Yahoo Finance Manchester's Trafford Centre taken over by lenders after sale fails
The Trafford Centre in Manchester, one of the UK’s biggest shopping malls, has been taken over by its lenders, a Canadian pension fund, after its directors failed to sell it.
The mall was previously owned by the shopping centre company Intu Properties, which collapsed into administration in June with debts of more than £4.5bn.
But a sale of Intu’s most valuable asset failed and the Trafford Centre is now in the hands of one of Intu’s main lenders, the Canada Pension Plan Investment Board (CPPIB), Canada’s biggest pension fund.
CPPIB lent Intu £250m three years ago, secured against the Trafford Centre, which attracted more than 30 million visitors last year. But Intu breached its debt covenants after a collapse in rental income from retailers in the wake of the Covid-19 pandemic.
CPPIB decided to exercise its rights to take control of the Trafford Centre because no acceptable bids were received for the mall. Bids came in at only about £800m – half the £1.7bn valuation the centre had a year ago.
The Trafford Centre and Intu’s other 16 shopping centres, including Lakeside in Essex and the Metrocentre in Gateshead, have stayed outside the insolvency process because they are directly owned by special purpose vehicles.
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All of the malls have stayed open and are under new management. Intu’s administrator, KPMG, is trying to sell off the company’s remaining assets – offices and land.
Two other big shopping centre operators, British Land, which owns Meadowhall in Sheffield, and Landsec, which owns Bluewater in Kent, have both been forced to slash the value of their property portfolios by almost £1bn as the pandemic took its toll on retailers.
This week, the central London landlord Shaftesbury also wrote down the value of its portfolio – and slumped to a £700m loss as a result – after a sharp drop in rental income.
Geoffrey Souter, of CPPIB, said: “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.”
The Canadian pension fund has also invested in London’s Westfield Stratford and Birmingham’s Bullring and Grand Central.
