Trafford Centre under new ownership following move by pensions vehicle

Trafford Centre

Canada Pension Plan Investment Board (CPP Investments) has acquired ownership of the Trafford Centre retail site in Manchester.

The deal is through CPP’s wholly-owned subsidiary CPPIB Credit Investments Inc.

No price has been revealed, but it is understood to be in the region of £800m, which is less than the £1.3bn valuation quoted in August this year.

In 2017, CPPIB Credit provided a £250m facility to Intu Trafford Centre Group (UK), a subsidiary of intu properties and the indirect owner of the Trafford Centre, which was secured by the equity interest in the Trafford Centre.

In June 2020, intu was placed into administration and a sale process was initiated for the Trafford Centre, however no viable bids were received.

As the principal secured creditor of ITCG with security over the equity interest in the Trafford Centre, in the absence of alternative sources of funding and the unsuccessful sale process, CPPIB Credit has exercised its rights to acquire the shares in ITCG and the ownership of the Trafford Centre.

Geoff Souter, managing director, head of real assets credit, CPPIB Credit, said: “The Trafford Centre is one of the UK’s top five shopping centres, welcoming more than 30 million shoppers annually, and counts many leading global retailers among its occupiers.

“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.”

CPPIB Credit will also evaluate the Trafford Centre’s complex capital structure to ensure it supports the return to long-term viability.

CPP Investments is a well-established investor in UK shopping centres with specialist experience of owning large scale retail assets.

It has a strong track record in UK retail with investments in London’s Westfield Stratford, Birmingham’s Bullring and Grand Central.

Canada Pension Plan Investment Board is a professional investment management organisation that invests around the world in the best interests of the more than 20 million contributors and beneficiaries of the Canada Pension Plan.

In order to build diversified portfolios of assets, investments in public equities, private equities, real estate, infrastructure and fixed income are made by CPP Investments.

Based in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At September 30, 2020, the Fund totalled C$456.7bn.