Primaris REIT Expands Portfolio with $565 Million Mall Purchase
Exciting New Acquisition for Primaris REIT
Primaris Real Estate Investment Trust (TSX: PMZ) has recently made headlines with its announcement of a significant acquisition. The Trust has entered into an agreement to purchase a 100% interest in Promenades St-Bruno, an esteemed shopping destination located in Montreal, Quebec. The acquisition, valued at $565 million, includes both cash and equity components, demonstrating Primaris's commitment to enhancing its portfolio of high-quality retail properties.
Significant Features of the Acquisition
This acquisition is a notable addition to Primaris's portfolio and is expected to be accretive to annualized fully diluted funds from operations (FFO) per unit. Specific benefits include an anticipated increase in average net debt to adjusted EBITDA ratio, which is projected to stay within a target range of 4.0x to 6.0x. Further enhancing the overall value, the pro forma same-store sales productivity is set to rise from $784 per square foot to $791.
Increased Guidance for 2025
The news brings positive updates on guidance metrics for the 2025 fiscal year. Primaris has raised its FFO per unit projections from $1.74 to a range of $1.78 to $1.82. Moreover, same-property cash net operating income (NOI) growth is now estimated between 4.0% to 5.0%, reflecting confidence in the overall market and business strategies.
What Makes Promenades St-Bruno Stand Out?
Promenades St-Bruno is not just any shopping center; it boasts annual sales exceeding $271 million, and impressive sales figures of $917 per square foot. The mall occupies a prime location on 154 acres of land in Quebec's growing market. As a strategic property, its proximity to mass transit enhances its appeal for potential tenants and visitors alike.
Potential for Increased NOI Growth
With the acquisition comes multiple opportunities to enhance net operating income. Primaris plans to leverage its management platform to redevelop the space and lease approximately 130,600 square feet of former anchor space to high-quality tenants, thus improving occupancy rates and rental income.
Transaction Details and Financing Strategy
The total consideration of $565 million is structured to include $320 million in cash and $245 million in equity, further comprising series A trust units at a strategic issue price. Primaris expects to fund this equity component through a unit offering aimed to enhance liquidity and trading volume of the REIT's units.
Investor Relations and Market Impact
For investors, the operational strategies Primaris is implementing through this acquisition and equity offering are poised to strengthen its market position. Enhanced trading liquidity resulting from the unit offering is anticipated to benefit all unitholders of Primaris, making it an attractive investment opportunity moving forward.
Future Outlook and Growth Prospects
Primaris's CEO emphasized the strategic advantage gained from high-quality acquisitions. The company remains focused on enhancing its enclosed shopping center portfolio, with a potential expansion of over $3.3 billion in acquisitions since 2021, indicative of a robust growth strategy. The operational improvements and increased sales generated from Promenades St-Bruno will likely contribute positively to the REIT's overall performance.
About Primaris Real Estate Investment Trust
Primaris is recognized as Canada's sole enclosed shopping center-focused REIT, emphasizing premium retail opportunities in burgeoning markets. The portfolio encompasses 15.6 million square feet valued approximately at $5.4 billion. Through its fully integrated management platform, it continues to strive towards operational excellence and strategic growth.
Frequently Asked Questions
What was the value of the acquisition for Promenades St-Bruno?
The acquisition was valued at $565 million.
How will the acquisition impact FFO for Primaris?
The acquisition is expected to be approximately $0.04 accretive to annualized fully diluted FFO per unit.
What is the anticipated change in cash NOI growth for 2025?
Primaris has raised its cash NOI growth guidance for 2025 to a range of 4.0% to 5.0%.
Who is the vendor for the acquisition?
The vendor for the acquisition is Cadillac Fairview.
How is the acquisition to be financed?
The acquisition will be financed through a combination of cash and equity offerings, with plans for a new unit offering.
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