Peel confirms Trafford Centre talks

PEEL Group has said that its proposed £1.6bn sale of the Trafford Centre reflects its “long term, ongoing strategy to broaden its investments in many diverse sectors through partnerships and co-investment with complementary businesses”.

Following this morning’s confirmation by Capital Shopping Centres that it is in talks with Peel over a purchase of the 1.5m sq ft centre, the regional property giant said:

“As part of this strategy, Peel aims to retain ongoing interests in its major assets, as illustrated by its successful partnerships with RREEF at Peel Ports, Vancouver Airport Services at Peel Airports, Covanta at Ince Park and most recently with SIS Live at Peel’s MediaCityUK project.”

The latter refers to a new joint venture announced last week which will see SIS operate the new studio block built at MediaCityUK at Salford Quays under a ten-year deal.

Subject to shareholder approval, Capital Shopping Centres is paying £750m in equity for the shopping and leisure complex and is assuming responsibility for £800m of loans and £50m of other net liabilities. Peel is contributing a cash payment of £75m and in return Peel Group founder John Whittaker will receive an equity stake of 19.9%  in Capital Shopping Centres, which could rise to 24.9% if some of CSC’s bonds were converted. Mr Whittaker will also be invited onto CSC’s board, taking on the non-executive post of deputy chairman.

Peel said that there were no major changes planned if the deal were to progress.

“The Trafford Centre’s success lies in its first-rate management and excellent staff and Peel Group has assured the Trafford Centre team that it’s very much business as usual,” the company said.

“An update on the progress of talks will be provided in due course.”

John Aspery, a partner in the corporate real estate team at King Sturge’s Manchester office, which works on valuations for Peel on UK schemes other than the Trafford Centre, said that although it was “difficult to imagine” why an owner would look to sell an asset at this stage in the property cycle, prime assets like the Trafford Centre would always attract interest.

“There’s always good appetite for a trophy asset and this is one of them,” he said.