JERICHO, N.Y. -- Getty Realty Corp. said that it has entered into an agreement with Getty Petroleum Marketing Inc. (GPMI) relating to GPMI's Chapter 11 bankruptcy proceeding. The agreement, called a stipulation, is between Getty Realty, GPMI and the Official Committee of Unsecured Creditors in the bankruptcy proceedings.
It is subject to the approval of the bankruptcy court at a hearing that will be held on April 2, 2012.
GPMI filed for bankruptcy on Dec. 5, 2011, a week after Getty Realty said that it was terminating GPMI's master lease for nonpayment of rent. GPMI said that it expected operations to continue as usual during the restructuring process (click here for previous CSP Daily News coverage).
As of Nov. 30, 2011, GPMI 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 that it believes by entering into this stipulation, it will be able to avoid possible contentious and costly litigation, improve its ability to capture cash flow from the properties in question, minimize disruption to the properties that could occur from cessation of gasoline sales and permit it to take greater control of the process for the orderly recovering, re-leasing or otherwise disposing of its properties.
Getty Realty said that it wants an orderly transition of control of the properties that were previously leased to GPMI and to reposition the portfolio as quickly and efficiently as possible to maximize cash flow from these assets. It expects that the stipulation, if approved by the court, will help achieve these objectives while limiting the costs associated with potential litigation.
GPMI has paid the Getty Realty $10.3 million of approximately $19 million in fixed rent due to the company for the period December 5, 2012 through March 31, 2012 and GPMI is expected to make payment to the company of another approximately $1.5 million on or before April 1, 2012. All unpaid amounts due from GPMI under the master lease for periods after filing of the bankruptcy (including real-estate taxes, which are not being paid by GPMI, but are being advanced by the company) become due and payable on April 30, 2012.
The stipulation sets April 30, 2012 as the date by which GPMI must either assume or reject the master lease. It provides that at any time before rejection of the master lease, Getty Realty may take back individual or groups of properties leased by GPMI for the purpose of re-leasing, selling, licensing or otherwise disposing of them, and in such case the rent due to from GPMI will be reduced based on an agreed-upon formula. After a rejection of the master lease, Getty Realty will take possession of all remaining properties subject to the lease.
Getty filed a document with the U.S. Securities & Exchange Commission (SEC) on March 8 regarding the stipulation.
Jericho, N.Y.-based Getty Realty Corp. is the leading publicly traded real-estate investment trust (REIT) in the United States specializing in ownership and leasing of convenience store/gas station properties and petroleum distribution terminals. It owns and leases approximately 1,149 properties nationwide.
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