REMI
Primaris to trade three enclosed shopping centres

Primaris to trade three enclosed shopping centres

Thursday, January 23, 2025

Primaris Real Estate Investment Trust (REIT) has pumped up its holdings of Canadian enclosed shopping centres with major acquisitions in Ontario and Alberta. The $585-million deal is expected to close Jan. 31, giving the REIT a 100 per cent interest in Oshawa Centre, a regional mall on the east side of the Greater Toronto Area, and a 50 per cent interest in Southgate Centre, a super-regional mall in Edmonton.

On the disposition side, Primaris also announces the pending sale of the 385,000-square-foot Sherwood Park Mall in suburban Edmonton. The $107-million deal, which is set to close Feb. 13, marks the first time the REIT has sold off an enclosed shopping centre, and accounts for a large share of $183.7 million worth of dispositions over the past 13 months. Other recent transactions include the open-air Edinburgh Market Place, a 113,000-square-foot, grocery-anchored centre in Guelph, Ontario, that sold for $31.5 million in mid-December.

The newly acquired malls will enter the Primaris portfolio at number one and number three in terms of all-store sales volume, and are projected to drive the portfolio’s same-store productivity up to $736 per square foot from $684 per square foot as of Sept. 30, 2024. Both are considered the leading performers in their categories within their respective markets.

“There is significant opportunity for growth at both centres including the conversion of tenants from variable to net rent deals, leasing up vacant space and temporarily tenanted space, and optimizing former department store space,” says Patrick Sullivan, the REIT’s president and chief operating officer.

Southgate Centre is an 846,000-square-foot mall on a 39-acre site in Edmonton’s Malmo Plains neighbourhood. It recorded same-store sales productivity of $1,375 per square foot for the 12 months ending Aug. 31, 2024 and has a long-term in-place occupancy of 87.5 per cent with a weighted average lease term of 5.9 years.

The Oshawa Centre is a 1.2-million-square-foot mall, including a 100,000-square-foot office component, located on a 79-acre site with close proximity to Highways 401 and 407 and linked into the GTA’s GO Transit system. Same-store productivity was pegged at $758 per square foot for the 12-month period ending Aug. 31, 2024. The long-term, in-place occupancy stands at 73.8 per cent, and the weighted average lease term is 3.8 years.

The purchase will take form as $335 million in cash, $75 million in the REIT’s series A units and $175 million in exchangeable preferred units.

“Since December 31, 2021, Primaris has acquired $2.4 billion of leading enclosed shopping centres from five of Canada’s 10 largest pension funds,” says Alex Avery, the REIT’s chief executive officer. “Consistent with prior acquisitions, these properties enhance the REIT’s value proposition with retailers, and offer a significant income growth opportunity consistent with the growth we see ahead for our existing assets.”

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