What changed in this filing

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Item 1. Financial Statements

2021-07-29 compared with 2021-04-29 · 121 added, 87 removed, 579 unchanged (26% of the section changed)

43 unchanged sentences

Three Months Ended

Six Months Ended

Revenues from rental properties

18 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Impairment charges

(Gain) loss on dispositions of real estate

Gain on dispositions of real estate

Deferred rent receivable

23 unchanged sentences

Payment of finance lease obligations

Security deposits received (refunded)

Security deposits (refunded) received

Payments of cash dividends

1 unchanged sentence

Proceeds from issuance of common stock, net - ATM

Net cash flow provided by (used in) financing activities

Net cash flow (used in) provided by financing activities

Change in cash, cash equivalents and restricted cash

11 unchanged sentences

Getty Realty Corp.

(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 acquisition, ownership, leasing, financing and redevelopment of convenience stores, gasoline stations and other automotive-related and retail real estate, including express car washes, automotive service centers, automotive parts retailers and select other properties.

(together with its subsidiaries, unless otherwise indicated or except where the context otherwise requires, “we,” “us” or “our”) is a publicly traded, net lease real estate investment trust (“REIT”) specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate.

Our predecessor was originally founded in 1955 and our common stock was listed on the NYSE in 1997.

As of March 31, 2021, our portfolio included 960 properties located in 35 states and Washington, D.C., and our tenants operated under a variety of national and regional retail brands.

Our company is headquartered in New York, New York and is internally managed by our management team, which has extensive experience acquiring, owning and managing convenience stores, gasoline stations and other automotive-related and retail real estate.

As of June 30, 2021, our portfolio included 1,005 properties located in 35 states and Washington, D.C., and our tenants operated under a variety of national and regional retail brands.

Our company is headquartered in New York, New York and is internally managed by our management team, which has extensive experience acquiring, owning and managing convenience, automotive and other single tenant retail real estate.

— ACCOUNTING POLICIES

45 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 months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021 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 six months ended June 30, 2021 and 2020.

For the three and six months ended June 30, 2021, 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.

11 unchanged sentences

In addition, during the year ended December 31, 2020, we recorded an additional allowance for credit losses of $ 28,000 on these notes and mortgages receivable due to changes in expected economic conditions, which was included within other income in our consolidated statements of operations.

There were no indicators for impairments related to our notes and mortgages receivable during the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2021, 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 six months ended June 30, 2021 and 2020.

For the three and six months ended June 30, 2021, we did no t record any additional allowance for credit losses.

From time to time, we may originate construction loans for the construction of income-producing properties, which we expect to purchase via sale-leaseback transactions at the end of the construction period.

During the three months ended March 31, 2021, we funded, and had outstanding as of March 31, 2021, such construction loans in the amount of $ 8,395,000 , including accrued interest.

During the six months ended June 30, 2021, we funded, and had outstanding as of June 30, 2021, such construction loans in the amount of $ 11,083,000 , including accrued interest.

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

21 unchanged sentences

Account for the deferred payments as variable lease payments.

We elected to treat lease concessions with option (1) above for the quarter ended March 31, 2021.

We elected to treat lease concessions with option (1) above for the quarter ended June 30, 2021.

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 $ 776,000 for the three months ended March 31, 2021 and $ 1,031,000 for the three months ended March 31, 2020.

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 $ 43,000 of impairments recognized during the three months ended March 31, 2021) and (ii) discounted cash flow models (this method was used to determine $ 0 of impairments recognized during the three months ended March 31, 2021).

In addition, during the three months ended March 31, 2021, we recorded $ 733,000 of impairments due to the accumulation of asset retirement costs at certain properties as a result of changes in estimates associated with our estimated environmental liabilities, which increased the carrying values of these properties in excess of their fair values.

For the three months ended March 31, 2021 and 2020, impairment charges aggregating $ 335,000 and $ 206,000 , respectively, were related to properties that were previously disposed of by us.

We recorded impairment charges aggregating $ 756,000 and $ 1,532,000 for the three and six months ended June 30, 2021 and $ 507,000 and $ 1,538,000 for the three and six months ended June 30, 2020.

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 $ 43,000 of impairments recognized during the six months ended June 30, 2021) and (ii) discounted cash flow models (this method was used to determine $ 0 of impairments recognized during the six months ended June 30, 2021).

The $1,489,000 of impairments recognized during the six months ended June 30, 2021, was due to the accumulation of asset retirement costs at certain properties as a result of changes in estimates associated with our estimated environmental liabilities, which increased the carrying values of these properties in excess of their fair values.

For the six months ended June 30, 2021 and 2020, impairment charges aggregating $ 614,000 and $ 306,000 , 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.

37 unchanged sentences

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

As of March 31, 2021, we owned 902 properties and leased 58 properties from third-party landlords.

As of June 30, 2021, we owned 951 properties and leased 54 properties from third-party landlords.

These 1,005 properties are located in 35 states across the United States and Washington, D.C.

Substantially all of our properties are leased on a triple-net basis to convenience store retailers, petroleum distributors and other automotive-related and retail tenants.

Our tenants either operate their businesses at our properties directly or sublet our properties and supply fuel to third parties who operate the convenience store and gasoline station businesses.

Substantially all of our properties are leased on a triple-net basis to convenience store retailers, petroleum distributors, car wash operators and other automotive-related and retail tenants.

Our tenants either operate their businesses at our properties directly or, in the case of certain convenience stores and gasoline stations, sublet our properties and supply fuel to third parties who operate the businesses.

Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases and in certain cases also for environmental contamination that existed before their leases commenced.

4 unchanged sentences

Pursuant to ASU 2016-02, for leases in which we are the lessor, we (i) retained the classification of our historical leases as we were not required to reassess classification upon adoption of the new standard , (ii) expense 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) aggregate revenue from our lease components and non-lease components (comprised of tenant reimbursements) into revenue from rental properties.

Revenues from rental properties were $ 36,951,000 and $ 34,650,000 for the three months ended March 31, 2021 and 2020, respectively.

Rental income contractually due from our tenants included in revenues from rental properties was $ 33,539,000 and $ 31,393,000 for the three months ended March 31, 2021 and 2020, respectively.

Revenues from rental properties were $ 38,263,000 and $ 75,214,000 for the three and six months ended June 30, 2021, and $ 36,336,000 and $ 70,986,000 for the three and six months ended June 30, 2020, respectively .

Rental income contractually due from our tenants included in revenues from rental properties was $ 34,366,000 and $ 67,904,000 for the three and six months ended June 30, 2021, and $ 31,784,000 and $ 63,178,000 for the three and six months ended June 30, 2020, 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 (collectively, “Revenue Recognition Adjustments”).

Revenue Recognition Adjustments included in revenues from rental properties resulted in a reduction in revenue of $ 343,000 and $ 69,000 for the three months ended March 31, 2021 and 2020, 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 $ 3,756,000 and $ 3,326,000 for the three months ended March 31, 2021 and 2020, respectively .

The components of the $ 76,094,000 investment in direct financing leases as of March 31, 2021, are lease payments receivable of $ 109,946,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 46,862,000 and $ 918,000 allowance for credit losses.

As a result, revenues from rental properties include (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of above-market and below-market leases, (iii) 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 (iv) the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”).

Revenue Recognition Adjustments included in revenues from rental

properties resulted in a reduction in revenue of $ 383,000 and $ 726,000 for the three and six months ended June 30, 2021, and a reduction in revenue of $ 86,000 and $ 156,000 for the three and six months ended June 30, 2020 , 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 and reimbursable by our tenants pursuant to the terms of triple-net lease agreements, were $ 4,280,000 and $ 8,036,000 for the three and six months ended June 30, 2021, respectively, and $ 4,638,000 and $ 7,964,000 for the three and six months ended June 30, 2020, respectively .

The components of the $ 74,895,000 investment in direct financing leases as of June 30, 2021, are lease payments receivable of $ 106,612,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 44,727,000 and $ 918,000 allowance for credit losses.

The components of the $ 77,238,000 investment in direct financing leases as of December 31, 2020, are lease payments receivable of $ 113,256,000 plus unguaranteed estimated residual value of $ 13,928,000 less unearned income of $ 49,028,000 and $ 918,000 allowance for credit losses.

Of the $918,000 aggregate credit loss reserve related to these direct financing leases, $ 578,000 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 March 31, 2021, future contractual annual rentals receivable from our tenants, which have terms in excess of one year are as follows (in thousands):

As of June 30, 2021, future contractual annual rentals receivable from our tenants, which have terms in excess of one year are as follows (in thousands):

Financing Leases

25 unchanged sentences

Three Months Ended

March 31, 2021

June 30, 2021

Six Months Ended

June 30, 2021

Operating lease cost

6 unchanged sentences

Three Months Ended

March 31, 2021

June 30, 2021

Six Months Ended

June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities

2 unchanged sentences

Financing cash flows for finance leases

As of March 31, 2021, scheduled lease liabilities mature as follows (in thousands) :

As of June 30, 2021, scheduled lease liabilities mature as follows (in thousands) :

Financing Leases

3 unchanged sentences

Major Tenants

As of March 31, 2021, we had four significant tenants by revenue:

As of June 30, 2021, we had four 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 15 % of our total revenues for the three months ended March 31, 2021 and 2020.

In the aggregate, our leases with subsidiaries of Global represented 15 % and 16 % of our total revenues for the six months ended June 30, 2021 and 2020.

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

1 unchanged sentence

ARKO) (“Arko”).

In the aggregate, our leases with subsidiaries of Arko represented 15 % of our total revenues for each of the three months ended March 31, 2021 and 2020, respectively.

In the aggregate, our leases with subsidiaries of Arko represented 15 % of our total revenues for each of the six months ended June 30, 2021 and 2020.

All of our unitary leases with subsidiaries of Arko 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 three months ended March 31, 2021 and 2020, respectively.

In the aggregate, our leases with United Oil represented 12 % of our total revenues for each of the six months ended June 30, 2021 and 2020.

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 9 % and 11 % of our total revenues for the three months ended March 31, 2021 and 2020, respectively.

In the aggregate, our leases with subsidiaries of Chestnut represented 9 % and 10 % of our total revenues for the six months ended June 30, 2021 and 2020, 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 re-leased these properties.

As of March 31, 2021, 350 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 across 14 separate portfolios and 26 properties are leased as single unit triple-net leases.

As of June 30, 2021, 348 of the properties we own or lease were previously leased to Marketing, of which 315 properties are subject to long-term triple-net leases with petroleum distributors across 14 separate portfolios and 26 properties are leased as single unit triple-net leases.

The portfolio 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 portfolio 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 March 31, 2021, we have a remaining commitment to fund up to $ 6,772,000 in the aggregate with our tenants for our portion of such capital improvements.

As of June 30, 2021, we have a remaining commitment to fund up to $ 6,712,000 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 March 31, 2021, 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 June 30, 2021, 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 $ 1,211,000 (net of accumulated amortization of $ 1,794,000 ) 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 involved in various legal proceedings and claims which arise in the ordinary course of our business.

As of March 31, 2021 and December 31, 2020, we had accrued $ 4,275,000 for certain of these matters which we believe were appropriate based on information then currently available.

As of June 30, 2021 and December 31, 2020, we had accrued $ 4,275,000 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.

6 unchanged sentences

Many of the parties to the AOC, including us, are also members of a Cooperating Parties Group (“CPG”).

The CPG agreed to an interim allocation formula for purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this interim allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the LPRSA.

The CPG agreed to an interim allocation formula for

purposes of allocating the costs to complete the RI/FS among its members, with the understanding that this interim allocation formula is not binding on the parties in terms of any potential liability for the costs to remediate the LPRSA.

The CPG submitted to the EPA its draft RI/FS in 2015, which sets forth various alternatives for remediating the entire 17 miles of the LPRSA.

In October 2018, the EPA issued a letter directing the CPG to prepare a streamlined feasibility study for just the upper 9-miles of the LPRSA based on an iterative approach using adaptive management strategies.

On December 4, 2020, The CPG submitted a Final Draft Interim Remedy Feasibility Study (“IR/FS”) to the EPA which identifies various targeted dredge and cap alternatives for the upper 9-miles of the

On December 11, 2020, EPA conditionally approved the CPG’s IR/FS for the upper 9-miles of the LPRSA, which recognizes that interim actions and adaptive management may be appropriate before deciding a final remedy.

27 unchanged sentences

Factual discovery is ongoing, and we are defending the claims consistent with our defenses in the related proceedings.

Many uncertainties remain regarding the anticipated interim remedy selection for the Upper 9-mile IR ROD and how the EPA intends to implement either the Upper 9-mile IR ROD and/or the Lower 8-mile ROD work, including whether EPA will designate certain PRPs as work parties and/or if EPA will identify PRPs for future cash-out settlement negotiations for the Upper 9-mile IR ROD, the Lower 8-mile ROD work or both.

certain PRPs as work parties and/or if EPA will identify PRPs for future cash-out settlement negotiations for the Upper 9-mile IR ROD, the Lower 8-mile ROD work or both.

Further, none of the above referenced AOCs and RODs relating to the LPRSA obligate us to fund or perform any remedial action contemplated for the LPRSA and do not resolve liability issues for remedial work or the restoration of or compensation for alleged natural resource damages to the LPRSA, which are not known at this time.

34 unchanged sentences

Our ultimate liability, if any, in this proceeding is uncertain and subject to numerous contingencies which cannot be predicted and the outcome of which are not yet known.

Uniondale, New York Litigation

In September 2004, the State of New York commenced an action against us, United Gas Corp., Costa Gas Station, Inc., Vincent Costa, Sharon Irni, The Ingraham Bedell Corporation, Richard Berger and Exxon Mobil in New York Supreme Court in Albany County seeking recovery for reimbursement of investigation and remediation costs claimed to have been incurred by the New York Environmental Protection and Spill Compensation Fund relating to contamination it alleges emanated from various gasoline station properties located in the same vicinity in Uniondale, New York, including a site formerly owned by us and at which a petroleum

release and cleanup occurred.

Uniondale, N ew Y ork Litigation

The complaint also seeks future costs for remediation, as well as interest and penalties.

3 unchanged sentences

In 2016, the various actions filed by the State of New York and our third-party actions were consolidated for discovery proceedings and trial.

Discovery in this case is in later stages and, as it nears completion, a schedule for trial will be established.

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 March 31, 2021 , 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 entered into a settlement agreement with the State of New York and the other parties to this lawsuit, which includes mutual releases.

This settlement is in the process of being funded by the defendants, following which a stipulation of discontinuance will be filed and the lawsuit will be dismissed.

Our settlement contribution is consistent with the amount we accrued for this lawsuit as of June 30, 2021.

Although we believe that this case will be resolved as contemplated by the settlement agreement, until funding is fully made and the stipulation of discontinuance is filed, this case cannot be considered fully resolved.

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

20 unchanged sentences

Total debt, net

Unamortized debt issuance costs, related to the Revolving Facility, at March 31, 2021 and December 31, 2020, of $ 915 and $ 1,135 , respectively, are included in prepaid expenses and other assets on our consolidated balance sheets .

Unamortized debt issuance costs, related to the Revolving Facility, at June 30, 2021 and December 31, 2020, of $ 695 and $ 1,135 , respectively, are included in prepaid expenses and other assets on our consolidated balance sheets .

Credit Agreement

36 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 March 31, 2021, 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 June 30, 2021, 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 March 31, 2021, scheduled debt maturities, including balloon payments, are as follows (in thousands):

As of June 30, 2021, scheduled debt maturities, including balloon payments, are as follows (in thousands):

Unsecured Notes

7 unchanged sentences

It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities.

We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations.

We assess whether to accrue for environmental liabilities based upon

relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial cap ability, and their intent to pay for such obligations.

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 .

18 unchanged sentences

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

As of March 31, 2021, we had accrued a total of $ 48,722,000 for our prospective environmental remediation obligations.

As of June 30, 2021, we had accrued a total of $ 47,932,000 for our prospective environmental remediation obligations.

This accrual consisted of (a) $ 11,920,000 , 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) $ 36,012,000 for future environmental liabilities related to preexisting unknown contamination.

1 unchanged sentence

This accrual consisted of (a) $ 11,718,000 , 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) $ 36,366,000 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, $ 461,000 and $ 466,000 of net accretion expense was recorded for the three months ended March 31, 2021 and 2020, respectively, which is included in environmental expenses.

In addition, during the three months ended March 31, 2021 and 2020, we recorded credits to environmental expenses aggregating $ 308,000 and $ 788,000 , 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 three months ended March 31, 2021 and 2020, changes in environmental estimates aggregating, $ 39,000 and $ 32,000 , respectively, were related to properties that were previously disposed of by us.

During the three months ended March 31, 2021 and 2020, we increased the carrying values of certain of our properties by $ 922,000 and $ 812,000 , respectively, due to changes in estimated environmental remediation costs.

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $ 863,000 and $ 922,000 of net accretion expense was recorded for the six months ended June 30, 2021 and 2020, respectively, which is included in environmental expenses.

In addition, during the six months ended June 30, 2021 and 2020, we recorded credits to environmental expenses aggregating $ 1,039,000 and $ 1,228,000 , 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, 2021 and 2020 , changes in environmental estimates aggregating, $ 92,000 and $ 73,000 , respectively, were related to properties that were previously disposed of by us.

During the six months ended June 30, 2021 and 2020, we increased the carrying values of certain of our properties by $ 1,211,000 and $ 1,441,000 , 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 three months ended March 31, 2021 and 2020, was $ 975,000 and $ 1,002,000 , respectively.

Capitalized asset retirement costs were $ 39,227,000 (consisting of $ 23,441,000 of known environmental liabilities and $ 15,786,000 of reserves for future environmental liabilities) as of March 31, 2021, and $ 39,610,000 (consisting of $ 23,573,000 of known environmental liabilities and $ 16,037,000 of reserves for future environmental liabilities) as of December 31, 2020.

We recorded impairment charges aggregating $ 744,000 and $ 941,000 for the three months ended March 31, 2021 and 2020, respectively, for capitalized asset retirement costs.

Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations for the six months ended June 30, 2021 and 2020, was $ 1,971,000 and $ 1,995,000 , respectively.

Capitalized asset retirement costs were $ 39,370,000 (consisting of $ 23,584,000 of known environmental liabilities and $ 15,786,000 of reserves for future environmental liabilities) as of June 30, 2021, and $ 39,610,000 (consisting of $ 23,573,000 of known environmental liabilities and $ 16,037,000 of reserves for future environmental liabilities) as of December 31, 2020.

We recorded impairment charges aggregating $ 1,500,000 and $ 1,446,000 for the six months ended June 30, 2021 and 2020, 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 months ended March 31, 2021 and 2020, is as follows (in thousands except per share amounts):

A summary of the changes in stockholders’ equity for the three and six months ended June 30, 2021 and 2020, is as follows (in thousands except per share amounts):

Paid In Excess

BALANCE, MARCH 31, 2021

Dividends declared — $ 0.39 per share

Shares issued pursuant to ATM Program, net

Shares issued pursuant to dividend reinvestment

Stock-based compensation/settlements

BALANCE, JUNE 30, 2021

BALANCE, DECEMBER 31, 2020

3 unchanged sentences

Stock-based compensation/settlements

BALANCE, MARCH 31, 2021

BALANCE, JUNE 30, 2021

Paid In Excess

BALANCE, MARCH 31, 2020

Dividends declared — $ 0.37 per share

Shares issued pursuant to ATM Program, net

Shares issued pursuant to dividend reinvestment

Stock-based compensation/settlements

BALANCE, JUNE 30, 2020

BALANCE, DECEMBER 31, 2019

4 unchanged sentences

Stock-based compensation/settlements

BALANCE, MARCH 31, 2020

BALANCE, JUNE 30, 2020

On March 1, 2021, our Board of Directors granted 192,550 restricted stock units (“RSU” or “RSUs”) under our Amended and Restated 2004 Omnibus Incentive Compensation Plan.

4 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 months ended March 31, 2021, we issued a total of 743,000 shares of common stock and received net proceeds of $ 20,266,000 under the 2018 ATM Program and the ATM Program.

During the three months ended March 31, 2020, no shares of common stock were issued under the 2018 ATM Program.

During the three and six months ended June 30, 2021, we issued a total of 289,000 and 1,032,000 shares of common stock and received net proceeds of $ 9,312,000 and $ 29,578,000 under the ATM Program and the 2018 ATM Program.

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 2018 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 three months ended March 31, 2021, we paid regular quarterly dividends of $ 17,332,000 or $ 0.39 per share.

For the three months ended March 31, 2020, we paid regular quarterly dividends of $ 15,557,000 or $ 0.37 per share.

For the six months ended June 30, 2021, we paid regular quarterly dividends of $ 35,022,000 or $ 0.78 per share.

For the six months ended June 30, 2020, we paid regular quarterly dividends of $ 31,189,000 or $ 0.74 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 three months ended March 31, 2021 and 2020, we issued 649 and 12,309 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $ 18,000 and $ 394,000 , respectively.

During the six months ended June 30, 2021 and 2020, we issued 1,258 and 13,027 shares of common stock, respectively, under the dividend reinvestment plan and received proceeds of $ 36,000 and $ 410,000 , respectively.

Stock-Based Compensation

Compensation cost for our stock-based compensation plans using the fair value method was $ 905,000 and $ 732,000 for the three months ended March 31, 2021 and 2020, 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 $ 1,937,000 and $ 1,600,000 for the six months ended June 30, 2021 and 2020, 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

Less earnings attributable to RSUs outstanding

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Debt Instruments

As of March 31, 2021 and December 31, 2020, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value.

As of March 31, 2021 and December 31, 2020, the fair value of the borrowings under our senior unsecured notes was $ 538,600,000 and $ 549,800,000 , respectively.

The fair value of the borrowings outstanding as of March 31, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, the carrying value of the borrowings under the Restated Credit Agreement approximated fair value.

As of June 30, 2021 and December 31, 2020, the fair value of the borrowings under our senior unsecured

notes was $ 555,272,000 and $ 549,800,000 , respectively.

The fair value of the borrowings outstanding as of June 30, 2021 and December 31, 2020 , 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 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 March 31, 2021, 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 June 30, 2021, 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 March 31, 2021 and December 31, 2020, of $ 395,000 and $ 1,979,000 , 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 June 30, 2021 and December 31, 2020, of $ 395,000 and $ 1,979,000 , 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 March 31, 2021, there were no properties that met the criteria to be classified as held for sale.

During the three months ended March 31, 2021 , we sold five properties, in separate transactions, which resulted in an aggregate gain of $ 7,319,000 , included in gain on dispositions of real estate in our consolidated statements of operations.

In addition, during the three months ended March 31, 2021, we received funds from a property condemnation resulting in a loss of $ 100,000 , included in gain on dispositions of real estate in our consolidated statements of operations.

As of June 30, 2021, there were no properties that met the criteria to be classified as held for sale.

During the six months ended June 30, 2021 , we sold five properties, in separate transactions, which resulted in an aggregate gain of $ 7,319,000 , included in gain on dispositions of real estate in our consolidated statements of operations.

In addition, during the six months ended June 30, 2021 we received funds from two property condemnations resulting in a gain of $ 159,000 , included in gain on dispositions of real estate in our consolidated statements of operations.

— PROPERTY ACQUISITIONS

During the three months ended March 31, 2021, we acquired fee simple interests in six properties for an aggregate purchase price of $ 21,852,000 .

In March 2021, we acquired fee simple interests in four car wash properties for an aggregate purchase price of $ 13,947,000 and entered into a unitary lease at the closing of the transactions.

We funded the transactions with available cash.

During the six months ended June 30, 2021, we acquired fee simple interests in 55 properties for an aggregate purchase price of $ 63,304,000 .

In May 2021, we acquired fee simple interests in 46 oil change centers subject to existing, individual leases for an aggregate purchase price of $ 31,018,000 .

We funded the transaction with available cash and funds available under our Revolving Facility.

The leases had approximately 11.5 years of initial term remaining as of the date of acquisition and include three five-year renewal options.

The leases require 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 every five years during the initial and renewal terms of the lease.

The properties are located throughout Ohio and Michigan.

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 $ 4,551,000 of the purchase

price to land, $ 22,539,000 to buildings and improvements, $ 3,120,000 to in-place leases, $ 2,224,000 to above-market leases, and $ 1,416,000 to below-market leases which is accounted for as a deferred liability.

On multiple dates in March, April and May 2021, we acquired fee simple interests in a total of seven car wash properties for an aggregate purchase price of $ 24,381,000 and entered into a single unitary lease at the closing of the transactions.

We funded the transactions with available cash and funds available under our Revolving Facility.

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

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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 Greater Cincinnati, OH and Lexington, KY areas.

The properties are located in the Greater Cincinnati, OH and Lexington, KY metropolitan areas.

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 $ 2,782,000 of the purchase price to land, $ 9,997,000 to buildings and improvements, $ 1,168,000 to in-place leases.

In addition, during the three months ended March 31, 2021, we acquired fee simple interests in two car wash properties for an aggregate purchase price of $ 7,905,000 .

We estimated the fair value of acquired tangible assets (consisting of land, buildings and improvements) “as if vacant.” Based on these estimates, we allocated $ 4,081,000 of the purchase price to land, $ 18,262,000 to buildings and improvements, and $ 2,038,000 to in-place leases.

In addition, during the six months ended June 30, 2021, we acquired fee simple interests in two individual car wash properties for an aggregate purchase price of $ 7,905,000 .

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 $ 1,865,000 of the purchase price to land, $ 5,396,000 to buildings and improvements and $ 644,000 to in-place leases.

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 .

In February 2020, we acquired fee simple interests in 10 car wash properties for an aggregate purchase price of $ 50,303,000

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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 three months ended March 31, 2020, we acquired fee simple interests in two car wash properties for an aggregate purchase price of $ 7,018,000 .

In addition, during the six months ended June 30, 2020, we 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 .

We accounted for the acquisitions as asset acquisitions.

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— SUBSEQUENT EVENTS

In preparing our unaudited consolidated financial statements, we have evaluated events and transactions occurring after March 31, 2021, for recognition or disclosure purposes.

Based on this evaluation, there were no significant subsequent events from March 31, 2021, through the date the financial statements were issued.

In preparing our unaudited consolidated financial statements, we have evaluated events and transactions occurring after June 30, 2021, for recognition or disclosure purposes.

Based on this evaluation, there were no significant subsequent events from June 30, 2021, through the date the financial statements were issued.

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