Brookfield Property Partners, one of the largest mall and retail center landlords in the world, will continue its plans to sell lower-performing retail properties and redevelop the best-performing assets, executives said during the firm's investor-day presentation on Thursday.
The comments came a day after the firm cut 20% of its retail staff, affecting both headquarters staff and staff at its retail centers around the world, according to a memo received by Business Insider.
A main driver for those cuts, other than distress in the retail market caused by the coronavirus pandemic, is that the firm plans to shrink its portfolio to only its "higher value, larger scale" properties around the world, said Brookfield Property Partners CEO Brian Kingston.
"The number of malls we will have at some point in the future will be fewer than the number we have today," Kingston said.
The company doesn't plan to sell properties right now, during the height of concern about the future of retail, but will sell them as the market recovers, according to Kingston.
Brookfield Properties is focusing on its top-performing malls
Brookfield Property Partners is one of the largest owners of retail space in the world, with 122 properties that span more than 120 million square feet.
However, its highest-performing assets are concentrated in the top 25 malls, according to Brookfield Property Partners CFO Bryan Davis. Davis said that these 25 properties account for $15 billion in asset value, or 45% of the company's total retail asset value.
The company has been hit hard by coronavirus shutdowns, with shares falling from a 2020 high of $19.92 to $10.99 a share at the end of trading on Thursday.
Brookfield is far from alone, the coronavirus has seemed to accelerate the "retail apocalypse" that saw 9,300 stores close in 2019. A June report from Coresight Research predicted that number to more than double in 2020.
Kingston's investor day comments marked a continuation of the company's strategy since purchasing mall-operator GGP and its 125-property portfolio in 2018. Kingston told The Wall Street Journal in 2018 that the company planned to bring partners in to redevelop underperforming assets while leaving open the possibility of selling some other properties. In November of that year, Brookfield announced on an earnings call that it intended to redevelop 100 of GGP's properties.
Redevelopment has become an increasingly popular strategy for retail developers who are looking to either rescue underperforming assets or are looking to supercharge retail that is already relatively high performing.
The goal for high-performing properties, according to Meredith Darnall, a senior VP of business intelligence and strategy for Brookfield Properties' retail team, is to create "mini-cities" that reimagine shopping centers as "daily hubs of commerce."
These properties combine residential and hospitality uses with a wide range of retail, from dining and entertainment to health and wellness.
