Gap Sues Landlord for Rent Relief Due to ‘Radical’ Change in Circumstances Caused by Pandemic

Ella Chochrek
·3 mins read

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Gap Inc. is taking Brookfield Properties Retail Inc. to court.

The apparel and accessories company and several of its owned-retail shops on Thursday filed a complaint in Illinois Circuit Court against the property manager — claiming that it does not owe any more rent under the terms of its leases.

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Gap — parent to Athleta, Banana Republic, Janie & Jack and Old Navy — claims it leases were signed without consideration that a pandemic would cause a “radical change in circumstances” and lead revenues to fall “to zero overnight.” As such, the corporation is asking a judge to rule that it has not owed rent since mid-March, when government mandates forced it to shutter their doors.

“Under principles of good conscience, [Brookfield] should not be allowed to retain the rent and other consideration paid for the period of time that [Gap and other retailers] were unable to operate retail stores at the premises as originally contemplated by the leases,” the complaint reads.

Even upon reopening, Gap argues, its ability to conduct business has been frustrated, as it is “expected to downgrade services in the interest of health and safety, and consumers are still too concerned about the risk of entering a store to return to the shopping centers en masse.” Gap further claims that it was promised “retail space in vibrant shopping centers” and that it would not have agreed to the same contracts had it known it would not be able to operate stores as usual for the full duration of the leasing period.

A representative from Brookfield did not immediately return FN’s request for comment.

This isn’t the only legal dispute between Gap and Brookfield over skipped rent payments. Last month, Brookfield filed a suit against the company in Texas, claiming that it had missed $2 million in rent in Texas the state over the course of three months, as well as additional payments nationwide.

“For three months running, Gap has failed to pay rent at virtually every Brookfield location nationwide, even for stores that Gap is operating,” Brookfield wrote in a June court filing.

In late April, Gap announced that it would skip out on rent payments for its North American units. The company, noted that it was negotiating with landlords to defer or abate rent as stores remain closed, adding that it could terminate some leases as well as permanently shutter some outposts.

In addition to its legal battle with Brookfield, Gap is facing at least two other lawsuits over its decision to miss rent payments. In June, Simon Property Group filed a complaint in Delaware state court alleging that the retailer missed nearly $66 million in rent and other charges. In May, a suit against Gap was filed by New York City landlord 48th Americas LLC., which said the company violated its leasing agreement by missing fixed and other rent payments totaling over $530,000.

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