Strategic Group Completes Restructuring, Says It Reduced $1.02 Billion in Debt
The Calgary-based strategy group says it has resolved a restructuring that began in late 2019, reducing its exposure to Alberta’s office real estate market by 92%.
The company said it reduced its debt by $1.02 billion, disposing of 110 office and retail properties.
“Thanks to careful restructuring and the current composition of our property portfolio, our cash flow has improved significantly and will continue to improve,” CEO Riaz Mamdani said in a statement.
The company previously obtained protection in December 2019 under the Companies’ Creditors Arrangement Act (CCAA), which would have allowed it to retain possession and control of its assets.
But the company’s offer to put more than 50 properties under protection was later rejected by Court of Queen’s Bench Judge Karen Horner, who appointed Alvarez & Marsal Canada Inc. as receiver.
The company said its portfolio now consists of 86% residential, 9% office and 5% retail properties.
Daorcey Le Bray, spokesperson for Strategic Group, said in an email that the receivership is now fully resolved and the company is not attached to the CCAA.
Le Bray added that the company is focused on residential projects, including two apartment towers it launched amid the pandemic.
The company also announced plans to convert the 11-story Barron Building on Eighth Avenue SW, the former home of the Uptown Theater, into residential rental apartments.
About a third of office space in the heart of the city has emptied since 2015.
Greg Kwong, regional general manager for the Canadian Prairies for CBRE, said it’s good news to see the company weather the “real estate storm” and emerge with a viable business.
“It’s a sign of the times. It’s probably one of the most high-profile companies to have made this announcement. There are a lot of other struggling companies going through the same process,” he said. declared.
WATCH | Calgary is looking to redesign its empty office towers:
Kwong said the company’s year-end numbers showed a downtown vacancy rate of about 33.5%.
“It’s an all-time high. But we’ve been hovering between 31% and 33% in the last 18 months,” he said.
“It seems to have stabilized at this level. Given some of the strong projections presented by oil companies and cash flow, things could improve here through 2022.”
Strategic Group owns residential, commercial and office properties across the country.