TORONTO--(BUSINESS WIRE)--Slate Office REIT (TSX: SOT.UN) (the "REIT"), announced today that it has agreed to acquire 120 South LaSalle and the adjacent parking garage in downtown Chicago, Illinois for a price of US$155.5 million (US$237 per square foot). The REIT has also entered into an agreement to sell 139 Water Street and the Water Street Properties1 in St. John’s, Newfoundland for $17.5 million. Both transactions remain subject to customary closing conditions and are expected to be completed in the third quarter of 2018.
“We are very excited to announce our second U.S. acquisition of 2018,” said Scott Antoniak, the REIT’s Chief Executive Officer. “120 South LaSalle is a landmark downtown Chicago address and is the US headquarters of CIBC, a leading Canadian based global financial institution and a key strategic financial partner of Slate Office REIT.”
120 South LaSalle, Chicago Acquisition Highlights
- 656,080 square foot, 23-storey, downtown office building with an adjacent parking garage, located in the Central Loop of Chicago
- 84% occupied with a weighted average lease term of 10.4 years
- Anchored by CIBC (AA credit), which occupies 45% of the gross leasable area for its U.S. corporate headquarters
- Purchase price of US$155.5 million (US$237 per square foot) is significantly below estimated replacement cost
- Cash flow growth opportunities from contractual rental increases, near-term leasing opportunities and rents that are ~21% below market
- Opportunity to enhance value via re-imagined amenity offering, retail repositioning and office lease-up
- In close proximity to the REIT’s existing asset, 20 South Clark, providing operating, leasing and marketing synergies
Water Street Disposition Highlights
- $17.5 million sale price is being satisfied with $14.8 million of cash and a vendor-take-back loan in the amount of $2.7 million
- The vendor-take-back loan bears interest at 8%, matures in August 2020 and is secured by the Water Street Properties
- Occupancy of 41.5% will increase the REIT’s occupancy by 100 basis points
- Sale represents the REIT’s commitment to executing its strategy of recycling capital into compelling new acquisition opportunities
- The REIT expects to initially use the net proceeds to reduce outstanding debt, which may be redrawn to fund future acquisition activity
About Slate Office REIT (TSX: SOT.UN)
Slate Office REIT is an open-ended real estate investment trust. The REIT's portfolio currently comprises 44 strategic and well-located real estate assets located primarily across Canada's major population centres including one downtown asset in Chicago, Illinois. The REIT is focused on maximizing value through internal organic rental and occupancy growth and strategic acquisitions. Visit slateofficereit.com to learn more.
About Slate Asset Management L.P.
Slate Asset Management L.P. is a leading real estate investment platform with over $5.5 billion in assets under management. Slate is a value-oriented manager and a significant sponsor of all of its private and publicly-traded investment vehicles, which are tailored to the unique goals and objectives of its investors. The firm's careful and selective investment approach creates long-term value with an emphasis on capital preservation and outsized returns. Slate is supported by exceptional people, flexible capital and a proven ability to originate and execute on a wide range of compelling investment opportunities. Visit slateam.com to learn more.
¹Comprised of 6 properties: 50 Harbour Drive, 151-153 Water Street, 155 Water Street, 157-163 Water Street, 169 Water Street and 171-173 Water Street.