Monthly Dividend Stock In Focus: Primaris Real Estate Investment Trust

Up to date on April tenth, 2025 by Nathan Parsh

Primaris Actual Property Funding Belief (PMREF) has three interesting funding traits:

#1: It’s a REIT so it has a positive tax construction and pays out nearly all of its earnings as dividends.Associated:  Listing of publicly traded REITs

#2: It’s a high-yield inventory based mostly on its 6.2% dividend yield.Associated: Listing of 5%+ yielding shares

#3: It pays dividends month-to-month as a substitute of quarterly.Associated: Listing of month-to-month dividend shares

You may obtain our full listing of month-to-month dividend shares (together with related monetary metrics like dividend yields and payout ratios), which you’ll entry under:

Primaris Actual Property Funding Belief’s trifecta of favorable tax standing as a REIT, a excessive dividend yield, and a month-to-month dividend make it interesting to particular person traders.

However there’s extra to the corporate than simply these components. Preserve studying this text to study extra about Primaris Actual Property Funding Belief.

Enterprise Overview

Primaris Actual Property Funding Belief is the one enclosed procuring center-focused REIT in Canada. Its possession pursuits are primarily in dominant enclosed procuring facilities in rising markets. Its asset portfolio totals 15 million sq. toes and has a worth of roughly C$4.6 billion.

Supply: Investor Presentation

Like most mall REITs, Primaris REIT is dealing with a robust secular headwind, specifically the shift of shoppers from conventional procuring to on-line purchases. This development has pushed quite a few brick-and-mortar shops out of enterprise in recent times and has markedly accelerated for the reason that onset of the coronavirus disaster.

Primaris REIT is doing its greatest to regulate to the altering enterprise panorama. To this finish, the corporate tries to attain economies of scale whereas additionally enabling and supporting omnichannel integration.

Furthermore, Primaris REIT owns and operates procuring facilities that represent the first retail mode in its markets. The REIT additionally targets procuring facilities with annual gross sales of at the very least C$80 million to attain the important mass wanted to attain important economies of scale.

Supply: Investor Presentation

Moreover, Primaris REIT tries to construct multi-location tenant relationships to create deeper relationships with its tenants and profit from such relationships in the long term.

On February twelfth, 2025, the corporate reported fourth-quarter outcomes for the interval ending December thirty first, 2024.

The belief’s whole rental income reached $100 million, which was supported by steady occupancy ranges and contributions from just lately acquired belongings.

Identical Properties Money Web Working Earnings (NOI) grew 9.1%. Dedicated occupancy stood at 94.5%, with in-place occupancy at 90.4%. Primaris additionally noticed a 14.5% improve in funds from operations (FFO) per common diluted unit, reaching $0.42, and maintained a strong monetary place with $590 million in liquidity and $4.1 billion in unencumbered belongings.

Progress Prospects

Because of the traits of its core markets, Primaris REIT has some important development drivers. In its markets, the inhabitants and common family earnings are anticipated to develop by a low to mid-single-digit development price going ahead. This implies greater revenues for the procuring facilities and, therefore, greater revenues for Primaris REIT.

Furthermore, as occupancy is at the moment standing under historic common ranges, there’s ample room for future development for this REIT. Administration is assured in sustained development within the upcoming years.

Alternatively, traders ought to always remember the robust secular headwind from the shift of shoppers towards on-line procuring. Whereas Primaris REIT is doing its greatest to regulate to the brand new enterprise atmosphere, the secular shift of shoppers will virtually actually proceed exerting a considerable drag on the enterprise of the REIT. General, we discover it prudent to imagine only a 1.0% common annual development of FFO per unit over the subsequent 5 years to be protected.

Dividend & Valuation Evaluation

Primaris REIT is at the moment providing a 6.2% dividend yield. It’s thus an attention-grabbing candidate for income-oriented traders however the latter needs to be conscious that the dividend could fluctuate considerably over time because of the gyrations of the change price between the Canadian greenback and the USD. Because of its respectable enterprise mannequin, strong payout ratio of fifty%, the belief isn’t prone to reduce its dividend within the absence of a extreme recession.

Notably, Primaris REIT has maintained a stronger steadiness sheet than most REITs to have adequate monetary energy to endure the secular decline of malls and the impact of a possible recession on its enterprise. The corporate has an honest steadiness sheet, with a leverage ratio (Web Debt to EBITDA) of 5.8x.

Alternatively, because of the aggressive rate of interest hikes and few price cuts applied by the Fed in response to excessive inflation, curiosity expense is prone to rise considerably within the upcoming years. It is a headwind for the overwhelming majority of REITs, together with Primaris REIT. If excessive inflation persists for for much longer than at the moment anticipated, excessive rates of interest will in all probability take their toll on Primaris REIT’s backside line.

Relating to valuation, Primaris REIT is at the moment buying and selling for under 8.1 instances its anticipated FFO for this 12 months.

Given the headwind from on-line procuring, we assume a good price-to-FFO ratio of 9.0 for the inventory. Due to this fact, the present FFO a number of is barely decrease than our assumed honest price-to-FFO ratio. If the inventory trades at its honest valuation degree in 5 years, then valuation would add a small quantity to whole returns.

Contemplating the 1% annual FFO-per-share development, the 6.2% dividend, and a slight tailwind from a number of expansions, Primaris REIT may provide a excessive single-digit common annual whole return over the subsequent 5 years. Whereas not sufficient to warrant a purchase suggestion at the moment, traders who prioritize protected earnings may discover Primaris REIT to be a lovely funding possibility.

Closing Ideas

Primaris REIT is the one REIT in Canada targeted on enclosed procuring facilities. With a 6%+ dividend yield and a strong payout ratio of fifty%, it’s a lovely candidate for income-oriented traders’ portfolios.

Alternatively, traders ought to concentrate on the dangers of this REIT. Attributable to its give attention to malls, Primaris REIT is susceptible to recessions, whereas it additionally faces a robust headwind because of the shift of shoppers from brick-and-mortar retailers to on-line purchases. Solely traders who’re snug with these dangers ought to contemplate buying this inventory.

Furthermore, Primaris REIT is characterised by exceptionally low buying and selling quantity. It’s exhausting to determine or promote a distinguished place on this inventory.

Don’t miss the assets under for extra month-to-month dividend inventory investing analysis.

And see the assets under for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.