Earnings from continuing operations increased by $1.9 million to $10.7 million for the quarter ended Dec. 31, 2009, as compared to $8.8 million [image-nocss] for the quarter ended Dec. 31, 2008. Earnings from continuing operations increased by $2.6 million to $41.4 million for the year ended Dec. 31, 2009, as compared to $38.8 million for the year ended Dec. 31, 2008. Earnings from discontinued operations, primarily comprised of gains on dispositions of real estate, were $600,000 and $5.6 million for the quarter and year ended Dec. 31, 2009, respectively, as compared to $500,000 and $3 million for the respective prior-year periods.
The $2 million and $5.2 million increase in net earnings for the quarter and year ended Dec. 31, 2009, as compared to the respective prior-year periods, were principally due to increased rental income, increased gains on dispositions of real estate and lower interest expense, partially offset by higher aggregate operating expenses. The results for the quarter ended Dec. 31, 2009, were positively impacted by the acquisition on Sept. 25, 2009, of 36 Exxon-branded gas station and convenience store properties located primarily in Prince George's County, Md. The results for the quarter ended Dec. 31, 2009, include approximately $1.6 of rental revenue offset by approximately $300,000 of interest expense incurred as a result of additional borrowings outstanding used to fund such acquisition.
Funds from operations, or FFO, increased by $1.5 million to $13.7 million for the quarter ended Dec. 31, 2009, and increased by $1.7 million to $52.6 million for the year ended Dec. 31, 2009, as compared to $12.2 million and $50.9 million for the respective prior-year periods. Adjusted funds from operations, or AFFO, increased by $1.2 million to $12.7 million for the quarter ended Dec. 31, 2009 and increased by $3.4 million to $51.7 million for the year ended Dec. 31, 2009, as compared to $11.5 million and $48.3 million for the respective prior-year periods.
Revenues from rental properties included in continuing operations increased by $1.9 million for the quarter ended Dec. 31, 2009, and increased by $1.7 million for the year ended Dec. 31, 2009, to $22.5 million and $84.5 million, respectively, as compared to $20.6 million for the quarter ended Dec. 31, 2008 and $82.8 million for the year ended Dec. 31, 2008, primarily due to rental income from properties acquired at the end of third-quarter 2009 and rent escalations.
Rent received increased by $1.6 million to $21.5 million for the quarter ended Dec. 31, 2009, and by $2.2 million to $82.5 million for the year ended Dec. 31, 2009, as compared to the respective prior-year periods. The increases in rent received were primarily due to rent escalations and rental income from properties acquired, partially offset by the effect of dispositions of real estate and lease expirations.
Rental property expenses included in continuing operations decreased by $100,000 to $2.6 million for the quarter ended Dec. 31, 2009 and by $600,000 to $10.9 million for the year ended Dec. 31, 2009, as compared to $2.7 million and $11.5 million for the respective prior-year periods. The decreases in rental property expenses were principally due to lower rent expense incurred as a result of third-party lease expirations when compared to the prior-year periods.
Environmental expenses, net of estimated recoveries from underground storage tank (UST) funds included in continuing operations for the quarter ended Dec. 31, 2009, increased by $800,000 to $3.1 million, as compared to $2.3 million for the prior-year quarter. The increase in net environmental expenses for the quarter ended Dec. 31, 2009, was primarily due to an increase in litigation loss reserves of $2.2 million, partially offset by a decrease in estimated environmental remediation costs of $1.3 million. Environmental expenses, net of estimated recoveries from UST funds included in continuing operations for the year ended Dec. 31, 2009, increased by $1.4 million to $8.8 million, as compared to $7.4 million for the year ended Dec. 31, 2008.
The increase in net environmental expenses for the year ended Dec. 31, 2009, was due to an increase in litigation loss reserves of $2.4 million, which was partially offset by a reduction in legal fees of $200,000 and a reduction in estimated environmental remediation costs of $700,000 million, respectively. In addition to estimated environmental remediation costs of $3.9 million, environmental expenses for the year ended Dec. 31, 2009, also included legal fees of $1.5 million, principally for trial related costs incurred for several active litigation matters, adjustments to provisions for environmental litigation loss reserves of $2.6 million, and project management fees of $800,000.
Depreciation and amortization expense included in continuing operations decreased by $200,000 to $3 million for the quarter ended Dec. 31, 2009 and by $700,000 to $11 million for the year ended Dec. 31, 2009, as compared to $3.2 million and $11.7 million for the respective prior-year periods. Depreciation expense decreased in the 2009 periods as compared to the 2008 periods due to the effect of certain assets becoming fully depreciated, lease expirations and property dispositions.
The results for the year ended Dec. 31, 2009, include $1.1 million of impairment charges principally recorded in the quarter ended June 30, 2009, attributable to general reductions in real estate valuations and, in certain cases, the removal or scheduled removal of USTs by Getty Petroleum Marketing Inc.
Gains on dispositions of real estate, partially included in both other income and discontinued operations, was $600,000 for the quarter ended Dec. 31, 2009, and $5.5 million for the year ended Dec. 31, 2009, as compared to $400,000 and $2.8 million for the respective prior-year periods. Gains on disposition of real estate vary from period to period and, accordingly, undue reliance should not be placed on the magnitude or the direction of change in reported gains for one period as compared to prior periods.
Interest expense decreased by $200,000 to $1.5 million for the quarter ended Dec. 31, 2009, and by $1.9 million to $5.1 million for the year ended Dec. 31, 2009, as compared to $1.7 million and $7 million for the respective prior-year periods. The decreases in interest expense were primarily due to lower average interest rates in 2009 on the company's floating rate borrowings, partially offset by an increase in average borrowings outstanding related to the acquisition of properties in third-quarter 2009.
The company previously disclosed that for the year ended Dec. 31, 2008, Getty Petroleum Marketing, the company's primary tenant, reported a significant loss, continuing a trend of reporting large losses in recent years. In fourth-quarter 2009, Getty Petroleum Marketing announced a restructuring of its business that included the sale to its affiliates, including Lukoil North America, of all assets unrelated to the properties Getty Petroleum Marketing leases from the company.
According to its press release, Getty Petroleum Marketing has paid off substantially all of its debt guaranteed by Lukoil, its parent company. It also took steps to reduce operating costs, including closing two marketing regions and eliminating jobs
Leo Liebowitz, the company's chairman and CEO, said, "Representatives of [Getty Petroleum Marketing] have in the past indicated to us that they were considering significant changes to its business model. We believe that Marketing is significantly reducing its business of directly supplying fuel to its subtenants in favor of entering into subleases with petroleum distributors who supply fuel to their own facilities as well as those operated by others. Approximately 250 locations, comprising substantially all of the retail locations in New England that we lease to Marketing, are being subleased by Marketing to a single distributor, who is rebranding these stations to BP. We also believe that Marketing has entered into a sublease with a distributor in New Jersey for approximately 85 of the properties we lease to Marketing. We continue to monitor Marketing's business developments. In the meantime, Marketing has continued to pay its monthly rent on time."
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