Mr. Alex Avery reports

PRIMARIS REIT ANNOUNCES LANDMARK TRANSACTION OF TROPHY SHOPPING CENTRE DEMONSTRATING ITS ABILITY TO EXECUTE ON GROWTH STRATEGY

Primaris Real Estate Investment Trust has agreed to acquire Conestoga Mall in Waterloo, Ont., from Ivanhoe Cambridge, for aggregate consideration of $270.0-million, to be satisfied by a combination of cash and equity. This high-quality asset acquisition is consistent with Primaris's previously expressed growth strategy, to own and acquire market leading shopping malls.

"This landmark transaction is the culmination of months of collaboration with Ivanhoe Cambridge, and further validates and demonstrates support for Primaris's platform, strategy and value proposition," said Alex Avery, chief executive officer. "Since the inception of Primaris REIT, we have been very clear about the significant opportunity to acquire additional market leading Canadian shopping centres. Primaris is uniquely positioned as a potential buyer, with institutional scale as the third-largest owner-operator of enclosed shopping centres in Canada with pro-forma assets of approximately $3.5-billion, a very well capitalized balance sheet, a differentiated financial model and a mandate for growth."

"Conestoga was identified early in the process of evaluating potential acquisition targets for a number of notable characteristics, including its leading market position, strong sales performance, mass rapid transit connection and its attractive location within a growing market," said Patrick Sullivan, president and chief operating officer. "Our team is very excited to add Conestoga Mall to our property portfolio, with significant income growth potential consistent with the growth we see ahead for our existing assets. With new and exciting retailers unique in the market including Apple, Lululemon and Nespresso, Conestoga Mall is amongst the top 15 most productive malls in Canada and will be highly accretive to Primaris's overall portfolio quality."

Rags Davloor, chief financial officer, added: "Our differentiated financial model, including very low leverage, a low payout ratio and significant retained free cash flow is a major strategic advantage for Primaris. We are very pleased to be able to execute a transaction of this quality while preserving our industry leading financial metrics within target ranges."

Annie Houle, head of Canada at Ivanhoe Cambridge, commented: "We are very pleased to have executed this transaction with Primaris REIT, given their commitment to continue to unlock the full potential of this established shopping mall in the Kitchener-Waterloo area. Primaris REIT's defined business strategy, experienced management platform and prudent capital management supports this new investment."

Transaction highlights

• Aggregate consideration of $270.0-million, comprising:
  • $165.0-million of cash;
  • $25.0-million of Series A units of the trust (REIT units) at an issue price of the lower of $21.49 per REIT unit, or the NAV (net asset value) per REIT unit disclosed in the trust's most recently published management's discussion and analysis (MD&A) at the time of closing;
  • $80.0-million of 6.0 per cent exchangeable preferred units in a newly formed subsidiary limited partnership, which preferred units shall be exchangeable into REIT units in certain circumstances at an exchange price equal to the issue price per REIT unit, subject to customary adjustments. The preferred units shall rank senior to any outstanding classes of units of the limited partnership with respect to distributions and rights upon liquidation, windup and dissolution;
• Conestoga Mall is unencumbered;
• Expected closing in July, 2023, subject to the satisfaction of customary closing conditions, including the approvals of the Toronto Stock Exchange and under the Competition Act (Canada).

Conestoga Mall property highlights

• Leading regional enclosed shopping centre in the high-growth market of Kitchener-Waterloo, Ont.;
• Immediately adjacent to Conestoga station, on the 19-station ION light rail mass rapid transit system;
• 585,000-square-foot mall (excluding Zehrs) located on 49.8 acres of land, for an approximate 31.0-per-cent site coverage;
• $982 same-store sales productivity and annual all-store sales volume of $180.8-million;
• 94.4-per-cent in-place occupancy;
• $46.0-million redevelopment completed in 2018;
• Large format tenants include HBC, Galaxy Cinema, Sport Chek, Indigo and H&M, and shadow-anchored by Zehrs with direct access to the mall;
• Unique commercial retail unit (CRU) tenants to the region include Apple, Lululemon, Nespresso, with other notable CRU tenants including Aritzia, Sephora, Aerie, Old Navy and RW & Co.

Significant NOI growth potential

Similar to the trust's existing owned portfolio, Conestoga Mall offers significant NOI growth potential over the next few years, as operating and financial performance normalizes, and as Primaris's full-service management platform integrates and operates the property. Opportunities to increase operating income at Conestoga Mall include:

• Lease up of approximately 58,000 square feet of vacant or temporary tenanted space to strong tenants at market rents;
• The conversion of tenants on preferred rent deals to standard market leases;
• Primaris intends to leverage it scalable management platform to deploy its cost management strategy.

Mass rapid transit connectivity in high-growth market

Conestoga station is the final station of the 19-station ION light rail mass rapid transit system that commenced operations in late 2019. ION ridership has grown to 1.4 million riders per month. The existing route connects Conestoga station to both the University of Waterloo and Wilfrid Laurier University, with phase 2 of the ION system expected to add eight further stations, fully connecting Cambridge to the existing Kitchener-Waterloo light rail network.

Conestoga Mall is the market leading enclosed shopping centre in the region, with a high average total trade area household income of $112,400. It is located in a growing region with a population of 515,700 and is an approximate one-hour drive to Toronto Pearson Airport. Sometimes referred to as Silicon Valley North, or the Technology Triangle, the region is home to many technology companies, incubators and universities, including the Perimeter Institute for Theoretical Physics, Wilfrid Laurier University and the University of Waterloo.

As the Kitchener-Waterloo region continues to grow, and ION ridership continues to grow, Primaris expects to benefit from being immediately adjacent to the Conestoga station.

Please see the presentation titled "Conestoga Mall" on Primaris's investor relations website for additional details.

Proforma Primaris portfolio

The consideration payable by Primaris allows Primaris to maintain its best-in-class capital structure and financial leverage metrics within the trust's previously disclosed target range. Upon closing, Conestoga Mall will become the trust's highest sales productivity property, and second highest all-store sales volume property, after Orchard Park Mall in Kelowna, B.C. Primaris anticipates the below pro forma metrics:

• Based on the 3.0 per cent to 5.0 per cent same property cash NOI growth guidance provided in the Q1 2023 MD&A, and assuming a July, 2023, closing, cash NOI for the 2023 fiscal year is anticipated to be in the range of $220-million to $224-million (cash NOI for the year ended Dec. 31, 2022, was $206.1-million);
• Average net debt to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is anticipated to remain within target range of 4.0 times to 6.0 times.

Advisers

CBRE Ltd. acted as real estate advisors and TD Securities acted as financial advisers to Ivanhoe Cambridge.

Real Asset Strategies Inc. is acting as investor relations adviser to Primaris REIT.

About Primaris Real Estate Investment Trust

Primaris is Canada's only enclosed shopping centre focused REIT, with ownership interests primarily in the leading enclosed shopping centres in growing markets. The current portfolio totals 10.9 million square feet valued at approximately $3.1-billion at Primaris's share. Economies of scale are achieved through its fully internal, vertically integrated, full-service national management platform. Primaris is very well capitalized and is exceptionally well positioned to take advantage of market opportunities at an extraordinary moment in the evolution of the Canadian retail property landscape.

About Ivanhoe Cambridge

Ivanhoe Cambridge develops and invests in high-quality real estate properties, projects and companies that are shaping the urban fabric in dynamic cities around the world. It does so responsibly, with a view to generate long-term performance. Ivanhoe Cambridge is committed to creating living spaces that foster the well-being of people and communities, while reducing its environmental footprint. Ivanhoe Cambridge holds interests in 1,500 buildings, primarily in the industrial and logistics, office, residential and retail sectors. Ivanhoe Cambridge held $77-billion in real estate assets as of Dec. 31, 2022, and is a real estate subsidiary of CDPQ, a global investment group.

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