Updated, 10:45p.m.: A Taubman spokeswoman issued the following company statement: “We are attempting to navigate through this situation in the best way we can, while being as flexible as we can with our tenants in light of our ongoing obligations. The tenant memo does not replace our willingness to talk to each tenant about their respective challenges and help them chart an appropriate course for the future. In fact, we’ve had numerous calls with our long-standing tenants and most fully understand our position as it is a challenging time for all involved. Naturally, the environment is much harder for smaller, less-established temporary occupants that may only be operating in one center.”
What We Reported Earlier:
Tenants must continue to pay rent amid the coronavirus pandemic, Taubman Centers told retailers in a March 25 memo.
The mall giant said in the letter that it “naturally had numerous inquiries” from tenants regarding whether they had to continue to pay rent and other charges. In response, it issued a memo informing tenants these obligations remain.
“Landlord’s obligation to pay its lenders, utility companies, insurance companies and the like, to ensure the safety and security of the building and maintain the appropriate level of operations, remains,” the letter continues. “The rental income that we receive from tenants is essential in order to meet these obligations. All tenants will be expected to meet their Lease obligations.”
Taubman Centers owns 21 locations including the Beverly Center in Los Angeles, The Mall at Short Hills in New Jersey and the Fair Oaks Mall in Virginia. All but two of its locations have temporarily shuttered their doors due to the coronavirus, with some restaurants open for takeout only. The second-largest operator of malls in the U.S., Taubman entereed an agreement to be acquired by larger rival Simon Properties for $3.6 billion; the deal is expected to be finalized in 2020.
In recent years, mall owners have had to cope with retail bankruptcies and declining foot traffic. According to a Deloitte report, mall shopping fell 7.6% in 2018 year-over-year, while non-mall shopping rose 0.5%.
In a March 17 letter addressed to President Donald Trump, Vice President Mike Pence and Treasury Secretary Steven Mnuchin, the International Council of Shopping Centers asked the government for help weathering the “insurmountable strain” placed on its members by the coronavirus crisis, asking the federal government to “guarantee or directly pay for business interruption coverage for retailers, restaurants and other tenants as well as landlords.”
“Without ensuring the stability of our tenant base, the repayment of up to $1 trillion of secured and unsecured debt underlying the shopping center industry will be at risk,” the letter read. “This will jeopardize the entire industry and cause long-term damage to financial markets, rampant unemployment and irreparable harm to communities across our country.”