JERICHO, N.Y. -- Getty Realty Corp. said that the U.S. Bankruptcy Court in the bankruptcy case of Getty Petroleum Marketing Inc., the company's largest tenant, issued an order Tuesday affirming the company's right to receive post-bankruptcy rent for December 2011 and January 2012 and rejecting an attempt by Getty Petroleum to "offset" the rent for such months.
The Court ordered Getty Petroleum 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 to pay $3 million towards these obligations by January 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, not later than February 5, 2012.
David B. Driscoll, president and CEO of Getty Realty, said, "We welcome the decision of the Bankruptcy Court requiring [Getty Petroleum] Marketing to comply with its post-bankruptcy obligations under the master lease. 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. 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 has previously disclosed that it had served Getty Petroleum with a formal notice of termination of the master lease as a result of Getty Petroleum's nonpayment of November 2011 rent.
As of November 30, 2011, Getty Petroleum 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, Getty Petroleum is responsible for the payment of taxes, maintenance, repair, insurance, environmental and other operating expenses.
Getty Realty said it believes that it is likely that Getty Petroleum has not paid some or all of the real-estate taxes due and owing under the master lease in a timely manner.
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 Getty Petroleum's environmental liabilities. In addition, the company may incur significant costs associated with proceedings against Getty Petroleum 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. These developments could materially adversely affect the company's business, financial condition, revenues operating expenses, results of operations, liquidity, ability to pay dividends or stock price.
The company cannot provide any assurance regarding the ultimate resolution of Getty Petroleum's bankruptcy, it said.
Jericho, N.Y.-based Getty Realty is the largest publicly-traded real-estate investment trust (REIT) in the United States specializing 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.