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Bal Harbour Shops seeks to give Saks Fifth Avenue the boot
Whitman Family Development alleges store has taken advantage of pandemic to not pay $1.8M in rent and other expenses
One of South Florida’s longest running retail marriages could be headed for a bitter breakup.
For nearly 45 years, Saks Fifth Avenue has anchored Bal Harbour Shops, helping transform the shopping center into one of the most exclusive luxury retail destinations in the world. Now, mall owner Whitman Family Development is poised to end the relationship by filing an eviction lawsuit against Saks in Miami-Dade Circuit Court.
According to the suit, filed last week, Saks hasn’t paid its percentage rent, which is derived from the department store’s net sales, for February, March and April. Saks also owes Bal Harbour Shops for 2019 real estate taxes that the national retailer is supposed to pay as additional expenses under its lease, the lawsuit states.
Bal Harbour Shops alleges Saks owes more than $1.8 million as of July 8. In addition, Whitman Family Development wants Saks to return a portion of an $18 million advance it provided the national retailer to renovate its department store at 9700 Collins Avenue in Bal Harbour.
In a statement, a Saks spokesperson said the company will defend against the lawsuit. “In this situation, we are looking forward to the legal system determining what is fair and reasonable for all parties,” the statement said. “For many years, Saks has been a significant part of the success of Bal Harbour Shops, and we expect to continue to be part of that success for a long time to come.”
Bal Harbour Shops, which is in the midst of a nearly $500 million expansion and renovation, reopened on May 18 after nearly two months of closure due to COVID-19 restrictions in the village and Miami-Dade County. Despite being closed, the Saks department store continued to generate sales, including reporting sales in June that “actually exceeded” reported sales for the same month in 2019, the lawsuit alleges.
In a statement, a Bal Harbour Shops spokesperson said Saks falls under a category of tenant that “made a carefully calculated strategy to intentionally default on lease commitments and seek to use the pandemic as a convenient excuse to evade their financial obligations.”
“Regrettably, Saks Fifth Avenue seems to be such a tenant,” the statement continued. “Saks’ extensive arrearages include long overdue rent that accrued pre-Covid, as well as percentage rent on sales that occurred after Saks re-opened for business after the lifting of closure orders from county and municipal governments.”
Saks steadfastly refused to make any effort to pay any part of its rent despite posting impressive post-Covid sales at Bal Harbour Shops, the statement said. “Bal Harbour Shops has worked tirelessly to ensure our business and our tenants can survive and thrive in this environment,” the statement said. “Regrettably, this injudicious behavior has left us with no other option than to terminate the Saks lease and sue to evict Saks from Bal Harbour Shops.”
On Aug. 4, Hudson Bay Company, Saks’ parent, informed Whitman Family Development owner and Manager General Matthew Whitman Lazenby via letter that the lease did not give the mall owner the authority to demand the $1.8 million. The lease agreement allows Saks to be excused from its obligations if its business is hindered by an Act of God and government shutdowns, according to the letter attached to the lawsuit.
“In this case, [the] tenant was ordered to close its business operations not only in Bal Harbour, but throughout the country,” the letter states. “The result of these governmental orders and restrictions has been devastating.”
Furthermore, the letter states, Saks has recently won favorable court rulings in other U.S. jurisdictions where landlords sought to evict the department store.
In Saks’ statement to The Real Deal, the company spokesperson said Lazenby and the Whitman family have not acted in good faith.
“Not only have they chosen not to adequately assume their fair share of the damages created by the global health crisis still gripping our nation, they have used the press and legal system to bully tenants,” the statement said. “They are upset that Saks Fifth Avenue has not succumbed to their bullying and are continuing to inflict damage to our business and reputation with these actions.”