Jim Cramer's Take on Gap: The Government Can't Save the REITs

Katherine Ross

U.S. mall operator Simon Property Group (SPG) - Get Report is reportedly suing the once-iconic retailer for nearly $66 million in unpaid rent accumulated during the peak of the coronavirus pandemic.

Simon, the owner of retail shopping malls in 37 U.S. states, said last month that even with some of its key retail tenants unable to pay monthly rent amid the lockdown, it would still commit to a quarterly dividend, paid in cash, and fully expects its tenants to honor their lease commitments. The group did not, however, disclose rent collection data for April and May.

Gap told investors on April 23 that it expects a 'material' earnings hit from the coronavirus pandemic and warned that cash from operations might not be able to fund the business going forward. It also said it was suspending rent payments on closed stores and negotiating with landlords for further deferrals. 

So, what does this mean for Gap? Will we start to see more and more headlines like this as retailers and other businesses are unable to pay rent?

While he believes things are getting better, Jim Cramer said the government can't save the REITs. He breaks down why in the video above. 

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

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