Getty Realty Corp. (NYSE:GTY) (“Getty” or the “Company”) announced its preliminary financial results for the quarter ended September 30, 2013.
Highlights For The Quarter Ended September 30, 2013
- Net Income of $41.9 million, or $1.25 per share, including the benefit derived from the Lukoil Settlement and gains from dispositions of properties.
- Funds From Operations of $20.6 million, or $0.62 per share, including the benefit derived from the Lukoil Settlement.
- Adjusted Funds From Operations of $18.5 million, or $0.55 per share, including the benefit derived from the Lukoil Settlement.
- Received a $31.7 million distribution from the Marketing Estate as a result of the Lukoil Settlement resulting in a $17.1 million, or $0.51 per share, benefit for the quarter.
- Sold 17 properties in the quarter resulting in gains from dispositions of $27.0 million, or $0.81 per share.
“The combination of the Lukoil Settlement and the continuing rapid pace of property dispositions generated approximately $60 million of cash this quarter. On an ongoing basis, these achievements should also contribute to measurably lower operating costs through reductions in litigation expenses, maintenance costs and real estate tax expenses, which savings were noticeable immediately,” commented, David B. Driscoll, Getty Realty’s President and CEO. “We are also pleased that the contribution from our recent acquisition is positively impacting our earnings and that we started to realize some of the initial benefits of our cost saving initiatives in the third quarter. With our strong and improving balance sheet and our team’s focus on both operating the business and the pursuit of select opportunities to enhance the Company’s growth, we expect that our efforts will increase value for our shareholders as we move forward.”
On July 29, 2013, the Bankruptcy Court approved a settlement between Lukoil and certain former directors and officers of Getty Petroleum Marketing Inc. (“Marketing”), collectively, and the Marketing Estate, of the claims made in the Lukoil Complaint (the “Lukoil Settlement”). The terms of the Lukoil Settlement included a release of the defendants from the claims alleged in the Lukoil Complaint and a collective payment to the Marketing Estate of $93.0 million of which $25.1 million was distributed to the Company pursuant to the Litigation Funding Agreement and $6.6 million was distributed to the Company in full satisfaction of the Company’s post-petition priority claims related to the lease with Marketing (the “Master Lease”). Of the $25.1 million received under the Litigation Funding Agreement, $8.0 million was accounted for as a repayment of advances made to the Marketing Estate plus accrued interest; $14.0 million was accounted for as payment of rent and real estate taxes due from Marketing, and the related bad debt reserve was reversed; and the remainder of $3.1 million was recorded as additional income and is reflected in continuing operations in the Company’s consolidated statement of operations as other revenue. The Company may realize additional distributions from the Marketing Estate for its remaining general unsecured claims stemming from Marketing’s default of its obligations under the Master Lease as and when assets that remain in the Marketing Estate become available for distribution to Marketing’s creditors.