Shoppers ascend and descend escalators on the King of Prussia Mall, owned by Simon Property Group, United State’s largest retail procuring area, in King of Prussia, Pennsylvania.
Mark Makela | Reuters
The biggest mall proprietor within the nation ,Simon Property Group, is suing one in every of its biggest tenants, Gap, saying it didn’t pay greater than $65.9 million in rent and different prices due in the course of the coronavirus pandemic.
The battle in Delaware state courtroom highlights the mounting stress between retail landlords and their tenants, a lot of which stopped paying rent after the disaster compelled them to close shops. The go well with was filed Tuesday, and extra are anticipated.
Many landlords are additionally starting to ship default notices to retailers which have skipped payments.
Apparel retailer Gap mentioned in late April that it stopped paying rent on its briefly shuttered shops, amounting to about $115 million in month-to-month bills in North America.
Simon malls have 412 Gap shops, together with Banana Republic and Old Navy. This makes Gap Simon’s biggest in-line tenant at its malls by way of rent.
Gap additionally warned in late April that litigation may come up because of its skipped payments. “Although we believe that strong legal grounds exist to support our claim that we are not obligated to pay rent for the stores that have been closed … there can be no assurance that such arguments will succeed,” the corporate mentioned in a submitting with the Securities and Exchange Commission on the time.
Simon is asking the courtroom to order Gap to pay as much as $66 million, along with future rent payments.
Representatives from Simon and Gap didn’t instantly reply to CNBC’s requests for extra remark.
Simon Chief Executive Officer David Simon has made it clear he expects rent to be paid, regardless of any non permanent retailer closures.
“The bottom line is, we do have a contract and we do expect to get paid,” he advised analysts throughout a May 11 earnings convention name.
Gap shares have been down 2.1% in Thursday’s premarket. Simon shares have been up 4%.
Gap is ready to report quarterly earnings Thursday afternoon.