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Canada  + Cross Border News + Maritimes + Ontario  + Office  | 
Slate reached agreements to sell 12.3% of its gross leasable area for $101.9 million.

Slate to Sell 11-Property Office Portfolio, De-Emphasize Sector

Slate Asset Management has announced plans to accelerate its focus on so-called essential real estate and shift away from office assets.

Essential real estate refers to properties that meet non-discretionary needs of day-to-day life, including grocery, residential, industrial and logistics, and healthcare.

As part of the effort, SAM has accepted an officer to sell a privately owned 11-unit office portfolio in midtown Toronto and Ottawa to an undisclosed buyer, the company said in a news release.

“Our decision to sharpen Slate’s focus on essential real estate will allow us to redeploy capital, expertise, and resources to asset classes within our portfolio that we believe are highly defensive and offer the best risk-adjusted returns for our investors,” said Brady Welch, co-founding partner of Slate. He added that 80% of the firm’s global, diverse portfolio contains non-office assets.

The shift away from office and the proposed portfolio divestment clarify SAM’s focus after the company recently initiated the termination of its management agreement with Slate Office REIT.

Along with this transition, trustees Blair Welch, who is also a SAM co-founder and principal, and Brady Welch have resigned from the REIT’s board.

SAM has provided 180 days’ notice, during which, the company said, it will work with the REIT to ensure a smooth transition of management services. Sam Altman, chair of the board of trustees, stated that internalizing assset management will align better with unitholders and reduce costs for the REIT.

SAM’s renewed focus and the proposed portfolio sale follow a battle among the REIT’s board members and an ongoing effort to protect the REIT against insolvency.

Blair and Brady Welch have accused trustee George Armoyan of inappropriately bidding for the trust’s assets, the Globe and Mail reported previously. The accusations were made in a letter sent to other board members, according to the Globe.

Armoyan has denied the allegations in an e-mail to the Globe, contending that the REIT has badly underperformed its peers over the past decade while SAM has collected $132 million in management fees.

The Nova Scotia-based investor told the Globe that SAM has overseen the destruction of hundreds of millions of dollars in unitholder value.

The REIT owns and operates high-quality office real estate across North America and Europe.

Meanwhile, SAM has been investing in essential real estate since 2011. The company said its global portfolio is valued at $9 billion and includes grocery, residential, industrial, healthcare, and logistics properties.

Photo: Slate Office REIT

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Inside The Story

Slate Office REITBrady WelchGeorge Armoyan

About Monte Stewart

Monte Stewart serves as Content Director - Canada for Connect Commercial Real Estate. Based in Vancouver, British Columbia, Monte provides daily news coverage of major Canadian commercial real estate markets, including Vancouver, Toronto, Montreal and Calgary. He has written about the real estate sector for various media outlets and Avison Young since the early 2000s. In addition, he has covered sports, general news and business for several leading wire services and publications, including The Canadian Press, The Associated Press, The Calgary Herald, The Globe and Mail, Research Money, The Daily Oil Bulletin, Natural Gas World and The Toronto Star. Monte is active in his community as a youth basketball coach and raises funds for such charitable causes as Movember.

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