Canada Pension Plan Investment Board, which trades as CPP Investments, has scooped up the mall’s ownership by exercising share rights as the main secured creditor of the asset’s owner, Intu Trafford Centre Group.
CPP has acquired the 2.2m sq ft shopping centre in Trafford, Greater Manchester, through its wholly owned subsidiary CPPIB Credit Investments.
The value of the deal was not disclosed due to its nature as a share right exercise but is thought to be around £800m – significantly below the Trafford Centre’s last valuation of £1.2bn before its owner Intu Properties collapsed into administration in June.
CPPIB Credit in 2017 provided a £250m loan facility to Intu Trafford Centre Group, a special purpose subsidiary set up by Intu to own and manage the mall. The loan was secured by the equity interest in the Trafford Centre.
In June, Intu appointed administrators at professional services firm KPMG and a sale process was initiated for the Trafford Centre, however no viable bids were received.
CPP said in a statement today: “As the principal secured creditor of Intu Trafford Centre Group, with security over the equity interest in the Trafford Centre, and in the absence of alternative sources of funding and the unsuccessful sale process, CPPIB Credit has exercised its rights to acquire the shares in ITCG and the ownership of the Trafford Centre.”
The mall was built by local landowner the Peel Group in the late 1990s and opened to the public in 1998. In 2011, Peel sold it to Capital Shopping Centres (which later rebranded as Intu) for £1.6bn but retained a 24.6% stake in Intu, which collapsed into administration 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, along with Intu’s other 16 UK shopping centres, which are also owned by independent special purpose vehicles.
CPP is an established investor in UK shopping centres with specialist experience of owning large-scale retail assets. Its global equity investment portfolio – valued at CAD$456.7bn (£265.3bn) as of 30 September – 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.
CPPIB Credit said in its statement today it would “evaluate the Trafford Centre’s complex capital structure to ensure it supports the return to long-term viability”.
Geoff Souter, managing director and head of real assets credit at CPPIB Credit, added: “The Trafford Centre is one of the UK’s top five shopping centres, welcoming more than 30 million shoppers annually, and counts many leading global retailers among its occupiers.
“While conditions for retail in 2020 have been very challenging, we are able to take a long-term view and believe that, with strategic management and investment, the Trafford Centre has strong prospects.
“An immediate priority is to support the Trafford Centre’s management, ensuring continued optimal operation of the Trafford Centre, and to appoint a long-term expert operating partner.”