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Brookfield Property Sells Forever 21 Stake as Retail Continues to Drag

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Brookfield Property Partners sold its stake in Forever 21 for $63 million during Q1 2021, which contributed to the real estate company’s quarterly income of $731 million. Brookfield’s flow from operations (FFO) was $125 million for the quarter, down from $309 million during the same period in 2020.

Brookfield has been challenged by what has proven to be a difficult year for mall-based retailers. Vacancies rose as brick-and-mortar stores failed to meet rents, although Brookfield aimed to offer $5 billion in relief through the Retail Revitalization Program. Brookfield also acquired Forever 21 out of bankruptcy, preserving many of its leases, in partnership with Simon Property Group and Authentic Brands Group.

Unsurprisingly, the real estate firm’s latest FFO was hit primarily by the residual effects of the economic slowdown, including “occupancy changes, co-tenancy claims, reduction in rents, impact of abatements and reduced overage and temporary rents,” according to its supplementary Q1 2021 report. The Core Retail business accounted for $108 million in FFO, compared to $195 million during the same period in 2020, with the decline attributed to lower occupancy rates.

Core Retail leased approximately 5.9 million square feet over the past 12 months. Brookfield’s properties were 91.5% leased as of March 31, 2021, a decrease of 100 basis points from the prior period. On a year-over-year basis, in-place rents were up 2.5%.

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“While we continue to experience challenges in certain of our operations and markets due to the ongoing consequences of the pandemic and global economic slowdown, we remain encouraged by a recovery in activity in select sectors within our business,” said Brian Kingston, CEO of Brookfield Property Partners in a statement.

This may be the last public financial report from Brookfield Property Partners. Parent company Brookfield Asset Management plans to take its mall business private in the near future.

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