Commercial mortgage-backed securities tracker Trepp is predicting the current period in the market as the “calm before the storm.”
So with bad news on the way, the CMBS market is only going to get more conflicted. Indeed it is already growing into a conflict that pits brother against brother.
According to a statement this week, the real estate investment trust Getty Realty [stock GTY][/stock] is at the end of its rope with its biggest tenant missing the rent.
And so, Getty Realty decided to terminate the tenant’s lease.
Commercial mortgage-backed securities tracker Trepp is predicting the current period in the market as the “calm before the storm.”
So with bad news on the way, the CMBS market is only going to get more conflicted. Indeed it is already growing into a conflict that pits brother against brother.
According to a statement this week, the real estate investment trust Getty Realty [stock GTY][/stock] is at the end of its rope with its biggest tenant missing the rent.
And so, Getty Realty decided to terminate the tenant’s lease.
The only problem is that tenant is sister company Getty Petroleum. According to the commercial real estate information firm, CoStar Group [stock CSGP][/stock], the two firms split operations in 1997. What’s even stranger is the two companies still work in the same office (which I hope isn’t a Getty Realty property for obvious reasons).
Getty Petroleum represents 70% of Getty Realty’s book of business. It’s equal to 800 gas stations and convenience stores.
Under the prior arrangement, Getty Petroleum leases out the gas stations to Exxon, British Petroleum, etc. Considering the price of fuel, it’s no wonder Getty Realty decided to seek possession of the properties itself.
Getty Realty admits the move “may result in long-term leases on sub-groups of properties.”
So in short, Getty Realty says it can do what Getty Petroleum is failing at: running a petroleum business. CoStar mentions that Getty Petroleum may file for bankruptcy, so good-luck wished to Getty Realty.
Look, business is business, sure. But it’s a sad commentary on market reality that, despite some downtime in a negative cycle, the CMBS market still finds a way to pit brother against brother.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
