Dive Brief:
- Blue Owl Capital has terminated the lease agreements for the convenience stores it leased to SQRL Service Stations in late 2023, according to a court filing in the Circuit of Cook County, Illinois.
- Blue Owl sent termination notices to SQRL’s leadership in mid April after the convenience retailer missed that month’s rent payments, in violation of its lease agreements, according to the filing. Additionally, Blue Owl alleges that SQRL breached its lease agreements by misusing funds that were provided to make capital improvements to the properties.
- SQRL’s leadership is refusing to accept these lease terminations, vacate its properties and turn them over to Blue Owl, according to the filing and as confirmed by SQRL Service Stations’ CEO Jamal Hizam.
Dive Insight:
When asked to comment on Blue Owl terminating its leases with SQRL, Hizam confirmed to C-Store Dive that the real estate investment trust sent him termination notices because April rent had not been paid by the first of the month.
Hizam said that since he wasn’t officially the owner of SQRL’s c-stores until April 5, those rent payments were not his responsibility and should have been covered by the former owners.
Hizam also said he won't leave those stores without the courts ordering him to do so.
“We sent [Blue Owl] a letter from our attorneys and told them we are not going to surrender,” Hizam said over the phone. “We are not willing to back off on our lease. We will fight… we will stay… and they never replied.”
SQRL’s refusal to vacate the stores has made it impossible for Blue Owl to lease those properties to other operators, according to the filing. Blue Owl also alleges that SQRL’s leadership is “actively trying to market properties … to other third-party lessors and operators, seeking to sell or re-lease the properties and take advantage of those rents.”
According to the court filing, after SQRL Service Stations missed its rent payments for April, Blue Owl sent the retailer written notices on April 10 demanding it immediately pay all unpaid rent, as well as late fees.
The court filing notes that by April 16, SQRL had not made these payments, causing Blue Owl to issue written notices that it had officially terminated the leases, effective immediately.
The filing notes that SQRL owes Blue Owl nearly $6 million in rent payments plus the late fees from April. It also states that as of the filing date, SQRL’s lease breaches have resulted in over $1 billion worth of losses for Blue Owl.
Beyond all unpaid rent and attorneys fees incurred during this lawsuit, Blue Owl is requesting unspecified damages for the “misuse and waste” of more than $20 million in funds it gave to SQRL for store improvements. Blue Owl alleges that SQRL used the money for other purposes, and that improvements to its stores were never made.
SQRL Holdings, SQRL Service Stations’ parent company, made waves in the c-store industry when it acquired 210 locations in the U.S. last October. At the time, the seller was undisclosed, but later surfaced as Blue Owl, which formerly leased those locations to bankrupt retailer Mountain Express Oil.
The attorney representing Blue Owl did not respond by press time to a request for comment.
