GETTY REALTY CORP /MD/

Previous wording

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the sections entitled “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024; “Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2025; “Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the period ended June 30, 2025; and “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q for the period ended September 30, 2025.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand our operations and our present business environment from the perspective of management. The following discussion and analysis should be read in conjunction with the sections entitled “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025; and “Cautionary Note Regarding Forward-Looking Statements” and “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q for the period ended March 31, 2026.

Previous wording

These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and are subject to known and unknown risks, uncertainties and other factors including, but not limited to, the risks described in “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, “Part I, “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II, Item 1A. Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2025 and June 30, 2025, and this Quarterly Report on Form 10-Q for the period ended September 30, 2025 as such risk factors may be updated from time to time in our public filings. Such risks and uncertainties were derived based on numerous important assumptions, which may not be realized, and may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Most of these factors are difficult to predict accurately and are generally beyond our control. New risk factors and uncertainties may also emerge from time to time, and there can be no assurance that we have identified all risks and uncertainties that may affect it.

Current wording

These forward-looking statements are based on our current beliefs and assumptions and information currently available to us, and are subject to known and unknown risks, uncertainties and other factors including, but not limited to, the risks described in “Part I, Item 1A. Risk Factors” and “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and this Quarterly Report on Form 10-Q for the period ended March 31, 2026 as such risk factors may be updated from time to time in our public filings. Such risks and uncertainties were derived based on numerous important assumptions, which may not be realized, and may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Most of these factors are difficult to predict accurately and are generally beyond our control. New risk factors and uncertainties may also emerge from time to time, and there can be no assurance that we have identified all risks and uncertainties that may affect it.

Previous wording

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, our growth or reinvestment strategies, our ability to pay dividends or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and those that are described from time to time in our other filings with the SEC.

Current wording

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, our growth or reinvestment strategies, our ability to pay dividends or stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in our Annual Report on Form 10-K, this Quarterly Report on Form 10-Q and those that are described from time to time in our other filings with the SEC.

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 September 30, 2025, our portfolio included 1,160 properties, including 1,130 properties owned by us and 30 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 includes convenience stores, express tunnel car washes, automotive service centers (gasoline and repair, oil and maintenance, tire and battery, and collision), drive-thru quick service restaurants, and certain other freestanding retail properties. As of March 31, 2026, our portfolio included 1,191 properties, including 1,165 properties owned by us and 26 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

Our 1,160 properties are located in 44 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 retail uses, 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 1,191 properties are located in 45 states and Washington D.C., and our typical property is located in a larger metropolitan area and is used as a convenience store, express tunnel car wash, automotive service center, drive thru quick service restaurant, or certain other freestanding retail uses. Many of our properties are located at highly trafficked urban intersections or conveniently close to highway entrances or exit ramps.

Previous wording

As of September 30, 2025, we leased 1,156 of our properties to tenants under triple-net leases, including 948 properties leased under 61 separate unitary or master triple-net leases, and 208 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 September 30, 2025, our weighted average remaining lease term, excluding renewal options, was 9.9 years.

Current wording

As of March 31, 2026, we leased 1,186 of our properties to tenants under triple-net leases, including 970 properties leased under 64 separate unitary or master triple-net leases, and 216 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, 2026, our weighted average remaining lease term, excluding renewal options, was 10.1 years.

Previous wording

As of September 30, 2025, we also had two vacant properties and two properties under redevelopment.

Current wording

As of March 31, 2026, we also had three properties vacant and two properties under redevelopment.

Previous wording

During the nine months ended September 30, 2025, we invested $135.7 million (net of amounts funded in prior periods) across 61 properties, including the acquisition of 27 drive-thru quick service restaurants, nine auto service centers, seven express tunnel car washes and 10 convenience stores.

Current wording

During the three months ended March 31, 2026, we invested $31.5 million across 29 properties, including the acquisition of 16 auto service centers and six drive-thru quick service restaurants.

Previous wording

During the nine months ended September 30, 2024, we invested $132.5 million (net of amounts funded in prior periods) across 60 properties, including the acquisition of 29 express tunnel car washes, 17 auto service centers, three drive thru quick service restaurants, and three convenience stores.

Current wording

During the three months ended March 31, 2025, we invested $11.1 million across six properties, including the acquisition of three drive-thru quick service restaurants, one express tunnel car wash, and one auto service center.

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 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.

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, losses on termination of swaps, and other items that do not impact our recurring cash flow and which are not indicative of our core operating performance.

Previous wording

The decrease in interest on notes and mortgages receivable was primarily due to a decrease in average notes and mortgages receivables outstanding as collections of notes and mortgages receivable for completed development funding projects offset incremental development funding advances for the construction of new-to-industry properties.

Current wording

The decrease in interest on notes and mortgages receivable was due primarily to a decrease in the average notes and mortgages receivables outstanding during the three months ended March 31, 2026 as compared to the prior year period.

Previous wording

The decrease in property operating expenses was primarily due to a decrease in reimbursable real estate taxes as we transitioned certain tenants to paying real estate taxes due directly to the applicable taxing authorities, as well as lower rent expense. The decrease in leasing and redevelopment expenses was primarily due to a decrease in professional fees related to leasing activities for potential redevelopment projects.

Current wording

The decrease in property operating expenses was primarily due to lower rent expense. The increase in leasing and redevelopment expenses was primarily due to an increase in professional fees related to leasing activities.

Previous wording

Impairments are recorded when the carrying value of a property is reduced to fair value. Impairment charges for the three months ended September 30, 2025 and 2024 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 nine months ended September 30, 2025 also included reductions in the carrying value of certain properties based on third-party indications of potential selling prices.

Current wording

Impairments are recorded when the carrying value of a property is reduced to fair value. Impairment charges for the three months ended March 31, 2026 and 2025 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, 2026 also included reductions in the carrying value of certain properties based on third-party indications of potential selling prices.

Previous wording

The change in environmental expenses during the three months ended September 30, 2025, was primarily due to removal of $4.1 million of unknown reserve liabilities which had previously been accrued for certain properties, offset by an increase in environmental litigation accruals of $0.6 million. 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 change in environmental expenses was primarily due to the removal of the remaining $7.7 million of unknown reserve liabilities which had previously been accrued for certain properties. 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 increase in general and administrative expenses was primarily due to increases in employee-related expenses, professional fees, and certain deal pursuit costs, 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 net non-recurring costs of $2.1 million related to the retirement of our former Chief Operating Officer, partially offset by decreases in professional fees and certain transaction related costs.

Previous wording

The gains on dispositions of real estate were primarily due to the disposition of one property during the three months ended September 30, 2025. During the three months ended September 30, 2024, we recorded a loss on dispositions of real estate related to the 23 properties sold to our tenant Global Partners L.P. as part of a unitary lease amendment.

Current wording

Gains on Dispositions of Real Estate

Previous wording

We expect to meet our short-term liquidity requirements through cash flow from operations, funds available under our Credit Facility, proceeds from Senior Unsecured Notes, proceeds from the settlement of shares of common stock subject to forward sales agreements under our Equity Offering and ATM Program, and available cash and cash equivalents.

Current wording

We expect to meet our short-term liquidity requirements through cash flow from operations, funds available under our Credit Facility, proceeds from the settlement of shares of common stock subject to forward sales agreements under our Equity Offering and ATM Program, and available cash and cash equivalents.

Previous wording

As of September 30, 2025, we had $260.0 million of availability under our Credit Facility, 3.7 million shares of common stock subject to forward sales agreements which are anticipated to generate approximately $113.1 million of gross proceeds upon settlement, and available cash and cash equivalents of $5.2 million.

Current wording

As of March 31, 2026, we had $450.0 million of availability under our Credit Facility, 5.5 million shares of common stock subject to forward sales agreements which are anticipated to generate approximately $171.5 million of gross proceeds upon settlement, and available cash and cash equivalents of $3.7 million.

Previous wording

Our cash flow activities for the nine months ended September 30, 2025 and 2024, are summarized as follows (in thousands):

Current wording

Our cash flow activities for the three months ended March 31, 2026 and 2025, are summarized as follows (in thousands):

Previous wording

The change in net cash flow provided by operating activities for the nine months ended September 30, 2025 and 2024 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 three months ended March 31, 2026 and 2025 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 $64.5 million decrease in property acquisitions, a $13.9 million decrease in issuance of notes and mortgages receivable and a $3.8 million increase in deposits for property acquisitions, partially offset by a $77.7 million decrease in collections of notes and mortgages receivable.

Current wording

The increase in net cash flow used in investing activities was primarily due to an $18.5 million increase in property acquisitions and a $2.0 million increase in issuance of notes and mortgages receivable, partially offset by a $3.4 million increase in proceeds from dispositions of real estate and a $1.3 million increase in collections of notes and mortgages receivable.

Previous wording

The decrease in net cash flow provided by financing activities was primarily due to the net repayment under the Credit Facility and Term Loan of $120.0 million, the repayment of $50.0 million Series C Notes, a decrease in net proceeds from the issuance of common stock under the ATM program of $20.2 million, an increase in cash dividends paid of $5.9 million, and an increase in payments of debt issuance costs of $4.4 million, partially offset by the issuance of $125.0 million of new Senior Unsecured Notes, and an increase in net proceeds from the issuance of common stock under the equity offering of $65.4 million.

Current wording

The decrease in net cash flow used in financing activities was primarily due to an $8.9 million increase in net proceeds from the issuance of common stock under the ATM Program and a $2.8 million decrease in payment of debt issuance costs, partially offset by an increase of $3.3 million in payments of cash dividends.

Previous wording

In November 2024, we entered into a seventh amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America and certain of its affiliates (collectively, “Prudential”) (the "Seventh Amended and Restated Prudential Agreement") pursuant to which, in February 2025, we issued $50.0 million of 5.70% Series T Guaranteed Senior Notes due February 22, 2032 (the “Series T Notes”) to Prudential and used the proceeds to repay the $50.0 million of 4.75% Series C Guaranteed Senior Notes due February 25, 2025 (the “Series C Notes”) outstanding under our sixth amended and restated note purchase and guarantee agreement with Prudential (the "Sixth Amended and Restated Prudential Agreement"). The other senior unsecured notes outstanding as of September 30, 2025 under the Sixth Amended and Restated Prudential Agreement, including (i) $50.0 million of 5.47% Series D Guaranteed Senior Notes due June 21, 2028 (the “Series D Notes”), (ii) $50.0 million of 3.52% Series F Guaranteed Senior Notes due September 12, 2029 (the “Series F Notes”), (iii) $100.0 million of 3.43% Series I Guaranteed Senior Notes due November 25, 2030 (the “Series I Notes”) and (iv) $80.0 million of 3.65% Series Q Guaranteed Senior Notes due January 20, 2033 (the “Series Q Notes”), remain outstanding under the Seventh Amended and Restated Prudential Agreement.

Current wording

In November 2024, we entered into a seventh amended and restated note purchase and guarantee agreement with The Prudential Insurance Company of America and certain of its affiliates (collectively, “Prudential”) (the "Seventh Amended and Restated Prudential Agreement") pursuant to which, in February 2025, we issued $50.0 million of 5.70% Series T Guaranteed Senior Notes due February 22, 2032 (the “Series T Notes”) to Prudential and used the proceeds to repay the $50.0 million of 4.75% Series C Guaranteed Senior Notes due February 25, 2025 (the “Series C Notes”) outstanding under our sixth amended and restated note purchase and guarantee agreement with Prudential (the "Sixth Amended and Restated Prudential Agreement"). The other senior unsecured notes outstanding as of March 31, 2026 under the Sixth Amended and Restated Prudential Agreement, including (i) $50.0 million of 5.47% Series D Guaranteed Senior Notes due June 21, 2028 (the “Series D Notes”), (ii) $50.0 million of 3.52% Series F Guaranteed Senior Notes due September 12, 2029 (the “Series F Notes”), (iii) $100.0 million of 3.43% Series I Guaranteed Senior Notes due November 25, 2030 (the “Series I Notes”) and (iv) $80.0 million of 3.765% Series Q Guaranteed Senior Notes due January 20, 2033 (the “Series Q Notes”), remain outstanding under the Seventh Amended and Restated Prudential Agreement.

Previous wording

The funded and outstanding 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, Series Q Notes, Series R Notes, Series S Notes and Series T Notes are collectively referred to as the "Senior Unsecured Notes".

Current wording

The funded and outstanding 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, Series Q Notes, Series R Notes, Series S Notes, Series T Notes, and Series U Notes are collectively referred to as the “Senior Unsecured Notes”.

Previous wording

The amounts outstanding under our Credit Facility, Term Loan, and Senior Unsecured Notes, exclusive of extension options, are as follows ($ in thousands):

Current wording

The amounts outstanding under our Credit Facility and Senior Unsecured Notes, exclusive of extension options, are as follows ($ in thousands):

Previous wording

Unamortized debt issuance costs related to the Credit Facility were $3.8 million and $0.6 million as of September 30, 2025 and December 31, 2024, respectively, and are included in prepaid expenses and other assets on our consolidated balance sheets.

Current wording

Unamortized debt issuance costs related to the Credit Facility were $3.2 million and $3.5 million as of March 31, 2026 and December 31, 2025, respectively, and are included in prepaid expenses and other assets on our consolidated balance sheets.

Previous wording

In July 2024, we completed a follow-on public offering of 4.0 million shares of common stock in connection with forward sales agreements. During the nine months ended September 30, 2025, we settled 2.3 million shares and realized net proceeds of $65.3 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement. We expect to settle the remaining forward sales agreements via physical delivery of the outstanding shares of common stock in exchange for gross cash proceeds of approximately $51.9 million.

Current wording

In February 2026, we completed a follow-on public offering of 4.0 million shares of common stock in connection with forward sales agreements. We expect to settle the forward sales agreements, typically within 12 months, via physical delivery of the outstanding shares of common stock in exchange for gross cash proceeds of approximately $129.9 million. As of March 31, 2026, no shares were settled.

Previous wording

The use of forward sales agreements allow us to lock in a share price on the sale of shares at the time the forward sales agreements become effective, but defer receiving the proceeds from the sale of shares until a later date. To account for the forward sales agreements, we considered the accounting guidance governing financial instruments and derivatives. To date, we have concluded that our forward sales agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares.

Current wording

The use of forward sales agreements allow us to establish a share price for the sale of shares of common stock at the time the forward sales agreements become effective, but defer receiving the proceeds from the sale of shares of common stock until a later date. To account for the forward sales agreements, we considered the accounting guidance governing financial instruments and derivatives. To date, we have concluded that our forward sales agreements are not liabilities as they do not embody obligations to repurchase our shares nor do they embody obligations to issue a variable number of shares for which the monetary value are predominantly fixed, varying with something other than the fair value of the shares, or varying inversely in relation to our shares.

Previous wording

During the nine months ended September 30, 2025 and September 30, 2024, no shares of common stock were issued under the ATM Program. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

Current wording

During the three months ended March 31, 2026 and March 31, 2025, no shares of common stock were issued under the ATM Program. Future sales, if any, will depend on a variety of factors to be determined by us from time to time, including among others, market conditions, the trading price of our common stock, determinations by us of the appropriate sources of funding for us and potential uses of funding available to us.

Previous wording

The following table summarizes activity under our ATM Program in connection with forward sales agreements for the nine months ended September 30, 2025 and 2024 ($ in thousands):

Current wording

The following table summarizes activity under our ATM Program in connection with forwards sales agreements as of March 31, 2026 and 2025, respectively ($ in thousands):

Previous wording

Regular quarterly dividends paid to our stockholders for the nine months ended September 30, 2025 were $80.8 million, or $1.41 per share. There can be no assurance that we will continue to pay dividends at historical rates.

Current wording

Regular quarterly dividends paid to our stockholders for the three months ended March 31, 2026 were $29.8 million, or $0.485 per share. There can be no assurance that we will continue to pay dividends at historical rates.

Previous wording

We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. Under applicable law, we are contingently liable for these environmental obligations in the event that our tenant does not satisfy them, and we are required to accrue for environmental liabilities that we believe are allocable to others under our leases if we determine that it is probable that our tenant will not meet its environmental obligations. Our assumptions regarding the ultimate allocation method and share of responsibility that we use to allocate environmental liabilities may change, which has resulted, and may in the future result, in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the past will continue to do so. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant fails to pay them.

Current wording

We enter into leases and various other agreements which contractually allocate responsibility between the parties for known and unknown environmental liabilities at or relating to the subject properties. Under applicable law, we are contingently liable for these environmental obligations in the event that our tenant does not satisfy them, and we are required to accrue for environmental liabilities that we believe are allocable to others under our leases if we determine that it is probable that our tenant will not meet its environmental obligations. It is possible that our assumptions regarding the ultimate allocation method and share of responsibility that we used to allocate environmental liabilities may change, which may result in material adjustments to the amounts recorded for environmental litigation accruals and environmental remediation liabilities. We assess whether to accrue for environmental liabilities based upon relevant factors including our tenants’ histories of paying for such obligations, our assessment of their financial capability, and their intent to pay for such obligations. However, there can be no assurance that our assessments are correct or that our tenants who have paid their obligations in the past will continue to do so. We may ultimately be responsible to pay for environmental liabilities as the property owner if our tenant fails to pay them.

Previous wording

For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which is mainly the responsibility of our tenant but in certain cases partially paid for by us) and remediation of any environmental contamination that arises during the term of their tenancy. Our tenants are also responsible for their 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

For substantially all of our triple-net leases, our tenants are contractually responsible for compliance with environmental laws and regulations, removal of USTs at the end of their lease term (the cost of which is mainly the responsibility of our tenant, but in certain cases partially paid for by us) and remediation of any environmental contamination that arises during the term of their tenancy. 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 when appropriate.

Previous wording

For the subset of our triple-net leases which cover properties previously leased to Marketing (substantially all of which commenced in 2012), the allocation of responsibility differs from our other triple-net leases as it relates to preexisting known and unknown contamination. Under the terms of our leases covering properties previously leased to Marketing, we agreed to be responsible for environmental contamination that was known at the time the lease commenced, and for unknown environmental contamination which existed prior to commencement of the lease and which is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases) (a “Lookback Period”). After expiration of the applicable Lookback Period, responsibility for all newly discovered contamination at these properties, even if it relates to periods prior to commencement of the lease or sale, is the contractual responsibility of our tenant or buyer as the case may be.

Current wording

For the subset of our triple-net leases which cover properties previously leased to Marketing (substantially all of which commenced in 2012), the allocation of responsibility differs from our other triple-net leases as it relates to preexisting known and unknown contamination. Under the terms of our leases covering properties previously leased to Marketing, we agreed to be responsible for environmental contamination that was known at the time the lease commenced, and for unknown environmental contamination which existed prior to commencement of the lease and which is discovered (other than as a result of a voluntary site investigation) during the first 10 years of the lease term (or a shorter period for a minority of such leases) (a “Lookback Period”). A similar lookback period allocation also applies to certain properties previously leased to Marketing which we have sold. After expiration of the applicable Lookback Period, responsibility for all newly discovered contamination at these properties, even if it relates to periods prior to commencement of the lease or sale, is the contractual responsibility of our tenant or buyer as the case may be.

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 us therefor, 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, during the three months ended September 30, 2025, we removed $4.1 million and, as of September 30, 2025, we had removed $28.3 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 on the part of the Company 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 us, we have concluded that there is no material continued risk of having to satisfy contractual obligations relating to preexisting unknown environmental contamination at certain properties. Accordingly, during the three months ended March 31, 2026, we removed the remaining $7.7 million of unknown reserve liabilities and, as of March 31, 2026, we had removed $36.0 million of unknown reserve liabilities which had previously been accrued for these properties. As of March 31, 2026, no unknown environmental reserve liabilities remain on our consolidated balance sheet.

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 September 30, 2025, we had accrued a total of $16.5 million for our prospective environmental remediation obligations. This accrual consisted of (i) $8.8 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) $7.7 million of unknown reserve liabilities, which was our estimate of future environmental liabilities related to preexisting unknown contamination. As of December 31, 2024, we had accrued a total of $20.9 million for our prospective environmental remediation obligations. This accrual consisted of (i) $9.1 million of known reserve liabilities and (ii) $11.8 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 March 31, 2026, we had accrued a total of $8.5 million for our prospective environmental remediation obligations, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries As of December 31, 2025, we had accrued a total of $15.9 million for our prospective environmental remediation obligations. This accrual consisted of (a) $8.2 million, which was our estimate of reasonably estimable environmental remediation liability, including obligations to remove USTs for which we are responsible, net of estimated recoveries and (b) $7.7 million for 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, $0.2 million and $0.3 million of net accretion expense was recorded for the nine months ended September 30, 2025 and 2024, respectively, and included in environmental expenses. In addition, during the nine months ended September 30, 2025 and 2024, we recorded credits to environmental expenses aggregating $4.4 million and $0.8 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.

Current wording

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.1 million of net accretion expense was recorded for each of the three months ended March 31, 2026 and 2025 and included in environmental expenses. In addition, during the three months ended March 31, 2026 and 2025, we recorded credits to environmental expenses aggregating $7.8 million and $0.2 million, respectively, where decreases in estimated remediation costs exceeded the depreciated carrying value of previously capitalized asset retirement costs. Changes in environmental estimates aggregating $35 thousand for each of the three months ended March 31, 2026 and 2025, were related to properties that were previously disposed of by us. Environmental expenses also include project management fees, legal fees, and environmental litigation accruals.

Previous wording

During the nine months ended September 30, 2025 and 2024, we increased the carrying values of certain of our properties by $2.0 million and $1.9 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 each of the three months ended March 31, 2026 and 2025, we increased the carrying values of certain of our properties by $0.6 million 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 on our consolidated statements of operations was $1.4 million and $2.0 million for the nine months ended September 30, 2025 and 2024, respectively. Capitalized asset retirement costs were $29.5 million (consisting of $24.1 million of known environmental obligations and $5.4 million of reserves for future environmental obligations related to preexisting unknown contamination) as of September 30, 2025, and $33.2 million (consisting of $25.0 million of known environmental obligations and $8.2 million of reserves for future environmental obligations related to preexisting unknown contamination) as of December 31, 2024. We recorded impairment charges aggregating $1.6 million for each of the nine months ended September 30, 2025 and 2024, 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 for the three months ended March 31, 2026 and 2025, were $0.4 million and $0.5 million, respectively. Capitalized asset retirement costs were $24.1 million for known environmental liabilities as of March 31, 2026, and $29.3 million, including $23.9 million of known environmental liabilities and $5.4 million of reserves for future environmental liabilities) as of December 31, 2025. We recorded impairment charges aggregating $0.4 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively, for capitalized asset retirement costs.

Previous wording

In July 2012, we purchased a 10-year pollution legal liability insurance policy covering substantially all of our properties at that time for discovery of preexisting unknown environmental liabilities and for new environmental events. The policy had a $50.0 million aggregate limit and was subject to various self-insured retentions and other conditions and limitations. This policy expired in July 2022, although claims made prior to such expiration remain subject to coverage. In September 2022, we purchased a 5-year pollution legal liability insurance policy to cover a subset of our properties which we believe present the greatest risk for discovery of preexisting unknown environmental liabilities and for new environmental events. The policy has a $25.0 million in aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our intention in purchasing this policy was to obtain protection for certain properties which we believe have the greatest risk of significant environmental events.

Current wording

In September 2022, we purchased a 5-year pollution legal liability insurance policy to cover a subset of our properties which we believe present the greatest risk for discovery of preexisting unknown environmental liabilities and for new environmental events. The policy has a $25.0 million aggregate limit and is subject to various self-insured retentions and other conditions and limitations. Our intention in purchasing this policy was to obtain protection for certain properties which we believe have the greatest risk of significant environmental events.