Southeast Michigan mall owner Taubman Centers is requiring its tenants to pay rent during the coronavirus (COVID-19) pandemic, according to a memo obtained by CNBC.
The Bloomfield Hills real estate investment trust owns 26 shopping centers in the U.S. and Asia, including Twelve Oaks Mall in Novi and the Great Lakes Crossing Outlets in Auburn Hills.
Michigan is currently operating under Gov. Whitmer’s stay at home order, requiring residents to isolate at home amid the COVID-19 outbreak. Under these unprecedented circumstances, the retail industry is taking a blow as people avoid shopping and stores temporarily close.
However, Taubman still fully expects their tenants to pay rent during these closures, as the company has obligations of its own.
“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 said in the memo. "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.”
Taubman announced on March 19 that most of its shopping centers would close to help prevent the spread of COVID-19.
“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," a spokeswoman from Taubman 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.”
As stores abide by the mandatory closures, it may become difficult for many of them to pay rent.
Just earlier this week, The Cheesecake Factory warned it would not be paying rent amid restaurant and mall closures due to the pandemic in a SEC filing.
In the filing, the restaurant stated that it has laid off about 41,000 hourly employees around the country and will not pay rent for the month of April.
“We are in various stages of discussions with our landlords regarding ongoing rent obligations, including the potential deferral, abatement and/or restructuring of rent otherwise payable during the period of the COVID-19 related closure," the filing said.
Taubman has one Cheesecake Factory location at Twelve Oaks Mall.
Last month, Taubman entered into a deal with The Simon Property Group, selling them 80% ownership interest in Taubman Realty.