$70M offered for Portage Place Toronto firm's redevelopment plan may include student housing
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Hey there, time traveller!
This article was published 05/07/2019 (1425 days ago), so information in it may no longer be current.
The potential sale of Portage Place to a Toronto developer with a reputation for turning around distressed properties has garnered positive reviews from city hall and the agency that owns the land the downtown shopping centre is built on.
Starlight Investments has offered the owners, a subsidiary of Vancouver-based Peterson Group, $22.9 million for the mall and a further $47 million to North Portage Development Corp., which holds the land lease and owns the parkade under 393 Portage Ave.
“This is a significant reinvestment into our downtown, with a potential of $300 million coming in,” said Clare MacKay, vice-president of strategic initiatives for The Forks (a subsidiary of North Portage), who was part of the team that briefed city councillors.
“It looks like this is a good deal for Winnipeg and for downtown, and a reinvestment in something that right now is not receiving any investment.”
MacKay told reporters Starlight plans to invest up to $230 million, in addition to the purchase price, to redevelop the mall, including the possibility of constructing student housing.
Members of council were briefed on the possible sale at a closed-door meeting Friday.
“There’s a new investor kicking the tires and expressing interest in it, and that’s positive,” Coun. Jeff Browaty said as he left the briefing.
Mayor Brian Bowman said he hoped a sale would lead to a turnaround for the downtown property that many residents view as a place to avoid.
“Right now, we have to acknowledge that Portage Place is not doing as much for our community as it could,” Bowman told reporters.
“What I hear consistently from people is the fact that there are safety concerns in that area of the city and that mall. With investment comes opportunity, for not just a safer downtown, but also a reinvigorated north Portage area.”
The potential deal would appear to be a risk for North Portage, which has been using revenue from the land lease and underground parkade to offset annual operating losses at The Forks.
However, Browaty and MacKay said, if accepted, the deal would allow North Portage to invest the $47 million — most likely with the Winnipeg Foundation — and use the interest income to cover any such shortfalls.
MacKay said any sale of the land and parkade has to result in maintaining cash flow to The Forks.
“Any deal we enter into at this point has to keep our organization whole,” she said. “We’re taking parking revenue and land lease revenue (from Portage Place) and turning that into investment and interest revenue to keep The Forks North Portage whole.”
The Peterson Group has been trying to sell the property for two years. The Free Press reported in August that interested buyers had been scared off because the shopping centre sits on land owned by the three levels of government (via the development corporation).
Portage Place was touted as the saviour of downtown Winnipeg when it was proposed, but its value has tumbled since opening in 1987 following the controversial expropriation of several small properties on the north side of Portage Avenue.
It was built by Cadillac Fairview at a cost of $92 million. Ten years later, it was sold for about $45 million, and then sold again in 2005 to the Peterson Group for about $20 million.
MacKay said Starlight Investment has a track record of turning around distressed properties across North America, adding she is confident if the deal goes ahead, the firm will do the same with Portage Place.
The North Portage board has unanimously approved the deal, MacKay said, and the agency is seeking approval from the three shareholders: City of Winnipeg, Province of Manitoba and the federal government.
Council is expected to vote on the sale at its July 18 meeting.
MacKay said similar requests have been made to Manitoba and Ottawa, which would allow Starlight to initiate its deep review and due diligence on the property and possible development scenarios.
If all three levels of government approve, MacKay said, she expected the sale would close by the end of the year.
Starlight Investments officials did not respond to a request for an interview, but a representative acting on the company’s behalf said, “A proposed redevelopment of Portage Place Shopping Centre presents an opportunity to be a transformative project for the city of Winnipeg. Starlight Investments is in the process of exploring this opportunity and will be providing updates to the public in the coming weeks.”
What’s relationship between Portage Place and The Forks?
According to the The Forks website:
“North Portage Development Corporation (NPDC) was incorporated on Dec. 13, 1983, under the laws of Manitoba as a community development corporation and commenced operations on that date. The objective of the corporation is to provide a mechanism for implementing the redevelopment of the North Portage area through a combination of investments by the corporation, the private sector, institutions and governments. The corporation is owned equally by the following shareholders: federal government of Canada, the province of Manitoba, and the City of Winnipeg.
“The Forks Renewal Corporation (FRC) is a wholly owned subsidiary of NPDC. FRC was incorporated on July 24, 1987 under the laws of Manitoba and commenced operations July 29, 1987. The objective of the corporation is to provide a mechanism for implementing the redevelopment of the former CN East Yards area through a combination of investments by the corporation, the private sector, institutions, and governments.
“The operations of the two corporations were merged in 1994 to form The Forks North Portage Partnership. The partnership is governed by a ten-member board of directors.”
North Portage Development Corp. owns the land the downtown mall is built on, as well as most of the surrounding property, including the private street immediately north of the mall. It also holds the leases for the adjacent Fred Douglas Place and the Promenade apartment towers.
Updated on Friday, July 5, 2019 10:52 AM CDT: Replaces photo, fixes typo
Updated on Friday, July 5, 2019 12:02 PM CDT: Updates the EPC will consider the deal next week.
Updated on Friday, July 5, 2019 5:17 PM CDT: Final version
Updated on Friday, July 5, 2019 7:00 PM CDT: Removes photo
Updated on Friday, July 5, 2019 8:04 PM CDT: Adds photo