The owners of Springdale property that was the site of a Kmart on Sunset Avenue filed suit against Sears Holdings Corp. in Washington County Circuit Court in late September.
JK Properties of NWA LLC, led by Ken Nguyen, filed the suit through attorney M. Scott Hall of Hall Estill in Fayetteville. The suit alleges that Sears — the suit named Sears Roebuck & Co. as the defendant — had violated the lease between the two parties and asked a judge to declare the lease terminated.
The empty Kmart store has been on the market for a new buyer or tenant, but Alan Cole of Colliers International told Arkansas Business last month that the lease entanglements were problematic.
“There are a lot of different moving pieces on that deal,” Cole said. “The building could have been split and leased a couple of different times with the amount of interest in the property. It’s a special case with the lease on the place.”
JK Properties acquired the property as part of a $3 million transaction with Harp’s Properties in 2016. Sears Roebuck & Co. merged with Kmart Corp. in 2004 to form Sears Holdings.
Kmart signed a lease with the original owners in 1979 and built a 60,000-SF store on the 7-acre site. The Kmart closed in December 2016 and has been vacant since.
JK Properties alleged Sears, as the successor to the original tenant, violated the lease by failing to pay property taxes for 2016 and 2017 and for not keeping the property maintained. In the suit, JK Properties said it has received code violations from the city of Springdale.
Washington County court records show that property taxes of nearly $21,000 were paid for the property for 2016 (in October 2017) and for 2017 (on Oct. 8).
JK Properties alleged the lease allows the owner to reclaim the property if the tenant vacated, as it said Sears did since closing the Kmart store.
JK Properties is suing for breach of contract with damages of more than $75,000. It is also asking for a declaratory judgment that the lease has been terminated.
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