Plaza restaurants find no relief from landlords amid COVID-19

Owners say Taubman won't defer rent
Changes coming to the Country Club Plaza
Posted at 1:53 PM, Apr 01, 2020
and last updated 2020-04-02 06:07:45-04

KANSAS CITY, Mo. — Restaurants are taking a financial beating thanks to public-gathering limits and stay-at-home orders, which have closed seating areas for the foreseeable future.

Many are trying to ride out the COVID-19 pandemic by offering to-go service, hoping to avoid laying off entire staffs and possibly closing their doors, never to reopen.

But a group of Plaza restaurant owners said Taubman Centers — a retail landlord owned by the Simon Property Group that operates malls and shopping centers, including the Country Club Plaza, in 13 states plus Puerto Rico, China and South Korea — is playing hardball about rent payments.

Taubman sent a letter to all tenants dated March 25, which said that “all Tenants will be expected to meet their Lease obligations.”

While Taubman recognizes that “the COVID-19 pandemic has led to the closure of many stores or otherwise impacted the operations of our Tenants,” the landlord company said its obligations to “lenders, utility companies, insurance companies and the like, to ensure the safety and security of the building and maintain the appropriate level of operations, remains.”

Page 1 of Tenant Communication

But for Plaza restaurant owners, that’s not good enough.

In a letter sent to 41 Action News from a public relations outfit on behalf of “Plaza Restaurant Owners,” the restaurateurs noted that many Plaza-area eateries “have been pillars of community, employment and service for decades.”

“It is in that spirit that many of these local restaurant owners have pivoted to provide take-out options to the community while earnestly trying to keep staff employed,” Plaza Restaurant Owners continued. "These efforts are only possible with the help and understanding of our vendors, suppliers and community partners.”

Taubman, the group charges, has not been accommodating.

The Plaza Restaurant Owners said they reached out to Taubman and Macerich, which bought the Country Club Plaza in partnership with Taubman in 2016, “to explore possible lease rent freezes, deferments, or other options that could help these businesses survive until our community is moving again.”

Instead, ownership sent a letter to all tenants encouraging them “to look to their business interruption insurance policies to assist in making the Tenant whole” and able to make lease payments in full.

Moreover, the Plaza Restaurant Owners said the retail property’s owners have effectively raised rent through “increased ‘Common Area Maintenance’ fees and larger property tax amounts.”

Taubman did not address the maintenance fees, but noted that Jackson County's new property assessments are responsible for the property tax increases and were "communicated well before the COVID-19 situation" to tenants.

"Our tenants are very aware that we are appealing the increase with the Board of Taxation," Taubman said in a statement.

As the County Club Plaza's operating partner, Taubman said it's well aware of the COVID-19 outbreak's impact on businesses. It has not been immune either, and is willing to work with tenants.

The landlord clarified its stance on lease payments in a statement to 41 Action News:

Just like the Plaza restaurant owners, we are attempting to navigate through this unprecedented situation in the best way we can, while being as flexible as possible with our tenants. The tenant memo in no way replaces our willingness to talk to each tenant about their respective challenges to see if mutually agreeable solutions can be found. In fact, we’ve had numerous, highly productive calls with several Country Club Plaza tenants. Naturally, this new reality can be much harder for less-established tenants and we sympathize with their position. However, as our recent letter stated, we must continue to fulfill our significant obligations and tenants share in the responsibility to ensure the long-term viability of each shopping center.

Restaurant owners have reached out to the County Club Plaza business office and Taubman attorneys.

As recently as Tuesday, Taubman legal staff told Plaza restaurant tenants, "We haven’t made any decisions yet as information continues to evolve along with the severity of the situation. In the meantime, I would encourage you to inquire into your eligibility under the CARE Act."

Still, the net result may mean the restaurants are forced to close, according to the Plaza Restaurant Owners’ letter:

“These increased effective rent amounts, combined with the Plaza ownership’s unwillingness to work with the local business owners in this time of crisis, clearly is meant to put the corporate profits of the Taubman and Macerich groups ahead of the Kansas City community, the local restaurants and their thousands of employees. Unfortunately, under these circumstances, the continued operation of many of these local restaurants is seriously at risk.”

The Cheesecake Factory, which operates a location on the Country Club Plaza, previously announced plans to skip April lease payments amid the COVID-19 outbreak.

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