Slate Office REIT has entered into an agreement to sell 5500 North Service Road in Burlington, Ontario for $52.2 million. The REIT expects to use the net proceeds to reduce outstanding debt and to fund future investment opportunities.
“5500 North Service Road is an excellent example of the REIT’s strategy and ability to create value for unitholders. In 18 months, we took an asset that was acquired as part of a portfolio, increased occupancy, stabilized the income and are now disposing of the asset at a significant premium to our acquisition price,” said Scott Antoniak, the REIT’s Chief Executive Officer. “The disposition proceeds are expected to be reinvested in future accretive investment opportunities.”
- Acquired as part of a portfolio from Cominar REIT in March 2018.
- Completed 80,000 square feet of leasing increasing occupancy to 87%.
- Sale price represents a 21% or $9.1 million premium to the REIT’s purchase price.
- Represents a 14% increase to the REIT’s IFRS value at June 30, 2019, further validating the net asset value of the REIT. This disposition, along with previously completed transactions, has validated over 60% of the REIT’s net asset value.
- Enables the REIT to exit a non-strategic market and provides unitholders with a compelling levered internal rate of return of 13%.
- In total the REIT has completed $311 million of dispositions since July 2018 at a 17% ($46 million) premium to purchase price and an average levered internal rate of return of 15%.
Closing is expected in the fourth quarter of 2019.