Slate Asset Management, a Toronto-based private real estate investor, has made its first overseas purchase, the firm said last week.
The firm purchased 67 predominantly grocery-anchored retail properties throughout Germany. The acquisition price was not disclosed, but PERE understands that it was more than €100 million.
Slate had previously focused its investment on Canadian and US real estate. Starting in 2011, the firm assembled a 65-property portfolio in secondary markets – such as suburban Detroit and Minneapolis –through a series of private funds with Canadian investors. The firm ultimately listed those investment vehicles on the Toronto Stock Exchange as Slate Retail REIT, a Canadian real estate investment trust, which it continues to manage.
“With the volatility of capital markets globally, one of the safest places to have capital is in grocery-anchored real estate because people have to eat,” Katie Talbot, an associate at Slate, told PERE.
To translate this investment strategy for the German market, the firm opened a Frankfurt office last month and researched the differences between the property type in Germany and the US. Talbot said German grocery stores are significantly smaller, but because shoppers buy food more frequently than their American counterparts, proximity to consumers is critical and there are more stores per person than in the US.
Capital for the acquisition came from Slate European Real Estate Limited Partnership I, a value-added fund created specifically for the first European purchase. Slate raised capital from a Canadian investor base that was 30 percent institutions and a mix of high net worth individuals and family endowments. After the success of the first fund and acquisition, Slate is considering other investments across Europe and across property types. As the firm finds new opportunities, it will raise new funds.
“Quite frankly, the closed-end fund market in Canada is pretty scarce right now, so people are craving opportunities,” Peter Tsoulogiannis, one of the firm’s vice presidents, told PERE. “Now we’re well into the dealflow and people take us even more seriously than they did a few weeks ago.”
Slate is currently raising an opportunistic fund to focus on Canadian real estate, sources familiar with the situation told PERE. The vehicle, which has a $300 million target, currently has about $150 million in commitments, with a first close planned by the end of the year, the sources added.
Two unnamed Canadian pensions and one other institutional investor have committed capital to the fund. With capital from the vehicle, Slate has purchased eight acres of property in suburban Toronto, where the firm plans to build four residential towers.
The firm invests in between 5 percent and 10 percent of each fund. Across its vehicles, Slate’s exit strategy remains the same: “Our goal is to make our investors money,” Talbot said. “Whatever path unlocks the most value is the one we’re going to take.”
Slate has about $3.5 billion in assets under management, according to last week’s statement.