Brookfield Cutting 20 Percent of Retail Arm as It Looks to Sell Off Some Malls
By Nicholas Rizzi September 23, 2020 2:01 pm
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Brookfield Properties plans to lay off about 20 percent of its retail staff as one of the largest real estate companies in the country looks to sell off some of its malls.
Brookfield retail CEO Jared Chupalia wrote in an email to staff this week — obtained by CNBC — that the company “made the conscious decision to keep all of our team employed while we gained a better understanding of [the coronavirus pandemic’s] longer-term impact,” but ultimately chose to make the cuts “to align with the future scale of our portfolio.”
A spokeswoman for Brookfield did not respond to a request for comment.
The cuts will impact 20 percent of the nearly 2,000-employee retail division and affect staff on both the corporate and leasing sides, according to CNBC.
Aside from the cuts, Brookfield is also looking to sell off some of the 125 malls it picked up when it acquired GGP for about $9.25 billion in 2018, the Financial Times reported. The company said after the acquisition that it wanted to dispose of some of the properties, and Chupalia wrote in the email “that the opportunity to act on this plan has been accelerated and the time is now.”
Retail has been struggling during the pandemic as stores were forced to temporarily close to slow the spread of the virus. The country saw historically low sales figures while dozens of retailers filed for bankruptcy. Mall owners have also been fighting to collect rent during the pandemic, with some taking to the courts to get tenants to pay up.
In June, Brookfield said it only collected about 35 percent of rent at its retail properties in the second quarter of this year, according to the Financial Times. Brookfield also filed a lawsuit against Gap over $2 million in missed rent at stores in Texas, Bloomberg reported.
Meanwhile, Brookfield is facing pressure on its $895 million commercial mortgage-backed securities loan for two of its massive malls after Neiman Marcus announced it would close its location in one of the malls, as Commercial Observer previously reported. Brookfield also defaulted on the mortgages for at least seven of its malls by the end of June, according to the Financial Times.
The rocky retail climate hasn’t stopped Brookfield from picking up a bankrupt department store during the pandemic. Earlier this month, Brookfield joined mall giant Simon Property Group to buy JCPenney for a mix of $1.75 billion in cash and loan debt.
