Mall Landlord Simon Property Suing Retailer Gap Over Missed Rent
Gap Inc. is facing a lawsuit from Simon Property Group, the largest mall owner in the U.S., for $66 million in unpaid rent and other charges, according to the Wall Street Journal.
Filed on Tuesday, the lawsuit details Gap’s missing payments for rent in April, May, and June. Now, in addition to the rent fees, Simon Property is also seeking financial compensation for lawyer fees and other charges.
The lawsuit says, “The requirement that The Gap Entities timely pay rent due under the leases has not been excused.” While Gap has not made any official statements, the retailer said they are talking to the property owners on “mutually agreeable solutions and fair rent terms.”
Communications manager at Gap, Mark Daniel Snyder said, “It’s important to note the profound effect that Covid has had on shopping centers as well, leaving them closed to us and our customers for months.”
In Gap’s first-quarter earnings call on Thursday, Chief Financial Officer Katrina O’Connell said, “We’re just knee deep with all the landlords today. It’s very hard to say how long it will take, but I do know that one of our primary objectives is to use this opportunity to partner with our landlords to come out with a better profitability for the company.”
Gap explained its forgone rent payments as a consequence of reduced revenue amidst store closures during the pandemic. The company claims to have been in communication with Simon Property, which controls 412 Gap stores, to renegotiate leases.
Gap suffered a $932 million loss in May as the first quarter came to a close, in addition to hundreds of millions in impairment charges. Sales dropped by 43 percent. Yet, Gap’s Athleta and Old Navy boosted online sales by 13 percent.
Referring to Gap’s more than 1500 stores in the U.S., Chief Executive and President Sonia Syngal said the company is hoping “to have the vast majority of our North American stores reopened in June.”