The Mall's Second Act: Primaris REIT Rewrites the Retail Playbook

TORONTO, ON – July 29, 2026 – While the narrative of the struggling shopping mall has been a persistent theme for years, Primaris REIT is authoring a decidedly different story. The company's second-quarter results for 2026 not only reaffirmed its steady financial guidance but, more importantly, showcased a strategic masterstroke in progress: the highly profitable transformation of vast, vacant anchor tenant spaces into high-value retail destinations.

Primaris, Canada’s only REIT focused exclusively on enclosed shopping centres, is demonstrating that the end of one retail era can be the beginning of a far more lucrative one. By methodically re-leasing and redeveloping the spaces once occupied by Hudson’s Bay Company (HBC), the REIT is proving that agility and strategic capital allocation are the keys to building the resilient commercial systems of tomorrow.

From Anchor Weight to Growth Engine

The departure of a legacy anchor tenant like HBC could have been a significant blow. For Primaris, it has become a catalyst for unprecedented value creation. The REIT’s Q2 update reveals that a remarkable 84% of the 1.3 million square feet of former HBC space is already leased or in advanced negotiations. This isn't just about filling space; it's about fundamentally upgrading its value.

The new leases are expected to generate approximately $14.9 million in annual rental revenue—a staggering four times the rent previously paid by HBC for the same footprint. This dramatic uplift underscores a successful pivot from low-rent, low-productivity anchors to a dynamic mix of higher-quality tenants.

"Leasing momentum across our portfolio remains exceptionally strong, supported by robust tenant demand and continued progress re-leasing former HBC space," said Patrick Sullivan, President and Chief Operating Officer. He noted the company is securing these tenants on attractive terms, driving occupancy, and ultimately unlocking "significant embedded value across the portfolio."

This transformation is backed by a substantial capital commitment of $175 million to $225 million earmarked for redeveloping these spaces. The strategy is twofold: executing long-term leases with single or multiple tenants where it makes sense, and creatively subdividing the massive boxes to accommodate a mix of large-format retailers and high-value smaller units. This approach replaces the monolithic, single-brand anchor with a diversified ecosystem of tenants that can better draw traffic and serve community needs.

A Disciplined Balance Sheet Fuels the Pivot

Executing such an ambitious transformation requires a rock-solid financial foundation, which Primaris has diligently maintained. The company’s results point to a disciplined strategy where a strong balance sheet enables bold operational moves. With $655.1 million in liquidity, a conservative FFO Payout Ratio of 48.8%, and a Net Asset Value (NAV) of $21.72 per unit, the REIT has the flexibility to invest for the long term.

"Our balance sheet remains a key competitive advantage for Primaris," stated Rags Davloor, Chief Financial Officer. "With low leverage, a conservative payout ratio and substantial liquidity, we are well positioned to execute on our strategic priorities."

This financial discipline is evident in the REIT’s recent capital recycling activities. In the second quarter, Primaris completed $99.5 million in non-core dispositions. Simultaneously, it made strategic acquisitions, including paying $64.0 million to secure the remaining 50% interest in Fredericton's Regent Mall, bringing its ownership to 100%. It also acquired the adjoining vacant HBC box at Devonshire Mall in Windsor for $4.5 million, with plans not to re-lease but to demolish it to create a redesigned, more inviting mall entrance. These moves demonstrate a clear focus: shedding non-strategic assets to double down on core properties and enhance the overall portfolio quality.

Charting the Future of the Canadian Mall

Primaris’s strategy offers a compelling blueprint for the future of enclosed shopping centres. With the HBC re-leasing project well underway, the company is already looking to its next phase of value creation. Management has identified approximately 120 acres of land, valued between $275 million and $375 million, for potential monetization, alongside an additional $200 million in non-enclosed properties targeted for disposition.

This isn't just a sell-off; it's a strategic unlocking of capital from land that was often encumbered by the very anchor leases that have now been vacated. It provides a war chest for future investment and further sharpens the REIT’s focus on its core, high-performing enclosed centres.

While headline occupancy figures like the 86.6% in-place rate may temporarily appear lower than those of REITs focused on necessity-based retail, this metric reflects a portfolio in active and profitable transition. In fact, in-place occupancy for the company's 'Same Properties'—those owned for the entire period—actually increased to 89.2%, showcasing strong underlying operational health.

As CEO Alex Avery affirmed, the company is "exceptionally well positioned to deliver above-average earnings growth and long-term value creation for our unitholders." By turning a potential crisis into a strategic advantage, Primaris is not just surviving the retail shift—it is building a more efficient, effective, and valuable system for the modern era.