LOUISVILLE, Ky. (WDRB) – At least six retailers in a popular St. Matthews shopping center are behind on their rent following their forced closure amid the pandemic, according to lawsuits filed in Jefferson Circuit Court this week.
Louisville real estate firm Hagan Properties filed separate legal actions against tenants of its Shelbyville Road Plaza shopping center – Carter’s, Guitar Center, Mattress Firm, Lane Bryant, Catherines and Off Broadway Shoes – alleging that each company missed April’s rent and owes damages.
Hagan Properties principal Tommy Edwards said in an interview that the landlord is not trying to evict the retailers, calling that a “last resort.” Instead, the lawsuits are meant to spark “a dialogue” with the sophisticated, national companies behind those brands.
“This (coronavirus pandemic) ramped up in the middle of March, and some of the large, national corporations took an immediate stance that essentially said, ‘We won’t be paying you rent and we are not going to have any more communication with you,’ which is a pretty unfair way of going about this,” Edwards said. “ … Some tenants have taken the approach that, ‘We are not going to have any dialogue unless you force us to.’”
WDRB has requested comment from each of the retailers.
Kentucky Gov. Andy Beshear on March 23 ordered retailers such as the Shelbyville Road Plaza tenants to close to curb the spread of the virus. Beshear made exceptions only for “essential” retailers such as grocery stores, pharmacies, gas stations and liquor stores.
Beshear rolled out a plan Wednesday that would allow retailers to reopen on May 20 but with reduced capacity and mandatory precautions.
National data: Many retailers behind
Commercial landlords across the U.S. have seen a precipitous decline in rent collections since the pandemic restrictions began.
Datex Property Solutions, a California company that makes software used by real estate investment trusts and other landlords, tracks real-time rent payments made by about 800 retailers nationwide.
The company's data show that, as of April 24, landlords had collected 54% of the monthly rent due, compared to 86% a month earlier, when the pandemic restrictions were just beginning.
"We have seen, and our clients have seen, fairly dramatic drop-offs in collections during this period," Datex CEO Mark Sigal told WDRB.
The data show some types of tenants, such as movie theaters and fitness centers, have largely stopped paying altogether. Grocers, which have been allowed to stay open, have been keeping up with payments.
Sigal said some landlords are working out deals with tenants, such as deferring rent payments to future months. But some retailers who may have financial wherewithal to pay are "strategically" choosing not to, he said.
"The line in the sand is where the landlord feels the tenant is dealing with them straight," Sigal said.