Post by
incomedreamer11 on Mar 07, 2022 9:37am
TD comments
Impact: SLIGHTLY POSITIVE Occupancy (see Exhibit) continued to trend higher in Q4/21 as retailers position for the reopening, and the pace of store closures remains at historic lows. Excluding Northland Village (where tenants are not being renewed pending its conversion to an open-air shopping centre):
Original Primaris portfolio committed occupancy increased +110bps vs. Q2/21 to 92.1%, and
Total portfolio in-place occupancy increased +160bps vs. Q2/21 to 87.6%. PMZ's 2021 financial report reflected operating results for the original Primaris properties (7.6mmsf), while supplementary disclosure incorporated the HOOPP properties (3.9mmsf) which were acquired on December 31, 2021.
Q4/21 NOI (excluding HOOPP properties) of $36.6mm fell 9% y/y due to temporary rent adjustments (caused in part by pandemic-related impacts preventing tenant sales performance from meeting year-end targets), 70bps lower y/y occupancy (due to Northland Village), and lower straight-line rent.
Pro forma FY2021 NOI (including the HOOPP properties) of $181.8mm slightly beat our $178.6mm comparable estimate. Our previously-published $168.6mm estimate did not reflect a $10mm newly-announced reclassification of management/administration costs (understood to be non-recoverable) out of property operating costs. Guidance/Outlook: Management reiterated the 2022 NOI forecast at $187.5mm (including the aforementioned G&A reclassification) and over the next few years expects committed occupancy to reach 94%-96%. IFRS NAV/unit of $22.07 met original guidance, and reflects a 6.52% cap rate (which should clear up any uncertainty prompted by last October's circular).
NCIB Approved: Primaris received approval for a 7.5mm-unit (~7% of outstanding units) NCIB commencing March 9, 2022. Per the CEO Letter to Unitholders, "our most attractive use of capital, bar none, is buying back units at a deep discount to NAV/unit, on a leverage-neutral basis". With the units trading 25%/32% below our/ IFRS NAV, we would expect repurchases to commence promptly.
Balance Sheet: D/GBV was 28.4% while pro forma debt/EBITDA was 5.5x. PostQ4, Primaris obtained a $700mm unsecured revolving credit facility and repaid the $200mm note payable to HOOPP.
New Credit Rating: On March 4, DBRS assigned Primaris its inaugural credit rating at BBB (stable trend), opening the door to the potential issuance of debentures.