Ivanhoé Cambridge Inc. is trying to sell stakes in 10 Canadian malls across the country, according to people familiar with the matter, the second time in a year the real estate company has sought to reduce its exposure to retail.
The initiative comes as the retail sector undergoes a massive shakeup with consumers increasingly shopping at Amazon and other online merchants instead of traditional brick-and-mortar stores. The proliferation of e-commerce and discount stores has upended the sector and put companies such as Sears out of business.
Ivanhoé, the real estate company of the Caisse de dépôt et placement du Québec, is selling a 50-per-cent non-managing interest in highly profitable malls such as Vaughan Mills north of Toronto, Conestoga Mall in Waterloo and Guildford Town Centre in Surrey, B.C., according to sources who were not authorized to speak because the discussions are confidential.
The company is also looking to divest a partial stake in the recently built Tsawwassen Mills, an outlet mall near one of the Vancouver area’s ferry terminals and the U.S. border, as well as non-controlling stakes in malls in Calgary, Victoria and Quebec City, the sources said. The company will continue to manage and operate the 10 malls.
A spokesman for Ivanhoé said: “We don’t comment on rumours about our investment strategy."
Ivanhoé, which held more than $60-billion in assets as of the end of 2017, also owns offices and apartments in the Americas, as well as the Fairmont Château Frontenac hotel in Quebec City among other commercial property.
Like many other North American mall owners, Ivanhoé has been searching for ways to turn its retail spaces into more of a destination instead of simply a place to shop. The pension fund owns 28 malls in Canada, 17 shopping centres in Brazil, as well as one in China and another in Germany, according to its website.
The Quebec-based company recently partnered with Cirque du Soleil Entertainment Group to reshape part of its popular Vaughan Mills shopping centre into an entertainment district with activities such as bungee jumping, juggling, face painting and trampolines.
It also partnered with Time Out Market to change part of its Montreal Eaton Centre into a market of bars and restaurants, similar to the popular foodie destination in Lisbon.
Although there is money to be made as a mall landlord, investors have soured on the sector.
This is the second round of partial mall sales for Ivanhoé. Earlier this year, the pension fund sold its non-controlling interest in two malls – one in Richmond and another in Toronto. Ivanhoé had also wanted to sell a stake in one of its Calgary shopping centres, Market Mall, but had to take it off the auction block because of lack of interest.
Other mall owners are retooling their business. RioCan Real Estate Investment Trust is in the middle of selling dozens of shopping centres in smaller cities across the country in order to focus on Canada’s largest markets – Toronto, Montreal, Vancouver, Calgary, Ottawa and Edmonton.
In addition to the malls in Waterloo, Vaughan and Vancouver region, Ivanhoé is looking to sell a partial, non-controlling stake in the following: CrossIron Mills north of Calgary’s business district; Dearfoot Meadows in Calgary; Mayfair Shopping Centre in Victoria; Outlet Collection at Niagara: Place Montreal Trust in Montreal and Place Ste-Foy in Quebec City.
Royal Bank of Canada and commercial realtor CBRE were hired to run the sales process, the sources said. The two firms worked on Ivanhoé’s other round of Canadian mall sales. Spokesmen for RBC and CBRE declined to comment.
Stay up to date on all our Streetwise stories. We have a Streetwise newsletter, covering mergers and acquisitions, plus financial services news. It is sent Tuesday to Saturday morning. Sign up today.