Brookfield Property (BPY) (BPYU) plans to lay off 20% of its retail-related workforce, according to a report by CNBC. The global property owner, which has more than 170 retail properties in its portfolio, plans to make cuts to its corporate staff and leasing agents. The move will better align its workforce "with the future scale of our portfolio," according to Jared Chupaila, the CEO of Brookfield Property's retail group, in an email obtained by CNBC.
Brookfield is the latest mall owner to reduce its workforce due to the impact COVID-19 has had on the retail sector. Industry leader Simon Property Group (SPG 0.62%) furloughed 30% of its employees in March when it shut its malls to slow the spread of coronavirus. Simon also permanently laid off some workers, cut the base salaries of certain employees by 10% to 30%, and substantially reduced capital spending by suspending and eliminating more than $1 billion of new and redevelopment projects. Simon also cut its dividend, which Brookfield has been reluctant to do.
Brookfield's mall operations suffered due to the COVID-19 outbreak. With the company temporarily closing many of its malls earlier this year, its tenants couldn't generate sales. As a result, several couldn't pay their rent. That impacted Brookfield's cash flow, which led it to reportedly hold talks with some lenders about getting 12-month extensions on some of the loans backing its malls and skipping some payments on mall-related debt.
Despite the workforce realignment, Brookfield isn't shrinking its retail exposure. It recently partnered with Simon to rescue bankrupt retailer J.C. Penney in an $800 million deal. That move would grant them control over the retailer's real estate, giving them the flexibility to keep stores open or redevelop the locations.