Simon Property Sues Gap for $66M in Rent Payments | Financial Buzz

Simon Property Sues Gap for $66M in Rent Payments

Simon Property Group (NYSE: SPG), the largest U.S. mall, has sued Gap (NYSE: GPS) for a sum of USD65.9 Million in unpaid rent and additional charges amid the coronavirus pandemic. 

The lawsuit, filed Tuesday in a Delaware state court, brings to light the escalating tension between retail landlords and multinational retail tenants. Similar suits are likely to be filed as many tenants have halted rent payments after lockdown orders were enforced in March. 

“The bottom line is that we do have a contract, and we do expect to get paid,” Simon said.

Gap, the American global retailer and one of Simon’s biggest tenants, has breached its contract “for failure to pay rent for April, May and June 2020,”according to the suit. “The amounts due will continue to accrue each month, with interest.”

Although Simon Property Group is asking for full payment of due rent plus future lease payments, Gap had announced in April that it would not pay rent while its stores remained closed. Additionally, the claim has triggered landlords in manhattan and Orange County to file individual lawsuits against the clothing company. Gap has not clarified how it intends to keep up its non payments as it aims to reopen 800 stores. 

Gap cautioned in April that the lack of payments could lead to legal action. “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 company said in a filing with the Securities and Exchange Commission at the time.  

Gap shares plummeted 2.1% Thursday in Premakert, while Simon shares rose 4%.