Despite virtually all retail stores being ordered closed due to the coronavirus pandemic, regional shopping mall operator Taubman Centers (TCO) is telling its tenants they must continue paying their rent.
Taubman says if retailers want relief, they should look to their insurance policies for business interruption coverage, but it has its own bills to pay. "All tenants will be expected to meet their lease obligations," the company said in a memo to tenants.
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A looming rent strike
The pandemic has upended the retail industry by forcing companies that can to survive by turning to their e-commerce platforms, though it will likely not be near enough to make up the difference. Similarly, restaurants that are located in malls have been devastated because while they're able to resort to takeout and delivery, business has been largely brought to a standstill.
Cheesecake Factory (CAKE -2.19%) has furloughed 41,000 workers, its CEO has taken a pay cut, and the chain has told its landlords it cannot pay April's rent for its nearly 300 locations and it doesn't know when it will be able to resume payment. While it understands the decision hurts the malls, it says it appreciates their "understanding."
Taubman Centers has only one Cheesecake Factory restaurant, but Simon Property Group (SPG 0.42%), which is in the process of acquiring Taubman, has 29.
The regional mall operator told CNBC that although it expects its tenants to pay their rents, it is still contacting them to "help them chart an appropriate course for the future."
Taubman Centers operates 26 malls, all of which are considered upscale, class A malls.
