Shoppers ascend and descend escalators at the King of Prussia Mall, owned by Simon Property Group, United State’s biggest retail shopping area, in King of Prussia, Pennsylvania.
Mark Makela | Reuters
The most significant shopping center owner in the nation ,Simon Property Group, is taking legal action against among its most significant occupants, Gap, stating it stopped working to pay more than $65.9 million in lease and other charges due throughout the coronavirus pandemic.
The fight in Delaware state court highlights the installing stress in between retail property owners and their occupants, a number of which stopped paying lease after the crisis required them to shut shops. The match was submitted Tuesday, and more are anticipated.
Many property owners are likewise starting to send out default notifications to merchants that have actually avoided payments.
Apparel seller Gap stated in late April that it stopped paying lease on its briefly shuttered shops, totaling up to about $115 million in month-to-month expenditures in North America.
Simon shopping malls have 412 Gap shops, consisting of Banana Republic and Old Navy. This makes Gap Simon’s most significant in-line occupant at its shopping malls in regards to lease.
Gap likewise cautioned in late April that lawsuits might emerge as an outcome of its avoided 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 business stated in a filing with the Securities and Exchange Commission at the time.
Simon is asking the court to order Gap to pay up to $66 million, in addition to future lease payments.
Representatives from Simon and Gap did not right away react to CNBC’s ask for extra remark.
Simon Chief Executive Officer David Simon has actually made it clear he anticipates lease to be paid, in spite of any short-term shop closures.
“The bottom line is, we do have a contract and we do expect to get paid,” he informed experts throughout a May 11 revenues teleconference.
Gap shares were down 2.1% in Thursday’s premarket. Simon shares were up 4%.
Gap is set to report quarterly revenues Thursday afternoon.