search

The Real Deal Logo

Trending

H-E-B snags 21 acres in Celina, hinting at development boomH-E-B snags 21 acres in Celina, hinting at development boomLawmakers reach sweeping housing deal with “good cause eviction,” new 421aLawmakers reach sweeping housing deal with “good cause eviction,” new 421aChetrits have a problem in PassaicChetrits have a problem in PassaicTrump accused of making false statements about $50M Chicago tower loanTrump accused of making false statements about $50M Chicago tower loan
Commercial
New York

NBA owes Moinian $7.5M in rent for Fifth Ave store

Store incurred $20M of losses prior to pandemic

Joseph Moinian and the NBA Store at 545 Fifth Ave. (Google Maps, iStock)
Joseph Moinian and the NBA Store at 545 Fifth Ave. (Google Maps, iStock)

UPDATED, Jan. 15 2020, 4:15 p.m.: Talk about a foul: The NBA Store at 545 Fifth Avenue, which has remained closed throughout the pandemic, now owes $7 million to its landlord, the Moinian Group.

The dispute is the basis of a lawsuit, first filed in New York State Supreme Court in June, by the landlord against NBA Media Ventures. At the time the suit was filed, the NBA owed the landlord nearly $1.9 million in back rent. But now, seven months later, that number has spiked to $7 million.

While Moinian claims that the store has broken its lease by not paying rent, the store claims that the Covid-19 pandemic has made it impossible to operate.

“Like other retail stores on Fifth Avenue in New York City, the NBA Store was required to close as a result of the coronavirus pandemic. Under those circumstances, we don’t believe these claims have any merit,” said NBA spokesman Mike Bass. “We have attempted, and will continue to attempt, to work directly with our landlord to resolve this matter in a manner that is fair to all parties.”

But the store was struggling prior to the pandemic, incurring losses of $20 million since it opened in 2015. In an May email to Moinian that was submitted as part of the lawsuit, the league’s senior vice president of global partnerships, Hrishi Karthikeyan, said “our continued ability to operate the Store is only sustainable inasmuch as there is a discernible path to profitability.”

“We did not open the Store to serve as a promotional vehicle for the NBA,” Karthikeyan wrote.

Sign Up for the undefined Newsletter

The NBA signed a 20-year lease for the store in 2014. It takes up over 25,000 square feet within the building — which also counts Knotel and Best Buy as tenants — and has 76 feet of frontage along Fifth Avenue.

“It’s unclear why the NBA has not opened their doors, even during the busier holiday season, while the neighboring retailers have been open since retail restrictions were lifted. The NBA is a multi-billion-company and yet they seem to think the law does not pertain to them,” said Edward E. Klein, managing partner of the Klein Law Group, which is representing the developer. “While we wait for the NBA to make good on their outstanding rent balance, we are hopeful that at the very least, the matter will be rectified through the court.”

As of May, the store’s $625,000 monthly rent made up 20 percent of the location’s base rent, according to data from Kroll Bond Rating Agency. A notice to cure was delivered to NBA Media Ventures May 19.

Under the terms of the lease, NBA Media Ventures owed $7,500,000 per year in rent, with that figure increasing to $8,437,500 starting next year. It will eventually reach a maximum of $10,678,710.96 per year until the lease expires.

The Fifth Avenue retail corridor between 42nd and 49th streets has been suffering due to the pandemic: According to REBNY’s most recent retail report, the average asking rent fell 16 percent year-over-year, and in the period since the NBA signed its lease, rents have fallen 40 percent.

UPDATE: This story was updated to add a statement from a lawyer for Moinian Group. 

Read more

Tags
Fifth Avenue RetailReal Estate Lawsuits