Vans is entering into negotiations with its landlords for lease terminations or rent reductions related to its 11 skateparks, three of which are owned by Mills Corp., two by Simon Property Group, one by PREIT and one by Belz.
Vans management says half of its skateparks are breaking even and the other half are losing money. The company’s first skatepark—a 42,355-square-foot location at Mills’ Block at Orange in Los Angeles—is still one of its most profitable from a sales and branding standpoint, says Merrill Lynch analyst Steve Sakwa. Other locations, such as Ontario Mills’ 47,328-square-foot park and Potomac Mills’ 62,778-square-foot park, are more likely to go dark.
If that were to happen, Mills could receive $5 million in early termination payments to close the Vans Skateparks at Ontario and Potomac Mills, Sakwa says. "In the best possible scenario, Mills would re-lease these skateparks to another park operator such as ESPN," he says in a report filed yesterday. "In a less positive scenario, Mills is unable to release the space to ESPN and needs to find another retail/entertainment use." Converting skateparks to other uses could cost owners as much as $20 per square foot.