Slate Grocery REIT has agreed to sell its portfolio of 115 U.S. grocery-anchored shopping centres to a JV of Brixmor Properties and Everview Partners. The deal includes the HIghland Square shopping centre in Crossville, Tennessee, pictured. (Courtesy Slate Grocery REIT)
Slate Grocery REIT (SGR-UN-T) has agreed to be acquired and taken private by a U.S.-based joint venture of Brixmor Property Group and Everview Partners in an all-cash deal valued at $2.3 billion (all figures in US dollars unless otherwise noted).
Slate Grocery’s portfolio is comprised of 115 grocery-anchored retail properties across 23 U.S. states. Last week the REIT announced it was suspending distributions on the recommendation of a special committee formed in May to undertake a strategic review.
The strategic review announcement followed a buyout proposal from Slate Grocery’s external manager, Slate Asset Management, a Toronto-based private equity firm co-founded by Blair and Brady Welch.
Both Brixmor and Slate Grocery issued press releases this morning announcing the deal which will see all outstanding units of the REIT acquired for $13 per unit.
“The all-cash Transaction provides Unitholders with immediate liquidity and certainty of value at an attractive premium,” Slate Grocery announced, noting the offer is a 13 per cent premium on unit closing prices on May 21, the last trading day before the strategic review was announced, and roughly 20 per cent on the Sept. 23 closing price, following the announcement of the suspension of distributions.
Slate Asset Management supports the outcome
Despite the buyout bid which prompted the REIT’s strategic review, Slate Asset Management co-founding partner Brady Welch said the company “fully supports” the outcome and will now focus on “redeploying capital into grocery-anchored real estate in North America and continuing to grow Slate’s grocery platform in Europe, which is already one of the largest portfolios on the continent.”
“This outcome validates what we have long believed: grocery-anchored essential real estate is a high-quality, in-demand asset class, and active in-house management creates measurable value for investors,” he said.
“The Special Committee ran a rigorous process and Slate Asset Management, as external manager of the REIT and the REIT’s largest investor, is fully supportive of the outcome.”
Slate Grocery said the deal follows a competitive auction process and received the unanimous recommendation of the special committee.
The special committee considered:
the immediate liquidity and certainty of value provided by the all-cash consideration;
the premium to the REIT’s trading price;
the comprehensive strategic review process;
the relative attractiveness of the transaction compared to other strategic alternatives reasonably available to the REIT, including proposals received in the REIT’s competitive auction process;
the terms of the arrangement agreement; and
the fairness opinions received from Evercore Group L.L.C. and CIBC World Markets Inc.
Following the recommendation of the special committee, Slate Grocery’s board unanimously recommended the unitholders vote in favour of the transaction, the announcement said.
If the transaction closes after Jan. 20, 2027, unitholders will also receive additional cash consideration of $0.002482 per unit for each day from and after such date until closing, which would increase the aggregate consideration payable to unitholders by approximately $150,000 per day.
Under the terms of the agreement, Slate Asset Management will receive a fixed termination fee of $50 million upon closing to terminate its management agreement with the REIT, the announcement said.
The arrangement also includes a $31 million termination fee payable by the REIT under certain conditions (such as a superior proposal) and a $63 million reverse termination fee payable by the purchaser if the deal fails to close under specified circumstances.
The REIT will be delisted from the TSX and become a private entity following the completion of the transaction.
Brixmor, Everview and ADIA buyout structure
Brixmor will acquire a portfolio of 23 grocery-anchored shopping centres, comprising approximately three million square feet for $636 million.
A newly formed institutional joint venture between Brixmor and affiliates of Everview Partners will acquire the remaining 92 assets for $1.71 billion and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) will act as a strategic investor alongside Everview in the transaction.
The joint venture is also acquiring Slate North American Essential Real Estate REIT’s JV interest for $187.5 million, the press release said.
The 23-asset portfolio Brixmor is acquiring is approximately 96 per cent leased and located entirely within Brixmor’s existing operating footprint, predominantly across Florida, Georgia and the Carolinas, the company said.
Brixmor (BRX-N) owns and operates a portfolio of U.S. open-air shopping centres. Its 346 retail centres comprise approximately 63 million square feet of prime retail space in established trade areas.
Everview Partners, L.P. is a private investment management firm founded in 2024 which invests across the capital structure in real asset companies and properties and seeks to partner with business leaders to drive sustainable growth and profitability.
Established in 1976, the Abu Dhabi Investment Authority (ADIA) is a globally-diversified investment institution.
EDITOR’S NOTE: This article will be updated should additional information become available.