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JERICHO, N.Y -- In an effort to negotiate nuances within existing leases with its principal tenant Getty Petroleum Marketing, Inc., Getty Realty Corp.'s board of directors designated David Driscoll as the lead independent director.
"The company's management team and I are looking forward to holding further discussions with marketing in the near future to try to achieve a mutually satisfactory modification of the marketing leases," Driscoll said in a released statement.
To date, there are approximately 890 marketing properties under several leases, most of which fall under a unitary triple-net master lease with a 15-year term continuing through 2015 and covering virtually all of the properties leased to Getty Petroleum Marketing Inc.
According to the company's annual report, as of Dec. 31, 2007, Getty Petroleum Marketing's financial performance deteriorated to the extent that it proposed a removal of approximately 40 percent of the properties from existing marketing leases and a reduction of rent for the remaining properties. Getty Realty Corp. did not accept the proposal and maintains that lease modification discussions will ensue until a fair settlement is reached.
The negotiations are critical as Getty's parent company, OAO Lukoil, will not continue to provide ongoing financial support to Getty Petroleum Marketing in the event it is not self-sufficient.
Leo Liebowitz, the company's chairman and CEO, said in a released statement "the company and marketing [Getty Petroleum Marketing] have already established a record over the years of successfully negotiating the removal of properties from the marketing leases on mutually agreed upon terms, and in fact over the past few years over 25 properties have been removed from the marketing leases by mutual agreement. The company in certain cases did not exercise options to extend the term of the underlying leases, and in other cases sold the recaptured properties in tax-free exchanges and reinvested the proceeds in new properties for lease to others." Liebowitz noted that Getty Petroleum Marketing is current on its rent payments.
"Over the past several months, the company has entered into various letter agreements with marketing to remove approximately 25 additional properties from the marketing leases. The company has identified potential purchasers for most of these properties and in many cases, has purchase and sales contracts in place," Liebowitz said.