OneEleven asks startups for abated rent, then retracts, claiming “misunderstanding”

oneeleven

OneEleven startups are reeling over a notice sent to them today asking for the payment of rent they were previously told would be abated.

Multiple OneEleven member startups have confirmed with BetaKit that they have received an email notice from Paul Manning, recently named the Toronto tech accelerator’s chief restructuring officer following its sudden shutdown in April.

The notice reads:

    “I note that Article 9.2 of the Membership Agreement signed by you…requires notice of termination in writing to OneEleven, as well as, payment of all amounts owing pursuant to the terms of the Agreement up to the date of termination.

    “While payment of the Fees for April and May was deferred, these are still amounts owing pursuant to the terms of the Membership Agreement which must be remitted in full prior to termination. Please let me know what arrangements you will be making to pay those Fees.”

That statement seems to directly contradict previously communicated information from OneEleven. BetaKit has obtained an email dated March 23 from former OneEleven executive director, Siri Agrell, titled “rent abatement.” In the email, Agrell states directly:

    “I’m writing to inform you that we will not be billing you for April or May rent [emphasis hers, ed.].

    “It is my hope that this abatement will help you contend with the next couple of months, and avoid layoffs as much as possible. I know this is a difficult time, and I appreciate your patience and collaboration as we navigate this together.”

Agrell’s statements mirror those made in OneEleven’s public shutdown notice on April 22, which was signed by the executive director and OneEleven board chair, Dean Hopkins.

“We immediately provided two months of rent abatement to our members for April and May, ensuring that they had some runway to access new government support programs and assess their own strategies without major layoffs,” the announcement reads.

RELATED LINK: Board communicated shutdown decision to OneEleven executive director

It is worth noting that BetaKit has currently only confirmed that startups who have made the decision to leave the OneEleven space have received the notice regarding April and May rent. As part of the original shutdown notice posted on OneEleven’s website, member companies have the option to remain in the space after May 31, under new contractual agreements with Oxford Properties, which owns the space.

The disparity in terms between exiting and remaining startups has created tension among OneEleven’s member community, according to those BetaKit spoke with.

“So if you cancel you get an email from Paul at OneEleven saying you owe money for April and May,” one OneEleven startup CEO BetaKit under condition of anonymity. “If you don’t cancel, you get a nice email from Oxford saying they will honor Siri’s commitment.”

An Oxford spokesperson confirmed with BetaKit that Oxford “will not collect rent from members for April and May.”

The tension has been aided by inconsistency in communication from OneEleven’s property owner, Oxford. In an email to OnEleven startups from dated May 1st, obtained by BetaKit, Oxford noted that “the doors to 325 Front Street West will remain open and Oxford will honour the deferral of May’s rent that OneEleven offered to assist in managing through these challenging times.”

CC’d on the email was Kevin Hardy, vice president and head of Toronto Office at Oxford. In a follow-up conversation with at least one startup, however, Hardy noted that “there will be no rent for May as was previously extended to you by OneEleven.”

Further confusing matters is the lack of clarity on terms for startups hoping to continue their stay in the OneEleven space. Oxford’s email on May 1 notes that “the length of [OneEleven member startups’] rental terms will remain unchanged, and we have no intention of requiring extended terms from you.”

However, the letter does not confirm that the rental terms themselves will remain unchanged. In addition, Oxford has asked that each startup reach out to tailor “a solution to meet [their] requirements,” leaving some to fear they will be forced into negotiating new deals unequal to larger member startups in the space.

When reached for comment, an Oxford spokesperson told BetaKit that the May 1 email mention of deferral and not abatement was a “misunderstanding.” The spokesperson confirmed with BetaKit that Oxford “will not collect rent from members for April and May.”

The spokesperson also shared an expectation that OneEleven (which directly collects member rent) will be sending a similar statement to startups tomorrow morning. Several member startups BetaKit spoke with have cancelled their pre-authorized debits with OneEleven just in case.

At time of publishing, Manning had not responded to requests for comment or clarification.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.