TD funds make bigger bet on malls with a 50-per-cent stake in Cadillac Fairview’s Carrefour Laval

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Toronto-Dominion Bank’s real estate funds are making a bigger bet on shopping malls by acquiring a 50-per-cent stake in one of Cadillac Fairview’s Quebec malls along with the option to buy part of Sherway Gardens mall in Toronto.

This is TD’s second major deal with Cadillac Fairview Corp. Ltd. since the bank bolstered its wealth-management business last year with the acquisition of institutional money manager and real estate investor Greystone.

Earlier this year, TD agreed to lease the majority of Cadillac Fairview’s new 46-storey Toronto office tower, which is currently under construction. The bank will also be a part owner of that building.

Together, these deals strengthen a partnership that started in 1967 when the bank and Cadillac Fairview opened the doors on their TD office tower complex in Toronto’s financial district.

Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Plan, and TD would not provide financial terms of the deal. The bank’s Greystone real estate funds made the purchase for the benefit of TD Asset Management Inc. clients.

The deal will give TD’s clients additional exposure to Canada’s top-performing malls. TD already had a stake in another Cadillac Fairview shopping centre, called Fairview, in north Toronto.

“These are significant properties,” said Craig Patterson, researcher with the Retail Council of Canada.

Carrefour Laval, the Quebec shopping centre, had annual sales of $858 per square foot over the past 12 months; Sherway Gardens had sales of $1,099 per square foot over the same period; and Fairview Mall had annual sales of $987 per square foot, according to Mr. Patterson.

That performance puts the three malls in the top 30 in Canada by that measure, with Carrefour Laval ranked No. 23, Sherway Gardens No. 8 and Fairview No. 12, according to Mr. Patterson’s research.

TD and Cadillac Fairview have announced plans to spend $80-million to overhaul Fairview Mall and make it easier for shoppers to access the nearby subway station. Like other mall owners, they are considering redeveloping underused parts of the property to include residential and office space.

The companies did not say whether they would redevelop Carrefour Laval and Sherway Gardens except to say that “inherent growth opportunities" exist at each property.

As e-commerce expands, mall owners are under pressure to overhaul their properties to attract shoppers. On top of adding activities such as bungee jumping, property owners are also redeveloping retail space into other uses such as apartments, condos and offices.

The most successful shopping centres require constant investment and include top retailers such as Apple Inc. and yoga clothing store Lululemon Athletica.

“That is a sign that the shopping centre is drawing the right shopper," Mr. Patterson said. “The more productive shopping centres have upscale tenants and chain stores. They target households that will spend.”

Cadillac Fairview is also testing a shopping app that will make it easier for customers to find stores, and eventually wants to roll out its own mobile wallet for its malls.

Cadillac Fairview has partnerships at some of its other Canadian malls. But it retains control and management of its 19 shopping centres. The real estate company also owns and develops office towers and recently bought a large tract of land east of downtown Toronto that is expected to be home to 10-million-square feet of new office space.

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