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Richmond Centre is seen in Richmond, B.C., on Nov. 16, 2017.

Rafal Gerszak/The Globe and Mail

Ivanhoé Cambridge is in talks to sell two of its mall investments in Toronto and the Vancouver area but is yanking its Calgary stake off the market as the shopping centre is being redeveloped, according to people familiar with the matter.

Ivanhoé, the real estate investment arm of the Caisse de dépôt et placement du Québec, put its 50-per-cent non-managing interest in three malls on the auction block late last year.

The Quebec pension fund received bids for its stakes in the Fairview Mall in Toronto and Richmond Centre in the Vancouver region but not Market Mall in Calgary, the sources said.

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Alberta Investment Management Corp. (AIMco), the province's public pension fund, is vying for Ivanhoé's Richmond Centre investment, while Greystone Managed Investments Inc., a privately owned institutional money manager, is interested in the Toronto mall, according to the sources, who cautioned the deals are not final and could change.

Because of the lack of interest in the Calgary mall, Ivanhoé decided to take the partial stake off the market, the sources said. Ivanhoé declined to comment.

The Calgary property is undergoing a transformation after discount retailer Target failed in Canada in 2015 and left Market Mall and other shopping centres with big spaces to fill.

Target's departure came as Alberta suffered through the plunge in oil prices. Since then, Market Mall has been renovating the former Target space and the rest of the shopping centre with more underground parking spots and the addition of well-known brands such as Sporting Life and Saks Off 5th. It is unknown whether Ivanhoé will put its stake up for sale again after the redevelopment is completed.

Cadillac Fairview operates and owns the other half of Market Mall and has the same arrangement with Ivanhoé at the Vancouver and Toronto malls.

If AIMco and Greystone are successful with their bids, they would become partners with Cadillac Fairview – the real estate arm of the Ontario Teachers' Pension Plan. AIMco declined to comment. Greystone said it has no information at this time.

Ivanhoé's mall sale is occurring as the bricks-and-mortar retail industry scrambles to reinvent itself amid competition from online vendors. "There is still a ton of people shopping at the stores," said Frank Magliocco, PwC Canada's real-estate expert. "Those that are successful and have been successful are these big malls, the high-end malls that have created that experience for the consumer."

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The three Ivanhoé-Cadillac Fairview malls are among the top 20 shopping centres in Canada, according to the Retail Council of Canada, with Richmond Centre bringing in the most revenue per square foot among the three, followed by Fairview and Market Mall.

Richmond would give AIMco a stake in another lucrative mall as well as more property in Vancouver, where a tiny portion of its real estate assets is located. The Alberta pension fund already owns the country's most profitable mall, Yorkdale in Toronto.

"While there is this e-commerce threat, there is still plenty of money to be made there," Mr. Magliocco said. "You have to take a look at what has happened to the value of these malls over the last number of years. They have done exceptionally well."

When Ivanhoé launched the sale last year, there was talk that each stake could fetch about $500-million. The value of the AIMco and Greystone bids is not known.

Ivanhoé currently owns 29 malls in Canada. The pension fund also owns shopping centres in Brazil, China and Germany, as well as office and residential property.

Real estate firm CBRE Group Inc. and Royal Bank of Canada are running the sales process for Ivanhoé. Both declined to comment.

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