Coronavirus

Old Navy Center City Hauled Into Court Over Unpaid Rent During Coronavirus Shutdown

And you thought your rent was high.


the chestnut street old navy in philadelphia, which is being sued for unpaid rent

The Old Navy on Chestnut Street in Philadelphia on May 27, 2020. The store is being sued by its landlord for unpaid rent during the coronavirus pandemic. (Photo by Diane Schwartz).

All of the Old Navy stores in Philadelphia are closed. They have been since March, because stores that sell nothing but clothes that get all stretched out after two trips through the washing machine aren’t exactly on the essential businesses list. But you know who is still very much in business? Old Navy’s landlord.

The landlord for the Old Navy on the 1600 block of Chestnut Street in Philadelphia is officially known as Gazit Horizons LLC. Gazit Horizons is the Miami Beach-based arm of Gazit Globe, a publicly traded Israeli real estate conglomerate that has billions and billions of dollars in assets around the world. And now Gazit Horizons is taking the Old Navy on Chestnut Street to court over rent that has gone unpaid during the coronavirus pandemic.

According to a federal breach of contract lawsuit that Gazit just filed against Old Navy, Gazit bought the building in September 2019, inheriting along with it Old Navy, which signed a 10-year lease on the 23,464-square foot spot back in 2015.

But Gazit says that Old Navy hasn’t paid its rent for April or May. The Chestnut Street Old Navy isn’t the only Old Navy in the country to stop paying its rent. Far from it. Gap Inc., which operates Gap, Old Navy, Banana Republic, and Athleta stores, announced in April that the company stopped paying rent on all of its properties due to serious financial problems brought about by the coronavirus pandemic.

Just how much is Old Navy’s rent in Center City? $97,766.67 per month. When you tack on late fees and other charges in the amount of $31,499.84 total for the two months, that comes out to $227,033.18, the amount that Gazit is suing for. Plus attorney costs.

In the lawsuit, Gazit says that the company emailed Old Navy a notice of default on April 14th. And then on May 7th, Gazit sent another one demanding payment. But to date, Gazit says that Old Navy hasn’t paid a dime of what the company owes.

And in case you’re wondering if Old Navy can use a force majeure defense to avoid paying its rent — force majeure being the legal concept that can allow a party to get out of a contract due to unforeseeable or extraordinary circumstances — Gazit says no.

According to Gazit, Old Navy signed away that possibility when the company signed its lease in 2015, since the lease specifically reads “force majeure shall not excuse prompt and timely payments when due.”

An Old Navy representative did not immediately return a call seeking comment.

Though Gazit has other retail tenants around the United States, including in Boston, New York and Miami, this is the first such lawsuit that the company has filed during the pandemic.