Trafford Centre: The End Of The Story?
Somewhere in property heaven, no-longer trading corporate entities and defunct Greater Manchester retail/leisure projects are looking down on the fate of Manchester's Trafford Centre mega-mall, and saying ‘told you so’.
It is 22 years since John Whittaker and Peel Holdings opened the doors on the 2.2M SF Manchester shopping centre. It is 30 years since Whittaker began the planning battles ahead of its construction, battles that involved legal challenges from city centre developers, loud public disputes with big-name retailers, and a fierce fight with Manchester City Council and other local authorities.
But now, with Intu on the brink of calling in administrators, it could be (temporarily) over. Intu has appointed KPMG to prepare a contingency plan for administration as it concludes talks with lenders over the future of its £5B debt mountain.
Loan-to-value covenants were in peril before the coronavirus outbreak, but the pandemic has hurried forward the day of reckoning. The March quarter day saw just 40% of rents paid. The June quarter day, expected to bring more bad news on rents paid, is the moment of truth.
The gist of the early criticism of the Trafford Centre was that Manchester did not need so much additional retail floorspace. This turned out to be right in ways the original objectors, which included Boots and Marks & Spencer and Merlin, the then-owner of the Great Northern site, could never have guessed. The fight went all the way to the House of Lords, at the time the UK’s Supreme Court.
In the wake of their Lordships’ approval of the scheme in 1995, a host of other local retail and leisure schemes were shelved, with others given additional impetus as they readied themselves for competition.
Manchester’s 1996 post-terrorist bomb redevelopment was heavily influenced by the need to fight off the rival attractions of the Trafford Centre.
The Trafford Centre was designed to resemble St Peter’s Basilica in Rome, with its embracing colonnade and domed centrepiece, a look that declared it to be the centre of the retail world. The ghosts of those who objected, or feared the centre’s consequences for high street retail in Greater Manchester, may now be partly satisfied.
“Intu has been in discussions with key stakeholders to progress [a] standstill strategy ahead of the revolving credit facility covenant waiver deadline of 26 June 2020,” a company statement said on 23 June. A 15-month extension of the standstill was Intu’s best hope.
“This all remains subject to further negotiations, with no certainty as to whether Intu will achieve a standstill, or on what terms or for what duration... In the event that Intu Properties plc is unable to reach a standstill [and] if the administrator is not pre-funded then there is a risk that centres may have to close for a period,” the statement concluded.
The collapse in 2018 of the £3.4B Hammerson bid for Intu, and Klépierre's £5B bid for Hammerson, meant Intu Deputy Chairman and Peel founder Whittaker missed out on a hefty payout and escape route.
Subsequent fundraising efforts by Intu threatened to be expensive for Whittaker, whose shareholding hovers around one-quarter of the business.