Next week, partners Greg Call and Jennifer Romano will present three courses to attendees at the National Retail Tenants Association National Conference in Orlando, Florida.  Greg is a long-time NRTA participant and presenter, and he received the NRTA Founders’ Service Award in 2007.  Greg will be teaching a course entitled “Read the Lease: Operating Cost Clauses,” which will discuss how to carefully read operating cost clauses and related provisions and to understand how the words of the lease govern what landlords may charge.  Topics will include such key issues as management fees and calculating denominators.

Jennifer has presented at the NRTA National Conference for the last five years and is a member of its legal track curriculum committee.  Jennifer will be co-presenting a course entitled “10 Pitfalls to Avoid in Pre-Litigation Disputes.” Some of the topics that will be addressed are preservation of electronic documents, protecting the attorney/client privilege, and avoiding a waiver of claims.

In addition, Greg and Jennifer will co-present a course entitled “Goals, Strategies & Tactics:  Litigating Lease Disputes,” which uses a practical, hands-on approach to teach attendees how to manage and resolve lease disputes from preparing a demand letter to litigating a tenant’s claims.

Information about the NRTA and its National Conference can be found at http://www.retailtenants.org.

General Growth Properties has completed the spin-off of 30 shopping malls into a publicly traded real estate investment trust called Rouse Properties, the Chicago-based company announced.

The properties in question are scattered across 19 states and are located in either small U.S. cities or in what are viewed as second-tier centers in larger cities, according to Bloomberg. The transaction, which was approved by General Growth’s board in December, allows the company to focus on managing properties with higher rents and tenant sales as it continues to pay down debt, Bloomberg reports.

In 2009, General Growth filed restructuring plans for itself and most of its subsidiaries to exit bankruptcy. The company filed for Chapter 11 protection in April of that year with almost $27 billion in debt. It exited bankruptcy in November 2010.

It was General Growth’s 2004 purchase of Columbia, Maryland–based Rouse Company for $7.2 billion that helped fuel its financial problems. General Growth took on debt to pay for that acquisition, then was unable to refinance that debt once the recession hit, according to the Baltimore Business Journal. General Growth is the second-largest U.S. mall operator behind Simon Property Group. 

Content for this post was provided by Daniel A. Sasse, partner in the Orange County office of Crowell & Moring.

Simon Property Group was sued recently for using anticompetitive tactics to prevent key retailers from following through with lease agreements. Gumwood HP Shopping Partners LP alleges that Simon has a pattern of abusing its power to bully its tenants into complying with its wishes. The suit asserts Simon engaged in monopolization, attempted monopolization and restraint of trade in violation of the Sherman Act.

Continue Reading Simon Property Group Accused of Using Anticompetitive Tactics

Under many retail leases, the tenant is required to pay the landlord for electricity used to operate the retail store. Lease provisions regarding electricity charges are often complex or unclear, and provisions regarding how to allocate electricity use to each tenant and what rates to charge vary substantially. Often, retailers are charged for more electricity than they use and at rates that are far higher than what the landlord actually paid for the electricity.

At the link is an article my colleague, Greg Call, and I wrote regarding steps a retailer can take to investigate whether it is being overcharged for electricity and to pursue the landlord for relief.

Anyone who works with retail leases knows that leases are not all the same, and the parties cannot assume that cookie cutter language will meet all needs. However, if you work with leases in unusual locations, such as a theme park, the differences are even more significant and the impact on profitability can be staggering.

Continue Reading Unusual Retail Locations Require Special Attention to Lease Language

As previously reported, Simon Property Group, Inc. recently acquired Prime Outlets Acquisition Company, LLC. This gained the attention of the FTC, which determined that the merger would result in reduction or elimination of competition among outlet centers in southwest Ohio; Chicago, and Orlando. Now, as part of a settlement with the FTC, Simon will divest some of its property and modify certain tenant leases.

Continue Reading Simon Reaches Agreement with FTC over Prime Outlets Acquisition; Comments Due December 10

Traditionally, retail tenants have sought to include provisions in their leases explicitly giving them the right to audit landlords’ books, particularly with regard to common area maintenance (CAM) charges. However, case law suggests that a retailer may not be out of luck if its lease is silent as to audit rights. Tenants should also be aware that even where audit rights are set out in a lease, landlords often insert restrictive clauses that seek to limit tenants’ rights to recover overcharges in court.

Continue Reading The Effect of CAM Audit Clauses in Retail Leases

As shopping center occupancy rates have decreased, enforcing co-tenancy rights has taken center stage for retailers. The key to enforcing rights under a co-tenancy provision is to rely on the plain language of the lease.

For example, in the past year, courts in Michigan and Georgia have ruled in favor of Rainbow, USA in co-tenancy disputes based on the precise language of co-tenancy provisions in the leases. In both cases, the court relied on the plain language of Rainbow’s leases to hold that Rainbow was entitled to pay reduced rent based on the landlord’s failure to meet co-tenancy requirements under the lease.

Continue Reading Co-Tenancy Disputes With Landlords Are Decided Based on the Plain Language of the Lease

Like any charge under a retail lease, insurance charges can be the source of disputes between retail tenants and their landlords.  Special concerns arise when the landlord chooses to self-insure against certain risks.  It is not uncommon for a large landlord to self-insure at least a portion of its insurance obligations or for a landlord to create a “captive” insurance company to insure its properties. In many cases, these programs do not satisfy the landlord’s insurance obligations under the lease and the costs of these programs are not properly charged to the tenant.  At the link is an article I wrote with my colleague, Jennifer Romano, on tenants’ rights regarding insurance and monitoring those rights. 

Retail leases typically contain provisions allowing the landlord to charge the tenant a pro rata share of taxes paid by the landlord. The particular wording of the lease governs what the landlord can and cannot charge a tenant. Looking for ways to cut costs, more tenants are monitoring the taxes passed through by landlords and challenging certain charges.

Continue Reading Taxes May Not Be a Straight Pass-Through Under Retail Leases