Investor the Peel Group, which sold the Trafford Centre to the company now known as Intu Properties in 2011 and remains its largest shareholder, said Intu’s collapse will have no bearing on its own financial position.
The Peel Group has a 24.6% stake in Intu, which fell into administration on Friday after failing to strike a deal with lenders to pay down its estimated £4.5bn in debt.
Administrators at ‘Big Four’ consultancy KPMG are now working with Intu’s management on a strategy to repay creditors and seal the future of Intu’s portfolio of 17 shopping centres in the UK and two in Europe.
The malls, including the Trafford Centre, are continuing to trade as independent entities outside of the administration process. However, a sale of some or all the assets is one option being considered by the KPMG administration team.
The Peel Group, headed up by chairman John Whittaker, was reportedly considering a deal in 2018 to buy back the Trafford Centre, and speculation has mounted in the past week that it may still like to do so. Intu was in talks with Peel and other shareholders earlier this year over possible options to raise funds to help strengthen Intu’s position.
A spokesperson for Peel declined to comment on any deal rumours and said Intu’s administration would not affect the group’s finances despite its sizeable shareholding in the collapsed firm.
“Intu’s challenges do not have any significant impact on the Peel Group’s financial position or future prospects,” the spokesperson said. “Intu has been facing difficulties for several years now against a backdrop of a fast-changing retail sector.
“As a result, our investment in Intu has been a relatively small part of the group’s investment portfolio since 2017. The Peel Group has a diverse and resilient real estate and infrastructure-focused portfolio that continues to offer exceptional future growth opportunities.”
The statement added that, “as a long-term investor in Intu, it is with considerable sadness that we note the announcement, despite the best efforts of the Intu management and other stakeholders to prevent this outcome.
“Our first thoughts are with Intu staff who will be directly impacted by this regrettable news at a time of hardship across the UK, particularly in the retail and leisure sectors.”
The group’s broader investments at TraffordCity and City Gateway – subsidiary Peel L&P’s 1,000-acre site that includes the Trafford Centre – also remain unaffected, the statement said. “Our commitment to TraffordCity [whose second phase reached practical completion last week] is undiminished.
“We also have exciting plans for a Therme spa, a new home for EventCity and the first residential developments at Trafford Waters all planned to commence in 2021.”
Peel sold the Trafford Centre to Capital Shopping Centres, which later became Intu, for £1.6bn in 2011. Should there be another sale of the glitzy mall in Greater Manchester, the administrators would be obliged to work with the directors of the SPV ‘propco’ that manages the Trafford Centre, which include many current and former staff from Intu and Peel.
One of Intu’s biggest creditors is Canadian pension fund CPP Investments, which in 2017 provided £250m of debt financing towards the retail landlord, secured against the Trafford Centre specifically, with a maturity date of 2022.
CPP’s 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.
A spokesperson for CPP Investments said: “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.”