It’s not looking good for Slate Office REIT, now rebranded as Ravelin Properties (TSX: RPR.UN):
Toronto, Ontario–(Newsfile Corp. – February 20, 2026) – Ravelin Properties REIT (TSX: RPR.UN) (“Ravelin” or the “REIT”), an internally managed global owner and operator of well-located commercial real estate, announced today that it does not expect to make principal or interest payments on the upcoming maturity date of its 9.00% convertible unsecured subordinated debentures (the “9% Debentures”).
The maturity date of the 9% Debentures is February 28, 2026. In connection with the upcoming maturity date, the 9% Debentures, which currently trade on the Toronto Stock Exchange under “RPR.DB”, will be halted at the market open and delisted at the close of trading on the business day following the maturity date, being March 2, 2026.
The REIT has been in default of its obligations to pay interest on the 9% Debentures since March 1, 2024. The repayment price due on maturity is $1,180 per $1,000 principal amount of 9% Debentures, representing aggregate principal amount of $28,750,000, and $5,175,000 for accrued and unpaid interest thereon to, but excluding, the maturity date.
The big question I have in my mind is – how will George Armoyan, who went through a huge effort to take over the REIT, be able to salvage this situation? It is incredibly unlikely anybody from the public will be able to make lemonade from the lemons (the units and debentures are well subordinated), but Armoyan’s corp, G2S2, has lent Slate/Ravelin a ton of money and maybe this was the plan all along when they will get to eat away at the entrails of this soon to be extinct REIT.
More like unravelin’
Touché!!
This is an interesting situation. Both Charles Pellerin (Dec) and George (Jan) have stepped down from the Board, clearing away potential conflicts of interest. George (via Sime) still has a big stake in the debentures as well as the senior debt (via G2S2). Debenture holders have been very patient and continue to be, accumulating a not-insubstantial claim of unpaid interest.
The solution here is pretty straightforward – convert the debentures and unpaid interest to equity at NAV. The fact this has not played out is testament to a stubborn group of debenture holders insistent on something “better”. If they overplay their hand, they risk major losses.
CCAA doesn’t favour any party, including Armoyan since he wouldn’t be able to control the SISP process (which is why it has not happened). True, he knows more about the intrinsic value of the property book than other rushed buyers but he stands gain substantial control of the going concern upon conversion as well as to insert a reasonable equity cushion between the senior debt and CCAA.
There is nothing inherently wrong with the property book of Ravelin. A capital reset can create a viable entity. There are worse bets than acquiring Ravelin debentures below $20.
The numbers don’t work very well to support this theory.
Let’s just take the September 30 2025 financials at face value.
Properties at $1.17 billion. Debt is $1.12 billion. Ignoring AP of $77M on top of it.
Convertibles are $158M of that debt. Even if they are totally capitalized/collapsed into equity the entity itself is not exactly your model REIT.
G2S2’s investment is, page 28/36 of Ravelin’s Q3-2025:
Mortgages – $304M, 8 properties
Convertibles – $12.1M (about 7.7%)
Revolving loans – $284M, 11 properties
G2S2 sounds like they can pull the plug and be senior.
Clarke’s take-out is a good deal for Clarke and a much better outcome for debenture holders than holding out for CCAA. This has an echo of RFA Financial take-out of Artis. In both cases, NAV is acquired at a big discount by an entity than can patiently and profitably run them off overtime.
Yeah, and the only way anybody in the public could have made money from this is by purchasing the debentures about a month ago to today – and the market for them has been incredibly illiquid. Congrats on those that got the debt under 20 cents on the dollar!
… and its not over yet. Buyers of the debentures in the high $20s are effectively buying CKI at a discount to market, which itself is reflecting a discount due to the deal. Assuming this closes of course.
14.56 shares of CKI per $1,000 face value debentures gives the debentures roughly 33-34 cents on the dollar presently, so roughly a 10% give or take merger arbitrage spread. The debenture holders are getting away with manslaughter (not murder…) here in my opinion!