Primaris REIT says it has leased or is in advanced negotiations for 84% of the former Hudson’s Bay Company store space in its shopping-centre portfolio, with the redeveloped locations expected to generate nearly four times the annual rent previously paid by HBC.

The REIT reported the leasing success in a broader activity update.

Primaris said 881,400 square feet of the approximately 1.3 million square feet vacated by HBC has been leased or is in advanced negotiations, including 608,500 square feet secured under long-term lease agreements with high-credit-quality tenants. The leased space is expected to generate about $14.9 million in annual rental revenue, compared with $3.7 million previously generated by HBC, a 298% increase. Primaris expects the former HBC locations to produce more than $18.9 million in annualized net rent, or about $22 million in annual cash net operating income, once redevelopment is complete.

The REIT expects to invest $175 million to $225 million to redevelop the former HBC spaces, targeting yields above 10%. It also reported strong leasing interest for the remaining available space from grocery, pharmacy, sporting goods and other national and international retailers.

Across its broader portfolio, Primaris said recently completed leases, future leasing at its top 10 properties and the HBC redevelopment program are expected to contribute approximately $52 million in incremental annual cash net operating income by June 2029. The completed leasing activity includes about 300,000 square feet of space, plus a new Walmart location replacing a former Sears store at Lime Ridge Mall in Hamilton.

“The substantial leasing completed to date will deliver very attractive returns with strong rental-rate growth, while enhancing traffic and tenant mix across our shopping centres,” said Primaris Chief Operating Officer Patrick Sullivan.

Primaris also announced $168 million in shopping-centre transactions completed this month. The REIT sold its 50% managing interest in McAllister Place in Saint John, N.B., for $32 million and Marlborough Mall and Professional Centre in Calgary for $67.5 million. It also acquired the remaining 50% interest in Regent Mall in Fredericton, N.B., for $64 million, giving it full ownership of the property, and purchased the adjoining former HBC store at Devonshire Mall in Windsor for $4.5 million, where it plans to demolish the building and create a new mall entrance. The acquisition of the former Bay space give Primaris full ownership of the mall site. The former Bay store’s purchase price had been disclosed previously.

Following the transactions, same-store sales productivity across the portfolio increased to $817 per square foot from $801.

The REIT said it has identified between $275 million and $375 million of excess land, representing about 120 acres, for potential monetization.

Primaris Chief Investment Officer Julian Schonfeldt said the monetization effort offers opportunities to unlock embedded value and generate an additional capital source to fund future growth within the REIT’s core portfolio.

Primaris has also identified about $200 million of non-core, non-enclosed shopping-centre properties and retail pads that could be sold as part of its capital-allocation strategy.

The REIT said it does not intend to own, manage or develop residential properties and will remain focused on enclosed shopping centres.

Primaris reaffirmed its 2026 guidance for cash net operating income of $390 million to $400 million and funds from operations of $1.85 to $1.90 per unit. The only change to its outlook was an increase in expected general and administrative expenses to $44 million to $46 million, up from $42 million to $44 million, reflecting about $2 million in failed transaction costs.

The positive activity update comes after Primaris regained full control of all former HBC anchor spaces across its national enclosed shopping-centre portfolio in XX. At the time, Primaris said the regained control would open the door to major leasing and redevelopment activity.

Sullivan called the departure of Canada’s final department store “an enormous opportunity for Primaris,”‘ adding that it provided “maximum flexibility for revitalization through reinvestment and remerchandising, as well as substantial land sales.”

Primaris secured full control of the HBC leases in 2025 after they were disclaimed in the iconic now-defunct retailer’s ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

Pictured: Former Bay store at Sunridge Mall in Calgary.

Photo: Shutterstock