Slate Asset Management has reached a deal to sell its interest in 11 office properties in Toronto and Ottawa, the company announced this week. The Toronto-based firm said the decision to divest its stake in the buildings is part of a move to focus on “essential real estate.” The company said it would continue to […]
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Slate Asset Management has reached a deal to sell its interest in 11 office properties in Toronto and Ottawa, the company announced this week.
The Toronto-based firm said the decision to divest its stake in the buildings is part of a move to focus on “essential real estate.” The company said it would continue to invest “in real estate that supports the non-discretionary needs of day-to-day life, including grocery, residential, industrial and logistics, and healthcare.”
In a news release Thursday announcing the transaction, Slate did not elaborate on the number or location of Ottawa properties it was offloading. The company’s website no longer lists any buildings in the National Capital Region.
In an email to OBJ later Thursday, Slate spokesperson Olivia Putrim said details of the transaction are “confidential,” adding the firm is “not in a position” to disclose more information.
Slate also announced that subsidiary Slate Management ULC is in the process of terminating its management agreement with Slate Office REIT, which owns and operates the organization’s office portfolio.
Slate said the moves “significantly decrease” its “global exposure to office real estate.”
In a statement on Thursday, Slate co-founding partner Brady Welch said non-office properties now comprise more than 80 per cent of the firm’s real estate portfolio. Welch said selling the Toronto and Ottawa buildings will “sharpen Slate’s focus” on assets that are likely to generate the best returns for investors.
“While we continue to believe the outlook for the office market will improve over time, we are focusing on the opportunity to scale our investments in sectors that are benefiting from strong tailwinds and high growth,” co-founding partner Blair Welch added.
“Our well-established platforms in the U.S., 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.”
The company is the latest institutional investor to downsize its holdings in the National Capital Region in the face of ongoing uncertainty over the future of the office sector.
Slate joins organizations such as Manulife Investment Management, which recently put its 18-storey highrise at 150 Slater St. on the market.
Earlier this year, Manulife sold the 183,000-square-foot Churchill Office Park on Carling Avenue, best-known for being the home of Corel during the graphics software pioneer’s heyday in the 1990s, to local real estate firm Regional Group.
Meanwhile, a series of other high-profile Ottawa office properties, including Place de Ville, One60 Elgin, the Carling Executive Centre and the Park of Commerce complex, have been put up for sale in recent years.
Some real estate brokers say the spate of marquee office transactions is a sign that Ottawa – long regarded as one of the country’s most stable real estate markets – is no longer the sure bet for solid returns that it once was.
Institutional investors that have traditionally owned many of the capital’s most sought-after office assets “are not looking at Ottawa anymore as a market to get into,” Alan Doak, a partner at Proveras Commercial Realty, told OBJ last month.
Doak said there is a lingering perception that the federal government, which owns or leases about half of downtown Ottawa’s office space, as well as non-profit organizations that also constitute a hefty chunk of tenancies, are not as eager to return to the office in a post-pandemic world as private-sector companies that make up a much bigger portion of office renters in other cities.
In an email to OBJ on Thursday, Doak said Slate’s decision to sell its Ottawa office assets “seems like a good strategy” for the company's investors.
“Office is no longer as ‘essential’ as it was,” he explained.
Other brokers agree. Darren Fleming of Real Strategy Advisors recently told OBJ the city’s office market is “much riskier than it’s ever been at any time in recent history.”
“You’re going to get guys like Manulife who are just no longer comfortable with the level of risk associated with those assets,” he said, adding the situation is probably going to get worse for office landlords before it gets better.
