Pressure mounts on Yew Grove’s buyer after shares plunge Pressure mounts on Yew Grove’s buyer after shares plunge
Canadian landlord of ESB and OPW may look to sell assets after loan default
The Canadian owner of a portfolio of 22 commercial properties in Ireland faces increased financial pressures after defaulting on its loans.
Shares in Slate Office Reit, which bought the portfolio of publicly quoted Yew Grove Reit for €170 million in 2022, have plunged by 82 per cent in the past year, from $2 (Canadian) to 36c. Last Thursday the Toronto exchange put the Reit’s listing under review.
The company’s properties, which include offices in
Dublin, Kildare, Westmeath and Cork, are valued at C$253 million (€171 million). It drew down a term facility of €49.9 million with AIB in 2022 at the time of the acquisition.
Slate accounts for the first quarter of the year show that a term loan facility of C$129 million (€87.28 million) is secured by the 22 Irish properties.
Slate told The Sunday Times last week that its loans with AIB were not in default.
The Reit’s woes could open the door for an approach from Mel Sutcliffe’s Quanta Capital.
It abandoned plans to place a counter-bid for the Dublin and London-listed Yew Grove Reit after the Central Bank of Ireland announced a crackdown on the amount funds could borrow for property.
The company had owned a 4.5 per cent share in Yew Grove through its investment vehicle Goldstein Property ICAV. Sutcliffe declined to comment last Friday but in recent months he has said he would be interested in pursuing a deal with Slate for the portfolio.
Slate Office Reit has a portfolio of 52 properties in Canada, the US and Ireland and an investment property portfolio worth $1.28 billion.
The company has been looking to sell some of its investment properties to refinance its maturing debt. This year it sold the 8,100 sq m units 7 and 8 Airways in Swords for €7.5 million to the Australian-headquartered Arrow Capital.
Its Irish properties include One and Three Gateway in East Wall, Dublin 3, and properties at Citywest business park, as well as Cork airport business park.
The portfolio has a solid rent roll with an average occupancy rate of 89 per cent, and revenue of $5.6 million in the first three months. Seven of the properties are let to the Irish government, according to the company’s accounts. The Office of Public Works and ESB are tenants.
In a letter to investors in May, Brady Welch, the interim chief executive, said management “continue to have conviction in the value of our office portfolio and believe the actions the Reit has taken to retain cash, pay down debt, and proactively create value within our portfolio and capital structure will ultimately position us for long-term success”.
The company last month said it “continues to make progress on its previously announced portfolio realignment plan, and in connection with the foregoing, continues to engage with its senior lenders to determine a mutually acceptable path forward in respect of obligations”.
Slate’s decision to buy Yew Grove was not universally welcomed by its shareholders. In an open letter to investors in October 2022, George Armoyan, one of the company’s biggest shareholders, criticised management’s decision to buy the Irish portfolio. He said Slate’s “pivot into non-core geographies and sectors … obfuscated the true value of the Reit’s assets”.
The Irish Times has said Quanta spent more than €20 million on three retail properties on Grafton Street.