Taubman To Tenants: April Rent Payments Are Essential
Retail landlord Taubman Centers is insisting that its tenants pay rent for April, saying that it, too, has financial obligations to meet for the month.
“The rental income that we receive from tenants is essential in order to meet these obligations,” Taubman said in a March 25 memo to tenants that CNBC obtained and published. "All tenants will be expected to meet their lease obligations.”
"Further, tenants are encouraged to look to their business interruption insurance policies to assist in making the tenant whole," the memo said.
"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," Taubman said in a statement emailed to Bisnow. "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."
It isn't clear yet how many retailers will try to forgo April rental payments at Taubman properties or those of any other major landlord, but recently Cheesecake Factory, which operates 294 U.S. restaurants, said it will not be paying rent in April. Only one Cheesecake Factory is in a Taubman mall, CNBC reports, but the move could encourage other beleaguered retailers to do the same.
Other retail landlords are taking a different tack. Walmart said recently that it is waiving April rent for businesses that operate in Sam’s Club and Walmart Supercenter locations, including hair and nail salons, optometrists, restaurants, veterinary clinics and banks. All together, the retail giant leases space to more than 10,000 smaller retailers nationwide.
Currently, Bloomfield Hills, Michigan-based Taubman owns or manages 26 regional, super-regional and outlet shopping centers in the U.S. and East Asia.
On March 19, the company temporarily closed all 16 of its U.S. properties except two, the open-air Country Club Plaza in Kansas City, Missouri, and International Market Place in Hawaii.
In some markets, restaurants or other tenants with exterior public entrances at enclosed Taubman malls stayed open, to the extent permitted by local law, but all businesses with entrances inside Taubman malls were obliged to close.
In Asia, the company operates three shopping centers: CityOn.Xi’an in Xi’an, China, CityOn.Zhengzhou in Zhengzhou, China, and Starfield Hanam in Hanam, South Korea. In response to the novel coronavirus outbreak, CityOn.Xi’an was closed for 34 days, reopening on Feb. 29, while CityOn.Zhengzhou was closed for 10 days, reopening on Feb. 27. Starfield Hanam did not close.
The move by Taubman to close its U.S. properties came the day after Simon Property Group said that it was temporarily closing all of the U.S. malls in its much larger portfolio.
At the beginning of 2020, Simon owned or operated 175 U.S. shopping centers. Indianapolis-based Simon is in the process of acquiring Taubman for $3.6B in a deal announced in February that hasn't closed yet.
UPDATE, MARCH 31, 10:05 A.M. ET: This story has been updated to include a statement from Taubman Centers.
