Lender takes control of Intu's Trafford Centre after bids fail to meet expectations

By

Sandra Halliday

Published
Dec 17, 2020

One of the largest shopping malls in the UK, the Trafford Centre in Manchester, has been taken over by its lenders after no bidder offered an acceptable price. 

The destination has changed hands as part of the fallout from the Intu Properties failure earlier this year that has seen a number of its prestigious malls moving to new management.

The Canada Pension Plan Investment Board (CPPIB), which is Canada’s biggest pension fund, has taken control of the Trafford Centre after it lent Intu £250 million three years ago with the mall being put up as security for the loan.

While the Trafford Centre has been hit hard by the pandemic this year, in normal circumstances it's one of the most successful retail destinations in Britain with over 30 million visitors last year.

Despite that, the pressure that retail landlords remain under because of the shift to online and the pandemic meant that no bids for the mall were acceptable. It reportedly attracted interest from Frasers Group’s Mike Ashley, from Henderson Park Capital and Morgan Stanley’s property division. But the highest bid of around £900 million, was only a little more than half the £1.7 billin the location was valued at just a year ago.

CPPIB will now work with asset manager Unibail-Rodamco-Westfield to try to turn around the fortunes of the 22-year-old 1.8 million sq ft centre. It had been the first super-mall in Britain when it opened a year before Bluewater made a similar impact in southern Britain.

Other retail landlords have seen the value of their portfolios falling this year with landlord giants British Land, Shafestbury and Landsec all writing down part of their portfolio values.

So does that mean the long-term prospects for the Trafford Centre are weak? Not necessarily. CPPIB’s Geoffrey Souter 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.”

And the pension fund seems to have great faith in UK retail generally as it also has investments in other shopping malls around the country, including London’s Westfield Stratford and Birmingham’s Bullring and Grand Central.