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Mall owner Simon Property Group (NYSE:SPG) is suing its Gap Inc. (NYSE:GPS), whose largest non-anchor tenant is failing to pay rent for its stores that it temporarily shutters of the COVID-19 pandemic.

Simon Property seeks $66 million in unpaid rent

In a lawsuit filed early this week, Simon Property indicated that Gap has withheld rent of three months, amounting to around $66 million for the temporarily closed stores. The mall operator temporarily shuttered its properties in March following the operations’ closure by retail anchors such as Gap, Nordstrom, and Macy’s.

The landlord now seeks rent for April, May, and June, which Gap has withheld. According to the lawsuit, Simon Property also wants Gap to pay attorney fees and other charges. Part of the suit indicates that Gap is required to pay rent due under leases on time, as that has not been excused.

Gap has not commented on the suit but indicated that it is committed to working with landlords to arrive at agreeable terms regarding paying of rent. The company’s communications manager Mark Daniel Synder acknowledged the profound effect that the coronavirus pandemic has had on the retailer and its customers. The clothing retailer operates over 390 retail locations at Simon Property’s malls, which include namesake brands Banana Republic and Old Navy.

Gap anticipated issues with landlords

In a Q1 earnings call last, the company spoke about landlords indicating that it was knee-deep with them. However, there was no mention of Simon Property. Gap CFO Katrina O’Connell indicated that they were not sure how long it could take, but they are committed to taking the opportunity to partner with landlords to enhance the company’s profitability.

In April, the company said that it stopped paying rent for the closed stores due to inadequate cash flow. At the time, the retailer indicated that it was seeking to renegotiate its leases over the same. However, Gap is not alone as other retailers such as Foot Locker have also indicated that they will not pay rent for shuttered stores due to COVID-19.

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