Slate Office REIT has defaulted on $158-million worth of debt, complicating management’s restructuring plan that involved selling off properties to generate cash for debt repayment.
Although Slate owned office properties in Canada and the United States, it derived the bulk of its operating income from the Greater Toronto Area and Atlantic Canada. While many real estate owners are wrestling with the same trends, Slate has felt them acutely because it operates in the office sector, which has the highest vacancy rates within commercial real estate. While the office vacancy rate in Canada is currently 18.4 per cent, according to consultancy CBRE, Slate’s rate is higher because it owns a number of Class B real estate assets, meaning they are not in prime downtown cores and are more likely to be located in suburban areas.
In a statement, State said it “continues to make progress on its previously announced portfolio realignment plan” and that it is working with its senior lenders to “determine a mutually acceptable path forward” with regard to the debt owned to them.