Friday, April 24, 2009

Oh no she didnt... Highland bites back at Dillard's

Dillard's wanted to break it's lease that expires in 2017 because Highland Mall (JPMCC 2002-CIB4) is supposedly mismanaged and is now a ghost town, so they sue in court. Mind you the Dillard lease appears to have been renegotiated in 2007.

The mall is having issues: The 3Q 2008 numbers were 1.38x NCF DSCR and 81% occupancy down from prior year occupancies of 94+%, and significantly lower than the rest of the MSA. They lost JC Penney and apparently there is dark space (no relation) in that section of the mall. And there is a huge ongoing local dispute because the mall shut down early one day following a predominantly african-american track event - the NAACP has given speeches, names like Jim Crow were plastered on billboards, and a boycott has been sounded by african american and hispanic populations (this mall is in Texas) - so it has issues.

GGP and SPG jointly own the mall, so I guess Dillard's figured it could railroad its way around that pesky contractual lease given the problems at the parent co's. Nope. The mall counter sued Dillard's:

The mall’s owners ask for a declaratory judgment, attorneys’ fees and damages related to Dillard’s alleged breach of contract, “business disparagement” and “interference with business relations.”
Now their legal fees and judgments are likely to exceed any lease expense they could have had.

Searching for on-line law degrees with a focus on CRE law now...

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