Highlands Coffee locked in rental disputes at major locations

Real estate developer Hoa Binh House has lodged a complaint with authorities of Ward 25 in HCMC’s Binh Thanh District, saying the coffee chain owes it five months’ rents at nearly VND500 million ($22,036).

A Hoa Binh House representative said that the company had blocked the entrance to Highlands Coffee’s location at the Pax Sky building Monday morning.

"So far Highlands Coffee has not made any moves to pay its debt. They have not contacted us to deal with the complaints we have filed."

A Highlands Coffee rep said that the company was trying to resolve conflicts with Hoa Binh House, and that both sides had exchanged many letters on the issue.

The coffee chain, part of the Philippines’s Jollibee Foods Corporation, said that prolonged social distancing in HCMC in the third quarter had caused major losses to the company with revenues falling to zero.

Highlands Coffee does not have the ability to pay rent in full for that period. Therefore, the coffee chain requested Hoa Binh House for a 50 percent discount in the first week of July, from Jul. 1 to Jul. 8, and a 100 percent discount on rent from July 9-15. The chain also asked for 50-100 percent discount the entire time that the city imposed social distancing.

The discount will be deducted in Highlands Coffee’s payments starting August 15 onward, the chain suggested.

Hoa Binh House, however, did not agree. Its rep said that the building it is operating, Pax Sky, was also affected by HCMC’s social distancing, which exerted major financial pressure.

Highlands Coffee cannot unilaterally invoke the force majeure clause without a decision from the court to that effect.

Hoa Binh House agreed to give a 20 percent discount in August, and had Highlands Coffee agreed to it, the real estate developer would have given another 20 percent discount for the next three months.

Since Highlands Coffee still kept asking for the full discount, Hoa Binh House terminated their contract on November 12 and cut electricity and water to the location.

Highlands Coffee later set up its own electric generator and water tank and continued to do business. It also told Hoa Binh House it would seek compensation for the damage caused by cutting off electricity and water supply.

It was reported earlier that the coffee chain also owed six months’ rents for its outlet in Artemis building in Hanoi’s Thanh Xuan District. The amount involved was more than VND1 billion.

Residents in the neighborhood said that as the conflict played out, many people wearing Highlands Coffee uniformed showed up and had physical contact with securities guards of the Artemis building.

Highlands Coffee told reporters that the company was in financial difficulties due to social distancing in the capital and was negotiating with Artemis building mangers.

It said that the building managers unilaterally cut electricity and water and even confiscated Highlands Coffee’s assets.

It did not comment on the report of people in its uniform showing up and causing disruptions in the neighborhood.

The rep confirmed that Highlands Coffee, which has 450 outlets nationwide, wants to resolve its conflicts with landlords under existing laws.