Primaris Real Estate Investment Trust (($TSE:PMZ.UN)) has held its Q4 earnings call. Read on for the main highlights of the call.
Primaris REIT recently held its earnings call, showcasing a positive outlook with significant growth in key financial metrics and strategic acquisitions. Despite challenges such as Comark’s creditor protection and high interest rates, the company remains optimistic about its future performance.
Strong Growth in FFO and Occupancy
In the past year, Primaris REIT has seen a notable 6.5% increase in Funds From Operations (FFO) per unit, with committed occupancy nearing an impressive 96%. Furthermore, the company has successfully enhanced its recovery ratios, illustrating a strong operational performance.
Significant Acquisitions
Primaris has strategically acquired Oshawa Centre and a 50% interest in Southgate Centre, which has bolstered their portfolio. These acquisitions have resulted in an increase in same-store sales productivity to $749 per square foot, highlighting the positive impact on their financial performance.
Robust Leasing Activity
The company has engaged in vigorous leasing activities, completing 87 lease renewals with a spread of 5.3% and securing 31 new deals within the quarter. These efforts have contributed to an uplift in Net Operating Income (NOI) through the conversion of leases with preferred rental terms.
Financial Stability and Growth
Primaris REIT reported an FFO per unit of $0.46 for the quarter, marking a 14.5% increase from the previous year. The balance sheet remains robust with unencumbered assets totaling $3.6 billion, underscoring the company’s financial stability and growth potential.
ESG Progress
In its commitment to environmental sustainability, Primaris has set ambitious ESG targets, including a 25% reduction in greenhouse gas emissions by 2035. The company has already achieved a 5% reduction in emissions in 2024, demonstrating progress towards these goals.
Comark Creditor Protection
The filing for creditor protection by Comark has impacted 36 stores within the Primaris portfolio, potentially affecting rental income. Despite this challenge, Primaris is actively managing the situation to mitigate negative impacts.
Interest Rate and Debt Concerns
Primaris continues to navigate higher financing costs, with an average net debt to adjusted EBITDA of 5.8x and interest rates on total debt at 5.37%. These figures highlight the company’s ongoing efforts to manage its debt levels amidst a challenging interest rate environment.
Guidance for 2025
Looking ahead to 2025, Primaris REIT anticipates a same property cash net operating income (NOI) growth of 3% to 4%. The expected FFO per unit diluted is projected between $1.70 and $1.75, considering the impact of recent acquisitions and planned dispositions. The company maintains a strong financial position with $3.6 billion in unencumbered assets and substantial liquidity, providing flexibility for further growth through acquisitions and capital allocations.
In conclusion, Primaris REIT’s earnings call reflected a positive sentiment, driven by strong growth in financial metrics, strategic acquisitions, and robust leasing activity. While challenges such as Comark’s creditor protection and rising interest rates persist, the company’s forward-looking guidance and commitment to ESG goals demonstrate confidence in its continued growth trajectory.