Simon Property Group Sues The Gap For Not Paying Rent During COVID-19 Pandemic

Jun 13, 2020

Credit (Simon Property Group)

Indianapolis-based Simon Property Group is suing one of its largest tenants for unpaid rent during the coronavirus pandemic. The lawsuit highlights just one of the company’s recent moves due to COVID-19.

The lawsuit filed by Simon in Delaware state court claims The Gap failed to pay nearly $66 million in rent and other charges during months when the retailer was closed.

Indiana University Kelley School of Business Center for Education and Research in Retail director John Talbott says it sends a message that Simon will hold tenants to their lease obligations.

“That’s the main message I see is that there’s just not possible for Simon to allow Gap to not just pay without trying to enforce it through the courts, because everybody would just not pay,” says Talbott.

He says one of the biggest challenges for Simon going forward is getting people back into its shopping centers.

“Gap is an important part of what makes their malls interesting," says Talbott. “And if Gap isn’t there or if Gap stores are closed, then people coming back to that mall are going to say, ‘Yeah the mall’s open, but a lot of the big stores aren’t even – they’re not open doing business in there.’ And that’s obviously bad for Simon.”

Simon has also recently terminated its $3.6 billion purchase of Taubman malls, stating the company failed to limit the economic impact of the pandemic.