I think Primaris is one of the most mispriced REITs in Canada today.
Not because malls are making a comeback, but because the market seems to be treating all malls as dying assets when the operating data for dominant regional malls says otherwise.
Primaris owns dominant enclosed malls across Canada.
The portfolio generates approximately $734-$1000+/sq ft in sales productivity, maintains positive leasing spreads, and continues to attract tenant demand despite the constant "retail apocalypse" narrative. Management has repeatedly emphasized becoming the first call for retailers expanding in Canada.
Why I became interested
The common narrative is:
- E-commerce kills malls * Department stores are dying * Nobody shops in person anymore
But when I looked at the actual numbers, I found:
- 2025 Same Property Cash NOI growth of 5.6% * 2025 FFO per unit growth of 9.2% * Renewing lease spreads of 7.4% for the year * FFO payout ratio below 50% * Multiple annual distribution increases * BBB (High) credit rating * Significant liquidity and manageable leverage levels
Those are not the metrics I would expect from a business that is supposedly dying.
The HBC situation
The biggest concern today is obviously Hudson's Bay.
The market seems worried that former HBC boxes will become permanent vacancies.
Management has stated that approximately 70% of former HBC space is already in advanced negotiations, with 35% committed or conditionally leased.
If they fail to execute, the thesis weakens.
If they successfully replace those spaces with higher-rent tenants, the opposite may happen and NOI could improve over time.
What I think the market is missing
The question may not be:
"Are malls dying?"
The better question may be:
"Are dominant regional malls with limited competition still valuable?"
Retailers continue leasing space.
Occupancy remains relatively strong despite HBC.
Lease renewals are being signed at higher rents.
Tenant sales remain healthy.
Management continues raising distributions.
Those facts seem inconsistent with the narrative that enclosed malls are obsolete.
The bear case
To be fair, there are several reasons I could be wrong:
- HBC replacement takes longer than expected. * Consumer spending weakens significantly. * Enclosed mall valuations deserve permanent discounts. * E-commerce eventually pressures tenant demand more than expected. * Management overestimates redevelopment returns.
My current view
I don't think Primaris is the best REIT in Canada.
I think it may be the REIT with the largest gap between public perception and operating reality.
Interested to hear the strongest bear case from people who have looked at PMZ.UN.