Getty Realty Corp. Announces Preliminary Financial Results for the Quarter and Year Ended December 31, 2012

  Getty Realty Corp. Announces Preliminary Financial Results for the Quarter
  and Year Ended December 31, 2012

          Funds From Operations of $8.9 Million, or $0.26 Per Share

      Adjusted Funds From Operations of $7.4 Million, or $0.22 Per Share

                Net Income of $5.8 Million, or $0.17 Per Share

               Enters into $275 Million of New Debt Financings

    2013 First Quarter Dividend Increased by 60% to $0.20 Per Common Share

Business Wire

JERICHO, N.Y. -- February 28, 2013

Getty Realty Corp. (NYSE: GTY) (“Getty” or the “Company”) announced its
preliminary financial results for the quarter and year ended December 31,
2012, the refinancing of its outstanding debt with a new $175 million credit
facility and a $100 million long-term senior secured term loan.

David B. Driscoll, Getty’s President and CEO commented, “We became a
fundamentally new company during 2012 as we largely completed a significant
transformation resulting from the repositioning of our properties formerly
leased to Getty Petroleum Marketing. By year end we had largely completed our
re-leasing program and we believe that during the first six months of 2013 we
will achieve stabilized levels of operating performance. In addition, we have
been able to refinance our maturing debt with a combination of bank debt and
attractively priced long-term fixed rate debt. This refinance not only
strengthens our balance sheet, it also provides the Company with ample
capacity to fund additional growth as we move forward. Together, these
positive developments have provided us with the confidence to raise our
dividend for the first quarter by 60% over the previous quarterly dividend
rate declared in 2012. As we move further into 2013, we have re-initiated our
pursuit of growth via accretive acquisitions to create additional value for
our shareholders.”

Financial Results:

Net Earnings:

The Company reported net earnings for the quarter ended December 31, 2012 of
$5.8 million, or $0.17 per share, which increased by $25.3 million as compared
to a net loss of $19.5 million, or $0.58 per share, for the quarter ended
December 31, 2011. Net earnings for the year ended December 31, 2012 decreased
by $0.1 million to $12.4 million, or $0.37 per share, as compared to $12.5
million, or $0.37 per share, for the year ended December 31, 2011.

All per share amounts in this press release are presented on a fully diluted
per common share basis, unless stated otherwise.

Results for the quarter and year ended December 31, 2012 continued to be
materially affected by events related to the bankruptcy and ongoing
liquidation of Getty Petroleum Marketing Inc. (“Marketing”) and the
repositioning of the remaining portfolio of properties which were previously
subject to the Master Lease with Marketing, resulting in a reduction in the
net contribution from this portfolio of properties.

The Company’s quarterly and annual results for 2012 and 2011 include
significant adjustments and costs related to Marketing’s bankruptcy and the
repositioning of the portfolio of properties previously leased to Marketing
such as impairment charges, provisions for bad debts and straight-line rent
receivable reserves. In addition, the Company is still incurring legal fees,
other professional fees, environmental remediation costs and property
operating expenses related to the bankruptcy and repositioning of the
portfolio of properties previously leased to Marketing. The impact of these
adjustments and expenditures make comparisons of performance for 2012 and 2011
less meaningful.

Adjusted Funds From Operations and Funds From Operations:

Adjusted Funds From Operations (AFFO) was $7.4 million, or $0.22 per share,
for the quarter ended December 31, 2012, as compared to $8.6 million, or $0.26
per share, for the quarter ended December 31, 2011. AFFO for the year ended
December 31, 2012 was $28.8 million, or $0.86 per share, versus $62.7 million,
or $1.88 per share, for the year ended December 31, 2011.

Funds From Operations (FFO) increased by $8.6 million to $8.9 million, or
$0.26 per share, for the quarter ended December 31, 2012, as compared to $0.3
million, or $0.01 per share, for the quarter ended December 31, 2011. FFO for
2012 was $33.2 million, or $0.99 per share, as compared to $42.1 million, or
$1.26 per share, for 2011.

AFFO and FFO are supplemental non-GAAP measures of the performance of real
estate investment trusts. The Company pays particular attention to AFFO, a
supplemental non-GAAP measure helpful to investors in measuring the Company’s
fundamental operating performance. In accordance with the National Association
of Real Estate Investment Trusts’ modified guidance for reporting FFO, Getty
has restated reporting of FFO for all periods presented to exclude non-cash
impairment charges. Details about this change, related definitions and
reconciliations to net earnings can be found in the financial tables at the
end of this release.

Operating Income:

Total revenues included in continuing operations were $24.3 million for the
quarter ended December 31, 2012, as compared to $28.4 million for quarter
ended December 31, 2011. The $4.1 million decrease in revenues was primarily
due to lower rental revenue realized from new triple-net leases for properties
previously subject to the Master Lease. In addition, revenues were affected by
rent escalations, dispositions of certain real estate, lease expirations and
non-cash revenue recognition adjustments.

Total revenues included in continuing operations were $102.2 million for the
year ended December 31, 2012, as compared to $102.9 million for the year ended
December 31, 2011. Revenues included in continuing operations increased in
2012 as a result of the full year impact of the March 2011 Nouria acquisition
offset by lower rental revenue realized from new triple-net leases for
properties previously subject to the Master Lease. In addition, revenues were
affected by rent escalations, dispositions of certain real estate, lease
expirations and non-cash revenue recognition adjustments.

Rental property expenses included in continuing operations were $8.8 million
and $30.2 million for the quarter and year ended December 31, 2012 as compared
to $5.9 million and $16.0 million for the quarter and year ended December 31,
2011. The increases in rental property expenses were primarily related to
Marketing’s bankruptcy resulting in increases in real estate taxes paid by the
Company and reimbursed as additional rent paid by its tenants and unreimbursed
real estate taxes and maintenance expenses paid by the Company.

Environmental expenses included in continuing operations for the quarter and
year ended December 31, 2012 was $0.4 million and $0.8 million as compared to
$1.7 million and $5.6 million for the quarter and year ended December 31,
2011. The decreases in environmental expenses were principally due to lower
provisions for litigation loss reserves and changes in estimated environmental
remediation costs and lower legal fees.

General and administrative expenses included in continuing operations was $3.3
million for the quarter ended December 31, 2012 as compared to $11.8 million
recorded for the quarter ended December 31, 2011. The $8.5 million decrease in
general and administrative expenses was principally due to a $7.3 million
provision for bad debts recorded in the fourth quarter of 2011, modestly
offset by higher employee related expenses and legal fees recorded in the
quarter.

General and administrative expenses included in continuing operations was
$29.1 million for the year ended December 31, 2012 as compared to $22.1
million recorded for the year ended December 31, 2011. The $7.0 million
increase in general and administrative expenses was principally due to a $5.9
million increase in provision for bad debts and increased legal fees related
to the Marketing Bankruptcy.

Non-cash impairment charges of $2.2 million and $6.3 million are included in
continuing operations for the quarter and year ended December 31, 2012,
respectively, as compared to $13.4 million and $15.9 million recorded for the
quarter and year ended December 31, 2011, respectively. The non-cash
impairment charges recorded during the quarter and year ended December 31,
2012 were attributable to reductions in the Company’s estimates of value for
properties held for sale and the accumulation of asset retirement costs as a
result of an increase in estimated environmental liabilities which increased
the carrying value of certain properties above their fair value. The non-cash
impairment charges recorded for the quarter and year ended December 31, 2011
were attributable to recording Marketing’s environmental liabilities and
reductions in the Company’s estimates of value for properties marketed for
sale. Impairment charges vary from period to period and accordingly, undue
reliance should not be placed on the magnitude or the directions of change in
impairment charges for one period as compared to prior periods.

Earnings from discontinued operations increased by $4.4 million to $1.4
million for the quarter ended December 31, 2012, as compared to a loss of $3.0
million for the quarter ended December 31, 2011. Earnings from discontinued
operations decreased by $4.4 million to a loss of $1.4 million for the year
ended December 31, 2012, as compared to earnings of $3.0 million for the year
ended December 31, 2011. The decrease in earnings from discontinued operations
for the full year 2012 was primarily due to higher impairment charges and
lower rental revenue partially offset by an increase in gains on dispositions
of real estate. Gains on disposition of real estate and impairment charges
vary from period to period and accordingly, undue reliance should not be
placed on the magnitude or the directions of change in reported gains and
impairment charges for one period as compared to prior periods.

Recent Developments:

As previously disclosed, the Company continues to reposition the properties
previously leased to Marketing under the Master Lease.

As a continuation of the repositioning process and the ongoing liquidation of
Marketing, during the fourth quarter of 2012, the Company:

  *Entered into four triple-net lease agreements covering 161 operating
    properties with affiliates of Capital Petroleum Group, Lehigh Gas
    Partners, Global Partners and BP North America. The properties are located
    in New York City and the surrounding New York and New Jersey metropolitan
    areas. The leases have 15 year initial terms with provisions for renewal
    terms and annual rent escalations.
  *Sold 25 properties bringing the total number of properties sold in 2012 to
    54. Thus far in 2013, the Company has sold 35 properties and one terminal
    property. To date, the Company has generated $31.6 million of proceeds
    from these dispositions.
  *Continued to enforce the Company’s rights through eviction proceedings
    involving certain of its properties in various jurisdictions against
    Marketing’s former subtenants (or sub-subtenants) who have not vacated
    properties and occupy the Company’s properties without rights. The Company
    is incurring costs, primarily legal expenses, in connection with such
    proceedings.

Refinancing Activities:

On February 25, 2013, the Company entered into new debt commitments of $275
million consisting of a $175 million senior secured revolving credit facility
with J.P. Morgan Chase Bank, N.A., as Administrative Agent (the “Credit
Agreement”) and a $100 million long-term term loan with The Prudential
Insurance Company of America (the “Prudential Loan Agreement”). The Credit
Agreement matures in August 2015 and bears interest at a margin of 250 to 300
bps over LIBOR based on the Company’s total leverage and the Prudential Loan
Agreement matures in February 2021 and bears interest at 6.00%. Neither the
Credit Agreement nor the Prudential Loan Agreement provide for scheduled
reductions in the principal balance prior to maturity. Subject to the terms of
the Credit Agreement, the Company has the option to extend the term of the
Credit Agreement for one additional year to August 2016. The Company also has
the option to increase by $50 million the amount of the Credit Agreement to
$225 million.

The Company used cash on hand and proceeds from the Credit Agreement and the
Prudential Loan Agreement to repay all amounts then outstanding under its $175
million amended and restated senior secured revolving credit agreement which
was scheduled to mature on March 9, 2013 and its $25 million amended term loan
agreement with TD Bank, which was scheduled to mature on March 31, 2013.

2013 First Quarter Cash Dividend on Common Shares:

The Company’s Board of Directors unanimously approved an increase in the 2013
first quarter cash dividend to $0.20 per common share payable on April 11,
2013 to shareholders of record on March 31, 2013. The increase of $0.075 per
share represents a 60% increase over the previous quarterly dividend rate
declared in 2012.

Guidance:

Historically, the Company has not issued guidance and does not intend to
establish a policy of doing so in the future. However, the Company has elected
to provide guidance for the year ended December 31, 2013 since its historical
financial results have been significantly impacted by the events of the past
year and the ongoing repositioning of the Marketing portfolio which makes the
Company’s current results inconsistent with the Company’s historical
performance. The ongoing repositioning of the Marketing portfolio and other
factors are expected to disproportionately negatively impact the Company’s
results during the first two quarters of 2013.

At this time, the Company is providing the following guidance for 2013: FFO
for the year ended December 31, 2103 is expected to be between $0.94 and $1.02
per share on a fully diluted basis and AFFO for the year ended December 31,
2103 is expected to be between $0.82 and $0.90 per share on a fully diluted
basis.

The guidance is based on current plans and assumptions and subject to risks
and uncertainties more fully described in this press release and the Company's
reports filed with the Securities and Exchange Commission.

Conference Call Information:

Getty Realty Corp.’s Fourth Quarter Earnings Conference Call is scheduled for
tomorrow, Friday, March 1, 2013 at 9:00 a.m. Eastern Time. To participate in
the conference call, please dial (888) 254-2821 ten minutes before the
scheduled start time and reference pass code 3371954. If you cannot
participate in the live event, a replay will be available on March 1, 2013
beginning at 12:00 noon Eastern Time through 12:00 midnight Eastern Time,
March 8, 2013. To access the replay, please dial (877) 870-5176, or (858)
384-5517 for international participants, and reference pass code 3371954.

About Getty:

Getty Realty Corp. is the leading publicly-traded real estate investment trust
in the United States specializing in ownership, leasing and financing of
convenience store/gas station properties and petroleum distribution terminals.
The Company currently owns and leases approximately 1,050 properties
nationwide.

Forward Looking Statements:

CERTAIN STATEMENTS CONTAINED HEREIN MAY CONSTITUTE “FORWARD-LOOKING
STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995. WHEN THE WORDS “BELIEVES,” “EXPECTS,” “PLANS,” “PROJECTS,”
“ESTIMATES”, “ANTICIPATES” AND SIMILAR EXPRESSIONS ARE USED, THEY IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON
MANAGEMENT’S CURRENT BELIEFS AND ASSUMPTIONS AND INFORMATION CURRENTLY
AVAILABLE TO MANAGEMENT AND INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS
OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE
OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.
EXAMPLES OF FORWARD-LOOKING STATEMENTS INCLUDE THE STATEMENTS MADE BY MR.
DRISCOLL AND THE COMPANY’S FFO AND AFFO GUIDANCE.

INFORMATION CONCERNING FACTORS THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS CAN BE FOUND IN THE
COMPANY’S PERIODIC REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS TO REFLECT FUTURE EVENTS OR CIRCUMSTANCES OR
REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
                                                             
                                                 December 31,  December 31,
                                                2012          2011
Assets:                                                       
                                                                  
Real Estate:
Land                                               $336,223       $345,473
Buildings and improvements                         226,093        270,381
                                                   562,316        615,854
Less – accumulated depreciation and                (116,768)      (137,117)
amortization
Real estate, net                                   445,548        478,737
                                                                  
Net investment in direct financing leases          91,904         92,632
Deferred rent receivable (net of allowance of      12,448         8,080
$25,630 as of December 31, 2011)
Cash and cash equivalents                          16,876         7,698
Notes, mortgages and accounts receivable (net
of allowance of $25,371 at December 31, 2012       41,865         36,083
and $9,480 at December 31, 2011)
Prepaid expenses and other assets                  31,940         11,859
Total assets                                       $640,581       $635,089
                                                             
Liabilities and Shareholders' Equity:                         
                                                                  
Borrowings under credit line                       $150,290       $147,700
Term loan                                          22,030         22,810
Environmental remediation costs                    46,114         57,700
Dividends payable                                  4,202          —
Accounts payable and accrued expenses              45,196         34,710
Total liabilities                                  267,832        262,920
Commitments and contingencies                      —              —
Shareholders' equity:
Common stock, par value $.01 per share;
authorized
50,000,000 shares; issued 33,396,720 at
December 31, 2012 and 33,394,395 at December       334            334
31, 2011
Paid-in capital                                    461,426        460,687
Dividends paid in excess of earnings               (89,011)       (88,852)
Total shareholders' equity                         372,749        372,169
Total liabilities and shareholders' equity         $640,581       $635,089

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                    
                    Three months ended          Year ended December 31,
                      December 31,
                    2012            2011        2012         2011
                                                               
Revenues from         $  23,493        $27,593       $ 99,286      $ 100,263
rental properties
Interest on notes
and mortgages           775          757           2,882       2,658   
receivable
Total revenues          24,268       28,350        102,168     102,921 
                                                                   
Operating expenses:
Rental property          8,750         5,940           30,232        16,023
expenses
Impairment charges       2,246         13,434          6,328         15,904
Environmental            433           1,719           774           5,597
expenses
General and
administrative           3,287         11,757          29,116        22,065
expenses
Allowance for
deferred rental          —             8,336           —             19,288
revenue
Depreciation and
amortization            2,389        2,513         12,541      9,511   
expense
Total operating         17,105       43,699        78,991      88,388  
expenses
Operating income         7,163         (15,349   )     23,177        14,533
(loss)
                                                                   
Other income             59            (63       )     562           16
(expense), net
Interest expense        (2,860  )     (1,046    )    (9,931  )    (5,125  )
Earnings (loss)
from continuing          4,362         (16,458   )     13,808        9,424
operations
                                                                   
Discontinued
operations:
Earnings (loss)
from operating           (1,580  )     (3,363    )     (8,199  )     2,084
activities
Gains from
dispositions of         3,019        339           6,838       948     
real estate
Earnings (loss)
from discontinued       1,439        (3,024    )    (1,361  )    3,032   
operations
Net earnings (loss)   $  5,801        $(19,482  )   $ 12,447     $ 12,456  
                                                                   
Basic and diluted
earnings (loss) per
common share:
Earnings (loss)
from continuing       $  .13           $ (.49    )   $ .41         $ .28
operations
Earnings (loss)
from discontinued     $  .04           $ (.09    )   $ (.04    )   $ .09
operations
Net earnings (loss)   $  .17           $ (.58    )   $ .37         $ .37
                                                                   
Weighted-average
shares outstanding:
Basic                    33,396        33,394          33,395        33,171
Stock options and
restricted stock        —            —             —           1       
units
Diluted                 33,396       33,394        33,395      33,172  

GETTY REALTY CORP. AND SUBSIDIARIES
RECONCILIATION OF NET EARNINGS TO
FUNDS FROM OPERATIONS AND
ADJUSTED FUNDS FROM OPERATIONS
(in thousands, except per share amounts)
(unaudited)

                                                 
                 Three months ended December 31,  Year ended December 31,
                 2012              2011          2012        2011
Net earnings      $  5,801          $ (19,482 )   $ 12,447    $ 12,456
(loss)
                                                                    
Depreciation and
amortization of       2,734              2,982           13,700       10,336
real estate
assets
Gains from
dispositions of       (3,047  )          (339    )       (6,866 )     (968   )
real estate
Impairment           3,390            17,132        13,942     20,226 
charges
Funds from            8,878              293             33,223       42,050
operations
Allowance for
deferred rental       —                  8,715           —            19,758
revenue
Revenue
recognition           (1,439  )          (369    )       (4,433 )     (1,163 )
adjustments
Acquisition          —                —             —          2,034  
costs
Adjusted funds     $  7,439           $ 8,639        $ 28,790    $ 62,679 
from operations
                                                                    
Diluted per
share amounts:
Earnings (loss)    $  0.17             $ (0.58   )     $ 0.37       $ 0.37
per share
Funds from
operations per     $  0.26             $ 0.01          $ 0.99       $ 1.26
share
Adjusted funds
from operations    $  0.22             $ 0.26          $ 0.86       $ 1.88
per share
                                                                    
Diluted weighted
average shares        33,396             33,394          33,395       33,172
outstanding

In addition to measurements defined by accounting principles generally
accepted in the United States of America (“GAAP”), Getty also focuses on funds
from operations (“FFO”) and adjusted funds from operations (“AFFO”) to measure
its performance. FFO is generally considered to be an appropriate supplemental
non-GAAP measure of the performance of REITs. In accordance with the National
Association of Real Estate Investment Trusts’ modified guidance for reporting
FFO, Getty has restated reporting of FFO for all periods presented to exclude
non-cash impairment charges. FFO is defined by the National Association of
Real Estate Investment Trusts as net earnings before depreciation and
amortization of real estate assets, gains or losses on dispositions of real
estate (including such non-FFO items reported in discontinued operations),
non-cash impairment charges, extraordinary items and cumulative effect of
accounting change. Other REITs may use definitions of FFO and/or AFFO that are
different than Getty’s and; accordingly, may not be comparable. Beginning in
2011, Getty revised its definition of AFFO to exclude direct expensed costs
related to property acquisitions and other unusual or infrequently occurring
items.

FFO excludes various items such as gains or losses from property dispositions
and depreciation and amortization of real estate assets and non-cash
impairment charges. In Getty’s case, however, GAAP net earnings and FFO
typically include the impact of the “Revenue Recognition Adjustments”
comprised of deferred rental revenue (straight-line rental revenue), the net
amortization of above-market and below-market leases and income recognized
from direct financing leases on Getty’s recognition of revenues from rental
properties, as offset by the impact of related collection reserves. GAAP net
earnings and FFO from time to time may also include property acquisition costs
or other unusual or infrequently recurring items. Deferred rental revenue
results primarily from fixed rental increases scheduled under certain leases
with Getty’s tenants. In accordance with GAAP, the aggregate minimum rent due
over the current term of these leases are recognized on a straight-line (or
average) basis rather than when payment is contractually due. The present
value of the difference between the fair market rent and the contractual rent
for in-place leases at the time properties are acquired is amortized into
revenue from rental properties over the remaining lives of the in-place
leases. Income from direct financing leases is recognized over the lease terms
using the effective interest method which produces a constant periodic rate of
return on the net investments in the leased properties. Property acquisition
costs are expensed, generally in the period when properties are acquired, and
are not reflective of normal operations. Other unusual or infrequently
occurring items are not reflective of normal operations.

Getty pays particular attention to AFFO, a supplemental non-GAAP performance
measure that Getty defines as FFO less Revenue Recognition Adjustments,
property acquisition costs and other unusual or infrequently occurring items.
In Getty’s view, AFFO provides a more accurate depiction than FFO of Getty’s
fundamental operating performance related to: (i)the impact of scheduled rent
increases from operating leases, net of related collection reserves; (ii)the
rental revenue earned from acquired in-place leases; (iii)the impact of rent
due from direct financing leases; (iv) Getty’s operating expenses (exclusive
of direct expensed operating property acquisition costs); and (v)other
unusual or infrequently occurring items. Neither FFO nor AFFO represent cash
generated from operating activities calculated in accordance with GAAP and
therefore these measures should not be considered an alternative for GAAP net
earnings or as a measure of liquidity.


SUPPLEMENTAL TAX REPORTING INFORMATION FOR
COMMON DIVIDENDS PAID
YEAR ENDED DECEMBER 31, 2012
                                             
                                                                
                                                                
                                      Box 1a      Box 2a        Box 3
                          Total       Total       Total
Record       Paid         Dividends   Ordinary    Capital Gain  Non-Dividend
Date         Date         Per Share   Dividends   Distributions Distributions
                                                                
06/28/2012   07/12/2012   $0.125000   $0.010913   $0.067080     $0.047007
09/27/2012   10/11/2012   0.125000    0.010913    0.067080      0.047007
12/27/2012   01/10/2013   0.077993    0.010913    0.067080      0.000000
Totals                    $0.327993   $0.032739   $0.201240     $0.094014

The dividend paid on January 10, 2013 excludes $.047007 per share which was
allocated to 2013. The total dividend paid was $0.1250 per share.

Contact:

Getty Realty Corp.
Thomas J. Stirnweis, 516-478-5403
 
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