Staples announced to landlords that it wouldn't pay April rent even though it remains open for business.
Amid the COVID-19 pandemic, Staples, which is deemed an essential business has informed landlords that they will not be paying rent in April. Staples has over 1,000 locations.
Retail tenants and landlords nationwide have been hit by an almost unforeseen tsunami. The vast majority of businesses were required to shut down, thus putting cash flow in the red. Over the course of the first few days to weeks of the COVID-19/Corona Virus shutdown taking place across the county many if not all of these tenants reached out to landlords to work through their rent obligations. Staples, along with a handful of other national tenants, approached things differently by informing landlords that they would not be paying their April rent.
An interesting point here is that Staples's quick action to announce to landlords that it would not make April rent likely effects the decision of landlords and asset managers when discussing rent abatement or deferral for many of the small shop space tenants. An argument could be made that Staples is still around due to the innovation of these small shop tenants, most of which are a franchise-based business, who have created exciting experiential concepts that drive traffic to shopping centers.
According to an Axios article, Staples is owned by private equity company Sycamore Partners, who last year refinanced its buyout via $3.2 billion in new debt, out of which Sycamore paid itself a $1 billion dividend. Or, put another way, Staples took on $1 billion in additional debt, thus reducing its financial flexibility in a crisis.
Staples ownership type
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