<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2005

                                       OR

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

For the transition period from __________ to __________

Commission file number 001-13777

                               GETTY REALTY CORP.
                            ------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                          <C>
            MARYLAND                                              11-3412575
-------------------------------                              ------------------
(State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization)                              Identification No.)
</TABLE>

                         125 JERICHO TURNPIKE, SUITE 103
                        ---------------------------------
                             JERICHO, NEW YORK 11753
                            -------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

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

    ________________________________________________________________________
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]

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

Registrant had outstanding 24,716,052 shares of Common Stock, par value $.01 per
share, as of November 7, 2005.
<PAGE>
                               GETTY REALTY CORP.

                                      INDEX

<TABLE>
<CAPTION>
                                                                     Page Number
                                                                     -----------
<S>                                                                  <C>
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

Consolidated Balance Sheets as of September 30, 2005 and
   December 31, 2004                                                       1

Consolidated Statements of Operations for the Three and Nine
   Months ended September 30, 2005 and 2004                                2

Consolidated Statements of Cash Flows for the
   Nine Months ended September 30, 2005 and 2004                           3

Notes to Consolidated Financial Statements                                 4

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                               11

Item 3. Quantitative and Qualitative Disclosures about Market Risk        23

Item 4. Controls and Procedures                                           23

Part II. OTHER INFORMATION

Item 1. Legal Proceedings                                                 25

Item 5. Other Information                                                 26

Item 6. Exhibits                                                          27

Signatures                                                                28
</TABLE>
<PAGE>
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

<TABLE>
<CAPTION>
                                                                        September 30,    December 31,
                                                                             2005            2004
                                                                       ---------------   ------------
<S>                                                                    <C>               <C>
Assets:

Real Estate:
   Land                                                                   $ 172,091       $ 156,571
   Buildings and improvements                                               199,437         190,019
                                                                          ---------       ---------
                                                                            371,528         346,590
   Less - accumulated depreciation and amortization                        (108,577)       (106,463)
                                                                          ---------       ---------
      Real estate, net                                                      262,951         240,127

Deferred rent receivable                                                     27,855          25,117
Cash and equivalents                                                            954          15,700
Recoveries from state underground storage tank funds, net                     4,888           5,437
Mortgages and accounts receivable, net                                        2,412           3,961
Prepaid expenses and other assets                                             1,316             386
                                                                          ---------       ---------
      Total assets                                                        $ 300,376       $ 290,728
                                                                          =========       =========
Liabilities and Shareholders' Equity:

Debt                                                                      $  34,931       $  24,509
Environmental remediation costs                                              19,376          20,626
Dividends payable                                                            11,009          10,495
Accounts payable and accrued expenses                                         7,246           9,595
                                                                          ---------       ---------
      Total liabilities                                                      72,562          65,225
                                                                          ---------       ---------
Commitments and contingencies
Shareholders' equity:
   Common stock, par value $.01 per share; authorized
      50,000,000 shares; issued 24,716,052 at September 30, 2005 and
      24,694,071 at December 31, 2004                                           247             247
   Paid-in capital                                                          257,720         257,295
   Dividends paid in excess of earnings                                     (30,153)        (32,039)
                                                                          ---------       ---------
      Total shareholders' equity                                            227,814         225,503
                                                                          ---------       ---------
      Total liabilities and shareholders' equity                          $ 300,376       $ 290,728
                                                                          =========       =========
</TABLE>

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



                                      -1-
<PAGE>

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

<TABLE>
<CAPTION>
                                               Three months ended September 30,   Nine months ended September 30,
                                               --------------------------------   -------------------------------
                                                         2005      2004                    2005      2004
                                                       -------   -------                 -------   -------
<S>                                            <C>               <C>              <C>              <C>
Revenues from rental properties                        $17,768   $16,425                 $53,036   $49,379

Expenses:
   Rental property expenses                              2,551     2,462                   7,735     7,470
   Environmental expenses, net                             375     1,049                   1,786     4,564
   General and administrative expenses                   1,167     1,492                   3,767     4,124
   Depreciation and amortization expense                 2,086     1,764                   6,100     5,428
                                                       -------   -------                 -------   -------
      Total operating expenses                           6,179     6,767                  19,388    21,586
                                                       -------   -------                 -------   -------
Operating income                                        11,589     9,658                  33,648    27,793

   Other income, net                                       179       323                     370       752
   Interest expense                                       (496)      (12)                 (1,096)      (52)
                                                       -------   -------                 -------   -------
Net earnings before income taxes                        11,272     9,969                  32,922    28,493

Income tax benefit                                       1,494        --                   1,494        --
                                                       -------   -------                 -------   -------
Net earnings                                           $12,766   $ 9,969                 $34,416   $28,493
                                                       =======   =======                 =======   =======
Net earnings per common share:
   Basic                                               $   .52   $   .40                 $  1.39   $  1.15
   Diluted                                             $   .52   $   .40                 $  1.39   $  1.15

Weighted average shares outstanding:
   Basic                                                24,715    24,680                  24,710    24,677
   Stock options and restricted  stock units                19        40                      15        40
                                                       -------   -------                 -------   -------
   Diluted                                              24,734    24,720                  24,725    24,717
                                                       =======   =======                 =======   =======

Dividends declared per share:                          $  .445   $  .425                 $ 1.315   $ 1.275
</TABLE>

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



                                       -2-
<PAGE>

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

<TABLE>
<CAPTION>
                                                                Nine months ended
                                                                  September 30,
                                                               -------------------
                                                                 2005       2004
                                                               --------   --------
<S>                                                            <C>        <C>
Cash flows from operating activities:
Net earnings                                                   $ 34,416   $ 28,493
Adjustments to reconcile net earnings to
   net cash provided by operating activities:
   Depreciation and amortization expense                          6,100      5,428
   Deferred rental revenue                                       (2,738)    (3,344)
   Gain on dispositions of real estate                             (177)      (334)
   Accretion expense                                                639        711
   Stock-based compensation expense                                 102         14
Changes in assets and liabilities:
   Recoveries from state underground storage tank funds, net        856      1,818
   Mortgages and accounts receivable, net                         1,241        591
   Prepaid expenses and other assets                             (1,001)       160
   Environmental remediation costs                               (2,196)    (2,713)
   Accounts payable and accrued expenses                           (855)       264
   Accrued income taxes                                          (1,494)        --
                                                               --------   --------
      Net cash provided by operating activities                  34,893     31,088
                                                               --------   --------

Cash flows from investing activities:
   Property acquisitions and capital expenditures               (29,571)    (8,632)
   Collection of mortgages receivable, net                          308      1,563
   Proceeds from dispositions of real estate                        895        641
                                                               --------   --------
      Net cash used in investing activities                     (28,368)    (6,428)
                                                               --------   --------

Cash flows from financing activities:
   Cash dividends paid                                          (32,016)   (31,461)
   Borrowings under credit agreement, net                        10,700         --
   Repayment of mortgages payable, net                             (278)      (316)
   Proceeds from stock issued                                       323         70
                                                               --------   --------
      Net cash used in financing activities                     (21,271)   (31,707)
                                                               --------   --------

Net decrease in cash and equivalents                            (14,746)    (7,047)
Cash and equivalents at beginning of period                      15,700     19,905
                                                               --------   --------
Cash and equivalents at end of period                          $    954   $ 12,858
                                                               ========   ========

Supplemental disclosures of cash flow information
   Cash paid (refunded) during the period for:
      Interest                                                 $    977   $     49
      Income taxes, net                                             446        373
      Recoveries from state underground storage tank funds       (1,495)    (1,532)
      Environmental remediation costs                             3,534      4,271
</TABLE>

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



                                      -3-
<PAGE>

                       GETTY REALTY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. General:

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

     The financial statements have been prepared in conformity with GAAP, which
requires management to make its best estimates, judgments and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the period reported. While all available
information has been considered, actual results could differ from those
estimates, judgments and assumptions. Estimates, judgments and assumptions
underlying the accompanying consolidated financial statements include, but are
not limited to, deferred rent receivable, recoveries from state underground
storage tank funds, environmental remediation costs, depreciation and
amortization, impairment of long-lived assets, litigation, accrued expenses,
income taxes and exposure to paying an earnings and profits deficiency dividend.

     The consolidated financial statements are unaudited but, in the opinion of
management, reflect all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation. These statements should be read in
conjunction with the consolidated financial statements and related notes, which
appear in the Company's Annual Report on Form 10-K for the year ended December
31, 2004.

2. Earnings Per Share:

     Basic earnings per share is computed by dividing net earnings by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share also give effect to the potential dilution from the issuance
of common shares in settlement of stock option and restricted stock unit awards.

3. Stock-Based Employee Compensation:

     The Company recorded stock-based employee compensation expense of $38,000
and $102,000 for the three and nine months ended September 30, 2005,
respectively, and $10,000 and $14,000 for the three and nine months ended
September 30, 2004, respectively, utilizing the fair value basis of accounting.
Under the fair value method of accounting, compensation expense equal to the
fair value of the stock-based award at the date of grant is recognized as
compensation expense ratably over the


                                      -4-
<PAGE>

vesting period of the award. Stock-based employee compensation expense is
related to restricted stock units granted in June 2004 and March 2005 under the
Company's Omnibus Incentive Compensation Plan which vest over five years from
the date of grant. For the three and nine months ended September 30, 2005, the
stock-based employee compensation expense is also related to stock options
granted in September 2001 and December 2002 under the Company's Stock Option
Plan which vest over four years from the date of grant.

     Effective December 31, 2002 the Company changed to the fair value basis of
accounting for stock-based employee compensation for awards granted subsequent
to that date. In 2004 the Company accounted for options granted under its stock
option plan prior to January 1, 2003 using the intrinsic value method.
Historically, the exercise price of options granted by the Company was the same
as the market price at the grant date and stock-based compensation expense was
not included in reported net earnings. Since there were no stock-based
compensation awards granted from January 1, 2003 through March 31, 2004,
stock-based employee compensation expense was not required to be recorded in the
first quarter of 2004. Effective January 1, 2005, the Company changed to the
fair value basis of accounting for all of the awards outstanding as of that date
that it had been accounting for under the intrinsic value method.

     Had compensation cost for the Company's stock option plan been accounted
for in 2004 using the fair value method for all grants, the Company's total
stock-based employee compensation expense using the fair value method, pro-forma
net earnings and pro-forma net earnings per share on a basic and diluted basis
would have been as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                         Three months     Nine months
                                             ended           ended
                                         September 30,   September 30,
                                             2004             2004
                                         -------------   -------------
<S>                                      <C>             <C>
Net earnings, as reported                    $9,969         $28,493
Add: Stock-based employee
   compensation expense included in
   reported net earnings                         10              14
Deduct: Total stock-based employee
   compensation expense using the fair
   value method                                  33              83
                                             ------         -------
Pro-forma net earnings                       $9,946         $28,424
                                             ======         =======

Net earnings per common share:
   As reported                               $  .40         $  1.15
   Pro-forma                                 $  .40         $  1.15
</TABLE>


                                      -5-
<PAGE>

4. Shareholders' Equity:

     A summary of the changes in shareholders' equity for the nine months ended
September 30, 2005 is as follows (in thousands, except share amounts):

<TABLE>
<CAPTION>
                                                                             Dividends
                                                Common Stock                  Paid In
                                            -------------------    Paid-in   Excess Of
                                              Shares     Amount    Capital    Earnings     Total
                                            ----------   ------   --------   ---------   --------
<S>                                         <C>          <C>      <C>        <C>         <C>
Balance, December 31, 2004                  24,694,071    $247    $257,295   $(32,039)   $225,503
Net earnings                                                                   34,416      34,416
Dividends                                                                     (32,530)    (32,530)
Stock-based employee compensation expense                              102                    102
Stock issued                                    21,981                 323                    323
                                            ----------    ----    --------   --------    --------
Balance, September 30, 2005                 24,716,052    $247    $257,720   $(30,153)   $227,814
                                            ==========    ====    ========   ========    ========
</TABLE>

     The Company is authorized to issue 20,000,000 shares of preferred stock,
par value $.01 per share, of which none were issued as of December 31, 2004 or
September 30, 2005.

5. Commitments and Contingencies:

     In order to qualify as a REIT, among other items, the Company paid a
$64,162,000 special one-time "earnings and profits" (as defined in the Internal
Revenue Code) cash distribution to shareholders in August 2001. Determination of
accumulated earnings and profits for federal income tax purposes is extremely
complex. Should the Internal Revenue Service successfully assert that the
Company's accumulated earnings and profits were greater than the amount
distributed, the Company may fail to qualify as a REIT; however, the Company may
avoid losing its REIT status by paying a deficiency dividend to eliminate any
remaining accumulated earnings and profits. The Company may have to borrow money
or sell assets to pay such a deficiency dividend. As of September 30, 2005 and
December 31, 2004 the Company had accrued $1,100,000 and $2,594,000,
respectively, for this and certain other tax matters which it believes were
appropriate based on information then currently available. The accrual for
uncertain tax positions is adjusted as circumstances change and as the
uncertainties become more clearly defined, such as when audits are settled or
exposures expire. Accordingly, an income tax benefit of $1,494,000 was recorded
in the third quarter of 2005 due to the net reduction in the amount accrued for
uncertain tax positions to the extent that the uncertainties regarding these
exposures have been resolved. The ultimate resolution of these matters may have
a significant impact on the results of operations for any single fiscal year or
interim period.

     In order to minimize the Company's exposure to credit risk associated with
financial instruments, the Company places its temporary cash investments with
high credit quality institutions. Temporary cash investments, if any, are held
in an institutional money market fund or federal agency discount notes.


                                      -6-
<PAGE>

     As of September 30, 2005, the Company leased nine hundred forty-two of its
one thousand sixty properties on a long-term net basis to Getty Petroleum
Marketing Inc. ("Marketing") under a master lease ("Master Lease") and a
coterminous supplemental lease for one property (collectively the "Marketing
Leases") (see note 2 to the consolidated financial statements which appear in
the Company's Annual Report on Form 10-K for the year ended December 31, 2004).
Marketing operated substantially all of the Company's petroleum marketing
businesses when it was spun-off to the Company's shareholders as a separate
publicly held company in March 1997 (the "Spin-Off"). In December 2000,
Marketing was acquired by a subsidiary of OAO Lukoil, one of Russia's largest
oil companies. The Company's financial results depend largely on rental income
from Marketing, and to a lesser extent on rental income from other tenants, and
are therefore materially dependent upon the ability of Marketing to meet its
obligations under the Marketing Leases. Substantially all of the deferred rental
revenue of $27,855,000 recorded as of September 30, 2005 is due to recognition
of rental revenue on a straight-line basis under the Marketing Leases.
Marketing's financial results depend largely on retail petroleum marketing
margins and rental income from its dealers. The petroleum marketing industry has
been and continues to be volatile and highly competitive. Marketing has made all
required monthly rental payments under the Marketing Leases when due.

     Under the Master Lease, the Company has agreed to provide limited
environmental indemnification, capped at $4,250,000 and expiring in 2010, to
Marketing for certain pre-existing conditions at six of the terminals which are
owned by the Company. Under the agreement, Marketing will pay the first
$1,500,000 of costs and expenses incurred in connection with remediating any
such pre-existing conditions, Marketing and the Company will share equally the
next $8,500,000 of those costs and expenses and Marketing will pay all
additional costs and expenses over $10,000,000. The Company has not accrued a
liability in connection with this indemnification agreement since it is
uncertain that any amounts will be required to be paid under the agreement.

     The Company is subject to various legal proceedings and claims which arise
in the ordinary course of its business. In addition, the Company has retained
responsibility for all pre-Spin-Off legal proceedings and claims relating to the
petroleum marketing business. As of September 30, 2005 and December 31, 2004 the
Company had accrued $2,667,000 and $3,623,000, respectively, for certain of
these matters which it believes were appropriate based on information then
currently available. The ultimate resolution of these matters is not expected to
have a material adverse effect on the Company's financial condition or results
of operations.

     In September 2003, the Company was notified by the State of New Jersey
Department of Environmental Protection that the Company is one of approximately
60 potentially responsible parties for natural resource damages resulting from
discharges of hazardous substances into the Lower Passaic River. The definitive
list of potentially responsible parties and their actual responsibility for the
alleged damages, the aggregate cost to remediate the Lower Passaic River, the
amount of natural resource damages and the method of allocating such amounts
among the potentially responsible parties have not been determined. In September
2004, the Company received a General Notice Letter from the US EPA (the "EPA
Notice"), advising the Company that it may be a potentially responsible party
for costs of remediating certain conditions resulting from discharges of
hazardous substances into the Lower Passaic River. ChevronTexaco received the
same EPA Notice regarding those same conditions. Additionally, the Company
believes that ChevronTexaco is contractually obligated to


                                      -7-
<PAGE>

indemnify the Company, pursuant to an indemnification agreement, for most of the
conditions at the property identified by the New Jersey Department of
Environmental Protection and the EPA. Accordingly, the ultimate legal and
financial liability of the Company, if any, cannot be estimated with any
certainty at this time.

     From October 2003 through September 2005, the Company was notified that it
had been made party to 38 cases in Connecticut, Florida, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia and West
Virginia brought by local water providers or governmental agencies. These cases
allege various theories of liability due to contamination of groundwater with
MTBE as the basis for claims seeking compensatory and punitive damages. Each
case names as defendants approximately 50 petroleum refiners, manufacturers,
distributors and retailers of MTBE, or gasoline containing MTBE. The accuracy of
the allegations as they relate to the Company, its defenses to such claims, the
aggregate amount of damages, the definitive list of defendants and the method of
allocating such amounts among the defendants have not been determined.
Accordingly, the ultimate legal and financial liability of the Company, if any,
cannot be estimated with any certainty at this time.

6. Environmental Remediation Costs:

     The Company is subject to numerous existing federal, state and local laws
and regulations, including matters relating to the protection of the
environment. Environmental expenses are principally attributable to remediation
costs which include installing, operating, maintaining and decommissioning
remediation systems, monitoring contamination, and governmental agency reporting
incurred in connection with contaminated properties. Environmental remediation
liabilities and related assets are measured at fair value based on their
expected future cash flows which have been adjusted for inflation and discounted
to present value. For the three and nine months ended September 30, 2005, the
aggregate of the net changes in estimated remediation costs and accretion
expense included in environmental expenses in the Company's consolidated
statements of operations were $46,000 and $1,338,000, respectively, and $466,000
and $2,395,000, respectively, for the comparable prior year periods, which
amounts were net of changes in estimated recoveries from state underground
storage tank ("UST") remediation funds. Environmental expenses also include
project management fees, legal fees and provisions for environmental litigation
loss reserves.

     In accordance with leases with certain tenants, the Company has agreed to
bring the leased properties with known environmental contamination to within
applicable standards and to regulatory or contractual closure ("Closure") in an
efficient and economical manner. Generally, upon achieving Closure at each
individual property, the Company's environmental liability under the lease for
that property will be satisfied and future remediation obligations will be the
responsibility of the tenant. Of the nine hundred forty-two properties leased to
Marketing as of September 30, 2005, the Company has agreed to pay all costs
relating to, and to indemnify Marketing for, certain environmental liabilities
and obligations for the remaining two hundred sixty-eight properties that are
scheduled in the Master Lease and have not achieved Closure. The Company will
continue to seek reimbursement from state UST remediation funds related to these
environmental expenditures where available.

     The estimated future costs for known environmental remediation requirements
are accrued when


                                      -8-
<PAGE>

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

     Environmental exposures are difficult to assess and estimate for numerous
reasons, including the extent of contamination, alternative treatment methods
that may be applied, location of the property which subjects it to differing
local laws and regulations and their interpretations, as well as the time it
takes to remediate contamination. In developing the Company's liability for
probable and reasonably estimable environmental remediation costs, on a property
by property basis, the Company considers among other things, enacted laws and
regulations, assessments of contamination and surrounding geology, quality of
information available, currently available technologies for treatment,
alternative methods of remediation and prior experience. These accrual estimates
are subject to significant change, and are adjusted as the remediation treatment
progresses, as circumstances change and as these contingencies become more
clearly defined and reasonably estimable. As of September 30, 2005, the Company
has remediation action plans in place for 301 (93%) of the 324 properties for
which it retained environmental responsibility and has not received a no further
action letter and the remaining 23 properties (7%) remain in the assessment
phase.

     As of September 30, 2005, December 31, 2004 and December 31, 2003 the
Company had accrued $19,376,000, $20,626,000, and $23,551,000, respectively, as
management's best estimate of the fair value of reasonably estimable
environmental remediation costs. As of September 30, 2005, December 31, 2004 and
December 31, 2003, the Company had also recorded $4,888,000, $5,437,000 and
$7,454,000, respectively, as management's best estimate for recoveries from
state UST remediation funds, net of allowance, related to environmental
obligations and liabilities. Accrued environmental remediation costs and
recoveries from state UST remediation funds have been accreted for the change in
present value due to the passage of time and, accordingly, $639,000 and $711,000
of net accretion expense is included in environmental expenses for the nine
months ended September 30, 2005 and 2004, respectively. Environmental
expenditures were $3,534,000 and $4,271,000 and recoveries from UST remediation
funds were $1,495,000 and $1,532,000 for the nine months ended September 30,
2005 and 2004, respectively.

     In view of the uncertainties associated with environmental expenditures,
however, the Company believes it is possible that the fair value of future
actual net expenditures could be substantially higher than these estimates.
Adjustments to accrued liabilities for environmental remediation costs will be
reflected in the Company's financial statements as they become probable and a
reasonable estimate of fair value can be made. Although future environmental
expenses may have a significant impact on results of operations for any single
fiscal year or interim period, the Company currently believes that such costs
will not have a material adverse effect on the Company's long-term financial
position.


                                      -9-
<PAGE>

7. Debt

     As of September 30, 2005, debt consisted of $34,700,000 in borrowings under
the Credit Agreement, described below, bearing interest at 5.0% and $231,000 of
mortgages due in varying amounts through May 1, 2015.

     On June 30, 2005, the Company entered into an unsecured three-year senior
revolving $100,000,000 Credit Agreement ("Credit Agreement") with a group of six
domestic commercial banks which replaced the Company's outstanding $50,000,000
uncommitted line of credit with one bank. The Credit Agreement matures on June
30, 2008 and does not provide for scheduled reductions in the principal balance
prior to its maturity. Subject to the terms of the Credit Agreement, the Company
has the right to increase the Credit Agreement by $25,000,000 and to extend the
term of the Credit Agreement for one additional year.

     Borrowings under the Credit Agreement bear interest at a rate equal to the
sum of a base rate or a LIBOR rate plus an applicable margin based on the
Company's leverage ratio and ranging from 0.25% to 1.75%. The annual commitment
fee on the unused Credit Agreement will range from 0.10% to 0.20% based on
usage. The Credit Agreement includes customary terms and conditions, including
financial covenants such as leverage and coverage ratios and other customary
covenants, including limitations on the Company's ability to incur debt and pay
dividends and maintenance of tangible net worth and events of default, including
a change of control and failure to maintain REIT status. The Company does not
believe that these covenants will limit its current business practices.

8. Acquisition

     On March 25, 2005, the Company acquired 23 convenience store and retail
motor fuel properties in Virginia for approximately $29,000,000 which is
included in land and buildings and improvements in the consolidated balance
sheet as of September 30, 2005. Available cash and equivalents and revolving
debt were utilized to finance the transaction.

     All of the properties are triple-net-leased to a single tenant who
previously leased the properties from the seller and operates the locations
under its proprietary convenience store brand in its network of over 200
locations. The lease provides for annual rentals at a competitive rate and
provides for escalations thereafter. The lease has an initial term of fifteen
years and provides the tenant options for three renewal terms of five years
each. The lease also provides that the tenant is responsible for all existing
and future environmental conditions at the properties.


                                      -10-
<PAGE>

     Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

     This discussion and analysis of financial condition and results of
operations should be read in conjunction with the Section entitled "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" which appears in our Annual Report on Form 10-K for the year ended
December 31, 2004, "Risks and Uncertainties" in Exhibit 99 to this Quarterly
Report on Form 10-Q, and the consolidated financial statements and related notes
which appear in this Quarterly Report on Form 10-Q.

     General

     We are a real estate investment trust ("REIT") specializing in the
ownership and leasing of retail motor fuel and convenience store properties and
petroleum distribution terminals. We elected to be taxed as a REIT under the
federal income tax laws beginning January 1, 2001. As a REIT, we are not subject
to federal corporate income tax on the taxable income we distribute to our
shareholders. In order to continue to qualify for taxation as a REIT, we are
required, among other things, to distribute at least 90% of our taxable income
to shareholders each year.

     We lease or sublet our properties primarily to distributors and retailers
engaged in the sale of gasoline and other motor fuel products, convenience store
products and automotive repair services that are responsible for the payment of
taxes, maintenance, repair, insurance and other operating expenses and for
managing the actual operations conducted at these properties. Nine hundred
forty-two of our one thousand sixty properties are leased on a long-term basis
under a master lease (the "Master Lease") and a coterminous supplemental lease
for one property, (collectively the "Marketing Leases") to Getty Petroleum
Marketing Inc. ("Marketing") which was spun-off to our shareholders as a
separate publicly held company in March 1997. In December 2000, Marketing was
acquired by a subsidiary of OAO Lukoil ("Lukoil"), one of Russia's largest
integrated oil companies.

     We rely upon the revenue from leasing retail motor fuel and convenience
store properties and petroleum distribution terminals, primarily to Marketing,
for substantially all of our revenues (88.9% for the nine months ended September
30, 2005). Accordingly, our revenues will be dependent to a large degree on the
economic performance of Marketing and of the petroleum marketing industry and
any factor that adversely affects Marketing or our other lessees may have a
material adverse effect on our financial condition and results of operations.
Marketing's financial results depend largely on retail petroleum marketing
margins and rental income from subtenants who operate our properties. The
petroleum marketing industry has been and continues to be volatile and highly
competitive. In the event that Marketing cannot or will not perform its monetary
obligations under the Marketing Leases with us, our financial condition and
results of operations would be materially adversely affected. Although Marketing
is wholly owned by a subsidiary of Lukoil, no assurance can be given that Lukoil
will cause Marketing to fulfill any of its monetary obligations under the
Marketing Leases.

     We periodically receive and review Marketing's financial statements and
other financial data. We receive this information from Marketing pursuant to the
terms of the Master Lease. Certain of this information is not publicly available
and the terms of the Master Lease prohibit us from including this


                                      -11-
<PAGE>

financial information in our Annual Reports on Form 10-K, our Quarterly Reports
on Form 10-Q or in our Annual Reports to Shareholders. The financial performance
of Marketing may deteriorate, and Marketing may ultimately default on its
monetary obligations to us before we receive financial information from
Marketing that would indicate the deterioration or before we would have the
opportunity to advise our shareholders of any increased risk of default.

     Certain financial and other information concerning Marketing is available
from Dun & Bradstreet and may be accessed by their web site (www.dnbsearch.com)
upon payment of their fee.

     The most recent selected financial data of Marketing which is publicly
available is provided below. Neither we, nor our auditors, were involved in the
preparation of this data.

                         Getty Petroleum Marketing Inc.
                             Selected Financial Data

<TABLE>
<CAPTION>
                                               For the years ended December 31,
                                             ------------------------------------
                                                2004         2003         2002
                                             ----------   ----------   ----------
                                                   (unaudited, in thousands)
<S>                                          <C>          <C>          <C>
OPERATING DATA:

Total revenues                               $2,696,102   $1,297,042   $1,029,926
Total expenses                                2,670,282    1,290,439    1,038,385
                                             ----------   ----------   ----------
Earnings (loss) before provision (credit)
   for income taxes                              25,820        6,603       (8,459)
Provision (credit) for income taxes              10,784        3,157       (3,389)
                                             ----------   ----------   ----------
Net earnings (loss)                          $   15,036   $    3,446      ($5,070)
                                             ==========   ==========   ==========

BALANCE SHEET DATA (AT END OF PERIOD):

ASSETS:

Cash and equivalents                         $   76,485   $   44,210   $   18,678
Other current assets                            161,901       68,971       62,448
                                             ----------   ----------   ----------
Total current assets                            238,386      113,181       81,126

Property and equipment, net                     367,453      134,792      139,477
Other assets                                     54,292        3,956        5,338
                                             ----------   ----------   ----------
Total assets                                 $  660,131   $  251,929   $  225,941
                                             ==========   ==========   ==========

LIABILITIES AND STOCKHOLDER'S EQUITY:

Total current liabilities                    $  214,171   $  125,940   $  107,362
Long-term liabilities                           318,091       62,419       58,438
                                             ----------   ----------   ----------
Total liabilities                               532,262      188,359      165,800

Total stockholder's equity                      127,869       63,570       60,141
                                             ----------   ----------   ----------
Total liabilities and stockholder's equity   $  660,131   $  251,929   $  225,941
                                             ==========   ==========   ==========
</TABLE>

     If Marketing does not fulfill its monetary obligations to us under the
Marketing Leases, our financial condition and results of operations will be
materially adversely affected. Based on our


                                      -12-
<PAGE>

review of the financial statements and other financial data Marketing has
provided to us to date, we believe that Marketing has the liquidity and
financial ability to continue to pay timely its monetary obligations under the
Marketing Leases, as it has since the inception of the Master Lease in 1997.

     As part of a periodic review by the Division of Corporation Finance of the
Securities and Exchange Commission ("SEC") of our Annual Report on Form 10-K for
the year ended December 31, 2003, we received and responded to a number of
comments. The only comment that remains unresolved pertains to the SEC's
position that we must include the financial statements and summarized financial
data of Marketing in our periodic filings. The SEC recently indicated that,
unless we file Marketing's financial statements and summarized financial data
with our periodic reports, (i) it will not consider our Annual Reports on Forms
10-K for the years 2000 - 2004 to be compliant; (ii) it will not consider us to
be current in our reporting requirements; and (iii) it will not be in a position
to declare effective any registration statements we may file for public
offerings of our securities. We continue to dispute the SEC's position that
these financial statements and the summarized financial data of Marketing are
required. We do not believe that we have a material liability for offers and
sales of our securities made pursuant to registration statements that did not
contain the financial statements or summarized financial data of Marketing. We
cannot accurately predict the consequences if we are ultimately unsuccessful in
our position that the financial statements and summarized financial data of
Marketing are not required.

     We manage our business to enhance the value of our real estate portfolio
and, as a REIT, place particular emphasis on minimizing risk and generating cash
sufficient to make required distributions to shareholders of at least 90% of our
taxable income each year. In addition to measurements defined by generally
accepted accounting principles ("GAAP"), our management also focuses on funds
from operations ("FFO") and adjusted funds from operations ("AFFO") to measure
our performance. FFO is generally considered to be an appropriate supplemental
non-GAAP measure of the performance of REITs. FFO is defined by the National
Association of Real Estate Investment Trusts as net earnings before depreciation
and amortization of real estate assets, gains or losses on sales of real estate,
non-FFO items reported in discontinued operations and extraordinary items. Other
REITs may use definitions of FFO and/or AFFO that are different than ours and,
accordingly, may not be comparable.

     We believe that FFO is helpful to investors in measuring our performance
because FFO excludes various items included in GAAP net earnings that do not
relate to, or are not indicative of, our fundamental operating performance such
as gains or losses from property sales and depreciation and amortization of real
estate assets. In our case, however, GAAP net earnings and FFO include the
significant impact of deferred rental revenue (straight-line rent) on our
recognition of revenues from rental properties, which results from fixed rental
increases scheduled under certain leases with our tenants. In accordance with
GAAP, the aggregate minimum rent due over the initial term of these leases is
recognized on a straight-line basis rather than when due. GAAP net earnings and
FFO for the three and nine months ended September 30, 2005 also include the
income tax benefit recognized due to a net reduction in amounts accrued for
uncertain tax positions related to being taxed as a C-Corp. prior to 2001. As a
result, management pays particular attention to AFFO, a supplemental non-GAAP
performance measure that we define as FFO less straight-line rent and income tax
benefit. Income taxes have not had a significant impact on our earnings since
the year ended December 31, 2001, when we first elected to be taxed as a REIT,
and accordingly has not appeared as a separate item in our statement of
operations or reconciliation of AFFO from net earnings. In management's view,


                                      -13-
<PAGE>

AFFO provides a more accurate depiction than FFO of the impact of scheduled rent
increases under these leases and our election to be taxed as a REIT beginning in
2001. Neither FFO nor AFFO represent cash generated from operating activities
calculated in accordance with GAAP and therefore should not be considered an
alternative for GAAP net earnings or as a measure of liquidity.

     A reconciliation of net earnings to FFO and AFFO for the three and nine
months ended September 30, 2005 and 2004 is as follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                                          Three months ended   Nine months ended
                                                             September 30,       September 30,
                                                          ------------------   -----------------
                                                            2005      2004       2005      2004
                                                          -------   -------    -------   -------
<S>                                                       <C>       <C>        <C>       <C>
Net earnings                                              $12,766   $ 9,969    $34,416   $28,493
Depreciation and amortization of real estate assets (*)     2,015     1,764      6,029     5,428
Gains on sales of real estate                                (105)     (188)      (177)     (334)
                                                          -------   -------    -------   -------
Funds from operations                                      14,676    11,545     40,268    33,587
Deferred rental revenue (straight-line rent)                 (853)   (1,113)    (2,738)   (3,344)
Income tax benefit                                         (1,494)       --     (1,494)       --
                                                          -------   -------    -------   -------
Adjusted funds from operations                            $12,329   $10,432    $36,036   $30,243
                                                          =======   =======    =======   =======
Diluted per common share amounts:
   Earnings per share                                     $   .52   $   .40    $  1.39   $  1.15
   Funds from operations per share                        $   .59   $   .47    $  1.63   $  1.36
   Adjusted funds from operations per share               $   .50   $   .42    $  1.46   $  1.22

Diluted weighted average shares outstanding                24,734    24,720     24,725    24,717
</TABLE>

(*)  Depreciation and amortization expense as reflected in our Consolidated
     Statements of Operations also includes depreciation on non-real estate
     assets.

Results of operations

Quarter ended September 30, 2005 compared to the quarter ended September 30,
2004

     Revenues from rental properties were $17.8 million for the three months
ended September 30, 2005 and $16.4 million for the three months ended September
30, 2004. We received rent from properties leased to Marketing under the
Marketing Leases of approximately $14.9 million in the three months ended
September 30, 2005 and $14.7 million in the three months ended September 30,
2004. We also received rent from other tenants of $2.0 million in the three
months ended September 30, 2005 and $0.6 million in the three months ended
September 30, 2004. The increase in rent received was primarily due to rental
income from the properties acquired in November 2004 and March 2005 and rent
escalations, and was partially offset by the effect of lease terminations and
property dispositions. In addition to rent received, revenues from rental
properties include deferred rental revenues of $0.9 million for the three months
ended September 30, 2005 and $1.1 million for the three months ended September
30, 2004, recognized as required by GAAP, related to the fixed


                                      -14-
<PAGE>

future rent increases scheduled under certain leases with our tenants. The
aggregate minimum rent due over the initial term of these leases is recognized
on a straight-line basis rather than when due.

     Rental property expenses, which are principally comprised of rent expense
and real estate and other state and local taxes, were $2.6 million for the three
months ended September 30, 2005, which was comparable to the $2.5 million
recorded for the three months ended September 30, 2004.

     Environmental expenses, net for the three months ended September 30, 2005
were $0.4 million as compared to $1.0 million for the three months ended
September 30, 2004. The decrease was principally due to a $0.4 million reduction
in changes in estimated environmental expenses, net of estimated recoveries, and
accretion expense as well as a $0.2 million reduction in legal fees and
litigation related expenses as compared to the prior year period. The net
changes in estimated environmental expenses and accretion expense aggregated
$46,000 for the three months ended September 30, 2005 compared to $0.5 million
recorded in the comparable period last year. The decrease in net changes in
estimated environmental costs for the quarter was due, in part, to successfully
obtaining additional reimbursements or regulatory approval for significantly
less costly remediation treatment methods at a small number of locations.

     General and administrative expenses for the three months ended September
30, 2005 were $1.2 million compared to $1.5 million recorded for the three
months ended September 30, 2004. The $0.3 million decrease was principally due
to lower legal expenses.

     Depreciation and amortization expense for the three months ended September
30, 2005 was $2.1 million, as compared to the $1.8 million recorded for the
three months ended September 30, 2004. The increase was primarily due to
depreciation and amortization of properties acquired in November 2004 and March
2005 partially offset by property dispositions.

     As a result, total operating expenses declined by approximately $0.6
million for the three months ended September 30, 2005, as compared to the three
months ended September 30, 2004.

     Other income, net for the three months ended September 30, 2005 was $0.2
million, which was comparable to $0.3 million recorded for the three months
ended September 30, 2004.

     Interest expense, principally related to borrowings used to finance the
acquisition of properties in November 2004 and March 2005, was $0.5 million for
the three months ended September 30, 2005 and was insignificant for the three
months ended September 30, 2004.

     The tax benefit of $1.5 million recorded in 2005 was recognized due to a
net reduction in the amount accrued for uncertain tax positions to the extent
that the uncertainties regarding these exposures have been resolved.

     Net earnings were $12.8 million for the three months ended September 30,
2005 as compared to $10.0 million for the comparable prior year period. Net
earnings for the three months ended September 30, 2005 increased by 28.1%, or
$2.8 million, over the comparable period in 2004. FFO


                                      -15-
<PAGE>

increased $3.1 million, or 27.1%, to $14.7 million and AFFO increased $1.9
million, or 18.2%, to $12.3 million in the three months ended September 30,
2005. FFO increased more than AFFO on both a dollar and percentage basis due to
the income tax benefit recorded in 2005 which was partially offset by a $0.3
million decrease in deferred rental revenues (both of which are included in net
earnings and FFO but are excluded from AFFO) recorded for the three months ended
September 30, 2005 as compared to the three months ended September 30, 2004.

     Diluted earnings per share for the three months ended September 30, 2005
increased $0.12 per share to $0.52 per share, as compared to the three months
ended September 30, 2004. Diluted FFO per share increased $0.12 per share to
$0.59 per share compared to the three months ended September 30, 2004. Diluted
AFFO per share for the three months ended September 30, 2005 increased $0.08 per
share to $0.50 per share, as compared to the three months ended September 30,
2004.

Nine months ended September 30, 2005 compared to nine months ended September 30,
2004

     Revenues from rental properties were $53.0 million for the nine months
ended September 30, 2005 and $49.4 million for the nine months ended September
30, 2004. We received rent from properties leased to Marketing under the
Marketing Leases of approximately $44.7 million in the nine months ended
September 30, 2005 and $44.2 million for the nine months ended September 30,
2004. We also received rent from other tenants of $5.6 million in the nine
months ended September 30, 2005 and $1.8 million in nine months ended September
30, 2004. The increase in rent received was primarily due to rental income from
the properties acquired in November 2004 and March 2005 and rent escalations,
and was partially offset by the effect of lease terminations and property
dispositions. In addition to rent received, revenues from rental properties
include deferred rental revenues of $2.7 million for the nine months ended
September 30, 2005 and $3.3 million for the nine months ended September 30,
2004.

     Rental property expenses were $7.7 million for the nine months ended
September 30, 2005, which was comparable to the $7.5 million recorded for the
nine months ended September 30, 2004.

     Environmental expenses, net were $1.8 million for the nine months ended
September 30, 2005 as compared to $4.6 million for the nine months ended
September 30, 2004. The decrease was primarily due to a $1.7 million reduction
in litigation related expenses as well as a $1.1 million reduction in the change
in estimated environmental costs, net of estimated recoveries, and accretion
expense as compared to the prior year period. Environmental expenses for the
nine months ended September 30, 2005 include a $0.6 million net credit for
environmental litigation expense, which was principally recorded in the first
quarter of 2005, due to net reductions in litigation loss reserve estimates. The
net change in estimated environmental expenses and accretion expense aggregated
$1.3 million for the nine months ended September 30, 2005 compared to $2.4
million recorded in the comparable period last year.

     General and administrative expenses were $3.8 million for the nine months
ended September 30, 2005 as compared to $4.1 million recorded for the nine
months ended September 30, 2004. The $0.3 million decrease was principally due
to lower legal expenses.


                                      -16-
<PAGE>

     Depreciation and amortization expense for the nine months ended September
30, 2005 was $6.1 million, as compared to the $5.4 million recorded for the nine
months ended September 30, 2004. The increase was primarily due to depreciation
and amortization of properties acquired in November 2004 and March 2005
partially offset by property dispositions.

     As a result, total operating expenses declined by approximately $2.2
million for the nine months ended September 30, 2005 as compared to the nine
months ended September 30, 2004.

     Other income, net for the nine months ended September 30, 2005 was $0.4
million, as compared to $0.8 million recorded for the nine months ended
September 30, 2004. The $0.4 million decrease as compared to the prior year
period is primarily due to decreases in investment income and in gains on
dispositions of properties.

     Interest expense, principally related to borrowings used to finance the
acquisition of properties in November 2004 and March 2005, was $1.1 million for
the nine months ended September 30, 2005 and was insignificant for the nine
months ended September 30, 2004.

     The tax benefit of $1.5 million recorded in 2005 was recognized due a net
reduction in the amount accrued for uncertain tax positions to the extent that
the uncertainties regarding these exposures have been resolved.

     Net earnings were $34.4 million for the nine months ended September 30,
2005 as compared to $28.5 million for the comparable prior year period. Net
earnings for the nine months ended September 30, 2005 increased by 20.8%, or
$5.9 million, over the comparable period in 2004. FFO increased $6.7 million, or
19.9%, to $40.3 million and AFFO increased $5.8 million, or 19.1%, to $36.0
million in the nine months ended September 30, 2005. FFO increased more than
AFFO on both a dollar and percentage basis due to the income tax benefit
recorded in 2005 which was partially offset by a $0.6 million decrease in
deferred rental revenues (both of which are included in net earnings and FFO but
are excluded from AFFO) recorded for the nine months ended September 30, 2005 as
compared to the nine months ended September 30, 2004.

     Diluted earnings per share for the nine months ended September 30, 2005
increased $0.24 per share to $1.39 per share, as compared to the nine months
ended September 30, 2004. Diluted FFO per share increased $0.27 per share to
$1.63 per share compared to respective amounts for the nine months ended
September 30, 2004. Diluted AFFO per share for the nine months ended September
30, 2005 increased $0.24 per share to $1.46 per share, as compared to the nine
months ended September 30, 2004.

Liquidity and Capital Resources

     Our principal sources of liquidity are the cash flows from our business,
funds available under a revolving credit agreement that matures in 2008 and
available cash and equivalents. Management believes that dividend payments and
cash requirements for our business for the next twelve months,


                                      -17-
<PAGE>

including environmental remediation expenditures, capital expenditures and debt
service, can be met by cash flows from operations, borrowing under the revolving
credit agreement and available cash and equivalents.

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

     On June 30, 2005, we entered into an unsecured three-year senior revolving
$100.0 million credit agreement ("Credit Agreement") with a group of six
domestic commercial banks. Subject to the terms of the Credit Agreement, we have
the right to increase the Credit Agreement by $25.0 million and to extend the
term of the Credit Agreement for one additional year. Borrowings under the
Credit Agreement bear interest at a rate equal to the sum of a base rate or a
LIBOR rate plus an applicable margin based on our leverage ratio and ranging
from 0.25% to 1.75%. The annual commitment fee on the unused Credit Agreement
will range from 0.10% to 0.20% based on the amount of borrowings. The Credit
Agreement includes customary terms and conditions, including financial covenants
such as leverage and coverage ratios and other customary covenants, including
limitations on our ability to incur debt and pay dividends and maintenance of
tangible net worth, and events of default, including a change of control and
failure to maintain REIT status. We do not believe that these covenants will
limit our current business practices.

     Total borrowings outstanding under the Credit Agreement at September 30,
2005 were $34.7 million, bearing interest at a rate of 5.0% per annum. Total
borrowings increased to $37.2 million as of November 1, 2005 principally due to
additional borrowings for dividends accrued as of September 30, 2005 of $11.0
million that were paid in October, net of repayments from positive cash flows
provided by rental operations in October and November. Accordingly, we had $62.8
million of unused availability under the terms of the Credit Agreement as of
November 1, 2005.

     We elected to be taxed as a REIT under the federal income tax laws with the
year beginning January 1, 2001. As a REIT, we are required, among other things,
to distribute at least 90% of our taxable income to shareholders each year.
Payment of dividends is subject to market conditions, our financial condition
and other factors, and therefore cannot be assured. Dividends paid to our
shareholders were $32.0 million for the nine months ended September 30, 2005 and
$31.5 million for the prior year period. We presently intend to pay stock
dividends of $0.445 per quarter ($1.78 per share on an annual basis), and
commenced doing so with the quarterly dividend declared in the quarter ended
September 30, 2005.

     On March 25, 2005, we acquired 23 convenience store and retail motor fuel
properties in Virginia for approximately $29.0 million which is included in land
and buildings and improvements in the consolidated balance sheet as of September
30, 2005. We utilized available cash and equivalents and revolving debt to
finance the transaction. All of the properties are triple-net-leased to a single
tenant who previously leased the properties from the seller and operates the
locations under its proprietary convenience store brand in its network of over
200 locations. The lease provides for annual rentals at


                                      -18-
<PAGE>

a competitive rate and provides for escalations thereafter. The lease has an
initial term of fifteen years and provides the tenant options for three renewal
terms of five years each. The lease also provides that the tenant is responsible
for all existing and future environmental conditions at the properties.

Critical Accounting Policies

     Our accompanying interim consolidated financial statements include the
financial condition and results of operations of Getty Realty Corp. and our
wholly-owned subsidiaries. The preparation of financial statements in accordance
with GAAP requires management to make estimates, judgments and assumptions that
affect amounts reported in its financial statements. Although we have made our
best estimates, judgments and assumptions regarding future uncertainties
relating to the information included in our financial statements, giving due
consideration to the accounting policies selected and materiality, actual
results could differ from these estimates, judgments and assumptions. We do not
believe that there is a great likelihood that materially different amounts would
be reported related to the application of the accounting policies described
below.

     Estimates, judgments and assumptions underlying the accompanying
consolidated financial statements include, but are not limited to, deferred rent
receivable, recoveries from state underground storage tank funds, environmental
remediation costs (see "Environmental Matters" below), real estate, depreciation
and amortization, impairment of long-lived assets, litigation, accrued expenses,
income taxes and exposure to paying an earnings and profits deficiency dividend.
The information included in our financial statements that is based on estimates,
judgments and assumptions is subject to significant change and is adjusted as
circumstances change and as the uncertainties become more clearly defined. Our
accounting policies are described in note 1 to the consolidated financial
statements which appear in our Annual Report on Form 10-K for the year ended
December 31, 2004. We believe that the more critical of our accounting policies
relate to revenue recognition, impairment of long-lived assets, income taxes,
environmental costs and recoveries from state underground storage tank funds and
litigation, each of which is discussed in "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report
on Form 10-K for the year ended December 31, 2004.

Environmental Matters

     We are subject to numerous existing federal, state and local laws and
regulations, including matters relating to the protection of the environment. In
accordance with the leases with certain of our tenants, we have agreed to bring
the leased properties with known environmental contamination to within
applicable standards and to regulatory or contractual closure ("Closure") in an
efficient and economical manner. Generally, upon achieving Closure at an
individual property, our environmental liability under the lease for that
property will be satisfied and future remediation obligations will be the
responsibility of our tenant. We will continue to seek reimbursement from state
UST remediation funds related to these environmental liabilities where
available. As of September 30, 2005, we have remediation action plans in place
for 301 (97%) of the 324 properties for which we retained environmental
responsibility and the remaining 23 properties (7%) remain in the assessment
phase.


                                      -19-
<PAGE>

     As of September 30, 2005, December 31, 2004 and December 31, 2003, we had
accrued $19.4 million, $20.6 million, and $23.6 million, respectively, as
management's best estimate of the fair value of reasonably estimable
environmental remediation costs. As of September 30, 2005, December 31, 2004 and
December 31, 2003, we had also recorded $4.9 million, $5.4 million and $7.5
million, respectively, as management's best estimate for net recoveries from
state UST remediation funds, net of allowance, related to environmental
obligations and liabilities. Accrued environmental remediation costs and
recoveries from state UST remediation funds have been accreted for the change in
present value due to the passage of time and, accordingly, $0.6 million and $0.7
million of accretion expense is included in environmental expenses for the nine
month periods ended September 30, 2005 and 2004, respectively. Environmental
expenditures were $3.5 million, and recoveries from underground storage tank
funds were $1.5 million for the nine month period ended September 30, 2005. We
currently estimate that our net environmental remediation spending will be
approximately $5.0 million during 2005. Our business plan for 2005 currently
projects a net change in estimated remediation costs and accretion expense of
approximately $3.6 million.

     Environmental liabilities and related assets are currently measured at fair
value based on their expected future cash flows which have been adjusted for
inflation and discounted to present value. We also use probability weighted
alternative cash flow forecasts to determine fair value. For locations where
remediation efforts are not assumed to be completed during the current year, we
assumed a 50% probability factor that the actual environmental expenses will
exceed engineering estimates for an amount assumed to equal one year of expenses
aggregating $6.2 million for those sites. Accordingly, the environmental accrual
as of September 30, 2005 was increased by $2.4 million, net of assumed
recoveries and before inflation and present value discount adjustments. The
resulting net environmental accrual as of September 30, 2005 was then further
increased by $1.2 million for the assumed impact of inflation using an inflation
rate of 2.75%. Assuming a credit-adjusted risk-free rate of 7.0%, we then
reduced the net environmental accrual, as previously adjusted, by a $2.5 million
discount to present value. Had we assumed an inflation rate that was 0.5% higher
and a discount rate that was 0.5% lower, net environmental liabilities as of
September 30, 2005 would have increased by $0.2 million and $0.1 million,
respectively, for those factors for an aggregate increase in the net
environmental accrual of $0.3 million. However, the aggregate net change in
environmental estimates and accretion expense recorded during the nine months
ended September 30, 2005 would not have changed significantly if these changes
in the assumptions were made effective December 31, 2004.

     In view of the uncertainties associated with environmental expenditures,
however, we believe it is possible that the fair value of future actual net
expenditures could be substantially higher than these estimates. Adjustments to
accrued liabilities for environmental remediation costs will be reflected in our
financial statements as they become probable and a reasonable estimate of fair
value can be made. For the nine months ended September 30, 2005 and 2004, the
aggregate of the net change in estimated remediation costs and accretion expense
included in our consolidated statement of operations amounted to $1.4 million
and $2.4 million, respectively, which amounts were net of probable recoveries
from state UST remediation funds. Although future environmental costs may have a
significant impact on results of operations for any single fiscal year or
interim period, we believe that such costs will not have a material adverse
effect on our long-term financial position.


                                      -20-
<PAGE>

     Our discussion of environmental matters should be read in conjunction with
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" which appears in the Company's Annual Report on Form 10-K for the
year ended December 31, 2004 and the consolidated financial statements and
related notes (including notes 5 and 6) which appear in this Quarterly Report on
Form 10-Q.

     Forward Looking Statements

     Certain statements in this Quarterly Report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. When we use the words "believes," "expects," "plans," "projects,"
"estimates" and similar expressions, we intend to identify forward-looking
statements. Examples of forward-looking statements include statements regarding
our expectations regarding future payments from Marketing; the expected effect
of regulations on our long-term performance; our expected ability to maintain
compliance with applicable regulations; the adequacy of our current and
anticipated cash flows; our belief that we do not have a material liability for
offers and sales of our securities made pursuant to registration statements that
did not contain the financial statements of Marketing; our expectations
regarding future acquisitions; the impact of the covenants included in the
Credit Agreement on our current business practices; the probable outcome of
litigation or regulatory actions; our expected recoveries from underground
storage tank funds; our exposure to environmental remediation expenses; our
estimates regarding remediation costs and accretion expense; our expectations as
to the long-term effect of environmental liabilities on our financial condition;
our exposure to interest rate fluctuations; our expectations regarding corporate
level federal income taxes; the indemnification obligations of the Company and
others; assumptions regarding the future applicability of accounting estimates,
assumptions and policies; our intention to pay future dividends and our beliefs
about the reasonableness of our accounting estimates, judgments and assumptions.

     These forward-looking statements are based on our current beliefs and
assumptions and information currently available to us and involve known and
unknown risks (including the risks described herein and other risks that we
describe from time to time in our filings with the Securities and Exchange
Commission), uncertainties and other factors, which may cause our actual
results, performance and achievements to be materially different from any future
results, performance or achievements, expressed or implied by these
forward-looking statements. These factors are more fully detailed in our Annual
Report on Form 10-K for the year ended December 31, 2004, as updated by Exhibit
99 filed with this Quarterly Report on Form 10-Q, and include, but are not
limited to: risks associated with owning and leasing real estate generally;
dependence on Marketing as a tenant and on rentals from companies engaged in the
petroleum marketing and convenience store businesses; competition for properties
and tenants; risk of tenant non-renewal; the effects of taxation and other
regulations; potential litigation exposure; our expectations as to the cost of
completing environmental remediation; the risk of loss of our management team;
the impact of our electing to be taxed as a REIT, including subsequent failure
to qualify as a REIT; risks associated with owning real estate located in the
same region of the United States; risks associated with potential future
acquisitions; losses not covered by insurance; future dependence on external
sources of capital; our potential inability to pay dividends and terrorist
attacks and other acts of violence and war.


                                      -21-
<PAGE>

     As a result of these and other factors, we may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect our business, financial condition,
operating results and stock price. An investment in our stock involves various
risks, including those mentioned above and elsewhere in this report and those
that are detailed from time to time in our other filings with the Securities and
Exchange Commission.

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


                                      -22-
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We do not use derivative financial or commodity instruments for trading,
speculative or any other purpose. We had no outstanding derivative instruments
as of September 30, 2005 or at any time during the nine months then ended. We do
not have any foreign operations, and are therefore not exposed to foreign
currency exchange rate risks.

     We are exposed to interest rate risks, primarily as a result of our $100.0
million Credit Agreement. We manage our exposure to this risk by minimizing, to
the extent feasible, our overall borrowing and monitoring available financing
alternatives. Our interest rate risk has changed as compared to December 31,
2004 due to increased borrowings under the Credit Agreement but we do not
foresee any significant changes in our exposure or in how we manage this
exposure in the near future. We use borrowings under the Credit Agreement to
finance acquisitions and for general corporate purposes. Borrowings under our
Credit Agreement bear interest at a rate equal to the sum of a base rate or a
LIBOR rate plus an applicable margin based on our leverage ratio and ranging
from 0.25% to 1.75%. At September 30, 2005, we had borrowings outstanding of
$34.7 million under our Credit Agreement bearing interest at a rate of 5.0% per
annum, and had not entered into any instruments to hedge our resulting exposure
to interest-rate risk.

     Management believes that the fair value of the debt equals its carrying
value at September 30, 2005 and December 31, 2004. Our exposure to fluctuations
in interest rates will increase or decrease in the future with increases or
decreases in the amount of borrowings outstanding under our Credit Agreement.

     In order to minimize our exposure to credit risk associated with financial
instruments, we place our temporary cash investments with high-credit-quality
institutions. Temporary cash investments, if any, are held in an institutional
money market fund and short-term federal agency discount notes.

Item 4. Controls and Procedures

     The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Commission's rules and forms, and that such information is accumulated and
communicated to the Company's management, including its Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.

     As required by Rule 13a-15(b), the Company carried out an evaluation, under
the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of


                                      -23-
<PAGE>

the Company's disclosure controls and procedures as of the end of the quarter
covered by this report. Based on the foregoing, the Company's Chief Executive
Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures were effective at a reasonable assurance level as of
September 30, 2005.

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


                                      -24-
<PAGE>
     PART II. OTHER INFORMATION

     Item 1. Legal Proceedings

     In July 2005, we were notified that an action was commenced against Getty
Petroleum Marketing Inc. ("Marketing"), in United States District Court,
Northern District of New York, by a property owner regarding certain discharges
of petroleum that are alleged to have originated, in whole or in part, from a
property we own and lease to Marketing. Pursuant to the terms of the lease for
this property, Marketing has requested and we have agreed to provide the defense
for this matter. The case is in its early stages.

     In July 2005, we received a demand from a property owner for reimbursement
of cleanup and soil removal costs, at a former retail motor fuel property
located in Brooklyn, New York, supplied by us with gasoline that the owner
expects to incur in connection with the proposed development of its property.
The owner claims that the costs will be reimbursable pursuant to an Indemnity
Agreement that we entered into with the property owner. Although we have
acknowledged responsibility for the contaminated soil, and have been engaged in
the remediation of the same, we have denied responsibility for the full extent
of the costs estimated to be incurred. Litigation has not been commenced and
discussions regarding the demand are in their early stages.

     In September 2005, we received a demand from a property owner for
reimbursement of cleanup and soil removal costs claimed to have been incurred by
it in connection with the development of its property located in Philadelphia,
Pennsylvania that, in part, is a former retail motor fuel property supplied by
us with gasoline. The current owner claims that the costs are reimbursable
pursuant to an Indemnity Agreement that we entered into with the prior property
owner. Although we have acknowledged responsibility for a portion of the
contaminated soil, and were engaged in the remediation of the same, we have
denied responsibility for the full extent of the costs estimated to be incurred.
Litigation has not been commenced and discussions regarding the demand are in
their early stages.

     In June 1999, a case was commenced in New York Supreme Court in Nassau
County against Marketing. The plaintiff is seeking monetary damages and alleges
that he contracted acute myelogenous leukemia as a result of exposure to
benzene-containing gasoline, between 1992 and 1998, when he worked periodically
at an independently owned and operated retail motor fuel property which we
supplied with gasoline. Although we are not named in the case, we are
indemnifying Marketing pursuant to written agreements. In September 2005 we were
advised that the case was dismissed, with prejudice. However, in October 2005
the plaintiff filed an appeal of this dismissal.

     From October 2003 through September 2005, the Company was notified that it
had been made party to 38 cases in Connecticut, Florida, Massachusetts, New
Hampshire, New Jersey, New York, Pennsylvania, Vermont, Virginia and West
Virginia brought by local water providers or governmental agencies. These cases
allege various theories of liability due to contamination of groundwater with
MTBE as the basis for claims seeking compensatory and punitive damages. Each
case names as defendants approximately 50 petroleum refiners, manufacturers,
distributors and retailers of MTBE,


                                      -25-
<PAGE>
or gasoline containing MTBE. The accuracy of the allegations as they relate to
the Company, its defenses to such claims, the aggregate amount of damages, the
definitive list of defendants and the method of allocating such amounts among
the defendants have not been determined. Accordingly, the ultimate legal and
financial liability of the Company, if any, cannot be estimated with any
certainty at this time.

     Please refer to "Item 3. Legal Proceedings" of our Annual Report on Form
10-K for the year ended December 31, 2004 and notes 3 and 5 to our consolidated
financial statements in such Form 10-K, as well as to Part II, "Item 1. Legal
Proceedings" of our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2005 and June 30, 2005 and notes 5 and 6 to our accompanying consolidated
financial statements which appear in this Form 10-Q for additional information.

     Item 5. Other Information

     (a) On June 30, 2005, we entered into an unsecured three-year senior
revolving $100.0 million Credit Agreement with JPMorgan Chase Bank, N.A.
("JPMorgan"), as administrative agent for itself and for Bank of America as
Syndication Agent, Citizens Bank of Rhode Island, as Documentation Agent, Israel
Discount Bank of New York, North Fork Bank and HSBC Bank USA, National
Association. The credit facility replaced our $50.0 million uncommitted line of
credit with JPMorgan that expired on June 30, 2005. The Credit Agreement matures
on June 30, 2008 and does not provide for scheduled reductions in the principal
balance prior to its maturity. Subject to the terms of the Credit Agreement, we
have the right to increase the Credit Agreement by $25.0 million and to extend
the term of the Credit Agreement for one additional year. Borrowings under the
Credit Agreement bear interest at a rate equal to the sum of a base rate or a
LIBOR rate plus an applicable margin based on our leverage ratio and ranging
from 0.25% to 1.75%. The annual commitment fee on the unused Credit Agreement
will range from 0.10% to 0.20% based on usage.

     The Credit Agreement includes customary terms and conditions, including
financial covenants such as leverage and coverage ratios and other customary
covenants, including limitations on our ability to incur debt and pay dividends
and maintenance of tangible net worth, and events of default, including a change
of control and failure to maintain REIT status. We do not believe that these
covenants will limit our current business practices. If any event of default
were to occur and if the default were not subsequently waived by the lenders,
the lenders would be entitled to declare all amounts outstanding under the
Credit Agreement immediately due and payable. We are not aware of any event of
default under the Credit Agreement that occurred prior to, or existed as of, the
date of the filing of this Quarterly Report on Form 10-Q.

     The Credit Agreement is attached as Exhibit 10.21 to the Quarterly Report
on Form 10-Q for the quarterly period ending June 30, 2005, which we filed with
the Securities and Exchange Commission on August 9, 2005.


                                      -26-
<PAGE>
Item 6. Exhibits

<TABLE>
<CAPTION>
Exhibit No.   Description of Exhibit
-----------   ----------------------
<S>           <C>
  31(i).1     Rule 13a-14(a) Certification of Chief Financial Officer

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

  32.1        Certification of Chief Executive Officer pursuant to 18 U.S.C.
              Section 1350 (a)

  32.2        Certifications of Chief Financial Officer pursuant to 18 U.S.C.
              Section 1350 (a)

  99          Risks and Uncertainties
</TABLE>

(a) These certifications are being furnished solely to accompany the Report
pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be
incorporated by reference into any filing of the Company, whether made before or
after the date hereof, regardless of any general incorporation language in such
filing.


                                      -27-
<PAGE>
                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        GETTY REALTY CORP.
                                        (Registrant)


Dated: November 7, 2005                 BY: /s/ Thomas J. Stirnweis
                                            ------------------------------------
                                            (Signature)
                                            THOMAS J. STIRNWEIS
                                            Vice President, Treasurer and Chief
                                            Financial Officer


Dated: November 7, 2005                 BY: /s/ Leo Liebowitz
                                            ------------------------------------
                                            (Signature)
                                            LEO LIEBOWITZ
                                            Chairman and Chief Executive Officer


                                      -28-