The complaint, filed in a Delaware state court, notes an intensifying struggle between major tenants of the retailing company and real estate investment funds, which control most of the retail space in the U.S. Many tenants, including Gap, stopped paying their rents after the quarantine began in March when they were forced to stop trading and have now barely made ends meet.
But according to Simon Property Group, difficult financial times are no reason to give up on those commitments. As CEO David Simon has said, “The point is that we have a contract, and we expect to get paid.”
The lawsuit includes a demand to pay the rent for April, May, and June 2020 and reports that interest will be charged for all subsequent months. Simon Property Group estimates the debt for Gap, one of its largest tenants, at $65.9 million.
The clothing manufacturer announced its intention to stop paying the rent back in April and this has already led to a number of small lawsuits. The lawsuit initiated by Simon Property Group is the largest yet and threatens to become a real problem for the retailer. It is not yet clear how long the company plans to continue its non-payment policy.
It should be noted that Simon Property Group is also going through some bad times. The company’s shares fell from $142 to $72 in a few months. Even the opening of shopping centers after the weakening of quarantine has not helped much so far, as their attendance is only 25% of the quarantine period.
