Landlord Blasts FedEx For Rent Reduction Request
FedEx, citing the devastating impact of Covid-19, requested that its rent be cut in half at some FedEx Office locations for three months, a move sharply criticized by one landlord.
“This unprecedented crisis impacted our business in March and will continue to do so in the coming months,” Ari Spitzer, FedEx’s vice president of real estate, said in the April 13 letter obtained by CNBC.
“As an essential business, we enable the movement of so many critical supplies, including medicine and medical supplies, commerce, and at a time when so many other businesses are closed or closing, we have continued to operate to keep fulfilling our mission. We write now to request your assistance.”
The rent reduction would cover June 1 to Aug. 31. The company said it has continued to operate about 2,000 FedEx Office stores “as an essential business, supporting urgent printing and shipping needs for our customers.”
In a statement to CNBC, the company said, “Due to the economic impact of Covid-19, FedEx Office has implemented a number of temporary measures to protect the financial stability of the company for the long-term benefit of our workforce, customers and shareholders. While we can’t go into specifics, these measures are intended to align our cost structure with current operational and business requirements.”
The company declined to comment on how many landlords received a rent reduction request and said it would not respond beyond the statement.
The request outraged Paul Orfalea, who is a landlord for nine FedEx locations in seven states across the country. The facilities, which are in strip malls and stand-alone buildings, are rented by partnerships in which Orfalea has a stake. He said so far he has received rent reduction letters for five FedEx locations.
Orfalea, a philanthropist and public speaker who teaches at USC and Loyola Marymount, founded Kinko’s in 1970. The printing services store grew into more than 1,000 stores around the world and nearly $2 billion in annual sales. Orfalea stepped aside as chairman and left the board in 2000, prior to FedEx acquiring the business in 2004.