Getty Realty Says Relationship With Getty Marketing Has 'Deteriorated'

JERICHO, N.Y. -- Difficulties between Getty Realty Corp. and its largest tenant, Getty Petroleum Marketing Inc. (GPMI), continue. In a just-filed 10-Q report by Getty Realty to the U.S. Securities and Exchange Commission, the company said its relationship with GPMI "has deteriorated over the past several months."

A dispute between Getty Realty and GPMI dates back to August, when the latter allegedly failed to pay its rent on time. The same thing happened in September. However, GPMI ultimately paid both months' rent with applicable interest.

The tensions between the real estate investment trust and its largest tenant did not stop there, though. As Convenience Store News Online reported on Sept. 23, GPMI sent notice to Getty Realty accusing it of "failing to perform certain environmental remediation." GPMI added that it would offset costs of such remediation against its October and November 2011 rent to Getty Realty.

Getty Realty has stated in a news release, on its conference call and again in the 10-Q that it believes GPMI's accusations are "wholly without merit." According to the 10-Q filing, GPMI paid its October 2011 rent, approximately $5 million, in full after a court order by the New York State Supreme Court was issued. About $900,000 of that money is currently being held in escrow by the court.

Despite the court ruling, Getty Realty said in its 10-Q that "we may continue to experience disruption in rent receipts due from [GPMI] under the master lease."

In an attempt to ensure that GPMI pays its monthly rent moving forward, Getty Realty said it was actively pursuing non-payments in rent, "including taking legal actions to enforce our rights under the master lease. We cannot provide any assurance regarding the ultimate resolution of these or any subsequent actions."

In its 10-Q, Getty Realty also mentioned the possibility that GPMI could assert additional legal claims against them. To counteract such future claims, Getty Realty opened the door to the possibility it would file counterclaims against its tenant.

Getty Realty Corp. is the largest publicly-traded real estate investment trust in the United States. It owns and leases about 1,170 properties nationwide.