Primaris Real Estate Investment Trust is adding Quebec City's biggest mall, Les Galeries de la Capitale, to its portfolio under a $325 million deal in one of the largest retail sales of the year.
The retail real estate investment trust focused on enclosed shopping centres said it agreed to acquire the 1 million-square-foot mall for $170 million in cash, $55 million of trust units and $100 million in preferred units.
Last week, CoStar News first reported that final bids for the mall were being reviewed, and that Toronto-based Primaris was likely to make an offer.
"Les Galeries de la Capitale is a market-leading regional enclosed shopping centre that exemplifies the type of property Primaris is targeting with its growth strategy," said Patrick Sullivan, president and chief operating officer, in a statement.
The shopping centre covers 26% of its 91-acre site in Quebec City, the country's seventh most significant population centre, the REIT said.
"The opportunity for growth at this asset includes the conversion of tenants from variable to net rent deals, leasing up vacant space, including the former Sears department store," said Sullivan.
Primaris on shopping spree
The REIT recently has made major additions to its portfolio in the past two years, including a $270 million purchase of Conestoga Mall in Waterloo, west of Toronto and the $370 million acquisition of Halifax Shopping Centre.
Primaris' acquisition of Les Galeries de la Capitale is expected to close Tuesday, the REIT said.
"This acquisition builds on Primaris’ profile as an attractive buyer of large, high-quality assets, Primaris REIT Alex Avery said in a statement. "Five of Canada’s 10 largest pension funds have now vended market-leading shopping centres to Primaris, taking back equity and convertible preferred equity investments in the REIT."
Primaris was spun out of H&R REIT into a separate company in 2022 and immediately struck a deal to buy six shopping centres and two additional properties from Healthcare of Ontario Pension Plan for $800 million, including $600 million of REIT units.
“Consistent with prior acquisitions, this property enhances the REIT’s value proposition with retailers and offers a significant income growth opportunity consistent with the growth we see ahead for our existing assets," said Avery about the latest deal.
The Quebec City mall will become the second-largest holding in the Primaris portfolio behind Halifax Shopping Centre.
For the record
CBRE Canada, Desjardins Capital Markets and TD Securities acted as advisers to Primaris REIT. RBC Capital Markets Real Estate Group acted as adviser to the sellers, Oxford Properties and the Canada Pension Plan Investment Board, or CPPIB.