Tenant Entitled to Rent Abatement After Anchor Is Replaced by Dissimilar Store

July 31, 2002

A lease said that if an anchor left the center, the tenant could abate its monthly rent by paying the percentage rent only. The lease also permitted the tenant to cancel its lease if the owner hadn't replaced the lost anchor with a “similar type and size business” within nine months. When one of the anchors—a craft supply store—left the center, the tenant began paying percentage rent only. After a Christian bookstore moved into the anchor's space, the tenant refused to pay its fixed rent. It argued that the bookstore wasn't a similar business to the craft supply store.

A lease said that if an anchor left the center, the tenant could abate its monthly rent by paying the percentage rent only. The lease also permitted the tenant to cancel its lease if the owner hadn't replaced the lost anchor with a “similar type and size business” within nine months. When one of the anchors—a craft supply store—left the center, the tenant began paying percentage rent only. After a Christian bookstore moved into the anchor's space, the tenant refused to pay its fixed rent. It argued that the bookstore wasn't a similar business to the craft supply store. So the owner sued the tenant.

A Texas appeals court ruled that because the new anchor wasn't in a business similar to the original anchor, the tenant owed percentage rent only. The court rejected the owner's argument that the businesses were similar, as they both sold goods to the public, noting that one business sold religious merchandise and the other sold craft supplies [Hartford-Lubbock LP II v. The Cato Corp.].

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