Lee Howard and David Calkins had already made up their minds to close down their original location of Urban Bar-B-Que on Chapman Avenue in Rockville, Md. They had a good run, but after 17 years, their barbecue joint was ceding ground to the restaurants popping up along nearby Rockville Pike. The coronavirus pandemic was only making things worse, and in February, the owners told their landlord they wouldn’t renew their lease when it expired in August.
By March, with sales totaling just hundreds of dollars on some days, they asked White Flint Express Realty Group for rent relief to help them weather the pandemic. The request was denied. Facing the prospect of losing thousands of dollars a month just to ride out the lease, Calkins wrote the landlord late in the month, recounting past grievances with property managers and announcing that he and Howard were closing the business. They would surrender the equipment inside (including an $18,000 smoker) as well as the security deposit. In return, they asked White Flint Express to release them from the remaining months of their lease.
To Howard and Calkins, it seemed a reasonable request during an outbreak when many landlords are deferring, reducing or outright forgiving rents for a month or two or three. But in a letter back to Calkins, an attorney for White Flint Express rejected the proposal and threatened to sue Urban’s owners, not just for defaulting on April’s rent, but for defaulting on the lease by abandoning the property. Any legal action, the lawyer wrote, would seek back rent, late fees, attorneys’ fees and all future rent. The letter also noted that Howard and Calkins, along with their spouses (Laura and Laurie, respectively), were personally responsible for the debt. The Washington Post reviewed a copy of the letter.
Within an hour, Calkins wrote an email saying that White Flint Express, a subsidiary of Greenhill Companies in Bethesda, Md., had already earned more than $1.5 million in rent from Urban Bar-B-Que since it opened in 2003. “They are not getting another cent,” he added. Calkins said he looked forward to countersuing.
Leonard “Lenny” Greenberg, founder of Greenhill, has another take. “When you’re shutting down stores, with or without the pandemic, you still have obligations,” he told The Post.
The coronavirus has brought out the best and the worst in landlord-tenant relationships. At a time when restaurants are limited to carryout and delivery or shut down entirely, restaurateurs, chefs, bakers and bar owners are trying to piece together a survival plan during a pandemic with no obvious end date: They’re looking at microgrants, Small Business Administration loans, donations from regulars, pivots into improvised grocery stores, anything to keep the lights on. But one of the largest fixed costs for almost every food establishment is rent, so many operators are looking to their landlords for a break. Any kind of break.
These are some of their stories. They illustrate a few themes: unclear communication, fear, hidden agendas, harmony, humanity and, sometimes, hostility.
Reem’s California in Oakland, Calif.: Good cop, bad cop
Under normal circumstances, Reem Assil’s Middle Eastern bakery and cafe attracts a steady stream of customers heading to or from the BART station, just steps from her shop’s entrance in a pioneering development in the multicultural Fruitvale neighborhood of Oakland, Calif. But with ridership down more than 90 percent on the Bay Area Rapid Transit Service, sales at Reem’s have plummeted more than 80 percent. Assil closed her shop briefly, then reopened as one of hundreds of restaurants working with World Central Kitchen to feed the vulnerable in their neighborhoods.
Assil has had conversations with Chris Iglesias, chief executive of the Unity Council, the community development organization that owns and operates Fruitvale Village, where Reem’s California opened in 2017. Iglesias has been sympathetic and hopeful about helping Assil. But, she says, his sense of optimism and generosity has not filtered down to Unity’s property managers, who collect the rent.
“There’s a good-cop part, like, ‘Don’t worry. We’re in this with you. We’re going to figure it out,’ ” says Assil. “Then you have the property manager who is haranguing us a little bit, just seeing whatever they can get.”
The disconnect extends to email communications, too. On March 31, Unity’s chief operating officer sent an email to all commercial tenants and residents saying the organization supports Oakland’s eviction moratorium. It also provided resources on available grants and loans. It promised to waive all late fees and “work directly with tenants to develop payment plans.”
Two weeks later, on April 13, Assil received an email from Unity’s head of property management, wondering where her rent was.
“They talk as a matter of fact, like nothing’s happened,” Assil says. “I thought we can talk through this, then we get an email like that. It’s just demoralizing.”
Iglesias knows the pandemic has been brutal on his tenants. He knows that “a lot of our tenants just aren’t going to be able to pay us right now.” But as a landlord, Unity can’t say that in its communications, Iglesias says. The nonprofit group has its own debt obligations on the Fruitvale development. It has to work with its lenders to find some breathing room, too.
“We might keep the discussions going with the tenants, knowing that we’re not going to get paid,” Iglesias says. “But technically, we can’t say, ‘Well, we’ll just forgive it.’ What we want to do is say, ‘Hey, let’s figure out a way that you can pay us something later, whatever.’ ”
More than a year ago, Iglesias says, Unity refinanced the transit development at Fruitvale. As part of the deal, the community development financial institution that worked with Unity wanted the nonprofit group to build its cash reserves.
“Now we have decent reserves,” Iglesias says. “That can get us through the next few months potentially, without taking too big a hit to the development. … So that money shifts the focus to our tenants. What can we do to help them right now?”
That information, however, had not been passed along to Assil. At least not yet.
Buffalo & Bergen in Washington, D.C.: Instant forgiveness
March 13 was a Friday. It couldn’t have been a worse day for Gina Chersevani, founder and owner of Buffalo & Bergen, which opened a bricks-and-mortar location on Capitol Hill in December. Chersevani’s mom died that morning, after a heartbreaking battle with dementia. The restaurateur was on her way to New York for the funeral, amid a pandemic that threatened to shut down her business, when she received an email from Eric Korsvall, manager of Massachusetts Avenue Properties, her landlord on the Hill.
“You probably have a lot of pressing concerns with respect to your operations, staff, guests. Paying your rent at 3rd & Mass might be a concern, and we want to help you by taking that off the table for a few months. We want you to take care of your people first, and to help you do that, we will forgo any rent due,” wrote Korsvall, who said he was unaware that Chersevani’s mother had died when he sent the email.
Chersevani was speechless. Her bagel and cocktail counter was just hitting its stride in late January after a protracted build-out, battles with historic preservationists and a slow start. But then her mother’s health began to deteriorate, requiring trips to Long Island. The visits provided Chersevani with a glimpse into the future for Washington: The pandemic had interrupted life in New York, and she knew it would soon do the same in the District. The loves of her life, she sensed, were dying.
Korsvall’s offer cut through the darkness. It immediately released Chersevani from paying potentially tens of thousands of dollars in rent, depending on the length of the pandemic.
“Not a lot of people in the world are ever going to do something like that for you,” she says. “Other landlords that I know have tons of money . . . They’re not doing anything.”
The source of this generosity may surprise you: Massachusetts Avenue Properties is an affiliate of the Heritage Foundation, the conservative think tank known for its fiscal restraint and its influence with Republican and Democratic administrations. Korsvall says the foundation knew about his decision to waive rents for the tenants under the Massachusetts Avenue banner, but he had the authority to make the call himself.
“We could do this,” Korsvall told The Post. “I don’t expect that every landlord should do what we did. For us, it was the right business decision, and I don’t want to project that this is the model and everybody should do that. … Some landlords could be in worse shape than their tenant.”
Korsvall says that, in the long run, it would cost a landlord more money to find a new tenant, and wait out another permitting and build-out process, than to help a current tenant get through the upheaval. Besides, there’s no guarantee that new tenants, or the people who invest in them, will have the stomach to launch a business in this atmosphere.
As of today, the plan is to forgive six months of rent, Korsvall said. If this pandemic stretches out longer, he’ll work out a plan with Chersevani that benefits both parties.
“If we forgo six months or more and we have a successful tenant for the next 10 years, that was a no-brainer,” the landlord says.
Urban Bar-B-Que in Rockville: Past is prologue
The war of words between the owners of Urban Bar-B-Que and their landlord is not a symptom of the coronavirus alone. There is history. Both sides have grievances.
The conflict goes back years. Laurie Calkins, who handles the books for Urban Bar-B-Que, has accused White Flint Express of overcharging for water usage and other maintenance fees. David Calkins says the landlord once put locks on the door when Urban was three days late on rent. White Flint Express also leased the space next to Urban to a medical marijuana dispensary, and on some nights, the skunky aromas can waft into the family restaurant. When Urban informed White Flint Express that they would not renew the lease in February, the landlord quickly slapped a “for lease” sign on the Chapman Avenue property.
“People aren’t going to come to a place where the landlord just plastered a sign that says ‘for lease’ on it. They think you’re closed,” David Calkins says. “So that was another nail in the coffin.”
Greenberg, the founder of White Hill’s parent company, has his own complaints. He says Urban’s woes had little to do with a pandemic or any other issue. Their food had simply gone downhill over the years, he argues. He says Laurie Calkins was rude and “nasty to everybody in my office.” He says the owners are not being accountable to a signed lease, regardless of the conditions outside the door.
“I would love to walk into my bank and say, ‘Gee, things aren’t so good today. Let me off the hook,’ ” Greenberg says. “They’re not doing that.”
Greenberg suggests that, had the restaurateurs been more professional, they might have received a more receptive audience when they asked first for rent relief and later to terminate the lease early. He says he has helped other small tenants try to ride out the pandemic: In some instances, he has accepted half a tenant’s rent in April, with tenants agreeing to pay the other half, without interest, over the remaining months of their lease, starting in January 2021. For any further breaks on rent, Greenberg says he needs to see proof that tenants have secured loans or grants. He also wants to review their books.
The rent deferrals are “what everyone’s doing,” Greenberg says. “I know people who aren’t doing anything, and we have been complimented on our generosity.”
Half Eaten Cookie Hospitality in Colorado: The futurist
Bryan Dayton owns four restaurants, two in Denver and two in Boulder, under Half Eaten Cookie Hospitality. Two of them are closed, and two (Oak at Fourteenth in Boulder and Brider in Denver) remain open for takeout and/or delivery. Dayton says he’s not paying rent, other than the minimal common area maintenance fees. He’s working with his landlords for long-term relief beyond deferrals or abatement.
To survive the coronavirus outbreak, he says, he wants to renegotiate all his leases to lower his rates by 25 to 50 percent until restaurants return to their pre-pandemic capacity and sales.
“If everything goes right, and we don’t have another outbreak or anything along those lines, we’re not going to see a true reprieve from this for another 18 or 24 months,” Dayton says. “There’s going to be a lot more economic disaster on the other side of this for us, whether that’s higher insurance rates, whether that’s outfitting my staff with masks and more rubber gloves, cleaning. All these little things that we’re not really thinking about right now.”
To Dayton, the questions are not limited to staff or operations, either. Will diners come back? Will vulnerable older customers, who spend more money than younger ones, be too scared to enter restaurants? He expects his restaurants will be at 50 percent capacity once they go back online, and you can’t expect to pay prime commercial real estate rents in that environment.
This is the time for a reset, he says, and not just for restaurant owners. Landlords and their lenders will suffer, too. He wants to see everyone hammer out a future that works for all: If the landlords need a break, they should one negotiate it with their banks, and then pass it along to their tenants.
“Things were a little bit out of control before this happened, and this is the time to say, ‘Hey, let’s take a deep breath, let’s all work together. Let’s get this settled,’ ” Dayton says.
Dayton wouldn’t provide the names of his landlords. The Post tracked down one landlord, who did not return emails seeking comment. So how have they responded to him so far?
“I’d say that three of my landlords have been really receptive on this,” Dayton says. One remains unmoved. “That’s where it gets little bit more tense and aggressive, and those are different conversations, and they’re not healthy for anyone.”
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