<PAGE>
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                     THE SECURITIES AND EXCHANGE ACT OF 1934



For the quarter ended JUNE 30, 2002             Commission file number 001-13777
                      -------------                                    ---------


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

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



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

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

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

Registrant had outstanding 21,441,219 shares of Common Stock, par value $.01 per
share, and 2,865,768 shares of Series A Participating Convertible Redeemable
Preferred Stock, par value $.01 per share, as of July 31, 2002.


================================================================================




<PAGE>



                                                 GETTY REALTY CORP.

                                                        INDEX

<TABLE>
<CAPTION>

Part I.  FINANCIAL INFORMATION                                                              Page Number
                                                                                            -----------
<S>                                                                                         <C>
Item 1.  Financial Statements

 Consolidated Balance Sheets as of June 30, 2002 and
  December 31, 2001                                                                              1

 Consolidated Statements of Operations for the three
  and six months ended June 30, 2002 and 2001                                                    2

 Consolidated Statements of Cash Flows for the
  six months ended June 30, 2002 and 2001                                                        3

 Notes to Consolidated Financial Statements                                                    4 - 6

Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                                          7 - 14

Part II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                                       15

Signatures                                                                                      15
</TABLE>



<PAGE>


                       GETTY REALTY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)
                                   (unaudited)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                          June 30,          December 31,
------------------------------------------------------------------------------------------------------------------------
                                                                                            2002                2001
------------------------------------------------------------------------------------------------------------------------
Assets:
------------------------------------------------------------------------------------------------------------------------

<S>                                                                                      <C>                 <C>
Real Estate:
   Land                                                                                  $ 134,838           $ 134,717
   Buildings and improvements                                                              175,930             176,635
                                                                                         ---------           ---------
                                                                                           310,768             311,352
   Less - accumulated depreciation                                                         (92,965)            (89,242)
                                                                                         ---------           ---------
        Real estate, net                                                                   217,803             222,110
Cash and equivalents                                                                        35,729              37,523
Mortgages and accounts receivable, net                                                       5,168               4,819
Deferred rent receivable                                                                    11,766               8,388
Recoveries from state underground storage tank funds                                        15,542              14,276
Prepaid expenses and other assets                                                            1,140               1,072
                                                                                         ---------           ---------
           Total assets                                                                  $ 287,148           $ 288,188
                                                                                         =========           =========


------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
------------------------------------------------------------------------------------------------------------------------

Mortgages payable                                                                        $     961           $     997
Dividends payable                                                                           10,116              10,108
Accounts payable and accrued expenses                                                       10,102              12,018
Environmental remediation costs                                                             29,660              27,292
                                                                                         ---------           ---------
           Total liabilities                                                                50,839              50,415
                                                                                         ---------           ---------
Commitments and contingencies
Shareholders' equity:
    Preferred stock, par value $.01 per share; authorized 20,000,000 shares for
      issuance in series of which 3,000,000 shares are classified as Series A
      Participating Convertible Redeemable Preferred; issued 2,888,798
      at June 30, 2002 and December 31, 2001                                                72,220              72,220
    Common stock, par value $.01 per share; authorized
      50,000,000 shares; issued 22,459,987 at June 30,
      2002 and 22,441,168 at December 31, 2001                                                 225                 224
    Paid-in capital                                                                        198,772             198,575
    Dividends paid in excess of earnings                                                   (22,200)            (20,537)
    Preferred stock held in treasury, at cost; 23,030
      shares at June 30, 2002 and December 31, 2001                                           (430)               (430)
    Common stock held in treasury, at cost; 1,018,768
      shares at June 30, 2002 and 1,018,848 at December 31, 2001                           (12,278)            (12,279)
                                                                                         ---------           ---------
           Total shareholders' equity                                                      236,309             237,773
                                                                                         ---------           ---------
           Total liabilities and shareholders' equity                                    $ 287,148           $ 288,188
                                                                                         =========           =========

</TABLE>

                             See accompanying notes.


                                       1
<PAGE>






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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                  Three months ended June 30,               Six months ended June 30,
---------------------------------------------------------------------------------------------------------------------
                                                    2002                2001                2002                2001
---------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                 <C>                 <C>                 <C>
Revenues:
  Revenues from rental properties                 $16,802             $17,092             $33,679             $34,238
  Other income, net                                   792                 675               1,352                 907
                                                  -------             -------             -------             -------
                                                   17,594              17,767              35,031              35,145
                                                  -------             -------             -------             -------

Expenses:
  Rental property expenses                          3,061               2,901               6,166               5,697
  Environmental expenses, net                       1,657               1,254               3,306               4,013
  General and administrative expenses               1,211               1,219               2,289               2,236
  Depreciation expense                              2,327               2,364               4,641               4,733
  Interest expense                                     32                 744                  65               1,642
                                                  -------             -------             -------             -------
                                                    8,288               8,482              16,467              18,321
                                                  -------             -------             -------             -------
Earnings before income taxes                        9,306               9,285              18,564              16,824

Provision for income taxes                           --                 3,824                --                 7,031
                                                  -------             -------             -------             -------
Net earnings                                        9,306               5,461              18,564               9,793

Preferred stock dividends                           1,272               1,272               2,544               2,544
                                                  -------             -------             -------             -------
Net earnings applicable to common
shareholders                                      $ 8,034             $ 4,189             $16,020             $ 7,249
                                                  =======             =======             =======             =======



Net earnings per common share:
     Basic                                        $  0.37             $  0.33             $  0.75             $   0.58
     Diluted                                      $  0.37             $  0.33             $  0.75             $   0.58

Weighted average common shares
  outstanding:
     Basic                                         21,434              12,550              21,429               12,549
     Diluted                                       21,443              12,561              21,439               12,557
</TABLE>


                             See accompanying notes.



                                       2
<PAGE>

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
                                                                Six months ended June 30,
-----------------------------------------------------------------------------------------
                                                                   2002            2001
-----------------------------------------------------------------------------------------
<S>                                                             <C>              <C>
Cash flows from operating activities:
Net earnings                                                    $ 18,564         $  9,793
Adjustments to reconcile net earnings to
  net cash provided by operating activities:
    Depreciation                                                   4,641            4,733
    Deferred income taxes                                             --            2,052
    Gain on dispositions of real estate                             (816)            (628)
    Deferred rent                                                 (3,378)          (4,194)
Changes in assets and liabilities:
    Mortgages and accounts receivable                               (349)             566
    Recoveries from state underground storage tank funds          (1,266)           1,202
    Prepaid expenses and other assets                                (68)           4,297
    Accounts payable and accrued expenses                         (1,916)            (933)
    Environmental remediation costs                                2,368           (1,206)
                                                                --------         --------
          Net cash provided by operating activities               17,780           15,682
                                                                --------         --------

Cash flows from investing activities:
    Capital expenditures                                             (86)            (373)
    Property acquisitions                                         (1,073)              --
    Proceeds from dispositions of real estate                      1,641            1,101
                                                                --------         --------
          Net cash provided by investing activities                  482              728
                                                                --------         --------

Cash flows from financing activities:
    Repayments under credit lines, net                                --           (7,600)
    Repayment of mortgages payable                                   (36)          (1,113)
    Cash dividends paid                                          (20,219)          (6,332)
    Stock options and treasury stock, net                            199               17
                                                                --------         --------
          Net cash used in financing activities                  (20,056)         (15,028)
                                                                --------         --------

Net increase (decrease) in cash and equivalents                   (1,794)           1,382
Cash and equivalents at beginning of period                       37,523              723
                                                                --------         --------

Cash and equivalents at end of period                           $ 35,729         $  2,105
                                                                ========         ========


Supplemental disclosures of cash flow information
  Cash paid (refunded) during the period for:
        Interest                                                $     65         $  1,685
        Income taxes, net                                            421              333
        Recoveries from state underground storage funds           (1,878)          (2,943)
        Environmental remediation costs                            3,574            6,287
</TABLE>

                             See accompanying notes.



                                       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 service stations, convenience stores and petroleum marketing
terminals. All significant intercompany accounts and transactions have been
eliminated. Certain prior period amounts have been reclassified to conform to
the current period presentation.


     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. Estimates 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, impairment of long-lived assets, litigation, accrued expenses and
income taxes.

     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, 2001.

2. Earnings per common share:

     Basic earnings per common share is computed by dividing net earnings less
preferred dividends by the weighted average number of common shares outstanding
during the period. Diluted earnings per common share also gives effect to the
potential dilution from the exercise of stock options in the amount of 9,000 and
10,000 shares, respectively, for the three and six months ended June 30, 2002
and 11,000 and 8,000 shares, respectively, for the prior year periods.

     For the three and six months ended June 30, 2002 and 2001, conversion of
the Series A Participating Convertible Redeemable Preferred stock into common
stock utilizing the if-converted method would have been antidilutive and
therefore conversion was not assumed for purposes of computing either basic or
diluted earnings per common share.

3. Income taxes:

     The Company and its subsidiaries file a consolidated federal income tax
return. In the third quarter of 2001, and effective retroactive to January 1,
2001, the Company elected to qualify, and believes it is operating so as to
continue to qualify, as a REIT for federal income tax purposes. Accordingly, the
Company generally will not be subject to federal corporate income tax, provided
that distributions to its shareholders equal at least 100% of its REIT taxable
income as defined under the Internal Revenue Code.


                                       4
<PAGE>

The Company is subject to income taxes in certain states that do not conform to
the federal REIT provisions and to other state taxes that are not based on
income. The Company recorded a nonrecurring tax benefit of approximately $36.6
million in the third quarter of 2001 to reverse accrued income tax liabilities
that it would no longer be required to pay as a REIT, including certain taxes
that were provided for during the first two quarters of 2001. If the Company
sells any property within ten years after its REIT election for which a gain is
not deferred in a like-kind property exchange, it will be taxed on the built-in
gain that existed as of January 1, 2001 and is realized from such sale at the
highest corporate tax rate. This ten-year built-in gain tax period will end on
January 1, 2011.

4. New accounting pronouncements:

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations" and Statement of Financial Accounting Standards No. 142 ("SFAS
No.142"), "Goodwill and Other Intangible Assets." SFAS No. 141 requires the
purchase method of accounting to be used for all business combinations initiated
after June 30, 2001. SFAS No. 141 also addresses the initial recognition and
measurement of goodwill and other intangible assets acquired in business
combinations and requires intangible assets to be recognized apart from goodwill
if certain tests are met. The adoption of SFAS No. 141 has not had a significant
effect on the Company's financial position or results of operations. SFAS No.
142 requires that goodwill not be amortized but instead be measured for
impairment at least annually, or when events indicate that there may be an
impairment. SFAS No. 142 is effective for fiscal years beginning after December
15, 2001. The Company adopted SFAS No. 142 effective January 1, 2002. The
adoption of SFAS No. 142 has not had a significant effect on the Company's
financial position or results of operations.

     In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS No. 144"), "Accounting for the Impairment or Disposal
of Long-Lived Assets." SFAS No. 144 provides new guidance on the recognition of
impairment losses on long-lived assets to be held and used or to be disposed of
and also broadens the definition of what constitutes a discontinued operation
and how the results of a discontinued operation are to be measured and
presented. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. The Company adopted SFAS No. 144 effective January 1, 2002. The
adoption of SFAS No. 144 has not had a significant effect on the Company's
financial position or results of operations.

     On April 30, 2002, the FASB issued Statement of Financial Accounting
Standards No. 145 ("SFAS No. 145"), "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No.
145 eliminates the requirement that gains and losses from the extinguishment of
debt be aggregated and, if material, classified as an extraordinary item, net of
the related income tax effect. Further, SFAS No. 145 eliminates an inconsistency
between the accounting for sale-leaseback transactions and certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS No. 145 also makes several other technical corrections to
existing pronouncements that may change accounting practice. Generally, SFAS No.
145 is effective for transactions occurring after May 15, 2002. The Company
adopted the provisions of this statement beginning with the second quarter of
2002. The adoption of SFAS No. 145 has not had a significant impact on the
Company's financial position or results of operations.



                                       5
<PAGE>



5.  Stockholders' equity:

     A summary of the changes in stockholders' equity for the six months ended
June 30, 2002 is as follows (in thousands, except per share amounts):


<TABLE>
<CAPTION>

                                                                                          Preferred          Common
                                                                                            Stock             Stock
                                                                                           Held in           Held in
                                   Preferred          Common                  Dividends    Treasury,         Treasury,
                                     Stock            Stock                   Paid in       At Cost          at Cost
                                 -------------------------------   Paid-In    Excess Of ---------------------------------
                                 Shares  Amount   Shares  Amount   Capital    Earnings  Shares  Amount  Shares    Amount     Total
                                 --------------------------------------------------------------------------------------------------
<S>                               <C>    <C>      <C>     <C>      <C>       <C>        <C>     <C>      <C>     <C>       <C>
BALANCE, DECEMBER 31, 2001        2,889  $72,220  22,441   $224    $198,575   $(20,537)   23    $(430)   1,019   $(12,279) $237,773
Net earnings                                                                    18,564                                       18,564
Cash dividends:
  Common -- $.825 per share                                                    (17,683)                                     (17,683)
  Preferred  -- $.8875 per share                                                (2,544)                                      (2,544)
Stock options                                         19      1         197                                                     198
Issuance of Treasury Stock                                               --                                             1         1
                                 --------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 2002            2,889  $72,220  22,460   $225    $198,772   $(22,200)   23    $(430)   1,019   $(12,278) $236,309
                                 ===================================================================================================
</TABLE>


                                        6
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     General

     We are a real estate company specializing in the ownership and leasing of
service stations, convenience stores and petroleum marketing terminals. We lease
most of our properties on a long-term net basis to Getty Petroleum Marketing
Inc. ("Marketing"), which was spun-off to our stockholders on March 21, 1997 and
subsequently acquired by a subsidiary of OAO Lukoil ("Lukoil"), Russia's largest
vertically integrated oil company, in December 2000.

     Our financial results largely depend on rental income from Marketing and
other tenants and are materially dependent upon the ability of Marketing to meet
its obligations under the master lease entered into on February 1, 1997 and
amended and restated effective December 9, 2000 (the "Master Lease"). Based on
the information currently available to us, we do not anticipate that Marketing
will have difficulty in making required rental payments under the Master Lease
in the foreseeable future.

     On August 1, 2001, we closed a public offering of 8,855,000 shares of our
common stock. A portion of the $131.5 million net proceeds of the offering was
used to pay a $64.1 million special one-time "earnings and profits" (as defined
in the Internal Revenue Code) cash distribution to preferred and common
shareholders and $37.4 million was used to repay substantially all of our
mortgage debt and outstanding lines of credit.

     In addition, on August 1, 2001, our shareholders approved a charter
amendment to include ownership limitations typical for a real estate investment
trust ("REIT") and accordingly, we elected to be taxed as a REIT under the
federal income tax laws with the year beginning January 1, 2001. As a result,
during the third quarter of 2001, we recorded a nonrecurring tax benefit to
reverse previously accrued income tax liabilities that we would no longer be
required to pay as a REIT, including certain taxes that were provided during the
first two quarters of 2001. 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. Moreover, as a REIT, we will not be
subject to federal corporate income tax if we distribute at least 100% of our
taxable income to our shareholders.

     Results of Operations - Quarter ended June 30, 2002 compared with the
       quarter ended June 30, 2001

     Revenues from rental properties for the quarter ended June 30, 2002 were
$16.8 million, compared to $17.1 million for the quarter ended June 30, 2001.
Approximately $16.2 million and $16.5 million of these rentals for the quarters
ended June 30, 2002 and 2001, respectively, were from properties leased to
Marketing under the Master Lease. Revenues from rental properties include $1.7
million and $2.1 million of deferred rent recognized in the current and prior
periods, respectively, related to the 2% future annual rent increases due from
Marketing under the terms of the Master Lease. The aggregate minimum rent due
over the initial 15-year term of the Master Lease is recognized on a
straight-line basis rather than when due. The $.4 million decrease in deferred
rent was partially offset by $.1 million of additional rental income received
during the current quarter due to the 2% annual rent increase under the Master
Lease effective in December 2001, net of a reduction in the number of properties
leased compared to the prior period.


                                       7
<PAGE>

     Other income was $.8 million for the quarter ended June 30, 2002, an
increase from the prior period due to $.1 million of additional investment
income.

     Rental property expenses, which are principally comprised of rent expense
and real estate and other taxes, were $3.1 million for the quarter ended June
30, 2002, compared to $2.9 million for the quarter ended June 30, 2001. The $.2
million increase was primarily due to taxes provided in the current quarter for
states that do not conform to the federal REIT provisions.

     Environmental expenses, net for the quarter ended June 30, 2002 were $1.7
million, an increase of $.4 million over the prior period. The current period
environmental expenses include a net change in estimated remediation costs of
$1.4 million, a $.5 million increase over the net change recorded in the prior
year period.

     General and administrative expenses for the quarter ended June 30, 2002
were $1.2 million, which is comparable with the quarter ended June 30, 2001.

     Depreciation expense was $2.3 million and $2.4 million, respectively, for
the quarters ended June 30, 2002 and 2001. The decrease was primarily the result
of assets becoming fully depreciated and real estate dispositions.

     Interest expense for the quarter ended June 30, 2002 decreased to $32,000
from $744,000 in the quarter ended June 30, 2001. The decrease was due to the
repayment of substantially all of our mortgage debt and outstanding lines of
credit in August 2001.

     Results of Operations - Six months ended June 30, 2002 compared with the
       six months ended June 30, 2001

     Revenues from rental properties for the six months ended June 30, 2002 were
$33.7 million, compared to $34.2 million for the six months ended June 30, 2001.
Approximately $32.5 million and $33.0 million of these rentals for the six
months ended June 30, 2002 and 2001, respectively, were from properties leased
to Marketing under the Master Lease. Revenues from rental properties include
$3.4 million and $4.2 million of deferred rent recognized in the current and
prior periods, respectively. The $.8 million decrease in deferred rent was
partially offset by $.3 million of additional rental income received during the
six months ended June 30, 2002, due to the 2% annual rent increase under the
Master Lease effective in December 2001, net of a reduction in the number of
properties leased compared to the prior period.

     Other income was $1.4 million and $.9 million for the six months ended June
30, 2002 and 2001, respectively. The increase from the prior period was due to
$.3 million of additional investment income and $.2 million of additional gains
on dispositions of properties.

     Rental property expenses were $6.2 million for the six months ended June
30, 2002, compared to $5.7 million for the six months ended June 30, 2001. The
$.5 million increase was primarily due to taxes provided during the six months
ended June 30, 2002 for states that do not conform to the federal REIT
provisions and real estate tax refunds received in the prior period.

     Environmental expenses, net for the six months ended June 30, 2002 were
$3.3 million, a decrease of $.7 million over the prior period. The current
period environmental expenses include


                                       8
<PAGE>

a net change in estimated remediation costs of $2.8 million compared to $3.3
million recorded in the prior year period.

     General and administrative expenses for the six months ended June 30, 2002
were $2.3 million, which is comparable with the six months ended June 30, 2001.

     Depreciation expense was $4.6 million and $4.7 million, respectively, for
the six months ended June 30, 2002 and 2001. The decrease was primarily the
result of assets becoming fully depreciated and real estate dispositions.

     Interest expense for the six months ended June 30, 2002 decreased to
$65,000 from $1,642,000 in the six months ended June 30, 2001. The decrease was
due to the repayment of substantially all of our mortgage debt and outstanding
lines of credit in August 2001.

     Liquidity and Capital Resources

     Our principal sources of liquidity are cash and equivalents, the cash flows
from our business and our short-term uncommitted line of credit with a bank.
Management believes that dividend payments and cash requirements for our
business, including environmental remediation expenditures, capital expenditures
and debt service, can be met by cash flows from operations, available cash and
equivalents and the credit line. As of June 30, 2002, we had a line of credit
amounting to $25.0 million, of which $3.3 million was utilized in connection
with outstanding letters of credit. Borrowings under the lines of credit are
unsecured and bear interest at the prime rate or, at our option, LIBOR plus
1.25%. The line of credit is subject to annual renewal at the discretion of the
bank.

     At a special meeting of shareholders held on August 1, 2001, our
shareholders approved a charter amendment containing ownership limitations
typical for a REIT. 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. We presently intend to pay common stock dividends of
$0.4125 per quarter ($1.65 per share on an annual basis), and commenced doing so
with the quarterly dividend declared in September 2001. We presently intend to
pay quarterly dividends of $0.44375 per share of preferred stock ($1.775 per
share on an annual basis) until dividends declared per share of common stock in
any calendar year exceed $1.5691, at which time preferred shareholders will
participate in the excess common stock dividends declared for the calendar year
on an "as converted" basis. Based on the current conversion rate and our current
annual common stock dividend rate of $1.65 per share, preferred stockholders
would receive annual dividends aggregating approximately $1.8665 per preferred
share. Payment of dividends is subject to market conditions, our financial
condition, the distribution preferences of our preferred stock and other
factors, and therefore cannot be assured. We declared cash common stock
dividends of $.4125 and $.15 per share during each of the first two quarters in
2002 and 2001, respectively. We also declared preferred stock dividends of
$.44375 per share during each of these quarters. Cash dividends paid aggregated
$20.2 million and $6.3 million for the six months ended June 30, 2002 and 2001,
respectively.

     In order to initially qualify for REIT status, we were required to make a
distribution to shareholders in an amount at least equal to our accumulated
earnings and profits from the years we operated as a taxable corporation.
Determination of accumulated earnings and profits for


                                       9
<PAGE>

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 in 2001, 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.

     Property acquisitions and capital expenditures for the six months ended
June 30, 2002 were $1.2 million.

     Critical Accounting Policies

     Our accompanying consolidated financial statements include the accounts of
Getty Realty Corp. and our wholly-owned subsidiaries. The preparation of
financial statements in accordance with generally accepted accounting principles
("GAAP") requires management to make estimates and assumptions that affect
amounts reported in its financial statements. We have made our best estimates
and judgments relating to certain amounts which are included in our financial
statements, giving due consideration to the accounting policies selected and
materiality. 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. Application of these accounting policies however,
involves the exercise of judgment and use of assumptions as to future
uncertainties and, as a result, actual results could differ from these
estimates. 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, 2001. We believe the more critical of our accounting policies
are as follows:

     Revenue Recognition - We earn revenue primarily from operating leases with
Marketing and other tenants. According to GAAP, we recognize income under the
Master Lease with Marketing on the straight-line method, which effectively
recognizes contractual lease payments evenly over the initial fifteen year term
of the lease. A critical assumption in applying this accounting method is that
the tenant will make all contractual lease payments during the initial lease
term and that the deferred rent receivable of $11.8 million recorded as of June
30, 2002 will ultimately be collected. Accordingly, we may be required to
reverse a portion of the recorded deferred rent receivable if it becomes
apparent that a property will be disposed of before the end of the initial lease
term.

     Impairment of long-lived assets - Real estate assets represent "long-lived"
assets for accounting purposes. We review the recorded value of long-lived
assets for impairment in value whenever any events or changes in circumstances
indicate that the carrying amount of the assets may not be recoverable. We
believe that our real estate assets are not carried at amounts in excess of
their estimated net realizable fair value.

     Income taxes - Our future financial results generally will not reflect
provisions for current or deferred income taxes since we elected to be taxed as
a REIT effective as of January 1, 2001. Our intention is to operate in a manner
that will allow us to continue to be taxed as a REIT and, as a result, we do not
expect to pay substantial corporate-level federal income taxes. Many of these
REIT requirements, however, are highly technical and complex. If we were to fail
to meet these requirements, we may be subject to federal income tax.


                                       10
<PAGE>

     Environmental Costs - We provide for estimated future costs for known
environmental remediation requirements when it is probable that a liability has
been incurred and the amount of remediation costs can be reasonably estimated
(see Environmental Matters). Frequently the best estimate of costs for a
component of the liability can only be identified as a range, and no amount
within the range is a better estimate of the liability than any other amount. In
that circumstance, GAAP requires that the minimum of the range be accrued for
that cost component. Since environmental exposures are difficult to assess and
estimate and knowledge about these liabilities is not known upon the occurrence
of a single event, but rather is gained over a continuum of events, we believe
that it is appropriate that our accrual estimates are adjusted as the
remediation treatment progresses, as circumstances change and as environmental
contingencies become more clearly defined and reasonably estimable.

     Environmental Matters

     We are subject to numerous existing federal, state and local laws and
regulations, including matters relating to the protection of the environment.
Currently, environmental expenses are principally attributable to remediation,
monitoring and governmental agency reporting incurred in connection with
contaminated properties. In prior periods, a larger portion of the expenses also
included soil disposal, the replacement or upgrading of underground storage
tanks ("USTs") to meet federal, state and local environmental standards, as well
as routine monitoring and tank testing.

     Under the Master Lease with Marketing, and in accordance with leases with
other tenants, we agreed to bring the leased properties with known environmental
contamination to regulatory or contractual closure ("Closure") in an economical
manner and, thereafter, transfer all future environmental risks to our tenants.
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 have agreed
to pay all costs relating to, and to indemnify Marketing for, environmental
liabilities and obligations scheduled in the Master Lease, as amended. We will
continue to collect recoveries from certain state UST remediation funds related
to these environmental liabilities.

     We have also agreed to provide limited environmental indemnification to
Marketing with respect to six leased terminals and limited indemnification
relating to compliance of properties with local laws. Our aggregate
indemnification liability for these items is capped at a maximum of $5.6
million. We have not accrued a liability for these indemnification agreements
since it is uncertain that any significant amounts will be required to be paid
under the agreements.

     The estimated future costs for known environmental remediation requirements
are accrued when it is probable that a liability has been incurred and the
amount of remediation costs can be reasonably estimated in accordance with GAAP.
The environmental remediation liability is estimated based on the level and
impact of contamination for each property. The accrued liability is the
aggregate of the best estimates of cost for each component of the liability. If
the best estimate of costs for a component of the liability can only be
identified as a range, and no amount within the range is a better estimate than
any other amount, the minimum of the range is accrued for that cost component.
Recoveries of environmental costs, principally from state underground storage
tank remediation funds, are accrued as a reduction in environmental expenses,
net when such recoveries are considered probable.


                                       11
<PAGE>

     Environmental exposures are difficult to assess and estimate for numerous
reasons, including the extent of contamination, alternative treatment methods
that may be applied, location of the property which subjects it to differing
local laws and regulations and their interpretations, as well as the time it
takes to remediate contamination. In developing our liability for probable and
reasonably estimable environmental remediation costs, on a property by property
basis, we consider among other things, enacted laws and regulations, assessments
of contamination and the 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
June 30, 2002, we had remediation action plans in place for 351 (83%) of the
422 properties for which we retain environmental responsibility. Seventy-one
properties (17%) remain in the assessment phase, which when completed will
likely result in a change in estimate for those properties.

     As of June 30, 2002 and December 31, 2001, we had accrued $29.7 million and
$27.3 million, respectively, as management's best estimate for probable and
reasonably estimable environmental remediation costs. As of June 30, 2002 and
December 31, 2001, we had also recorded $15.5 million and $14.3 million,
respectively, as management's best estimate for recoveries from state UST
remediation funds related to environmental obligations and liabilities. It is
possible that estimated aggregate cash expenditures for environmental
remediation from 2002 through 2010 could approximate $38.6 million, or
approximately $19.8 million on a net basis after estimated recoveries from state
UST remediation funds of approximately $18.8 million. Neither the aggregate cash
expenditure nor the accrued environmental remediation costs, nor their related
recoveries, have been adjusted for inflation or discounted to present value. It
is possible that estimated net cash expenditures during the 2002 through 2010
period could exceed the net amount accrued as of December 31, 2001 by
approximately $6.8 million. We estimate that approximately 100 properties will
not have Closure by 2010 and that spending will continue afterwards, although at
significantly reduced levels. During 2002, we estimate that our net
environmental remediation spending will be approximately $7.4 million and our
business plan for 2002 reflects a net change in estimated remediation costs of
approximately $6.0 million. During the first six months of 2002, our net
environmental remediation spending was $1.7 million and we recorded a net change
in estimated remediation costs of $2.8 million.

     In view of the uncertainties associated with environmental expenditures,
however, we believe it is possible that 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 reasonably estimable as defined by GAAP.
Although 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.

     We cannot predict what environmental legislation or regulations may be
enacted in the future or how existing laws or regulations will be administered
or interpreted with respect to products or activities to which they have not
previously been applied. Compliance with more stringent laws or regulations, as
well as more vigorous enforcement policies of the regulatory agencies or
stricter interpretation of existing laws which may develop in the future, could
have an adverse effect on our financial position, or that of our tenants, and
could require substantial additional expenditures for future remediation.


                                       12
<PAGE>

     New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations" and Statement of Financial Accounting Standards No. 142 ("SFAS
No.142"), "Goodwill and Other Intangible Assets." SFAS No. 141 requires the
purchase method of accounting to be used for all business combinations initiated
after June 30, 2001. SFAS No. 141 also addresses the initial recognition and
measurement of goodwill and other intangible assets acquired in business
combinations and requires intangible assets to be recognized apart from goodwill
if certain tests are met. The adoption of SFAS No. 141 has not had a significant
effect on our financial position or results of operations. SFAS No. 142 requires
that goodwill not be amortized but instead be measured for impairment at least
annually, or when events indicate that there may be an impairment. SFAS No. 142
is effective for fiscal years beginning after December 15, 2001. We adopted SFAS
No. 142 effective January 1, 2002. The adoption of SFAS No. 142 has not had a
significant effect on our financial position or results of operations.

     In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS No. 144"), "Accounting for the Impairment or Disposal
of Long-Lived Assets." SFAS No. 144 provides new guidance on the recognition of
impairment losses on long-lived assets to be held and used or to be disposed of
and also broadens the definition of what constitutes a discontinued operation
and how the results of a discontinued operation are to be measured and
presented. SFAS No. 144 is effective for fiscal years beginning after December
15, 2001. We adopted SFAS No. 142 effective January 1, 2002. The adoption of
SFAS No. 144 has not had a significant effect on our financial position or
results of operations.

     On April 30, 2002, the FASB issued Statement of Financial Accounting
Standards No. 145 ("SFAS No. 145"), "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No.
145 eliminates the requirement that gains and losses from the extinguishment of
debt be aggregated and, if material, classified as an extraordinary item, net of
the related income tax effect. Further, SFAS No. 145 eliminates an inconsistency
between the accounting for sale-leaseback transactions and certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. SFAS No. 145 also makes several other technical corrections to
existing pronouncements that may change accounting practice. Generally, SFAS No.
145 is effective for transactions occurring after May 15, 2002. We adopted the
provisions of this statement beginning with the second quarter of 2002. The
adoption of SFAS No. 145 has not had a significant effect on our financial
position or results of operations.

     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. These forward-looking statements involve known and unknown risks,
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, 2001 and include, but are not limited to: risks associated
with owning and leasing real estate generally; dependence on


                                       13
<PAGE>

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 regulation; our expectations
as to the cost of completing environmental remediation; and the impact of our
electing to be taxed as a REIT, including subsequent failure to qualify as a
REIT and future dependence on external sources of capital.

     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
which 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.


                                       14
<PAGE>
                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

                  (a) Exhibits:

                   Designation of Exhibit
                  in this Quarterly Report
                        on Form 10-Q              Description of Exhibit

                            None.

                  (b) Reports filed on Form 8-K:

                            None.



                                   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:  August 13, 2002                   BY:  /s/ THOMAS J. STIRNWEIS
                                               ---------------------------------
                                                        (Signature)
                                               THOMAS J. STIRNWEIS
                                               Corporate Controller and
                                               Treasurer
                                               (Principal Financial and
                                               Accounting Officer)


Dated:  August 13, 2002                   BY:  /s/ LEO LIEBOWITZ
                                               ---------------------------------
                                                      (Signature)
                                               LEO LIEBOWITZ
                                               President and Chief Executive
                                               Officer


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