Slate Office REIT’s SOT-UN-T managers have resigned from their executive and board roles, representing a victory for activist investor and company trustee George Armoyan.
The trust said late Wednesday that Slate Management ULC, the external manager of the REIT, has provided 180 days’ notice that it will terminate its management agreement. Trustees Blair Welch and Brady Welch, Slate Management’s principals, also resigned from the REIT’s board, Slate Office REIT said. Brady Welch is Slate Office REIT’s chief executive officer.
Units in the trust skyrocketed nearly 50 per cent in Thursday’s trading on the news, closing at 85 cents apiece.
The units have more than doubled since The Globe and Mail reported in late July on a behind-the-scenes war between the Welches and Mr. Armoyan. The Welches had sent letters to their fellow trustees accusing Mr. Armoyan, who is also a trustee, of inappropriately bidding for the trust’s assets and pushing it to the brink of insolvency with demands for more control – allegations he denied.
Mr. Armoyan, who owns 20 per cent of Slate Office REIT, said the company has badly underperformed its peers over the past decade while the Welches’ company has collected $132-million in management fees.
“During its tenure as manager of the REIT, Slate Asset Management has overseen the destruction of over $700-million in unitholder value,” Mr. Armoyan said in a July e-mail to The Globe.
The Welches and Mr. Armoyan did not immediately respond to request for comment.
In a statement, board chair Sam Altman said the trust is “working collaboratively” with Slate Management to eliminate the need for an external manager. Mr. Altman said Slate Office REIT’s trustees “believe that internalized management will achieve strong alignment with unitholders and lower costs for the REIT.”
Slate Office REIT has more than $1.1-billion in debt and a market capitalization of about $68-million. The trust has been attempting a turnaround by selling off properties, but it defaulted on $158-million worth of its debt in June.
Mr. Armoyan is a Nova Scotia investor with a taste for distressed situations and no fear of challenging management. In October, 2022, he revealed that he had acquired 15.8 per cent of the trust and held $7.1-million in debt that was convertible into more units. Mr. Armoyan requested a special meeting of unitholders to remove five Slate Office REIT trustees, including the Welch brothers, and elect a slate of four new members, including himself.
In February, 2023, Slate Office REIT and the Welch brothers came to what seemed an uneasy peace with Mr. Armoyan, placing him and another trustee on the board.