Primaris Real Estate Investment Trust has announced robust financial and operational results for the fourth quarter and full year ended December 31, 2024, reinforcing its position as a dominant player in Canada’s retail real estate sector.
“Our shopping centre portfolio performed very well in 2024, with NOI growth coming from strong rental revenue growth, rising occupancy, and falling non-recoverable expenses,” said Patrick Sullivan, President and Chief Operating Officer. “Over the last four months, Primaris has acquired approximately $910 million of dominant enclosed shopping centres, and our team is doing an excellent job integrating these assets into our national, full-service platform. Primaris is very quickly moving towards our ambition of becoming the first call for retailers looking to grow and expand their footprint in Canada.”
Q4 2024 Financial and Operating Highlights
- $143.2 million total rental revenue.
- 9.1% Same Properties Cash Net Operating Income (Cash NOI) growth.
- 9.5% Same Properties shopping centres Cash NOI growth.
- 95.6% committed occupancy, 94.5% in-place occupancy, and 90.4% long-term occupancy.
- 5.3% weighted average spread on renewing rents across 446,000 square feet.
- 14.5% Funds from Operations (FFO) per average diluted unit growth to $0.460.
- 48.9% FFO Payout Ratio.
- $4.3 billion total assets.
- $589.8 million in liquidity and $3.6 billion in unencumbered assets.
- $21.55 Net Asset Value (NAV) per unit.
Annual 2024 Financial and Operating Highlights
- 4.5% Same Properties Cash NOI growth.
- 4.8% weighted average spread on renewing rents across 1,246,000 square feet.
- $705 same-store sales productivity.
- 6.5% FFO per average diluted unit growth to $1.690.
- 52.4% FFO Payout Ratio.
Leasing and Occupancy Performance
In the quarter, Primaris completed 137 leasing deals totaling 0.6 million square feet. The weighted average spread on renewing rents (for the 87 leases renewed in the quarter) was 5.3% (5.8% for commercial retail unit renewals and 2.6% for large format renewals). Included in the leasing activity for the quarter were 19 leases that were for a lease term of less than one year, or for percentage rent in lieu of base rent. While these lease structures have always been a tool to manage tenant relocations and the timing of development plans, during the pandemic, leases structured as percentage rent in lieu of base rent were more prevalent to assist tenants and to maintain occupancy rates. As these leases mature, management anticipates moving tenants back to traditional lease structures. At December 31, 2024, percentage rent in lieu of base rent leases were in place for 0.6 million square feet of GLA, or 3.1% of in-place leases and had a weighted average lease term of approximately 2.7 years.
“Primaris’ low leverage balance sheet, a key pillar to our strategy, is a critical enabler to our acquisition strategy,” said Chief Financial Officer Rags Davloor. “We are well on our way to achieving our three-year target of acquiring over $1 billion in assets, while maintaining industry-leading leverage metrics. With unencumbered assets of $3.6 billion and no unfunded 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 many other groups are finding access to capital, and particularly financing, challenging.”
Strategic Acquisitions and Portfolio Growth
Primaris continued its expansion strategy in 2024 with major acquisitions and divestitures:
- October 1, 2024 – Acquired Les Galeries de la Capitale in Quebec City, Quebec.
- January 31, 2025 – Acquired a 50% co-ownership interest in Southgate Centre in Edmonton, Alberta, and a 100% interest in Oshawa Centre in Oshawa, Ontario for $585.0 million.
- Waived conditions on the disposal of Sherwood Park Mall, Sherwood Park Professional Centre, and a parcel of excess land for $107.0 million, expected to close on February 28, 2025.
- Redevelopment contributions added $2.5 million in incremental rent to the portfolio in 2024.
“We are very pleased with our 2024 results, driven by outperformance in same property NOI growth, and FFO per unit growth,” said Alex Avery, Chief Executive Officer. “With the acquisition of Oshawa Centre and a 50% interest in Southgate Centre, we are increasing our relevance with retailers and building on Primaris’ profile as an attractive buyer of large, high-quality assets. Consistent with prior acquisitions, these additions to our portfolio are designed to deliver higher internal growth, driving NAV per unit growth, FFO per unit growth and ultimately distribution per unit growth. As we look forward to 2025 and beyond, we see a long runway of opportunity embedded within our existing portfolio, and a variety of acquisition opportunities that can enhance our value proposition with retailers, and our total return to unitholders. We are well positioned to capitalize on these opportunities with the right team and platform, and the right financial model for the road ahead.”
Primaris is Canada’s only enclosed shopping centre focused REIT, with ownership interests in leading enclosed shopping centres located in growing Canadian markets. The current portfolio totals 15.0 million square feet valued at approximately $4.6 billion at Primaris’ share. Economies of scale are achieved through its fully internal, vertically integrated, full-service national management platform. Primaris is very well-capitalized and is exceptionally well positioned to take advantage of market opportunities at an extraordinary moment in the evolution of the Canadian retail property landscape.
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