Slate Properties buys GE Real Estate Toronto portfolio

Potentially overlooked in Slate Properties Inc.’s recent purchase of the Toronto real estate portfolio of GE Capital Real Estate was the subsequent sale of the industrial property to Pure Industrial Real Estate Trust (PIRET).
Slate Properties Inc., a Toronto-based real estate company, acquired GE Capital Real Estate’s 79 industrial and office buildings (approximately six million square feet) in a deal that closed last week.
It then sold the industrial property part of the portfolio (59 buildings comprising about 3.7 million sq. ft.) to PIRET for $358.5 million.
Slate made the purchase from GE Capital, a unit of General Electric Co., after the company made a strategic decision to reduce its real estate holdings.
“GE engaged an advisor to help them dispose of the real estate and it came along with consideration of people and other office commitments that they had,” explained Brady Welch, a partner of Slate Properties.
A GE spokeswoman told Bloomberg News the sale was part of its strategy to sell into strong markets, reduce its equity holdings and boost its debt business. It has a $2-billion mortgage portfolio in Canada and wants to originate another $1 billion this year.

2 St. Clair Avenue East, Toronto, Ontario owned by Slate Properties prior to this recent transaction
GE retains 22 Canadian buildings
GE Capital Real Estate still has 22 buildings in Canada.
PIRET’s acquisition represented a going-in capitalization rate of approximately 6.33 per cent.
“The acquisition of these properties significantly enhances our scale in the GTA, Canada's largest industrial market,” PIRET’s president Kevan Gorrie told Canada Newswire.
“It further demonstrates our ability to execute on our disciplined acquisition strategy which focuses on high quality industrial properties, that are well located with convenient access to major transportation routes and proximity to densely populated markets.
“Over 90 per cent of PIRET's portfolio is now located in the GTA, Vancouver, Edmonton and Calgary, the leading industrial markets in Canada.”
While the GE purchase is Slate’s largest deal to date, “it doesn’t really change how we do business,” Welch said. “For us, in 2011 we had 30 office buildings and we sold 29 of them to Dundee REIT so now we have 22.
“We are a pure asset management company, we third-party property manage, we are investors, we operate the real estate like investors and we are hands-on when it comes to making decisions on leasing and (capital expenditure) decisions and we believe these are well-positioned real estate” assets.
Slate’s model is to partner with private equity, pension funds, and for its U.S. real estate portfolio, to line up high-net worth investors to fund acquisitions.
“Depending on the type of opportunity, we match the real estate with what we believe is the best capital for that opportunity,” Welch said.
Office, retail mix for Slate
Slate has built an office portfolio consisting of 22 properties comprising 2.8 million sq. ft. of buildings with a decidedly Toronto focus following the GE purchase.
Notable holdings include the 21-storey Class A tower at 24 St. Clair Ave. West, a 17-storey office building at 56 Wellesley St. West, and a 16-storey Class A building at 30 St. Clair Ave. West (all in Toronto).
The company also owns the 19-storey Sir Richard Scott Building and the 11-storey office tower 251 Laurier West, both in Ottawa. Those two buildings in the nation’s capital were purchased in February.
“We don’t think of ourselves as just office guys or retail guys, we are real estate investors,” said Welch. “Predominately we look at conventional type of asset classes, so retail, industrial or office.
“We are not multi-family, we are not apartment people, we are not hotel people but that is not to say that we haven’t looked at that real estate before.”
Slate also holds a retail portfolio of 22 properties made up of 2.4 million sq. ft.
In retail, it focuses on acquiring grocery-anchored properties in U.S. markets. When it launched one of its retail investment funds last year, Slate outlined its strategy: the recession had created retail vacancy rates near 25-year highs and had created an opportunity to buy “well-located retail assets, specifically anchored retail properties, at a significant discount to peak market value and replacement cost.”

2 St. Clair Avenue West, Toronto, Ontario owned by Slate Properties prior to this recent transaction
Brother team
Slate is headed by Brady Welch and his brother Blair, who were literally raised in the real estate business.
Their father Norbert Welch created his own company and spent 40 years in the real estate development business.
The GE deal, could “potentially” raise up Slate for consideration for larger and larger deals, said Brady.
“My brother and I, there have been lots of other large transactions that we have looked at in the past. We were one of the potential buyers of the ING portfolio that was sold to KingSett. We have looked at other large transactions, this is just one that we ended up doing,” said Brady.
The brothers have nearly two decades of experience in the real estate industry. Before co-founding Slate in 2004, Blair worked with First National Financial Corporation and prior to that was a consultant to General Motors Acceptance Corporation Commercial Mortgage, a vice-president of New York-based Fortress Investment Group, and a member of the corporate finance group of Bankers Trust in New York and Toronto.
Brady Welch spent the majority of his career managing real estate portfolios for large U.S. private equity firms before co-founding Slate.
He held senior roles with Fortress Investment Group and before that managed the joint venture investments of Truscan (the former real estate arm of Canada Trust) in Class A office towers in Canada’s five major urban markets. He started with Brazos Advisors (now Lonestar).



Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

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Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

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