Morningstar DBRS Comments on Primaris Real Estate Investment Trust's Acquisition of Lime Ridge Mall

DBRS, Inc. (Morningstar DBRS) comments on Primaris Real Estate Investment Trust's (Primaris) acquisition of Lime Ridge Mall, an enclosed shopping center in Hamilton, Ontario, from Cadillac Fairview Corporation Limited (the acquisition). Lime Ridge Mall was acquired on June 17, 2025, for total consideration of $416 million, consisting of $235.0 million in cash, $81.0 million of Series A Trust units, and $100 million of exchangeable preferred units.

The acquisition demonstrates continued execution of Primaris' growth strategy and progress toward achieving three-year acquisition targets in high-quality, market-leading regional enclosed shopping centres. The acquisition of Lime Ridge Mall follows the acquisition of both Southgate Centre and Oshawa Centre in January 2025 with a similar transaction structure with funding consisting of a mix of cash, trust units, and preferred limited partnership units.

As of the last 12 months (LTM) ended March 31, 2025, Primaris' leverage measured by total debt-to-EBITDA stood at 6.7 times (x). Morningstar DBRS expects leverage to see a modest uptick in the near term to the low-7.0x range as a result of its acquisition strategy. Notwithstanding the acquisition, Morningstar DBRS expects Primaris to continue to manage leverage in the 5.5x to 6.0x range in the medium term as it continues to execute on its disposition pipeline ($160 million of dispositions in first quarter 2025 and $352 million assets held for sale as of March 31, 2025) of non-core assets over the next three years, in addition to the annualized income generated from recent acquisitions.

As stated in our latest credit rating action on April 17, 2025, Morningstar DBRS would consider a negative credit rating action should Primaris' key financial risk assessment metrics deteriorate such that total debt-to-EBITDA increases above 7.3x and EBITDA-to-interest coverage declines below 2.66x on a sustained basis, all else equal. A positive credit rating action is unlikely in the near to medium term given the overall business risk assessment.

Notes:
All figures are in Canadian dollars unless otherwise noted.

For more information on this credit, visit http://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.

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