Primaris REIT - Comprehensive Analysis Report

Summary

Primaris REIT is an unincorporated, open-ended real estate investment trust uniquely focused on owning, developing, and operating a national portfolio of enclosed shopping centres in mid-sized Canadian markets, positioning itself as Canada's sole REIT dedicated to this sector. The company's vision is to champion and elevate retail for Canadians, driven by a mission to create value for stakeholders and communities through proactive and responsible management. It operates with a fully integrated, specialized shopping centre platform, emphasizing core values of respect, empowerment, integrity, teamwork, and accountability to execute its strategy.

1. Strategic Focus & Objectives

Core Objectives

Primaris REIT's main business objectives are centered on driving value through strategic growth and disciplined financial management. Key objectives include:
Achieving 3% to 4% same properties cash net operating income (NOI) growth for 2025.
Targeting Funds from Operations (FFO) per unit diluted in the range of $1.70 to $1.75 for 2025.
Acquiring over $1 billion in assets within the next three years while maintaining industry-leading leverage metrics.
Capitalizing on consolidation opportunities within the Canadian enclosed shopping centre market.
Proactive and responsible management to drive value for stakeholders and communities.

Specialization Areas

Primaris REIT specializes in the ownership, development, and operation of enclosed shopping centres. Its unique value proposition stems from:
Enclosed Shopping Centre Focus: Being Canada's only REIT exclusively focused on this asset class.
Mid-sized Canadian Markets: Targeting market-leading properties in growing mid-sized markets that serve as significant retail hubs.
Retailer Affordability: Providing attractive and affordable locations to tenant partners through disciplined cost management.
Vertically Integrated Platform: Leveraging a fully internal, full-service national management platform to achieve economies of scale and operational optimization.

Target Markets

Primaris REIT primarily targets:
Mid-sized Canadian Markets: Focusing on urban and suburban centers across Canada that are growing and boast diverse trade areas.
Strategic Property Locations: Properties that are often connected to mass transit and centrally located on substantial land parcels.
Tenant Partners: Retailers seeking attractive, affordable, and high-traffic locations within enclosed shopping centres.

2. Financial Overview

Funding History

Primaris REIT has a notable funding history, including its spin-off and subsequent strategic investments:
Spin-off from H&R REIT: On December 31, 2021, Primaris REIT was spun off from H&R REIT through a non-taxable distribution of units, making it an independent public entity.
HOOPP Contribution: Concurrent with the spin-off, the Healthcare of Ontario Pension Plan (HOOPP) contributed six large-format shopping centres, receiving approximately 26% of Primaris REIT's units in exchange.
Green Finance Debenture Issue: In June 2025, Primaris issued $200 million in senior unsecured debentures, maturing June 25, 2033, at a fixed annual interest rate of 4.835%. These funds are earmarked to finance eligible green projects, following the publication of its inaugural Green Finance Framework.
Post-IPO Equity Funding: In October 2025, Primaris received $147.5 million in Post-IPO Equity Funding.

Financial Performance and Metrics (as of September 30, 2025, and Q2 2025 ended June 30, 2025):
Trailing 12-month Revenue: $434 million.
Market Capitalization: $1.3 billion.
Shares Outstanding: 118 million.
Total Rental Revenue (Q2 2025): $150.8 million.
Same Properties Cash NOI Growth (Q2 2025): 5.5%.
FFO per Average Diluted Unit (Q2 2025): $0.445, a 5.5% increase.
Total Assets: $5.0 billion.
Unencumbered Assets: $4.4 billion.
Net Asset Value (NAV) per Unit Outstanding: $21.43.
FFO Payout Ratio: 52.6%.
Average Net Debt to Adjusted EBITDA: 5.8x.
Liquidity: $584.0 million.
Monthly Distribution (October 2025): $0.0717 per unit, representing $0.86 per unit on an annualized basis.

Significant Asset Transactions in 2025:
Acquisitions:
Lime Ridge Mall (Hamilton, Ontario) for $416 million, adding 791,000 square feet.
50% co-ownership interest in Southgate Centre (Edmonton, Alberta).
100% interest in Oshawa Centre (January 2025).
Dispositions:
Lansdowne Industrial (Peterborough, Ontario) for $9.9 million.
Northland Village and Northland Professional Centre (Calgary, Alberta) for $154.0 million (completed December 2025).
Approximately $400 million of non-core asset sales executed in 2025 as part of capital recycling.

3. Product Pipeline

Key Products/Services

Primaris REIT's primary "product" is its portfolio of market-leading enclosed shopping centres across Canada. These properties offer retail space to a diverse range of tenants.

Development Stage

Primaris is actively engaged in identifying and realizing intensification opportunities within its existing portfolio.
Intensification Potential: Approximately 400 acres of excess land out of 1,400 acres across its Canadian holdings have been identified for future development. These sites are being evaluated for higher and better uses.

Target Market/Condition

The intensification strategy targets:
Multi-residential and Mixed-use Developments: Leveraging extensive land holdings at existing shopping centre sites.
Ancillary Uses: Potential for hotels or self-storage facilities to complement the retail offering.
Developers: Primaris plans to sell this excess land to third-party developers rather than undertaking residential development directly, focusing on monetizing land value and enhancing surrounding communities.

Expected Timeline

While specific timelines for all projects are not detailed, master planning and evaluation are underway for several key sites, indicating ongoing progress in unlocking value from excess land.

Key Features and Benefits

Maximizing Asset Value: Unlocking value from underutilized land parcels.
Portfolio Enhancement: Creating dynamic, mixed-use communities around existing retail hubs.
New Revenue Streams: Potential for land sales and increased traffic to retail centers from new residential developments.
Strategic Locations: Leveraging existing prime locations with established infrastructure and transit access.

Notable properties identified for intensification include:
Galeries de la Capitale (Quebec City)
Halifax Shopping Centre
Oshawa Centre
Promenades St-Bruno
Sunridge Mall
Marlborough Mall (Calgary)
Dufferin Mall (Toronto)
Place d'Orleans (Ottawa)

For example, at Galeries de la Capitale, a master plan in partnership with local developer Immostar has identified potential for approximately 5,000 residential units.

4. Technology & Innovation

Technology Stack

Primaris REIT operates a fully internal, vertically integrated, full-service national management platform. This integrated approach allows for economies of scale and optimized operations across its portfolio. The company prioritizes technology within its overall IT strategy, with a focus on digital transformation and technology operations.

Proprietary Developments

PRIMARCHÉ Digital Marketplace: Launched in November 2021 in partnership with Dropit Shopping. This innovative platform digitizes real-time store inventory across Primaris' national shopping centre network into a single online marketplace. It enables a one-cart checkout experience and fast delivery from the closest mall to the customer. PRIMARCHÉ aims to enhance retailer sales potential by expanding their online reach, providing an additional sales channel, greater brand exposure, and an expanded customer base.

Scientific Methodologies

The PRIMARCHÉ platform utilizes Dropit's algorithms for optimal fulfillment. These algorithms ensure efficient order processing based on real-time inventory availability and customer proximity, streamlining shipping through a multi-courier aggregator, and managing last-mile collection and consolidation.

Technical Capabilities

Digital Transformation Expertise: Led by its Vice President of Information Technology, the company demonstrates strong capabilities in digital transformation and technology operations.
Utility Data Management Software: Implementation of systems to manage utility data for enhanced sustainability efforts.
Green Lease Provisions: Incorporation of green lease provisions that facilitate two-way data sharing, improving energy and carbon data collection and management across its properties.

5. Leadership & Management

Executive Team

Alex Avery, Chief Executive Officer
Professional Background: Over 20 years of experience in real estate and capital markets. Served on the board of trustees of H&R REIT (2017-2021) and as Executive Vice President, Asset Management & Strategic Initiatives at H&R REIT (2020 until the 2021 spin-off). Previously, he managed real estate securities portfolios with FrontFour Capital and spent over 12 years as a sell-side equity analyst at CIBC Capital Markets.
Notable Achievements & Key Contributions: Instrumental in the spin-off and establishment of Primaris REIT as an independent entity, now leading its strategic direction and growth. LinkedIn Profile: [https://www.linkedin.com/in/alex-avery-6140b01](https://www.linkedin.com/in/alex-avery-6140b01)

Patrick Sullivan, President & Chief Operating Officer
Professional Background: Over 30 years of experience in the real estate industry, primarily focused on enclosed shopping centres, covering brokerage, leasing, operations, asset management, and leadership. Joined Oxford Properties in 2003 with a focus on properties managed for Primaris. Appointed COO at H&R REIT's subsidiary Primaris in 2013 and maintained this position post-spin-out.
Notable Achievements & Key Contributions: Oversees the operational excellence and day-to-day management of Primaris's extensive portfolio, driving efficiency and performance. LinkedIn Profile: [https://www.linkedin.com/in/patrick-sullivan-7679a75a](https://www.linkedin.com/in/patrick-sullivan-7679a75a)

Rags Davloor, Chief Financial Officer
Professional Background: Over 35 years of experience in finance, operations, and development, including executive and board leadership roles. Has extensive background in mergers, acquisitions, and strategic planning, and strong relationships within Canadian capital markets.
Notable Achievements &