Strategic Group concludes restructuring, says it has reduced debt by $1.02B

The Calgary-based Strategic Group says it has resolved a restructuring that began in late 2019, reducing its exposure to Alberta’s office real estate market by 92 per cent. 

Calgary company was ordered to put properties with $650M in mortgages into receivership in 2019

Strategic Group CEO Riaz Mamdani speaks at an opening ceremony for Cube, a former office building his company converted to residential use, in this file photo. Mamdani said a recent restructuring provided lenders the opportunity to fully recover their debt. (Stéphanie Rousseau/Radio-Canada)

The Calgary-based Strategic Group says it has resolved a restructuring that began in late 2019, reducing its exposure to Alberta's office real estate market by 92 per cent. 

The company said it has reduced its debt by $1.02 billion, divesting 110 office and retail properties.

"Through careful restructuring and the current composition of our real estate portfolio, our cash flow has significantly improved and will continue to improve," said CEO Riaz Mamdani in a release.

The company had previously secured protection in December 2019 under the Companies' Creditors Arrangement Act (CCAA), which would have allowed it to remain in possession and control its assets.

But the company's bid to put the more than 50 properties under protection was later rejected by Court of Queen's Bench Justice Karen Horner, who appointed Alvarez & Marsal Canada Inc. as receiver.

The company said its portfolio now involves properties that are 86 per cent residential, nine per cent office and five per cent retail.

Daorcey Le Bray, a spokesperson for Strategic Group, said in an email that the receivership is now entirely resolved and that the company is not attached to the CCAA.

Le Bray added that the company's focus is on residential projects, including two apartment towers it launched in the middle of the pandemic. 

The company has also announced plans to repurpose the 11-storey Barron Building on Eighth Avenue S.W., the former home of the Uptown Theatre, into residential rental apartments. 

An artist's rendering of the Barron Building, which is being reconfigured into apartments. (Courtesy Strategic Group)

Around one-third of office space in the city's core has emptied out since 2015.

Greg Kwong, regional managing director of the Canadian prairies for CBRE, said it was good news to see the company survive the "real estate storm" and come out on the other end with a viable business.

"It's a sign of the times. They're probably one of the more high-profile companies that have made this announcement. There are a lot of other companies that are struggling that are working through that same process," he said.

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Kwong said the company's year-end numbers showed a downtown vacancy rate of about 33.5 per cent.

"That's an all-time high. But we've been hovering around the 31 to 33 per cent level over the last 18 months," he said. 

"It seems to have stabilized at that. Given some of the strong projections the oil companies are showing, and the cash flow, things may be looking better here going through 2022."

Strategic Group owns residential, retail and office properties across the country.

With files from Sarah Rieger