Slate Office REIT Snags $191M Portfolio in Canada

The Toronto-based company purchased the 1 million-square-foot group of properties, located in Greater Toronto and Atlantic Canada, from Cominar Real Estate Investment Trust.
105 Moatfield Drive in Toronto
105 Moatfield Drive in Toronto

Slate Office REIT has acquired a portfolio of seven properties in Greater Toronto and Atlantic Canada totaling nearly 1 million square feet from Cominar Real Estate Investment Trust for $191.4 million. The transaction includes the assumption of $81.9 million in existing debt.

The Toronto-based company was able to snap up the collection of office assets, referred to as the Acquisition Properties by the REIT, without facing competition. “The purchase of the Acquisition Properties is an off-market transaction that provides a number of benefits to unitholders, including attractive economics at $192 per square feet and immediate earnings accretion,” Scott Antoniak, CEO of Slate Office REIT, said in a prepared statement.

5500 North Service Road in Burlington, ON
5500 North Service Road in Burlington, ON

The group of office assets includes four properties in metropolitan Toronto and a single building in Toronto, all four of which the seller acquired in 2014 as part of a larger portfolio purchase. The four buildings are located at 225 Duncan Mill Road, 95 and 105 Moatfield in Toronto, and 5500 N. Service Road in Burlington, ON. Completing the portfolio are 81 Albert St. in Moncton, NB, 84-86 Chain Lake Drive in Halifax, NS, and in Fredericton, NB, a property at 570 Queen St. With a weighted average lease term of 4.8 years, the portfolio, which was 93 percent leased at the time of sale, offers upside potential.

Slate partially financed the purchase with proceeds from the sale of subscription receipts, which yielded a gross sum of roughly $103.5 million. The portfolio boosts the REIT’s property holdings to roughly 7.4 million square feet.

A buying state of mind

Slate is in expansion mode. “Heading into 2018, Slate Office REIT will explore new markets in North America, while maintaining the same discipline and investment rationale that we have applied to date,” Antoniak said in prepared remarks earlier this month. The U.S. market is high on Slate’s target list. The company entered into the U.S. in February with the $86.5 million acquisition of 20 South Clark St., a 380,000 square-foot office tower in downtown Chicago. The firm points to the Windy City building as an example of the type of U.S. office property that dovetails with its evolving investment strategy.

Canadian investors’ fondness for the U.S. real estate market has been strong for quite some time, with no sign of any significant waning. In 2017, Canada led the pack as the largest source of foreign capital in U.S. commercial real estate transactions, according to a report by commercial real estate services firm Cushman & Wakefield, followed by Singapore and China, which held the top spot in 2016.

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