Saks fights landlord to keep Stanford Shopping Center location open
By Jonathan Randles, Bloomberg
Bankrupt luxury retailer Saks Global Enterprises is moving to block Simon Property Group from closing two locations in California and New York, a clash that exposes a widening rift between one of the nation’s largest mall owners and one of its most prominent anchor tenants.
Simon is seeking to take over a Saks location at the Stanford Shopping Center in Palo Alto, California and a Saks OFF Fifth discount store at an outlet mall in Woodbury, New York. Simon claims Saks didn’t pay rent and other costs shortly before it sought Chapter 11 bankruptcy protection on Jan. 13.
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Saks responded on Monday in a court filing that its agreements give it time to pay back any rent it allegedly owes, including any disputed claims of missed payments related to maintenance in common areas, taxes and utility charges. The retailer said it also has the added protection of a bankruptcy stay that prevents Simon from disrupting its business.
Before the bankruptcy filing, Saks and Simon had a close business relationship. Simon invested $100 million in December 2024 to support Saks’ acquisition of Neiman Marcus, according to court papers. Saks Global is also Simon’s sixth largest anchor tenant by leased square-footage, according to a January report by Bloomberg Intelligence.
“Simon has decided that it can make more money on certain of the leases by reletting them at higher rates,” said Saks in its court filing.
By forcing Saks to withdraw from two currently operating stores, Simon would harm the business and prevent “any possibility of selling these valuable leases” to raise money that would benefit all company creditors, the retailer said.
A group of Saks senior noteholders and a committee representing its unsecured creditors are supporting the retailer and opposing Simon’s request. The two locations are important to Saks’ overall value and the leases weren’t properly terminated by Simon before the bankruptcy filing, the committee said in a Monday court filing.
Simon alleges that Saks was required to leave the New York and California premises by Jan. 18, just days after the retailer sought court protection, and owes at least $5.7 million. The Chapter 11 filing and Saks’ bankruptcy stay shouldn’t prevent the landlord from taking back the two locations because the leases were terminated shortly before the retailer sought court protection, Simon said.
A Saks spokesperson declined to comment. Representatives for Simon didn’t immediately respond to messages Tuesday.
Simon’s request will be reviewed by a Texas bankruptcy judge who is overseeing Saks’ Chapter 11 case.
Saks announced earlier this month that it was closing more than 10% of its full-price stores across the US as it attempts to restructure in Chapter 11. The retailer has also closed nearly all of its Saks OFF 5th discount stores.
The case is Saks Global Enterprises LLC, number 26-90103, in the US Bankruptcy Court for the Southern District of Texas.
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