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Strategic Group, one of Canada’s largest private real estate developers and managers, has placed its Alberta properties under creditor protection, citing cavernous office vacancy due to the severe downturn in the oil patch.​

Strategic, led by prominent Calgary businessman and philanthropist Riaz Mamdani, plans to restructure its business within the province in the court-supervised process. The company owes lenders more than $650-million on 56 properties, according to the filing.

Since 2014 – the start of the oil-industry downturn – 78 tenants occupying 573,333 square feet have either shut down or did not stay in their leased premises, the company said. It owns and manages commercial as well as residential buildings. Under the Companies’ Creditors Arrangement Act process, Strategic plans to sell some of them in hopes of putting itself on more stable financial footing.

The company said the restructuring is necessary because it sees no improvement in economic conditions on the horizon.

The combination of ballooning vacancy rates, falling revenue and rising costs led the company to seek protection from creditors, Mr. Mamdani said. In addition, taxes have climbed 55 per cent in four years, he said.

“We have tenants who are suffering from a lack of confidence. We have tenants who suffer from a lack of business and everything that comes along with the type of downturn that we have today,” Mr. Mamdani said in an interview.

“We had more defaults in the month of November of this year than I’ve ever had in my entire career, and do you know what? December got worse.”

Mr. Mamdani founded Strategic in 2001, and had built the company to an asset value of more than $1.5-billion. In 2016, he was targeted by a gunman outside his Calgary home in an incident that received national attention and remains unsolved.

In recent years – as Calgary’s vacancy rate topped 32 per cent – Strategic sought to blunt the impact by cutting staff, selling assets and increasing its proportion of multifamily rental properties. It has also converted some commercial space into residential units and storage facilities. These moves were not enough to return operations to profitability, however.

In sharp contrast to Toronto and Vancouver, Calgary’s office market has been hollowed out as energy companies have contracted and shed staff, or in the case of many foreign-based producers, sold their assets and left Canada. This has had a ripple effect on all of the support businesses and retail operations downtown and in industrial areas.

Meanwhile, new office towers have only added to the glut of available space in downtown Calgary. Brookfield Place opened in 2017 and Telus Sky is due to open soon. Together they add 1.8 million square feet, Strategic said in its filing.

In total, Strategic has 171 properties with 7.5-million square feet, but the assets in its other locales, such as British Columbia and Atlantic Canada, are not part of the filing. Neither are properties under construction or the company’s property management, development and construction businesses. In Alberta, Strategic has 354 employees.

Almost exactly three years ago, on Dec. 19, 2016, Mr. Mamdani was shot and injured as he left his home for Monday morning meetings. A man wearing an orange jacket fired multiple shots at the businessman’s Rolls-Royce as the vehicle exited the gates of the Mamdani family’s Mount Royal neighbourhood mansion.

Calgary police have not named any suspects.

With files from Kelly Cryderman

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