Mall owner Brookfield Asset Management Inc. plans to devote $5 billion to shoring up retailers hit by the coronavirus pandemic, a bet on a beaten-down sector that could also help keep its rent payments rolling in.
The initiative will be aimed at taking non-controlling stakes in retail businesses with pre-pandemic revenue of $250 million or more whose sales have plummeted as stores have been forced to close and consumers have remained on lockdown.
The Canadian investment giant plans to finance the program using money from its balance sheet and existing funds and investment strategies. It may also raise additional institutional capital for the program.
The retail-investment program will be run by Ron Bloom, vice chairman of Brookfield’s private-equity group. Mr. Bloom, a former restructuring banker at Lazard Ltd., is best known for his role leading the U.S. government’s auto task force during the financial crisis.
Being a tenant of Brookfield BAM, +2.99% won’t be a requirement for investment, according to people familiar with the matter. Still, providing rescue financing for retailers could be a roundabout way for Brookfield to inject capital into its malls whose rent rolls have been battered during the pandemic. Shares of Brookfield Property REIT Inc., which had fallen by nearly half from the beginning of March through Wednesday’s close, climbed by more than 6% after the Wall Street Journal reported on the plans.
Known for its contrarian investing style, Brookfield already has placed a large wager on bricks-and-mortar retail through its real-estate business. In August 2018, the firm closed a deal to buy the two-thirds of real-estate investment trust GGP Inc. it didn’t already own. The transaction valued the 125-property portfolio, mostly comprised of malls, at around $15 billion.
Brookfield’s announcement comes during a week when two major retailers, Neiman Marcus Group Inc. and J.Crew Group Inc., filed for chapter 11. J.C. Penney Co. is also preparing a bankruptcy filing, the Journal has reported.
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