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Primaris REIT Announces Strong Q1/25; Reaffirms 2025 Guidance
PRIMARIS REIT A
9,1905
€
+1,53%
+1,53%
Quarterly Financial and Operating Results Highlights
- $150.2 million total rental revenue;
- +9.4% Same Properties Cash Net Operating Income** (“Cash NOI”) growth;
- +10.2% Same Properties shopping centres Cash NOI** growth;
- 94.2% committed occupancy, 93.2% in-place occupancy, and 89.2% long-term in-place occupancy;
- +7.8% weighted average spread on renewing rents* across 224,000 square feet;
- +13.3% Funds from Operations** (“FFO”) per average diluted unit growth to $0.439;
- 52.8% FFO Payout Ratio**;
- $31.1 million in net income;
- $4.6 billion total assets;
- 5.7x Average Net Debt** to Adjusted EBITDA**;
- $648.5 million in liquidity*;
- $4.0 billion in unencumbered assets; and
- $21.40 Net Asset Value** (“NAV”) per unit outstanding.
Business Update Highlights
- Reaffirms 2025 guidance after accounting for the anticipated departure of The Hudson's Bay (“HBC”);
- Acquired a 50% interest in Southgate Centre in Edmonton, Alberta and a 100% ownership interest in Oshawa Centre in Oshawa, Ontario adding 1,639 thousand square feet of gross leasable area (“GLA”) to the portfolio;
- Disposed of two enclosed shopping centres, a professional centre and 4 acres of excess land;
- Issued $200 million aggregate principal amount of senior unsecured debentures at a fixed annual interest rate of 4.468%;
- Repaid the outstanding principal amount of $133.1 million on the Series B senior unsecured debentures that matured March 30, 2025;
- Entered into a $100 million three-year unsecured bilateral non-revolving term facility; and
- Reported total normal course issuer bid (“NCIB”) activity since inception of the Trust of 11,834,409 Trust Units repurchased at an average price of $14.09, or a discount to NAV** per unit of approximately 34.2%.
“Our shopping centre portfolio continues to perform very well in 2025, with NOI growth coming from strong rental revenue growth and percentage rent, increasing occupancy, and rising cost recoveries,” said Patrick Sullivan, President and Chief Operating Officer. “Since June of last year, Primaris has transacted on approximately $1.2 billion of real estate, driving our portfolio quality significantly higher with same store sales productivity totaling $768 per square foot. We are very quickly moving towards our ambition of becoming the first call for retailers looking to grow and expand their footprint in Canada.”
Chief Financial Officer, Rags Davloor added, “Primaris has nearly reached our three-year target of acquiring over $1 billion in assets, while maintaining industry leading leverage metrics. With unencumbered assets of $4 billion and no debt maturing until 2027, we have reduced refinancing risk, with significant access to liquidity. Our commitment to maintaining an extremely well capitalized balance sheet positions Primaris as a highly credible transaction counterparty, at a time when accessing large scale capital has been challenging.”
“Disciplined capital allocation is the foundation of our strategy. We have demonstrated its benefits through asset capital recycling and NCIB activity, driving strong financial and operating results, while also delivering transformative changes to our portfolio,” said Alex Avery, Chief Executive Officer. “We are increasing our relevance with retailers, and establishing a profile as an attractive buyer of large, high-quality assets. The changes we have made to the business are designed to deliver higher internal growth, which drives higher NAV per unit growth, higher FFO per unit growth and ultimately, consistent sector-leading distribution per unit growth.”
2025 Financial Outlook
Guidance: Disciplined capital allocation is a key pillar to Primaris' strategy. To this end, Primaris established certain targets for managing the Trust's financial condition (see Section 3, “Business Overview and Strategy” of the Management's Discussion and Analysis for the three months ended (the “MD&A”)). In addition to these established targets, Primaris provided guidance for the full year of 2025 in the Management's Discussion and Analysis for the three months and years ended December 31, 2024 (the “Annual MD&A”). The previously published guidance for the full year of 2025 has been reproduced again below and updated for management's current expectations based on the most recent information available to management.
|
| 2025 Guidance |
| MD&A Section Reference | ||
| (unaudited) | Previously Published | Updated | Additional Notes | ||
| Occupancy | Increase of 0.8% to 1.0% | Decrease of 6.0% to 7.0% | Assumes HBC disclaims all their leases, comprising 1,030.6 thousand square feet | Section 8.1, “Occupancy” and Section 8.6 “Top 30 Tenants” | |
| Contractual rent steps in rental revenue | $3.4 to $3.8 million | No change in guidance |
| Section 9.1, “Components of Net Income (Loss)” | |
| Straight-line rent adjustment in rental revenue | $6.8 to $7.2 million | No change in guidance |
| Section 9.1, “Components of Net Income (Loss)” | |
| Same Properties Cash NOI** growth | 3.0% to 4.0% | No change in guidance | Same Properties excludes Northland (under redevelopment) and the acquisitions of Les Galeries de la Capitale, Oshawa Centre and Southgate Centre | Section 9.1, “Components of Net Income (Loss)” | |
| Cash NOI** | $318 - $323 million | No change in guidance | Includes the impact of the January 31, 2025 acquisitions and approximately $300 million of dispositions throughout the year | Section 9.1, “Components of Net Income (Loss)” | |
| General and administrative expenses | $36 to $38 million | No change in guidance |
| Section 9.1, “Components of Net Income (Loss)” | |
| Operating capital expenditures | Recoverable Capital $18 to $20 million Leasing Capital $20 to $24 million | No change in guidance |
| Section 8.7, “Operating Capital Expenditures” | |
| Redevelopment capital expenditures | $48 to $50 million | No change in guidance | Primarily attributable to Devonshire Mall and Northland | Section 7.4, “Redevelopment and Development” | |
| FFO** per unit1 | $1.70 to $1.75 per unit fully diluted | No change in guidance | Includes the impact of the January 31, 2025 acquisitions and approximately $300 million of dispositions throughout the year | Section 9.2, “FFO** and AFFO**” | |
| ** Denotes a non-GAAP measure. See “Non-GAAP Measures”. See also Section 1, “Basis of Presentation” – “Use of Non-GAAP Measures” and Section 12, “Non-GAAP Measures” of the MD&A. | |||||
| 1 Units outstanding and weighted average units outstanding assumes the exchange of Exchangeable Preferred LP Units for Trust Units. See Section 10.6, “Unit Equity and Distributions” of the MD&A. | |||||
On September 24, 2024, Primaris released certain targets for the period ending December 31, 2027. These targets are not guidance, but are an outlook based on the execution of Primaris' strategic pillars.
| (unaudited) | 3 Year Targets | Progress to Date | Additional Notes | MD&A Section Reference |
| In-place Occupancy | 96.0% |
| In-place occupancy was 92.4% at December 31, 2023 In-place occupancy was 94.5% at December 31, 2024 | Section 8.1, “Occupancy” |
| Annual Same Properties Cash NOI** growth | 3% - 4% |
| Growth for the year ended December 31, 2023 was 5.4% Growth for the year ended December 31, 2024 was 4.5% | Section 9.1, “Components of Net Income (Loss)” |
| Acquisitions | > $1 billion | $910 million | October 1, 2024 - Les Galeries de la Capitale January 31, 2025 - Oshawa Centre and Southgate Centre | Section 7.3, “Transactions” |
| Dispositions | > $500 million | $200.5 million | December 13, 2024 - Edinburgh Market Place February 21, 2025 - excess land February 28, 2025 - Sherwood Park Mall and Professional Centre March 31, 2025 - St. Albert Centre | Section 7.3, “Transactions” |
| Annual FFO** per unit1 growth (fully diluted) | 4% to 6% |
|
| Section 9.2, “FFO** and AFFO**” |
| Annual Distribution Growth | 2% - 4% |
| In November 2022 announced a 2.5% increase In November 2023 announced a 2.4% increase In November 2024 announced a 2.4% increase | Section 10.6, “Unit Equity and Distributions” |
| ** Denotes a non-GAAP measure. See “Non-GAAP Measures”. See also Section 1, “Basis of Presentation” – “Use of Non-GAAP Measures” and Section 12, “Non-GAAP Measures” of the MD&A. | ||||
| 1 Per weighted average units outstanding calculated on a diluted basis, assuming the exchange of Exchangeable Preferred LP Units for Trust Units. See Section 10.6, “Unit Equity and Distributions” of the MD&A. | ||||
See Section 2, “Forward-Looking Statements and Financial Outlook” of the MD&A for a description of the material factors, assumptions, risks and uncertainties that could impact the financial outlook statements.
Select Financial and Operational Metrics
| As at or for the three months ended March 31, (in '000s of Canadian dollars unless otherwise indicated) (unaudited) |
| 2025 |
|
|
| 2024 |
|
| Change | ||
|
|
|
|
|
|
| ||||||
| Number of investment properties |
| 36 |
|
|
| 39 |
|
|
| (3 | |
| Gross leasable area (in millions of square feet) (at Primaris' share) |
| 14.2 |
|
|
| 12.5 |
|
|
| 1.7 |
|
| Long-term in-place occupancy |
| 89.2 | % |
|
| 89.1 |
|
| 0.1 | ||
| In-place occupancy |
| 93.2 | % |
|
| 92.0 |
|
| 1.2 | ||
| Committed occupancy |
| 94.2 | % |
|
| 94.1 |
|
| 0.1 | ||
| Weighted average net rent per occupied square foot1 | $ | 26.61 |
|
| 25.10 |
|
| 1.51 |
| ||
| Weighted average lease term (in years) |
| 4.0 |
|
|
| 4.2 |
|
|
| (0.2 | |
| Same stores sales productivity *,1 | $ | 768 |
| 613 |
|
| 155 |
| |||
| Total assets | $ | 4,596,120 |
|
| 3,928,995 |
|
| 667,125 |
| ||
| Total liabilities | $ | 2,400,472 |
|
| 1,801,200 |
|
| 599,272 |
| ||
| Total rental revenue | $ | 150,214 |
|
| 119,218 |
|
| 30,996 |
| ||
| Cash flow from (used in) operating activities | $ | 21,587 |
|
| 7,515 |
|
| 14,072 |
| ||
| Distributions per Trust Unit | $ | 0.215 |
|
| 0.210 |
|
| 0.005 |
| ||
| Cash Net Operating Income** (“Cash NOI”) | $ | 80,423 |
|
| 62,871 |
|
| 17,552 |
| ||
| Same Properties2 Cash NOI** growth3 |
| 9.4 | % |
|
| 2.0 |
|
| 7.4 | ||
| Net income (loss) | $ | 31,147 |
|
| 45,881 |
|
| (14,734 | |||
| Net income (loss) per unit4 | $ | 0.257 |
|
| 0.433 |
|
| (0.176 | |||
| Funds from Operations** (“FFO”) per unit4- average diluted | $ | 0.439 |
|
| 0.388 |
|
| 0.051 |
| ||
| FFO** per unit growth |
| 13.3 | % |
|
| 5.1 |
|
| 8.2 | ||
| FFO Payout Ratio** |
| 52.8 | % |
|
| 56.7 |
|
| (3.9 | ||
| Adjusted Funds from Operations** (“AFFO”) per unit4 - average diluted | $ | 0.346 |
|
| 0.282 |
|
| 0.064 |
| ||
| AFFO** per unit growth |
| 22.7 | % |
|
| (11.6 |
|
| 34.3 | ||
| AFFO Payout Ratio** |
| 67.1 | % |
|
| 78.0 |
|
| (10.9 | ||
| Weighted average units outstanding4 - diluted (in thousands) |
| 119,965 |
|
|
| 106,911 |
|
|
| 13,054 |
|
| Net Asset Value** (“NAV”) per unit outstanding4 | $ | 21.40 |
|
| 21.86 |
|
| (0.46 | |||
| Average Net Debt** to Adjusted EBITDA**6 | 5.7x |
| 5.7x |
|
| — |
| ||||
| Interest Coverage**5,6 | 3.0x |
| 3.4x |
| (0.4)x | ||||||
| Liquidity * | $ | 648,462 |
|
| 684,328 |
|
| (35,866 | |||
| Unencumbered assets | $ | 4,026,170 |
|
| 3,325,319 |
|
| 700,851 |
| ||
| Unencumbered assets to unsecured debt | 2.5x |
| 2.8x |
| (0.3x) | ||||||
| Secured debt as a percent of Total Debt** |
| 13.4 | % |
|
| 21.6 |
|
| (8.2 | ||
| Total Debt** to Total Assets**5 |
| 40.7 | % |
|
| 38.9 |
|
| 1.8 | ||
| Fixed rate debt as a percent of Total Debt** |
| 96.2 | % |
|
| 97.4 |
|
| (1.2 | ||
| Weighted average term to debt maturity - Total Debt** (in years) |
| 4.2 |
|
|
| 3.4 |
|
|
| 0.8 |
|
| Weighted average interest rate of Total Debt** |
| 5.20 | % |
|
| 5.21 |
|
| (0.01 | ||
| ** Denotes a non-GAAP measure. See “Non-GAAP Measures”. See also Section 1, “Basis of Presentation” – “Use of Non-GAAP Measures” and Section 12, “Non-GAAP Measures” in the MD&A. | |||||||||||
| * Supplementary financial measure. See “Use of Operating Metrics”. See also Section 1, “Basis of Presentation” - “Use of Operating Metrics” in the MD&A. | |||||||||||
| 1 For the rolling twelve-months ended February 28, 2025 and February 29, 2024, respectively. | |||||||||||
| 2 Properties owned throughout the entire 15 months ended March 31, 2025, excluding properties under development or major redevelopment, are referred to as “Same Properties”. | |||||||||||
| 3 Prior period amounts not restated for current period property categories. | |||||||||||
| 4 Units outstanding and weighted average units outstanding assumes the exchange of Exchangeable Preferred LP Units for Trust Units. See Section 10.6, “Unit Equity and Distributions” in the MD&A. | |||||||||||
| 5 Calculated on the basis described in the trust indenture and supplemental indentures that govern the Trust's senior unsecured debentures (collectively, the “Trust Indentures”). See Section 10.4, “Capital Structure” in the MD&A. | |||||||||||
| 6 For the rolling four-quarters ended March 31, 2025 and 2024, respectively. | |||||||||||
Operating Results
The below table compares the composition of FFO** and AFFO** and calculates the drivers of the changes for the three months ended March 31, 2025 as compared to the same period in 2024.
| For the three months ended March 31,
(in '000s of Canadian dollars except per unit amounts) (unaudited) | 2025 |
| 2024 |
| Change | ||||||||||||||||||
| Contribution |
| per unit1 |
| Contribution |
| per unit1 |
| Contribution |
| per unit1 | |||||||||||||
| NOI** from: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Same Properties2 | $ | 63,985 |
|
| $ | 0.534 |
|
| 58,179 |
|
| 0.544 |
|
| 5,806 |
|
| 0.054 |
| ||||
| Acquisitions |
| 14,000 |
|
|
| 0.117 |
|
|
| — |
|
|
| — |
|
|
| 14,000 |
|
|
| 0.131 |
|
| Dispositions |
| 2,332 |
|
|
| 0.019 |
|
|
| 5,060 |
|
|
| 0.047 |
|
|
| (2,728 |
|
| (0.026 | ||
| Property under redevelopment |
| 1,818 |
|
|
| 0.015 |
|
|
| 1,513 |
|
|
| 0.014 |
|
|
| 305 |
|
|
| 0.003 |
|
| Interest and other income |
| 2,325 |
|
|
| 0.019 |
|
|
| 2,317 |
|
|
| 0.022 |
|
|
| 8 |
|
|
| — |
|
| Net interest and other financing charges (excluding distributions on Exchangeable Preferred LP Units) |
| (25,455 | ) |
|
| (0.212 | ) |
|
| (19,230 |
|
| (0.180 |
|
| (6,225 |
|
| (0.058 | ||||
| General and administrative expenses (net of internal costs for leasing activity) |
| (6,084 | ) |
|
| (0.051 | ) |
|
| (6,060 |
|
| (0.056 |
|
| (24 |
|
| — |
| |||
| Amortization |
| (220 | ) |
|
| (0.002 | ) |
|
| (301 |
|
| (0.003 |
|
| 81 |
|
|
| 0.001 |
| ||
| Impact from variance of units outstanding |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.054 | |
| FFO** and FFO** per unit - average diluted | $ | 52,701 |
|
| $ | 0.439 |
|
| 41,478 |
|
| 0.388 |
|
| 11,223 |
|
| 0.051 |
| ||||
| FFO** per unit growth |
|
|
| 13.3 | % |
|
|
|
|
|
|
|
| ||||||||||
| FFO* | $ | 52,701 |
|
| $ | 0.439 |
|
| 41,478 |
|
| 0.388 |
|
| 11,223 |
|
| 0.105 |
| ||||
| Internal expenses for leases |
| (2,448 | ) |
|
| (0.020 | ) |
|
| (2,174 |
|
| (0.020 |
|
| (274 |
|
| (0.003 | ||||
| Straight-line rent |
| (1,368 | ) |
|
| (0.011 | ) |
|
| (1,839 |
|
| (0.017 |
|
| 471 |
|
|
| 0.004 |
| ||
| Recoverable and non-recoverable costs |
| (1,350 | ) |
|
| (0.012 | ) |
|
| (3,269 |
|
| (0.031 |
|
| 1,919 |
|
|
| 0.018 |
| ||
| Tenant allowances and leasing costs |
| (6,017 | ) |
|
| (0.050 | ) |
|
| (4,053 |
|
| (0.038 |
|
| (1,964 |
|
| (0.018 | ||||
| Impact from variance of units outstanding |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.042 | |
| AFFO** and AFFO** per unit - average diluted | $ | 41,518 |
|
| $ | 0.346 |
|
| 30,143 |
|
| 0.282 |
|
| 11,375 |
|
| 0.064 |
| ||||
| AFFO** per unit growth |
|
|
| 22.8 | % |
|
|
|
|
|
|
|
| ||||||||||
| ** Denotes a non-GAAP measure. See “Non-GAAP Measures”. See also Section 1, “Basis of Presentation” – “Use of Non-GAAP Measures” and Section 12, “Non-GAAP Measures” of the MD&A. | |||||||||||||||||||||||
| 1 Per weighted average diluted unit. Weighted average units outstanding assumes the exchange of Exchangeable Preferred LP Units for Trust Units. See Section 10.6, “Unit Equity and Distributions” of the MD&A. | |||||||||||||||||||||||
| 2 Properties owned throughout the entire 15 months ended March 31, 2025, excluding properties under development or major redevelopment, are referred to as “Same Properties”. Per unit calculations separate the impact of change in contribution from the change in the weighted average diluted units outstanding. | |||||||||||||||||||||||
FFO** for the three months ended March 31, 2025 was $0.051 per unit, or 13.3%, higher than the same period of the prior year. The increase was driven by growth in NOI** from Same Properties of $0.054 per unit and NOI** attributable to Acquisitions of $0.131 per unit. NOI** for the three months ended March 31, 2025 included a $2.5 million contribution from the recovery of property taxes from prior years (2024 - nil). Excluding this amount, FFO** per unit would have been $0.412, 6.2% higher than the same period of the prior year.
Same Properties Cash NOI** for the three month ended March 31, 2025 was $5.4 million, or 9.4%, higher than the same period of the prior year. Same Properties shopping centres Cash NOI** increased $5.4 million, or 10.2%, over the same period of the prior year. The increase in Same Properties shopping centres' Cash NOI** was primarily driven by higher revenues from base rent and net operating cost recoveries, partially offset by declines in percentage rent in lieu of base rent.
Excluding the recovery of property taxes from prior years and the change in bad debt expense, the Same Properties shopping centres Cash NOI** growth would have been 6.0%.
Redevelopment projects contributed $0.7 million of incremental rent to the portfolio during the quarter (see Section 7.4, “Redevelopment and Development” of the MD&A).
Occupancy and Leasing Results
Primaris’ leasing activities are focused on driving value by actively managing the tenant and merchandising mix at its investment properties. In-place occupancy increased 1.2% from March 31, 2024 to 93.2% at March 31, 2025. Fourth quarter occupancy is typically higher due to seasonal tenants.
| As at | 2025 Count |
| In-place Occupancy |
|
| |||
|
| March 31, 2025 | December 31, 2024 | March 31, 2024 | |||||
| Shopping centres1 | 22 |
| 93.6 | % | 94.3 | 91.1 | ||
| Other properties2 | 10 |
| 93.5 | % | 91.1 | 96.0 | ||
| Same Properties in-place occupancy3 | 32 |
| 93.5 | % | 93.9 | 91.7 | ||
| Acquisitions4 | 3 |
| 91.4 | % | 99.0 | — |
| |
| Property under redevelopment5 | 1 |
| 96.5 | % | 96.5 | 94.9 | ||
| In-place occupancy excluding dispositions | 36 |
| 93.2 | % | 94.4 | 91.8 | ||
| Dispositions6 |
|
| — | 95.9 | 93.9 | |||
| In-place occupancy |
|
| 93.2 | % | 94.5 | 92.0 | ||
| Same Properties average in-place occupancy |
|
|
|
| ||||
| Three months ended | 32 |
| 93.4 | % | 93.3 | 91.9 | ||
| 1 Shopping centres classified as Same Properties include 21 enclosed malls and 1 open air centre, Highstreet Shopping Centre in Abbotsford, BC. Für dich aus unserer Redaktion zusammengestelltHinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Weitere Artikel des AutorsThemen im Trend | ||||||||
