Getty Petroleum ordered to pay post-bankruptcy master lease amounts

By Caroline Salls

Pittsburgh, Jan. 11 - Getty Realty Corp. said its largest tenant Getty Petroleum Marketing, Inc. has been ordered to pay post-bankruptcy rent for December and January, according to a Getty Realty news release.

Getty said the U.S. Bankruptcy Court for the Southern District of New York rejected Getty Petroleum Marketing's attempt to offset the rent for those months and ordered it to comply with all of its post-bankruptcy master lease obligations.

According to the release, the master lease requires Getty Petroleum Marketing to pay fixed rent and real estate taxes.

Under the court order, Getty Petroleum must pay $3 million toward these obligations by Jan. 17 and the remainder due under the master lease for post-bankruptcy obligations, including $9 million of unpaid fixed rent, by Feb. 5.

"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," Getty Realty president and chief executive officer David B. Driscoll said in the release.

"We remain confident of the long-term value in the portfolio subject to the master lease and optimistic about the future of our company," Driscoll added in the release.

Getty Realty said it previously served Getty Petroleum Marketing with a formal notice of termination of the master lease as a result of the tenant's nonpayment of November rent.

As of Nov. 30, Getty Petroleum Marketing leased about 800 properties under the master lease, and the monthly fixed rent that was due to Getty Realty was $4.9 million.

Getty Realty said it believes that it is likely that Getty Petroleum Marketing has not paid some or all of the real estate taxes due under the master lease in a timely manner.

As a result, the landlord said it will likely be required to pay for some or all of the unpaid taxes and be required to increase the deferred rent receivable reserve, record additional impairment charges and accrue for Getty Petroleum Marketing's environmental liabilities.

In addition, Getty Realty said it may incur significant costs associated with proceedings against the tenant and a repositioning of the master lease portfolio, according to court documents.

The company said these developments could significantly affect its business, financial condition, revenues, operating expenses, results of operations, liquidity, ability to pay dividends or stock price.

Getty Petroleum, an East Meadow, N.Y., distributor of motor and heating fuels, filed for bankruptcy on Dec. 5. Its Chapter 11 case number is 11-15606.

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