Yew Grove’s Canadian suitor begins raising capital for €127.8m deal

Canadian property company Slate Office Reit has begun marketing a sale of shares and subordinated debt to finance its planned €127.8 million purchase of Dublin-listed Yew Grove Reit. the owner of office and industrial assets outside the centre of the Irish capital.

Slate Office’s plan to acquire Yew Grove, announced this week, is contingent on it being able to sell 55 million Canadian dollars (€38.2 million) of shares and 75 million Canadian dollars through a form of subordinated notes that can be converted into equity. The current deadline for completion of the capital raise and formal takeover offer to be submitted is November 29th.

A prospectus for the Slate Office capital raise stated that the total debt and share offering can rise from an initial target of 130 million Canadian dollars to 149.5 million, at the discretion of the banks and securities firms underwriting the deal.

The documents said that Slate Office Reit's manager, a unit of the Slate Asset Management group, plans to take on Yew Grove's existing management team. Yew Grove is led by chief executive Jonathan Laredo, chief financial officer Charles Peach and chief investment officer Michael Gibbons.

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‘Local market knowledge’

"The team has a strong track record of growth in Ireland and in-depth local market knowledge and relationships, which would position the Reit to capitalize on a significant pipeline," it said, adding that Slate Reit will pay the Slate Asset Management subsidiary, Slate Management ULC, 2 million Canadian dollars "for assuming all of the liabilities and costs associated with Yew Grove's management team".

Including Yew Grove’s €49.5 million of borrowings implies an overall enterprise value of €177.4 million on the Dublin-listed company, which is focused on office and industrial assets let to State entities, IDA-supported companies and large corporates.

Yew Grove floated on the Irish stock market in June 2018 after raising €75 million in an initial public offering (IPO). However, the value of its property portfolio, at €168 million as of the end of June, is considerably below the €300 million to €500 million asset base the real-estate investment trust (Reit) had been targeting within three years of the IPO.

It has struggled in recent times to raise enough capital in a speedy manner to continue to buy assets and grow.