Two lockdowns have meant businesses in a beloved central Auckland food court have struggled to pay their rent. They’re getting no relief from their former soap star landlord.
Struggling businesses in the Elliot Stables building in central Auckland have been served Property Law Act notices from their landlord, demanding that they pay the shortfall in their rent to avoid further legal action. Five eateries and one backpackers were served the PLA notices over the past two weeks, which gives the businesses 30 days to pay their arrears before the landlord – The Icon Group, led by former Shortland Street star and Rubicon frontman Paul Reid – takes further action to recover the amount.
Michael LeRoy-Dyson who owns the beleaguered Attic Backpackers on the top floor said despite his revenue being down 80% for most of the year, the landlord is wanting $16,000 in rent and $34,000 operating expenses (opex). “They say you’ve got 30 days otherwise we may seek to recover the property, which basically means we’ll come down and lock you out and then start legal action against you through your personal guarantee. And that involves forcing a company into liquidation for not paying its bills.”
“And we also get charged $1700 for the pleasure of receiving one of them.”
The Covid-19 pandemic, along with construction of the Central Rail Link, has devastated trade for the Elliot Stables eateries, some of which are only making a fraction of their usual revenue.
Sha Reubin, who owns Burgz Burgers, said he and the other business owners have personal guarantees attached to their multi-year leases which means the landlord can recoup any unpaid rent through their assets. He said they don’t know how to responds to the PLAs.
“I’m really stressed. I haven’t slept in days. We’ve tried to work it out with the landlord and pay what we can. We were trying to be reasonable but we can’t pay the rent they’re wanting. Have you seen the food court? It’s empty.”
They’re hoping the government can intervene in order to rectify what they perceive as a power imbalance between commercial tenants and their landlords, and remove personal guarantees in light of the pandemic.
“The landlord is a part of the problem, but the main thing is the government aren’t doing anything for small businesses,” says Reubin. “The whole system is one sided. And the government has done nothing to get us out of this.”
“We’re scared, we don’t have that money to fight this kind of thing. How many people have to go broke to serve one company?”
CEO of the Restaurant Association Marisa Bidois said the treatment of these businesses is “woeful” considering they lost the ability to trade under the higher alert levels.
“Some of these businesses are members of ours and we are supporting them as best we can. We know that they have sought legal counsel over their rental agreements but unfortunately it doesn’t look like they are getting a fair outcome.”
“We have been calling on the government for several months now to provide support on commercial lease agreements but there has been no resolution on this so far. This is difficult for all hospitality businesses, but particularly for those whose businesses are unable to operate.”
Minister of courts Andrew Little has previously told The Spinoff that the government was limited in what it could do for these businesses as moves to amend the Property Law Act had been blocked by New Zealand First.
Meanwhile, Green Party MP and Auckland central candidate Chlöe Swarbrick has contacted The Icon Group owner Reid to advocate on behalf of the Elliot Stables businesses and find a solution.
While she said The Icon Group refused an invitation to meet with her and the other parties involved to find a way through, she will be meeting with Paul Reid one-on-one “to try and understand their perspective as best as possible”.
“I staunchly believe that constructive dialogue is the best way to resolve the issue, given so many people are feeling the pain right now and these emotions can escalate unhelpfully through unequally-resourced legal action.”
The Spinoff has approached Reid and The Icon Group for comment.
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