Retail & Consumer Products Law Observer

Retail & Consumer Products Law Observer

Legal Insight for the Retail and Consumer Products Industry

Category Archives: Real Estate

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Crowell & Moring Partners Greg Call and Jennifer Romano to Speak at the National Retail Tenants Association National Conference

Posted in Real Estate
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,”… Continue Reading

General Growth Properties Completes Spin-off of 30 Malls to Rouse Properties

Posted in Corporate & Transactions, Real Estate
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… Continue Reading

Simon Property Group Accused of Using Anticompetitive Tactics

Posted in Antitrust & Claims Recovery, Real Estate
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… Continue Reading

Retailers May Be Overcharged for Electricity in Violation of Their Leases

Posted in Real Estate
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… Continue Reading

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

Posted in Corporate & Transactions, Real Estate
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… Continue Reading

The Effect of CAM Audit Clauses in Retail Leases

Posted in Real Estate
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… Continue Reading

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

Posted in Real Estate
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… Continue Reading

What Happens When Your Landlord Is Self-Insured?

Posted in Real Estate
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… Continue Reading

Retailers Look To Cut Costs By Enforcing Co-Tenancy Provisions

Posted in Real Estate
As retailers continue to close underperforming stores and look for other ways to cut costs in a weak economy, they are closely monitoring and enforcing co-tenancy provisions in retail leases. The language of the lease is critical in co-tenancy disputes.  Issues that arise include: What conditions trigger a tenant’s co-tenancy rights? Closure of anchor stores?… Continue Reading

CO-TENANCY RIGHTS CAN SHAVE COSTS

Posted in Real Estate
In this troubled economy, co-tenancy provisions are playing a critical role in retail leases. The Wall Street Journal recently reported that retail tenants with co-tenancy rights in their leases are “eking out critical savings” to counter the drop in sales.[1] Vendors are offering services that track store closings at shopping centers for purposes of co-tenancy… Continue Reading

Tenant Entitled to Claim Constructive Eviction Despite No Breach Statement in Estoppel Certificate and “Hell or High Water” Clause

Posted in Real Estate
Case: Reliastar Life Insurance Co. of NY v. Home Depot, U.S.A., Inc., 570 F.3d 513 (7th Cir. 2009) (applying New York law) The One Sentence Summary: A federal court applying New York law holds that a tenant’s execution of an estoppel certificate creates no warranties about present or future conditions not known by the tenant… Continue Reading

Landlord Entitled To Liquidated Damages Based On Loss Of Synergy, Goodwill And Patronage Resulting From Closure Of “National Tenant’s” Store

Posted in Real Estate
Case: El Centro Mall, LLC v. Payless Shoesource, Inc., Cal. Court of Appeal, Fourth District, Division Three, No. G040038 (May 21, 2009) The One Sentence Summary: In an action by landlord El Centro Mall seeking liquidated damages of $98,000 based on defendant Payless Shoesource’s closure of its store before expiration of the lease term, Payless… Continue Reading

Preparing for a Tenant’s Opportunities from the Potentially Bankrupt Landlord

Posted in Real Estate
The Coming Challenge: Major commercial landlords may be on the brink of bankruptcy due to the current financial environment and the credit crunch. See, for example, the continuing news coverage of the struggles of General Growth Properties, such as General Growth Properties Seeks Further Loan Extension (Reuters). What A Tenant Should Do: Prepare Now! Tenants… Continue Reading

The Center is Failing: What Are Your Rights?

Posted in Real Estate
The Summary: In today’s financial climate, it is hard to keep up with the changes happening in shopping centers across the country. Retail space in shopping centers is staying vacant for several months or longer. Landlords are converting retail space to non-retail use or closing entire wings or floors of shopping centers. Landlords are even… Continue Reading

Retail Lease Tying Rental Rate To Rent Of Competing Tenant Or Its Successor Held Inapplicable Where Competing Tenant Is Defunct

Posted in Real Estate
Case: California National Bank v. Woodbridge Plaza LLC, Case No. 05CC03999 (Cal. Ct. App. 6/20/08) The One Sentence Summary: California Court of Appeal held that a bank’s retail lease providing for an extended lease term at the lesser of the then prevailing rental rate or the latest square foot rental rate of a competing bank… Continue Reading

California Court Imposes Duty on Landlord to Inspect Tenant’s Premises upon Entry of Unlawful Detainer Judgment of Possession

Posted in Real Estate
Case: Stone v. Center Trust Retail Properties, Inc., Case No. B181180 (Cal. Ct. App. 5/30/08) The One Sentence Summary: The California Court of Appeal held that a shopping center landlord has a duty to inspect a tenant’s premises upon the entry of a judgment of possession in an unlawful detainer action, creating potential liability of… Continue Reading

Landlord Must Provide Tenant with Supporting Documentation of Actual Common Area Expenses Incurred

Posted in Real Estate
Case: McClain v. Octagon Plaza, LLC, Case No. B194037 (Cal. Ct. App. 1/31/08)The One Sentence Summary: Where retail lease requires tenant to pay its share of common area expenses based on landlord’s statement of the expenses, tenant is entitled to review landlord’s supporting documentation to verify that the stated expenses were incurred and that the… Continue Reading

What Makes For A Successful Tenant Overcharge Claim Against A Shopping Center Owner Or Operator

Posted in Real Estate
The One Sentence Summary: In successful claim after successful claim, it is the lease language that is most important. Full Posting: Every year there are thousands of disputes in which retail tenants claim they are overcharged by owners and operators of shopping centers for CAM expenses, utilities, taxes, marketing fund payments and other charges. The… Continue Reading

California Supreme Court Upholds City’s Zoning Ordinance Restricting Retail Sales in Designated Districts

Posted in Real Estate
Case: Hernandez v. City of Hanford, No. S143287 (Cal. Sup. Ct. 6/7/07) The One Sentence Summary: California Supreme Court held that City of Hanford’s zoning ordinance restricting the sale of furniture in shopping mall district in order to protect retail furniture stores deemed vital to economic viability of city’s downtown commercial district was not unconstitutional.… Continue Reading

Trial Court Rejects Property Owners’ Challenge to Condemnation of Land for Brooklyn’s Atlantic Yards Arena and Development Project

Posted in Real Estate
Case: Goldstein v. Pataki, 488 F. Supp. 2d 254 (E.D.N.Y. 6/6/07) The One Sentence Summary: District court in Brooklyn rejected property owners’ claim that condemnation of property for mixed-use development project consisting of sports arena for New Jersey Nets basketball franchise, housing units, offices, retail space, and a hotel violated public use requirement of eminent… Continue Reading