Slate Office REIT (SOT-UN-T) announced chief executive officer Steve Hodgson will step down to “pursue other opportunities” as of May 12 and be replaced on an interim basis by Brady Welch, a member of its board and founding partner of the REIT’s manager Slate Asset Management.
The Toronto-based REIT has just emerged from a period of unrest among some of its investors which led to two new board appointments, and also slashed its monthly distributions by over two-thirds, to one cent per unit from 3.3 cents.
“Brady is a proven leader whose global real estate expertise and deep knowledge of our business will be invaluable in the next phase of the REIT’s growth,” said Monty Baker, the REIT’s board chair, in the announcement.
“With the global office sector facing significant headwinds, Brady’s decades of experience navigating through various economic cycles in Canada, the U.S., the Europe will help us further strengthen the REIT’s position to execute on our strategy for long-term performance.”
Welch has over 30 years of real estate industry experience in Canada, the U.S. and Europe.
Prior to co-founding Slate Asset Management, he held senior management positions with Fortress Investment Group in New York, where he was responsible for direct investments in real estate equity and debt portfolios and related asset management strategies in Canada, the U.S. and Europe.
Prior to Fortress, he managed Truscan’s (now TD Canada Trust) investments in class-A office towers in Canada’s five major urban markets. He has been a trustee since the REIT’s inception and will remain on the board during his tenure as interim CEO.
Hodgson to remain for transition period
Slate has not announced a timeline to name a permanent CEO.
“Slate Office REIT has grown into a stable, global platform with a portfolio of high-quality office real estate,” Welch said in the announcement.
“I believe we are well-positioned to navigate the headwinds facing the office sector and I look forward to working with (managing director and REIT CFO) Charles Peach and the broader Slate Asset Management team to execute on our long-term strategy of aligning the REIT’s portfolio with assets, tenants and markets that will create value for our unitholders.”
Welch is to work with Hodgson and other members of the REIT’s senior management team over the coming weeks to ensure a smooth leadership transition.
“On behalf of the entire board, I’d like to thank Steve for his leadership and many contributions over the last several years,” Baker said in the announcement.
“Steve was instrumental in navigating the REIT through the challenges of the pandemic and driving the early execution of the REIT’s ongoing repositioning strategy. We wish him all the best in his future endeavours.”
Slate’s recent activity
The disgruntled shareholder group was led by privately held investment company G2S2 Capital Inc., which was publicly critical of the REIT’s strategy and performance. Halifax-based G2S2 is the REIT’s largest shareholder, with control of over 15 per cent of its units.
To settle the dispute, Slate management agreed to appoint G2S2 executive chairman George Armoyan and former RBC Capital Markets Real Estate Group (Quebec) managing director Jean-Charles Angers to the board.
The board moves and the cut in its disbursements resulted from a strategic review which had been launched in response to the criticisms. That review concluded at the end of March.
In morning trading on the TSX, Slate Office REIT units were at $2.09, just above their 52-week low of $2.01. The units have traded as high as $5.11 during the past year, but have declined significantly since early March.
About Slate Office REIT, Slate Asset Management
Slate Office REIT is a global owner and operator of workplace real estate with a portfolio encompassing over 50 assets in North America and Europe. As of the end of 2022, it held $1.876 billion in assets and had total debts of $1.15 billion (61.9 per cent loan-to-value ratio).
The REIT owns interests in and operates a portfolio of strategic and well-located real estate assets in North America and Europe. The majority of the REIT’s portfolio is comprised of government and high-quality credit tenants.
Slate Asset Management is a global alternative investment platform targeting real assets which focuses on fundamentals with the objective of creating long-term value for investors and partners.
Slate’s platform has a range of real estate and infrastructure investment strategies, including opportunistic, value-add, core-plus and debt investments.