Big Retail, Landlords Fight Over Rent At Closed Stores

There are battles brewing between landlords and large company tenants that haven’t paid rent during the coronavirus pandemic, including luminary names like Petco, Dick’s Sporting Goods and Victoria’s Secret, according to The Wall Street Journal.

Some other names include office retailer Staples, French luxury conglomerate Louis Vuitton and fashion retailer Burlington Stores.

The position of many of these tenants is that the pandemic is a force majeure situation, out of their control enough that they are physically unable to meet the obligations of their contract with the property owners. But many property owners haven’t recognized this situation as a force majeure.

While landlords have been understanding of some smaller businesses’ trials and tribulations as the coronavirus-mandated shutdown continues, landlords for these large companies are beginning to grow tired of non-payment, hypothesizing that the companies actually do have the money and just aren’t paying rent anyway.

So, after the typical 10- to 15-day waiting period to pay, some landlords are saying they’ll declare those companies in default.

However, some states like Ohio, Wisconsin and California have implemented policies making it harder for landlords to evict tenants for nonpayment during the pandemic. And some smaller-profile property owners might not want the time-consuming effort of a long court battle with some of these companies.

As of mid-April, mall owners had collected roughly 10 percent to 25 percent of tenant rents, as their stores are more likely to have been deemed nonessential. Owners of essential places like grocers and pharmacies have higher success rates; they’ve collected 50 percent to 60 percent so far.

Petco and Staples have openly said they are unable to pay rent due to the decline in shopping for understandable reasons during the pandemic. Petco said it has had to scale back pet services due to social distancing rules and has had higher costs to implement those rules and help keep people safe.

Burlington said it was “carefully managing” its expenses due to the massive loss of revenue during the pandemic.

Rent payments on homes and apartments saw a 31 percent drop earlier this month due to the loss of jobs and other fiscal uncertainties.