Mall giant Taubman tells tenants: You must pay rent
One of the nation’s largest mall owners instructed its tenants to make their rent payments even though their malls are closed during the coronavirus pandemic.
A letter sent to Taubman Centers tenants nationwide and obtained by USA Today shows the company’s directive to its tenants to make their payments on time.
“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,” Taubman told tenants in the letter. “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.”
The company said in the letter that it received “numerous inquiries” from tenants regarding potential rent relief.
With 15.8 million square feet of space, Taubman Centers is the 16th-largest mall property owner in the country, according to real estate data source CoStar Group. Taubman has no properties in Illinois.
Taubman spokesperson Maria Mainville confirmed the authenticity of the letter and defended the company’s decision to send it.
“We understand that these challenging times are going to be hard for some tenants,” Mainville said in an email. “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.”
Alex Victor, partner in the hospitality and restaurant group at law firm Davidoff Hutcher & Citron, said it’s unclear whether a global pandemic qualifies as an event that would suspend payments under most leases.
“Most leases are going to say the requirement to pay rent is absolute and independent of all the other covenants,” he said. But tenants “might say, well, because of this whole thing, it’s made it impossible for me to conduct my business.”