A Canadian investor in U.S. grocery-anchored real estate is reviewing its business plans after receiving an unsolicited proposal from affiliates of its external manager, Slate Asset Management.
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The board of trustees for Toronto-based Slate Grocery REIT, which has a 15.2M SF portfolio valued at $2.4B across 23 states, has established a special committee of independent trustees to evaluate strategic alternatives, the company announced Friday.
“We are focused on finding a path that maximizes value for all unitholders,” Andrea Stephen, chair of Slate Grocery REIT's board, said in a statement.
Nearly half of the firm's properties are in the Southeast, with Kroger and Walmart combined occupying more than 18% of its portfolio, which had a 94.4% occupancy rate at the end of March.
The grocery-focused business decided to establish a formal process to solicit third-party proposals after it received the bid from private companies linked to investment and asset management firm Slate Asset Management.
“The Committee recognizes that the value of the underlying portfolio may not be fully reflected in the public markets,” Chair of the REIT’s special committee Marc Rouleau said in a statement.
The REIT’s stock price jumped by almost 6% after the markets opened Friday. Its share price of $16.78 equates to a market value of $992M. In a first-quarter investor presentation, the REIT estimated it was trading at a more than 14% discount to its net asset value.
Slate Asset Management, which is also based in Toronto, has 12.8B Canadian dollars in assets under management. It completed CA$28.7B in acquisitions between its 2005 founding and the end of last year.
Slate Grocery REIT didn't immediately respond to a request for comment, while Slate Asset Management declined to comment.
The REIT could become the latest in a wave of public landlord mergers and acquisitions in the commercial real estate sector as capital sources seek refuge from the economic instability introduced by the Iran war and to benefit from the gap between public and private real estate valuations.
Three acquisitions valued at more than $1B took place in Q1, including a $10.5B all-stock merger between National Storage Affiliates and Public Storage.
Last month, Ares Management Corp. announced plans to acquire Whitestone REIT and take its 5M SF open-air retail portfolio, valued at $1.7B, off the public market.
This week, AvalonBay and Equity Residential reached a deal for the largest REIT merger in U.S. history, a combination that would create the nation's biggest apartment landlord, with a 180,000-unit, $69B portfolio.
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