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Getty Realty: gas station tenants delay rent payment

Gas prices at the Lukoil Gas Station on

Gas prices at the Lukoil Gas Station on Middle Country Road in Centereach. (Feb. 28, 2011) Credit: James Carbone

Share prices of Jericho-based Getty Realty Corp. by midday Wednesday dropped by nearly one-fourth on the New York Stock Exchange after news of an abrupt change in its relationship with Russian petroleum giant Lukoil Oil Co. — one of Getty Realty's largest tenants. 

It was not immediately clear whether Getty would lose its Lukoil tenant network — more than 75 percent of its lessees. 

Getty Realty owns or leases about 1,100 gas stations and convenience stores, and nine petroleum terminals in 21 states. It had revenues of $84.5 million in 2009, its most recently reported fiscal year.

Shortly before noon the shares had dropped 23 percent, or $6.65, to $22.14, on volume of 1.6 million. This followed a Tuesday close of $28.85. 

JPMorgan Chase & Co. analysts downgraded the stock after Getty Realty issued an announcement titled, "Lukoil Transfers Ownership of Getty Petroleum Marketing Inc." 

The company said it was "informed by management of Lukoil North America LLC that on February 28, 2011, OAO Lukoil had transferred its interest in its wholly-owned subsidiary, Getty Petroleum Marketing, Inc. ("Marketing"), the company's largest tenant, to an unrelated party." 

Getty said it has "commenced a preliminary dialogue with the new management of Marketing." 

Significantly, Getty said it learned Tuesday that "the monthly rental payment due under the \[Lukoil\] master lease by close of business on March 1, 2011 will not be received when due but that Marketing expects to make the monthly rental payment on or before March 7, 2011." 

Getty Realty said it "cannot provide any assurance that Marketing will meet its rental, environmental or other obligations under the master lease." 

Getty says on its website that it is the largest real estate investment trust of its kind — specializing in gas stations — in the United States.

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