Victoria’s Secret Sues Landlord of Herald Square Flagship Over Nearly $1 Million Rent
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Victoria’s Secret has become the latest brand to go to court over rent payments amid the coronavirus pandemic.
On Monday, the beleaguered lingerie giant and its parent L Brands Inc. sued Herald Square Owner LLC, which is owned by SL Green Realty Corp., in New York state court. It argued that the COVID-19 health crisis has made it “impossible” to continue paying its landlord the monthly rent of nearly $1 million for its Herald Square flagship store.
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In the filing, the company wrote that the “purpose” of paying $937,734 a month was “completely frustrated” as government-mandated lockdowns forced the closure of its outpost in the formerly high-traffic Manhattan intersection.
“That purpose is also frustrated when the subject store can open at only a marginal capacity,” it added, “or when customers are too fearful of profound illness and potential death to venture out to shop for lingerie or other personal items.”
Victoria’s Secret has requested the judge to rescind its lease for the store, located at the 2 Herald Square building at the intersection of 34th Street, 6th Avenue and Broadway.
Tensions between landlords and their tenants continue to mount: As retailers skip out on their lease obligations, commercial owners who need to meet their own mortgage terms have been indicating that they are experiencing pressure to take legal action against their shuttered tenants.
With many stores still closed to the public, Gap and Ross Stores, as well as Nordstrom, H&M and Burlington Stores, are among some of the companies that have opted not to make their rent payments as the outbreak throws their balance sheets into disarray. In response, some landlords — including those for Gap and Ross — have filed lawsuits against retail tenants.
Many commercial leases contain a force majeure clause, which essentially frees both parties from certain obligations caused by circumstances beyond their control, including wars, strikes and, in some cases, pandemics and other similar unforeseen events.
Nevertheless, the situation has created a domino effect, with a number of retail tenants seeking concessions from landlords, who say they, too, are struggling with debt. For instance, with only a fourth of its retail tenants paying rent, Macerich is working to address collections with store owners on a “tenant-by-tenant basis.” Fellow mall owner CBL & Associates Properties, which missed an interest payment and faces default after it collected only 27% of rent payments, noted that majority of its occupants have requested rent relief.
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