HomeBase Sued for Back Rent on Fullerton Center Lease
The owner of a Fullerton shopping center has sued HomeBase Inc. for more than $100,000 in back rent and for a court order ending the lease that the home improvement retailer has at the Orangefair Marketplace.
Orangefair Co. LLC in Beverly Hills said in its Orange County Superior Court lawsuit that the Irvine warehouse chain hasn’t paid $54,690 of its $59,690 monthly rent in each of the past two months.
The property owner is asking the court to break the lease on what was once HomeBase’s main store and executive offices and require the tenant to pay back rent, court costs and daily rent of $1,989.67 starting in December.
HomeBase retains rights to the property under a lease that runs through July 2002. Those rights have kept the owner from leasing the building to another tenant, Orangefair’s attorneys said.
“We believe that HomeBase has an obligation to pay rent, irrespective of whether or not it is physically there.” said Gregg A. Martin, Orangefair’s attorney.
HomeBase operated at the site through September, said Jim Ginsburg, Orangefair’s corporate attorney. But the Irvine firm said it closed the store in July. HomeBase had no further comment on the lawsuit, which was filed last week.
Despite the dispute over rent, the owner never threatened the retailer with eviction while the store was open, Ginsburg said. “We never threw them out,” he said. “They decided they just couldn’t beat the competition anymore and closed up.”
HomeBase, which occupied the Fullerton site since the mid-1980s, has been operating in an increasingly competitive marketplace.
The nation’s strong economy, coupled with low interest rates, has fueled the housing market and pumped new life into the home improvement industry. Large chains, such as Home Depot in Atlanta and Lowe’s Co. in North Carolina have been encroaching on the territory of home-grown HomeBase, which has 88 stores in 10 Western states.
HomeBase’s earnings and revenue dropped in its fiscal third quarter, which ended Oct. 30, according to financial results the company released Tuesday. Quarterly earnings fell 46% to $3.9 million, or 10 cents a share, from $7.2 million, or 17 cents a share, in last year’s third quarter. Revenue for the quarter rose 5.3% to $379.2 million from $360.1 million a year ago.
For the first nine months, earnings fell 33% to $14.7 million, or 36 cents a share, from last year’s profit of $21.9 million, or 51 cents a share. Revenue rose 9% to $1.2 billion from $1.1 billion for the same period last year.
The company also said it has obtained a commitment for a new five-year, $250-million line of credit from BankBoston Retail Finance Inc. to replace the company’s current $105-million line of credit. Once the financing becomes final, the company plans to repurchase of up to $20 million of HomeBase stock and certain notes due 2004.
The line of credit will be used to create “a new merchandising concept” to help the company expand, HomeBase said in a statement. It did not explain the new concept.
The company also said it has cut back its expansion plans for the next fiscal year. It plans to open one to three new stores next year, rather than the five to six stores it previously announced it would open.
HomeBase stock closed at $4 a share Tuesday, up 19 cents from Monday’s close on the New York Stock Exchange.
