Simon Property Group is suing Gap Inc. after the apparel and accessories chain allegedly skipped out on nearly $66 million in rent payments.
Simon filed a lawsuit in Delaware state court Tuesday accusing Gap of “failure to pay more than $65.9 million in rent and other charges due.” Simon said Gap has not paid rent for April, May and June, and that the retailer’s owed payments “will continue to accrue each month, with interest.”
Gap is one of Simon’s largest in-line tenants in terms of rent. The company operates more than 400 units at Simon properties across banners including Banana Republic and Old Navy.
In late April, Gap announced that it would skip out on about $115 million worth of rent payments for its North American units. The chain added that it was negotiating with landlords to defer or abate rent as stores remain closed — or even to terminate leases and permanently shutter some outposts. Additionally, the company warned that litigation could arise out of its decision to skip out on rent.
A number of other retailers, such as Urban Outfitters Inc., H&M and Burlington Stores, also decided not to pay rent while stores were shut during the coronavirus pandemic. However, Simon CEO David Simon has made it clear that he expects retail tenants to continue to pay.
Watch on FN
“The bottom line is, we do have a contract and we do expect to get paid,” he told analysts in a mid-May earnings call.
In addition to receiving default notices, Gap and other retailers have begun to be hit with lawsuits by commercials landlords in recent weeks. A lawsuit against Gap was filed early last month by New York City landlord 48th Americas LLC., which said the corporation violated its leasing agreement by failing to make fixed and other rent payments, totaling $530,334.39. More specifically, 48th Americas said Gap skipped two monthly rent payments of $264,190, as well as water and snow removal charges.
What’s more, last month Palm Springs Mile Associates Ltd. sued Ross Stores Inc. in Florida district court, accusing the off-price chain of owing $5.5 million in back rent on three stores. Also last month, the NBA was sued in New York district court for owing roughly $1.25 million after missing two months of rent, plus additional charges, on its Midtown Manhattan flagship.