Friday, June 19, 2009

Z Gallerie Asks Leases To Be Cancelled

Z Gallerie has asked the US Bankruptcy Court to cancel 25 of its 77 leases around the United States, including the one at 917 State Street. I had previously reported that Z Gallerie was declaring bankruptcy and closing around a third of its stores in April.

The request by Z Gallerie would alleviate their responsibilities to the owners of the property who have a lease that runs for another 5 years. The owners have been marketing the property for lease on their own in hopes of finding a tenant to let Z Gallerie off of their lease but with this request into the court it probably means that Z Gallerie has stopped all payments of rent to the ownership.

There are always plusses and minuses when dealing with a national tenant. Typically, the plusses outweigh the minuses. This is an instance of when dealing with a big company with lots of lawyers will end up hurting a property owner. Most of the owners in Santa Barbara are smaller, more personal entities. They are not large corporations with massive holdings and often cannot afford to go after delinquent tenants. Sometimes that gets forgotten around here.

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