Getty Realty Corp., the nation's largest publicly traded, gasoline station-focused real estate investment trust, said its prime tenant has filed for bankruptcy protection.
Headquartered in Jericho, Getty Realty is landlord to more than 1,100 Getty and Mobil gas stations and convenience stores nationwide. Its prime tenant holds about 75 percent of its leases.
The tenant, Getty Petroleum Marketing, filed for protection in U.S. Bankruptcy Court, Southern District of New York, after it failed to pay its November rent to Getty Realty.
The news had an immediate effect on Getty Realty Corp.'s share price, sending it down more than 3 percent overnight; it is down 51 percent for the year, from a high of $29.75, to $14.90 in premarket trading Tuesday.
Getty Realty disclosed the news after market close Monday.
"We welcome the fact that the process will now have structure and the supervision of the Bankruptcy Court to protect the value of our estate," David B. Driscoll, Getty Realty's chief executive, said in a prepared statement Monday. "Notwithstanding the filing by Marketing today, we remain optimistic about the future of our company.”
Driscoll said the company will continue to try to repossess the properties, and to eventually "reposition the portfolio of properties subject to the master lease in order to maximize the value of the portfolio."
Problems at the Jericho realty company accelerated in February after an abrupt change in its relationship with Russian petroleum giant Lukoil Oil Co., which had previously owned a major interest in the prime tenant network of stations. Lukoil on Feb. 28 announced that it had transferred its interest in Getty's wholly owned subsidiary, Getty Petroleum Marketing Inc., to an unrelated party.
The bankruptcy filing this week came after Getty Realty said it had served its tenant with a formal notice of termination of the master lease due to nonpayment of rent. Getty Realty said it would exercise its right to take possession of the premises underlying the lease by Dec. 12.
Dealing with the tenant's bankruptcy could lead to significant, unusual expenses for increases in Getty Realty's deferred rent receivable reserve, impairment charges, environmental liabilities and legal costs, the company said.