On Wednesday, Primaris REIT from Toronto (TSX: PMZ. UN) revealed deals worth $585 million involving Southgate Centre mall in Alberta and Oshawa Centre mall in Ontario, making it one of the biggest deals so far this year.
Primaris is buying half of Southgate Centre and the entire Oshawa Centre for a total price of $585 million. This includes $335 million in cash, $75 million in series A units priced at $21.82 each, and $175 million in exchangeable preferred units through a newly set-up subsidiary limited partnership.
The deal, advised by CBRE and TD Securities, is planned to wrap up by January 31.
While Primaris didn’t name the seller, both stakes belong to Montreal-based Ivanhoé Cambridge, which still lists these malls on its site. Ivanhoé Cambridge is part of Caisse de dépôt et placement du Québec (CDPQ), the pension fund managing Quebec’s retirement investments. JLL currently manages both properties.
Southgate Centre
This Alberta mall is located at 5015 111 Street NW in Edmonton’s Malmo Plains area.
Sitting on 39 acres with about 66% site coverage, it offers 846,000 sq. ft of retail space. Some tenants include Hudson’s Bay, Winners, Safeway, Uniqlo, Apple, Sephora, and Lululemon.
A look at Southgate Centre at 5015 111 Street NW in Edmonton, Alberta. / JLL
A $93 million renovation was finished in 2022 that revamped 260,000 sq. ft previously used by Sears.
Primaris says Southgate has a steady occupancy rate of 87.5%, an average lease length (WALT) of 5.9 years, and reported sales totaling $300 million over the year ending August 31, 2024.
Oshawa Centre
This Ontario mall sits at 419 King Street West in Oshawa – about a 40-minute drive east from downtown Toronto.
The property covers an even bigger area-79 acres-with around 47% site coverage. It holds about 1.2 million sq. ft of retail space with tenants like Hudson’s Bay, Marshalls, H& M, Uniqlo, Zara, Sport Chek, Aritzia and Sephora. The Regional Municipality of Durham also leases space here.
The mall got a big upgrade finishing back in 2016-a redevelopment costing $230 million expanded about 375,000 sq. ft and added another 260,000 sq. ft.
According to Primaris REIT’s info: Oshawa Centre holds an occupancy rate near long-term average of 73.8%, a WALT around 3.8 years and recorded sales hitting $242 million for the year ending August 31st this year.
Primaris REIT
Primaris calls itself “Canada’s only enclosed shopping centre focused REIT,” mainly dealing with top enclosed malls located mostly in growing mid-sized cities across Canada.
“Economies of scale are achieved through its fully internal , vertically integrated , full-service national management platform,” according to their website. “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.”
The REIT originally started out as Borealis Retail REIT back in 2003 , sponsored by Ontario Municipal Employees Retirement System (OMERS) – whose real estate investments are now handled by Oxford Properties. In 2009 , they brought management inside before being bought by H & R REIT four years later. Then on December 31 , 2021 , H & R spun off Primaris REIT while Healthcare Of Ontario Pension Plan (HOOPP) put six large shopping centres into it for about a quarter stake.
In Wednesday’s announcement , Primaris said its portfolio totals roughly15million sq. ft valued around$4.6 billion based on its share price.
“Since December 31 , 2021 , Primaris has acquired$2.4 billion worth leading enclosed shopping centres from five out Canada’s ten largest pension funds with sellers taking equity plus exchangeable preferred equity investments back into our REIT ,” said CEO Alex Avery.”The transactions announced today improve overall quality within our portfolio driving annual same store sales productivity from$684 per square foot as September 30th last year up to$736 per square foot proforma.”
“Southgate and Oshawa Centres are two key regional enclosed malls matching all property features Primaris targets under growth plans ,” added President & COO Patrick Sullivan.”Both sit within large fast-growing markets served well by mass transit showing strong sales volumes with plenty room for growth via switching tenants from variable rent deals leasing vacant or temporary spaces plus optimizing former department store areas.”
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