Primaris REIT's Land Optimization and Above-NAV Trading Open New Growth Options
The Canadian mall REIT unlocks $275M-$375M of excess land while trading at a premium to IFRS NAV, giving it more acquisition tools and an embedded $52M NOI runway.
PMZ-UN.TO · Earnings Call · 2026-07-30
Operational Momentum: Record Leasing and HBC Re-tenanting
Primaris REIT continues to deliver on its post-spinout transformation. In the second quarter of 2026, the company reaffirmed its leading position among Canadian enclosed-mall owners. “In June, we announced visibility to approximately $52 million of incremental annual cash NOI from leasing activity expected to commence over the next three years” — Alexander Avery, CEO · 2026-07-30, driven by record CRU leasing, strong renewal spreads, and accelerating re-tenanting of former Hudson's Bay (HBC) boxes. The company has already leased or advanced negotiations on 84% of the former HBC space, with rents nearly four times what HBC paid. “With in-place occupancy currently sitting at 86.6%, we have approximately 1,000 basis points of occupancy gains ahead of us to get us to stabilized occupancy of 96%.” — Alexander Avery, CEO · 2026-07-30 This occupancy runway, combined with bay box re-tenanting and a steady stream of tenant demand, underpins the company's confidence in above-average same-property NOI growth. Pat Sullivan highlighted that “CRU leasing performance is outstanding, driven by record leasing volume” — Patrick Sullivan, Management/Executive · 2026-07-30, with committed occupancy now 91.1% versus in-place 86.6%.
Land Optimization: A New Strategic Lever
A notable new theme on this call is the explicit land optimization strategy, which turns underutilized land into a source of zero-cost capital. Management identified a pipeline of $275M to $375M of excess land to be monetized over time, alongside roughly $200M of non-core retail pads and other assets.
We have identified a potential pipeline of $275 million to $375 million of excess land, which we intend to monetize over time.
This initiative is distinct from prior discussions and signals a more active approach to recycling capital. While the company has always executed dispositions, the scale and strategic framing here are new. The proceeds are expected to fund higher-yielding core investments, further enhancing portfolio quality and cash-flow durability.
Capital Allocation Shift as Units Trade Above NAV
Perhaps the most consequential change is the reversal in the company's relationship to IFRS NAV. Historically trading at a wide discount, Primaris now trades at a premium, which management says gives it more flexibility in transactions. Alex Avery noted in the Q&A that “our stock price moved from 14s last year up to 19 at the time that we terminated the transaction” — Alexander Avery, CEO · 2026-07-30, referring to a terminated portfolio disposition that was replaced by more opportunistic sales. The higher unit price also makes issuing equity at NAV more attractive, and management explicitly mentions having "more tools in the toolbox" for acquisitions. This shift is significant for capital allocation, allowing the company to pursue acquisitions without the steep NAV dilution of the past. Prior to this, the company was forced to use creative structures and accept equity discounts, as acknowledged in earlier calls. From the 2025-05-02 call, Alex reflected on the long view: “We have the benefit of years of advanced planning.” — Alex Avery, CEO · 2025-05-02 The current call underscores that this planning is now paying off in a higher valuation.
Revenue Growth Outlook and Acquisition Pipeline
The combination of leasing momentum, land monetization, and above-NAV trading supports a clear outlook for earnings growth. Management reaffirmed 2026 guidance and suggested that same-property NOI growth could exceed the 3–4% range for several years as the HBC re-tenanting and CRU occupancy gains layer in. The embedded place occupancy growth, plus the $52M incremental NOI, provides a path to substantial FFO expansion. On the acquisition front, Julian noted an uptick in pension fund discussions, and the company remains optimistic about adding one to three malls this year. Pat Sullivan, in a prior call, emphasized the priority on quality tenants: “Our ultimate goal is to get long-term leases with national covenant tenants.” — Patrick Sullivan, President and Chief Operating Officer · 2025-10-30 That discipline continues today, with CRU leasing and St. Bruno redevelopment projects, such as the $50M food hall investment expected to deliver ~10% returns, demonstrating how the company is rotating capital into higher-yielding opportunities. As the portfolio matures, Primaris is positioning itself to be a first-call landlord with improved cash-flow quality and a more flexible balance sheet.