Primaris Real Estate Investment Trust (PMZ-UN) October 7, 2026 Capital Markets Day Transcript

All right, good morning. Thank you everyone for joining us at Primaris REITs 2026 Investor Day at Promenade St. Bruno. This is a property that we acquired a year ago this coming Saturday. I'm Alex Avery. I'm Primaris' Chief Executive Officer. Around the room, you will find a number of Primaris folks. Stéphane Landry is our Head of Operations for Central Canada. He's sitting on the right. Julie Morin is the General Manager for Promenade St. Bruno. I believe she's standing in the back. These lights are fairly bright. And then we've got quite a few other folks here. Patrick Sullivan, who will be presenting after me, our President and Chief Operating Officer. We've got Leslie Bust, who's SVP Finance. Graham Proctor, SVP Asset Management. Julian Schoenfeld, right there, who is our Chief Investment Officer. Claire Mahaney who puts all of our communications and investor relations stuff together intimately involved in today Nadia Markova who is one of our really bright people helping us understand our own business working on business intelligence data management and investment analytics and then of course last night and today we have Tim Pierre who is the chair of our board one of our trustees and actively involved in our investor outreach that our board does each year actually I think it's coming up I would think sometime soon and Louie Forbes who is also on our board he's the chair of our audit committee one-time former CFO of Primaris and also also intimately involved in our investor outreach so we've got quite a few people here we're gonna spend a bunch of time together and I would encourage anyone here to approach and chat with all of our team members and ask them any and all questions that you find interesting. So cautionary statements we'll go right past that. The agenda so as I said I'm going to set the stage for a few minutes we're going to move on to Pat and he's going to talk about our business, the operations, the management of shopping malls, and share a lot of the insights that he's particularly well-suited to sharing. We'll have a little Q&A after that, because I think we find that investors and analysts find that topic particularly of interest, given that the mall business is experiencing strong growth, and there was a period of time when people didn't pay a lot of attention to malls. After that, we'll have a little bit of a break. Leslie's going to share a lot more about our differentiated financial model. Julian will talk about our investments and our investment strategy, and then I will wrap it up. So we'll have a lunch after that. We'll tour the mall, and Pat's going to share some more specific to this shopping center after that. But if you look at where we stand today, this is primaris by numbers. We have about $5.6 billion worth of assets. That's up pretty sharply from about $2.3 billion. That was prior to the spin-out. But even those numbers don't capture the full volume of activity. We've completed about $4.4 billion of acquisitions and dispositions in the last five years. We've built a $2 billion unsecured bond program. We've turned over about 70% of our portfolio as new since 2021. The portfolio quality has changed quite a bit. And we've done all of this while delivering some pretty attractive returns for our investors. So where it all started, and this is something that we review this slide with our board at each quarterly meeting. I'm not sure I've ever actually articulated this, but the reason that I go over it, it never changes. And it probably seems like we're just killing a bit of time in the board meeting. But I make sure to go over it each board meeting because it really is the pillars of our strategy. um you've all seen it before size and scale we have a 5.6 billion dollar national portfolio of malls um that's important because in the mall business it's a scale business for many reasons relevance with retailers having the internal management capability access to capital um there's a lot of good reasons for size and scale um proper capitalization uh leslie's going to talk later about our differentiated financial model. We harp on it and I will harp on it a little bit more as well. Affordability for our malls to do well. We need our retailers to do well and we partner with our retailers to make sure that they're profitable because when they're profitable, we're profitable. Scale and consolidation. This is something that just uh i don't know if it was last week or the week before we announced uh the um upper canada mall acquisition um the latest in a series of uh marquee acquisitions which we're we're quite proud of and we see you know more room for uh for that type of activity in the future and then our discipline this disciplined capital allocation uh julian will speak more about that but that is very key to our strategy. And as I said, we talk about this every quarter at the board meeting because these are the pillars upon which Primaris is built. So the portfolio construction, we've been very, very active, as you can see, lots and lots of acquisitions, fairly consistent pace, the number and dollar value has changed, but we've been pretty much in acquisition mode since the day that we spun out, even before the day that we spun out. And it has been fast and furious. We continue to have lots of opportunities. And I think as part of a proper disciplined capital allocation strategy, capital recycling is a critical part of that as well. And when you look at all of this activity, we're not transacting just so that we can pay brokerage fees to all of the property brokers. We're doing it for very specific reasons. And at the heart of what we're trying to accomplish is we're trying to maximize the steady state run rate, same property NOI growth in our portfolio. So we're basically trying to increase that steady state growth rate. Right now, our best estimate once we get through this next three-year period of leasing up to 96 or so percentage occupancy we think our portfolio is going to revert to about a three to four percent same property NOI growth trajectory and in the period between now and then we think we can probably do better than that as we're filling up vacant space. So what that really requires in terms of getting that steady state maximum or optimal internal growth rate is you need to have market dominant shopping centers. We define that in a lot of ways, but at its simplest, what we're really talking about is malls that have the largest aggregate sales volume in the market. It's the place where the most retail transactions are taking place in the market. And what that means is that we're relevant to retailers because if a retailer is going to come into the market they want to go to the place where the most retail sales takes place because that's where they're going to have the greatest volume make the most money and have the greatest access to consumers similarly on the consumer side they're going to come to our shopping centers because it's the place where they can find the most variety and options within their shopping needs. If you look at how this is translated into portfolio metrics, our aggregate sales on the left has risen from about $1.7 billion to $3.8 billion, which is 121% increase in the volume of retail sales that take place in our portfolio. So, you know, pretty substantial growth. Sales per square foot have risen from 589 in the line chart, 589 to 829. That's up 41%. We expect that number to continue to climb over time, in part because of, you know, further acquisitions, organic growth within our portfolio and select dispositions. One of the really interesting metrics that we haven't talked a lot about before, but I think really speaks to the market dominance of our portfolio is the average mall CRU sales. So the average per mall of aggregate sales. Before the spin out, we were at $74 million per mall. That is now $151 million. That's up 104%. We have really shifted to being the dominant mall in the market, which in a lot of cases we already were, but we've now become the dominant mall in bigger markets with bigger trade areas and more sales volume, which, you know, again, really speaks to Primaris being relevant to retailers. Pat flew in late last night yesterday he was working with all of the retailers at the ICSC conference in Toronto and I'm sure he'll share some details about that but I think the punchline from last year's ICSC was that Primaris is very much the sought-after landlord. A lot of retailers that we had a relationship with are now more prioritizing that relationship. We have retailers that we didn't have a relationship with that are now very interested in building a relationship with primaris um so this this is our uh three-year um our three-year targets that we published in september of 2024 um what you'll notice about them is uh all the way down the right we've achieved or are on track to achieving um all of those targets uh even the ones sometimes we say on track but we've actually exceeded the top end of the range like the first one annual same property, cash, NOI growth, we were above the top end of the range. Later, I'm going to share the, well, it's already in the press release that went out this morning, but we'll talk about the next three years. We blew through the acquisitions target, we blew through the dispositions target, and all of the other metrics we've been able to achieve. You know, it's important that when we give guidance or give targets to the market that we actually deliver on them. And so I think the whole team is very proud of this slide and what it says about our ability to execute in this chart so this is a funny slide I think a lot of people have different reactions to it a lot of our employees love this slide and they love this slide because a lot of us get paid partially in stock we also have a unit purchase loan program that's available to anyone in the company below the SVP level where you can borrow up to $100,000 non-recourse to buy units in Primaris. And so we have dozens of people throughout the organization, a lot of whom bought the stock a couple of years ago and have made a lot of money. They are very well aligned with the Primaris story. And what's fantastic about that is when we have town halls we get a lot more engagement from all parts of the company lots of questions and people are genuinely interested with this financial incentive that they have to understanding why our stock price goes up or why it goes down you know what they're doing in their part of the business and how it contributes to the overall mission that we're on And so, yeah, understandably, there's a lot of employees that really like this chart. I think when some analysts look at this, some investors look at this, they might have a thought of, you know, maybe this is a reversion to the mean story. You know, the stock has performed tremendously in the first nine months of 2026, substantially outperforming all of our peers. We can talk about a lot of details there, but I think there are some people that look at it and say, you know, big move, shows over, nothing to see, you know, you can move along. When I look at this chart, I immediately get the urge to remind everyone that our stock is currently trading at a valuation that implies an 8% cap rate, which for the quality of the malls that we own including the one that we're standing in or sitting in right now strikes me as a particularly high implied cap rate I'll note that that eight percent implied cap rate is also reflective of eighty six point six percent in place occupancy which would suggest that our current valuation implies a stabilized cap rate somewhere north of a nine percent we have an interest rate tailwind I could get into all sorts of things that as the chief cheerleader at Primaris, I could tell you many great things about Primaris, but we'll skip past that. One of the other things that I see in this chart is a superior business model. We've been talking about the differentiated financial model since day one, low leverage and a low payout ratio and compounding the retained free cash flow provides a structurally higher growth rate on a per unit basis as compared to a higher leverage, higher payout ratio model. And to frame that alternative, consider a REIT with high leverage and a high payout ratio. It becomes solely dependent on access to the equity markets to achieve growth, asset growth, create value, to be able to reinvest in the business above and beyond sort of the steady state. And that is really, I think, where the per unit growth comes from, is having the flexibility to allocate capital, to have the ability to invest in acquisitions, developments, buyback stock. You need the financial flexibility to take advantage of all the opportunities that a REIT faces and when you have high leverage and a high payout ratio interestingly enough the only time that you have access to capital is when everybody else has access to capital and when everybody else has access to capital and you have access to capital everybody gets that capital and then they go out and they compete for properties you know if you're trying to acquire a property and there are 30 other bidders, you can be sure that the pricing is going to be optimized. You're going to pay for vacant space. You're going to have very limited flexibility to capture any value or create any value. So when I think that the low leverage, low payout ratio model, we talk about it a lot of different ways, but I think that's one of the things. One of the ways to think about it is having capital that is available to you essentially at all points in time allows you to take advantage of opportunities that a lot of a lot of REITs that have higher leverage are unable to take advantage of. I don't really think there should be much debate on this point. You know, if you go into other parts around the world, the US, Europe, Asia, Australia, the REITs with the lowest leverage and the lowest payout ratio have consistently delivered above average returns. And I think Canada has been stubbornly stuck in the old model with, you know, the high payout ratio and high leverage. But, you know, we talk a lot about it and I've harped about it probably enough for today. But when I think about this chart, I don't think it's a one-time dynamic with our stock outperforming. I think our stock is structurally designed to deliver superior internal growth, superior per unit growth, and that's why we have both hardwired into our executive compensation a ceiling of six times debt to EBITDA and also aligned our executive compensation with relative total unit holder return. So I think with that, I will stop talking about the differentiated financial model, which I could talk about all day. And I will turn it over to Pat, who is going to share a lot about the mall business. Pat?

Thanks, Alex. Thanks, everyone for coming today. We have a slide called slide four in our investor deck that, you know, most of us usually cringe when we bring it up and talk about it it starts from 2005 to basically going forward in terms of the evolution of the shopping center I'm old so I'm actually gonna go back further than 2005 because I think it's relevant to explaining what I want to talk about today which is the I can get this thing to work I want to talk about the transformation of the credit profile of the shopping center over the last 30 years because it has actually been significant but to explain it I think I need to go back into the 90s. I started in real estate in 1991 as a broker in Vancouver. Office rates were a dollar a foot in downtown Vancouver for office space. Sounds familiar to a couple years ago. And shopping centers have just come out of a really, really bad time. The late 80s, early 90s, high interest rates. Companies when it broke like Bramley, Trisac, Dayon, they had land banked and they got caught with high interest rates and declining revenues. When you get further into the 90s, you had companies like Cambridge, Cadillac, Oxford, all were in financial trouble. Cadillac actually filed for bankruptcy and restructured. Cambridge didn't, but struggled to get through the 90s with their balance sheet intact. And along the way, you got recapitalization of those businesses by the pension funds. The pension funds started buying partial interest in malls before actually buying the entire company. The case took over Cambridge and merged it with their other company, Ivanhoe. Entrea took over Cadillac and Omer's took over Oxford. During that same period of time, you had department stores that were starting to wane in basically their relevance. By the late 90s, you had Eden's that had gone bankrupt for the most part and was in the process of being replaced. and then you had Walmart coming to Canada and taking over Wilco and making it very clear that they had no intention of staying in shopping centers. The interesting dynamic as we go through that part in a couple in a couples with Sears and HPC starting to become less relevant with the consumer is that you had a lot of sales migrate from the department store into the small shop space in the mall and in the 90s and into the early 2000s you had a lot of locals and regionals in the shopping centers. And we used to have, every year, we had merchandise meetings at the end of the year where all the tenants would gather. It would be a gala. The marketing manager would put on a big dinner and you'd explain what happened in the shopping center. And there were so many locals in the mall that the room was full. That was their livelihood. So you had probably upwards of 50% of the mall tenants were locals. And what happened when you had this migration of sales from the anchor tenants back into the shopping center sales started going up you had pension funds started buying into these assets and saying we want to reinvest in them so they started making bigger investments and the small shop guys started realizing their sales were going up rents were going up too and you had a lot of expansion going on national tenants started expanding more you had gap come to canada in the mid to late 90s that was the big first american coming up here and taking space and so there was a lot of interest in shopping centers and expanding their footprint and over time you saw locals and regional tenants start to diminish and i remember louie might remember like we spent the first four or five years primaris having a slide where we talked about our percentage of waiting for locals and regionals versus nationals because it was a lot of concerned people in terms of the credit worthiness of the of the tenants we had and i mean i i go back as far as 2010 here and you see our our predominant tenants were hbc sears for zany group which by the way i think went broke that year and Canadian Tire bought them and Reitmans and Loblaws I think is on this list simply because we owned a power center that had a or a couple power centers that had a bunch of large grocery stores but if you got below this line you saw a lot more fashion tenants as well and so there was there was a there was a real concern for a long period of time what was the credit worthiness of the mall look like and in fact we got into years like 2011 where we had a significant big a significant year of bankruptcies driven partially by the financial crisis of three years earlier, where you got through a period where these guys were hanging on, and then they finally threw in the towel. So we had a lot of bankruptcies in 2011. It cleared out a lot of space, but we had a lot of turnover in the shopping center. So in 2015, when you had Target finally fail, we had an opportunity to reset our tenant mix, which we hadn't had before. So after Target failed, the year after Target failed, mall sales went up. We hadn't replaced Target, but the, you know, kind of going back in history, the sales go from the department store into the shopping center. Probably not a hundred percent, but the shopping center picked it up. So you had CRU sales volume pickup. We replaced Target with necessity-based retailers, such as grocery stores, pharmacies, but also fashion boxes like TJX and such forth, all of which were really strong covenant tenants which is fantastic if you go back 50 and 20 years malls have been kicking out grocery stores they didn't think they were worthy of being in the shopping center they wanted fashion they thought they was it was they drove traffic to the grocery store but not to the mall people didn't do both they didn't grocery shop and go to the shopping center so they were shunned from the mall but when target left we were all looking for large format tenants and it made sense that grocery store and it's turned out to be a fabulous addition to the mall because people do cross shop between grocery and the shopping center itself and what it does is it brings just more footfall in general to the mall when sears failed similar story malls mall sales went up for the in the year after we added more box stores and in the years following both target and sears overall mall sales have climbed up significantly because we increased the regular footfall to the shopping center we took a target or a sears that might have been lost sears was probably doing 10 12 million at the time it failed and target might have been doing 20 we replaced them with tenants that were probably doing 50 or 60 million dollars in aggregate so you had a significant number of people coming to the shopping center you created a bigger retail destination node and that in turn helped the cru tenants in the mall as well so over this time period local and regional tenants got a priced out of the shopping center b there was so much demand from small shop tenants because sales were so buoyant that they wanted more and more space more and more Americans were coming up here you know Target kind of stalled that for a couple years as there was a little apprehension why did Target fail what was wrong with Canada nothing wrong with Canada it was what was wrong with Target and then we fast forward and then we have the e-commerce start and with e-commerce we we had a lull in expansion with retailers did they need to add more stores surprisingly the pandemic took care of that because people started to real stores. Tenants got through the pandemic realizing they needed e-commerce, but they made no money on it. So when they had to rely on it, basically for 100% of their sales, it was a real problem for them. So they started to realize we need stores. So after the pandemic, they started opening stores. So the example I used the most is Sephora. Pre-pandemic, we had a really hard time getting Sephora to expand into some of the secondary markets. Post-pandemic, they were like, we need stores in all these markets. And what they learned was when they added a store, their overall sales volume combined between e-commerce and their store itself went up. And so now we have a proliferation of tenants wanting more stores because they need an omni-channel network. You're going to see going forward, if it already hasn't really started, tenants are starting to charge for deliveries. They're starting to charge for returns. They really want you to go to the store. They want you to pick it up in the store. They They want you to return it in the store. They don't make money online. There are retailers that are abandoning e-commerce because they say, what's the point of doing this if we're just losing money? We don't really need to be there. We're not gonna try to compete with Amazon. They can have it. We have a very good business. We need to be profitable. So they're abandoning that side of it. So when we talk about mall sales and the impact of these boxes opening the malls, we always talk about all-store sales volume for the CRU. What we never really get into is the all-store sales volume for the shopping center itself and there's two reasons for that and the primary reason is if you go back 20 30 40 years the anchors didn't report sales you didn't get numbers from hbc or sears or target so you didn't really know what their numbers were i can tell you there were some sears stores sears and devonshire did 60 million dollars at one point you know by the end they were doing 10 and a lot of that migrated into the mall so these guys had fallen off significantly but that's the primary reason we didn't report a number with the bigger sales volume and now it's just become kind of the standard norm that that's what we report on if we talk about bruno st bruno here uh we have a mall that's approaching 300 million in cru sales volume there's probably another 150 done in the box stores and that's without the bay and when the bay gets re-merchandised my guess is we'll grow that number by 10 and we'll be up to 500 million so it's that's a significant amount of footfall in the shopping center is 150 million dollars goes into the box stores which helps drive further traffic into the shopping center and feeds the cru tenants so at the end of the day you see where our merchandise mixes ended up these tenants want to be in the in the in a retail center that drives the majority of sales in the region that it's that it's in you're starting to see walmart want to come back to malls we've announced two of them there may be more um they want to be back in shopping centers they in 2003-4 they couldn't wait to get out of malls they thought the the ideal format for them does freestand on the street with parking right in front and what they realized is the mall has so much activity they can drive further sales and higher sales by going to the mall and being part of the shopping center whereas they used to buck having an entrance into the mall they are now open to having an entrance into the mall they want feed off the traffic grocery stores same thing when we're going through this whole process with the bay and i'll get into the bay shortly a lot of the box stores we're getting we're not net new to the market they're just relocations from other centers in the area that want to upgrade their real estate to be in the dominant retail asset and that's the kind of tenant we're attracting here and that's why our merchandise mix and our tenant quality has morphed so drastically we're getting the walmarts we're getting the the grocery we're getting tgx we're getting high covenant tenants and over the last 10 years our fashion mix in the shopping center has diminished in terms of small shops so we've we used to run well over 30% fashion tenants and we're we're into the low 20s now and that was driven by adding TGX adding H&M adding Old Navy there had to be an offset corresponding offset with fashion so we reduced the small shop fashion we got rid of a lot of the smaller local tenants regional tenants that were fashion based we've a lot of more electronics we've added a lot more of the health and beauty as well so Tenamix has changed drastically so while there was some mall development in the 2000s with Ivanhoe building their mills concepts bond crossiron Niagara and such forth there's been very little and and population growth has grown significantly but malls have not been developed retail space have not been built and now as we get into today it's really really hard to rationalize building anything it's going to cost a thousand dollars a foot plus to build a shopping center which means you need rents that no one's going to pay so nothing's getting built and it's really really become a key topic out there in the retail community because a lot of the smart retailers like tjx who were really not focused on major store expansion over the next 24 months they got directed from the u.s when the hbc went down that they needed to ramp up their their their store count in Canada. And the reason was because I think there's a recognition. This is the last large block of real estate you're going to find for years in Canada. And once it's gone, your expansion options will become very, very limited. And so there's a lot of retailers out there pushing hard, whether it's TGX, Canadian Tire, Walmart, grocery guys, they're all looking for space. And I mean, I'll get into HPC shortly. But there's a lot of activity with all of those big banners so merchandise mix is a is a concept that we talk about a lot it's essential for a shopping center you have to continually bring in new brands to keep them all reinvigorated we're never going to be a hundred percent occupied in all likelihood we're always going to be holding some space to re-merchandise because tenants come to malls for the brands we always hear experiential we hear entertainment we hear you know add more restaurants and such forth but the excitement when you open a new Abercrombie in a mall or a new Lululemon or some of the brands has just opened in here you know Uniqlo has been opening stores they get lineups in the mall when they first open that are 200 people long and that's just the excitement over the brand so entertainment's nice it still comes back to are you branding your shopping centers with the latest concepts that's what people want and that's what our primary focus is so as we get into the so anyways that the the some of these tenants we're doing business with there's a number of Americans there's some food concepts out of this US we're doing a lot of deals right now with Brown's expanding Lululemon's Le'Veon Rose expansions Victoria's Secrets mini soap you know on the power center side you know we've announced some Walmart's TGX Canadian tire banners there's lots of activity with all these guys I'm really bad at following my speech with the slide so I'll try to I'll try to keep up so when we talk about the drivers of our rent you know kind of fits into this but the main drivers of a rent really comes from there's the straightforward rent structure where we lease space we charge track we have a contractual rent we build in rental escalations it's typically it's migrated from 2% to 3% most retailers are now accepting three percent as the new two percent aligning with inflation um and then we get into all the other ways we can diversify our revenue base beyond just straightforward rent that i don't think a lot of our retail peers uh operating in other kind of developments whether it be power center strip malls have percentage rent is very much unique to a shopping center it represents typically used to represent one and a half to two percent of our revenue right now it's three to four percent and that's driven primarily by the fact that there's been such significant inflation in prices sales have gone up retail space is not as plentiful as it used to be so there's a number of factors that have driven sales but inflation certainly drove that and that's what percentage rent was originally the whole original concept of percentage rent was a hedge against inflation you entered into these 10-year leases how are you going to get rental escalations or capture the fact that sales might increase and the beauty getting sales reported and getting percentage rent is we have visibility into their sales and we can participate in the tenant success throughout the lease term without actually rewriting the lease and so when it comes to the expiry we typically try to crystallize that excess rent into a new base rent and create that as the new base going forward i expect that three and a half the four percent of noi to diminish over time as we reset these rents that are midterm but we'll recapture it in terms of base rent our cam we have a very flexible lease for the most part people can consider malls very expensive to operate which they can be at times however we recover virtually everything we spend from the tenant our lease allows us to recover we where we spend when we have a capital spend we if we treat it almost like that we treat it very much like a loan we spend the money we recover the money from the tenant typically we amortize it some of our leases the Cadillac lease is a great example it allows us to actually accelerate the amortization earlier but we charge interest on the money that we spend so we recover interest income from the tenants we also charge an administration fee for running the cam pool we we charge 15% so in theory when you're fully occupied and you're recovering all of your cash from the tenants you can recover up to 115% of your cam expenditure um and that's something we've talked about a lot is our recovery ratios and how they're diminished right now we do have some malls that have crept over 100 at this time uh we expect that to keep marching forward i think our recovery ratios are on average are still in the 80s uh we have we have two malls that right now are 104 and lethbridge and peter pond in fort mcmurray they're running at 104 so we're getting up there with some of our properties as we come full of more occupied. Years ago, I think in 2017, we kind of bucked the traditional operational position and we went out and hired an accountant to run our asset management group, basically operations, Graham Proctor. I mean, nobody had ever hired an accountant to run this division, but the one thing we recognize is we spend such a significant amount of money on our capital at the properties and recovering it from the tenants that it was probably best managed by somebody who understand math as opposed to understand how a boiler worked and that's really benefited us in terms of making sure that we're recovering our money and maximizing our returns on what we do spend especially leasing revenue which is a slide at the end i should have had it moved but it's a slide at the end we generally generate about five to seven percent of our noi through specially leasing 30 to 35 percent of that comes from inline space which is space we you know we're not fully occupied we'll rent out the space that's not occupied and as i mentioned before we we hold that space sometimes for re-merchandising um typically for re-merchandising or periods when we're buying malls that are very much under leased um there's a lot of sl revenue we also get it from various other sources um whether that be branding it's changed over time i mean 30 years ago you had a coin a coin operated vending machines you had pay phones you had storage lockers you had all kinds of things like that it's transformed over time we actually make money off santa now santa used to be a uh santa used to be a cost center now it's something we make money off we used to be a marketing event now it's really especially leasing event but there's all kinds of other things with branding and promotion there's car shows and such forth um when the online when the space gets leased when inline space gets leased up when there's higher vacancy like there is now especially leasing people will turn their attention to other sources of revenue uh we've gone through periods when we've been really well occupied and it's and our on our sl as a percentage of our noi has been maintained at five to seven percent it really hasn't varied over 20 years so it is it's just a function of their time typically we have one specially leasing person at every property. They generate on average, a cost benefit is about 10%. So it pays to have somebody dedicated on site. We've tried before to have one person look after multiple sites. And while it spreads the cost out, you generally don't generate as much revenue. So we felt it was important to have somebody at every site. In terms of marketing, marketing is a very important aspect of the property it's but it was one that was really not managed well for the last 25 years it was it's a it's it's a pool that the tenants pay into so we're basically spending the tenant money about 10 years ago we used to there used to be a landlord contribution it was typical it was built into a lot of the anchor leases with the demise of target sears and hbc in fact i didn't even worry about hbc noticing we stopped making our landlord contribution which was a non-recoverable expense that saved us about 100 to 150 thousand dollars a year and then we in the last five years we hired someone specifically to manage marketing and unlike the past where we hired a marketing person we actually hired someone to actually manage the money and so marketing people typically spend all the money that you give them at the site and that's great sometimes it's it's on good promotions and sometimes it's not money well spent so this person came in to really make sure the money was spent wisely and so we've now taken this uh this aspect of our company and we've turned it into a department where we're able to use the marketing money to do things like sponsor the canadian hockey league nationally and we did that last year we're a major sponsor uh it's driving traffic to our shopping centers the memorial cup last year was in clona they they took the memorial cup across canada to different shopping centers the hockey players from the various hockey teams that play in the CHL, came to our malls, and in some of the communities, the CHL is a big deal, and it drove a lot of traffic to the shopping center, and that's one of the great things about having a national platform and having someone overseeing marketing on a national basis. You can use that money and spread it around and actually drive traffic across the entire portfolio. The other thing about marketing money as marketing money there's many things you can do with it signage in a shopping center which was typically a recoverable capital item you can actually call that marketing so there's there's different different aspects to how you use the money um but having somebody manage the money has been very important for from our perspective what i really love about malls is they're like lego um i've always thought you can the beauty of a shopping center is you can expand them you can you can reduce the size you can move tenants around the flexibility is so important for re-merchandising and as I mentioned before it is so important that we bring in new brands to reinvigorate them all and keep it fresh for consumers and it's really made possible because the mall is so flexible you know you might have a power center where you have a space that's impossible to subdivise you don't have enough frontage you have tenants on either side of them with really long lease terms you're stuck with what you have in a mall we have relocation clauses in our leases that allow us to move lead a move tenants so in Brunehue we'll talk about it shortly we're moving the food court we're able to do that with tenants midterm because we have a relocation clause and lastly another source of revenue that we don't talk about very often we regenerate about 1% of our NOI from storage rent and so when you think about tenants they have their peaks and valleys in terms of seasons but they a lot of them need storage and they'd like it on site so we'll take dead space whether that's in a basement or just space that's historically chronically vacant and we'll lease it out to tenants for storage and there's a tremendous demand for storage and our rents i would say in the last 25 years have crept from we used to charge like five and ten dollars a foot for storage we're up to like 50 60 a foot for storage now and it's not part of our gla and we don't recover cam attacks necessarily from it so it's just pure rent that goes to our bottom line and there's no cost associated with it uh in terms of uh recoveries so um that's about one percent held pretty steady at one percent over time um so in terms of hbc um we've got a lot of deals we're right at the finish line we've got board approval on the majority of our boxes uh conestoga orchard park oshawa lime ridge Galleria Capitel they're all they're all well underway in terms of the construction process that the getting city approvals and such forth we've got the majority of the space leased I'd love to be able to stand here and make announcements about tenants but for the most part they're all publicly traded companies and because some of these tenants are relocating from other centers they don't want to talk about it and they'd rather get further along towards their their their possession date before their landlord finds out they're actually moving and their employees find out that they're actually moving as well so there's there's some tenants that were all announced and there's some that we won't but for the most part uh we are made we've made tremendous progress our rent is going to be significantly higher than hbc we're still on target with what we've communicated in terms of expenditure but going back to where i started this whole conversation it will further enhance the tenant quality and credit quality of our shopping centers. These are all covenant tenants going into our malls. So a mall has typically been about 55% anchor, 45% CRU. And we're taking $4 rent from HBC and we're converting it to on average $18 or $19 in base rent from the replacement space on a plus or minus a million square feet. That's a tremendous lift in NOI. the majority of that revenue will kick in in 2028 and 2029 it's going to take a while to get the construction going and then the tenant fit-out periods take a while so that's when the majority of the revenue will kick in but everything we see is proceeding as we've talked about everything's great in terms of tenant lineups and leasing progress we're in really good shape with that I really don't have much more to say. I will be happy to take any questions if you have them. Lights are in my eye.

Just on that last point on HBC, can you just walk through the cadence of, you know, the next three years? You said majority weighted to 28, 29.

What does that mean for 2027 if you had to sort of, I think it's a total million square feet if you had to lay out the NOI? yeah 20 2027 so the the project we have furthest along right now is gallery de capital it's already started um and calorie de capital is is uh is basically fully leased um and a lot of those tenants will start paying rent later in 2020 or probably mid to late 2027 there's several restaurants um fashion box uh imaginaire l'imaginaire is taking a large space in the in in the HPC box there as well. The majority of the rest are all going to be turnovers in late 27 or early 28.

You mentioned the 55 versus 45 percentage. When you think of something like a Walmart, is that not essentially a new type of anchor tenant? And what do the rents look like? I mean, they're obviously a very powerful firm. Are they different than what you're getting on the CRU? Or what is the trade-off versus putting more investment to get more CRU in?

Yeah, I mean, Walmart is an anchor. The overall weighting in the portfolio is not going to change materially just because we've added a Walmart or a sport check or any of these replacements. It's still going to be in the 50-ish range. Walmart rents depend on the site they're taking and, you know, how badly they wanted it. There's one deal that we're working on right now that we haven't announced yet. where basically it's done, where they're paying a significantly higher rent than they typically do because they really wanted it. It's a relocation of a store. And then there's others like PDO where it's not a really high rent at all. It's a mid-single digit. And that was just a function of they saw it as an infill location, but not one they necessarily needed. For the mall itself, it's a tremendous addition for the shopping center.

Any other questions? Okay, we'll take a quick five-minute break, and we'll be back just before 11.

Hello, everyone. Can you please take your seats? Thanks again for joining us today. Greg sends his regrets. He really wanted to be here to present today, and I think it's mostly because after every investor meeting, he complains that he doesn't get to say very much. And it's really not because he's a shy guy. It's just because you don't ask many questions about Primaris' financial health. I take that as a compliment, but since I'm here, I'll give you a quick run-through of the differentiated financial model. Primaris was purposefully built with a low FFO payout ratio. Retained cash flow provides long-term compounding benefits for NAV growth and distribution growth. Primaris has increased its distribution every year. It was built to do so, and we intend to continue to do so. When we first spun out, our FFO payout ratio was above our targeted range of 45 to 50%. 2023 was 52%, 2024 was 50%, and last year was 47%. We've been able to bring this ratio down while providing modest increases to distributions each year. Now that the payout ratio is within our defined range, we anticipate that future increases will be a little bit bigger than the 2% we've delivered in the past. Retained free cash flow provides us with a flexible pool of capital for distributions, redevelopment, acquisitions, and NCIB activity without having to rely solely on our unsecured revolving credit facility. We're also adding to this cash flow by disposing of some non-core assets. Most importantly, we're applying a disciplined approach to deploying that capital, focusing on long-term value growth for our unit holders without sacrificing the strength of our balance sheet. In addition to our low FFO payout ratio, we also have a low debt to EBITDA ratio. This is tightly tied to our investment-grade credit rating of BBB high, and it's also tied to our executive compensation, two things we care very much about. We're often asked if we would breach our six times limit, and while the answer's always been no, we don't deny that it's very tempting. But leverage is a double-edged sword. it amplifies the gains in the ups periods but it also amplifies the losses on the downside it's very easy to increase leverage but very hard to bring it down to bring it down entities are forced to sell some of their best properties or to issue equity in poor market conditions our low debt to EBITDA ratio gives us options. It reduces financial risk, supports access to lower-cost capital, and provides capacity to act when acquisition opportunities present themselves. It also enhances our resilience in economic cycles, reducing our refinancing risk. When Primera spun out, we were completely floating rate debt and interest rates were rising. In this environment, we were able to put together a well-laddered, unsecured debenture program and provide per-unit growth. And now it looks like we're going to be entering yet another period of rising interest rates. The average interest for the debentures that are maturing in the next three years is 5.7%. We put this debt in place back in 2022 and 2023. This was before we completely redeveloped our portfolio and upgraded. And since then, our credit spreads have also narrowed. We actually feel that we're going to have an interest rate tailwind which will allow us to continue to develop our debt ladder as opposed to focusing on short-term refinancing. We view balance sheet strength as a strategic asset and not just a financing tool. Our approach to managing Primaris' capital structure is to remove risk as much as possible, maintain our investment grade credit rating, and create flexibility for the business to operate as needed. We focus on preserving our liquidity to take risk out of debt refinancing windows. Our predominantly unsecured debt program allows us to disconnect the right side from the left side of the balance sheet, providing Primaris maximum flexibility to manage and enhance our portfolio without the constraints that are associated with property-level financing. And we can make capital allocation decisions based on value creation rather than asset-specific financing constraints. We retain a large pool of unencumbered assets, which provides further financial flexibility. Our low payout ratio, our strong balance sheet, and our low debt to EBITDA are not simply defensive characteristics these are strategic advantages that help us create value for our unit holders over the long term and with that i will turn it over to Julian

thank you perfect so i'm going to spend most of uh most of my time on stage talking

to this slide and this is really um kind of to explain how we think through capital allocation and our different sources and uses. So before I dive into them, I want to just first start off by saying our whole capital allocation program is generally done with three goals in mind, growing our FFO per unit while also strengthening our portfolio quality and risk profile while also operating within our strategic leverage and distribution guidelines. And so Leslie had talked about those being the 45 to 50% FFO payout ratio that we have in the five to six times debt to EBITDA. And so they're laid out in a certain order here, but I'm going to bounce around a little bit in a little bit of a different order with them. But I want to start off with the free cash flow. As Leslie mentioned, we've got a very balanced payout ratio that allows us to provide an adequate and attractive distribution yield to our unit holders, but gives us a regular cash flow, which is a very low source of capital. And it allows us to fund kind of more regular opportunities that are in front of us, whether that's, you know, doing out parcel developments, whether that's redeveloping some of our space, such as the HBC, and we're not reliant on the capital markets for that. and so you know we're past the days where REITs were valued purely on distribution yield and payout ratios were maxed out and you know there were REITs that were borrowing just to fund the distribution and I think to a certain extent there still are but in our case we we have this regular annual cash flow and so this is a very important part of the business that allows us to again fund those opportunities without having to be reliant on the markets and also allows us to be in offense mode in in markets that are maybe softer or where capital is not accessible and allows us to be counter cyclical which is is it's been a very key part of the primaris story on the debt side we've got a triple b high rating we've got a low cost of debt but we're we're very cognizant of the trouble that reads can get into if they go too high so we put a lot of thought into our debt target which we've narrowed to five to six times debt to EBITDA and so then you know working within that narrow range we tend to fund off of the unsecured programs you know broadly speaking we can fund off mortgages unsecured or the revolver on the revolver side of things that's not meant to be a structural part of the business but it does give us flexibility and so a good example was Upper Canada we funded 150 million of the 411 million transaction with the revolver. And again, it wasn't trying to game interest rates or make a call on them. But in this specific transaction, we have, you know, in our last quarter, we showed 200 million of assets held for sale. And while those didn't don't time perfectly with the acquisition, you know, we have a degree of certainty that those are going to materialize such that rather than fund off a bond, we could fund off the revolver knowing that that capital is going to come in. And then as it pertains to mortgages versus unsecureds, you know, right now, the unsecured is quite quite a bit more favorable you got a lower cost it's much easier to arrange and it you know as regs would mention you decouple the left and right hand side of the balance sheet and that's so important because it gives you incredible flexibility for selling or doing land sales or or other redevelopments in there so we tend to lean towards the the unsecured we have some mortgages in place but those are largely for the some of the partnerships that we have where our partner needs debt to get to their return targets. Those are important too. You never know what'll happen with the unsecured market. It can be cyclical and having those relationships with those secured lenders provides a benefit as well. Land sales is another one that I'd say is somewhat new to Primaris and largely off of the HBC bankruptcy that's freed up some of the land to now be sold. And what we really like about this is it's a zero cost of capital. It's a zero cost source of capital. And so, you know, we're well underway on that. And I'm going to talk about that a little bit more on the next slide. But it's land that we're not really using. As you saw when we were driving by, oftentimes it's pieces of grass that are outside of the ring road. No NOI being lost. In some cases, we're actually saving costs of landscaping, snow removal, property tax, that type of thing they come with a long timelines high degree of risk and they're going to be more bite-sized but we're well underway which i'll elaborate more on and eventually it's going to be just kind of a regular small source of free capital coming in and another benefit i'll mention is it really demonstrates um the value of the portfolio and how irreplaceable it is which i'll touch on more um above above that the the larger chunkier sources of of capital are the asset dispositions and equity offerings. And so those are more so being used to improve the portfolio, but also fund larger acquisitions. And so I'll talk to the asset dispositions first. We are looking to sell non-core assets. And so typically, by definition, that's your highest source, your highest cost of capital. So you're selling equity interests in your kind of lowest quality um assets that should be the highest source and it historically has been but for us it's more so our outlook for the future where are we going to see growth and you know you heard a lot about tenants being in expansion mode but being selective with where they want to be and so for us the dispositions are really focused on malls where we don't think there's a strong growth outlook in the future largely because it maybe it's a smaller center lower traffic center or in markets that we don't see strong fundamentals or growth in but again that should in theory be the highest cost and has been the highest cost of capital but I don't want to get too ahead of ourselves but we're seeing a lot of strong strong demand we ran a process in the summer which had really really impressive demand and we're having a lot of discussions with buyers and with all the shakeup that's going on in many many asset classes negative leverage low returns it a lot of real estate allocators are seeing them all as one of the few asset classes where you can get outsized returns and so we're seeing a lot of capital starting to build up around the mall space and a lack of supply and so I wouldn't be too surprised if you saw us in the future being able to sell some of our lowest tier malls at cap rates that might even be inside of where the overall better quality, more liquid portfolio is trading at right now around an approximately 8% cap rate. And I think that's a really fantastic dynamic that hopefully we'll be able to demonstrate. We're also looking at some of the out parcels as well. And so this is, Pat showed you when we were driving around, stuff that's outside of the ring road, good investment and good retail, but it's not really core to our business. Our platform, our cost of capital, our expertise are really centered around the enclosed shopping center. And so if we can tactically sell off some of these out parcels at cap rates that are meaningfully tighter and for stuff that's non-core and take advantage of the really strong interest for that open air retail and also the different buyer pools. So it's sometimes private buyers that have a very different philosophy and aren't focused on the same return metrics that we are we think that's a really tactical one so you know Mark Sinet who's with us is going to be launching the out parcels here this month we think we think there will be incredibly strong demand and it'll show that while we buy these malls at higher IRRs we can sell some of the non-core less important stuff at meaningfully tighter ones and that that can be a really good source of capital another place where we're looking at it as well as Some of the malls that we're looking to sell that we're deeming non-core, they come with out parcels as well. And so the buyers of the malls, the cap rates are coming in, but they're still wider than the out parcels. And the larger you go, the more that buyer pool falls off. And so in some cases where we have larger malls where the ticket size might prohibit some of the private investors, we're going to sever those out parcels, sell those at meaningfully tighter cap rates, and then the remaining non-core mall will be smaller and should price tighter simply by virtue of being able to attract more competition in the bidding side. The last major source that I'll talk through is equity offerings. That is one we take incredibly serious. We're sharing in ownership of our company. Our management team owns a meaningful amount in the stock and so we don't do it lightly. It's something we're very, very cautious about. And generally speaking, it's something we'll only do to find a very strategic acquisition. And so the most recent example of course is Upper Canada Mall. And, you know, we've done it with all the large acquisitions as well. We can do it to the public markets. We can do it to the vendors. We were now able to do it public because of where it's trading, but it doesn't mean that, you know, issuing to the vendors is off the table it's simply another tool in our tool belt and the way we think through that notwithstanding that we think the equity is a very good investment it was something that was needed to be able to capitalize on the opportunity that was upper canada and you know to talk very briefly on that again that was a low seven cap but that was uh which is tighter than where our cap rate is but we see a re it was accretive on day one part partly because there's no incremental gna load with it so you have to factor that in when you're comparing it our implied cap rate versus uh versus the cap rate we're buying at but um importantly that was a center with 70 vacancy in the gta with lots of upside we see a clear path to it and we're not paying for the upside that wasn't factored in it you know it is immediately uh modestly accretive but what's really exciting is where the future is and again we don't rely on buying it for where the future will be two three years from now we're happy with where it's at now but we're just very excited for that and you know I always say be weary of REITs that'll tell you you know we're really buying it off of year three in our case we're completely fine with where it's at now but Primaris has a very strong track record we talked about it in Halifax how that was bought at a high six cap rate it's now uh based on the NOI we have an implied close to a nine and we'll be north of a 10 after the sales of the annex in the land and so we do have a track record of doing that and so we will issue equity in order to get those types of acquisitions that improve portfolio quality FFO and and future growth and so let me pivot a little bit to the uses again I'm going to I'm going to bounce around on the orders here distribution to unit holders I mean that that's something that that's baked in with the 45 to 50 percent again it's done with an aim of providing an adequate or attractive yield to our unit holders and leaving behind enough cash. I already kind of touched on that, so I won't go too much more into that. But one part of that is that that's very stable. It's recurring. It's baked in there in a world where we're seeing distribution cuts throughout. This is done with the goal that it will never go down, and we have an annual cadence of increasing it, and that'll always be part of it. Debt repayment, we have a narrow band that we mentioned there. Again, the difference between the cost of debt and the IRRs is quite strong. So, you know, debt repayment is not a huge part. We just want to operate within five to six. You'll see us sometimes lower it in advance to give us flexibility for redeployment later. But we're happy with the targets we've sent. Redevelopments and expansion, this is investing in our own portfolio. And this is one of the lowest risk, highest return ones. We do it tactically. we want to be careful we don't want to add too much retail and oversaturate them all but where we where we do do it whether it be hbc putting up bank pads or restaurants it's uh you know we typically target yields that are over 10 we typically do it with leases in hand so it's quite de-risk uh we've got a construction team that you know knows very well what they're doing and this is kind of what they live and breathe and so yeah we're not doing you know we're not going to be building master plans or apartments or anything we've seen enough of our peers get in trouble with that and so it's really just kind of small within our snack bracket high yielding stuff that makes good sense on the math on its own and also just adds to the the mall's quality and and experience and share buyback that's been less of a part of the story right now we're not ignore like it doesn't mean it's turned off and we you know we still think the shares make make a wonderful investment and to be able to again in light of being able to potentially be selling some of our lower quality assets at cap rates that are tighter than are implied with less growth it speaks to how attractive the share buyback is on our end but we have to manage that with you know strategic acquisition opportunities you know our debt profile but we have been one of a very active read on that front. And that'll continue to be a tool that we can use in the right opportunities. And then asset acquisitions. Again, I did touch on that again. The goal with those is we're buying ones where we're improving our portfolio overall in terms of quality, whether that's through long-term growth, whether that's through higher traffic, higher sales, productivity exposure to major markets the the the main idea is we want to look we want to buy stuff that five years from now and similar to what we say with conestoga and halifax everyone's going to be saying what a great deal that was what an amazing uh investment that was and so we think upper canada fits squarely in that and we're going to continue to uh to to look at opportunities like that so uh diving a little bit more into the land we we published this in june we went through the entire portfolio you know our 25 malls which is soon to be 2026 later this month you know the typical size of our malls about 50 acres we've got typically between 25 30 percent site coverage and so there's a whole bunch of other restrictions that are in place but we came to around 120 acres of land with value of 275 to 375 million it's we view again view that as a very low cost of capital and in in many cases it not only does it not have any harm to them all by selling it but actually it even helps them all by bringing additional traffic we're not just looking at multi-res I think people think because of my background that we're gonna be heavily focused on multi-res but we're actually talking to everyone we talk to hotel users student housing we're talking to the seniors housing long-term care even self-storage in some cases we're really looking across asset classes and we do think it'll help support them all we're not going to be again doing these crazy master plans that'll be ripping up the parking lots and making a concrete jungle where you can barely see them all by and large it's stuff outside of the ring road so not disruptive to them all and that's where we're focusing first and where we'll just be adding kind of traffic and customers and so um i want to give a tiny update these do take quite a bit of time um oftentimes they're tied to rezonings and development is extremely fickle it's very very levered you know you've got a huge amount that you have to spend to build and a huge amount of value and a small tweak in assumptions can kind of make your residual land value go away but so all that's to say it'll take time and there is some degree of execution risk but we've got one for one under APS that's waived conditions two under APS that we're working through the due diligence we've got one under LOI that hopefully we'll have under APS very soon and then we're negotiating three other LOI so we're well underway it's exciting and we actually got I'm not going to give too many details on it but I got we got one unsolicited offer on one site that we know is a gem but it's not it's not GTA or Montreal or anything but there's something you special about the site but the the offers that I'll take as much as I can get and the value per acre of land on that site if you apply that to the entire mall the value would be twice what we have them all on our IFRS value and this is a I would say it not semi non core mall and so it really speaks to like the value of the land bank that is is not given any value and even further i'll say it speaks to the replacement cost when the land in that site specific and that's not that's not typical that it's that that's wrong but when the land is worth twice as much as them all it really shows you it shows you a how hard it's going to be to amass that type of scale of land but you can never really replace it and so that's one of the really strong moats around the business and so give us a bit more time and we'll have more and more updates and eventually you're going to start seeing a cadence of just free cash flow kind of pumping back in the business that we can reinvest in our strong opportunities. So I'm going to talk more specifically about this mall. I've just got two more slides. One of them is on the out parcels. Mark talked about it yesterday and Pat pointed them out as he was driving through. There's a Tesla dealership and then there's some other out parcels you know you've got Best Buy, Old Navy, La Cage, a few other tenants in there and so this is subject to a lot of demand. Mark said there's not enough supply out there. People are the investors are very very hungry for this. You can underwrite with incredibly strong fundamentals that we may not even believe in ourselves but and it's they're smaller in size so they draw a cap like a much broader capital pool than pretty much I think any almost any other asset class and right now and so you know you might even say that they might be somewhat overvalued and so if it's not core to us it's not part of you know what the platform is is directed to do it makes for a really good opportunity to sell and so we've got a lot of those we're excited about this one we've been working with Mark's team over the last couple of months and we're gonna be launching that this fall and again just given the simplicity and smaller size of that that shouldn't be too controversial of a process and should be able to sell and um really show that we don't pay we when we buy these malls we don't ascribe a separate value to the out parcels we value them with the same high irrs that we're using for our malls but then if we can flip and sell those for for lower and we talked about the annex at halifax for those of you that were there it's a very similar story um we'll we'll take advantage of that and then the last piece is the land we're sitting on over a hundred acres of land here st bruno is an affluent area in the south shore it's exciting and um you know we've we've got a lot of land on the out parcels um the first uh the first area that we're going to be targeting is going to be what we've got highlighted in green here on the screen that's the grassy area that pat was pointing to so there there is no other use for us with that um and with the proximity to the highways the highly affluent area the brand new airport that just opened and the most uh you know the best mall in the south shore this is as good as it gets for land in in the south shore and it's very attractive and so i'm out talking to you know all different uh developers of all different asset classes across the country and what i will say is this one right now is the one i get the most questions about there's a lot of interest the seniors housing folks love it because of the demographics the the affluent and and older population the hotel folks love it because of the new airport that just opened you know it couldn't be a better spot you're by the highway you're by the airport and you've got all the shopping and retail in there especially the keg one right so you think for a hotel uh hotel developer um they don't have to they don't have to build out or operate a restaurant you've got a perfect hotel restaurant beside it as well the multi-res folks are quite interested in it as well and so a bit of a frustrating one the reason this one's not front of the line in terms of the list that we we've said I was kind of walking through an APS and LOIs is the municipality has expressed that they want to see more density here and and that's very encouraging and we think either they're gonna rezone it for us or they will facilitate rezoning that we would do on our end but as great as that sounds they said okay well we got to sit down and think about this and we're gonna come out with a project charter that outlines the uses and the densities and by the way you're frozen from selling anything until we do that and you know since I joined over six months ago it's been coming in two to three weeks pretty much that's the update we get every two to three weeks and so they've said it's coming this month we mean it for real but I'll see it when I believe it but once we have that it'll allow us to to go to developers and say look this is what you can do with this the city is supportive there's a clear path to it and we've got a long line this is one i get um asked quite a bit about so that'll be uh very exciting for us i've outlined call it approximately seven acres that would be really easy to sell that's grass that's outside of the ring road and um you know and working with with mark and um another uh land broker daniel who specializes in this um we've talked about what we're going to do we've walked through values i think you know four million dollars an acre would would be um not controversial at all to say and so on seven acres you know you're talking you know plus or minus 28 and then i'll go even further than that we haven't outlined it but you know there's more land outside of the ring road you can see the red dotted lines is what we own so there's quite a bit more that we could do outside of the ring road that'll have a little bit more complications which is why it's not first and then even within the ring roads if uh you know whenever we run out if there are areas that aren't disruptive to the mall we would consider that we take piercing the ring road a little bit more seriously so that's kind of the last line of opportunity but you know again all of that value is something we didn't pay for so with that said I'm gonna let pass it back off to Alex

thank you Julian one thing I forgot to do when I first came up here at the beginning was Pierrick Picour is the marketing manager here at

Promenade St. Bruno he's in the back he joined us six or eight months ago from the Montreal Alouettes so lots of diverse marketing experience and I would highly recommend you you know chat him up as we walk around the mall because he has lots of interesting stuff that's going on at this shopping center so this is going to be shorter than my earlier ramble and it's going to be just about you know what we've been talking about this is management's focus and if you just look at through those four different buckets that's really what myself and Pat and Leslie and Julian have been talking about you know maintaining financial strength, allocating capital with discipline, driving NOI within the existing portfolio and growing FFO and AFFO and distributions per unit. I think we've mentioned a few times we've been very thoughtful about our executive compensation, creating alignment between our management team and unit holders. I think Julian mentioned there's a lot of the executive personal net wealth tied up in Primaris. We're very aligned with unit holders and so this is the stuff that we're focused on. When I think about the future of Primaris, this is, and I think that the team thinks about it this way as well, our June 29th press release spoke to the lease up of a lot of the HPC but also the CRU leasing that we've been doing. A lot of that CRU leasing was from legacy portfolios, but a lot of it was from properties that we've acquired over the last few years, leasing up vacant space, you know, still some remnants of the pandemic in terms of legacy vacancy within the portfolio. I think Pommie had asked earlier about the timing of the HBC, you know, rents commencing. That will be, as Pat was saying, you know, late 2027, 2028. A lot of the CRU leasing that we've been reporting on, particularly in Q1 of this year, a lot of that is going to be sort of filling some of that gap through 2027. Those leases typically take less time to build out the space and they tend to be at higher rents. And so our ramp of growth, even in 2026, if you look at our same property, NOI growth in the first half, you know, we're expecting it to pick up in the second half, as is implied in our guidance for 2026. And we'll see that ramp go through 2027, 2028, 2029. And as we think about the next phase of our growth, once we get to 96, 97, the growth will come from a different source. But we're pretty optimistic about the scale of that growth. You know, for the last few years, as we've been filling space, there are a number of tenants within our portfolio that we have allowed to persist. You know, some of them are not terribly productive or they don't pay very much rent, but they were filling space. And as we were trying to fill the space beside them, you know, we let that be. When our shopping centers are full, every tenant has to fight for their space. And that means they need to be more relevant for consumers. They need to pay higher rent. They need to sell more stuff. And so once we get the malls full, the next phase of growth is really around going back and optimizing the tenant mix, which is something we do on an ongoing basis. but there have been a number of retailers that we've let sort of persist in the portfolio. So that really, you know, I say 2029, 2032, but when you think about when that's actually going to happen, the full tenancy that we're talking about in the June 29th press release and in, you know, this slide, most of that will contractually be done, you know, in the next 12, 18, 24 months. And as soon as we get to that committed 96% is when you start to work on the tenant optimization. So a lot of that work will be, you know, even in the latter half of 2027, and a lot of it will be in 2028. And then the operational efficiency side of things, you know, I think it's fair to say that when you've got a portfolio that is 70% new in the last five years, including, you know, a billion and billion six of acquisitions in 2025, another 400 million that we just announced. We're still wrapping our arms around a lot of these properties. Sometimes it takes a little bit of time to figure out exactly, you know, what you have and, you know, where you can take it. And so as our business has been very fluid and dynamic in terms of the portfolio construction, there is a lot of opportunity in operational efficiency. Some of it comes back to AI and the optimization of some of our processes. Other things, our lease structures, we have a group of people in our lease administration group that basically calculate the recoveries from all of the tenants. I think we can utilize some technology, some AI to improve the efficiency there, but then that group sort of shifts its focus from sort of the rote calculation of the recoveries. All 3,000 tenants have a slightly different calculation of that recovery. And as you can, I guess, sort of better wrap your arms around exactly how all those calculations are done and utilize technology, you can also analyze that portfolio of leases and figure out ways that you can feed back to the legal team to say you know when we're writing these leases you know this is a little tweak that the tenant doesn't really care about but it'll improve our operating margin it'll improve our efficiency you know there's there's a dozen different things along that line and that's something that from a platform perspective we're really excited about you know being the next next phase of growth for Primaris. I mentioned earlier that we have a new set of three-year targets out 96% in place occupancy that is what our prior target was before we revised it due to the HBC bankruptcy interestingly enough if you exclude the HBC space we're at 96% committed we'd like to get the in place back up to that level as well. We think over the next three years, 2027, 2028, and 2029, we've got a three to five percent same property on a wide growth range. I think that's sort of a compound annual growth rate. We're not exactly sure where it's going to land in each year, but it has the potential to exceed the top end of that range in some years. And we think that the average will be somewhere in that range. Dispositions, $500 million. Julian just spoke about some of the land and out parcels. We do have some non-core malls as well that we'll be selling as well. Hopefully some of that news will be available in the near term. Capital expenditures, we've got $200 million-ish around the HBC, and then there's another $100 million of projects which once we wrap up the the webcast portion of this investor day pat's going to speak to some of the projects that we have going on in this mall there's a 50 million dollar project that's not hbc related that will go into that 300 million just here at this property ffo growth 48 as leslie was mentioning our payout ratio has dropped into the below midpoint of our target range and our FFO growth we believe is accelerating over the next three years and so we're expecting distribution increases in the four to eight percent range as well that's up you know from the two to two and a half that we've been doing for the last four or five years leverage we tightened up the bottom end of the range this isn't terribly strategic it's just sort of an acknowledgement from us that what we've really been doing when we think about the last five years is we've been trying to optimize the amount of equity in the business dropping leverage to four times doesn't really add a lot of advantage over five times and we are comfortable with our six-time ceiling so in practical reality we've really been optimizing for that five and a half to six range really but you know we're comfortable going down to five and the payout ratio is, you know, remains unchanged. One thing you'll note about this is we don't have a target on acquisitions. And that's not to say that there has been any change in our ambition or our opportunity set. We still remain very focused on acquiring malls that we think elevate our platform, you know, in terms of the quality, the internal growth rate of the steady state, same property NOI growth. It just is a very difficult thing to handicap because, you know, the acquisitions are $400 million, $500 million, $600 million. And, you know, when we do four acquisitions like we did in 2025, it's $1.6 billion. You know, we've got one so far this year at $400 million. You know, we're not super, super focused on growing specifically to grow. it's really about getting the right properties and and we think that there's a significant opportunity there but we just decided not to put out a specific target because you know it's it's just a tough one to wrap your arms around but we do remain very interested and we're in active discussions on a number of properties so that is a really good quote I'm not sure who it's attributed to but um that's probably a collective primaris team quote uh so we're pretty excited about um you know what lies ahead i hope everyone uh has found this very useful and productive and we're looking forward to touring everyone through the mall uh after we have some lunch but uh we have a little bit of time right now for some q a and uh it can be for myself it can be for Wesley, for Julian, for Pat, any questions that anyone has, we'd be happy to field at this point.

Alex, the $500 million disposition target, you had the same target three years ago. Are these assets that you always wanted to sell?

I assume they're not from assets you recently bought, so it's just continuing to trim from lower quality, lower sales? yeah so the the non-core dispositions is a combination of the land which as Julian very clearly mentioned has essentially no cost of capital for us we do have some out parcels which you know aren't strategic to us and when it comes to the malls you know again what we're really trying to optimize for is the steady state internal growth rate so we have some malls in our portfolio that are, you know, very good, steady performers. And what we're really trying to do is optimize around the high growth part of the portfolio. And embedded in your question was, you know, are these the same ones that we've always been looking at? I would say, you know, as our portfolio has grown and the averages that we spoke about earlier have improved, You know, that sort of that line for non-core tends to move up a little bit. As I mentioned a couple of minutes ago, hopefully we'll have some news on that front in the quite near future. And, you know, you'll see, you know, some of the examples that that would be non-core.

Hey, Alex.

It's Sam.

How's it going? Great presentation. Thank you for doing this today. I look forward to seeing them all. I just want to understand what's in the same property and why growth guidance. of 3% to 5%, and this might be for Leslie, but clearly it's 96% occupancy is where you're targeting over the next, I guess, three years. But what properties are in and not in that same property asset pool in terms of maybe some recent acquisitions that might not be part of that? And also you've talked in the past about getting to a mid-90s recovery ratio. Is that embedded in your 2029 target at this point and include it in the same property and a white growth guidance.

Yeah, Leslie, on the same property, would the 2025 acquisitions be in our 2027?

Yes. So next year, everything we bought in 2025 will be in 2027. So that will mean St. Bruno and Upper Canada will be the only ones that aren't St. Property next year.

And then St. Bruno steps in and then Upper Canada steps in. and yes we would consider the the growth in the recoveries as part of our same property growth predictions as well so really it's only upper canada mall that won't be in the same property for 2027 but after that everything else is in um and your recovery ratio question uh so on that point um one of the things that we found uh you know there's been a little bit of confusion about is when we talk about the drivers of same property NOI growth, lease up is a big driver. We've also talked about the recovery ratios going up as being a driver, but those two are really overlapping. As the occupancy goes up, the recovery ratio improves. I would say absolutely, we're expecting our recovery ratio to get into the mid-90s for low to mid-90s for property taxes and ideally the mid-90s to even the high 90s for the CAM. And the CAM, we can charge an administrative fee, which gives us the possibility to be over 100%. I think Pat said that Peter Pond and Park Place have both been at 104, both very well-run shopping centers. And we're hopeful that we'll be able to get the whole portfolio up into that mid-90s blended recovery ratio.

So, Alex, maybe just to follow up on that same property and my question, just to clarify, is the HPC backfill included in that figure when you're also, of course, putting in a fair amount of capex? I just want to make sure that, you know, the HPC space is part of that three to five.

Yeah, no, it is. And, you know, I think it's a good question in the sense that there's a lot of ways that you can drive same property NOI growth. If you wanted to buy up your rents, you can spend capital to manufacture same property NOI growth. In our case, we try to be as transparent as possible. The capital that we're spending, we're calculating the return based on the space being empty. So the 10% or 10% plus yields that we're getting on the HBC backfill is just the incremental cost and the gross rent that we're getting. And that will be included in the same property. and you know ideally you know if we're successful on everything that we're doing hopefully we'll be at the top end of the range or possibly above the top end of the range which for those who have followed us for a while we tend to like to set targets that we're reasonably confident that we can we can hit and so yeah I mean three to five is a number that we're quite comfortable that we'll be able to achieve and you know it's possible we could we could outperform and just just to follow up um that four to eight percent ffo growth that you've laid out there's clearly a number of moving parts here you know between three and five same property no i the 500 million

disposition depending on what yield versus land or an asset or an income producing asset so you know when you think about that four to eight percent is it more skewed to i guess some of the heavier leasing or benefit from a leasing standpoint on the backfill of that space uh i think that 50 million of noi that you showed kind of shows it kind of evenly over the next three years so just trying to reconcile that range of 48 and what that might look like in the later years versus the early years yeah so at the end of this month we're going to provide our 2027 guidance um and that will give us more specific numbers around 2027.

At this point, we're still working on the three-year budget and where all of those things land. I tried to touch on it earlier, but the contributions in 2027 are more likely to be skewed towards the CRU leasing. There's been record levels of CRU leasing in our portfolio. In one of Pat's slides, it showed the volume of leasing really accelerating. And that's not just because the portfolio is larger, it is, you know, on a comparable basis has been accelerating quite a bit. But as it relates to the FFO per unit growth, I think you touched on the key variables, dispositions, the dispositions, you know, there's no real two ways about it when you're selling something at a high single digit cap rate and the use is paying down debt or something else it's going to be dilutive fortunately these properties are smaller in dollar value than the acquisitions that we're making there is a negative spread the things that we're selling are typically slightly higher cap rate than the things that we're buying but on the whole we think that we're generating higher internal growth and it's really a timing uh difference but um yeah i mean to get to the four percent would imply a fair bit of dilution from dispositions and probably a lack of success on some of the leasing uh that we think we're you know pretty pretty well advanced on and um the high end of the range would be you know some outperformance from some of the acquisitions um some earlier delivery of the rent from some of the cru leasing but also the hbc uh backfill leasing um so four to eight percent we feel is a pretty comfortable range and again if things go really well you know possibly we'll be above that

range hey alex um we were out in halifax and that mall's fully occupied and there's a mark to market on rent story there um and you have malls that are in various rates of lease up but just given the replacement cost and the rents that are necessary to occupy new space do you expect to see a market rent move while you're leasing up this space or do you need to get to that 96 occupancy before you have tension and can push rents i don't know pat uh maybe maybe pat wants to answer that one i i think probably yes but i'll let yes

yeah no rent rents will move up i mean there's a lot of demand for space halifax a good example we have a ton of tenants that want more space existing tenants that want to expand we're going to be replacing some existing tenants in the mall that are performing and bringing in two new tenants are expanding existing ones and the rents are just going to climb.

Yeah. And again, one of the things that's unique about the mall business is that the rents aren't necessarily location specific, they're tenant specific. And one of the metrics that we always encourage people to look at is our gross rent occupancy cost ratio. And it's at 12.5%. We think we can get it up to the 14.5% range, recognizing that that's a gross rent metric. If you eliminate the additional rent component, you're really talking about 200 basis points of increase on 600, 650 basis points of net rent. So the mark-to-market that we believe exists in our portfolio is somewhere in that 25% to 30% range. And it takes some time. Leasing up space is a priority over the leasing spreads right now. but 12-18 months from now when we've done all of the committed leasing to get to 96 is when we really start to dig into that and that's you know pushing the rents on existing tenants we want to keep but also replacing some of the softer performing tenants. Is that Lauren?

Thank you.

Maybe I'll put Pat back and on the spot since he had an easy out last time with the increase in costs of financing are you seeing any slowdown in terms of appetite for retailers to continue to expand it's not financing that's causing them anxiety it's construction costs Mike closer to your mouth okay it's it's really construction costs that are hitting retailers right now it's the cost to build whether they you know their box stores like grocery stores or just tenant fit outs they're trying to figure out how to optimize their layout so they can cut costs down having said that it hasn't slowed down

expansion but it's certainly they're starting to talk about more uh thanks uh so my question is uh how much of the ffo per unit growth guidance is from the sale of residential density or in other words uh like what would the 48 target be if you sold zero excess land honestly i uh i believe that our modeling has not really incorporated much on that front we tend to be fairly conservative and as julian has highlighted um it is a complicated process uh julian's only been with us for six

months uh he brings all of the expertise in this in this realm and uh you know we're we're giving him a little bit of leeway until it actually comes through and um and the numbers are not that huge so it's it's incremental it is free capital essentially in terms of the cost of capital but um i would say that's kind of a bonus to the extent that we are successful on that front and we redeploy it. When you think about our weighted average cost of capital across our $5 billion of equity and debt, it's a relatively small number, but it really does help.

And particularly over time, we think it's going to be a significant driver, but to date, we haven't really factored that into our forecast thank you Alex I noticed that there you've had a chart on M&A targets in your presentations and some of the past ones and I can appreciate that you don't have a target on acquisitions but when you think about your opportunity set for malls that would fit your criteria what does that number look like is it another three billion is it four billion well Well, since the beginning, we've had a chart that said $40 or $50 billion.

We've acquired $3.8 billion in the last five years. There's still an awful lot out there. To give you some context or some qualitative description, there are a diversity of perspectives at the pension plan. And some of them are quite keen to, you know, get entirely out of direct real estate. Some of them have platforms and want to maintain that platform. And it's more a matter of rebalancing the mix of office retail, industrial, cell towers, data centers, infrastructure, other real assets. But I would say that, you know, we've acquired a fair bit. but I would say that the opportunity set is still well in excess of what we've acquired to date and we have you know some some more stuff that we're working on you know you never know until you know but we're optimistic that we'll be able to continue to add high quality shopping centers to the portfolio you know it's possible in the remainder of 2026 you know I think we'll be active in 2027 and i'm getting more confident that even 2028 will continue to have some significant opportunities um it's a it's a very interesting landscape the uh the malls that we acquire are large canada is not that large of a place and so um the liquidity in the mall market uh remains you know not anywhere near what it would be for instance grocery anchored strips where you can have an auction and have 30 or 40 bidders that are well qualified that are aggressive julian has spoken i think he spoke about it as well in halifax our most recent acquisition there was more competition that we've run into than than we have in the past which we believe is encouraging But we still remain a preferred buyer, particularly as you get larger and larger, $400 million and plus. You know, we have a great profile, you know, excellent access to capital, no financing condition. We're very professional. Our team underwrites these properties very quickly. We, you know, can communicate very clearly with the vendors. and we have established great relationships with all of these counterparties and we work very well with them. So we're quite optimistic that there's still a long way to go.

Thank you.

And that is three minutes before we were supposed to wrap this up. So I feel pretty good about that. And I think that's the end of the webcast portion. Yes. Thanks everyone for attending online and in person. And yeah.