Getty Realty Corp., of Jericho, N.Y., is looking to one of its directors to resolve a troubled relationship with its primary tenant, the U.S. arm of Russian oil giant Lukoil, Newsday reported.
Lukoil is looking to shed nearly half of the gas stations it leases from Getty Realty.
A real-estate investment trust that specializes in leasing convenience stores and gas stations, Getty has been locked in a battle over leases with Getty Petroleum Marketing of East Meadow, its primary tenant, which for the last eight years has been owned by OAO Lukoil, Russia’s largest non-state oil producer.
Getty Petroleum Marketing wants to shed 40% of the 890 gas stations it leases from Getty Realty in the Northeast, largely because the properties are unprofitable, people close to the arrangement told New York Newsday.
Getty Realty said Monday that its board of directors named David Driscoll as "lead independent director" to "work with the company’s management and attempt to negotiate a modification of the company’s leases" with Getty petroleum. A Getty director since last year, Driscoll is a managing partner at the Manhattan-based investment banking firm Morgan Joseph & Co. Inc.
Getty Realty said most of the leases are for 15-year terms that end in 2015. Getty Realty said Getty Petroleum’s financial performance "continued to deteriorate" in 2007, and Getty Petroleum also wants a reduction in rent for the properties it does not shed.
Getty Realty said it has not accepted Getty Petroleum’s proposals.
In March 1997, Getty spun off as two separate publicly-traded companies, Getty Realty and Getty Petroleum. In December 2000, Lukoil acquired Getty Petroleum for $71 million, becoming the first Russian company to acquire a U.S. publicly-traded company.