Firm refocuses on essential assets like residential, industrial, and grocery properties
Toronto-based Slate Asset Management is stepping away from the office real estate sector as it ramps up investments in other commercial properties.
The global investment firm recently announced it will end its management agreement with Slate Office REIT and sell an 11-property office portfolio in Canada, further distancing itself from the office real estate market.
Slate Office REIT, which holds a 10% stake in the office trust with a portfolio of 50 buildings, has faced challenges, including breaching debt covenants and dropping to a market capitalization of just over $50 million.
Instead, Slate Asset said it’s “accelerating its focus on essential real estate,” which includes grocery, residential, industrial, logistics, and healthcare properties. The firm classifies these property types as essential due to their defensive nature and ability to provide stable, risk-adjusted returns for investors.
"Our decision to sharpen Slate's focus on the theme of 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 generate the best risk-adjusted returns for our investors," Slate Asset co-founding partner Brady Welch said in a statement.
Founded 20 years ago, Slate Asset's global real estate portfolio is now over 80% invested outside of traditional office spaces. The firm is the largest shareholder of Slate Grocery REIT, which owns 116 grocery-anchored properties across the United States. While the company is reducing its office holdings, it is looking to capitalize on opportunities in sectors it sees as more resilient.
"We believe this is an opportune time to direct our team's collective energy into the areas of our business that are best positioned to drive value for our partners," said Welch.
Co-founder Blair Welch, who remained CEO of Slate Grocery REIT, noted that while the company still believes the office market may improve, its primary focus is now on scaling investments in other areas.
Read more: Slate deploying up to $500m of transitional capital to Canadian mortgage market
"Our well-established platforms in the US, Canada, and Europe will enable us to continue deploying capital strategically and opportunistically in asset classes that align with this thematic focus on essential real estate," Blair Welch said in a statement.
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