The Trafford Centre, Britain’s fourth-biggest shopping mall, is being put up for sale less than two months after its parent company, Intu Properties, collapsed into administration.
Sky News has learnt that the Manchester shopping destination, which draws 30 million visitors every year, is to be auctioned following pressure for a rapid sale from its biggest lender.
City sources said on Tuesday that the board of the entity which controls the Trafford Centre had appointed PJT Partners, the investment bank, and the property agent CBRE to market the site.
Like shopping centres across the UK, it has been hit hard by the coronavirus crisis’s impact on the retail industry.
The Trafford Centre was last valued publicly by Intu at close to £1.7bn, but is expected by analysts to be sold for at least 20% less than that sum – if a buyer can be found at an attractive price.
In a statement issued to Sky News, a spokesperson for the joint administrators of Intu properties said: “All parties are working constructively together to maximise value for this highly attractive asset.”
PJT had been advising the Canada Pension Plan Investment Board (CPPIB), the single-biggest lender in the Trafford Centre capital structure, for some time before Intu called in administrators in July.
CPPIB, one of the world’s largest pension funds, had been reported to want a quick sale of the Manchester site, but had been met by opposition from the holders of £690m of mortgage-backed bonds secured against the centre.
The appointment of advisers to kick off a formal sale process is expected to attract the interest of John Whittaker, the property tycoon who sold the Trafford Centre to Intu in 2011.
Other centres owned by the company included Lakeside in Essex
Mr Whittaker’s Peel Holdings recently relocated its head office from the Trafford Centre.
The auction process will provide a crucial test of investors’ appetite to buy flagship retail destinations at a time when footfall has been severely hampered by the COVID-19 crisis.
Retailers including Debenhams, Cath Kidston and Laura Ashley have fallen into administration, with numerous others turning to their creditors to secure approval for rescue deals.
Among those which have launched company voluntary arrangements (CVAs) to cut their rent bills and offload loss-making stores are Jigsaw and – imminently – New Look, for the second time in little more than a year.
Intu’s collapse reverberated through the commercial property and retail sectors.
The company owned centres including the Metrocentre in Gateshead and Lakeside in Essex.
Intu had been struggling for some time, although the speed of its collapse was remarkable given that it had been in London’s FTSE-250 index as recently as last year.
Intu is a key player in many of the regional economies in which it operates.
At the point of KPMG’s appointment, it directly employed nearly 3000 people, with a further 102,000 working in its UK shopping centres.
Another 30,000 people are employed in its supply chain.
KPMG, the administrator, has managed to secure funding to continue managing Intu’s portfolio of sites for a six-month period.
Property sources said that KPMG was working constructively with the directors of the Trafford Centre property company and its lenders to maximise the centre’s value.
One insider said the various parties expected the Trafford Centre to attract substantial interest from the UK and international investment communities.
“Assets of Trafford’s quality and lot size do not come to market often,” said one source.
The coronavirus pandemic has exacerbated the sense of crisis among retail landlords.
Last week, Hammerson, owner of the Brent Cross shopping centre, confirmed it would seek to raise more than £800m from an emergency rights issue and the sale of its stake in a portfolio of European malls.
Hammerson and Intu briefly considered merging in 2018.