AIMCo among seed investors for Slate’s latest fund – Exclusive

The $310m first close for Slate Canadian Real Estate Opportunity Fund II consisted entirely of follow-on commitments from investors in the predecessor fund.

Slate Asset Management has reached the first close for its second opportunistic real estate fund on C$310 million ($221 million, €204 million), thanks to re-ups from institutions such as AIMCo Realty Investors, PERE has learned.

The Toronto-based firm is targeting C$450 million for Canadian Real Estate Opportunity Fund II, which launched late last year. Slate is aiming to hold a final close by next spring. The fund has a hard-cap of C$600 million, but a source familiar with the fund tells PERE the manager has received interest totaling more than C$1 billion from prospective investors. Slate declined to comment on its fundraising efforts.

The first close consisted entirely of follow-on commitments from investors in Slate Canadian Real Estate Opportunity Fund I, which closed on C$311 million in May 2018. Along with AIMCo Realty Investors, the real estate investment arm of the Alberta pension investor, SCREO II’s seed investors include BMO Private Equity, a division of the Canadian bank, and the Ford Motor Company of Canada’s limited pension trust, PERE understands. Approximately 70 percent of commitments came from the US or Europe while the other 30 percent came from Canada.

Slate has not yet deployed capital from SCREO II, which the source said will allow the firm to capitalize on distress and price dislocation brought on by the covid-19 pandemic. The fund will focus on equity investments across all property types throughout Canada’s six largest metros – Toronto, Montreal, Vancouver, Calgary, Ottawa and Edmonton – as well as debt strategies, such as bridge loans and other short-term credit solutions.

On the equity side, Slate will target single-asset repositionings, portfolio acquisitions through mergers & acquisitions deals, as well as opportunities created by cyclical dislocation in places such as Alberta, Canada’s energy hub, which has been hit hard by cratering oil prices. Slate plans to execute its first transaction later this year. Leverage use for the fund is capped at 65 percent loan to value.

For its first fund, Slate deployed C$1.6 billion through six transactions within 18 months and it has already sold C$800 million of assets.

Slate has not hired a placement agent for SCREO II, but it will likely look to bring on a capital advisor as it looks to go beyond its existing investor pool and attract global institutional capital to the Canadian property market.