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Primaris REIT Provides HBC Exposure Update

Primaris REIT Provides HBC Exposure Update

Yahoo10-03-2025

TORONTO, March 10, 2025--(BUSINESS WIRE)--Primaris Real Estate Investment Trust ("Primaris" or the "Trust") (TSX: PMZ.UN) announces today its exposure to the Hudson's Bay Company ULC, the retailer Hudson's Bay and TheBay.com ("HBC"), in response to HBC's March 7, 2025, press release stating that it has commenced proceedings under the Companies' Creditors Arrangement Act.
Primaris has been preparing for this announcement for an extended period of time.
HBC Exposure
As at March 10, 2025, Primaris REIT's exposure to HBC is as follows:
10 HBC locations totaling 1,124,000 square feet of gross leasable area ("GLA");
12th largest tenant by annualized minimum rent;
Approximately $11.6 million total gross rental revenue, per annum;
$10.33 weighted average gross rent per occupied square foot;
Approximately $4.6 million net rental revenue per annum, or 1.4% of total annualized minimum rent;
$4.14 weighted average net rent per occupied square foot;
February rent was received for all locations excluding two centres; and
In addition to the 10 HBC locations in Primaris' portfolio, there is a shadow-anchor HBC located at Devonshire Mall in Windsor, Ontario which is owned by an unrelated HBC joint venture.
"Primaris REIT has been preparing for this day for a very, very long time, in fact years. We have learned so much over the past 10+ years with the departure of Zellers, Target, Sears, and now potentially HBC," said Patrick Sullivan, President and Chief Operating Officer. "Although there could be an impact to our financial and operating metrics in the short term, Primaris has detailed plans for all 10 locations, and is ready to take action if and when any locations are disclaimed."
The below table lists Primaris' properties with HBC tenancies.
As at March 10, 2025
(in '000s square feet, unless otherwise indicated)
(unaudited)
Property Ownership at Share
Property GLA
at Share
HBC GLA
at Share
Cataraqui Town Centre
945 Gardiners Rd, Kingston, ON
50 %
286.2
56.5
Conestoga Mall
550 King St N,
Waterloo, ON
100 %
666.1
130.6
Les Galeries de la Capitale
5401 Bd des Galeries, Québec, QC
100 %
987.5
163.3
Medicine Hat Mall
3292 Dunmore Road SE,
Medicine Hat, AB
100 %
467.5
93.2
Orchard Park Shopping Centre
2271 Harvey Avenue, Kelowna, BC
100 %
651.1
127.3
Oshawa Centre
419 King St W,
Oshawa, ON
100 %
1,215.2
122.6
Place d'Orleans Shopping Centre
110 Place d'Orleans Drive, Orleans, ON
50 %
350.1
57.8
Southgate Centre
5015 111 St NW, Edmonton, AB
50 %
425.4
118.3
St Albert Centre
375 St. Albert Trail,
St. Albert, AB
100 %
352.8
93.3
Sunridge Mall
2525 36th Street NE, Calgary, AB
100 %
803.7
161.3
10 locations
6,205.6
1,124.2
The below table illustrates the weighted average net rent and occupied GLA for Commercial Retail Unit ("CRU") and large format tenants for Primaris' portfolio at December 31, 2024. HBC's weighted average net rent per occupied square foot for the 10 locations is $4.14.
As at December 31, 2024
(per occupied square foot unless otherwise indicated) (unaudited)
Weighted Average
Net Rent1
Occupied GLA
('000s of square feet)
GLA Proportions
CRU tenants
$
43.26
5,204
42
%
Large format tenants
$
14.37
7,363
59
%
$
25.28
12,567
100
%
1 Supplementary financial measure, see Section 1, "Basis of Presentation" - "Use of Operating Metrics" of the December 31, 2024 Management's Discussion and Analysis.
The Primaris portfolio includes over 2,700 stores, of which there are approximately 35 co-tenancy clauses that name HBC. Co-tenancy clauses are provisions commonly found in commercial real estate leases that stipulate certain conditions under which a tenant's rent or other obligations may be reduced or modified. These clauses typically come into effect when specific anchor tenants, such as HBC, or a certain percentage of tenants within a shopping centre or retail complex cease operations or vacate their premises. These clauses may not be triggered simply by HBC closing. The purpose of a co-tenancy clauses is to protect tenants from potential loss of business and foot traffic due to the absence of prominent anchor tenants. Over the past number of decades, reference to anchor requirements and named tenants have been removed from tenants' leases due to the changing enclosed mall merchandise mix and the reliance on anchor tenants for foot traffic.
About Primaris Real Estate Investment Trust
Primaris is Canada's only enclosed shopping centre focused REIT, with ownership interests primarily in leading enclosed shopping centres located in growing Canadian markets. The portfolio totals 15.0 million square feet, valued at approximately $4.6 billion at Primaris' share. Economies of scale are achieved through its fully internal, vertically integrated, full-service national management platform. 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.
Forward-Looking Statements
Certain statements included in this news release constitute ''forward-looking information'' or "forward-looking statements" within the meaning of applicable securities laws. The words "will", "expects", "plans", "estimates", "intends" and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specific forward-looking statements made or implied in this news release include but are not limited to statements regarding: Primaris' future results, performance, prospects and opportunities, including with respect to the impact of the closure of any Hudson Bay Company locations in the portfolio, the Trust's strategy and plans and the Trust's portfolio quality. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements are not guarantees of future performance and are based on estimates and assumptions that are inherently subject to risks and uncertainties. Primaris cautions that although it is believed that the assumptions are reasonable in the circumstances, actual results, performance or achievements of Primaris may differ materially from the expectations set out in the forward-looking statements. Material risk factors and assumptions include those set out in the Trust's management's discussion and analysis for the three months and years ended December 31, 2024 and 2023 ("MD&A") which is available on SEDAR+, and in Primaris' other materials filed with the Canadian securities regulatory authorities from time to time. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, Primaris undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.
Non-GAAP Measures
The Trust's financial statements are prepared in accordance with IFRS accounting standards as issued by the IASB, however, in this news release, Primaris also uses a number of measures which do not have a standardized meaning prescribed under generally accepted accounting principles ("GAAP") in accordance with IFRS. These non-GAAP measures, which are denoted in this news release by the suffix "**" include non-GAAP financial measures and non-GAAP ratios, each as defined in National Instrument 52-112, Non-GAAP and Other Financial Measures Disclosure ("NI 52-112"). None of these non-GAAP measures should be construed as an alternative to financial measures calculated in accordance with GAAP. Furthermore, these non-GAAP measures may not be comparable to similar measures presented by other real estate entities and should not be construed as an alternative to financial measures determined in accordance with IFRS. Additional information regarding these non-GAAP measures, including definitions, an explanation of management's reasons as to why it believe the measure is useful to investor can be found in the section entitled :Non-GAAP Measures" in the MD&A. Reconciliations to the most directly comparable GAAP figure, where applicable, can be found in the Trust's MD&A, which is available on the Trust's profile on SEDAR+ at www.sedarplus.ca.
Use of Operating Metrics
Primaris uses certain operating metrics to monitor and measure the operational performance of its portfolio. Operating metrics in this news release include, amount others, in-place occupancy, weighted average gross rent per occupied square foot and weighted average net rent per occupied square foot. These operating metrics, which may constitute supplementary financial measures as defined in NI 52-112, are not derived from directly comparable measures contained in the Trust's financial statements but may be used by management and disclosed on a periodic basis to depict the historical or future expected operating performance of the Trust' portfolio. Weighted average gross rent per occupied square foot is defined as total annual gross rent divided by occupied GLA.
Primaris also uses certain nonfinancial operating metrics to describe its portfolio and portfolio operation performance. Non-financial operation metrics in this news release include, among others, gross leasable area ("GLA") and weighted average lease term. For greater certainty, the portfolio operating metrics in this news release include only the Trust's proportionate ownership of the 8 properties held in co-ownerships.
For more information: TSX: PMZ.UN www.primarisreit.com www.sedarplus.ca
View source version on businesswire.com: https://www.businesswire.com/news/home/20250310598460/en/
Contacts
Alex AveryChief Executive Officer416-642-7837aavery@primarisreit.com
Rags DavloorChief Financial Officer416-645-3716rdavloor@primarisreit.com
Claire MahaneyVP, Investor Relations & ESG647-949-3093cmahaney@primarisreit.com
Timothy PireChair of the Boardchair@primarisreit.com

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97,454,306Lease liabilities 1,545,432 1,201,604Contingent consideration 5,005,457 4,927,193 127,379,939 134,087,188 Non-current liabilities:Deferred income taxes 4,031,858 4,110,030Lease liabilities 10,391,849 9,977,941 14,423,707 14,087,971 141,803,646 148,175,159 Shareholders' equity:Share capital: 367,125,848 367,487,956Additional paid-in capital 45,380,347 48,263,266Accumulated other comprehensive loss (4,696,131) (7,456,599)Deficit (324,031,068) (323,548,911)83,778,996 84,745,712 Related party transactions Investment in associate Total liabilities and shareholders' equity $ 225,582,642 $ 232,920,871 D2L Consolidated Interim Statements of Comprehensive Income (Loss)(In U.S. dollars) For the three months ended April 30, 2025 and 2024(Unaudited)2025 2024Revenue:Subscription and support $ 47,735,572 $ 42,953,475Professional services and other 5,099,599 5,541,417 52,835,171 48,494,892 Cost of revenue:Subscription and support 11,840,420 11,946,610Professional services and other 3,964,545 3,870,868 15,804,965 15,817,478 Gross profit 37,030,206 32,677,414 Expenses:Sales and marketing 13,668,739 12,904,939Research and development 11,459,714 12,290,771General and administrative 8,386,362 8,099,431 33,514,815 33,295,141 Income (loss) from operations 3,515,391 (617,727) Interest and other income (expenses):Interest expense (220,129) (160,660)Interest income 717,052 1,084,045Other income 315,059 59,476Foreign exchange gain 1,536,516 230,781 2,348,498 1,213,642 Income before income taxes 5,863,889 595,915 Income taxes expense (recovery):Current 571,177 50,745Deferred 2,024,408 (27,096) 2,595,585 23,649 Income for the period 3,268,304 572,266 Other comprehensive gain (loss):Foreign currency translation gain (loss) 2,760,468 (795,690) Comprehensive income (loss) $ 6,028,772 $ (223,424) Earnings per share – basic $ 0.06 $ 0.01 Earnings per share – diluted 0.06 0.01Weighted average number of common shares – basic 54,689,330 54,015,602 Weighted average number of common shares – diluted 56,137,363 55,723,344D2L Consolidated Interim Statements of Changes in Shareholders' Equity(In U.S. dollars) For the three months ended April 30, 2025 and 2024(Unaudited)Share Capital Additional paid-in capital Accumulated other comprehensive loss Deficit TotalShares AmountBalance, January 31, 2025 54,653,174 $ 367,487,956 $ 48,263,266 $ (7,456,599) $ (323,548,911) $ 84,745,712 Issuance of Subordinate Voting Shares on exercise of options 13,734 120,279 (88,253) — — 32,026 Issuance of Subordinate Voting Shares on settlement of restricted share units 370,200 1,328,952 (5,292,603) — — (3,963,651) Stock-based compensation — — 3,213,041 — — 3,213,041 Reduction in excess tax benefit on stock-based compensation — — (715,104) — — (715,104) Repurchase of share capital for cancellation under NCIB (168,800) (1,811,339) — — — (1,811,339) Share repurchase commitment under the ASPP — — — — (3,750,461) (3,750,461) Other comprehensive income — — — 2,760,468 — 2,760,468 Income for the period — — — — 3,268,304 3,268,304 Balance, April 30, 2025 54,868,308 $ 367,125,848 $ 45,380,347 $ (4,696,131) $ (324,031,068) $ 83,778,996 Balance, January 31, 2024 53,978,085 $ 364,830,884 $ 47,485,107 $ (4,998,317) $ (350,437,401) $ 56,880,273 Issuance of Subordinate Voting Shares on exercise of options 206,299 1,739,261 (900,761) — — 838,500 Issuance of Subordinate Voting Shares on settlement of restricted share units 194,483 965,967 (2,587,799) — — (1,621,832) Stock-based compensation — — 2,332,754 — — 2,332,754 Repurchase of share capital for cancellation under NCIB (131,380) (1,021,919) — — — (1,021,919) Share repurchase commitment under the ASPP — — — — 284,181 284,181 Other comprehensive loss — — — (795,690) — (795,690) Income for the period — — — — 572,266 572,266 Balance, April 30, 2024 54,247,487 $ 366,514,193 $ 46,329,301 $ (5,794,007) $ (349,580,954) $ 57,468,533 D2L Consolidated Interim Statements of Cash Flows(In U.S. dollars) For the three months ended April 30, 2025 and 2024(Unaudited)2025 2024 Operating activities:Income for the period $ 3,268,304 $ 572,266Items not involving cash: Depreciation of property and equipment 392,558 436,493 Depreciation of right-of-use assets 347,334 286,692 Amortization of intangible assets 557,631 27,967 Gain on disposal of property and equipment (16,825) (45,803) Stock-based compensation 3,213,041 2,332,754 Net interest income (496,923) (923,385) Income tax expense 2,595,585 23,649 Fair value gain on loan receivable from associate (172,270) —Changes in operating assets and liabilities: Trade and other receivables 3,684,970 (2,528,272) Uninvoiced revenue (133,791) 168,438 Prepaid expenses 153,112 2,116,314 Deferred commissions 369,573 (191,409) Accounts payable and accrued liabilities (1,189,037) (6,008,716) Deferred revenue (14,399,467) (12,109,523) Right-of-use assets and lease liabilities — (43,743)Interest received 710,627 1,077,425Interest paid (1,633) (12,633)Income taxes paid (738,303) (4,239)Cash flows used in operating activities (1,855,514) (14,825,725) Financing activities:Payment of lease liabilities (487,522) (405,727)Proceeds from exercise of stock options 32,026 838,500Taxes paid on settlement of restricted share units (3,963,651) (1,621,832)Repurchase of share capital for cancellation under NCIB (1,811,339) (1,021,919)Cash flows used in financing activities (6,230,486) (2,210,978) Investing activities:Purchase of property and equipment (1,737) (171,869)Proceeds from disposal of property and equipment 16,825 45,803Cash flows from (used in) investing activities 15,088 (126,066) Effect of exchange rate changes on cash and cash equivalents 1,413,232 (929,583) Decrease in cash and cash equivalents (6,657,680) (18,092,352) Cash and cash equivalents, beginning of period 99,184,514 116,943,499 Cash and cash equivalents, end of period $ 92,526,834 $ 98,851,147 Non-IFRS Financial Measures and Reconciliation of Non-IFRS Financial Measures The information presented within this press release refers to certain non-IFRS financial measures (including non-IFRS ratios) including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit, Adjusted Gross Margin, Free Cash Flow, Free Cash Flow Margin, and Constant Currency Revenue. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. Non-IFRS financial measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS and are unlikely to be comparable to similar measures presented by other issuers. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations, financial performance and liquidity from management's perspective and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS measures. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of the Company. The Company's management also uses non-IFRS financial measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to assess our ability to meet our capital expenditures and working capital requirements. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA is defined as income (loss), excluding interest, taxes, depreciation and amortization (or EBITDA), adjusted for stock-based compensation, foreign exchange gains and losses, non-recurring expenses, transaction-related costs, fair value adjustment of acquired deferred revenue, income (loss) from equity accounted investee, change in fair value on the loan receivable from associate, impairment charges and other income and losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA expressed as a percentage of total revenue. For an explanation of management's use of Adjusted EBITDA and Adjusted EBITDA Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted EBITDA and Adjusted EBITDA Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Adjusted EBITDA to income for the period, and discloses Adjusted EBITDA Margin, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30 2025 2024Income for the period 3,268 572Stock-based compensation 3,213 2,333Foreign exchange gain (1,537) (231)Non-recurring expenses(1) 471 821Transaction-related costs(2) 440 672Fair value adjustment of acquired deferred revenue(3) 225 —Change in fair value of loan receivable from associate(4) (172) —Net interest income (497) (923)Income tax expense 2,596 24Depreciation and amortization 1,298 751Adjusted EBITDA 9,305 4,019Adjusted EBITDA Margin 17.6 % 8.3 %Notes: (1) These expenses relate to non-recurring activities, such as certain legal fees incurred that are not indicative of continuing operations, and changes of workforce or technology whereby certain functions were realigned to optimize operations. (2) These expenses include post-combination compensation costs from the acquisition of H5P, and was partially offset by a gain recognized from the reduction in the second anniversary payment owed to the selling shareholders of Connected Shopping Ltd ("Connected Shopping"), a company acquired in Fiscal 2024, which was recorded through Other income. In the prior fiscal year, these expenses included post-combination compensation, legal, professional and other fees related to the acquisition activities of H5P, Connected Shopping, and the divestiture of our majority ownership stake in SkillsWave. These expenses would not have been incurred if not for these transactions and are not considered to be indicative of expenses associated with the Company's continuing operations. (3) At the date of acquisition, the Company recognized a fair value adjustment on the opening deferred revenue balance acquired as part of the H5P acquisition as required under IFRS 3, Business Combinations. This adjustment is not reflective of ordinary operations and is expected to be substantially completed by the end of Fiscal 2026. (4) On a quarterly basis, the Company determines the fair value of the loan advanced to SkillsWave. The adjustments to the fair value of the loan are not reflective of the Company's main business operations and will not impact the Company's future results beyond the maturity date of the loan on June 28, 2029. Adjusted Gross Profit and Adjusted Gross Margin Adjusted Gross Profit is defined as gross profit excluding related stock-based compensation expenses and amortization from acquired intangible assets, specifically acquired technology. Adjusted Gross Margin is calculated as Adjusted Gross Profit expressed as a percentage of total revenue. For an explanation of management's use of Adjusted Gross Profit and Adjusted Gross Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Adjusted Gross Profit and Adjusted Gross Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Adjusted Gross Profit to gross profit, and discloses Adjusted Gross Margin, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30 2025 2024 Gross profit for the period 37,030 32,677 Stock-based compensation 206 146 Amortization from acquired intangible assets 431 16 Adjusted Gross Profit 37,667 32,839 Adjusted Gross Margin 71.3 % 67.7 % Free Cash Flow and Free Cash Flow MarginFree Cash Flow is defined as cash flows from (used in) operating activities less net additions to property and equipment. Free Cash Flow Margin is calculated as Free Cash Flow expressed as a percentage of total revenue. For an explanation of management's use of Free Cash Flow and Free Cash Flow Margin see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Free Cash Flow and Free Cash Flow Margin" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles Free Cash Flow to cash flow used in operating activities, and discloses Free Cash Flow Margin, for the periods indicated: (in thousands of U.S. dollars, except for percentages) Three months ended April 30 2025 2024 Cash flow used in operating activities (1,856) (14,826) Net disposal (additions) to property and equipment 15 (126) Free Cash Flow (1,841) (14,952) Free Cash Flow Margin -3.5 % -30.8 % Constant Currency Revenue Constant Currency Revenue is defined as our total revenue with foreign-currency-denominated revenues translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional currency. For an explanation of management's use of Constant Currency Revenue see "Non-IFRS and Other Financial Measures – Non-IFRS Financial Measures and Non-IFRS Financial Ratios – Constant Currency Revenue" section in the Company's Interim MD&A, which section is incorporated by reference herein. The following table reconciles our Constant Currency Revenue to revenue, for the periods indicated: (in thousands of U.S. dollars) Three months ended April 30 2025 2024 Total revenue for the period 52,835 48,495 Negative impact of foreign exchange rate changes over the prior period 773 — Constant Currency Revenue 53,608 48,495 Key Performance IndicatorsManagement uses a number of metrics, including the key performance indicators identified below, to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other issuers. These metrics are estimated operating metrics and not projections, nor actual financial results, and are not indicative of current or future performance. Annual Recurring Revenue and Constant Currency Annual Recurring Revenue: We define Annual Recurring Revenue ("ARR") as the annualized equivalent value of subscription revenue from all existing customer contracts as at the date being measured, exclusive of the implementation period. Our calculation of ARR assumes that customers will renew their contractual commitments as those commitments come up for renewal. We believe ARR provides a reasonable, real-time measure of performance in a subscription-based environment and provides us with visibility for potential growth in our cash flows. We believe that increasing ARR reflects the continued strength of our business and the successful execution of our strategy. Increasing ARR will continue to be our focus on a go-forward basis. We define Constant Currency Annual Recurring Revenue as foreign-currency-denominated ARR translated at the historical exchange rates from the comparable prior period into our U.S. dollar functional at April 30 (in millions of U.S. dollars, except percentages) 2025 2024 Change $ $ % ARR 206.2 190.3 8.4 % Constant Currency Annual Recurring Revenue 206.8 190.3 8.7 % SOURCE D2L Inc. View original content to download multimedia: Sign in to access your portfolio

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