Saks Fifth Avenue has responded after one of its landlords sued it over unpaid rent amid coronavirus-induced lockdowns.
On Monday, as first reported by FN’s sister publication WWD, Bal Harbour Shops filed a lawsuit against the high-end department store in the 11th Judicial Circuit Court of Miami Dade County. It aims to put an end to Saks’ lease at its open-air center, which is one of the world’s most recognizable shopping malls, as well as evict the chain from its property due to “extensive arrearages.”
In an email to FN, a Saks spokesperson said, “Saks Fifth Avenue has been working with our landlord partners to amicably and logically share the losses incurred as stores and malls were closed for several months during the pandemic. We and our reasonable partners agree that there are fair solutions to be had as we recover from this public health crisis.”
The company added, “While we have reached agreements or understandings with the majority of our landlords, unfortunately, this landlord was not willing to work with us on expenses when the mall was closed during the pandemic. 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.”
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According to Bal Harbour president and CEO Matthew Whitman Lazenby, Saks’ alleged arrearages include “long over due rent that accrued pre-COVID-19,” as well as “percentage rent on sales that occurred after Saks reopened for business” after local government restrictions were lifted. It claimed that it had given the chain “months” to honor its purportedly past due financial obligations, and despite its “impressive post-COVID-19 sales” at the Bal Harbour location, Saks had “steadfastly refused to make any effort” to pay its rent.
“Through this [pandemic], three distinct groups of tenants have emerged: those that honor their obligations to the best of their ability and then ask for help after doing so; those that engage in productive discussions and then faithfully honor their revised obligations; and those that make a choice — often driven not by necessity but by a carefully calculated strategy — to intentionally default on their lease commitments and to seek to use the pandemic as a convenient excuse to evade their financial obligations,” Lazenby said in an email to FN. “Regrettably, Saks Fifth Avenue seems to be such a tenant.”
According to WWD, Saks parent Hudson’s Bay Company executive chairman and CEO Richard Baker is preparing to file its own lawsuit against Lazenby and the Whitman family, which owns the shopping center, for “significant damages to the Saks Fifth Avenue brand and breach of confidentiality agreements.” (FN has reached out to HBC for confirmation.)
The legal battle between Saks and Bal Harbour is the latest in a series of lawsuits filed by property owners against their commercial tenants over missed rent payments as the outbreak forced the widespread closures of nonessential businesses across the country.
Mall-owner CBL & Associates Properties, which recently announced that it was preparing to file for bankruptcy, has shared that the majority of its occupants, including the bankrupted JCPenney, have requested rent relief. On the other hand, America’s largest mall owner, Simon Property Group has sued Gap after it opted against paying rent for April, May and June. A growing number of retailers — counting Nordstrom, H&M and Burlington Stores — have also skipped out on their lease obligations as the pandemic continues to throw their balance sheets into disarray.