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$70M offered for Portage Place

Toronto firm's redevelopment plan may include student housing

Hey there, time traveller!
This article was published 5/7/2019 (480 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."

MIKAELA MACKENZIE / WINNIPEG FREE PRESS FILES</p><p>Portage Place mall</p>

MIKAELA MACKENZIE / WINNIPEG FREE PRESS FILES

Portage Place mall

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."

aldo.santin@freepress.mb.ca

History

Updated on Friday, July 5, 2019 at 10:52 AM CDT: Replaces photo, fixes typo

12:02 PM: Updates the EPC will consider the deal next week.

5:17 PM: Final version

7:00 PM: Removes photo

8:04 PM: Adds photo

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