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Toronto-based Slate Grocery REIT (SGR-UN-T) has received a buyout proposal from its external manager, Slate Asset Management, the REIT announced this morning.
Slate Grocery said its board of trustees has established a special committee in response to the proposal from affiliates of Slate Asset Management. No details of the proposal have been released.
The special committee will consider the sale of the REIT but also a broad range of strategic alternatives, the announcement said. It will also initiate a formal process for potential competing proposals from third parties.
“The committee recognizes that the value of the underlying portfolio may not be fully reflected in the public markets, and as such, we are evaluating various alternatives ranging from initiatives under the status quo, to a whole company sale,” said Marc Rouleau, chair of the special committee in the announcement.
Andrea Stephen, chair of the board added: “We are focused on finding a path that maximizes value for all unitholders.”
About Slate Grocery, and its portfolio
Slate Grocery is an owner-operator of U.S. grocery-anchored real estate, with a portfolio of 115 properties and total assets of roughly $2.5 billion (all figures in US dollars unless otherwise noted) as of March 31.
Kroger, Walmart and Publix are among its top five tenants in a portfolio which boasted a 94.4 per cent occupancy rate at the close of Q1, according to CEO Blair Welch’s letter to unitholders, released on May 12.
“We continue to have strong conviction in the enduring strength and resilience of grocery-anchored real estate,” Welch wrote to unitholders. He said the REIT’s average in-place rent was $12.98 per square foot, well below the market average of $24.59, leaving “meaningful runway for continued rent increases.”
“Grocery-anchored retail remains well-positioned, and we believe these fundamentals, combined with the resilience of consumer spending on food and essential goods, underscore the longterm stability of our portfolio,” Welch wrote.
Slate Asset Management is a global alternative investor and manager focused on essential real estate and infrastructure assets. It was founded by brothers Blair and Brady Welch in 2005.
Evercore has been retained as exclusive financial advisor and Fasken Martineau DuMoulin LLP and Sidley Austin LLP as its independent legal counsel, the REIT's announcement said. The special committee has also engaged Raider Hill Advisors, L.L.C. as its exclusive special real estate advisor.
No unitholder action is required at this time, the REIT said.
“The special committee does not intend to provide further comment regarding the status of the special committee’s process unless and until it determines that further disclosure is appropriate or required in accordance with applicable securities laws,” the announcement said.
Slate Grocery REIT's stock was trading this morning in the C$16.57 range on the TSX, after closing at C$15.71 on Thursday.
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