A battle has erupted among three of Slate Office REIT’s six board members as the organization faces insolvency, the Globe and Mail reported.

Slate CEO Brady Welch and his brother Blair, the principals of the REIT’s external manager, Slate Asset Management, have accused fellow trustee George Armoyan of inappropriately bidding for the trust’s assets, the Globe reported. The accusations were made in a letter sent to other board members, according to the Globe.

Armoyan, who owns 20% of the REIT, has denied the allegations. He told the Globe in an e-mail that the REIT has badly underperformed its peers over the past decade while the Welches’ company has collected $132 million in management fees.

“During its tenure as manager of the REIT, Slate Asset Management has overseen the destruction of over $700 million in unitholder value,” Armoyan, a Nova Scotia-based investor, said in his email to the Globe, the publication reported.

The REIT has received notices of default from senior lenders in respect of its revolving credit facility. Toronto-based Slate previously said the notices restrict the REIT from making further accrued interest payments on outstanding debentures.

The Welches’ letter described the REIT as a “zone of insolvency” and blamed Armoyan for pushing it to the brink of bankruptcy, the Globe reported.

Armoyan told the Globe that most of the statements in the letter “are false.” He responded to the allegations in a letter to board members. But he declined to provide a copy of the letter to the Globe, citing “a duty of confidentiality to the REIT.”

Armoyan invested in the REIT through G2S2 Capital, which he chairs. Halifax-based G2S2 is a holding company and describes itself as a multi-strategy, value-oriented investment firm focused on identifying undervalued companies.

Armoyan is also the chairman, president and CEO of Beechville, N.S.-based investment company Clarke. According to its website, Clarke seeks to invest in real estate, public companies and other businesses that are undervalued, out of favour, distressed or in positive change.

Photo: Slate Office REIT