What changed in this filing

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Item 1. Financial Statements

2020-10-22 compared with 2020-07-23 · 123 added, 107 removed, 635 unchanged (27% of the section changed)

3 unchanged sentences

(in thousands, except per share amounts)

September 30,

Buildings and improvements

36 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenues from rental properties

18 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

27 unchanged sentences

Repayments under credit agreement

Proceeds from senior unsecured notes

Payment of debt issuance costs

Payment of finance lease obligations

18 unchanged sentences

(together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”) is the leading publicly-traded real estate investment trust (“REIT”) in the United States specializing in the ownership, leasing and financing of convenience store and gasoline station properties.

As of June 30, 2020, we owned 887 properties and leased 59 properties from third-party landlords.

As of September 30, 2020, we owned 896 properties and leased 58 properties from third-party landlords.

These 954 properties are located in 35 states across the United States and Washington, D.C.

52 unchanged sentences

In addition, we determine whether there has been a permanent decline in the current estimate of the residual value of the property.

There were no indicators for impairments of any of our direct financing leases during the three and six months ended June 30, 2020 and 2019.

For the three and six months ended June 30, 2020, we did no t record any additional allowance for credit losses.

There were no indicators for impairments of any of our direct financing leases during the three and nine months ended September 30, 2020 and 2019.

For the three and nine months ended September 30, 2020, we did no t record any additional allowance for credit losses.

When we enter into a contract to sell properties that are recorded as direct financing leases, we evaluate whether we believe that it is probable that the disposition will occur.

12 unchanged sentences

Periods prior to the adoption date that are presented for comparative purposes will not be adjusted.

We have also begun originating construction loans to developers for the construction of income-producing properties.

On April 1, 2020, we funded the initial draw of a construction loan.

At June 30, 2020, we held $ 2.2 million in construction loans which are included in notes and mortgages receivable.

From time to time, we may originate construction loans for the construction of income-producing properties.

During the nine months ended September 30, 2020, we funded a construction loan in the amount of $ 2.9 million, which was repaid as of September 30, 2020, and we exercised our option to purchase the property .

At September 30, 2020, there were no outstanding balances for construction loans.

Our construction loans generally provide for funding only during the construction phase, which is typically up to nine months, although our policy is to consider construction periods as long as 24 months.

3 unchanged sentences

We have the option to purchase the property at the end of the construction period.

There were no indicators for impairments related to our notes and mortgages receivable during the three and six months ended June 30, 2020 and 2019.

For the three and six months ended June 30, 2020, we did no t record any additional allowance for credit losses.

There were no indicators for impairments related to our notes and mortgages receivable during the three and nine months ended September 30, 2020 and 2019.

For the three and nine months ended September 30, 2020, we did no t record any additional allowance for credit losses.

Revenue Recognition and Deferred Rent Receivable

3 unchanged sentences

(i) identify the contract with the customer, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations and (v) recognize revenue when (or as) a performance obligation is satisfied.

Our primary source of revenue consists of revenue from rental properties and tenant reimbursements that is derived from leasing arrangements, which is specifically excluded from the standard, and thus had no material impact on our consolidated financial statements or notes to our consolidated financial statements as of June 30, 2020.

Lease payments from operating leases are recognized on a straight-line basis over the term of the leases.

14 unchanged sentences

Account for the concessions as if no changes to the lease contract were made.

Under that accounting, a lessor would increase

its lease receivable.

Under that accounting, a lessor would increase its lease receivable.

In its income statement, a lessor would continue to recognize income during the deferral period.

Account for the deferred payments as variable lease payments.

We elected to treat lease concessions with option (1) above for the quarter ended June 30, 2020.

We elected to treat lease concessions with option (1) above for the quarter ended September 30, 2020.

The present value of the difference between the fair market rent and the contractual rent for above-market and below-market leases at the time properties are acquired is amortized into revenues from rental properties over the remaining terms of the in-place leases.

5 unchanged sentences

Assets held for disposal are written down to fair value less estimated disposition costs.

We recorded impairment charges aggregating $ 507,000 and $ 1,538,000 for the three and six months ended June 30, 2020, respectively, and $ 701,000 and $ 1,472,000 for the three and six months ended June 30, 2019, respectively.

Our estimated fair values, as they relate to property carrying values, were primarily based upon (i) estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids, for which we do not have access to the unobservable inputs used to determine these estimated fair values, and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence (this method was used to determine $ 260,000 of impairments recognized during the six months ended June 30, 2020) and (ii) discounted cash flow models (this method was used to determine $ 117,000 of impairments recognized during the six months ended June 30, 2020).

During the six months ended June 30, 2020, we recorded $ 1,161,000 of impairments due to the accumulation of asset retirement costs as a result of changes in estimates associated with our estimated environmental liabilities which increased the carrying values of certain properties in excess of their fair values.

For the six months ended June 30, 2020 and 2019, impairment charges aggregating $ 306,000 and $ 362,000 , respectively, were related to properties that were previously disposed of by us.

We recorded impairment charges aggregating $ 1,325,000 and $ 2,863,000 for the three and nine months ended September 30, 2020, respectively, and $ 928,000 and $ 2,400,000 for the three and nine months ended September 30, 2019, respectively.

Our estimated fair values, as they relate to property carrying values, were primarily based upon (i) estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids, for which we do not have access to the unobservable inputs used to determine these estimated fair values, and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence (this method was used to determine $ 933,000 of impairments recognized during the nine months ended September 30, 2020) and (ii) discounted cash flow models (this method was used to determine $ 117,000 of impairments recognized during the nine months ended September 30, 2020).

During the nine months ended September 30, 2020, we recorded $ 1,813,000 of impairments due to the accumulation of asset retirement costs as a result of changes in estimates associated with our estimated environmental liabilities which increased the carrying values of certain properties in excess of their fair values.

For the nine months ended September 30, 2020 and 2019, impairment charges aggregating $ 601,000 and $ 610,000 , respectively, were related to properties that were previously disposed of by us.

The estimated fair value of real estate is based on the price that would be received from the sale of the property in an orderly transaction between market participants at the measurement date.

22 unchanged sentences

The accrued liability is the aggregate of our estimate of the fair value of cost for each component of the liability.

The accrued liability is net of estimated recoveries from state underground storage tank (“UST”) remediation funds considering estimated recovery rates developed from prior experience with the funds.

The accrued liability is net of estimated

recoveries from state underground storage tank (“UST”) remediation funds considering estimated recovery rates developed from prior experience with the funds.

Net environmental liabilities are currently measured based on their expected future cash flows which have been adjusted for inflation and discounted to present value.

18 unchanged sentences

We are currently evaluating the impact the adoption of ASU 2020-04 will have on our consolidated financial statements.

As of June 30, 2020, we owned 887 properties and leased 59 properties from third-party landlords.

As of September 30, 2020, we owned 896 properties and leased 58 properties from third-party landlords.

These 954 properties are located in 35 states across the United States and Washington, D.C.

10 unchanged sentences

For leases in which we are the lessor, we are (i) retaining classification of our historical leases as we are not required to reassess classification upon adoption of the new standard , (ii) expensing indirect leasing costs in connection with new or extended tenant leases, the recognition of which would have been deferred under prior accounting guidance and (iii) aggregating revenue from our lease components and non-lease components (comprised of tenant reimbursements) into revenue from rental properties.

Revenues from rental properties were $ 36,336,000 and $ 70,986,000 for the three and six months ended June 30, 2020, respectively, and $ 33,560,000 and $ 66,847,000 for three and six months ended June 30, 2019, respectively.

Rental income contractually due from our tenants included in revenues from rental properties was $ 31,784,000 and $ 63,178,000 for the three and six

months ended June 30, 2020 , respectively, and $ 29,378,000 and $ 58,586,000 for three and six months ended June 30, 2019 , respectively .

Revenues from rental properties were $ 37,194,000 and $ 108,180,000 for the three and nine months ended September 30, 2020, respectively, and $ 35,692,000 and $ 102,539,000 for three and nine months ended September 30, 2019, respectively.

Rental income contractually due from our tenants included in revenues from rental properties was $ 32,015,000 and $ 95,193,000 for the three and nine months ended September 30, 2020, respectively, and $ 30,149,000 and $ 88,735,000 for three and nine months ended September 30, 2019, respectively.

In accordance with GAAP, we recognize rental revenue in amounts which vary from the amount of rent contractually due during the periods presented.

As a result, revenues from rental properties include non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, the net amortization of above-market and below-market leases, rental income recorded under direct financing leases using the effective interest method which produces a constant periodic rate of return on the net investments in the leased properties and the amortization of deferred lease incentives (the “Revenue Recognition Adjustments”).

Revenue Recognition Adjustments included in revenues from rental properties was a charge of $ 86,000 and $ 156,000 for the three and six months ended June 30, 2020, respectively, and income of $ 235,000 and $ 614,000 for the three and six months ended June 30, 2019, respectively.

Tenant reimbursements, which are included in revenues from rental properties and which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $ 4,638,000 and $ 7,964,000 for the three and six months ended June 30, 2020, respectively, and $ 3,947,000 and $ 7,647,000 for the three and six months ended June 30, 2019, respectively.

We incurred $ 191,000 and $ 93,000 of lease origination costs for the six months ended June 30, 2020 and 2019, respectively.

Revenue Recognition Adjustments included in revenues from rental properties was a charge of $ 151,000 and $ 306,000 for the three and nine months ended September 30, 2020, respectively, and income of $ 185,000 and $ 799,000 for the three and nine months ended September 30, 2019, respectively.

Tenant reimbursements, which are included in revenues from rental properties and which consist of real estate taxes and other municipal charges paid by us which were reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $ 5,330,000 and $ 13,293,000 for the three and nine months ended September 30, 2020, respectively, and $ 5,358,000 and $ 13,005,000 for three and nine months ended September 30, 2019, respectively.

We incurred $ 270,000 and $ 171,000 of lease origination costs for the nine months ended September 30, 2020 and 2019, respectively.

This deferred expense is recognized on a straight-line basis as amortization expense in our consolidated statements of operations over the terms of the various leases.

The components of the $ 79,767,000 investment in direct financing leases as of June 30, 2020, are lease payments receivable of $ 119,864,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 53,447,000 and $ 578,000 allowance for credit losses.

The components of the $ 78,700,000 investment in direct financing leases as of September 30, 2020, are lease payments receivable of $ 116,572,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 51,222,000 and $ 578,000 allowance for credit losses.

The components of the $ 82,366,000 investment in direct financing leases as of December 31, 2019, are lease payments receivable of $ 126,412,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 57,974,000 .

We recorded a credit loss reserve related to these direct financing leases totaling $ 578,000 , which was recognized as a cumulative adjustment to retained earnings and as a reduction of the investment in direct financing leases balance on our consolidated balance sheets on January 1, 2020.

As of June 30, 2020, future contractual annual rentals receivable from our tenants, which have terms in excess of one year are as follows (in thousands):

As of September 30, 2020, future contractual annual rentals receivable from our tenants, which have terms in excess of one year are as follows (in thousands):

Financing Leases

7 unchanged sentences

ASU 2016-02 did not have a material impact on our consolidated balance sheets or on our consolidated statements of operations.

The most significant impact was the recognition of right-of-use assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged.

The most significant

impact was the recognition of right-of-use assets and lease liabilities for operating leases, while our accounting for financ e leases remained substantially unchanged.

The following presents the lease-related assets and liabilities (in thousands):

September 30,

Right-of-use assets - operating

14 unchanged sentences

Three Months Ended

June 30, 2020

Six Months Ended

June 30, 2020

September 30, 2020

Nine Months Ended

September 30, 2020

Operating lease cost

6 unchanged sentences

Three Months Ended

June 30, 2020

Six Months Ended

June 30, 2020

September 30, 2020

Nine Months Ended

September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities

2 unchanged sentences

Financing cash flows for finance leases

As of June 30, 2020, scheduled lease liabilities mature as follows (in thousands) :

As of September 30, 2020, scheduled lease liabilities mature as follows (in thousands) :

Financing Leases

3 unchanged sentences

Major Tenants

As of June 30, 2020, we had three significant tenants by revenue:

We leased 150 convenience store and gasoline station properties in three separate unitary leases and three stand-alone leases to subsidiaries of Global Partners LP (NYSE:

As of September 30, 2020, we had three significant tenants by revenue:

We leased 150 convenience store and gasoline station properties in three separate unitary leases and two stand-alone leases to subsidiaries of Global Partners LP (NYSE:

GLP) (“Global”).

In the aggregate, our leases with subsidiaries of

Global represented 16 % and 18 % of our total revenues for the six months ended June 30, 2020 and 2019 .

In the aggregate, our leases with subsidiaries of Global represented 16 % and 18 % of our total revenues for the nine months ended September 30, 2020 and 2019, respectively.

All of our unitary leases with subsidiaries of Global are guaranteed by the parent company.

We leased 77 convenience store and gasoline station properties pursuant to three separate unitary leases to Apro, LLC (d/b/a “United Oil”).

In the aggregate, our leases with United Oil represented 12 % and 13 % of our total revenues for the six months ended June 30, 2020 and 2019.

In the aggregate, our leases with United Oil represented 12 % and 13 % of our total revenues for the nine months ended September 30, 2020 and 2019, respectively.

We leased 74 convenience store and gasoline station properties pursuant to two separate unitary leases to subsidiaries of Chestnut Petroleum Dist., Inc.

(“Chestnut”).

In the aggregate, our leases with subsidiaries of Chestnut represented 10 % and 11 % of our total revenues for the six months ended June 30, 2020 and 2019.

In the aggregate, our leases with subsidiaries of Chestnut represented 10 % and 11 % of our total revenues for the nine months ended September 30, 2020 and 2019, respectively.

The largest of these unitary leases, covering 56 of our properties, is guaranteed by the parent company, its principals and numerous Chestnut affiliates.

2 unchanged sentences

(“Marketing”) was our largest tenant from 1997 until 2012 under a unitary triple-net master lease that was terminated in April 2012 as a consequence of Marketing’s bankruptcy, at which time we either sold or released these properties.

As of June 30, 2020, 359 of the properties we own or lease were previously leased to Marketing, of which 317 properties are subject to long-term triple-net leases with petroleum distributors in 14 separate property portfolios and 31 properties are leased as single unit triple-net leases.

As of September 30, 2020, 357 of the properties we own or lease were previously leased to Marketing, of which 317 properties are subject to long-term triple-net leases with petroleum distributors in 14 separate property portfolios and 30 properties are leased as single unit triple-net leases.

The leases covering properties previously leased to Marketing are unitary triple-net lease agreements generally with an initial term of 15 years and options for successive renewal terms of up to 20 years.

2 unchanged sentences

In addition, the majority of the leases require the tenants to invest capital in our properties, substantially all of which is related to the replacement of USTs that are owned by our tenants.

As of June 30, 2020, we have a remaining commitment to fund up to $ 6,967,000 in the aggregate with our tenants for our portion of such capital improvements.

As of September 30, 2020, we have a remaining commitment to fund up to $ 6,895,000 in the aggregate with our tenants for our portion of such capital improvements.

Our commitment provides us with the option to either reimburse our tenants or to offset rent when these capital expenditures are made.

2 unchanged sentences

We remain contingently liable for this obligation in the event that our tenants do not satisfy their responsibilities.

Accordingly, through June 30, 2020, we removed $ 13,813,000 of asset retirement obligations and $ 10,808,000 of net asset retirement costs related to USTs from our balance sheet.

Accordingly, through September 30, 2020, we removed $ 13,813,000 of asset retirement obligations and $ 10,808,000 of net asset retirement costs related to USTs from our balance sheet.

The cumulative change of $ 1,370,000 (net of accumulated amortization of $ 1,635,000 ) is recorded as deferred rental revenue and will be recognized on a straight-line basis as additional revenues from rental properties over the terms of the various leases.

5 unchanged sentences

We are subject to various legal proceedings and claims which arise in the ordinary course of our business.

As of June 30, 2020 and December 31, 2019, we had accrued $ 17,788,000 and $ 17,820,000 , respectively, for certain of these matters which we believe were appropriate based on information then currently available.

As of September 30, 2020 and December 31, 2019, we had accrued $ 17,860,000 and $ 17,820,000 , respectively, for certain of these matters which we believe were appropriate based on information then currently available.

We are unable to estimate ranges in excess of the amount accrued with any certainty for these matters.

3 unchanged sentences

In September 2003, we received a directive (the “Directive”) issued by the New Jersey Department of Environmental Protection (“NJDEP”) under the New Jersey Spill Compensation and Control Act.

The Directive indicated that we are one of approximately 66

potentially responsible parties (“PRPs”) for alleged natural resource damages resulting from the discharges of hazardous substances along the Lower Passaic River (the “Lower Passaic River”).

The Directive indicated that we are one of approximately 66 potentially responsible parties (“PRPs”) for alleged natural resource damages resulting from the discharges of hazardous substances along the Lower Passaic River (the “Lower Passaic River”).

The Directive provides, among other things, that the named recipients must conduct an assessment of the natural resources that have been injured by discharges into the Lower Passaic River and must implement interim compensatory restoration for the injured natural resources.

31 unchanged sentences

Bankruptcy Code.

In the Chapter 11 proceedings, YPF sought bankruptcy approval of a settlement under which YPF would pay $ 130,000,000 to the bankruptcy estate in exchange for a release in favor of Maxus, Tierra, YPF and YPF’s affiliates of Maxus and Tierra’s contractual environmental liability to Occidental.

Tierra’s contractual environmental liability to Occidental.

We and the CPG filed proofs of claims in the Maxus/Tierra bankruptcy proceedings for costs incurred by the CPG relating to the Lower Passaic River .

21 unchanged sentences

A portion of the case (“bellwether” trials) has been transferred to the United States District Court for the District of New Jersey for pre-trial proceedings and trial, although a trial date has not yet been set.

We continue to engage in settlement negotiations and a dialogue with the plaintiffs’ counsel to educate them on the unique role of the Company and our business as compared to other defendants in the litigation.

Although the ultimate outcome of the New Jersey MDL Proceedings cannot be ascertained at this time, we believe that it is probable that this litigation will be resolved in a manner that is unfavorable to us.

We are unable to estimate the possible loss or range of loss in excess of the amount accrued for the New Jersey MDL Proceedings.

It is possible that losses related to the New Jersey MDL Proceedings could exceed the amounts accrued as of June 30, 2020, which could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

We have agreed to settle the New Jersey MDL Proceedings in accordance with the terms of a proposed Judicial Consent Order (“JCO”), which includes payment by us of $ 13,500,000 in exchange for satisfaction and release of claims made against it by various parties including the NJDEP.

The JCO was subject to a 60 -day public comment period which expired on October 5, 2020, without comment by interested parties or members of the public.

Provided that no other objections are raised by the remaining defendants in the New Jersey MDL Proceedings, we expect that the JCO will be filed with the United States District Court for the Southern District of New York for its approval.

The amount of the settlement payment proposed to be made by us as set forth in the JCO has previously been fully accrued by us as a litigation reserve for the New Jersey MDL Proceedings, however, until the JCO is approved by the New York Federal District Court, it remains possible that our losses related to the New Jersey MDL Proceedings could exceed the amounts so accrued.

MTBE Litigation – State of Pennsylvania

1 unchanged sentence

The complaint names us and more than 50 other defendants, including petroleum refiners, manufacturers, distributors and retailers of MTBE or gasoline containing MTBE.

MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater.

The complaint seeks compensation for natural resource damages and for injuries sustained as a result of “defendants’ unfair and deceptive trade practices and acts in the marketing of MTBE and gasoline containing MTBE.” The plaintiffs also seek to recover costs paid or incurred by the State to detect, treat and remediate MTBE from public and private water wells and groundwater.

The plaintiffs assert causes of action against all defendants based on multiple theories, including strict liability – defective design;

32 unchanged sentences

We are unable to estimate the possible loss or range of loss in excess of the amount we have accrued for this lawsuit.

It is possible that losses related to this case could exceed the amounts accrued, as of June 30, 2020, which could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

It is possible that losses related to this case could exceed the amounts accrued, as of September 30, 2020, which could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price.

The amounts outstanding under our Restated Credit Agreement and our senior unsecured notes are as follows (in thousands):

Interest Rate

September 30,

Unsecured Revolving Credit Facility

14 unchanged sentences

Total debt, net

Unamortized debt issuance costs, related to the Revolving Facility, at June 30, 2020 and December 31, 2019, of $ 1,574 and $ 2,014 , respectively, are included in prepaid expenses and other assets on our consolidated balance sheets .

Unamortized debt issuance costs, related to the Revolving Facility, at September 30, 2020 and December 31, 2019, of $ 1,355 and $ 2,014 , respectively, are included in prepaid expenses and other assets on our consolidated balance sheets .

Credit Agreement

32 unchanged sentences

We may be prohibited from drawing funds under the Revolving Facility if there is any event or condition that constitutes an event of default under the Restated Credit Agreement or that, with the giving of any notice, the passage of time, or both, would be an event of default under the Restated Credit Agreement.

As of June 30, 2020, we are in compliance with all of the material terms of the Restated Credit Agreement and our senior unsecured notes, including the various financial covenants described herein.

As of September 30, 2020, we are in compliance with all of the material terms of the Restated Credit Agreement and our senior unsecured notes, including the various financial covenants described herein.

Debt Maturities

As of June 30, 2020, scheduled debt maturities, including balloon payments, are as follows (in thousands):

As of September 30, 2020, scheduled debt maturities, including balloon payments, are as follows (in thousands):

Unsecured Notes

29 unchanged sentences

environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter.

As of June 30, 2020 , we had accrued a total of $ 49,273,000 for our prospective environmental remediation obligations.

As of September 30, 2020 , we had accrued a total of $ 49,024,000 for our prospective environmental remediation obligations.

This accrual consisted of (a) $ 11,934,000 , which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $ 37,090,000 for future environmental liabilities related to preexisting unknown contamination.

1 unchanged sentence

This accrual consisted of (a) $ 12,470,000 , which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $ 38,253,000 for future environmental liabilities related to preexisting unknown contamination.

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $ 922,000 and $ 1,032,000 of net accretion expense was recorded for the six months ended June 30, 2020 and 2019, respectively, which is included in environmental expenses.

In addition, during the six months ended June 30, 2020 and 2019, we recorded credits to environmental expenses aggregating $ 1,228,000 and $ 559,000 , respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs.

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $ 1,375,000 and $ 1,507,000 of net accretion expense was recorded for the nine months ended September 30, 2020 and 2019, respectively, which is included in environmental expenses.

In addition, during the nine months ended September 30, 2020 and 2019, we recorded credits to environmental expenses aggregating $ 2,089,000 and $ 855,000 , respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs.

Environmental expenses also include project management fees, legal fees and environmental litigation accruals.

For the six months ended June 30, 2020 and 2019, changes in environmental estimates aggregating, $ 73,000 and $ 175,000 , respectively, were related to properties that were previously disposed of by us.

During the six months ended June 30, 2020 and 2019, we increased the carrying values of certain of our properties by $ 1,441,000 and $ 2,334,000 , respectively, due to changes in estimated environmental remediation costs.

For the nine months ended September 30, 2020 and 2019, changes in environmental estimates aggregating, $ 130,000 and $ 279,000 , respectively, were related to properties that were previously disposed of by us.

During the nine months ended September 30, 2020 and 2019, we increased the carrying values of certain of our properties by $ 2,271,000 and $ 3,700,000 , respectively, due to changes in estimated environmental remediation costs.

The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on our consolidated statements of cash flows.

Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10 -year period if the increase in carrying value is related to environmental remediation obligations or such shorter period if circumstances warrant, such as the remaining lease term for properties we lease from others.

Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the six months ended June 30, 2020 and 2019, was $ 1,995,000 and $ 2,078,000 , respectively.

Capitalized asset retirement costs were $ 39,611,000 (consisting of $ 22,687,000 of known environmental liabilities and $ 16,924,000 of reserves for future environmental liabilities) as of June 30, 2020, and $ 39,684,000 (consisting of $ 22,150,000 of known environmental liabilities and $ 17,534,000 of reserves for future environmental liabilities) as of December 31, 2019.

We recorded impairment charges aggregating $ 1,446,000 and $ 1,429,000 for the six months ended June 30, 2020 and 2019, respectively, for capitalized asset retirement costs.

Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the nine months ended September 30, 2020 and 2019, was $ 2,998,000 and $ 3,106,000 , respectively.

Capitalized asset retirement costs were $ 40,024,000 (consisting of $ 23,642,000 of known environmental liabilities and $ 16,382,000 of reserves for future environmental liabilities) as of September 30, 2020, and $ 39,684,000 (consisting of $ 22,150,000 of known environmental liabilities and $ 17,534,000 of reserves for future environmental liabilities) as of December 31, 2019.

We recorded impairment charges aggregating $ 2,118,000 and $ 2,357,000 for the nine months ended September 30, 2020 and 2019, respectively, for capitalized asset retirement costs.

Environmental exposures are difficult to assess and estimate for numerous reasons, including the amount of data available upon initial assessment 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, changes in costs associated with environmental remediation services and equipment, the availability of state UST remediation funds and the possibility of existing legal claims giving rise to allocation of responsibilities to others, as well as the time it takes to remediate contamination and receive regulatory approval.

12 unchanged sentences

— STOCKHOLDERS’ EQUITY

A summary of the changes in stockholders’ equity for the three and six months ended June 30, 2020 and 2019, is as follows (in thousands except per share amounts):

A summary of the changes in stockholders’ equity for the three and nine months ended September 30, 2020 and 2019, is as follows (in thousands except per share amounts):

Paid In Excess

BALANCE, MARCH 31, 2020

BALANCE, JUNE 30, 2020

Dividends declared — $ 0.37 per share

2 unchanged sentences

Stock-based compensation/settlements

BALANCE, JUNE 30, 2020

BALANCE, SEPTEMBER 30, 2020

BALANCE, DECEMBER 31, 2019

4 unchanged sentences

Stock-based compensation/settlements

BALANCE, JUNE 30, 2020

BALANCE, SEPTEMBER 30, 2020

Paid In Excess

BALANCE, MARCH 31, 2019

BALANCE, JUNE 30, 2019

Dividends declared — $ 0.35 per share

2 unchanged sentences

Stock-based compensation/settlements

BALANCE, JUNE 30, 2019

BALANCE, SEPTEMBER 30, 2019

BALANCE, DECEMBER 31, 2018

3 unchanged sentences

Stock-based compensation/settlements

BALANCE, JUNE 30, 2019

BALANCE, SEPTEMBER 30, 2019

On March 2, 2020, our Board of Directors granted 176,050 restricted stock units (“RSU” or “RSUs”) under our Amended and Restated 2004 Omnibus Incentive Compensation Plan.

2 unchanged sentences

Sales of the shares of common stock may be made, as needed, from time to time in at-the-market offerings as defined in Rule 415 of the Securities Act, including by means of ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or as otherwise agreed to with the applicable agent.

During the three and six months ended June 30, 2020, we issued a total of 404,000 shares of common stock and received net proceeds of $ 11,916,000 under the ATM Program.

During the three and six months ended June 30, 2019, we issued 213,000 shares of common stock and received net proceeds of $ 6,663,000 under the ATM Program.

During the three and nine months ended September 30, 2020, we issued a total of 922,000 and 1,326,000 shares of common stock and received net proceeds of $ 26,622,000 and $ 38,538,000 , respectively, under the ATM Program.

During the three and nine months ended September 30, 2019, we issued 70,000 and 283,000 shares of common stock and received net proceeds of $ 2,154,000 and $ 8,817,000 , respectively, under the ATM Program.

Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

For the six months ended June 30, 2020, we paid regular quarterly dividends of $ 31,189,000 or $ 0.74 per share.

For the six months ended June 30, 2019, we paid regular quarterly dividends of $ 29,050,000 or $ 0.70 per share.

For the nine months ended September 30, 2020, we paid regular quarterly dividends of $ 46,957,000 or $ 1.11 per share.

For the nine months ended September 30, 2019, we paid regular quarterly dividends of $ 43,678,000 or $ 1.05 per share.

Dividend Reinvestment Plan

Our dividend reinvestment plan provides our common stockholders with a convenient and economical method of acquiring additional shares of common stock by reinvesting all or a portion of their dividend distributions.

During the six months ended June 30, 2020 and 2019, we issued 13,027 and 23,571 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $ 410,000 and $ 718,000 , respectively.

During the nine months ended September 30, 2020 and 2019, we issued 13,585 and 35,424 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $ 426,000 and $ 1,082,000 , respectively.

Stock-Based Compensation

Compensation cost for our stock-based compensation plans using the fair value method was $ 1,600,000 and $ 1,139,000 for the six months ended June 30, 2020 and 2019, respectively, and is included in general and administrative expense in our consolidated statements of operations.

Compensation cost for our stock-based compensation plans using the fair value method was $ 2,467,000 and $ 1,803,000 for the nine months ended September 30, 2020 and 2019, respectively, and is included in general and administrative expense in our consolidated statements of operations.

— EARNINGS PER COMMON SHARE

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Less earnings attributable to RSUs outstanding

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Debt Instruments

As of June 30, 2020 and December 31, 2019, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value.

As of June 30, 2020 and December 31, 2019, the fair value of the borrowings under our senior unsecured notes was $ 470,100,000 and $ 470,600,000 , respectively.

The fair value of the borrowings outstanding as of June 30, 2020 and December 31, 2019, was determined using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, risk profile and borrowings outstanding, which are based on unobservable inputs within Level 3 of the Fair Value Hierarchy.

As of September 30, 2020 and December 31, 2019, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value.

As of September 30, 2020 and December 31, 2019, the fair value of the borrowings under our senior unsecured notes was $ 479,600,000 and $ 470,600,000 , respectively.

The fair value of the borrowings outstanding as of September 30, 2020 and December 31, 2019, was determined using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, risk profile and borrowings outstanding, which are based on unobservable inputs within Level 3 of the Fair Value Hierarchy.

Supplemental Retirement Plan

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We have a Supplemental Retirement Plan for executives.

The amounts held in trust under the Supplemental Retirement Plan using Level 2 inputs may be used

to satisfy claims of general creditors in the event of our or any of our subsidiaries’ bankruptcy.

The amounts held in trust under the Supplemental Retirement Plan using Level 2 inputs may be used to satisfy claims of general creditors in the event of our or any of our subsidiaries’ bankruptcy.

We have liability to the executives participating in the Supplemental Retirement Plan for the participant account balances equal to the aggregate of the amount invested at the executives’ direction and the income earned in such mutual funds.

The following summarizes as of June 30, 2020, our assets and liabilities measured at fair value on a recurring basis by level within the Fair Value Hierarchy (in thousands):

The following summarizes as of September 30, 2020, our assets and liabilities measured at fair value on a recurring basis by level within the Fair Value Hierarchy (in thousands):

Deferred compensation

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Real Estate Assets

We have certain real estate assets that are measured at fair value on a non-recurring basis using Level 3 inputs as of June 30, 2020 and December 31, 2019, of $ 1,170,000 and $ 785,000 , where impairment charges have been recorded.

We have certain real estate assets that are measured at fair value on a non-recurring basis using Level 3 inputs as of September 30, 2020 and December 31, 2019, of $ 1,664,000 and $ 785,000 , where impairment charges have been recorded.

Due to the subjectivity inherent in the internal valuation techniques used in estimating fair value, the amounts realized from the sale of such assets may vary significantly from these estimates.

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Assets that are classified as held for sale are recorded at the lower of their carrying amount or fair value less costs to sell.

As of June 30, 2020, there were no properties that met the criteria to be classified as held for sale.

During the six months ended June 30, 2020 , we sold five properties, in separate transactions, which resulted in an aggregate gain of $ 873,000 , included in gain (loss) on dispositions of real estate on our consolidated statements of operations.

During the six months ended June 30, 2020, we received funds from a property condemnation resulting in a gain of $ 183,000 , included in gain (loss) on dispositions of real estate in our consolidated statements of operations.

As of September 30, 2020, there were no properties that met the criteria to be classified as held for sale.

During the nine months ended September 30, 2020 , we sold six properties, in separate transactions, which resulted in an aggregate gain of $ 955,000 , included in gain (loss) on dispositions of real estate on our consolidated statements of operations.

During the nine months ended September 30, 2020, we received funds from a property condemnation resulting in a gain of $ 183,000 , included in gain (loss) on dispositions of real estate in our consolidated statements of operations.

In addition, during nine months ended September 30, 2020, we agreed to sever a property from a unitary lease and to substitute in its place, and add to the unitary lease, two new properties of equivalent net book value.

We did not recognize any gain (loss) in our consolidated statements of operations .

— PROPERTY ACQUISITIONS

During the six months ended June 30, 2020, we acquired fee simple interests in 15 properties for an aggregate purchase price of $ 68,671,000 .

During the nine months ended September 30, 2020, we acquired fee simple interests in 24 properties for an aggregate purchase price of $ 104,809,000 .

On February 4, 2020, and February 26, 2020, we acquired fee simple interests in ten car wash properties for an aggregate purchase price of $ 50,303,000 and entered into a unitary lease at the closing of the transactions.

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Rent is scheduled to increase annually during the initial and renewal terms of the lease.

The properties are located in Missouri and Kansas.

The properties are located within the Kansas City MSA.

We accounted for the acquisitions as asset acquisitions.

We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $ 4,775,000 of the purchase price to land, $ 41,093,000 to buildings and improvements, $ 3,727,000 to in-place leases, $ 1,955,000 to above-market leases and $ 1,247,000 to below-market leases which is accounted for as a deferred liability.

In addition, during the six months ended June 30, 2020, we also acquired fee simple interests in five convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $ 18,368,000 .

On August 25, 2020, we acquired fee simple interests in seven car wash properties for an aggregate purchase price of $ 28,301,000 and entered into a unitary lease at the closing of the transactions.

We funded the transactions through funds available under our Revolving Facility.

The unitary lease provides for an initial term of 15 years , with five five-year renewal options.

The unitary lease requires our tenant to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges.

Rent is scheduled to increase annually during the initial and renewal terms of the lease.

The properties are located with in the San Antonio MSA .

We accounted for the acquisitions as asset acquisitions.

We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $ 5,335,000 of the purchase price to land, $ 21,093,000 to buildings and improvements, $ 2,396,000 to in-place leases and $ 523,000 to below-market leases which is accounted for as a deferred liability.

In addition, during the nine months ended September 30, 2020, we also acquired fee simple interests in seven convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $ 26,205,000 .

We accounted for the acquisitions of fee simple interests as asset acquisitions.

We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $ 9,236,000 of the purchase price to land, $ 15,394,000 to buildings and improvements and $ 1,575,000 to in-place leases.

During the six months ended June 30, 2019, we acquired fee simple interests in nine properties for an aggregate purchase price of $ 29,700,000

During the nine months ended September 30, 2019, we acquired fee simple interests in 14 properties for an aggregate purchase price of $ 43,324,000

On June 17, 2019, we acquired fee simple interests in six convenience store and gasoline station properties for $ 24,724,000 and entered into a unitary lease at the closing of the transaction.

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Rent is scheduled to increase annually during the initial and renewal terms of the lease.

The properties are located within the metropolitan market of Los Angeles in the state of California.

The properties are located within the Los Angeles MSA.

We accounted for the acquisition as an asset acquisition.

We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $ 18,086,000 of the purchase price to land, $ 4,789,000 to buildings and improvements and $ 1,849,000 to in-place leases.

During the six months ended June 30, 2019, we also acquired fee simple interests in three convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $ 4,976,000 .

In addition, during the nine months ended September 30, 2019, we also acquired fee simple interests in eight convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $ 18,600,000 .

We accounted for the acquisitions of fee simple interests as asset acquisitions.

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During the year ended December 31, 2019, we acquired fee simple interests in 27 convenience store and gasoline station, and other automotive related properties for an aggregate purchase price of $ 87,157,000 .

On November 22, 2019, we acquired fee simple interests in four car wash properties for $ 14,144,000 and entered into a unitary lease with a QNC OpCo Inc.

(“QNC”) at the closing of the transaction.

We funded the QNC transaction through funds available under our Revolving Facility.

On November 22, 2019, we acquired fee simple interests in four car wash properties for $ 14,144,000 and entered into a unitary lease at the closing of the transaction.

We funded the transaction through funds available under our Revolving Facility.

The unitary lease provides for an initial term of 15 years, with five five-year renewal options.

The unitary lease requires QNC to pay a fixed annual rent plus all amounts pertaining to the properties, including environmental expenses, real estate taxes, assessments, license and permit fees, charges for public utilities and all other governmental charges.

Rent is scheduled to increase annually during the initial and renewal terms of the lease.

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— SUBSEQUENT EVENTS

In preparing our unaudited consolidated financial statements, we have evaluated events and transactions occurring after June 30, 2020, for recognition or disclosure purposes.

Based on this evaluation, there were no significant subsequent events from June 30, 2020, through the date the financial statements were issued, other than the disclosures herein .

In preparing our unaudited consolidated financial statements, we have evaluated events and transactions occurring after September 30, 2020, for recognition or disclosure purposes.

Based on this evaluation, there were no significant subsequent events from September 30, 2020, through the date the financial statements were issued, other than the disclosures herein .

The COVID-19 pandemic has created significant uncertainty and economic volatility.

While we have not incurred significant disruptions to our financial results thus far from the COVID-19 pandemic, we are unable to accurately predict the impact that COVID-19 will have on our business, operations and financial results.

While we have not incur red significant disruptions to our financial results thus far from the COVID-19 pandemic, we are un able to accurately predict the impact that COVID-19 will have on our business, operations and financial results.

Any impact to our business, operations and financial results will depend on numerous evolving factors, including:

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Any of these events could materially adversely impact our business, financial condition, results of operations or stock price.

As of July 23, 2020, we received July contractual base rent and mortgage payments from 98 % of our tenants or mortgagors, as applicable.

July collections to date may not be indicative of collections in any future period.

Accordingly, the impact of COVID-19 on our rental revenue or interest income for the third quarter of 2020 and thereafter cannot be determined at present.

As of October 22, 2020, we received October contractual base rent and mortgage payments from 98 % of our tenants or mortgagors, as applicable.

October collections to date may not be indicative of collections in any future period.

Accordingly, the impact of COVID-19 on our rental revenue or interest income for the fourth quarter of 2020 and thereafter cannot be definitively determined at present.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements