In a freezing cold car park outside the Trafford Centre at 7.40am yesterday, I tried to explain Peel Group’s deal to sell the shopping centre to Capital Shopping Centres (CSC) to listeners of BBC Radio Manchester’s Breakfast programme.
With no disrespect intended to the producers, reporters or listeners, I don’t think I was able to do the subject justice. One of the questions was: “Will shoppers notice any difference?” Of which my reply was: “Not one jot.”
In a nutshell, the deal is about giving Peel more reach and a greater ability to embark upon yet more transformative projects, but to take cash for stakes in businesses where they can unlock some value. It is a process that is ongoing and will not be the last.
So, here are the facts. CSC buys the Trafford Centre and £74.4m in cash in return for Peel taking a 20 per cent stake in CSC. The recently formed asset management business now propels Peel into a focused business with an asset value of £6.6bn with interests in shopping centres all over the country, including, intriguingly, a 48 per cent stake in the Manchester Arndale centre.
You start to see Peel’s stake in CSC and John Whittaker’s new role as deputy chairman as a step up in his ability to influence the retail property market.
But the deal also sees Peel taking money off the table for the future. Just as they did in selling a 65 per cent stake in their airports business to Vancouver Airports.
You don’t have to travel far from the Trafford Centre to see just where their future project pipeline is. There’s a new stadium for Salford Reds across the M60 at Barton, MediaCity at Salford Quays and more ambitious plans along the route of the Manchester Ship Canal towards the Atlantic Ocean, including high rise developments across from Liverpool at its Wirral Waters scheme.
Whittaker is thinking big again - he clearly never stops, to be fair. He has been in China with David Cameron drumming up support for British industry and seeking investment into these projects.
If you want a hint of where the strategy is going, look at the Peel’s other shareholder - the Olayan Group. A diverse industrial group, it owns stakes in a wide range of businesses. It operates like a sovereign wealth fund, investing and influencing. And it doesn't have to own the businesses outright to have a massive influence. And it's this way round that you should see this current deal.
Who is the king of UK shopping centres now? Who has gone from owning one centre to being at the top table of a business owning four of the top six? I mean, who wouldn’t back Whittaker to get his own way in any future strategy for CSC?
Comments? Email Michael Taylor, editor, Insider