The Trafford Center in Manchester, one of the UK’s largest shopping centers, was taken over by its lenders, a Canadian pension fund, after its directors failed to sell it.
The mall was previously owned by Intu Properties mall, which slumped into management in June with more than £ 4.5 billion in debt.
However, a sale of Intu’s most valuable assets failed and the Trafford Center is now in the hands of one of Intu’s key lenders, the Canada Pension Plan Investment Board (CPPIB), Canada’s largest pension fund.
CPPIB loaned £ 250 million to the Trafford Center three years ago, which attracted more than 30 million visitors last year. However, Intu has breached its debt clauses following a collapse in retail rental income as a result of the Covid-19 pandemic.
CPPIB decided to exercise its right to take control of the Trafford Center as no acceptable offers had been received for the mall. The bids were only around £ 800m – half of the £ 1.7bn valuation the center had a year ago.
The Trafford Center and Intu’s other 16 malls, including Lakeside in Essex and Metrocentre in Gateshead, have stayed out of bankruptcy as they are directly owned by specialty vehicles.
All shopping centers have remained open and are under new management. Intu’s administrator, KPMG, is trying to sell the company’s remaining assets – offices and land.
Two other major shopping center operators, British Land, which owns Meadowhall in Sheffield and Landsec, which owns Bluewater in Kent, had to drop the value of their real estate portfolios by nearly £ 1 billion as the pandemic hit retailers.
This week, central London landlord Shaftesbury also wrote down the value of its portfolio after a sharp drop in rental income – falling to a loss of £ 700m as a result.
Geoffrey Souter of CPPIB said, “Although retail conditions were very difficult in 2020, we can think long-term and believe that with strategic management and investment, the Trafford Center has good prospects.”
The Canadian pension fund has also invested in London’s Westfield Stratford, Birmingham Bullring and Grand Central.
