For months, retail landlords have been negotiating lease modification and rent breaks with tenants. But talks that reached a stalemate may soon end in litigation.
A wave of retail evictions among big tenants and small businesses is expected to flood in as courts reopen and eviction moratoriums across the country expire, according to the Wall Street Journal.
In Miami, Whitman Family Development began legal proceedings to evict Saks Fifth Avenue from its Bal Harbour Shops location for missing $1.9 million of rent. The retailer has a ground lease and pays a percentage of his sales as rent.
“We hope and think that the outcome of the lawsuit is that Saks would come to its senses and pay its rent in full,” Matthew Whitman Lazenby, CEO of Whitman Family Development, told the Journal. “If Saks still doesn’t do so, we’ll have a whole host of other options for the space.”
While overall retail rent collections for major chains have improved to nearly 80 percent in July, some sectors, particularly apparel, fitness and theater, continue to struggle with payments, according to a report from Datex Property Solutions.
Local retailers may fall behind even further, especially as rent relief programs begin to expire and tenants face the prospect of making up a backlog of payments.
Although lawyers say they expect proceedings to result in settlements and rent eventually being paid, they are being faced with an abundance of evictions in the works.
“Landlords need to figure out which tenants are going to thrive and make the center better and which ones have been struggling already,” Eric Ruzicka, a partner at Dorsey & Whitney LLP, told the Journal. “If it was a good relationship before coronavirus, it’s a salvageable relationship.” [WSJ] — Sasha Jones