Global alternative investment firm Slate Asset Management says it plans to increase its holdings in several commercial property types as it distances itself from the office sector.
The Toronto-based company that said recently it would terminate its management deal with publicly traded Slate Office REIT is further decoupling itself from the office sector by selling an 11-property portfolio in Canada partially owned by the parent company.
In turn, Slate Asset Management said it is "accelerating its focus on essential real estate" and will continue to invest globally in various property types and across the risk spectrum. Slate Asset has a global real estate portfolio that includes grocery, residential, industrial and logistics and healthcare properties it classifies as essential.
"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," said Brady Welch, co-founding partner of Slate Asset, in a statement.
Welch, who founded Slate Asset with his brother Blair Welch, also serves as CEO of the office REIT. Slate Asset has a 10% stake in the trust that has a portfolio of 50 buildings, including three in Chicago, but has breached its debt covenants and now has a market capitalization of just over 50 million Canadian dollars.
Slate Asset said its 20-year-old platform has a real estate portfolio that is more than 80% invested outside of traditional office spaces. Slate Asset is the largest shareholder of Slate Grocery REIT, a company that owns 116 properties across the United States.
"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 Brady Welch.
Blair Welch, who remains CEO of the grocery REIT, said the company believes the office market's outlook will improve but focuses on opportunities to scale its investments in other sectors.
"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.