(Bloomberg) -- A Hong Kong gym chain frequented by the city’s financial elite faces a lawsuit from a landlord alleging missed rent payments.
Pure Fitness is being sued for missed payments of rent and management fees at its facilities in ICBC Tower and Champion Tower in the central business district, a court filing shows. It owes HK$12.7 million ($1.6 million) excluding interest, according to the claim by CP (SH) Ltd.
“We have been having landlord discussions over the last few months as we push for rental reviews during this challenging economic cycle,” Pure Group said in a statement to Bloomberg News. “Most landlords have been understanding and supportive with deals agreed however, as in this exceptional case, some are yet to be closed out.”
Pure Group said the matter won’t affect normal service and operations at its branches and it was inappropriate to comment further given the ongoing legal proceedings.
Representatives for the owner of the buildings, Champion REIT, didn’t reply to a request for comment.
Founded in 2002 as a yoga studio in Hong Kong, Pure Group now has 42 facilities globally, according to its website. The gym operator, which tends to lease large spaces in premium locations, is facing growing competition from smaller, more specialized studios that can better keep a lid on costs.
Champion REIT is among landlords in Hong Kong that are struggling with rising office vacancies and sluggish demand for retail space as the financial hub’s allure fades.
The lawsuit “could raise concerns around potential liquidity risk of its retail tenants, which might lower the landlord’s rental collection rate,” said Bloomberg Intelligence analysts Patrick Wong and Yan Chi John Wong.
Pure Fitness also operates gyms in buildings owned by major landlords such as Hysan Development Co., New World Development Co., Sun Hung Kai Properties Ltd. and Swire Properties Ltd., the analysts wrote in a note.
Co-founder Colin Grant has rejoined Pure Group as executive chairman, the company also said.
--With assistance from Lorretta Chen.
(Updates with comments from Pure in third, fourth and last paragraphs)
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