Primaris Real Estate Investment Trust · TSX:PMZ.UN
Primaris Real Estate Investment Trust — Q4 2024 Earnings Presentation
51 slides from Primaris Real Estate Investment Trust's earnings presentation, Feb 14, 2025
Slide 1: Report to Unitholders 2024
Report to Unitholders 2024 Becoming the first call.
Slide 2: Caution Regarding Forward-Looking Statements
CAUTION Forward-Looking Statements and Future Orientated Financial Information Disclaimer: Certain statements included in this presentation constitute ‘‘forward-looking information’’ or “forward- looking statements” within the meaning of applicable securities laws. The words “will”, “expects”, “plan
Slide 3: Portfolio at a glance: $4.6B national portfolio
Conestoga Mall, Waterloo, Ontario $4.6B $4.1B BBB (high) Stable 95.6% National Portfolio 1 Unencumbered Assets 1 Investment Grade Rating Committed Occupancy 5.8x 2 15.0MSF $749 1 45% - 50% 1 1 Target FFO Payout Ratio** Average Net Debt** to GLA Same Store Sales Productivity Adjusted EBITDA** 1. Cons
Slide 4: Canadian Enclosed Evolution
Canadian Enclosed Evolution A blank slate to design a best-in-class vehicle to take advantage of the recovery in enclosed shopping centres Expansion Through Euphoria Retail in Transition Pandemic Growth Retailers conclude Over levered, too bricks & mortar anchors much concentration omnichannel strat
Slide 5: Primaris Strategic Advantage. Becoming the first call.
Primaris Strategic Advantage. Differentiated financial model and a mandate for growth Becoming the first call. Built to Grow and Thrive Size and Scale Proper Capitalization 1 • $4.6B national portfolio of leading • Average Net Debt** to Adjusted 2 enclosed shopping centres in growing EBITDA**: 5.8x
Slide 6: The Canadian Consolidation Opportunity
The Canadian Consolidation Opportunity 6
Slide 7: Canadian Consolidation Opportunity
Large opportunity to be the consolidator as institutions contemplate Canadian Consolidation rebalancing, Primaris stands alone as a potential buyer Opportunity Canada’s only enclosed shopping centre REIT $50 billion of Canadian enclosed Primaris stands alone as a shopping centres concentrated to ins
Slide 8: Target: leading shopping centres in growing Canadian markets
Target: leading shopping centres in growing Canadian markets January 31, 2025 January 31, 2025 October 1, 2024 Canada’s only enclosed Target shopping centre REIT Acquisition Criteria Southgate Centre, Edmonton, Alberta Oshawa Centre, Oshawa, Ontario Les Galeries de la Capitale, Quebec City, Quebec M
Slide 9: Acquisition Deal Structure Overview
Acquisitions further demonstrate Primaris as an attractive buyer for Canadian pension fund Acquisition Deal Structure vendors of market leading Canadian shopping centres Overview Southgate (50%) and (in millions of Canadian dollars Oshawa Centres Galeries de la Capitale Halifax Shopping Centre Cones
Slide 10: Primaris' High-Quality Target Assets
Primaris' High-Quality High quality target assets in growing target markets Target Assets Sources: ICSC Canada Mall Property Performance Report, 2023. 10
Slide 11: Southgate Centre
Significant NOI** Growth Potential as Primaris’ full-service Southgate management platform integrates and operates the property. Opportunities to increase operating income include: • The conversion of tenants on preferred rent deals to Centre standard market leases; • Lease up of approximately 56,00
Slide 12: Oshawa Centre
Significant NOI** Growth Potential as Primaris’ full-service Oshawa management platform integrates and operates the property. Opportunities to increase operating income include: • The conversion of tenants on preferred rent deals to Centre standard market leases; • Lease up of approximately 98,000 s
Slide 13: Les Galeries de la Capitale
Les Galeries Significant NOI** Growth Potential as Primaris’ full-service management platform integrates and operates the property. Opportunities to increase operating income include: de la Capitale • Conversion of tenants on preferred rent deals to standard market leases and co-tenancy clause resol
Slide 14: Conestoga Mall
Conestoga Significant NOI** Growth Potential as Primaris’ full- service management platform integrates and operates the property. Mall Opportunities to increase operating income at include: • Lease up of vacant or temporary tenanted space to strong tenants at market rents; • Conversion of tenants on
Slide 15: Halifax Shopping Centre
Significant NOI** Growth Potential as Primaris’ full- Halifax service management platform integrates and operates the property. Opportunities to increase operating income include: Shopping • Lease up of vacant or temporary tenanted space to strong tenants at market rents; • Conversion of tenants on
Slide 16: Shopping Centre Overview
Shopping Centre Adding large Leading Regional Shopping Centres to the Primaris Overview Portfolio Total CRU Same Store GLA at Share Property Name Location Sales Volume Sales 1 (SF) Site Coverage SF 6.7M 1 2 (thousands) Productivity (thousands) 1 Southgate Centre Edmonton, AB $300,000 $1,375 423 66%
Slide 17: Declining Supply of Quality Retail Space as Population Grows
Declining Supply of Quality Retail Space as Population Grows Low supply, rising sales, population growth and increasing tenant demand is creating a significant opportunity to drive rents and occupancy, driving NOI growth 1. Source: Environics Analytics Estimates & Projections. 2.7% population growth
Slide 18: Disciplined Capital Allocation
Disciplined Capital Allocation 18
Slide 19: Capital Structure Strategy and Targets
Capital Structure Strategy Designed to provide significant financial flexibility and create a differentiated and Targets investment profile among Canadian REITs Committed to maintaining a conservative financial profile Maintain low leverage Maintain staggered and long dated debt maturity profile to
Slide 20: Highly Differentiated Financial Model
Best-in-class structure built with Highly Differentiated Financial Model flexibility, optionality and liquidity, enabling minimized cost of capital 5.8x $3.6B 2.5x BBB Unsecured Credit 1 Facilities 1% Convertible Preferred LP Units Senior Unsecured Debentures 6% Average Net Unencumbered Unencumbered
Slide 21: NCIB Compounding Capital at a Rapid Pace
NCIB Compounding Capital A financial model built for measured amount of Indefinite Buybacks funded through at a Rapid Pace Free Cash Flow, on a Leverage Neutral Basis Compounding Capital Highly Differentiated Lowest Leverage and Free Cash FCF available for through Unit • Leverage remains neutral FFO
Slide 22: The Primaris REIT Portfolio
The Primaris REIT Portfolio 22
Slide 23: Leading Enclosed Shopping Centre Portfolio
Leading Enclosed Shopping Centre Portfolio Primaris owns and manages regional enclosed shopping centres in growing, Canadian markets NOI** by Asset Class NOI** by Region Professional Centre Alberta British Columbia + Industrial, 2% 29% 13% Open Air Retail, 4% Grocery-Anchored Quebec Plaza, 1% 2% Non
Slide 24: Strong Senior Leadership Team
Strong Senior Leadership Team Experienced Senior Leadership Team with significant real estate investment and operations expertise Alex Avery 22 6 Patrick Sullivan 32 21 Rags Davloor 37 3 Leslie Buist 15 6 Chief Executive President & Chief Chief Financial SVP, Finance Officer Officer Operating Office
Slide 25: Well Positioned for Growth
Well Positioned for Growth Resilience Through Economic Cycles and Poised for Future Growth 95.6% 94.8%94.8%95.3% 93.7%94.2%93.9%94.4% 91.8% 92.1% 92.2% 92.0% 92.5% 92.6% 92.5%92.8% 91.0% 91.5% 91.5%91.2%91.3%90.9%91.0% 90.7% 90.6% Committed 89.1% 89.2% 88.1% Occupancy Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q
Slide 26: Value, Staples and Necessity Type Tenants
Value, Staples and Necessity Creditworthy Top Tenants Create a High Quality Tenants Roster Type Tenants Annualized Store WALT² Credit Ratings Top Tenants¹ Sector Minimum Rent (% of Total) Count (yrs) (S&P/DBRS) Tenant Mix (% of Gross Rent) 1 Value Retail 5.1% 33 3.8 BBB / BBB Apparel, 23% 2 Value Re
Slide 27: Strong Canadian Retail Tenants
Canadian retail REIT tenants largely dominated by grocery, pharmacy and Strong Canadian Retail Tenants value retailers, representative of the Canadian consumer Common Retailer Other Canadian Retail REITs¹ across 5+ REITs Primaris REIT A B C D E F 1 Canadian Tire Canadian Tire Walmart Loblaws Empire/
Slide 28: Current Markets Demonstrate Strong Growth Characteristics
Current Markets Demonstrate With the rising cost of living in Canada's largest cities, high-growth markets, where Strong Growth Characteristics Primaris owns leading malls, are population growth December 2024 Rolling 12 Months Same Stores Sales PSF $1,375 $1,104 $952 $863 $764 $748 $821 $810 $758 $7
Slide 29: Positive Leasing Momentum
Strong large-format Positive Leasing Momentum leasing year-to-date momentum with high-quality tenants GLA Weighted Average Weighted Average3 Weighted Average For the three months ended Count Spread on Renewing December 31, 2024 (000s of SF) Lease term (in years) Net Rent per OSF Rents 3.1% 1 CRU New
Slide 30: Retailer Affordability
Retailer Affordability 30
Slide 31: Retailer Affordability Core Focus
Retailer Affordability Core Focus Efficient cost structure Park Place Mall, Lethbridge, AB • Operate with a lower cost structure 1 • Target GROC ratio of <15% 2 • Actual GROC ratio of 11% • Prudent total operating costs inflation of 3% • Use economies of scale to tender contracts portfolio wide • Ag
Slide 32: Capital Expenditure Programs Enable Prudent Cost Management
Capital Expenditure Programs Properties maintained to a high standard while Enable Prudent Cost Management keeping focus on controlling costs and adherence to our long-term capital plan Prudent 15-Year Capital Plans • All properties have a 15-year capital plan • Allows Primaris to properly manage Co
Slide 33: Unique Lease Structure Captures Growth
Unique Lease Structure Captures Growth Property operating costs are recovered from tenants who absorb the impact of rising inflation Lease Structure Primaris unique lease structure + • Long-term contractual net rents Net Rent provides the opportunity to • Incremental rent escalation grow revenues in
Slide 34: Financial Results
Financial Results 34
Slide 35: Strong Q4/24 Results
Strong performance has underlined our commitment to, and Strong Q4/24 Results confidence in our clear, and focused strategy of acquiring, owning and managing leading, Canadian enclosed shopping centres 1 2025 Guidance $1.70 to $1.75 per unit fully diluted +9.1% Same Driven by strong rental growth an
Slide 36: 2025 Financial Outlook
2025 Financial Outlook Management anticipates the following for the year ended 2025 Metrics Outlook Additional Notes Occupancy Increase of 0.8% to 1.0% Rental Revenue (Rent Steps) $3.4 to $3.8 million Rental Revenue (Straight-line) $6.8 to $7.2 million Same Properties includes 35 properties, exclude
Slide 37: ESG Linked to Business Strategy
ESG Linked to Business Strategy In early 2023, management and the Board approved our ESG Strategic Plan and 3-year CG&N Committee oversees and monitors Primaris’ Implementation Roadmap performance against the ESG Strategy • Strategic Plan and Roadmap based on the ESG Materiality Assessment, aligning
Slide 38: ESG Targets
ESG Targets As part of Primaris’ commitment to ESG initiatives, in 2024 the REIT developed ESG targets informed by the material ESG factors and their link to business performance KPIs Targets Current Measurement Period Actions to Achieve or Maintain Targets * Denotes a core ESG factor. 1. This targe
Slide 39: Primaris Screens Well Against Retail REIT Peers on All Metrics
Primaris Screens Well Against Primaris trades at a discount, despite its focused and clearly defined strategy, Retail REIT Peers on All Metrics with its Differentiated Financial Model and Disciplined Capital Allocation 1. Based on analyst estimates. 2. Primaris reports Average Net Debt** to Adjusted
Slide 40: Investment Proposition
Investment Proposition Implied discount to Net Asset Value** a compelling investment opportunity $21.55 33% Upside Capital Recycling Convert pandemic Occupancy Compounding Increasing Rents to NAV** Opportunities lease concessions Improvements Excess Free Upon Renewal 1 $14.53 to market rents Cash Fl
Slide 41: Appendix
Appendix = |
Slide 42: Case Study: Dufferin Grove Received Final Approval
Properties maintained to a high standard while Case Study: Dufferin Grove keeping focus on controlling costs and adherence to our long-term capital plan Received Final Approval Development Overview • $600 million intensification and redevelopment of Dufferin Mall’s northernmost parking area • Replac
Slide 43: Guided by Skilled Independent Board of Trustees
Tremendous Strategic Resource: Guided by Skilled Independent Experiential Retailing, Institutional Property Brokerage, Investment Management, REIT Board of Trustees Operations, Financial Strategy, Public Company Reporting, Retail Technology Avtar Bains Louis Forbes Deborah Weinswig • President of Pr
Slide 44: The Canadian Advantage
Canadian retail property landscape differs The Canadian Advantage substantially from the United States Canada US The Canadian Advantage Retail Space per Capita 17 sf per person¹ 23 sf per person¹ 35% less space drives higher sales productivity Immigration Record high immigration targets for Limiting
Slide 45: Orchard Park Shopping Centre
** Cash NOI Growth Orchard Park 4.3% 12.1% 11.6% 6.6% 6.6% Shopping 0.5% 2.4% 0.2% (0.9)% Centre (14.6)% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YoY Growth • Largest regional enclosed mall between the Greater Vancouver Area and Calgary $198M 99.8% 651,000 17.4%1 Annual Retail In-place SF T
Slide 46: Park Place Mall
** Cash NOI Growth Park Place 5.2% 5.0% 16.8% 6.6% 3.7% Mall 1.3% 2.2% 2.0% (0.9)% (3.0)% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YoY Growth • Located at the intersection of 1st Avenue South and Scenic Drive in Lethbridge, Alberta $92.5M 76.2% 473,000 15.6%1 • Built in 1988, expanded
Slide 47: Well-Staggered Lease Maturity
Well-Staggered Lease Maturity Balanced lease profile 2,000 $38.97 45 4.2yr Weighted Average Net Rent per occupied sq. ft.² 40 Weighted Average Lease Occupied GLA (in thousands sq. ft.) $33.15 35 $29.26 Term $28.85 $26.90 30 3.4yr $24.90 25 1,000 20 CRU Weighted Average Lease 15 Term 10 5 5.6yr Large
Slide 48: Asset List - Shopping Centres
Asset List - Shopping Centres GLA at Site Site Mortgage AllSales Pop- Store Building Cash1 Stores # Property Name Location Type Share Share Acres at Coverage In-place Mortgage Contractual 2 Same Store ulation Count Certs NOI** 2 Major Tenants (SF) Share at Share Occupancy (thous) Interest Maturity S
Slide 49: Asset List - Shopping Centres Continued
Asset List - Shopping Centres Continued Same GLA at Site Cash1 All Stores Pop- Site Acres Coverage Store Building In-place Mortgage Contractual Mortgage 2 Store # Property Name Location Type Share Share NOI** Sales Major Tenants ulation at Share Count Certs Occupancy (thous) Interest Maturity Sales2
Slide 50: Asset List - Other Property Types
Asset List - Other Property Types Site Cash1 All Stores GLA at Site Acres Store Building In-place Mortgage Contractual Mortgage 2 Same Store # Property Name Location Type Share Share Coverage NOI** Sales 2 Major Tenants (SF) at Share Count Certs Occupancy (thous) Interest Maturity Sales PSF at Share
Slide 51: Invest With Us
Invest With Us TICKER: PMZ.UN S&P/TSX Capped Total Portfolio of REIT Index and BBB (high) Stable Internally Managed Strong Institutional $4.6 Billion, S&P/TSX Investment Grade Exchange: TSX Independent Board Endorsement Providing Scale and Composite Index Credit Rating Trading Liquidity Member Conta
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