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Mall owner sues Old Navy for abandoning ship

Vestar says retailer owes $100K for missed April and May rent at LA County locations

Old Navy is facing two new lawsuits (Credit: iStock)
Old Navy is facing two lawsuits for skipping out on rent at L.A. County mall locations. (Credit: iStock)

Last month, Gap Inc. suspended rent payments at its 2,785 retail stores nationwide, including Banana Republic and Old Navy, saying the Covid-19 pandemic had crippled business.

The lawsuits from landlords and mall owners have already started rolling in.

The latest, from mall owner Vestar, cites Old Navy for breach of contract, saying it skipped out on a combined $100,000 in April and May rent at two stores in Glendora and Pico Rivera.

In the filings, Vestar — through LLCs East Gladstone Street Investors and Vestar California XXVI — claims Old Navy broke its leases. The retailer had a deal for its 17,000-square-foot store at Diamond Ridge mall in Glendora that extends until 2022; and a lease for the 13,000-square-foot location in Pico Rivera Towne Center that runs until 2029, according to the two suits filed last week in L.A. County Superior Court. Both mall properties are listed in Vestar’s portfolio, one of its 36 listed in California.

The lawsuits also include allegations that Old Navy didn’t pay property taxes, along with other obligations like contribution to maintain the mall’s common spaces.

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Attorney David Taran of Clark Hill filed both lawsuits. When reached Monday, he declined to comment.

A message left with the Gap Inc. was not returned.

Earlier this month, a landlord for a Gap store in Midtown Manhattan sued the company in federal court for $530,000 in missed April and May rent checks. The Gap cited the state’s stay-at-home order that has kept stores shuttered across New York City. Similar lawsuits involving retailers that have broken or abandoned leases, with Covid-19 as the stated reason, have begun popping up across the country in recent weeks.

In the most recent lawsuits, Old Navy had similarly-structured lease deals at both L.A. County malls.

For the Diamond Ridge location, it signed a 10-year lease in 2006, and then extended the deal in 2017 until 2022, according to the lawsuit. Old Navy’s rent is $25,759 a month, along with taxes and common charges, the suit claims.

For the Pico Rivera lease Old Navy signed in 2019, the retailer’s rent is $24,790 a month until 2029, the filing notes.

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Coronavirus Real EstateMallsRetail