)
Coworking giant Regus PLC lost an appeal in its dispute with New York landlord Vornado Realty Trust over a $90M lease agreement for a San Francisco office space Regus never occupied.
The ruling is the latest in a years-long legal struggle between Regus parent IWG-PLC and Vornado. The decision came Tuesday from the California Court of Appeals, the San Francisco Business Times reports.
Vornado is entitled to costs on appeal, the ruling said.
Regus leased 78K SF at 345 Montgomery St. in 2019, with plans to open its Spaces brand there, but never moved in. In 2020, Vornado kicked off legal action, alleging that Regus was trying to back out of a 15-year lease.
Vornado undertook a $66M renovation on the property, a distinctive downtown San Francisco building called The Cube that was formerly home to Bank of America’s flagship retail operation. Vornado owns 70% of The Cube, while former President Donald Trump’s company owns the remaining minority stake.
Regus argued in the original trial, and again on appeal, that it was allowed to terminate its lease because the city of San Francisco denied exterior signage plans. But the court ruled the termination was only lawful if Regus first received notification of signage rejection, or if it had not received approval by the promised delivery date of the renovated space.
Approval for the signage was issued Oct. 2, 2019, the Business Times reported, and Regus moved to terminate the lease on Sept. 26.
Like many coworking providers, IWG suffered financially during the height of the pandemic, with multiple entities related to Regus and Spaces filing for Chapter 11 bankruptcy protection in 2020.
Vornado weathered the pandemic on better footing, but has run into financial strain as the economy has worsened in recent months. In a Tuesday regulatory filing, the company disclosed it expects to take a $600M write-down on its portfolio, the bulk of which is related to properties it owns in Times Square and on Fifth Avenue in New York.
CORRECTION: Feb. 2, 2023, 6:11 PM ET.: This story has been updated to reflect accurate information about damages owed to Vornado by Regus.
)
)
)
)
)
)
)
)
)
)
)
)