The Canada Pension Plan Investment Board has taken over one of Britain’s largest shopping malls after it failed to sell as part of a bankruptcy-protection process.
The CPPIB said Wednesday that it has acquired the Trafford Centre in Manchester. The mall was among 17 British shopping centres owned by Intu Properties PLC, which filed for court protection from creditors last June after piling up £4.5-billion ($7.75-billion) in debt.
Intu put the mall up for sale this summer but couldn’t find a buyer. The company valued the shopping centre at £1.7-billion earlier this year, and media reports indicated that bids came in at about half that amount.
CPPIB Credit provided a £250-million loan to Intu in 2017 that was secured by an equity interest in the Trafford Centre. The pension fund said “in the absence of alternative sources of funding and the unsuccessful sale process, CPPIB Credit has exercised its rights to acquire the shares in [the mall] and the ownership of the Trafford Centre.”
“The Trafford Centre is one of the U.K.’s top five shopping centres, welcoming more than 30 million shoppers annually, and counts many leading global retailers among its occupiers,” said a statement from Geoff Souter, head of real assets credit at CPPIB Credit. “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.”
British retail has been in a tailspin this year, mainly because of the pandemic, which has forced stores to close for weeks at a time. Most of the country remains under tight restrictions on social movements, and there have been two lockdowns in England since March, which closed non-essential retail stores.
Earlier this month, Debenhams collapsed into liquidation after a bid to buy the department store chain fell apart. The 242-year-old retailer has 12,000 employees and 124 stores. That came only a day after the Arcadia Group, which owns several brand names such as Dorothy Perkins and Topshop, filed for bankruptcy protection. The company has more than 2,000 outlets in Britain and 34 other countries, including Canada, and employs about 15,000 people. The Trafford Centre has five Arcadia stores and a Debenhams.
Several other chains have also gone under in recent months, including Edinburgh Woollen Mill, Peacocks, and Monsoon Accessorize, as well as T. M. Lewin & Sons Ltd.
The Centre for Retail Research has estimated that almost 21,000 stores will close this year and that 158,000 retail jobs have been lost in 2020, the most since the 2008 financial crisis.
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