Developer pulls out of deal to take over Portage Place mall

A proposed deal that would have seen Toronto developer Starlight Investments take on a dramatic makeover of Portage Place mall in downtown Winnipeg appears to be dead. 

An email from Michael Jack, the City of Winnipeg chief administrative officer, says lawyers for Starlight have said that they are unable to proceed with the purchase of the mall, and would not be asking for another extension on the deal, which had already been delayed repeatedly.

Starlight initially made a $69.9-million offer in 2019 to buy Portage Place and promised $400 million to redevelop the 440,000-square-foot mall.

The developer had said it planned to build two 20-storey residential towers above the mall, with 30 per cent of the units designated affordable housing, plus new retail and office space at the Portage Avenue complex.

But the offer was conditional on the three levels of government providing a mix of contributions and tax support.

"Of course we are disappointed for this potential investment in our downtown to be off the table," Clare MacKay, a spokesperson for The Forks North Portage Partnership, which owns the land the mall sits on and the parkade underneath, said in an emailed statement Wednesday.

Jack's email says Starlight's lawyers informed the The Forks North Portage Partnership, in which the city is a shareholder, they were withdrawing from the proposed deal on Sept. 9. 

The Peterson Group is the the holder of the land lease and owner of the Portage Place shopping centre building. It's not clear what their intentions are for the mall going forward, the email says.

Mayor Brian Bowman also expressed his disappointment at a news conference Tuesday. 

"There has been a need for many decades for this particular property to do more for our community than it has been doing," he said. 

Starlight Investments declined to comment. 

The deal with Starlight Investments had been subject to numerous delays. Most recently, in July, city council agreed to give the developer until October to work out a funding deal with the federal government to move the project forward. 

Manitoba Families Minister Rochelle Squires said she understands "the federal government has been distracted lately," but with its new electoral mandate hopes they'll come back to the table and help hammer out a deal. And she still holds out hope for parts of Starlight's proposal.

"Particularly, let's focus on the affordable housing aspect and how we could potentially see the creation of 165 affordable housing units brought to the downtown area," she said.

"There is a significant lack of urban Indigenous housing, and there's also a lack for newcomer housing that is affordable," Squires said. "And there is a potential solution on the table. We just have to get to work and find it."

A spokesperson for the Canada Mortgage and Housing Corporation said it's still open to restarting discussions with Starlight regarding the company's proposal to create affordable housing.

If the Starlight deal can't be revived, Coun. Cindy Gilroy (Daniel MacIntyre) said she hopes other developers will step forward to take on the property.

"We have a community eager to be part of the discussions on what is possible and needed at the community level. It would be interesting to see what an RFP could look like moving forward with community consultation and input," she said in an email. 

"I just want to make sure that Portage Place remains open and we don't have another empty building, this would be very detrimental to our downtown."