GETTY REALTY CORP MD
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
GTY$28.56-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-26.
0000950170-24-049250
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0000950170-24-086604
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 156 current paragraphs.
90 unchanged; 38 reworded; 12 added; 2 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 6 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
The decrease in property operating expenses was primarily due to a decrease in reimbursable and non-reimbursable real estate taxes. The increase in leasing and redevelopment expenses was due to increases in professional fees, redevelopment project cost write-offs, and demolition costs.
Current report
Six Months Ended June 30, 2024, compared to the six months ended June 30, 2023
Current report
Property Costs
Current report
Impairment Charges
Current report
Environmental Expenses
Current report
The difference in environmental expenses for the six months ended June 30, 2024 was primarily due to changes in environmental estimates and lower accretion expenses.
Current report
General and Administrative Expenses
Current report
Depreciation and Amortization Expenses
Current report
The gain on dispositions of real estate were primarily due to the sale of one property and one partial condemnation during the six months ended June 30, 2024, and the sale of three properties and one lease termination during the six months ended June 30, 2023.
Current report
Interest Expense
Current report
During the three and six months ended June 30, 2024, we settled 0.2 million shares of common stock subject to forward sale agreements under the ATM Program for net proceeds of $7.2 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement.
Current report
During the three and six months ended June 30, 2023, we settled 1.0 million and 3.7 million shares of common stock, respectively, subject to forward sale agreements under the ATM Program for net proceeds of $31.2 million and $114.1 million, respectively, after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement. As of June 30, 2023, there were no shares remain subject to forward sale agreements under the ATM Program.
Removed paragraphs (2)
Previous report
Revenues from Rental Properties
Previous report
During the three months ended March 31, 2024, we did not enter into any new forward sale agreements or settle any outstanding forward sale agreements under the ATM Program.
Reworded paragraphs (38)
Previous wording
We are a net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate. Our portfolio is comprised of convenience stores, express tunnel car washes, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), and certain other freestanding retail properties, including drive-thru quick service restaurants and automotive parts retailers. As of March 31, 2024, our portfolio included 1,108 properties, including 1,071 properties owned by us and 37 properties that we leased from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our ordinary taxable income to our stockholders each year.
Current wording
We are a net lease REIT specializing in the acquisition, financing and development of convenience, automotive and other single tenant retail real estate. Our portfolio is comprised of convenience stores, express tunnel car washes, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), and certain other freestanding retail properties, including drive thru quick service restaurants and automotive parts retailers. As of June 30, 2024, our portfolio included 1,124 properties, including 1,088 properties owned by us and 36 properties that we leased from third-party landlords. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our stockholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our ordinary taxable income to our stockholders each year.
Previous wording
Substantially all of our properties are leased to convenience store operators, petroleum distributors, express tunnel car wash operators and other automotive-related and retail tenants. Our tenants either operate their business at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties that operate the business. Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases. Substantially all of our tenants are also responsible for pre-existing environmental contamination that is discovered during their lease term, except contamination that was known at lease commencement, as to which we have established reserves.
Current wording
Substantially all of our properties are leased on a triple-net basis to convenience store operators, petroleum distributors, express tunnel car wash operators and other automotive-related and retail tenants. Our tenants either operate their business at our properties directly or, in the case of certain convenience stores and gasoline and repair stations, sublet our properties and supply fuel to third parties that operate the business. Our triple-net lease tenants are responsible for the payment of all taxes, maintenance, repairs, insurance and other operating expenses relating to our properties, and are also responsible for environmental contamination occurring during the terms of their leases. Substantially all of our tenants are also responsible for pre-existing environmental contamination that is discovered during their lease term, except contamination that was known at lease commencement, as to which we have established reserves.
Previous wording
Our 1,108 properties are located in 42 states and Washington D.C. and include a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords. Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, or certain other freestanding retailers, including drive-thru quick service restaurants and automotive parts retailers. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps.
Current wording
Our 1,124 properties are located in 42 states and Washington D.C. and include a concentration in the Northeast and Mid-Atlantic regions that we believe is unique and not readily available for purchase or lease from other owners or landlords. Our typical property consists of approximately one acre of land in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, or certain other freestanding retailers, including drive thru quick service restaurants and automotive parts retailers. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps.
Previous wording
As of March 31, 2024, we leased 1,103 of our properties to tenants under triple-net leases, including 925 properties leased under 45 separate unitary or master triple-net leases, and 178 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of March 31, 2024, our weighted average remaining lease term, excluding renewal options, was 9.2 years.
Current wording
As of June 30, 2024, we leased 1,119 of our properties to tenants under triple-net leases, including 937 properties leased under 47 separate unitary or master triple-net leases, and 182 properties leased under single unit triple-net leases. These leases generally provide for an initial term of 15 or 20 years, with options for successive renewal terms of up to 20 years, and periodic rent escalations. As of June 30, 2024, our weighted average remaining lease term, excluding renewal options, was 9.2 years.
Previous wording
As of March 31, 2024, we were also actively redeveloping two of our properties as new convenience stores or for alternative single tenant retail uses, and three of our properties were vacant.
Current wording
As of June 30, 2024, we were also actively redeveloping two of our properties for alternative single tenant retail uses, and three of our properties were vacant.
Previous wording
During the three months ended March 31, 2024, we invested $40.6 million (net of amounts funded in prior periods) across 35 properties, including the acquisition of fee simple interests in 12 express tunnel car washes, seven auto service centers, two drive-thru quick service restaurants, and one convenience store.
Current wording
During the six months ended June 30, 2024, we invested $102.3 million (net of amounts funded in prior periods) across 53 properties, including the acquisition of fee simple interests in 19 express tunnel car washes, 16 auto service centers, three drive thru quick service restaurants, and two convenience stores.
Previous wording
During the three months ended March 31, 2023, we invested approximately $60.7 million (net of amounts funded in prior periods) across 26 properties, including the acquisition of fee simple interests in eight express tunnel car washes and one convenience store.
Current wording
During the six months ended June 30, 2023, we invested $111.6 million (net of amounts funded in prior periods) across 40 properties, including the acquisition of fee simple interests in 14 express tunnel car washes, one convenience store and one drive thru quick service restaurant.
Previous wording
As of March 31, 2024, we had two properties under active redevelopment and others in various stages of feasibility planning for potential recapture from our net lease portfolio.
Current wording
As of June 30, 2024, we had two properties under active redevelopment and several others in various stages of feasibility planning for potential recapture from our net lease portfolio.
Previous wording
We believe that FFO and AFFO are helpful to analysts and investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, the core operating performance of our portfolio. Specifically, FFO excludes items such as depreciation and amortization of real estate assets, gains or losses on dispositions of real estate assets, and impairment charges. With respect to AFFO, we further exclude the impact of (i) deferred rental revenue (straight-line rent), the net amortization of above-market and below-market leases, adjustments recorded for the recognition of rental income from direct financing leases, and the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”), (ii) environmental accretion expenses, environmental litigation accruals, insurance reimbursements, legal settlements and judgments, and changes in environmental remediation estimates (collectively, “Environmental Adjustments”), (iii) stock-based compensation expense, (iv) amortization of debt issuance costs and (v) other items, which may include allowances for credit losses on notes and mortgages receivable and direct financing leases, losses on extinguishment of debt, retirement and severance costs, and other items that do not impact our recurring cash flow and which are not indicative of our core operating performance.
Current wording
We believe that FFO and AFFO are helpful to analysts and investors in measuring our performance because both FFO and AFFO exclude various items included in GAAP net earnings that do not relate to, or are not indicative of, the core operating performance of our portfolio. Specifically, FFO excludes items such as depreciation and amortization of real estate assets, gains or losses on dispositions of real estate assets, and impairment charges. With respect to AFFO, we further exclude the impact of (i) deferred rental revenue (straight-line rent), the net amortization of intangible market lease assets and liabilities, adjustments recorded for the recognition of rental income from direct financing leases, and the amortization of deferred lease incentives (collectively, “Revenue Recognition Adjustments”), (ii) environmental accretion expenses, environmental litigation accruals, insurance reimbursements, legal settlements and judgments, and changes in environmental remediation estimates (collectively, “Environmental Adjustments”), (iii) stock-based compensation expense, (iv) amortization of debt issuance costs and (v) other items, which may include allowances for credit losses on notes and mortgages receivable and direct financing leases, losses on extinguishment of debt, retirement and severance costs, and other items that do not impact our recurring cash flow and which are not indicative of our core operating performance.
Previous wording
The following discussion describes our results of operations for the three months ended March 31, 2024.
Current wording
The following discussion describes our results of operations for the three and six months ended June 30, 2024.
Previous wording
Rental income includes base rental income and additional rental income, if any, based on the aggregate volume of fuel sold at certain properties. The increase in rental income was primarily due to additional base rental income from properties acquired during the prior 12 months, as well as rent commencements from completed redevelopments and contractual rent increases for certain in-place leases, partially offset by dispositions of real estate during the same period.
Current wording
Rental income includes base rental income and additional rental income, if any, based on the aggregate volume of fuel sold at certain properties. The increase in rental income was primarily due to additional base rental income from new property acquisitions, as well as rent commencements from completed redevelopments and contractual rent increases for certain in-place leases, partially offset by dispositions of real estate.
Previous wording
In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include revenue recognition adjustments comprised of (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of above-market and below-market leases, (iii) recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties, and (iv) the amortization of deferred lease incentives.
Current wording
In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include revenue recognition adjustments comprised of (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of intangible market lease assets and liabilities, (iii) recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties, and (iv) the amortization of deferred lease incentives.
Previous wording
Tenant reimbursements consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of triple-net lease agreements.
Current wording
Tenant reimbursements consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of our triple-net lease agreements.
Previous wording
The increase in interest on notes and mortgages receivable was primarily due to an increase in development funding advances for the construction of new-to-industry properties, as well as higher development funding rates, during the prior 12 months, partially offset by collections of notes and mortgages receivable during the same period.
Current wording
The increase in interest on notes and mortgages receivable was primarily due to an increase in development funding advances for the construction of new-to-industry properties, as well as higher development funding rates, partially offset by collections of notes and mortgages receivable.
Previous wording
Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges for the three months ended March 31, 2024 and 2023 were attributable to the addition of asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values. Impairment charges for the three months ended March 31, 2024 also included reductions in the carrying value of certain properties based on third-party indications of potential selling prices.
Current wording
Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges for the three months ended June 30, 2024 were attributable to (i) the effect of adding asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values. Impairment charges for the three months ended June 30, 2023 were attributable to (i) the effect of adding asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values, and (ii) reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties
Previous wording
The difference in environmental expenses for the three months ended March 31, 2024 was primarily due to lower legal and professional fees and reduced accretion expense. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period, as compared to prior periods.
Current wording
The difference in environmental expenses for the three months ended June 30, 2024 was primarily due to lower legal and professional fees, changes in environmental estimates, and reduced accretion expense. Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period, as compared to prior periods.
Previous wording
The gain on dispositions of real estate were primarily due to the disposition of one property during the three months ended March 31, 2024 and three properties during the three months ended March 31, 2023.
Current wording
The gain on dispositions of real estate were primarily due to the partial condemnation of one property during the three months ended June 30, 2024 and the disposition of one property during the three months ended June 30, 2023.
Previous wording
The decrease in property operating expenses was primarily due to a decrease in reimbursable and non-reimbursable real estate taxes and lower rent expense. The decrease in leasing and redevelopment expenses was primarily due to a decrease in demolition costs for redevelopment projects.
Current wording
The decrease in property operating expenses was primarily due to a decrease in reimbursable and non-reimbursable real estate taxes. The decrease in leasing and redevelopment expenses was primarily due to a decrease in demolition costs partially offset by an increase in professional fees and redevelopment project cost write-offs.
Previous wording
The increase in general and administrative expenses was primarily due to increases in employee-related expenses, professional and legal fees, and information technology expenses, partially offset by a decrease in non-recurring retirement and severance costs.
Current wording
The increase in general and administrative expenses was primarily due to increases in employee-related expenses, certain professional fees, and information technology expenses, partially offset by a decrease in non-recurring retirement and severance costs and legal fees.
Previous wording
As of March 31, 2024, we had $250.0 million of availability under our Revolving Credit Facility, $75.0 million of undrawn funds available under our Term Loan, 1.0 million shares of common stock subject to forward sale agreements which are anticipated to generate approximately $32.2 million of gross proceeds upon settlement, and available cash and cash equivalents of $10.7 million.
Current wording
As of June 30, 2024, we had $282.5 million of availability under our Revolving Credit Facility, 1.2 million shares of common stock subject to forward sale agreements which are anticipated to generate approximately $35.9 million of gross proceeds upon settlement, and available cash and cash equivalents of $4.7 million.
Previous wording
Our cash flow activities for the three months ended March 31, 2024 and 2023, are summarized as follows (in thousands):
Current wording
Our cash flow activities for the six months ended June 30, 2024 and 2023, are summarized as follows (in thousands):
Previous wording
The change in net cash flow provided by operating activities for the three months ended March 31, 2024 and 2023 was primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above and the other changes in assets and liabilities on our consolidated statements of cash flows.
Current wording
The change in net cash flow provided by operating activities for the six months ended June 30, 2024 and 2023 was primarily the result of changes in revenues and expenses as discussed in “Results of Operations” above and the other changes in assets and liabilities on our consolidated statements of cash flows.
Previous wording
The decrease in net cash flow used in investing activities was primarily due to a $52.9 million increase in collections of notes and mortgages receivable, partially offset by a $37.2 million increase in property acquisitions.
Current wording
The decrease in net cash flow used in investing activities was primarily due to a $62.7 million increase in collections of notes and mortgages receivable and a $22.5 million decrease in issuance of notes and mortgages receivable, partially offset by a $77.6 million increase in property acquisitions, a $3.3 million decrease in deposits for property acquisitions and a $1.4 million decrease in proceeds from dispositions of real estate.
Previous wording
The decrease in net cash flow provided by financing activities was primarily due to an decrease in net proceeds from the issuance of common stock under the ATM Program of $83.0 million and a decrease in net proceeds from Senior Unsecured Notes of $50.0 million, partially offset by an increase of $110.0 million in net borrowings under the Revolving Credit Facility.
Current wording
The decrease in net cash flow provided by financing activities was primarily due to a decrease in net proceeds from the issuance of common stock under the ATM Program of $107.0 million and a decrease in net proceeds from Senior Unsecured Notes of $50.0 million, partially offset by an increase of $77.5 million in net borrowings under the Revolving Credit Facility and $75.0 million under the Term Loan and an $8.3 million increase in cash dividends paid.
Previous wording
The Term Loan is comprised of (i) an initial principal amount of $75.0 million that was funded in a single draw at closing and used to repay amounts outstanding under our Revolving Credit Facility, and (ii) an additional principal amount of $75.0 million that could be funded in a single draw at our option any time on or prior to April 14, 2024. Subsequent to the three months ended March 31, 2024, we drew the additional $75.0 million available to us under the Term Loan.
Current wording
The Term Loan is comprised of (i) an initial principal amount of $75.0 million that was funded in a single draw at closing and used to repay amounts outstanding under our Revolving Credit Facility, and (ii) an additional principal amount of $75.0 million that was funded in a single draw in April 2024.
Previous wording
The funded and outstanding Series B Notes, Series C Notes, Series D Notes, Series E Notes, Series F Note, Series G Notes, Series H Notes, Series I Notes, Series J Notes, Series K Notes, Series L Notes, Series M Notes and Series N Notes are collectively referred to the "Senior Unsecured Notes".
Current wording
The funded and outstanding Series C Notes, Series D Notes, Series E Notes, Series F Note, Series G Notes, Series H Notes, Series I Notes, Series J Notes, Series K Notes, Series L Notes, Series M Notes, Series N Notes, Series O Notes, Series P Notes and Series Q Notes are collectively referred to the "Senior Unsecured Notes".
Previous wording
During the three months ended March 31, 2024 and 2023, no shares of common stock were issued under the ATM Program, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.
Current wording
During the three and six months ended June 30, 2024 and 2023, no shares of common stock were issued under the ATM Program, respectively. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.
Previous wording
As of March 31, 2024, we had approximately 1.0 million shares of common stock subject to outstanding forward sale agreements under the ATM Program at an average gross offering price of $30.67 per share. We expect to settle the forward sale agreements in full within 12 months of the respective agreement dates via physical delivery of the outstanding shares of common stock in exchange for cash proceeds, although we may elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreements, subject to certain conditions.
Current wording
As of June 30, 2024, we had approximately 1.2 million shares of common stock subject to outstanding forward sale agreements under the ATM Program at an average gross offering price of $29.03 per share. We expect to settle the forward sale agreements in full within 12 months of the respective agreement dates via physical delivery of the outstanding shares of common stock in exchange for cash proceeds, although we may elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreements, subject to certain conditions.
Previous wording
Regular quarterly dividends paid to our stockholders for the three months ended March 31, 2024 were $24.8 million, or $0.45 per share. There can be no assurance that we will continue to pay dividends at historical rates, if at all.
Current wording
Regular quarterly dividends paid to our stockholders for the six months ended June 30, 2024 were $49.8 million, or $0.90 per share. There can be no assurance that we will continue to pay dividends at historical rates, if at all.
Previous wording
Our consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with GAAP. The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in our consolidated financial statements. Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included in our consolidated financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.
Current wording
Our consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with GAAP. The preparation of consolidated financial statements in accordance with GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported on our consolidated financial statements. Although we have made estimates, judgments and assumptions regarding future uncertainties relating to the information included on our consolidated financial statements, giving due consideration to the accounting policies selected and materiality, actual results could differ from these estimates, judgments and assumptions and such differences could be material.
Previous wording
Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. The information included in our consolidated financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined.
Current wording
Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, real estate, receivables, deferred rent receivable, direct financing leases, depreciation and amortization, impairment of long-lived assets, environmental remediation obligations, litigation, accrued liabilities, income taxes and the allocation of the purchase price of properties acquired to the assets acquired and liabilities assumed. The information included on our consolidated financial statements that is based on estimates, judgments and assumptions is subject to significant change and is adjusted as circumstances change and as the uncertainties become more clearly defined.
Previous wording
Based on the expiration of the Lookback Periods, together with other factors which have significantly mitigated our potential liability for preexisting environmental obligations, including the absence of any contractual obligations relating to properties which have been sold, quantifiable trends associated with types and ages of USTs at issue, expectations regarding future UST replacements, and historical trends and expectations regarding discovery of preexisting unknown environmental contamination and/or attempted pursuit of the Company therefore, we concluded that there is no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties. Accordingly, as of March 31, 2024, we had removed $23.9 million of unknown reserve liabilities which had previously been accrued for these properties.
Current wording
Based on the expiration of the Lookback Periods, together with other factors which have significantly mitigated our potential liability for preexisting environmental obligations, including the absence of any contractual obligations relating to properties which have been sold, quantifiable trends associated with types and ages of USTs at issue, expectations regarding future UST replacements, and historical trends and expectations regarding discovery of preexisting unknown environmental contamination and/or attempted pursuit of the Company therefore, we concluded that there is no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties. Accordingly, as of June 30, 2024, we had removed $24.2 million of unknown reserve liabilities which had previously been accrued for these properties.
Previous wording
We continue to anticipate that our tenants under leases where the Lookback Periods have expired will replace USTs in the years ahead as these USTs near the end of their expected useful lives. At many of these properties the USTs in use are fabricated with older generation materials and technologies and we believe it is prudent to expect that upon their removal preexisting unknown environmental contamination will be identified. Although contractually these tenants are now responsible for preexisting unknown environmental contamination that is discovered during UST replacements, because the applicable Lookback Periods have expired before the end of the initial term of these leases, together with other relevant factors, we believe there remains continued risk that we will be responsible for remediation of preexisting environmental contamination associated with future UST removals at certain properties. Accordingly, we believe it is appropriate at this time to maintain $11.3 million of unknown reserve liabilities for certain properties with respect to which the Lookback Periods have expired as of March 31, 2024.
Current wording
We continue to anticipate that our tenants under leases where the Lookback Periods have expired will replace USTs in the years ahead as these USTs near the end of their expected useful lives. At many of these properties the USTs in use are fabricated with older generation materials and technologies and we believe it is prudent to expect that upon their removal preexisting unknown environmental contamination will be identified. Although contractually these tenants are now responsible for preexisting unknown environmental contamination that is discovered during UST replacements, because the applicable Lookback Periods have expired before the end of the initial term of these leases, together with other relevant factors, we believe there remains continued risk that we will be responsible for remediation of preexisting environmental contamination associated with future UST removals at certain properties. Accordingly, we believe it is appropriate at this time to maintain $11.0 million of unknown reserve liabilities for certain properties with respect to which the Lookback Periods have expired as of June 30, 2024.
Previous wording
We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation, and then discount them to present value. We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of March 31, 2024, we had accrued a total of $21.7 million for our prospective environmental remediation obligations. This accrual consisted of (i) $9.6 million of known reserve liabilities which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (ii) $12.1 million of unknown reserve liabilities, which was our estimate of future environmental liabilities related to preexisting unknown contamination. As of December 31, 2023, we had accrued a total of $22.4 million for our prospective environmental remediation obligations. This accrual consisted of (i) $9.9 million of known reserve liabilities and (ii) $12.5 million of unknown reserve liabilities, which was our estimate of future environmental liabilities related to preexisting unknown contamination.
Current wording
We measure our environmental remediation liabilities at fair value based on expected future net cash flows, adjusted for inflation, and then discount them to present value. We adjust our environmental remediation liabilities quarterly to reflect changes in projected expenditures, changes in present value due to the passage of time and reductions in estimated liabilities as a result of actual expenditures incurred during each quarter. As of June 30, 2024, we had accrued a total of $21.0 million for our prospective environmental remediation obligations. This accrual consisted of (i) $9.2 million of known reserve liabilities which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (ii) $11.8 million of unknown reserve liabilities, which was our estimate of future environmental liabilities related to preexisting unknown contamination. As of December 31, 2023, we had accrued a total of $22.4 million for our prospective environmental remediation obligations. This accrual consisted of (i) $9.9 million of known reserve liabilities and (ii) $12.5 million of unknown reserve liabilities, which was our estimate of future environmental liabilities related to preexisting unknown contamination.
Previous wording
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.1 million and $0.2 million of net accretion expense was recorded for the three months ended March 31, 2024 and 2023, respectively, which is included in environmental expenses. In addition, during the three months ended March 31, 2024 and 2023, we recorded an increase to environmental expenses aggregating $0.3 million and $0.1 million, respectively, where increases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.
Current wording
Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.2 million and $0.3 million of net accretion expense was recorded for the six months ended June 30, 2024 and 2023, respectively, which is included in environmental expenses. In addition, during the six months ended June 30, 2024 and 2023, we recorded credits to environmental expenses aggregating $0.8 million and $0.1 million, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Environmental expenses also include project management fees, legal fees and environmental litigation accruals.
Previous wording
During the three months ended March 31, 2024 and 2023, we increased the carrying values of certain of our properties by $0.6 million and $0.7 million, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on our consolidated statements of cash flows.
Current wording
During the six months ended June 30, 2024 and 2023, we increased the carrying values of certain of our properties by $1.1 million and $1.7 million, respectively, due to changes in estimated environmental remediation costs. The recognition and subsequent changes in estimates in environmental liabilities and the increase or decrease in carrying values of the properties are non-cash transactions which do not appear on our consolidated statements of cash flows.
Previous wording
Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is related to environmental remediation obligations or such shorter period if circumstances warrant, such as the remaining lease term for properties we lease from others. Depreciation and amortization expense related to capitalized asset retirement costs in our consolidated statements of operations was $0.7 million and $0.8 million for the three months ended March 31, 2024 and 2023. Capitalized asset retirement costs were $34.2 million (consisting of $26.0 million of known environmental obligations and $8.2 million of reserves for future environmental obligations related to preexisting unknown contamination) as of March 31, 2024, and $34.3 million (consisting of $25.8 million of known environmental obligations and $8.5 million of reserves for future environmental obligations related to preexisting unknown contamination) as of December 31, 2023. We recorded impairment charges aggregating $0.4 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively, for capitalized asset retirement costs.
Current wording
Capitalized asset retirement costs are being depreciated over the estimated remaining life of the UST, a 10-year period if the increase in carrying value is related to environmental remediation obligations or such shorter period if circumstances warrant, such as the remaining lease term for properties we lease from others. Depreciation and amortization expense related to capitalized asset retirement costs on our consolidated statements of operations was $1.3 million and $1.5 million for the six months ended June 30, 2024 and 2023. Capitalized asset retirement costs were $34.1 million (consisting of $26.0 million of known environmental obligations and $8.1 million of reserves for future environmental obligations related to preexisting unknown contamination) as of June 30, 2024, and $34.3 million (consisting of $25.8 million of known environmental obligations and $8.5 million of reserves for future environmental obligations related to preexisting unknown contamination) as of December 31, 2023. We recorded impairment charges aggregating $0.9 million and $1.3 million for the six months ended June 30, 2024 and 2023, respectively, for capitalized asset retirement costs.
Previous wording
In light of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges in excess of the amount accrued with any certainty; however, we believe that it is possible that the fair value of future actual net expenditures could be substantially higher than amounts currently recorded by us. Adjustments to accrued liabilities for environmental remediation obligations will be reflected in our consolidated financial statements as they become probable and a reasonable estimate of fair value can be made.
Current wording
In light of the uncertainties associated with environmental expenditure contingencies, we are unable to estimate ranges in excess of the amount accrued with any certainty; however, we believe that it is possible that the fair value of future actual net expenditures could be substantially higher than amounts currently recorded by us. Adjustments to accrued liabilities for environmental remediation obligations will be reflected on our consolidated financial statements as they become probable and a reasonable estimate of fair value can be made.
Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
The increase in general and administrative expenses was primarily due to increases in employee-related expenses and certain professional fees, offset by lower legal fees.
Current report — wording carried from elsewhere
The following table presents select data and comparative results from our consolidated statements of operations for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):
Current report — wording carried from elsewhere
The following table presents the results for revenues from rental properties for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):
Current report — wording carried from elsewhere
Rental income includes base rental income and additional rental income, if any, based on the aggregate volume of fuel sold at certain properties. The increase in rental income was primarily due to additional base rental income from new property acquisitions, as well as rent commencements from completed redevelopments and contractual rent increases for certain in-place leases, partially offset by dispositions of real estate.
Current report — wording carried from elsewhere
In accordance with GAAP, we recognize revenues from rental properties in amounts which vary from the amount of rent contractually due during the periods presented. As a result, revenues from rental properties include revenue recognition adjustments comprised of (i) non-cash adjustments recorded for deferred rental revenue due to the recognition of rental income on a straight-line basis over the current lease term, (ii) the net amortization of intangible market lease assets and liabilities, (iii) recognition of rental income under direct financing leases using the effective interest rate method which produces a constant periodic rate of return on the net investments in the leased properties, and (iv) the amortization of deferred lease incentives.
Current report — wording carried from elsewhere
Tenant reimbursements consist of real estate taxes and other municipal charges paid by us which are reimbursable by our tenants pursuant to the terms of our triple-net lease agreements.
Current report — wording carried from elsewhere
Interest on Notes and Mortgages Receivable
Current report — wording carried from elsewhere
The increase in interest on notes and mortgages receivable was primarily due to an increase in development funding advances for the construction of new-to-industry properties, as well as higher development funding rates, partially offset by collections of notes and mortgages receivable.
Current report — wording carried from elsewhere
The following table presents the results for property costs for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 (in thousands):
Current report — wording carried from elsewhere
Property costs are comprised of (i) property operating expenses, including rent expense, reimbursable and non-reimbursable real estate taxes and municipal charges, certain state and local taxes, and maintenance expenses, and (ii) leasing and redevelopment expenses, including professional fees, demolition costs, and redevelopment project cost write-offs, if any.
Current report — wording carried from elsewhere
Impairment charges are recorded when the carrying value of a property is reduced to fair value. Impairment charges for the six months ended June 30, 2024 were attributable to (i) the effect of adding asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values, and (ii) reductions in estimated sales prices from third-party offers based on signed contracts, letters of intent or indicative bids for certain of our properties. Impairment charges for the six months ended June 30, 2023 were attributable to (i) the effect of adding asset retirement costs to certain properties due to changes in estimates associated with our environmental liabilities, which increased the carrying values of these properties in excess of their fair values, and (ii) reductions in estimated undiscounted cash flows expected to be received during the assumed holding period for certain of our properties
Current report — wording carried from elsewhere
Environmental expenses vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported environmental expenses for one period, as compared to prior periods.
Current report — wording carried from elsewhere
The increase in depreciation and amortization expenses was primarily due to additional depreciation and amortization from properties acquired during the prior 12 months, partially offset by a decrease in depreciation charges related to asset retirement costs, the effect of certain assets becoming fully depreciated, lease terminations, and dispositions of real estate during the same period.
Current report — wording carried from elsewhere
Gain on Dispositions of Real Estate
Current report — wording carried from elsewhere
The increase in interest expense was due to higher average borrowings and higher average interest rates during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.
Current report — wording carried from elsewhere
During the three and six months ended June 30, 2024, we entered into forward sale agreements to sell an aggregate of 0.4 million shares of common stock at an average gross offering price of $27.98 per share under the ATM Program. We expect to settle the forward sale agreements in full within 12 months of the respective agreement dates via physical delivery of the outstanding shares of common stock in exchange for cash proceeds, although we may elect cash settlement or net share settlement for all or a portion of our obligations under the forward sale agreements, subject to certain conditions.