Primaris Real Estate Investment Trust (($TSE:PMZ.UN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Primaris Real Estate Investment Trust painted a picture of strong financial and operational performance. The company showcased significant growth in Funds From Operations (FFO), strategic acquisitions, and increased tenant sales. Despite challenges such as the impact of disclaimed HBC leases and potential tenant bankruptcies, the overall sentiment remained positive, buoyed by strategic leasing progress and financial stability.
Strong FFO Growth
Primaris reported an impressive near 6% growth in FFO per unit, underscoring its robust financial performance. This growth is largely attributed to the recovery in the Canadian mall sector, signaling a positive trend for the company’s financial health.
Significant Leasing Progress
The company made substantial strides in leasing, signing agreements for nearly 0.5 million square feet of space. Notably, this includes the entire former Sears premises at Lime Ridge Mall, demonstrating Primaris’s ability to capitalize on available opportunities.
Strategic Acquisitions
Primaris strategically acquired four top-tier malls in 2025, with a total investment of $1.6 billion. This move aims to enhance portfolio quality and achieve above-sector average Net Operating Income (NOI) growth, positioning the company for future success.
Distribution Increase
In a show of financial strength, Primaris announced a 2.3% increase in distributions, marking the fifth consecutive annual increase. This move is expected to pave the way for the company’s inclusion in the Dividend Aristocrats Index.
Positive Sales Growth
Tenant sales within Primaris properties have shown positive growth, with total sales productivity rising to $800 per square foot from $715 per square foot a year earlier. This growth highlights the company’s successful tenant engagement strategies.
Impact of HBC Leases
The disclaimed HBC leases posed a challenge for occupancy and NOI. However, Primaris has made significant progress in leasing these spaces, mitigating potential negative impacts on its financial performance.
Occupancy Challenges
While the portfolio in-place occupancy was down 1.6% from last year, improvements from the previous quarter indicate a positive trajectory. This suggests that Primaris is effectively addressing occupancy challenges.
Potential Toys “R” Us Bankruptcy
Primaris anticipates the potential bankruptcy of Toys “R” Us in the new year, which could impact approximately 104,000 square feet of space. The company is preparing for this eventuality, given the below-average rent of these spaces.
Forward-Looking Guidance
Primaris provided a robust forward-looking guidance, reflecting strong growth and strategic acquisitions. The company expects cash NOI between $352 million and $357 million for 2025, with FFO per unit ranging from $1.78 to $1.82. For 2026, projections include cash NOI of $385 million to $395 million, same-property cash NOI growth of 1% to 3%, and FFO per unit of $1.83 to $1.88. The company’s low leverage position, with an average net debt to adjusted EBITDA ratio of 5.9x, supports its strong financial model and strategic ambitions.
In conclusion, Primaris Real Estate Investment Trust’s earnings call highlighted a positive outlook, driven by strong financial performance and strategic initiatives. Despite facing some challenges, the company’s strategic leasing and acquisition efforts, coupled with robust forward-looking guidance, position it well for future growth and stability.