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In yet another sign of challenging times, real estate giant Brookfield Property Partners revealed layoffs Tuesday.
About 20 percent of associates in the retail division will be let go. Brookfield, one of the largest mall owners in the U.S., has more than 2,000 employees working in retail. That equals roughly 400 jobs, both in the field and in the company’s corporate offices, that have been lost. The firm’s other 20,000 employees are not affected by the news.
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“[The year] 2020 has had a profound impact on us all, both personally and professionally,” Jared Chupaila, chief executive officer of Brookfield Properties’ retail group, wrote in an e-mail to employees earlier in the week, which was later obtained by WWD. “Our business has been frustrated, interrupted and constrained. All our constituents — retailers, lenders, communities, partners, investors, consumers, vendors, shareholders and our own employees — have been affected by the events of this year and forced to revisit their relationships with our industry and our company.
“While many companies were quick to implement furloughs and layoffs at the onset of the pandemic, we made the conscious decision to keep all our team employed while we gained a better understanding of its longer-term impact on our company,” Chupaila continued. “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.”
Like other nonessential businesses, Brookfield was forced to close its malls in mid-March as the coronavirus made its way around the globe.
Chupaila was quick to point out in the e-mail to associates that Brookfield has been considering reducing the size of its workforce for some time — even pre-pandemic — while “opportunistically disposing of assets we determine do not meet the long-term investment strategy for our core portfolio. 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.”
But as recently as August, Brian Kingston, managing partner and Brookfield’s ceo of real estate, said the company was “cautiously optimistic” about the future.
“While we’re not completely out of the woods, we expect the severity of the impact of the shutdowns to be largely isolated within the second quarter,” he said at the time.
Meanwhile, the company was dealing with losses — some $1.5 billion, compared with earnings of $23 million a year earlier — and lowered ratings from debt watchdog group Moody’s Investors Service.
And with so many retailers suffering from losses of their own as a result of the shutdown, the landlord was only able to collect about 34 percent of rent due from its core retail portfolio during the most recent quarter. Shares of Brookfield Property Partners, which were trading up more than 2 percent Tuesday, are down about 45 percent year-over-year.
Brookfield owns 173 retail locations, largely in the U.S. In addition to retail, the company’ portfolio, which is spread out across 30 countries, includes offices, residential dwellings, hotels and self-storage spaces.
Representatives from Brookfield would not comment further. But according to Chupaila’s memo, the firm is offering severance and other benefits, such as career counseling, to employees who have been impacted by this decision.