Lenders have scored a legal victory over the Strategic Group real estate management firm, forcing 56 buildings owned and managed by the company into receivership.
Alvarez and Marsal Canada were ordered by an Alberta judge to take possession of the properties and can operate them on behalf of the lenders to which Strategic is indebted. The lenders, including BMO and RBC, argued in court that Strategic was trying to put its interests ahead of theirs.
Last month, Strategic announced it was seeking creditor protection for the properties, citing poor conditions as a result of an ongoing financial recession and a downtown Calgary vacancy rate hovering around 26 per cent.
CEO Riaz Mamdani had sought to restructure the holdings under creditor protection.
No spokesman was available from Strategic on Friday. However, the company posted a statement on its website. It states:
“On December 20, 2019, the court granted an order to appoint a receiver to the 56 properties that had originally sought CCAA protection. This development is consistent with our end goal: to have an orderly disposition of some of our real estate assets to maximize recovery for our stakeholders and ensure our company is stronger moving forward. We will work closely and collaboratively with the receiver to ensure a smooth transition and minimize impact to our tenants and residents. In the coming weeks, we share more information available once it becomes available.”
Strategic Group previously stated its property management, service companies, and development and construction business will not be affected. Strategic Group will continue to manage all of its properties. Projects currently under construction are not impacted.
“We are focused to create a strong new future for Strategic Group and all of our stakeholders,” Mamdani said in December. “It is our desire to be a vibrant contributor to our city and province.”Strategic Group’s property management, service companies, and development and construction business will not be affected. Strategic Group will continue to manage all of its properties. Projects currently under construction are not impacted.
“We are focused to create a strong new future for Strategic Group and all of our stakeholders,” said Mamdani. “It is our desire to be a vibrant contributor to our city and province.”
Meanwhile, city data released Thursday showed office property values were up one per cent, following four years of decline.
Approximately 354 employees of Strategic Group work in Alberta; which includes 184 at Strategic Real Estate Management, 130 at Strategic Maintenance Limited, with the balance working for another entity not involved in these proceedings. A company spokesman said no layoffs are planned.
In recent years, Strategic Group has diversified its real estate to include a viable multi-family rental portfolio. This business strategy was designed to support a long-term successful future for the company.
Strategic Group is a privately held real estate company headquartered in Calgary. Its operations include property management, leasing, development, re-development, repurposing, and construction. Strategic Group owns and manages a national office, retail, and apartment portfolio across the country.
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