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Slate Ready to Flip Cominar Assets

Toronto-based Company Close to Selling Tower it Bought From REIT in 2017 and Has Two Other Properties on Block
February 21, 2018
Pictured: 55 University Ave. in downtown Toronto.

The ink hasn't dried on one of 2017's largest real estate deals, but sources indicate Slate Acquisitions Inc. is in the process of flipping some of the $1.14 billion in property it bought from Cominar Real Estate Investment Trust.

Sources tell CoStar News that Slate is close to selling an office tower it acquired at 55 University Ave. with offers coming in between $700 to $750 per square foot for the 258,000-square-foot building. Slate has also put both the Dixie Outlet Mall and Woodside Square on the market.

The original deal with Cominar is scheduled to close in March, but by flipping some of the properties before that close, millions in land property transfer taxes will be avoided.

"The Bay Street building was considered a key part of the transaction," said one source. "It's really a B Class building but in an A Class location."

Cominar and Slate officials wouldn’t comment on the potential transactions.

The two malls on the market make up about 700,000 square feet of gross leasable area with a potential for 4.4 million of mixed-use residential and retail development. The approximate 400,000-square-foot Dixie Mall is located at Dixie Rd. and the QEW, while Woodside is a 24.5-acre site in the Finch Ave. and McCowan Rd. area.

The pair announced in December 2017 Quebec-City based Cominar REIT was selling 97 properties it considers non-core to Slate Acquisitions Inc. The move involves 6.2 million square feet and leaves the REIT focused on the province of Quebec with no properties in western Canada, the Greater Toronto Area or the Atlantic provinces.

In January, Slate announced that Slate Office REIT was buying $191.4 million worth of properties in the GTA and Atlantic region at $192 per square foot.

Slate would now appear to be divesting some of the assets it has acquired from Cominar, including the 18-storey tower at 55 University the REIT acquired from Ivanhoé Cambridge, the real estate subsidiary of the Caisse de dépôt et placement du Québec, in 2014 as part of a $1.63 billion portfolio deal.

Cominar plans to use the net proceeds from the $1.14 billion deal with Slate to pay down its debt, using $875 million in net proceeds to pay down the entire amount currently outstanding on its credit facility.

The REIT, which has said it intends to sell an additional $1 billion to $1.5 billion in properties, surprised some market observers in February with the announcement that Michael Dallaire was stepping down as chairman of the board. Dallaire had been chief executive of REIT until stepping down in November.

"Cominar has been an important part of my life since its creation 20 years ago," Dallaire said in statement, which indicated he would now be focused on future development projects of the Groupe Dallaire in Québec City.

Garry Marr, Toronto Market Reporter  CoStar Group   
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