Why Goldman Sachs is Buying into Calgary Real Estate

August 22, 2019 | Real Estate
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Pershinghill REITs give Goldman an edge in the Great White North

The Goldman Sachs real estate footprint just got a bit larger.

The Petershill program, operated by Goldman Sachs Asset Management’s Investments & Manager Selection (AIMS) Group, recently acquired a minority stake in Slate Asset Management.

Slate is a leading real-estate focused alternative investment platform with over $6.2 billion in assets under management. It also has significant experience in the Calgary real estate market.

In recent years, it has floated two listed REITS – the Slate Office REIT (TSX:SOT.UN) and Slate Retail REIT (TSX:SRT.UN), which invest in Canadian real estate opportunities that offer value over the long-term. Several of those opportunities exist in the rebounding Calgary market. 

Timing is everything

Calgary is the largest city and economic capital of the Canadian province of Alberta. However, it’s not Alberta’s political capital. But it’s worth noting that Alberta’s economic fortunes are linked closely to the oil industry and oil prices.

For this reason, energy prices and real estate prices have a relationship. Calgary real estate slumped after the 2014 crash in oil prices.

Fortunately, in a stroke of good timing, Slate exited its Calgary real estate investments in 2011, well before the downturn.

In a seemingly similar contrarian move, Slate has again been scouting afresh since 2018 for buying opportunities in Calgary real estate and has concluded many deals after that.

“We don’t believe Calgary is going anywhere,” said Slate’s chief operating officer Brian Bastable. “We believe in the market, and we think now is a good time to acquire a strong ownership stake in the market on a very good basis relative to how we can buy in other cities throughout Canada.”

Goldman Sachs real estate partners

The stake sale to Goldman will generate additional funds that Slate can utilize to double-down on its Calgary real estate bets. On its part, Goldman will benefit from Slate’s deep domain experience in Canadian real estate.

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