GETTY REALTY CORP /MD/

Previous 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.

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; “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, 2026; and “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q for the period ended June 30, 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 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.

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, “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, 2026, and this Quarterly Report on Form 10-Q for the period ended June 30, 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, this Quarterly Report 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, our Quarterly Reports 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 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.

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 June 30, 2026, our portfolio included 1,224 properties, including 1,198 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 1,191 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.

Current wording

Our 1,224 properties are located in 46 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 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.

Current wording

As of June 30, 2026, we leased 1,220 of our properties to tenants under triple-net leases, including 984 properties leased under 66 separate unitary or master triple-net leases, and 236 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, 2026, our weighted average remaining lease term, excluding renewal options, was 10.3 years.

Previous wording

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

Current wording

As of June 30, 2026, we also had three vacant properties and one property under redevelopment.

Previous 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.

Current wording

During the six months ended June 30, 2026, we invested $162.6 million across 67 properties, including the acquisition of 30 auto service centers, 20 drive-thru quick service restaurants, six express tunnel car washes and one convenience store.

Previous 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.

Current wording

During the six months ended June 30, 2025, we invested $78.4 million across 33 properties, including the acquisition of 12 drive-thru quick service restaurants, seven auto service centers, five convenience stores and five express tunnel car washes.

Previous wording

We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as modern convenience stores or other single tenant convenience and automotive retail uses, such as automotive parts retailers, quick service restaurants, auto service centers, and bank branches. We believe that the redeveloped properties can be leased or sold at higher values than their prior use. Since the inception of our redevelopment program in 2015, we have completed 34 redevelopment and revenue-enhancing capital expenditure projects.

Current wording

We believe that certain of our properties, primarily those currently being used as gas and repair businesses, are well-suited to be redeveloped as modern convenience stores or other single tenant convenience and automotive retail uses, such as automotive parts retailers, quick service restaurants, auto service centers, and bank branches. We believe that the redeveloped properties can be leased or sold at higher values than their prior use. Since the inception of our redevelopment program in 2015, we have completed 35 redevelopment and revenue-enhancing capital expenditure projects.

Previous wording

As of March 31, 2026, 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, 2026, we had one property under active redevelopment and 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 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.

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 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.

Current wording

The decrease in interest on notes and mortgages receivable was primarily due to a decrease in average notes and mortgages receivables outstanding during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

Previous 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.

Current wording

Impairments are recorded when the carrying value of a property is reduced to fair value. Impairment charges for both the three months ended June 30, 2026 and 2025 were attributable to (i) 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, and (ii) reductions in the carrying value of certain properties based on third-party indications of potential selling prices.

Previous wording

The gains on dispositions of real estate were primarily due to the disposition of two properties during each of the three months ended March 31, 2026 and 2025.

Current wording

The gains on dispositions of real estate were primarily due to the disposition of four properties during the three months ended June 30, 2026 and the disposition of three properties during the three months ended June 30, 2025.

Previous 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.

Current 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 directly to the applicable taxing authorities, as well as lower rent expense. The increase in leasing and redevelopment expenses was primarily due to demolition costs for redevelopment projects.

Previous 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.

Current wording

The change in environmental expenses was primarily due to (i) the removal of the remaining $7.7 million of unknown reserve liabilities which had previously been accrued for certain properties, and (ii) a decrease in environmental litigation accruals. 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 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.

Current wording

The increase in general and administrative expenses was primarily due to net non-recurring retirement costs of $2.3 million, of which $2.1 million related to the retirement of our former Chief Operating Officer, partially offset by decreases in employee-related expenses, professional fees, and certain transaction related costs.

Previous 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.

Current wording

As of June 30, 2026, we had $377.0 million of availability under our Credit Facility, 5.8 million shares of common stock subject to forward sales agreements which are anticipated to generate approximately $190.5 million of gross proceeds upon settlement, and available cash and cash equivalents of $4.8 million.

Previous wording

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

Current wording

Our cash flow activities for the six months ended June 30, 2026 and 2025, 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, 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.

Current wording

The change in net cash flow provided by operating activities for the six months ended June 30, 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 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.

Current wording

The increase in net cash flow used in investing activities was primarily due to a $63.6 million increase in property acquisitions, an $11.1 million decrease in collections of notes and mortgages receivable, a $7.4 million increase in issuance of notes and mortgages receivable, and a $6.9 million decrease in deposits for property acquisitions, partially offset by a $7.7 million increase in proceeds from dispositions of real estate.

Previous 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.

Current wording

The increase in net cash flow provided by financing activities was primarily due to a net increase in total borrowings of $55.5 million and an increase in net proceeds from the issuance of common stock of $16.0 million, partially offset by an increase in cash dividends paid of $6.7 million.

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 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.

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 June 30, 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 3.65% 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

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.

Current wording

Unamortized debt issuance costs related to the Credit Facility were $3.0 million and $3.5 million as of June 30, 2026 and December 31, 2025, respectively, and are included in prepaid expenses and other assets on our consolidated balance sheets

Previous 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.

Current wording

During the six months ended June 30, 2026 and June 30, 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

During the three months ended March 31, 2026, we settled 650,000 shares of common stock subject to outstanding forward sales agreements and realized net proceeds of $19.9 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement. During the three months ended March 31, 2025, we settled 406,727 shares of common stock subject to outstanding forward sales agreements and realized net proceeds of $11.0 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement.

Current wording

During the three and six months ended June 30, 2026, we settled 1,460,545 and 2,110,545 shares of common stock, respectively subject to outstanding forward sales agreements and realized net proceeds of $39.8 million and $59.7 million, respectively, after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement. During the three and six months ended June 30, 2025, we settled 406,727 shares of common stock subject to outstanding forward sales agreements and realized net proceeds of $10.9 million after deducting fees and expenses and making certain other adjustments as provided in the equity distribution agreement.

Previous 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):

Current wording

The following table summarizes activity under our ATM Program in connection with forward sales agreements for the six months ended June 30, 2026 and 2025 ($ in thousands):

Previous 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.

Current wording

Regular quarterly dividends paid to our stockholders for the six months ended June 30, 2026 were $60.1 million, or $0.97 per share. There can be no assurance that we will continue to pay dividends at historical rates.

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 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.

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 six months ended June 30, 2026, we removed the remaining $7.7 million of unknown reserve liabilities and, as of June 30, 2026, we had removed $36.0 million of unknown reserve liabilities which had previously been accrued for these properties. As of June 30, 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 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.

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, 2026, we had accrued a total of $8.4 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, $0.1 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.

Current wording

Environmental liabilities are accreted for the change in present value due to the passage of time and, accordingly, $0.2 million of net accretion expense was recorded for each of the six months ended June 30, 2026 and 2025 and included in environmental expenses. In addition, during the six months ended June 30, 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 $41 thousand for each of the six months ended June 30, 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 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.

Current wording

During the six months ended June 30, 2026 and 2025, we increased the carrying values of certain of our properties by $1.2 million and $1.3 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 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.

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 six months ended June 30, 2026 and 2025, were $0.7 million and $0.9 million, respectively. Capitalized asset retirement costs were $23.9 million for known environmental liabilities as of June 30, 2026, and $29.3 million, including $23.9 million for known environmental liabilities and $5.4 million of reserves for future environmental liabilities, as of December 31, 2025. We recorded impairment charges aggregating $0.9 million and $1.0 million for the six months ended June 30, 2026 and 2025, respectively, for capitalized asset retirement costs.

Previous wording

We are involved in various legal proceedings and claims which arise in the ordinary course of our business. As of March 31, 2026 and December 31, 2025, we had $5.5 million and $5.6 million, respectively, accrued for certain of these matters which we believe were appropriate based on information then currently available. Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, and our MTBE litigations in the states of Pennsylvania and Maryland, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. For additional information with respect to these and other pending environmental lawsuits and claims, see “Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2025, and “Part II, Item 1. Legal Proceedings” and Note 4 in “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q.

Current wording

We are subject to various legal proceedings and claims which arise in the ordinary course of our business. As of June 30, 2026 and December 31, 2025, we had $5.0 million and $5.6 million accrued, respectively, for these matters which we believe were appropriate based on information then currently available. Matters related to our former Newark, New Jersey Terminal and the Lower Passaic River, and our MTBE litigations in the states of Pennsylvania and Maryland, in particular, could cause a material adverse effect on our business, financial condition, results of operations, liquidity, ability to pay dividends or stock price. For additional information with respect to these and other pending environmental lawsuits and claims,see “Part I, Item 3. Legal Proceedings” in our Annual Report on Form 10-K for the year ended December 31, 2025; “Part II, Item 1. Legal Proceedings” and “Note 4 — Commitments and Contingencies” in “Part I, Item 1. Financial Statements” in our Quarterly Report on Form 10-Q for the period ended March 31, 2026; and “Part II, Item 1. Legal Proceedings” and “Note 4 — Commitments and Contingencies” in “Part I, Item 1. Financial Statements” in this Quarterly Report on Form 10-Q for the period ended June 30, 2026.