Slate closes first Canadian opportunistic fund above target – Exclusive

The Toronto-based firm brought in Canadian, US and European institutional investors for the vehicle.

Slate Asset Management has corralled C$311 million ($242 million; €201 million) for its first Canada-focused fund, PERE has learned.

The Toronto-based firm, which declined to comment, held a first close for Slate Canadian Real Estate Opportunity Fund I in February 2017 on C$100 million. Slate launched the opportunistic fund in November 2016 with a C$300 million target, PERE previously reported.

The fund’s investor base comprises Canadian pension funds, merchant banks and family endowments, as well as US and European endowments, pension funds, funds of funds and institutional managers. Lazard was the placement agent for the fund.

Slate is targeting a high teens net return for the vehicle and plans to deploy capital throughout Canada in asset repositioning and portfolio acquisitions, as well as in cyclical investment opportunities. The latter includes acquiring assets in the oil-dependent city of Calgary, where the real estate market has been hurt by lower oil prices in recent years and many investors have consequently sought to offload property. For the fund’s seed portfolio, Slate bought 12 Calgary office assets in early 2017 at what was said to be about a 50 percent discount to replacement cost.

Slate Canadian Real Estate Opportunity Fund I currently is about 60 percent deployed. In December, the firm agreed to purchase a 97-asset portfolio from Cominar Real Estate Investment Trust for C$1.14 billion, according to a statement at the time. The portfolio comprised 6.2 million square feet of office, retail and industrial real estate throughout Canada.

Brothers Blair and Brady Welch founded the firm, which manages about C$5.6 billion, in 2005.

Canadian real estate fundraising has seen little volume compared with the US, with an average of three Canada-focused funds closing per year since PERE first began tracking capital raised in Canada in 2008. Last year, two Canadian-focused funds closed, raising a total of $445 million, according to PERE data. Currently, there are three closed-end funds in market: Bentall Kennedy High Yield Canadian Property Fund I, Fiera Properties GTA Opportunity Fund and TwinRock Partners’ TRP Fund VII.