TORONTO, June 21, 2022 (GLOBE NEWSWIRE) — Slate Grocery REIT (TSX:SGR) (TSX:SGR) (the “REIT”), an owner and operator of U.S. grocery-anchored real estate, announced today that it has agreed to acquire 14 properties comprising 2.5 million square feet (the “Portfolio”). The Portfolio is valued at US$425 million (the “Acquisition”), which represents a 6.9% capitalization rate or US$174 per square foot. The Portfolio is located across seven states with over two-thirds of the Portfolio value being allocated to the Southeastern United States.   

The REIT also announced that it has entered into agreements (the “Subscription Agreements”) with Slate North American Essential Real Estate Income Fund L.P. (the “NA Essential Fund”), a vehicle managed by Slate Asset Management (“Slate”), which will result in the formation of a strategic joint venture (the “Joint Venture”). The NA Essential Fund has agreed to make an initial investment of US$180 million into the REIT’s assets (the “Investment”) through the purchase of partnership interests in two REIT subsidiaries (the “JV Partnerships”). Proceeds from the Investment will be used immediately to fund the REIT’s Acquisition.

Acquisition highlights:

Significant concentration of assets in the rapidly growing Sunbelt Region – Significantly increases the REIT’s exposure to Florida, North Carolina, and Georgia – leading markets for population growth in the US.
Comprised of a wide range of high-performing grocers – Increases the REIT’s exposure to leading national grocers, including Publix, Ahold Delhaize, Albertsons, and Walmart.
Attractive valuation and defensive basis – Low acquisition basis of US$174 per square foot (“PSF”) with below market rents.
Significantly increases the size and scale of the REIT’s portfolio – The REIT’s pro forma portfolio will comprise 15.7 million square feet and US$2.4 billion of essential grocery-anchored real estate.

The Acquisition will be financed through new bank financing, the proceeds from the US$180 million Investment from the NA Essential Fund (as described above), and existing balance sheet liquidity. Following the Acquisition, the REIT’s leverage is expected to be approximately 53.7%.

“This Acquisition and Joint Venture illustrate the value and resources Slate Asset Management brings to all of our managed entities,” said Blair Welch, Chief Executive Officer of Slate Grocery REIT and Founding Partner of Slate. “Our global reach and track record facilitate these creative solutions for capital and deals that enable the REIT’s continued growth and ensure we are providing the best value to the REIT’s unitholders. We are very pleased to establish this partnership between Slate Grocery REIT and the Slate North American Essential Real Estate Income Fund, which demonstrates confidence from a leading institutional investor in the REIT’s strategy, management, and valuation.”

The closing of each of the Investment and the Acquisition are expected to occur on July 14, 2022. For more information, please refer to the REIT’s website for both the most recent investor presentation as well as a presentation summarizing the Acquisition, available at slategroceryreit.com/investor-presentations.

Summary of the Joint Venture

The REIT has entered into Subscription Agreements with the NA Essential Fund, a vehicle managed by Slate, which will result in the formation of a strategic Joint Venture. The Joint Venture is part of a long-term strategic partnership between the REIT and the NA Essential Fund.

Joint Venture highlights:

Institutional validation of the REIT’s portfolio and management team – The Joint Venture creates a long-term partnership with a fund that includes New Zealand Superannuation Fund, a leading global sovereign wealth fund that endorses the strength, quality, and stability of the REIT’s platform.
Validation of the REIT’s real estate value – …

Full story available on Benzinga.com