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Neiman Marcus' looming bankruptcy is set to be a huge challenge for the ritzy new mall at Hudson Yards, potentially causing a domino effect of departures or lease renegotiations.
The luxury department store reportedly is on the verge of filing for bankruptcy protection, and that could be a mean a new lease deal with Related Cos. and Oxford Properties, which own the Hudson Yards mall where Neiman is the anchor tenant, Business Insider reports.
Related and Oxford cut a sweetheart deal with Neiman, paying for a pricey build-out and agreeing to take a cut of the department store's sales in lieu of rent, BI reports. But the wider issue is that some retailers have clauses in their own leases that give them the option to renegotiate or leave if Neiman packs up, according to the publication.
The Shops & Restaurants at Hudson Yards, which opened in March 2019, is closed because of the coronavirus pandemic. Retailers across the country are taking a massive hit from lockdown measures, and landlords say many of their retail tenants have not paid rent, a situation only set to get worse as April melts into May. Related CEO Jeff Blau, who has previously said that tenants who can pay their rent have an obligation to do so, told Bloomberg this week that he foresees a wave of defaults coming.
“Once that ecosystem of rent to expenses to interest to the banks gets broken at one part of the chain, that’s going to become a problem," he told Bloomberg.
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