SAFEWAY FILES SUIT OVER MALL EXPANSION

PHIL ADAMSAK

PORTLAND, Ore. (FNS) -- Safeway has sued its landlords at Lloyd Center, a venerable shopping mall here in which it is the only grocery outlet, seeking a lease renewal so it can begin an $8 million store expansion there.

While the mall manager was negotiating a lease extension with Safeway and indicating it would complete the renewal, the owner sold the mall to another developer for $167 million. That sale is expected to close in mid-July. Safeway is ready to begin demolition, but the new owner refuses to honor the draft agreement, it said. Safeway said its lease, in effect since 1957, will expire in two years.

Safeway asks $20 million in damages from the owners and operators of Lloyd Center if the lease isn't renewed, in a suit filed in Multnomah County Circuit Court. It names Chicago-based Heitman Properties of Oregon Ltd., the manager; Glimcher Development Corp. of Ohio, the buyer; and Si-Lloyd Associates Limited Partnership, the owner.

The expansion plans call for the 38-year-old, 20,290-square-foot store to be expanded to 35,500 square feet on two levels with parking facilities. It's the only major supermarket in a neighborhood in which residential and commercial activity is booming.

Safeway said the draft agreement calls for $200,000 annual rent from Safeway. Glimcher said it wants higher rent and the option to put competitive food operators in the mall. Safeway said it's ready to begin remodeling, and could open the new store by Dec. 1. If the lease isn't renewed, it said, relocation and other costs will total $20 million.

A Safeway spokesman said discussions are continuing, and the firm hopes to resolve the dispute short of a court battle.