Brookfield Gins Up $5 Billion For Retailer-Rescue Financing -- WSJ
08 Mai 2020 - 09:02AM
Dow Jones News
By Miriam Gottfried
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 8, 2020).
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 noncontrolling stakes in
retail businesses with prepandemic 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 said it 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, which was reported earlier by The
Wall Street Journal, 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 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 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 is now hoping to leverage its retail expertise and
the data it collects through its malls to backstop retailers whose
businesses it believes will eventually rebound. It plans to target
companies with experienced management teams that have been
operating for at least two years. Investments could also include
retailers that have already filed for bankruptcy protection.
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.
Brookfield is hardly the only investor looking for opportunities
amid the current economic carnage. Firms, including Silver Lake and
Apollo Global Management Inc., have invested billions of dollars in
the weeks since the pandemic began. Others, such as private-equity
giant Blackstone Group Inc., have taken a more cautious approach
based on the belief that the economic recovery will be gradual.
Brookfield's first investment in GGP was born out of the
financial crisis after that mall owner filed for bankruptcy
protection. That bet has generated more than $10 billion in profit
for Brookfield and its investors over the years, but its future had
looked uncertain even before the pandemic as the growth of
e-commerce continued to take its toll on bricks-and-mortar
retail.
Some of its major tenants had filed for bankruptcy protection
and announced significant store closures before the coronavirus,
and shares of rival mall owners had suffered.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
May 08, 2020 02:47 ET (06:47 GMT)
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