Brookfield Property Partners LP is slashing 20 per cent of the staff in its U.S. retail division as the novel coronavirus pandemic continues to wreak havoc on shopping malls.
The company, which has more than 170 malls in the United States and retail properties in Canada, China, South Korea, Brazil and Britain, will cut about 400 jobs in the U.S.
“After thoughtful consideration, we have reached the heavy decision to reduce the size of our workforce to align with the future scale of our portfolio," according to an excerpt of a memo Brookfield sent to employees on Monday. Cuts would be made "both in the field and in our corporate offices,” it said. The layoffs were first reported by CNBC.
The announcement comes after a brutal second quarter in which Brookfield Property lost US$1.5-billion and collected only 34 per cent of the rent from its enclosed malls.
Brookfield said that at the beginning of the pandemic, it kept its retail team employed to gain “a better understanding of its longer-term impact on our company."
The company has said for many years it plans to shrink its portfolio by selling assets. “Our experience of the past six months informs us that the opportunity to act on this plan has been accelerated and the time is now,” the memo said.
The pandemic has devastated indoor community spaces such as banquet halls, movie theatres, food courts and enclosed malls. Although malls started reopening in the summer, retailers such as J. Crew and Neiman Marcus could not withstand the precipitous drop in sales and have filed for bankruptcy protection. That could leave mall operators such as Brookfield with empty spaces.
Two years ago, Brookfield spent US$15-billion to acquire 125 shopping centres. Now, its parent company, Brookfield Asset Management, has thrown it a lifeline with US$1-billion to buy back some of its units that have traded on public markets. That is in addition to US$5-billion to invest in certain retailers. Brookfield Property recently partnered with fellow mall landlords Simon Property Group Inc. to buy most of department store JCPenney’s assets for US$1.75-billion.
Brookfield Property’s retail division has more than 2,000 staff, the company says. A spokeswoman said none of the retail cuts would occur in Canada.
Brookfield Property has lost nearly 40 per cent of its value on public markets since the beginning of the year.
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