#Simon Property sues Gap for not paying rent during coronavirus crisis

Simon Property sues Gap for not paying rent during coronavirus crisis

June 4, 2020 | 10:11am

The nation’s biggest mall operator is suing its largest tenant for not paying rent during the pandemic in what could be the beginning of a torrent of litigation over rent payments.

Simon Property is suing the owner of Banana Republic, Old Navy and The Gap for $66 million in back rent and other charges related to its 412 stores in Simon malls, according to the complaint filed in Delaware State court on Tuesday.

The Gap stopped paying rent on its stores in North America in April when it said in a public filing that its monthly lease obligations in the region represent $115 million per month.

The apparel giant also acknowledged that it might not be able to negotiate rent deferrals or abatements and that “any dispute under these leases may result in litigation with the respective landlord,” according to Gap’s April 23 filing.

Gap has already been sued in Manhattan for not paying rent for its store at 1212 Sixth Ave. and other locations in Orange County, Calif., according to The Real Deal, which first reported on the Simon complaint.

“The bottom line is, we do have a contract and we do expect to get paid,” Simon CEO, David Simon said in a May earnings call in which he was referring to closed stores in the malls.

“Simon is trying to send a message to the world that no one is too big to not pay the rent,” said Kenneth Rosen, a bankruptcy attorney at Lowenstein Sandler. “Everyone will be watching for the first major court decision on whether the pandemic excuses the payment of rent.


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