UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D. C. 20549
 FORM 10-Q
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    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.
  MARYLAND
    
    11-3412575(State or other jurisdiction of incorporation or
    
    (I.R.S. Employerorganization)
    
    Identification No.)
 125 Jericho Turnpike, Suite 103  Jericho, New York 11753
 (516) 478  5400  (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
  þ o
  o o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
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Page NumberPart I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Consolidated Balance Sheets as of March 31, 2011 and
December 31, 2010
    
    
    1Consolidated Statements of Operations for the
Three Months ended March 31, 2011 and 2010
    
    
    2Consolidated Statements of Comprehensive Income for the
Three Months ended March 31, 2011 and 2010
    
    
    3Consolidated Statements of Cash Flows for the
Three Months ended March 31, 2011 and 2010
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    49Item 4. Controls and Procedures
    
    
    51Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    51Item 1a. Risk Factors
    
    
    51Item 4. Other Information
    
    
    57Item 5. Exhibits
    
    
    58Signatures
    
    
    59




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GETTY REALTY CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS  (in thousands, except share data)  (unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETS:Real Estate:Land
    
    $
    360,929
    
    
    $
    253,413Buildings and improvements
    
    
    250,268
    
    
    
    251,174611,197
    
    
    
    504,587Less  accumulated depreciation and amortization
    
    
    (146,046
    )
    
    
    (144,217
    )Real estate, net
    
    
    465,151
    
    
    
    360,370Net investment in direct financing leases
    
    
    77,251
    
    
    
    20,540Deferred rent receivable (net of allowance of $7,608 at
March 31, 2011 and $8,170 at December 31, 2010)
    
    
    27,345
    
    
    
    27,385Cash and cash equivalents
    
    
    23,422
    
    
    
    6,122Recoveries from state underground storage tank funds, net
    
    
    3,982
    
    
    
    3,966Note, mortgages and accounts receivable, net
    
    
    32,168
    
    
    
    1,796Prepaid expenses and other assets
    
    
    21,233
    
    
    
    6,965Total assets
    
    $
    650,552
    
    
    $
    427,144LIABILITIES AND SHAREHOLDERS EQUITY:Borrowings under credit line
    
    $
    160,000
    
    
    $
    41,300Term loan
    
    
    23,395
    
    
    
    23,590Environmental remediation costs
    
    
    14,712
    
    
    
    14,874Dividends payable
    
    
    16,111
    
    
    
    14,432Accounts payable and accrued expenses
    
    
    33,423
    
    
    
    18,013Total liabilities
    
    
    247,641
    
    
    
    112,209Commitments and contingencies (notes 2, 3, 5 and 6)Shareholders equity:Common stock, par value $.01 per share; authorized
50,000,000 shares; issued 33,394,175 at March 31,
2011 and 29,944,155 at December 31, 2010
    
    
    334
    
    
    
    299Paid-in capital
    
    
    460,190
    
    
    
    368,093Dividends paid in excess of earnings
    
    
    (57,029
    )
    
    
    (52,304
    )Accumulated other comprehensive loss
    
    
    (584
    )
    
    
    (1,153
    )Total shareholders equity
    
    
    402,911
    
    
    
    314,935Total liabilities and shareholders equity
    
    $
    650,552
    
    
    $
    427,144
  - 1 -




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GETTY REALTY CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS  (in thousands, except per share amounts)  (unaudited)
 Three months ended March 31,2011
    
    
    2010Revenues from rental properties
    
    $
    25,025
    
    
    $
    22,449Operating expenses:Rental property expenses
    
    
    3,486
    
    
    
    3,216Impairment charges
    
    
    994
    
    
    
    Environmental expenses, net
    
    
    1,127
    
    
    
    1,552General and administrative expenses
    
    
    4,885
    
    
    
    2,338Depreciation and amortization expense
    
    
    2,325
    
    
    
    2,391Total operating expenses
    
    
    12,817
    
    
    
    9,497Operating income
    
    
    12,208
    
    
    
    12,952Other income, net
    
    
    411
    
    
    
    121Interest expense
    
    
    (1,319
    )
    
    
    (1,494
    )Earnings from continuing operations
    
    
    11,300
    
    
    
    11,579Discontinued operations:Earnings from operating activities
    
    
    18
    
    
    
    16Gains on dispositions of real estate
    
    
    68
    
    
    
    310Earnings from discontinued operations
    
    
    86
    
    
    
    326Net earnings
    
    $
    11,386
    
    
    $
    11,905Basic and diluted earnings per common share:Earnings from continuing operations
    
    $
    0.35
    
    
    $
    0.47Earnings from discontinued operations
    
    $
    0.00
    
    
    $
    0.01Net earnings
    
    $
    0.35
    
    
    $
    0.48Weighted-average shares outstanding:Basic
    
    
    32,502
    
    
    
    24,766Stock options and restricted stock units
    
    
    2
    
    
    
    3Diluted
    
    
    32,504
    
    
    
    24,769
 The accompanying notes are an integral part of these consolidated financial statements.
 - 2 -




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GETTY REALTY CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (in thousands)  (unaudited)
 Three months ended March 31,2011
    
    
    2010Net earnings
    
    $
    11,386
    
    
    $
    11,905Other comprehensive income:Unrealized gain on interest rate swap
    
    
    569
    
    
    
    303Comprehensive income
    
    $
    11,955
    
    
    $
    12,208
 The accompanying notes are an integral part of these consolidated financial statements.
 - 3 -




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GETTY REALTY CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (in thousands)  (unaudited)
 Three months ended March 31,2011
    
    
    2010Cash flows from operating activities:Net earnings
    
    $
    11,386
    
    
    $
    11,905Adjustments to reconcile net earnings to
net cash flow provided by operating activities:Depreciation and amortization expense
    
    
    2,325
    
    
    
    2,395Impairment charges
    
    
    994
    
    
    
    Gains from dispositions of real estate
    
    
    (68
    )
    
    
    (310
    )Deferred rental revenue, net of allowance
    
    
    40
    
    
    
    (138
    )Amortization of above-market and below-market leases
    
    
    (135
    )
    
    
    (173
    )Amortization of investment in direct financing lease
    
    
    89
    
    
    
    (73
    )Accretion expense
    
    
    136
    
    
    
    165Stock-based employee compensation expense
    
    
    143
    
    
    
    106Changes in assets and liabilities:Recoveries from state underground storage tank funds, net
    
    
    63
    
    
    
    (242
    )Accounts receivable
    
    
    (60
    )
    
    
    (63
    )Prepaid expenses and other assets
    
    
    240
    
    
    
    (353
    )Environmental remediation costs
    
    
    (377
    )
    
    
    235Accounts payable and accrued expenses
    
    
    156
    
    
    
    305Net cash flow provided by operating activities
    
    
    14,932
    
    
    
    13,759Cash flows from investing activities:Property acquisitions and capital expenditures
    
    
    (165,393
    )
    
    
    (1,500
    )Proceeds from dispositions of real estate
    
    
    116
    
    
    
    639Decrease in cash held for property acquisitions
    
    
    60
    
    
    
    1,124(Issuance) collection of note and mortgages receivable
    
    
    (30,312
    )
    
    
    34Net cash flow provided by (used in) investing activities
    
    
    (195,529
    )
    
    
    297Cash flows from financing activities:Borrowings (repayments) under credit agreement, net
    
    
    118,700
    
    
    
    (2,000
    )(Repayments) under term loan agreement
    
    
    (195
    )
    
    
    (195
    )Cash dividends paid
    
    
    (14,432
    )
    
    
    (11,842
    )Credit agreement origination costs
    
    
    (175
    )
    
    
    Security deposits received
    
    
    2,010
    
    
    
    72Net proceeds from issuance of common stock
    
    
    91,989
    
    
    
    Net cash flow provided by (used in) financing activities
    
    
    197,897
    
    
    
    (13,965
    )Net increase in cash and cash equivalents
    
    
    17,300
    
    
    
    91Cash and cash equivalents at beginning of period
    
    
    6,122
    
    
    
    3,050Cash and cash equivalents at end of period
    
    $
    23,422
    
    
    $
    3,141Supplemental disclosures of cash flow informationCash paid (refunded) during the period for:Interest
    
    $
    1,343
    
    
    $
    1,441Income taxes, net
    
    
    65
    
    
    
    74Recoveries from state underground storage tank funds
    
    
    (133
    )
    
    
    (206
    )Environmental remediation costs
    
    
    758
    
    
    
    995
 The accompanying notes are an integral part of these consolidated financial statements.
 - 4 -




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GETTY REALTY CORP. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)
 1. GENERAL
 Basis of Presentation:
  Use of Estimates, Judgments and Assumptions:
 Discontinued Operations:
 Unaudited, Interim Financial Statements: .
 - 5 -




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Earnings per Common Share:
 Three months endedMarch 31,(in thousands)
    
    2011
    
    
    2010Earnings from continuing operations
    
    $
    11,300
    
    
    $
    11,579Less dividend equivalents attributable to restricted stock units outstanding
    
    
    (82
    )
    
    
    (56
    )Earnings from continuing operations attributable to common shareholders used for basic
earnings per share calculation
    
    
    11,218
    
    
    
    11,523Discontinued operations
    
    
    86
    
    
    
    326Net earnings attributable to common shareholders used for basic earnings per share calculation
    
    $
    11,304
    
    
    $
    11,849Weighted-average number of common shares outstanding:Basic
    
    
    32,502
    
    
    
    24,766Stock options
    
    
    2
    
    
    
    3Diluted
    
    
    32,504
    
    
    
    24,769Restricted stock units outstanding at the end of the period
    
    
    171
    
    
    
    118
 2. LEASES
   - 6 -




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3. COMMITMENTS AND CONTINGENCIES
   - 7 -




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4. CREDIT AGREEMENT, TERM LOAN AGREEMENT AND INTEREST RATE SWAP AGREEMENT
    - 15 -




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5. ENVIRONMENTAL EXPENSES
  - 16 -




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- 17 -




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- 18 -




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6. SHAREHOLDERS EQUITY
  DIVIDENDS
    
    ACCUMULATEDPAID
    
    OTHERCOMMON STOCK
    
    PAID-IN
    
    IN EXCESS
    
    COMPREHENSIVESHARES
    
    AMOUNT
    
    CAPITAL
    
    OF EARNINGS
    
    LOSS
    
    TOTALBalance, December 31, 2010
    
    
    29,944,155
    
    
    $
    299
    
    
    $
    368,093
    
    
    $
    (52,304
    )
    
    $
    (1,153
    )
    
    $
    314,935Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,386
    
    
    
    
    
    
    
    11,386Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,111
    )
    
    
    
    
    
    
    (16,111
    )Stock-based employee compensation expense
    
    
    20
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    143Issuance of common stock
    
    
    3,450,000
    
    
    
    35
    
    
    
    91,954
    
    
    
    
    
    
    
    
    
    
    
    91,989Net unrealized gain on interest rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    569
    
    
    
    569Balance, March 31, 2011
    
    
    33,394,175
    
    
    $
    334
    
    
    $
    460,190
    
    
    $
    (57,029
    )
    
    $
    (584
    )
    
    $
    402,911
   7. PROPERTY ACQUISITIONS
 CPD NY SALE/LEASEBACK
   - 19 -




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- 20 -




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Three months ended March      31,2011
    
    
    2010Revenues
    
    $
    25,466
    
    
    $
    25,677Net earnings
    
    $
    11,768
    
    
    $
    14,367Basic and diluted net earnings
per common share
    
    $
    0.36
    
    
    $
    0.58
 NOURIA SALE/LEASEBACK
      - 21 -




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Three months ended March      31,2011
    
    
    2010Revenues
    
    $
    27,278
    
    
    $
    24,751Net earnings
    
    $
    13,268
    
    
    $
    13,753Basic and diluted net earnings
per common share
    
    $
    0.41
    
    
    $
    0.56
  Three months ended March      31,2011
    
    
    2010Revenues
    
    $
    27,711
    
    
    $
    27,943Net earnings
    
    $
    13,650
    
    
    $
    16,215Basic and diluted net earnings
per common share
    
    $
    0.42
    
    
    $
    0.65
 - 22 -




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8. SUPPLEMENTAL CONDENSED COMBINING FINANCIAL INFORMATION
    - 23 -




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##### 



GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedASSETS:Real Estate:Land
    
    $
    136,578
    
    
    $
    224,351
    
    
    $
    
    
    
    $
    360,929Buildings and improvements
    
    
    151,668
    
    
    
    98,229
    
    
    
    371
    
    
    
    250,268288,246
    
    
    
    322,580
    
    
    
    371
    
    
    
    611,197Less  accumulated depreciation and
amortization
    
    
    (119,392
    )
    
    
    (26,451
    )
    
    
    (203
    )
    
    
    (146,046
    )Real estate, net
    
    
    168,854
    
    
    
    296,129
    
    
    
    168
    
    
    
    465,151Net investment in direct financing leases
    
    
    
    
    
    
    77,251
    
    
    
    
    
    
    
    77,251Deferred rent receivable, net
    
    
    20,868
    
    
    
    6,477
    
    
    
    
    
    
    
    27,345Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    23,422
    
    
    
    23,422Recoveries from state underground storage
tank funds, net
    
    
    3,891
    
    
    
    91
    
    
    
    
    
    
    
    3,982Note, mortgages and accounts receivable, net
    
    
    17
    
    
    
    30,965
    
    
    
    1,186
    
    
    
    32,168Prepaid expenses and other assets
    
    
    
    
    
    
    18,042
    
    
    
    3,191
    
    
    
    21,233Total assets
    
    
    193,630
    
    
    
    428,955
    
    
    
    27,967
    
    
    
    650,552LIABILITIES:Borrowings under credit line
    
    
    
    
    
    
    
    
    
    
    160,000
    
    
    
    160,000Term loan
    
    
    
    
    
    
    
    
    
    
    23,395
    
    
    
    23,395Environmental remediation costs
    
    
    13,624
    
    
    
    1,088
    
    
    
    
    
    
    
    14,712Dividends payable
    
    
    
    
    
    
    
    
    
    
    16,111
    
    
    
    16,111Accounts payable and accrued expenses
    
    
    917
    
    
    
    23,546
    
    
    
    8,960
    
    
    
    33,423Total liabilities
    
    
    14,541
    
    
    
    24,634
    
    
    
    208,466
    
    
    
    247,641Net assets (liabilities)
    
    $
    179,089
    
    
    $
    404,321
    
    
    $
    (180,499
    )
    
    $
    402,911
 - 24 -




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GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedASSETS:Real Estate:Land
    
    $
    137,151
    
    
    $
    116,262
    
    
    $
    
    
    
    $
    253,413Buildings and improvements
    
    
    152,570
    
    
    
    98,233
    
    
    
    371
    
    
    
    251,174289,721
    
    
    
    214,495
    
    
    
    371
    
    
    
    504,587Less  accumulated depreciation and
amortization
    
    
    (118,784
    )
    
    
    (25,241
    )
    
    
    (192
    )
    
    
    (144,217
    )Real estate, net
    
    
    170,937
    
    
    
    189,254
    
    
    
    179
    
    
    
    360,370Net investment in direct financing lease
    
    
    
    
    
    
    20,540
    
    
    
    
    
    
    
    20,540Deferred rent receivable, net
    
    
    21,221
    
    
    
    6,164
    
    
    
    
    
    
    
    27,385Cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    6,122
    
    
    
    6,122Recoveries from state underground
storage tank funds, net
    
    
    3,874
    
    
    
    92
    
    
    
    
    
    
    
    3,966Mortgages and accounts receivable, net
    
    
    13
    
    
    
    509
    
    
    
    1,274
    
    
    
    1,796Prepaid expenses and other assets
    
    
    
    
    
    
    3,444
    
    
    
    3,521
    
    
    
    6,965Total assets
    
    
    196,045
    
    
    
    220,003
    
    
    
    11,096
    
    
    
    427,144LIABILITIES:Borrowings under credit line
    
    
    
    
    
    
    
    
    
    
    41,300
    
    
    
    41,300Term loan
    
    
    
    
    
    
    
    
    
    
    23,590
    
    
    
    23,590Environmental remediation costs
    
    
    13,841
    
    
    
    1,033
    
    
    
    
    
    
    
    14,874Dividends payable
    
    
    
    
    
    
    
    
    
    
    14,432
    
    
    
    14,432Accounts payable and accrued expenses
    
    
    962
    
    
    
    6,953
    
    
    
    10,098
    
    
    
    18,013Total liabilities
    
    
    14,803
    
    
    
    7,986
    
    
    
    89,420
    
    
    
    112,209Net assets (liabilities)
    
    $
    181,242
    
    
    $
    212,017
    
    
    $
    (78,324
    )
    
    $
    314,935
 - 25 -




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##### 



GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedRevenues from rental properties
    
    $
    14,810
    
    
    $
    10,215
    
    
    $
    
    
    
    $
    25,025Operating expenses:Rental property expenses
    
    
    1,417
    
    
    
    1,930
    
    
    
    139
    
    
    
    3,486Impairment charges
    
    
    994
    
    
    
    
    
    
    
    
    
    
    
    994Environmental expenses, net
    
    
    1,101
    
    
    
    26
    
    
    
    
    
    
    
    1,127General and administrative expenses
    
    
    31
    
    
    
    1,664
    
    
    
    3,190
    
    
    
    4,885Depreciation and amortization expense
    
    
    1,041
    
    
    
    1,274
    
    
    
    10
    
    
    
    2,325Total operating expenses
    
    
    4,584
    
    
    
    4,894
    
    
    
    3,339
    
    
    
    12,817Operating income (loss)
    
    
    10,226
    
    
    
    5,321
    
    
    
    (3,339
    )
    
    
    12,208Other income, net
    
    
    
    
    
    
    
    
    
    
    411
    
    
    
    411Interest expense
    
    
    
    
    
    
    
    
    
    
    (1,319
    )
    
    
    (1,319
    )Earnings (loss) from continuing operations
    
    
    10,226
    
    
    
    5,321
    
    
    
    (4,247
    )
    
    
    11,300Discontinued operations:Earnings (loss) from operating activities
    
    
    20
    
    
    
    (2
    )
    
    
    
    
    
    
    18Gains on dispositions of real estate
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Earnings (loss) from discontinued operations
    
    
    88
    
    
    
    (2
    )
    
    
    
    
    
    
    86Net earnings (loss)
    
    $
    10,314
    
    
    $
    5,319
    
    
    $
    (4,247
    )
    
    $
    11,386
  GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedRevenues from rental properties
    
    $
    14,814
    
    
    $
    7,635
    
    
    $
    
    
    
    $
    22,449Operating expenses:Rental property expenses
    
    
    1,907
    
    
    
    1,076
    
    
    
    233
    
    
    
    3,216Environmental expenses, net
    
    
    1,516
    
    
    
    36
    
    
    
    
    
    
    
    1,552General and administrative expenses
    
    
    32
    
    
    
    33
    
    
    
    2,273
    
    
    
    2,338Depreciation and amortization expense
    
    
    1,061
    
    
    
    1,322
    
    
    
    8
    
    
    
    2,391Total operating expenses
    
    
    4,516
    
    
    
    2,467
    
    
    
    2,514
    
    
    
    9,497Operating income (loss)
    
    
    10,298
    
    
    
    5,168
    
    
    
    (2,514
    )
    
    
    12,952Other income (expense), net
    
    
    
    
    
    
    
    
    
    
    121
    
    
    
    121Interest expense
    
    
    
    
    
    
    
    
    
    
    (1,494
    )
    
    
    (1,494
    )Earnings (loss) from continuing operations
    
    
    10,298
    
    
    
    5,168
    
    
    
    (3,887
    )
    
    
    11,579Discontinued operations:Earnings (loss) from operating activities
    
    
    31
    
    
    
    (15
    )
    
    
    
    
    
    
    16Gains on dispositions of real estate
    
    
    284
    
    
    
    26
    
    
    
    
    
    
    
    310Earnings from discontinued operations
    
    
    315
    
    
    
    11
    
    
    
    
    
    
    
    326Net earnings (loss)
    
    $
    10,613
    
    
    $
    5,179
    
    
    $
    (3,887
    )
    
    $
    11,905
 - 26 -




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##### 



GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net earnings (loss)
    
    $
    10,314
    
    
    $
    5,319
    
    
    $
    (4,247
    )
    
    $
    11,386Adjustments to reconcile net earnings (loss) to net cash flow
provided by (used in) operating activities:Depreciation and amortization expense
    
    
    1,041
    
    
    
    1,274
    
    
    
    10
    
    
    
    2,325Impairment charges
    
    
    994
    
    
    
    
    
    
    
    
    
    
    
    994Gain from dispositions of real estate
    
    
    (68
    )
    
    
    
    
    
    
    
    
    
    
    (68
    )Deferred rental revenue
    
    
    353
    
    
    
    (313
    )
    
    
    
    
    
    
    40Amortization of above-market and below-market leases
    
    
    
    
    
    
    (135
    )
    
    
    
    
    
    
    (135
    )Amortization of investment in direct financing lease
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    89Accretion expense
    
    
    133
    
    
    
    3
    
    
    
    
    
    
    
    136Stock-based employee compensation expense
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    143Changes in assets and liabilities:Recoveries from state underground storage tank funds, net
    
    
    60
    
    
    
    3
    
    
    
    
    
    
    
    63Mortgages and accounts receivable, net
    
    
    (4
    )
    
    
    (56
    )
    
    
    
    
    
    
    (60
    )Prepaid expenses and other assets
    
    
    
    
    
    
    (205
    )
    
    
    445
    
    
    
    240Environmental remediation costs
    
    
    (427
    )
    
    
    50
    
    
    
    
    
    
    
    (377
    )Accounts payable and accrued expenses
    
    
    (45
    )
    
    
    770
    
    
    
    (569
    )
    
    
    156Net cash flow provided by (used in) operating activities
    
    
    12,351
    
    
    
    6,799
    
    
    
    (4,218
    )
    
    
    14,932CASH FLOWS FROM INVESTING ACTIVITIES:Property acquisitions and capital expenditures
    
    
    
    
    
    
    (165,393
    )
    
    
    
    
    
    
    (165,393
    )Proceeds from dispositions of real estate
    
    
    116
    
    
    
    
    
    
    
    
    
    
    
    116Decrease in cash held for property acquisitions
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    60(Issuance of) collection of notes and mortgages receivable, net
    
    
    
    
    
    
    (30,400
    )
    
    
    88
    
    
    
    (30,312
    )Net cash flow provided by (used in) investing activities
    
    
    116
    
    
    
    (195,793
    )
    
    
    148
    
    
    
    (195,529
    )CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under credit agreement, net
    
    
    
    
    
    
    
    
    
    
    118,700
    
    
    
    118,700Repayments under term loan agreement
    
    
    
    
    
    
    
    
    
    
    (195
    )
    
    
    (195
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    (14,432
    )
    
    
    (14,432
    )Credit agreement origination costs
    
    
    
    
    
    
    
    
    
    
    (175
    )
    
    
    (175
    )Net proceeds from issuance of common stock
    
    
    
    
    
    
    
    
    
    
    91,989
    
    
    
    91,989Security deposits received
    
    
    
    
    
    
    2,010
    
    
    
    
    
    
    
    2,010Cash consolidation  Corporate
    
    
    (12,467
    )
    
    
    186,984
    
    
    
    (174,517
    )
    
    
    Net cash flow (used in) provided by financing activities
    
    
    (12,467
    )
    
    
    188,994
    
    
    
    21,370
    
    
    
    197,897Net increase in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    17,300
    
    
    
    17,300Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    
    
    
    
    6,122
    
    
    
    6,122Cash and cash equivalents at end of year
    
    $
    
    
    
    $
    
    
    
    $
    23,422
    
    
    $
    23,422
 - 27 -




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##### 



GettyPetroleum
    
    
    OtherMarketing
    
    
    Tenants
    
    
    Corporate
    
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net earnings (loss)
    
    $
    10,613
    
    
    $
    5,179
    
    
    $
    (3,887
    )
    
    $
    11,905Adjustments to reconcile net earnings (loss) to net cash flow
provided by (used in) operating activities:Depreciation and amortization expense
    
    
    1,064
    
    
    
    1,323
    
    
    
    8
    
    
    
    2,395Impairment charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain from dispositions of real estate
    
    
    (284
    )
    
    
    (26
    )
    
    
    
    
    
    
    (310
    )Deferred rental revenue
    
    
    324
    
    
    
    (462
    )
    
    
    
    
    
    
    (138
    )Amortization of above-market and below-market leases
    
    
    
    
    
    
    (173
    )
    
    
    
    
    
    
    (173
    )Amortization of investment in direct financing leases
    
    
    
    
    
    
    (73
    )
    
    
    
    
    
    
    (73
    )Accretion expense
    
    
    161
    
    
    
    4
    
    
    
    
    
    
    
    165Stock-based employee compensation expense
    
    
    
    
    
    
    
    
    
    
    106
    
    
    
    106Changes in assets and liabilities:Recoveries from state underground storage tank funds, net
    
    
    (211
    )
    
    
    (31
    )
    
    
    
    
    
    
    (242
    )Mortgages and accounts receivable, net
    
    
    (33
    )
    
    
    (30
    )
    
    
    
    
    
    
    (63
    )Prepaid expenses and other assets
    
    
    
    
    
    
    (174
    )
    
    
    (179
    )
    
    
    (353
    )Environmental remediation costs
    
    
    (645
    )
    
    
    880
    
    
    
    
    
    
    
    235Accounts payable and accrued expenses
    
    
    274
    
    
    
    (251
    )
    
    
    282
    
    
    
    305Net cash flow provided by (used in) operating activities
    
    
    11,263
    
    
    
    6,166
    
    
    
    (3,670
    )
    
    
    13,759CASH FLOWS FROM INVESTING ACTIVITIES:Property acquisitions and capital expenditures
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )Proceeds from dispositions of real estate
    
    
    414
    
    
    
    225
    
    
    
    
    
    
    
    639Increase in cash held for property acquisitions
    
    
    
    
    
    
    
    
    
    
    1,124
    
    
    
    1,124Collection of mortgages receivable, net
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    34Net cash flow provided by (used in) investing activities
    
    
    414
    
    
    
    (1,275
    )
    
    
    1,158
    
    
    
    297CASH FLOWS FROM FINANCING ACTIVITIES:Repayments under credit agreement, net
    
    
    
    
    
    
    
    
    
    
    (2,000
    )
    
    
    (2,000
    )Repayments under term loan agreement, net
    
    
    
    
    
    
    
    
    
    
    (195
    )
    
    
    (195
    )Cash dividends paid
    
    
    
    
    
    
    
    
    
    
    (11,842
    )
    
    
    (11,842
    )Security deposits received
    
    
    
    
    
    
    72
    
    
    
    
    
    
    
    72Cash consolidation  Corporate
    
    
    (11,677
    )
    
    
    (4,963
    )
    
    
    16,640
    
    
    
    Net cash flow (used in) provided by financing activities
    
    
    (11,677
    )
    
    
    (5,035
    )
    
    
    2,603
    
    
    
    (13,965
    )Net increase in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    91
    
    
    
    91Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    
    
    
    
    3,050
    
    
    
    3,050Cash and cash equivalents at end of year
    
    $
    
    
    
    $
    
    
    
    $
    3,141
    
    
    $
    3,141
 - 28 -




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GENERAL
 Real Estate Investment Trust
  Retail Petroleum Marketing Business
  Marketing and the Marketing Leases
  - 29 -




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- 30 -




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- 31 -




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.
   ®
 - 32 -




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- 33 -




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- 34 -




---



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- 35 -




---



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Supplemental Non-GAAP Measures
    - 36 -




---



##### 



Three months endedMarch 31,2011
    
    
    2010Net earnings
    
    $
    11,386
    
    
    $
    11,905Depreciation and amortization of real estate assets
    
    
    2,325
    
    
    
    2,395Gains from dispositions of real estate
    
    
    (68
    )
    
    
    (310
    )Funds from operations
    
    
    13,643
    
    
    
    13,990Revenue recognition adjustments
    
    
    (230
    )
    
    
    (384
    )Impairment charges
    
    
    994
    
    
    
    Property acquisition costs
    
    
    1,986
    
    
    
    Adjusted funds from operations
    
    $
    16,393
    
    
    $
    13,606Diluted per share amounts:Earnings per share
    
    $
    0.35
    
    
    $
    0.48Funds from operations per share
    
    $
    0.42
    
    
    $
    0.56Adjusted funds from operations per share
    
    $
    0.50
    
    
    $
    0.55Diluted weighted-average shares outstanding
    
    
    32,504
    
    
    
    24,769
 RESULTS OF OPERATIONS
 Three months ended March 31, 2011 compared to the three months ended March 31, 2010
  - 37 -




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- 38 -




---



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- 39 -




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
      - 40 -




---



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- 41 -




---



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    - 42 -




---



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ENVIRONMENTAL MATTERS
 General
   - 43 -




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- 44 -




---



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- 45 -




---



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- 46 -




---



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Environmental litigation
  Forward-Looking Statements
  - 47 -




---



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- 48 -




---



##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk
     - 49 -




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- 50 -




---



##### 



Item 4.
    
    Controls and Procedures
    
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  - 51 -




---



##### 



Our financial results are materially dependent on the performance of Marketing. In the event
that Marketing does not perform its rental, environmental or other obligations under the Marketing
Leases, our business, financial condition, revenues, operating expenses, results of operations,
liquidity, ability to pay dividends or stock price could be materially adversely affected. The
financial performance of Marketing has deteriorated in recent years.
    - 52 -




---



##### 



Lukoil transferred its ownership interest in Marketing. We cannot predict what impact such
transfer will have on Marketings ability or willingness to perform its rental, environmental and
other obligations under the Master Lease and on our business.
   If it becomes probable that Marketing will not pay its environmental obligations, or if we
change our assumptions for environmental liabilities related to the Marketing Leases we would be in
default of our Credit Agreement or Term Loan Agreement, our business, financial condition,
revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock
price could be materially adversely affected.
  - 53 -




---



##### 



If the Marketing Leases are modified significantly or terminated, our business, financial
condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends
or stock price could be materially adversely affected.
  - 54 -




---



##### 



Our accounting policies and methods are fundamental to how we record and report our financial
position and results of operations, and they require management to make estimates, judgments and
assumptions about matters that are inherently uncertain.
  - 55 -




---



##### 



We may be unable to pay dividends.
  - 56 -




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##### 



Item 4. Other Information
  - 57 -




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##### 



Item 5. Exhibits
 Exhibit No.
    
    Description of Exhibit10.1*
    
    Unitary Net Lease Agreement between GTY
NY Leasing, Inc., and CPD NY Energy Corp., dated January 13,
201131(i).1
    
    Rule 13a-14(a) Certification of Chief Financial Officer31(i).2
    
    Rule 13a-14(a) Certification of Chief Executive Officer32.1
    
    Certification of Chief Executive
Officer pursuant to 18 U.S.C. § 1350 (a)32.2
    
    Certifications of Chief Financial
Officer pursuant to 18 U.S.C. § 1350 (a)
 
 (a)
    
    These certifications are being furnished solely to accompany the Report pursuant
to 18 U.S.C. § 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.*
    
    Confidential treatment has
been sought for certain portions of this Exhibit pursuant to
Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
which portions have been omitted and filed separately with the
Securities and Exchange Commission. - 58 -




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##### 



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)BY:      /s/ Thomas J. Stirnweis(Signature)THOMAS J. STIRNWEIS

Vice President, Treasurer and
Chief Financial Officer 
May 12, 2011BY:      /s/ David Driscoll(Signature)DAVID DRISCOLL

President and Chief
Executive Officer 
May 12, 2011 - 59 -