Bankrupt commercial real estate company Meruelo Maddux Properties Inc. has reached a deal to retain its largest tenant, downtown clothing company American Apparel Inc.
The apparel maker has inked a 10-year lease to remain at its 747 Warehouse St. property in the industrial section of downtown, according to an Aug. 17 filing with the Securities and Exchange Commission.
“We are pleased that we've come to a positive resolution,” American Apparel Chief Executive Dov Charney told the Business Journal. “We are excited about developing and enhancing the site, and we hope to make it a better community asset as well as improving it to enhance the quality of our busines as whole.”
Financial terms of the new lease were not disclosed, and Charney declined comment on them.
The lease is a coup for beleaguered Meruelo Maddux. American Apparel occupies 800,000 square feet of the 1.4 million-square-foot industrial facility at Seventh and Alameda streets where Meruelo Maddux also has its headquarters.
Meruelo Maddux Chief Executive Richard Meruelo purchased the sprawling property for $19 million in 1997. Meruelo Maddux filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in March after announcing it couldn’t make payments on $266 million in debt. The company went public just two and half years ago.
“We have signed a new lease with American Apparrel and are happy to see them recommit to our site as their long-term headquarters and manufacturing home,” said Meruelo in an e-mailed statement.
The apparel company’s lease expired earlier this year and the company was shopping around for a new location. Mark Weinstein, president of real estate company MJW Investments Inc., said American Apparel had contacted his firm about moving into a vacated Sears distribution center it owns in Boyle Heights.
American Apparel has occupied the Warehouse Street facility, where it manufactures its clothing, for about a decade. The company, which has 272 retail stores worldwide, was founded in 1997.
Shares of Meruelo Maddux were up 1 cent to 31 cents in over-the-counter trading Wednesday afternoon.
Share of American Apparel were up 13 cents to $3.66 in afternoon trading Wednesday on the American Stock Exchange.
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