Among the many businesses not paying rent is Equinox, despite Related Companies’ CEO saying this week that commercial tenants must pay if they can afford it. Related’s principals are Equinox owners.
The gym chain has not paid rent for the month of April at multiple New York City locations, The Real Deal has learned from documents and three sources with direct knowledge.
Equinox’s failure to pay raises questions about its financial health and it comes as the company’s parent, Related Companies, takes a strong stance against commercial tenants not paying rent.
“Companies that have capability, have liquidity, have a strong balance sheet — I think they need to pay the rent,” CEO Jeff Blau said on CNBC’s “Squawk Box.” “What’s not okay is when you have large companies, whether it’s retail or corporate, that suddenly send blanket letters to their landlords saying ‘we’re not going to pay the rent.’”
“It’s a whole ecosystem,” he added in the interview. “The people that can pay need to pay.” Landlords should work with tenants who can’t, he noted.
Related acquired Equinox in 2005. The upscale fitness chain has locations in Related’s Hudson Yards and one of Related’s condo buildings with Taconic Investment Partners in Chelsea at 450 West 17th Street.
Jon Weinstein, a spokesperson for Related, said in a statement, “Equinox is an independent company, with multiple investors and we don’t make strategic or operational decisions for them.”
“We don’t comment on individual tenant rent collections or their financial situations,” he continued.
Principals of Related are among the owners of Equinox, whose representatives did not respond to requests for comment.
Non-essential businesses, including commercial gyms and even fitness facilities in residential buildings, have been ordered to close by Gov. Andrew Cuomo to slow the spread of the coronavirus.
But as health and government officials try to bring the virus under control, many businesses have been hemorrhaging cash, notably retailers, hotels and restaurants. Equinox is not billing its members while its gym locations are closed, sources confirmed.
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Major retailers, including chains Subway, Urban Outfitters and Mattress Firm, have told landlords they either cannot pay rent or need reductions. At the end of March, Neiman Marcus, which anchors Hudson Yards’ mall, was considering filing for bankruptcy. A stress test conducted by Goldman Sachs in early April found that department stores such as Kohl’s, Nordstrom and Macy’s could run out of cash within a month.
Blau told CNBC that 95 percent of Related’s office tenants but only 26 percent of its retail tenants had paid April rent.
Since Related acquired Equinox, the announcement of the deal has remained on Related’s website, but a source claimed there have been changes in the ownership structure.
Related’s landing page listed Equinox among its brands before they were all scrubbed from the website last August.
Until last summer Equinox was listed as one of Related’s brands on the real estate company’s landing page but the brands were scrubbed from the website Aug. 8 when controversy erupted about Related chairman Stephen Ross hosting a fundraiser for President Donald Trump.
Write to Erin Hudson at ekh@therealdeal.com