One of the collapsed mall owner Intu Properties’ biggest creditors, Canadian pension fund CPP Investments, is close to agreeing an £800m deal to take over the Greater Manchester shopping centre, the culmination of a five-month marketing process.
The Canada Pension Plan Investment Board, or CPPIB, which trades as CPP Investments, in 2017 provided £250m of debt financing towards former Trafford Centre owner Intu, which went into administration in June.
CPP’s loan was secured against the Trafford Centre specifically and has a maturity date of 2022. CPPIB is reportedly lined up to take over the mall with a credit bid of around £800m – significantly lower than the mall’s most recent valuation of £1.2bn before Intu’s collapse.
CPP declined to comment when approached by Place North West. Its global equity investment portfolio includes stakes in UK shopping centres including the Westfield in London, of which it owns 25%, the Bullring in Birmingham, and Wellington Place in Leeds.
Intu’s administrators at the professional services firm KPMG in August selected agency CBRE to market the Trafford Centre for sale for an undisclosed asking price.
At the time, the Peel Group, the Trafford Centre’s developer that sold it to Capital Shopping Centres (which later rebranded as Intu) for £1.6bn in 2011, was said to be interested in buying back the property, but such a deal has not materialised.
The 2.2m sq ft shopping mall in Trafford was built in the late 1990s and opened to the public in 1998. Peel retained a 24.6% stake in Intu, which collapsed into administration on 26 June this year after failing to strike a deal with lenders to pay down an estimated £4.5bn in debt.
The Trafford Centre has continued to operate throughout the administration process, as it and Intu’s other 16 UK shopping centres are each owned by independent special purpose vehicles.
KPMG in August also appointed PJT Partners as a mergers and acquisitions advisor for the Trafford Centre sale process, and has been working closely with the directors of the SPV that owns and manages the Trafford Centre, and its creditors, to maximise value for the asset.
A spokesperson for CPP Investments told Place North West in June: “In respect of our specific, ringfenced financing of the Trafford Centre, we will work with the administrator of Intu to support the long-term future of the Trafford Centre, and also ensure we are fulfilling our fiduciary duties to act in the best interest of the 20 million CPP contributors and beneficiaries.”
Meanwhile, it emerged this week that the ‘Big Four’ turnaround consultant David Hargrave, appointed by Intu in May to help it restructure its business, has stopped working for Intu’s joint administrators. It is understood his departure is an expected part of the administration process, which has now been underway for six months.