U.S. mall owner Taubman Centers, Inc. TCO is warning tenants against skipping rent payments, CNBC reported Sunday.
Taubman Says Rent 'Essential'
The real estate investment trust wrote in a March 25 memo obtained by CNBC that the rental income it receives from tenants is "essential" for it to meet its own financial obligations, like paying lenders on mortgages and utility expenses.
The Taubman memo reportedly said "all tenants will be expected" to stay true to their original lease obligations, despite financial difficulties related to the coronavirus.
So far, restaurant chain Cheesecake Factory Inc CAKE is the most notable national mall tenant to confirm it won't pay rent in April, although the company said it is in various stages of discussions with its landlords.
RBC Capital Markets and Costar Realty found just one Cheesecake Factory located within a Taubman property.
Taubman Sale Underway
Taubman ultimately bears the financial responsibility of managing its malls, even if they are entirely shut down. But landlords and tenants will ultimately end up "sharing the burden" in some form, Green Street Advisors retail analyst Vince Tibone told CNBC.
In February, Simon Property Group SPG announced the acquisition of 80% of Taubman in a $3.6-billion deal that's expected to close this year.
What's Next For Taubman
Taubman is "attempting to navigate" through the complex landscape the "best way we can" and plans on "being as flexible as we can," a company spokeswoman told CNBC.
So far, "most" tenants understand the status quo, she said, although the company acknowledges the situation is "much harder" for smaller and less-established occupants that may only have a presence in one mall.
Taubman shares were down 0.73% at $46.05 at the time of publication Monday, while Simon Property shares were down 4.37% at $55.63.
Photo by ChildofMidnight via Wikimedia.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.