Brookfield Property’s retail tenants paid 34% of rent in Q2

Company reported another big quarterly net loss, but CEO optimistic “worst of the economic shutdown is behind us”

National /
Aug.August 06, 2020 03:32 PM
Brookfield Property Partners’ Brian Kingston

Brookfield Property Partners’ Brian Kingston

Brookfield Property Partners collected just 34 percent of rent across its retail portfolio in the second quarter, helping drive another sharp decline in earnings this year. Its office holdings also took a hit.

The real estate arm of Brookfield Asset Management reported a net loss of $1.5 billion from April through June, compared with $23 million of net income over the same period in 2019.

At Thursday’s earnings call, company executives blamed its poor April through June results on coronavirus-caused mall closures. Most of its malls didn’t reopen until June, and the company has seen improved rent collections since July.

Brookfield Property Partners CEO Brian Kingston said the company was “cautiously optimistic that the worst of the economic shutdown is behind us.” He added that “our business is well positioned to handle any lingering impacts.” Brookfield is one of the largest mall operators in the U.S.

At its first quarter earnings call in May, company executives said they were negotiating with 2,400 of its retail tenants who had been unable to come up with the rent, and whose spaces were still closed at the time. That first quarter was also harsh for the Canadian giant, which reported a net loss of $373 million in Q1 compared with $713 million in net income year-over-year.

At its Q2 earnings, the company said cash flow from operations for its retail portfolio dropped to $140 million, compared to $170 million over the same period in 2019.

But the company’s core office portfolio also took a hit. It reported cash flow from operations of $126 million in the second quarter compared to $187 million in the same period in 2019. Occupancy fell slightly to 92.3 percent across the portfolio, with a remaining weighted average lease term of 8.6 years.

As other large office landlords have done, Kingston said he doesn’t believe the pandemic will have a lasting effect on the market.

“In the long run, we don’t think that remote working represents a threat to office,” he said.

The company also saw a decline in its liquid assets, which dropped to $5.9 billion, from $6.2 billion year-over-year.

“Operating with $6 billion in liquidity is more than adequate,” said CFO Bryan Davis. “We tend not to operate with lots of cash because it is not a good returning investment.”

Brookfield’s retail portfolio has come under close scrutiny by investors and analysts, who see it as a bellwether. Brookfield in May said it planned to inject $5 billion into major retail companies hit hard by the pandemic.

The company recently canceled plans to redevelop a mall in Burlington, Vermont, where it planned to build 10 apartment buildings and a 10-story office. It became involved in the project in 2017, but last month sold its interest to local partner Devonwood Investors.


Related Articles

arrow_forward_ios
Brookfield's Bruce Flatt, Aurora Capital Associates' Bobby Cayre and 530 Fifth Avenue (Google Maps)
Brookfield taking big loss on Fifth Ave retail condo
Brookfield taking big loss on Fifth Ave retail condo
12 MetroTech Center with Davidson Kempner Capital Management's Anthony A. Yoseloff (Getty, Brookfield)
Joint venture closes $128M deal at 12 MetroTech Center
Joint venture closes $128M deal at 12 MetroTech Center
Rendering of 227 West Street with Brookfield's Brian Kingston and Blackstone's Katie Keenan (OMA, Brookfield, Blackstone)
Brookfield lands $500M for next Greenpoint Landing development
Brookfield lands $500M for next Greenpoint Landing development
Brookfield Property Partners CEO Brian Kingston and 300 Vesey Street, at far left (Brookfield)
Brookfield scores $224M refi on Battery Park office tower
Brookfield scores $224M refi on Battery Park office tower
Many people are excited for shoppers to return, but many have switched to e-commerce. (Getty)
Is e-commerce king? Retailers reflect on pandemic changes during earnings calls
Is e-commerce king? Retailers reflect on pandemic changes during earnings calls
Procore CEO Tooey Courtemanche (Linkedin, SEC) 
Procore raises $635M in long-awaited IPO
Procore raises $635M in long-awaited IPO
Brookfield Asset Management’s Bruce Flatt (iStock)
Brookfield posts record FFO in Q1 — but not because of real estate
Brookfield posts record FFO in Q1 — but not because of real estate
60 Guilders' Kevin Chisholm, Brookfield's Brian Kingston and 12 Metrotech. (Brookfield, Chisholm ph: Larry Ford)
Brookfield to sell DoBro office condo for $130M
Brookfield to sell DoBro office condo for $130M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...