On Wednesday, Slate Office REIT (SOT-U:CN) (OTC: SLTTF) experienced a downgrade in its stock rating by RBC Capital. The firm shifted its stance on the real estate investment trust from Sector Perform to Underperform. Additionally, the price target was lowered to Cdn$0.30 from the previous Cdn$0.70.
The downgrade follows a recent announcement from Slate Office indicating that its senior lenders have issued notices of default. This situation has led to a restriction on the REIT's ability to make further interest payments on its outstanding convertible debentures. RBC Capital cites this development as a key reason for the rating change, alongside the reduced price target.
The analyst from RBC Capital highlighted that the visibility regarding the execution of asset sales, which are a part of the REIT's Portfolio Realignment Plan, is currently poor. There are also concerns about the continued availability and the cost of financing for Slate Office REIT moving forward.
The reduction in the price target by Cdn$0.40 to Cdn$0.30 per unit reflects the heightened risk profile and the speculative nature of the investment, as per the analyst's comments. Slate Office REIT's investors and potential investors are now facing a more uncertain future, given the current financial constraints and the unclear path to resolving them.
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