Primaris REIT has completed the sale of the 1.3-million-foot Galeries de la Capitale mall in Quebec City for $325 million in cash and stock.

Oxford Properties and the Canada Pension Plan Investment Board are selling the property. They held equal stakes in the mall under a joint-venture.

Primaris, Oxford and CPPIB are all based in Toronto.

The agreement called for Primaris to pay $170 million in cash, 2.5 million of the REIT’s regular units, and preferred units with a face value of $100 million. The preferred units will be converted into regular REIT units at a price of $21.86 apiece and have a contracted value of $87.6 million, subject to customary adjustments, said Primaris.

Galeries de la Capitale, has no debt liabilities.

CBRE Canada, RBC Capital Markets, Desjardins Capital Markets, and TD Securities advised Primaris on the transaction.

Primaris announced a bought-deal offering, which is designed to raise $69.6 million in conjunction with the Galeries acquisition. The offering is with an underwriter syndicated that includes RBC Capital Markets, Desjardins Capital Markets, and TD Securities, among others.

The offering includes 4.48 million units, priced at $15.55 per unit, with Primaris set to raise approximately $34 million and a selling unitholder receiving around $35.6 million.

Primaris plans to use the proceeds to repay debt incurred in the mall’s acquisition.

In a news release, CEO Alex Avery called the acquisition a strategic move that enhances the REIT units’ trading liquidity. Meanwhile, CFO Rags Davloor said the inclusion of equity and preferred equity allowed Primaris to maintain its best-in-class financial leverage metrics.

The offering is expected to close around October 9. The underwriters have been granted an over-allotment option could raise additional proceeds.

RBC Capital Markets acted as advisors to the vendors.

Oxford currently manages the property.

The deal is slated to close October 1.

Photo: Destination Quebec