Some stunning local food industry gossip is now spilling publicly into the headlines, as the sprawling upscale food court China Live is allegedly $4.2 million in arrears on unpaid rent, but it seems there’s a whole lot more backstory to this nasty landlord-tenant feud.
I imagine plenty of San Francisco restaurants are having trouble paying rent these days, with the inflation crunch, the storms, and people just not going out as much anymore. But I would not have expected one of the restaurants way behind on their rent to be restaurateur and chef George Chen’s luxe 30,000-square-foot food court and retail hall China Live, home of the $52 scotch cocktail, a concept so ambitious they’re trying to open an offshoot next to the Louvre in Paris.
A yearslong battle between China Live and its landlord is getting intense — and could lead to the restaurant's eviction. https://t.co/iHE7VEBjsG— San Francisco Business Times (@SFBusinessTimes) March 27, 2023
But in some bombshell food industry news Monday morning, the San Francisco Business Times reports that China Live is being sued by its landlord and threatened with eviction over an alleged $4.2 million in back unpaid rent. But there are actually dueling lawsuits here, including China Live also suing the landlord Cypress Properties, and there’s much more to this story that may be a larger power struggle for control of the whole 644 Broadway building.
S.F.'s China Live is the latest example of a high-profile eviction threat in the Bay Area restaurant industry. https://t.co/83S1b093gx— Chronicle Food (@SFChronicleFood) March 27, 2023
As the Chronicle’s writeup of this lawsuit explains, the landlord is technically 644 Broadway LLC, a subsidiary of Cypress Properties. The lawsuit was apparently filed in January, but the Business Times says the suit cites "unpaid rent obligations from 2017 to the end of 2022” — so, much of this would be pre-pandemic (China Live opened in 2017). Per the Chronicle, the lawsuit alleges that China Live “‘maliciously’ diverted federal pandemic assistance meant for paying rent to other uses.” And the Business Times does point out that China Live received at least $3.5 million in PPP loans, though we will remind you that “PPP” stood for “Paycheck Protection Program,” not “Rent Protection Program.”
Chine Live said in a statement to the Business Times that “We do plan on continuing to serve our loyal customers at our current location and to contribute to the recovery of San Francisco's Chinatown.” That’s obviously not saying anything, probably the wise route considering there is not one, but two lawsuits here.
Turns out China Live sued the landlord in 2021, and as the Business Times explains it, “the restaurant accuses the Cyprus affiliate of overcharging for maintenance, billing the tenant for more square footage than is actually usable, and interfering with the restaurant’s operations and ongoing future business discussions.”
On top of that, the landlord has defaulted on the $21 million loan they took out to buy the building, according to the Business Times. That paper reports that the landlord did get a forbearance agreement, but defaulted on that too. And the Business Times adds that “The landlord's lawsuit also alleges that Chen interfered with Cyprus' forbearance negotiations with its lender, encouraging the lender to foreclose on the property and offering to buy the promissory note at a discount and so gain control of the property.”
So there may be some brass-knuckle machinations and power struggles at play here, and this looks like a lot more than a standard “Oh, I need another month or two on the rent” situation. This may be a larger battle for ownership of the building. There are other tenants at 644 Broadway in addition to China Live — Boxcar Theatre and some music and film companies. But China Live, with its upstairs cocktail lounge and fine dining venue, is the anchor tenant, and its survival, or the landlord’s survival, could depend on what the courts decide in these two lawsuits.
Image: Julian H. via Yelp