Primaris REIT (PMZ-UN-T) has sold its 50 per cent managing interest in Kingston's Cataraqui Centre for $41.8 million as part of an ongoing effort to sell off non-core assets.

Primaris announced the disposition this morning along with the closing of its recent $411-million acquisition of Upper Canada Mall.

Details of the Cataraqui Centre buyer were not announced.

The REIT said the disposition "fully aligns with Primaris’ disciplined capital recycling strategy, monetizing a non-core asset and redeploying capital into opportunities that are expected to generate stronger long term value for unitholders."

Primaris has a target of $500 million in dispositions over the next three years, CEO Alex Avery told stakeholders at an Investors Day event held on Oct. 7. The target includes land, out parcels and some non-core malls. 

“The sale improves overall portfolio quality, reduces exposure to assets with more limited growth opportunities, simplifies ownership structures, and provides additional financial flexibility to support strategic growth initiatives and capital allocation priorities,” he said in the announcement.

Cataraqui Centre

Cataraqui Centre - formerly called Cataraqui Town Centre - is a 572,596-square-foot regional mall located at 945 Gardiners Rd., south of Highway 401, midway between Toronto and Montreal.

Primaris owned a 50 per cent management stake, with the other 50 per cent held by Healthcare of Ontario Pension Plan (HOOPP).

Primaris said the mall, which was built in 1982 and renovated in 2022, has 67 per cent occupancy with tenants that include Sport Chek, Sephora and Marshalls. There is a 113,000-sq.-ft. former Hudson's Bay Company anchor space still vacant.

Because the entire property was classified as an asset held for sale by Primaris REIT ahead of its disposition, Primaris excluded this vacant square footage from its previously reported active leasing pipeline and portfolio occupancy metrics.

According to the REIT's fact sheet on the mall, it draws 12 million visitors a year and offers $639 per square foot in same-store sales productivity.

Primaris' share of the ongoing mortgage is $33.4 million at a contractual interest rate of 5.29 per cent.

It intends to allocate the net proceeds of the disposition, expected to close on Jan. 6, 2027, to debt repayment and general trust purposes.

Upper Canada Mall closing

The REIT's acquisition of the almost one-million-square-foot Upper Canada Mall in Newmarket has also closed successfully. 

Primaris said all customary closing conditions were fulfilled or waived and the sale closed yesterday.

Primaris acquired Upper Canada Mall from former co-owners Oxford Properties and CPP Investments.

The REIT announced on Oct. 1 it would finance the acquisition from existing liquidity, including the net proceeds from its $230-million equity issuance in September, cash on hand and an expected draw of approximately $150 million on its unsecured revolving credit facility, which would leave $450 million of available liquidity under the facility.

In September, Primaris said it was in various stages of negotiations on potential acquisitions with an aggregate potential purchase price of more than $1 billion.

"We still remain very focused on acquiring malls that we think elevate our platform," Avery said at the Investors Day event, adding the REIT had not set a target number for acquisitions despite active discussions continuing. 

"You know we're not super-super focused on growing specifically to grow, it's really about getting the right properties, and we think that there's a significant opportunity there."

About Primaris REIT

Primaris is Canada's largest owner and operator of enclosed shopping centres. The REIT has a $5.6-billion national portfolio with 15.6 million square feet of gross leasable area.

Primaris was initially formed in 2003 as a publicly traded company then known as Borealis Retail REIT, sponsored by OMERS. In 2013, H&R REIT acquired the Primaris operating platform and 25 of the properties owned and managed by Primaris.

In late 2021, Primaris REIT was spun-off from H&R REIT. Since the spin-out, Primaris has transformed its portfolio with $3.3 billion in acquisitions.