VIRGINIA BEACH, Va. (WAVY) — A mall kiosk owner is at risk of losing his stand in Lynnhaven Mall, after owing more than $8,000 in back rent, including rent charged for months the mall wasn’t legally allowed to open.
Sweet Ambience, a small business that sells fragrance body oils, has a website and three locations in Hampton Roads. Two are mall kiosks: one at Virginia Beach’s Lynnhaven; another at MacArthur Center and the third location is a storefront in the 2600 block of Granby Street.
When Gov. Ralph Northam (D-Va.) forced all malls closed from March 24 to May 15 due to the COVID-19 pandemic, Justin Hampton, who manages the stores, said sales plummetted.
“We weren’t able to come in and make money,” Hampton said. “We are a small business and our business thrives in the mall.”
A mall at full capacity at that, according to Hampton. As phase 1 and 2 of Virginia’s reopening plan only allowed for malls to operate at 50 percent capacity, Sweet Ambience elected to stay closed.
Closed or open, Lynnhaven Mall wanted their money.
In a letter dated June 16, Senior General Manager Michael Harris wrote to Sweet Ambience owner Samuel Martinez, to inform the business that they were in default of their license agreement and that if they did not pay rent for April, May and June, and an overage charge from December 2019, by June 21, the business could be ejected.
On June 22 another letter was sent bringing the total amount owed to $8,468.40, saying the amount must be paid by close of business Thursday.
“It doesn’t really make sense,” Hampton said. “I don’t see how we can pay a balance when we weren’t in there … It’s not American. Being the fact this being the coronavirus pandemic, everybody is going through a hard time, I would think they would give some type of leeway.”
Lynnhaven Mall is owned by New York-based Brookfield Properties. All a spokesperson would say about the issue is, “We’re engaged with all of our tenants and we don’t discuss lease negotiations.”
A similar response came from Jim Wofford, General Manager of MacArthur Center. However Sweet Ambiance’s experience has been much different with the Starwood-owned property.
Wednesday afternoon, Hampton received an email that April and May’s rent would be waived with June being based on a percentage of sales.
“That is huge for us,” Hampton said. “We don’t have a lot right now.”
Nick Egelanian, founder of SiteWorks Retail Real Estate said the scenario playing out with Sweet Ambience is far from unique begin the state of brick and mortar retail.
“There is no solution to this,” Egelanian said. “The leases do not explicitly permit the tenants not to pay rent. And the landlords that have loans their loans don’t explicitly permit them to not permit their loans.”
Indeed, Brookfield Properties is also looking to skip payments on its mortgages and asks lenders for forbearance because of the pandemic, according to the Financial Times.
Egelanian in early April suggested a 90-day payments holiday so that things wouldn’t get to this point. However now he continues to push for the federal government to implement as system Pandemic Business Interruption Insurance to help fend off what could be a significant collapse in part of the retail industry.
The federal program would provide partial coverage for lost revenues retailers are seeing. Meaning they could pay some of their rent.
“It won’t keep them whole, but it will keep them alive,” Egelanian said. “The system wasn’t built for a systemic shutdown like this.”
