Westfield boots tenant Dune London from long-delayed WTC mall project

Shopping center-focused REIT sues shoe retailer for $10M in rent

New York /
May.May 26, 2016 05:30 PM

The operator of the delay-plagued shopping mall project at the World Trade Center gave the boot to one of its tenants, and is now claiming the retailer walked away from its $10 million lease by not taking possession of its space last month.

Los Angeles-based retail real estate investment trust Westfield Corp. is suing the shoe shop Dune London for 10 years’ worth of rent, fees and other charges totaling $10.3 million, according to a complaint filed Thursday in New York State Supreme Court.

The trendy shoe shop “attempt[ed] to walk away from its contractual obligations and default under a retail lease,” the suit claims.

Westfield said it sent a letter to Dune March 25 saying the space was ready for the retailer to move in and start building out. But when Dune failed to move in, it sent another notice in early April, giving the store another few days to take possession or forfeit its lease, according the lawsuit.

Neither Westfield nor Dune immediately responded to requests for comment.

The rent at the space was scheduled to be $774,000 in the first year, escalating to $1.1 million in the 10th year for a total of $9.29 million in payments, plus other charges and fees.

Dune is one of about 125 retailers that have stood by and watched as construction from the Metropolitan Transportation Authority and the Port Authority of New York and New Jersey have repeatedly delayed the opening of the $4 billion, Santiago Calatrava-designed Oculus and WTC transit hub.

The shoe shop signed a 10-year lease on a 2,277-square-foot space on the lower level of the mall down a corridor off the main rotunda, sandwiched between a 17,000-square-foot Victoria’s Secret and a shoebox-sized track and field store, according to Westfield’s 2014 merchandising plan for the World Trade Center.

The mall, which was originally scheduled to open several years ago, is now slated to open in August.

One source with knowledge of the project said tenants have been frustrated with recurring delays of the opening. Westfield is normally willing to negotiate and work with tenants, the source said, because if the mall opens with less than 85 percent of the stores up and running, the other tenants get a discount on their rents.

“[Westfield] can’t afford to have major tenants not open,” the source said.

Westfield controls the retail site under a 99-year lease it acquired in 2001, several weeks before the 9/11 terrorist attacks. The REIT assumed full ownership of the site in 2013 when it bought the Port Authority’s 50 percent interest for $800 million.


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