Primaris Real Estate Investment Trust (PMZ-UN) Investor Day 2024 summary

Strategic direction and portfolio growth

• Focus on acquiring market-dominant, high-productivity malls, targeting over CAD 1 billion in acquisitions and over CAD 500 million in dispositions over the next 18–36 months, with a preference for assets in growing mid-sized Canadian cities.

• Active discussions are underway for 5–6 target malls, using vendor takeback equity and a 50-50 cash/equity split in acquisitions.

• Dispositions will focus on non-core and lower-productivity assets, including some enclosed malls and land parcels, to optimize the portfolio.

• No plans to enter residential development; development sites like Dufferin Grove are expected to be monetized over time.

• Strategy leverages a national platform, economies of scale, and a full-service internal platform to drive operational efficiencies and become the first call for retailers.

Financial guidance and capital structure

• Targeting 3–4% same-property NOI growth and 4–6% FFO growth annually, with a 45%-50% FFO payout ratio and average net debt to adjusted EBITDA at 5.7x.

• Conservative capital structure with debt/EBITDA below 6x, 100% fixed-rate debt, no maturities until 2027, and 82% unsecured debt.

• Retained cash flow of approximately CAD 60 million per year supports redevelopment, debt repayment, and share repurchases.

• G&A as a percentage of revenue is expected to decline as scale increases, with overall G&A remaining flat in absolute terms.

• Guidance assumes no multiple expansion, but management sees significant upside if cap rates compress or the sector's reputation improves.

Operational performance, leasing, and tenant strategy

• Occupancy targets set at 96%, with committed occupancy at 94.4% as of June 2024 and a clear path to 96% through CRU leasing and rent commencements.

• Leasing momentum is strong, with high demand from both Canadian and international retailers; specialty leasing and remerchandising are key drivers.

• Merchandise mix has shifted toward large-format, national, and category-leading tenants, reducing risk and increasing stability.

• Proactive re-merchandising and redevelopment of anchor spaces, such as Sears box transformations, drive higher rents and traffic.

• Expense management and cost control are central, with a focus on keeping CAM costs competitive, improving recovery ratios, and smoothing capital expenditures.