132,677		309,235		71,647	1971
OXFORD, PA		191,449		118,321		65,212		244,558		309,770		217,909	1989
SOUTHBRIDGE, MA		249,169		62,205		161,960		149,414		311,374		80,091	1993
BUFFALO, NY		312,426		0		150,888		161,538		312,426		73,384	2000
PEMBROKE, NH		138,492		174,777		100,837		212,432		313,269		156,678	1986
CANDIA, NH		130,000		184,004		80,000		234,004		314,004		229,159	1986
N RICHLAND HILLS, TX		314,246		0		125,745		188,501		314,246		17,806	2007
BRONX, NY		130,396		184,222		90,396		224,222		314,618		207,544	1972
BALLSTON SPA, NY		210,000		105,073		100,000		215,073		315,073		210,459	1986
REGO PARK, NY		33,745		281,380		23,000		292,125		315,125		236,798	1974
PHILADELPHIA, PA		281,200		34,285		183,100		132,385		315,485		75,319	1985
EPSOM, NH		220,000		96,022		155,000		161,022		316,022		145,638	1986
TONAWANDA, NY		304,762		11,493		211,337		104,918		316,255		39,521	2000
RIDGEWOOD, NY		278,372		38,578		250,000		66,950		316,950		25,068	1986
WHITE PLAINS, NY		258,600		60,120		164,800		153,920		318,720		94,842	1985
NORRISTOWN, PA		241,300		78,419		157,100		162,619		319,719		90,430	1985
WEST TAGHKANIC, NY		202,750		117,540		121,650		198,640		320,290		135,096	1986
CATSKILL, NY		321,446		0		125,000		196,446		321,446		45,230	2004
ADAMSTOWN, PA		213,424		108,844		100,000		222,268		322,268		168,733	1989
GREEN VILLAGE, NJ		277,900		44,471		127,900		194,471		322,371		191,202	1985
MIDDLETOWN, RI		306,710		16,364		176,710		146,364		323,074		145,343	1987
BROOKLYN, NY		74,928		250,382		44,957		280,353		325,310		209,144	1978
SOUTH YARMOUTH, MA		275,866		49,961		179,313		146,514		325,827		65,103	1991
FURLONG, PA		175,300		151,150		175,300		151,150		326,450		97,131	1985
ALDAN, PA		281,200		45,539		183,100		143,639		326,739		84,049	1985
YARMOUTHPORT, MA		300,000		26,940		150,000		176,940		326,940		176,940	1986
FITCHBURG, MA		311,808		16,384		202,675		125,517		328,192		40,798	1991
WESTFIELD, MA		289,580		38,615		188,400		139,795		328,195		82,366	1985
ROBESONIA, PA		225,913		102,802		70,000		258,715		328,715		224,809	1989


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

Description					Land		Building and Improvements		Total


BELMONT, MA		301,300		27,938		196,200		133,038		329,238		71,941	1985
WORCESTER, MA		284,765		45,285		185,097		144,953		330,050		67,168	1991
QUEENSBURY, NY		225,000		105,592		165,000		165,592		330,592		160,273	1986
PITTSFIELD, MA		281,200		51,100		183,100		149,200		332,300		121,888	1985
BRIDGEPORT, CT		313,400		20,303		204,100		129,603		333,703		67,230	1985
CAIRO, NY		191,928		142,895		46,650		288,173		334,823		279,210	1988
METHUEN, MA		147,330		188,059		50,731		284,658		335,389		239,946	1986
FITCHBURG, MA		142,383		194,291		92,549		244,125		336,674		144,755	1992
MILFORD, CT		293,512		43,846		191,000		146,358		337,358		85,956	1985
BRENTWOOD, NY		253,058		84,485		125,000		212,543		337,543		205,657	1968
BAY SHORE, NY		47,685		289,972		0		337,657		337,657		336,713	1969
BRIDGEPORT, CT		313,400		24,314		204,100		133,614		337,714		70,985	1985
CONSHOHOCKEN, PA		261,100		77,885		170,000		168,985		338,985		110,753	1985
PHILADELPHIA, PA		289,300		50,010		188,400		150,910		339,310		92,167	1985
WEST BOYLSTON, MA		311,808		28,937		202,675		138,070		340,745		52,841	1991
NORTH LINDENHURST, NY		341,530		0		192,000		149,530		341,530		62,218	1998
LATHAM, NY		275,000		68,160		150,000		193,160		343,160		187,787	1986
REIFFTON, PA		338,250		5,295		43,470		300,075		343,545		300,075	1989
OLD BRIDGE, NJ		319,521		24,445		204,621		139,345		343,966		74,086	1985
WESTBROOK, CT		344,881		0		0		344,881		344,881		143,700	2004
SCOTCH PLAINS, NJ		331,063		14,455		214,600		130,918		345,518		65,909	1985
HILLTOP, NJ		329,500		16,758		214,600		131,658		346,258		65,932	1985
BREWSTER, NY		302,564		44,393		142,564		204,393		346,957		200,406	1988
COMMACK, NY		321,400		25,659		209,300		137,759		347,059		74,227	1985
HATBORO, PA		285,200		61,979		185,700		161,479		347,179		104,001	1985
WANTAGH, NY		261,814		85,758		175,000		172,572		347,572		124,605	1985
BROOKLYN, NY		116,328		232,254		75,000		273,582		348,582		197,062	1980
BRONX, NY		128,419		221,197		100,681		248,935		349,616		200,262	1972
NEW BERN, NC		349,946		0		190,389		159,557		349,946		19,490	2007
IRVINGTON, NJ		271,200		79,011		176,600		173,611		350,211		116,726	1985
MEDIA, PA		326,195		24,082		191,000		159,277		350,277		101,463	1985
HATBORO, PA		289,300		61,371		188,400		162,271		350,671		103,093	1985
PHILADELPHIA, PA		285,200		65,498		185,700		164,998		350,698		105,438	1985
RIDGE, NY		276,942		73,821		200,000		150,763		350,763		125,987	1977
GRAND ISLAND, NY		350,849		0		247,348		103,501		350,849		55,756	2000
METHUEN, MA		300,000		50,861		150,000		200,861		350,861		199,115	1986
CINNAMINSON, NJ		326,501		24,931		176,501		174,931		351,432		172,960	1987
ABINGTON, PA		309,300		43,696		201,400		151,596		352,996		88,995	1985
BEDFORD, TX		353,047		0		112,953		240,094		353,047		29,199	2007
WORCESTER, MA		342,608		11,101		222,695		131,014		353,709		37,328	1991
BROOKLYN, NY		100,000		254,503		66,890		287,613		354,503		240,968	1972
MAGNOLIA, NJ		329,500		26,488		214,600		141,388		355,988		76,662	1985
TUCKERTON, NJ		224,387		132,864		131,018		226,233		357,251		222,358	1987
MERRIMACK, NH		151,993		205,823		100,598		257,218		357,816		198,323	1986
HYDE PARK, NY		300,000		59,198		175,000		184,198		359,198		180,659	1986
WILMINGTON, DE		337,500		21,971		219,800		139,671		359,471		72,609	1985
EAST PROVIDENCE, RI		309,950		49,546		202,050		157,446		359,496		93,763	1985
SCARSDALE, NY		257,100		102,632		167,400		192,332		359,732		125,659	1985
BRISTOL, CT		359,906		0		0		359,906		359,906		149,963	2004
BAYONNE, NJ		341,500		18,947		222,400		138,047		360,447		70,535	1985
WINDSOR LOCKS, CT		360,664		0		0		360,664		360,664		60,113	2004
BROOKLYN, NY		237,100		125,067		154,400		207,767		362,167		125,486	1985
BRIDGEPORT, CT		346,442		16,990		230,000		133,432		363,432		131,730	1985
LEOLA, PA		262,890		102,007		131,189		233,708		364,897		105,602	1989
BRISTOL, CT		365,028		0		237,268		127,760		365,028		21,292	2004
BROOKLYN, NY		0		365,767		0		365,767		365,767		337,789	1970
BRIDGEPORT, CT		338,415		27,786		219,800		146,401		366,201		77,714	1985
HOLYOKE, MA		329,500		38,345		214,600		153,245		367,845		145,091	1985
PORTLAND, ME		325,400		42,652		211,900		156,152		368,052		82,597	1985
BRONX, NY		69,150		300,279		34,150		335,279		369,429		256,816	1972


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

Description					Land		Building and Improvements		Total


PLAINVILLE, CT		80,000		290,433		0		370,433		370,433		322,526	1983
CHERRY HILL, NJ		357,500		13,879		232,800		138,579		371,379		67,609	1985
CRANFORD, NJ		342,666		29,222		222,400		149,488		371,888		81,200	1985
STRATFORD, CT		301,300		70,735		196,200		175,835		372,035		112,470	1985
LEOMINSTER, MA		195,776		177,454		127,254		245,976		373,230		149,460	1991
MOHNTON, PA		317,228		56,374		66,425		307,177		373,602		291,371	1989
PAWTUCKET, RI		212,775		161,188		118,860		255,103		373,963		226,580	1986
HINGHAM, MA		352,606		22,484		242,520		132,570		375,090		130,995	1989
MINEOLA, NY		341,500		34,411		222,400		153,511		375,911		85,135	1985
BROOKLYN, NY		147,795		228,379		103,815		272,359		376,174		233,292	1972
STATEN ISLAND, NY		25,000		351,829		0		376,829		376,829		302,382	1972
WILMINGTON, DE		309,300		67,834		201,400		175,734		377,134		106,915	1985
SPRINGFIELD, MA		139,373		239,713		50,000		329,086		379,086		247,702	1983
TRENTON, NJ		373,600		9,572		243,300		139,872		383,172		65,722	1985
SLEEPY HOLLOW, NY		280,825		102,486		129,744		253,567		383,311		245,574	1969
S. GLENS FALLS, NY		325,000		58,892		188,700		195,192		383,892		195,192	1986
NORWALK, CT		257,308		128,940		104,000		282,248		386,248		281,503	1982
MASSAPEQUA, NY		333,400		53,696		217,100		169,996		387,096		103,834	1985
SPRING LAKE, NJ		345,500		42,194		225,000		162,694		387,694		90,468	1985
ROCHESTER, NH		179,717		208,103		100,000		287,820		387,820		233,623	1986
WORCESTER, MA		231,372		157,356		150,392		238,336		388,728		138,067	1991
OZONE PARK, NY		57,289		331,799		44,715		344,373		389,088		289,034	1976
NEW ROCHELLE, NY		337,500		51,741		219,800		169,441		389,241		96,058	1985
NEW BRITAIN, CT		390,497		0		253,823		136,674		390,497		22,779	2004
WALL TOWNSHIP, NJ		336,441		55,709		121,441		270,709		392,150		266,566	1986
BRONX, NY		70,132		322,265		30,132		362,265		392,397		272,357	1972
LANCASTER, PA		308,964		83,443		104,338		288,069		392,407		271,636	1989
FRIENDSHIP, NY		392,517		0		42,517		350,000		392,517		39,667	2006
SAUGERTIES, NY		328,668		63,983		328,668		63,983		392,651		60,624	1988
INTERCOURSE, PA		311,503		81,287		157,801		234,989		392,790		100,787	1989
SOUTH AMBOY, NJ		299,678		94,088		178,950		214,816		393,766		213,268	1978
BASKING RIDGE, NJ		362,172		32,960		200,000		195,132		395,132		131,994	1986
GARDEN CITY, NY		361,600		33,774		235,500		159,874		395,374		87,489	1985
WOBURN, MA		350,000		45,681		200,000		195,681		395,681		193,825	1986
COBALT, CT		395,683		0		0		395,683		395,683		164,867	2004
AUBURN, MA		369,306		27,792		240,049		157,049		397,098		54,077	1991
STATEN ISLAND, NY		357,904		39,588		230,300		167,192		397,492		95,569	1985
FLUSHING, NY		118,309		280,435		78,309		320,435		398,744		232,913	1973
OCEANSIDE, NY		313,400		88,863		204,100		198,163		402,263		102,139	1985
BELLAIRE, NY		329,500		73,358		214,600		188,258		402,858		111,531	1985
CATSKILL, NY		404,988		0		354,365		50,623		404,988		4,050	2007
NORTH HAVEN, CT		405,389		0		251,985		153,404		405,389		32,459	2004
BRIDGEPORT, CT		349,500		56,209		227,600		178,109		405,709		107,742	1985
WORCESTER, MA		385,600		21,339		251,100		155,839		406,939		79,050	1985
TRENTON, NJ		337,500		69,461		219,800		187,161		406,961		120,564	1985
WILMINGTON, DE		369,600		38,077		240,700		166,977		407,677		93,054	1985
BRONX, NY		118,025		290,298		73,025		335,298		408,323		282,534	1972
SEAFORD, NY		325,400		83,257		211,900		196,757		408,657		99,029	1985
WATERTOWN, CT		351,771		58,812		204,027		206,556		410,583		109,570	1992
MORRISVILLE, PA		377,600		33,522		245,900		165,222		411,122		90,191	1985
GLENDALE, NY		124,438		287,907		86,160		326,185		412,345		270,940	1976
JERICHO, NY		0		412,536		0		412,536		412,536		270,549	1998
BRONX, NY		60,000		353,955		60,800		353,155		413,955		277,239	1965
CORONA, NY		114,247		300,172		112,800		301,619		414,419		215,843	1965
NEW ROCHELLE, NY		415,180		0		251,875		163,305		415,180		67,712	1998
WARWICK, RI		376,563		39,933		205,889		210,607		416,496		208,671	1989
ST. ALBANS, NY		329,500		87,250		214,600		202,150		416,750		128,829	1985
NASHUA, NH		197,142		219,639		155,837		260,944		416,781		198,380	1986
WILMINGTON, DE		313,400		103,748		204,100		213,048		417,148		138,441	1985
HAVERHILL, MA		400,000		17,182		225,000		192,182		417,182		191,937	1986
PHILADELPHIA, PA		389,700		28,006		253,800		163,906		417,706		87,019	1985


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

Description					Land		Building and Improvements		Total		Accumulated Depreciation


BERGENFIELD, NJ		381,590		36,271		300,000		117,861		417,861		114,909	1990
PLAISTOW, NH		300,406		117,924		244,694		173,636		418,330		163,605	1987
BELMONT, MA		389,700		28,871		253,800		164,771		418,571		87,317	1985
NEW HOLLAND, PA		313,015		106,839		143,465		276,389		419,854		251,559	1989
MADISON, NC		420,878		0		45,705		375,174		420,878		34,864	2007
TRAPPE, PA		377,600		44,509		245,900		176,209		422,109		101,796	1985
FRAMINGHAM, MA		400,449		22,280		260,294		162,435		422,729		53,269	1991
TAYLORSVILLE, NC		422,809		0		134,188		288,621		422,809		28,316	2007
PROVIDENCE, RI		231,372		191,647		150,392		272,627		423,019		140,229	1991
NORTHBOROUGH, MA		404,900		18,353		263,185		160,068		423,253		48,522	1993
MASTIC, NY		313,400		110,180		204,100		219,480		423,580		157,909	1985
PARAMUS, NJ		381,700		42,394		248,600		175,494		424,094		100,322	1985
HAVERTOWN, PA		402,000		22,660		253,800		170,860		424,660		94,304	1985
ELIZABETH, NJ		405,800		18,881		264,300		160,381		424,681		79,555	1985
BEVERLY, MA		275,000		150,741		175,000		250,741		425,741		213,799	1986
WORCESTER, MA		275,866		150,472		179,313		247,025		426,338		135,122	1991
GLEN HEAD, NY		234,395		192,295		102,645		324,045		426,690		324,045	1982
MIDLOTHIAN, TX		429,142		0		71,970		357,172		429,142		37,101	2007
HUDSON, NY		303,741		126,379		151,871		278,249		430,120		133,493	1989
PHOENIXVILLE, PA		413,800		17,561		269,500		161,861		431,361		80,398	1985
LEWISTON, ME		341,900		89,500		222,400		209,000		431,400		141,051	1985
WYOMISSING HILLS, PA		319,320		113,176		76,074		356,422		432,496		334,171	1989
ALLENTOWN, PA		357,500		76,385		232,800		201,085		433,885		110,532	1985
DERRY, NH		417,988		16,295		157,988		276,295		434,283		275,733	1987
AUDUBON, NJ		421,800		12,949		274,700		160,049		434,749		76,937	1985
ASBURY PARK, NJ		418,966		18,038		272,100		164,904		437,004		82,827	1985
BELLEVILLE, NJ		397,700		39,410		259,000		178,110		437,110		98,955	1985
BLACKWOOD, NJ		401,700		36,736		261,600		176,836		438,436		97,885	1985
DOYLESTOWN, PA		405,800		32,659		264,300		174,159		438,459		93,290	1985
NEWARK, DE		405,800		35,844		264,300		177,344		441,644		96,555	1985
GLENVILLE, NY		343,723		98,299		219,800		222,222		442,022		144,438	1985
PHILADELPHIA, PA		237,100		205,495		154,400		288,195		442,595		182,411	1985
WORCESTER, MA		167,745		275,852		167,745		275,852		443,597		156,796	1991
FAIRFIELD, CT		430,000		13,631		280,000		163,631		443,631		77,554	1985
WEST CHESTER, PA		421,800		21,935		274,700		169,035		443,735		85,817	1985
REVERE, MA		250,000		193,854		150,000		293,854		443,854		249,800	1986
BRONX, NY		128,049		315,917		83,849		360,117		443,966		263,315	1972
LANSDALE, PA		243,844		200,458		243,844		200,458		444,302		117,725	1985
DUDLEY, MA		302,563		141,993		196,666		247,890		444,556		111,855	1991
METHUEN, MA		379,664		64,941		245,900		198,705		444,605		122,989	1985
LOWELL, MA		360,949		83,674		200,949		243,674		444,623		243,406	1985
JERSEY CITY, NJ		401,700		43,808		261,600		183,908		445,508		104,788	1985
WETHERSFIELD, CT		446,610		0		0		446,610		446,610		186,088	2004
BAYSIDE, NY		245,100		202,833		159,600		288,333		447,933		186,278	1985
RIDGEFIELD, CT		401,630		47,610		166,861		282,379		449,240		276,351	1985
SHARON HILL, PA		411,057		39,574		266,800		183,831		450,631		102,910	1985
ELMONT, NY		360,056		90,633		224,156		226,533		450,689		115,598	1985
WHITING, NJ		447,199		3,519		167,090		283,628		450,718		282,841	1989
PORT JEFFERSON, NY		387,478		63,743		245,753		205,468		451,221		124,739	1985
UPTON, MA		428,498		24,611		278,524		174,585		453,109		57,819	1991
WYANDANCH, NY		453,131		0		279,500		173,631		453,131		72,197	1998
WAKEFIELD, RI		413,800		39,616		269,500		183,916		453,416		94,885	1985
PORTSMOUTH, NH		225,000		228,704		125,000		328,704		453,704		264,433	1986
WORCESTER, MA		271,417		183,331		176,421		278,327		454,748		157,381	1991
ALDAN, PA		433,800		21,152		282,500		172,452		454,952		86,068	1985
WILLINGBORO, NJ		425,800		29,928		277,300		178,428		455,728		94,774	1985
NEWBURGH, NY		430,766		25,850		150,000		306,616		456,616		297,464	1989
HUNTINGDON VALLEY, PA		421,800		36,439		274,700		183,539		458,239		99,269	1985
WARWICK, RI		434,752		24,730		266,800		192,682		459,482		112,033	1985
EAST ORANGE, NJ		421,508		37,977		272,100		187,385		459,485		104,384	1985
NISKAYUNA, NY		425,000		35,421		275,000		185,421		460,421		180,531	1986


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

Description					Land		Building and Improvements		Total		Accumulated Depreciation


EVERETT, MA		269,500		190,931		269,500		190,931		460,431		109,593	1985
FOXBOROUGH, MA		426,593		34,403		325,000		135,996		460,996		129,994	1990
BRIDGEPORT, CT		377,600		83,549		245,900		215,249		461,149		141,059	1985
YONKERS, NY		291,348		170,478		216,348		245,478		461,826		225,565	1972
AUSTIN, TX		462,233		0		274,300		187,933		462,233		21,300	2007
SIMSBURY, CT		317,704		144,637		206,700		255,641		462,341		186,794	1985
BENNINGTON, VT		309,300		154,480		201,400		262,380		463,780		150,558	1985
BRONX, NY		104,130		360,410		90,000		374,540		464,540		308,097	1985
IRVINGTON, NJ		409,700		54,841		266,800		197,741		464,541		117,015	1985
LEICESTER, MA		266,968		197,898		173,529		291,337		464,866		159,423	1991
FARMINGTON, CT		466,271		0		303,076		163,195		466,271		27,200	2004
RUTHER GLEN, VA		0		466,341		31,341		435,000		466,341		65,250	2005
NORTH PLAINFIELD, NJ		227,190		239,709		175,000		291,899		466,899		283,378	1978
WATERBURY, CT		468,469		0		304,505		163,964		468,469		27,329	2004
QUAKERTOWN, PA		379,111		89,812		243,300		225,623		468,923		146,056	1985
WATCHUNG, NJ		449,900		20,339		293,000		177,239		470,239		87,508	1985
BROCKTON, MA		275,866		194,619		179,313		291,172		470,485		167,439	1991
WALPOLE, MA		449,900		20,586		293,000		177,486		470,486		85,658	1985
POTTSVILLE, PA		451,360		19,361		147,740		322,981		470,721		316,077	1990
PARLIN, NJ		441,900		29,075		287,800		183,175		470,975		95,855	1985
WESTFORD, MA		275,000		196,493		175,000		296,493		471,493		240,656	1986
CHATHAM, MA		275,000		197,302		175,000		297,302		472,302		239,173	1986
STATEN ISLAND, NY		101,033		371,591		75,650		396,974		472,624		283,688	1972
FALMOUTH, MA		150,000		322,942		75,000		397,942		472,942		314,094	1986
BLOOMFIELD, NJ		441,900		32,951		287,800		187,051		474,851		99,723	1985
STATEN ISLAND, NY		389,700		88,922		253,800		224,822		478,622		145,297	1985
CRANSTON, RI		466,100		12,576		303,500		175,176		478,676		83,092	1985
POTTSTOWN, PA		430,000		48,854		280,000		198,854		478,854		113,801	1985
MEDIA, PA		474,100		5,055		308,700		170,455		479,155		77,281	1985
WILMINGTON, DE		446,000		33,323		290,400		188,923		479,323		100,322	1985
TRENTON, NJ		466,100		13,987		303,500		176,587		480,087		84,289	1985
ORANGE, MA		476,102		4,015		250,000		230,117		480,117		213,118	1991
CHATHAM, NY		349,133		131,805		225,000		255,938		480,938		175,146	1985
CLINTON, MA		385,600		95,698		251,100		230,198		481,298		151,538	1985
NUTLEY, NJ		433,800		48,677		282,500		199,977		482,477		113,522	1985
JACKSONVILLE, FL		485,514		0		388,434		97,080		485,514		36,564	2000
JERSEY CITY, NJ		438,000		51,856		285,200		204,656		489,856		116,246	1985
CLIFTON HGTS., PA		428,201		63,403		256,400		235,204		491,604		155,624	1985
LEWISVILLE, TX		493,734		0		109,925		383,809		493,734		19,703	2008
BEVERLY, NJ		470,100		24,003		306,100		188,003		494,103		93,921	1985
NEPTUNE, NJ		455,726		39,090		293,000		201,816		494,816		108,946	1985
MOORESTOWN, NJ		470,100		27,064		306,100		191,064		497,164		98,571	1985
SALEM, NH		450,000		47,484		350,000		147,484		497,484		141,589	1986
PLAINFIELD, NJ		470,100		29,975		306,100		193,975		500,075		99,062	1985
EAST PROVIDENCE, RI		486,675		13,947		316,600		184,022		500,622		87,766	1985
FRAMINGHAM, MA		297,568		203,147		193,419		307,296		500,715		178,557	1992
ELMONT, NY		388,848		114,933		231,000		272,781		503,781		239,255	1978
METHUEN, MA		490,200		16,282		319,200		187,282		506,482		90,885	1985
SOMERVILLE, NJ		252,717		254,230		200,500		306,447		506,947		199,530	1987
GLEN HEAD, NY		462,468		45,355		300,900		206,923		507,823		115,455	1985
CHESHIRE, CT		490,200		19,050		319,200		190,050		509,250		93,563	1985
ALBANY, NY		404,888		104,378		261,600		247,666		509,266		164,570	1985
EAST MEADOW, NY		425,000		86,005		325,000		186,005		511,005		149,325	1986
WAYNE, NJ		490,200		21,766		319,200		192,766		511,966		95,698	1985
NUTLEY, NJ		0		512,504		329,248		183,256		512,504		20,321	1986
WEST ROXBURY, MA		490,200		23,134		319,200		194,134		513,334		94,193	1985
BRISTOL, PA		430,500		82,981		280,000		233,481		513,481		144,493	1985
PLEASANT VALLEY, NY		398,497		115,129		240,000		273,626		513,626		216,045	1986
WATERBURY, CT		515,172		0		334,862		180,310		515,172		30,050	2004
FLUSHING, NY		516,110		0		320,125		195,985		516,110		81,489	1998
FAIRVIEW HEIGHTS, IL		516,564		0		78,440		438,124		516,564		40,671	2007


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

Description					Land		Building and Improvements		Total		Accumulated Depreciation


WAYNE, NJ		474,100		42,926		308,700		208,326		517,026		114,819	1985
WESTBOROUGH, MA		311,808		205,994		202,675		315,127		517,802		181,224	1991
STAMFORD, CT		506,860		15,635		329,700		192,795		522,495		92,202	1985
SCHENECTADY, NY		225,000		298,103		150,000		373,103		523,103		368,360	1986
ROSLYN, PA		349,500		173,661		227,600		295,561		523,161		219,133	1985
PHILADELPHIA, PA		302,999		220,313		181,497		341,815		523,312		283,719	1985
GREAT NECK, NY		500,000		24,468		450,000		74,468		524,468		74,391	1985
STATEN ISLAND, NY		349,500		176,590		227,600		298,490		526,090		188,027	1985
HANOVER, PA		108,435		417,763		108,435		417,763		526,198		411,692	1958
WHITE PLAINS, NY		0		527,925		302,607		225,318		527,925		119,172	1972
SAYVILLE, NY		528,225		0		300,000		228,225		528,225		95,094	1998
GLENDALE, NY		368,625		159,763		235,500		292,888		528,388		180,701	1985
BRONX, NY		78,168		450,267		65,680		462,755		528,435		354,837	1972
HYDE PARK, MA		499,175		29,673		321,800		207,048		528,848		108,740	1985
UNION, NJ		490,200		41,361		319,200		212,361		531,561		112,345	1985
WEST MILFORD, NJ		502,200		31,918		327,000		207,118		534,118		108,346	1985
SPOTSWOOD, NJ		466,675		69,036		303,500		232,211		535,711		139,777	1985
BILLERICA, MA		400,000		135,809		250,000		285,809		535,809		271,481	1986
LONG BRANCH, NJ		514,300		22,951		334,900		202,351		537,251		101,290	1985
WILMINGTON, DE		381,700		156,704		248,600		289,804		538,404		178,103	1985
NEW BEDFORD, MA		522,300		18,274		340,100		200,474		540,574		96,436	1985
NORFOLK, VA		534,910		6,050		310,630		230,330		540,960		230,330	1990
PLAINVILLE, CT		544,503		0		353,927		190,576		544,503		31,763	2004
SOUTH WINDSOR, CT		544,857		0		336,737		208,120		544,857		55,038	2004
LEVITTOWN, NY		502,757		42,113		327,000		217,870		544,870		117,361	1985
JACKSONVILLE, FL		545,314		0		256,434		288,880		545,314		108,809	2000
ARLINGTON, MA		518,300		27,906		337,500		208,706		546,206		106,607	1985
STAMFORD, CT		506,580		40,429		329,700		217,309		547,009		115,058	1985
WALLINGFORD, CT		550,553		0		334,901		215,652		550,553		44,771	2004
LOWELL, MA		375,000		175,969		250,000		300,969		550,969		244,168	1986
PRATTSBURG, NY		553,136		0		303,136		250,000		553,136		28,333	2006
NEW YORK, NY		146,159		407,286		43,461		509,984		553,445		389,146	1976
SOUDERTON, PA		381,700		172,170		248,600		305,270		553,870		194,906	1985
SALT POINT, NY		0		554,243		301,775		252,468		554,243		93,244	1987
MERRICK, NY		477,498		77,925		240,764		314,659		555,423		143,579	1987
HARWICHPORT, MA		382,653		173,989		248,724		307,918		556,642		158,168	1991
ROCKLAND, MA		534,300		23,616		347,900		210,016		557,916		104,115	1985
ROCHESTER, NY		559,049		0		159,049		400,000		559,049		45,333	2006
JACKSONVILLE, FL		559,514		0		296,434		263,080		559,514		99,091	2000
VALATIE, NY		165,590		394,981		90,829		469,742		560,571		410,011	1989
FREEHOLD, NJ		494,275		68,507		402,834		159,948		562,782		90,408	1978
FALMOUTH, MA		519,382		43,841		458,461		104,762		563,223		103,923	1988
FLEMINGTON, NJ		546,742		17,494		346,342		217,894		564,236		103,347	1985
WORCESTER, MA		497,642		67,806		321,800		243,648		565,448		145,995	1985
PHILADELPHIA, PA		341,500		224,647		222,400		343,747		566,147		213,105	1985
RIDGEFIELD, CT		535,140		33,590		347,900		220,830		568,730		114,126	1985
EAST HARTFORD, CT		555,826		13,797		301,322		268,301		569,623		79,332	1991
HARTFORD, CT		570,898		0		371,084		199,814		570,898		33,304	2004
CENTRAL ISLIP, NY		572,244		0		357,500		214,744		572,244		89,367	1998
HEWLETT, NY		490,200		85,618		319,200		256,618		575,818		125,647	1985
NEW BEDFORD, MA		482,275		95,553		293,000		284,828		577,828		190,436	1985
PORTSMOUTH, VA		562,255		17,106		221,610		357,751		579,361		353,473	1990
LONG ISLAND CITY, NY		191,420		390,783		116,554		465,649		582,203		330,427	1981
BROOKLYN, NY		282,104		301,052		176,292		406,864		583,156		363,404	1967
STATEN ISLAND, NY		301,300		288,603		196,200		393,703		589,903		265,024	1985
CLEMENTON, NJ		562,500		27,581		366,300		223,781		590,081		112,687	1985
BRIDGEPORT, CT		526,775		63,505		342,700		247,580		590,280		142,201	1985
WILTON, CT		518,881		71,425		337,500		252,806		590,306		145,308	1985
ROCHESTER, NY		595,237		0		305,237		290,000		595,237		9,157	2008
PEABODY, MA		400,000		200,363		275,000		325,363		600,363		283,709	1986
SEWELL, NJ		551,912		48,485		355,712		244,685		600,397		130,610	1985


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

Description					Land		Building and Improvements		Total		Accumulated Depreciation


N. PROVIDENCE, RI		542,400		61,717		353,200		250,917		604,117		143,693	1985
NEW YORK, NY		0		605,891		0		605,891		605,891		443,005	1986
FITCHBURG, MA		390,276		216,589		253,679		353,186		606,865		187,140	1992
KERNERSVILLE, NC		608,441		0		250,505		357,936		608,441		35,761	2007
NORTH ANDOVER, MA		393,700		220,132		256,400		357,432		613,832		223,589	1985
FLORAL PARK, NY		616,700		0		356,400		260,300		616,700		108,328	1998
ASHAWAY, RI		618,609		0		402,096		216,513		618,609		36,088	2004
NORWALK, CT		0		619,018		401,996		217,022		619,018		24,661	1988
HALFMOON, NY		415,000		205,598		228,100		392,498		620,598		383,236	1986
HAMBURG, NJ		598,600		22,121		389,800		230,921		620,721		112,487	1985
ASHLAND, MA		606,700		17,424		395,100		229,024		624,124		106,153	1985
RANDALLSTOWN, MD		590,600		33,594		384,600		239,594		624,194		123,548	1985
WESTPORT, CT		603,260		23,070		392,500		233,830		626,330		111,073	1985
PHILADELPHIA, PA		405,800		221,269		264,300		362,769		627,069		243,263	1985
PHILADELPHIA, PA		417,800		210,406		272,100		356,106		628,206		209,874	1985
PATERSON, NJ		619,548		16,765		402,900		233,413		636,313		111,062	1985
DOVER, NJ		606,700		30,153		395,100		241,753		636,853		120,840	1985
CRANBURY, NJ		606,700		31,467		395,100		243,067		638,167		122,575	1985
KERNERSVILLE, NC		638,633		0		338,386		300,247		638,633		31,437	2007
CLINTON, MA		586,600		52,725		382,000		257,325		639,325		138,047	1985
WANTAGH, NY		640,680		0		370,200		270,480		640,680		112,697	1998
STERLING, MA		476,102		165,998		309,466		332,634		642,100		157,235	1991
PHILADELPHIA, PA		369,600		273,642		240,700		402,542		643,242		291,682	1985
PHILADELPHIA, PA		369,600		276,720		240,700		405,620		646,320		275,273	1985
EASTCHESTER, NY		614,700		34,500		400,300		248,900		649,200		126,891	1985
BALTIMORE, MD		474,100		176,067		308,700		341,467		650,167		201,170	1985
WORCESTER, MA		476,102		174,233		309,466		340,869		650,335		332,336	1991
NORTH MERRICK, NY		510,350		141,506		332,200		319,656		651,856		183,150	1985
BELMAR, NJ		630,800		22,371		410,800		242,371		653,171		117,831	1985
BROOKLYN, NY		276,831		376,706		168,423		485,114		653,537		357,052	1978
WATERTOWN, MA		357,500		296,588		321,030		333,058		654,088		213,660	1985
PORT EWEN, NY		657,147		0		176,924		480,223		657,147		47,853	2007
HASBROUCK HEIGHTS, NJ		639,648		19,648		416,000		243,296		659,296		115,788	1985
LEVITTOWN, NY		546,400		113,057		355,800		303,657		659,457		162,557	1985
LANCASTER, PA		642,000		17,993		300,000		359,993		659,993		359,993	1989
HARTFORD, CT		664,966		0		432,228		232,738		664,966		38,792	2004
ROCKVILLE CENTRE, NY		350,325		315,779		201,400		464,704		666,104		352,076	1985
FEASTERVILLE, PA		510,200		160,144		332,200		338,144		670,344		215,694	1985
NORTH ATTLEBORO, MA		662,900		16,549		431,700		247,749		679,449		116,320	1985
WEYMOUTH, MA		643,297		36,516		418,600		261,213		679,813		129,700	1985
RENSSELAER, NY		683,781		0		286,504		397,277		683,781		87,339	2004
BATAVIA, NY		684,279		0		364,279		320,000		684,279		36,267	2006
MCAFEE, NJ		670,900		15,711		436,900		249,711		686,611		116,230	1985
BROOKLYN, NY		421,800		270,436		274,700		417,536		692,236		266,711	1985
DARIEN, CT		667,180		26,061		434,300		258,941		693,241		126,796	1985
HYANNIS, MA		650,800		42,552		423,800		269,552		693,352		141,554	1985
MOUNTAINSIDE, NJ		664,100		31,620		431,700		264,020		695,720		130,274	1985
WINSTON SALEM, NC		696,397		0		251,987		444,410		696,397		48,678	2007
EAST HAMPTON, NY		659,127		39,313		427,827		270,613		698,440		137,463	1985
BARRE, MA		535,614		163,028		348,149		350,493		698,642		160,830	1991
BARRINGTON, RI		490,200		213,866		319,200		384,866		704,066		266,871	1985
DOBBS FERRY, NY		670,575		33,706		434,300		269,981		704,281		135,250	1985
NORTH BERGEN, NJ		629,527		81,006		409,527		301,006		710,533		173,873	1985
PHILADELPHIA, PA		687,000		25,017		447,400		264,617		712,017		127,431	1985
FRANKLIN TWP., NJ		683,000		30,257		444,800		268,457		713,257		133,770	1985
ALFRED STATION, NY		714,108		0		414,108		300,000		714,108		34,000	2006
NEW HAVEN, CT		538,400		176,230		350,600		364,030		714,630		258,057	1985
STAMFORD, CT		603,260		112,305		392,500		323,065		715,565		201,191	1985
BLOOMFIELD, NJ		695,000		21,021		371,400		344,621		716,021		230,898	1985
BAYSIDE, NY		470,100		246,576		306,100		410,576		716,676		248,075	1985
WILLIMANTIC, CT		716,782		0		465,908		250,874		716,782		41,813	2004


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

Description						Land		Building and Improvements		Total		Accumulated Depreciation


TRENTON, NJ		684,650		33,275			444,800		273,125		717,925		137,961	1985
BRONX, NY		390,200		329,357			251,100		468,457		719,557		296,590	1985
NORWALK, CT		510,760		209,820			332,200		388,380		720,580		239,435	1985
ST. GEORGES, DE		498,200		222,596			324,725		396,071		720,796		293,151	1985
SANDSTON, VA		0		721,651			101,651		620,000		721,651		93,000	2005
RIVERHEAD, NY		723,346		0			431,700		291,646		723,346		121,374	1998
AVON, CT		730,886		0			402,949		327,937		730,886		96,628	2002
BIDDEFORD, ME		723,100		8,009			340,000		391,109		731,109		325,049	1985
NEWTON, MA		691,000		42,832			450,000		283,832		733,832		141,538	1985
LONDONDERRY, NH		703,100		31,092			457,900		276,292		734,192		136,026	1985
SAG HARBOR, NY		703,600		36,012			458,200		281,412		739,612		143,094	1985
RIDGEWOOD, NJ		703,100		36,959			457,900		282,159		740,059		140,211	1985
FLEMINGTON, NJ		708,160		33,072			460,500		280,732		741,232		137,084	1985
PRINCETON, NJ		703,100		40,615			457,900		285,815		743,715		146,858	1985
HARRISBURG, PA		399,016		347,590			198,740		547,866		746,606		344,802	1989
MAYNARD, MA		735,200		12,714			478,800		269,114		747,914		122,939	1985
BROOKLYN, NY		476,816		272,765			306,100		443,481		749,581		281,823	1985
WORCESTER, MA		547,283		205,733			355,734		397,282		753,016		195,499	1991
BRIARCLIFF MANOR, NY		652,213		103,753			501,687		254,279		755,966		231,839	1976
SALEM, NH		743,200		19,847			484,000		279,047		763,047		130,478	1985
ROCKLAND, MA		578,600		185,285			376,800		387,085		763,885		234,817	1985
RANDOLPH, MA		743,200		25,069			484,000		284,269		768,269		136,189	1985
FAIRHAVEN, MA		725,500		48,828			470,900		303,428		774,328		158,477	1985
EAST PEMBROKE, NY		787,465		0			537,465		250,000		787,465		28,333	2006
READING, PA		750,000		49,125			0		799,125		799,125		789,901	1989
WOBURN, MA		507,600		294,303			507,600		294,303		801,903		140,533	1985
BALTIMORE, MD		802,414		0			0		802,414		802,414		70,212	2007
UNION CITY, NJ		799,500		3,440			520,600		282,340		802,940		125,227	1985
WATERBURY, CT		804,040		0			516,387		287,653		804,040		52,496	2004
STOUGHTON, MA		775,300		34,554			504,900		304,954		809,854		148,890	1985
ROCHESTER, NY		823,031		0			273,031		550,000		823,031		63,358	2006
WEST ORANGE, NJ		799,500		34,733			520,600		313,633		834,233		156,456	1985
ASHLAND, VA		0		839,997			839,997		0		839,997		0	2005
SUFFIELD, CT		237,401		602,635			200,878		639,158		840,036		187,636	2004
WALKERTOWN, NC		844,749		0			488,239		356,509		844,749		39,562	2007
W.READING, PA		790,432		68,726			387,641		471,517		859,158		465,075	1989
BELLINGHAM, MA		734,189		132,725			476,200		390,714		866,914		239,279	1985
ORLANDO, FL		867,515		0			401,435		466,080		867,515		175,554	2000
JONESBORO, AR		868,501		0			173,096		695,405		868,501		31,284	2007
FALL RIVER, MA		859,800		24,423			559,900		324,323		884,223		153,018	1985
ELLICOTT CITY, MD		895,049		(0	)		0		895,049		895,049		82,439	2007
SUTTON, MA		714,159		187,355			464,203		437,311		901,514		200,066	1993
LIVINGSTON, NJ		871,800		30,003			567,700		334,103		901,803		161,144	1985
MECHANICSVILLE, VA		0		902,892			272,892		630,000		902,892		94,500	2005
BROOKLYN, NY		626,700		282,677			408,100		501,277		909,377		320,294	1985
CHESAPEAKE, VA		883,685		26,247			325,508		584,424		909,932		579,208	1990
MIDDLETOWN, NY		751,200		166,411			489,200		428,411		917,611		225,350	1985
MANSFIELD, OH		921,108		0			331,599		589,509		921,108		6,862	2008
WATERTOWN, CT		924,586		0			566,986		357,600		924,586		94,466	2004
PLYMOUTH, CT		930,885		0			605,075		325,810		930,885		54,300	2004
WASHINGTON TOWNSHIP, NJ		912,000		21,261			593,900		339,361		933,261		159,158	1985
AVOCA, NY		935,543		0			634,543		301,000		935,543		34,000	2006
NEWINGTON, CT		953,512		0			619,783		333,729		953,512		55,621	2004
OCEAN CITY, NJ		843,700		113,162			549,400		407,462		956,862		240,926	1985
MECHANICSVILLE, VA		0		957,418			324,158		633,260		957,418		134,666	2005
BYRON, NY		969,117		0			669,117		300,000		969,117		34,000	2006
ROCHESTER, NH		972,200		12,775			633,100		351,875		984,975		159,658	1985
WARSAW, NY		990,259		0			690,259		300,000		990,259		34,000	2006
DURHAM, CT		993,909		0			0		993,909		993,909		414,129	2004
CHURCHVILLE, NY		1,011,381		0			601,381		410,000		1,011,381		46,467	2006
GREIGSVILLE, NY		1,017,739		0			202,873		814,866		1,017,739		38,307	2008


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

Description						Land		Building and Improvements		Total		Accumulated Depreciation


COLONIA, NJ		952,200		74,451			620,100		406,551		1,026,651		216,295	1985
LAKEVILLE, NY		1,027,783		0			202,857		824,926		1,027,783		39,197	2008
CHESAPEAKE, VA		1,026,115		7,149			407,026		626,238		1,033,264		624,636	1990
GLEN ALLEN, VA		0		1,036,585			411,585		625,000		1,036,585		93,750	2005
LODI, NJ		0		1,037,440			587,823		449,617		1,037,440		151,871	1988
MIDDLETOWN, CT		1,038,592		0			675,085		363,507		1,038,592		60,583	2004
WINDSOR, CT		1,042,081		0			669,804		372,277		1,042,081		155,117	2004
MECHANICSVILLE, VA		0		1,042,870			222,870		820,000		1,042,870		123,000	2005
NEW OXFORD, PA		1,044,707		13,500			18,687		1,039,520		1,058,207		791,323	1996
HONOLULU, HI		1,070,141		0			980,680		89,460		1,070,141		12,630	2007
GLEN ALLEN, VA		0		1,077,402			322,402		755,000		1,077,402		113,250	2005
WEBSTER, MA		1,012,400		67,645			659,300		420,745		1,080,045		218,323	1985
GARDNER, MA		1,008,400		73,740			656,700		425,440		1,082,140		217,211	1985
YONKERS, NY		1,020,400		61,875			664,500		417,775		1,082,275		212,485	1985
SEEKONK, MA		1,072,700		29,112			698,500		403,312		1,101,812		187,535	1985
MECHANICSVILLE, VA		0		1,124,769			504,769		620,000		1,124,769		93,000	2005
RICHMOND, VA		0		1,131,878			546,878		585,000		1,131,878		87,750	2005
WALNUT COVE, NC		1,140,945		0			513,565		627,380		1,140,945		69,314	2007
SHRUB OAK, NY		1,060,700		81,807			690,700		451,807		1,142,507		238,435	1985
WORCESTER, MA		978,880		191,413			636,272		534,021		1,170,293		217,313	1991
CRESTLINE, OH		1,201,523		0			284,761		916,762		1,201,523		11,367	2008
WEST HAVEN, CT		1,214,831		0			789,640		425,191		1,214,831		70,867	2004
CHESAPEAKE, VA		1,184,759		32,132			604,983		611,908		1,216,891		132,131	1990
FARMVILLE, VA		0		1,226,505			621,505		605,000		1,226,505		90,750	2005
BELFIELD, ND		1,232,010		0			381,909		850,101		1,232,010		129,470	2007
BRONX, NY		543,833		693,438			473,695		763,576		1,237,271		752,658	1970
NAPLES, NY		1,257,487		0			827,487		430,000		1,257,487		48,733	2006
FREDERICKSBURG, VA		0		1,279,280			469,280		810,000		1,279,280		121,500	2005
FORT LEE, NJ		1,245,500		39,408			811,100		473,808		1,284,908		227,313	1985
FREDERICKSBURG, VA		0		1,289,425			798,444		490,981		1,289,425		94,004	2005
SPOTSYLVANIA, VA		0		1,290,239			490,239		800,000		1,290,239		120,000	2005
EL CAJON, CA		1,292,114		0			779,828		512,286		1,292,114		42,472	2007
ELLINGTON, CT		1,294,889		0			841,678		453,211		1,294,889		75,533	2004
LAKE HOPATCONG, NJ		1,305,034		0			800,000		505,034		1,305,034		303,226	2000
SAVONA, NY		1,314,135		0			964,136		349,999		1,314,135		39,667	2006
FILLMORE, CA		1,354,113		0			950,061		404,052		1,354,113		37,786	2007
KANEOHE, HI		1,363,901		0			821,691		542,210		1,363,901		52,654	2007
BELLFLOWER, CA		1,369,511		0			910,252		459,259		1,369,511		43,108	2007
WINDSOR LOCKS, CT		1,433,330		0			0		1,433,330		1,433,330		597,221	2004
VERNON, CT		1,434,223		0			0		1,434,223		1,434,223		597,592	2004
POWAY, CA		1,439,021		(0	)		0		1,439,021		1,439,021		114,467	2007
PETERSBURG, VA		0		1,441,374			816,374		625,000		1,441,374		93,750	2005
PERRY, NY		1,443,847		0			1,043,847		400,000		1,443,847		45,333	2006
BROOKLAND, AR		1,467,809		0			149,218		1,318,591		1,467,809		56,442	2007
NEW HAVEN, CT		1,412,860		56,420			898,470		570,810		1,469,280		281,917	1985
MECHANICSVILLE, VA		0		1,476,043			876,043		600,000		1,476,043		90,000	2005
BRICK, NJ		1,507,684		0			1,000,000		507,684		1,507,684		247,725	2000
WAIANAE, HI		1,520,144		0			648,273		871,871		1,520,144		72,706	2007
HALEIWA, HI		1,521,648		0			1,058,124		463,524		1,521,648		53,621	2007
MERIDEN, CT		1,531,772		0			989,165		542,607		1,531,772		92,929	2004
HONOLULU, HI		1,538,997		0			1,219,217		319,780		1,538,997		28,955	2007
HOOKSETT, NH		1,561,628		0			823,915		737,712		1,561,628		115,904	2007
BRISTOL, CT		1,594,129		0			1,036,184		557,945		1,594,129		92,992	2004
HESPERIA, CA		1,643,449		0			849,352		794,097		1,643,449		68,660	2007
MECHANICSVILLE, VA		0		1,677,065			1,157,065		520,000		1,677,065		78,000	2005
KING WILLIAM, VA		0		1,687,540			1,067,540		620,000		1,687,540		93,000	2005
HOUSTON, TX		1,688,904		0			223,664		1,465,240		1,688,904		111,373	2007
FREDERICKSBURG, VA		0		1,715,914			995,914		720,000		1,715,914		108,000	2005
HONOLULU, HI		1,768,878		0			1,192,216		576,662		1,768,878		48,078	2007
ALLENSTOWN, NH		1,787,116		0			466,994		1,320,122		1,787,116		119,762	2007
LONG ISLAND CITY, NY		1,646,307		259,443			1,071,500		834,250		1,905,750		507,752	1985


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

Description					Land		Building and Improvements		Total		Accumulated Depreciation


SAN DIMAS, CA		1,941,008		0		749,066		1,191,942		1,941,008		94,544	2007
SAN MARCOS, TX		1,953,653		0		250,739		1,702,914		1,953,653		133,479	2007
LA PALMA, CA		1,971,592		0		1,389,383		582,210		1,971,592		53,595	2007
KANEOHE, HI		1,977,671		0		1,473,275		504,396		1,977,671		47,249	2007
WAIANAE, HI		1,996,811		0		870,775		1,126,036		1,996,811		94,383	2007
SOUTH WINDHAM, CT		644,141		1,397,938		598,394		1,443,685		2,042,079		86,304	2004
HARKER HEIGHTS, TX		2,051,704		0		588,320		1,463,384		2,051,704		192,815	2007
FT WORTH, TX		2,114,924		0		866,062		1,248,863		2,114,924		112,417	2007
RENSSELAER, NY		1,653,500		514,444		1,076,800		1,091,144		2,167,944		766,271	1985
BENICIA, CA		2,223,362		0		1,057,519		1,165,843		2,223,362		114,287	2007
COACHELLA, CA		2,234,957		0		1,216,646		1,018,312		2,234,957		93,082	2007
BALTIMORE, MD		2,258,897		0		721,876		1,537,022		2,258,897		125,569	2007
BEDFORD, NH		2,301,297		0		1,271,171		1,030,126		2,301,297		102,923	2007
AUSTIN, TX		2,368,425		0		738,210		1,630,215		2,368,425		130,764	2007
TEMPLE, TX		2,405,953		0		1,215,488		1,190,465		2,405,953		103,791	2007
WAIPAHU, HI		2,458,592		0		945,327		1,513,264		2,458,592		121,087	2007
MONTPELIER, VA		0		2,480,686		1,725,686		755,000		2,480,686		113,250	2005
KELLER, TX		2,506,573		0		996,029		1,510,544		2,506,573		128,732	2007
EAST PROVIDENCE, RI		2,297,435		568,241		1,495,700		1,369,976		2,865,676		666,885	1985
JONESBORO, AR		2,985,267		0		330,322		2,654,945		2,985,267		192,817	2007
NEWARK, NJ		3,086,592		164,432		2,005,800		1,245,224		3,251,024		637,621	1985
AUSTIN, TX		3,510,062		0		1,594,536		1,915,526		3,510,062		155,432	2007
FREDERICKSBURG, VA		0		3,623,228		2,828,228		795,000		3,623,228		119,250	2005
WACO, TX		3,884,407		0		894,356		2,990,051		3,884,407		262,069	2007
THE COLONY, TX		4,395,696		0		337,083		4,058,613		4,395,696		300,138	2007
HONOLULU, HI		9,210,707		0		8,193,984		1,016,724		9,210,707		87,664	2007
MISCELLANEOUS INVESTMENTS		10,879,528		12,876,458		6,453,867		17,302,118		23,755,986		15,868,528	0

	$	364,207,264	$	109,360,132	$	221,540,125	$	252,027,271	$	473,567,396	$	129,322,033


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

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

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

SIGNATURES

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


	Getty Realty Corp.
	(Registrant)

	By:	/s/ Thomas J. Stirnweis

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

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


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

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

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

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

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

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

EXHIBIT INDEX

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


EXHIBIT NO.		DESCRIPTION

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

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

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

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

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

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

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

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

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

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

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


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

10.6*	Amended and Restated Supplemental Retirement Plan for Executives of the Getty Realty Corp. and Participating Subsidiaries (adopted by the Company on December 16, 1997 and amended and restated effective January 1, 2009).	(a)

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

21	Subsidiaries of the Company.	(a)

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

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

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

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

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



(a)	Filed herewith

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

*	Management contract or compensatory plan or arrangement.

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