Getty Realty Corp. said in a news release that the U.S. Bankruptcy Court in the bankruptcy case of Getty Petroleum Marketing, Inc., on Jan. 10 issued an order affirming Getty Realty’s right to receive post-bankruptcy rent for December 2011 and January. The court has rejected an attempt by Getty Petroleum Marketing to “offset” the rent for such months.
The court has ordered Getty Petroleum Marketing to comply with all of its post-bankruptcy obligations under the master lease, including the obligations to pay fixed rent and real estate taxes. The order requires Getty Petroleum Marketing to pay $3 million toward these obligations by Jan. 17 and the remainder of the amounts due under the master lease on account of unpaid post-bankruptcy obligations, which includes more than $9 million of unpaid fixed rent, no later than Feb. 5.
“We welcome the decision of the Bankruptcy Court requiring Marketing to comply with its post-bankruptcy obligations under the Master Lease,” said David B. Driscoll, president and CEO of Getty Realty Corp. “The company intends to continue to protect its interests with respect to the Master Lease and pursue all other rights and remedies available to it as appropriate.”
Driscoll furthered, “We remain confident of the long-term value in the portfolio subject to the Master Lease and optimistic about the future of our Company.”
Getty Realty previously disclosed that it had served Marketing with a formal notice of termination of the master lease as a result of Marketing’s nonpayment of November 2011 rent. As of Nov. 30, 2011, Marketing leased approximately 800 properties under the master lease and the monthly fixed rent that was due to the company under the master lease was approximately $4.9 million. Under the master lease, Marketing is responsible for the payment of taxes, maintenance, repair, insurance, environmental and other operating expenses. The company believes that it is likely that Marketing has not paid some or all of the real estate taxes due and owing under the master lease in a timely manner.
According to the release, as a result of the foregoing developments, it is likely that Getty Realty will be required to accrue and pay for some or all of these unpaid real estate taxes. Also, as previously disclosed, it is also likely that the company will be required to increase the deferred rent receivable reserve, record additional impairment charges, and accrue for Marketing’s environmental liabilities. In addition, the company may incur significant costs associated with proceedings against Marketing and a repositioning of the master lease portfolio. Getty Realty has not determined the amounts of any such costs or potential adjustments to its financial statements, but said that these developments could materially adversely impact its business, financial condition, revenues, operating expenses, results of operations, liquidity, and ability to pay dividends or stock price. The company can’t provide any assurance regarding the ultimate resolution of Marketing’s bankruptcy.
Getty Realty Corp., a publicly traded real estate investment trust, specializes in ownership, leasing and financing of retail motor fuel and convenience store properties and petroleum distribution terminals. The company owns and leases approximately 1,155 properties nationwide.