With high interest rates squeezing Canadian households and cautious spending the new norm, many investors are looking for safe, income-producing places to park their money. Real estate investment trusts (REITs) are a classic choice. But not all REITs are created equal, especially in today’s environment where retail, office, and residential spaces are facing their own unique pressures. That’s why one name stands out right now: Primaris Real Estate Investment Trust (TSX:PMZ.UN). It’s offering a dividend yield of around 5.7% and trading at what could be a rare and compelling discount.
About Primaris
Primaris isn’t your typical retail REIT. It focuses exclusively on enclosed shopping malls across Canada. It owns 12.5 million square feet of retail space spread over 13 properties and a few joint ventures. These aren’t flashy city-centre malls filled with luxury brands. Instead, Primaris owns malls in mid-sized cities, places like Kingston, Regina, and Kelowna. That might sound boring at first, but boring is often what you want when you’re chasing steady income and long-term capital preservation.
The dividend stock has also been steadily improving its financials. In its most recent earnings report, released for the first quarter of 2025, Primaris brought in revenue of $150.2 million. It reported net income of $64.7 million over the last 12 months and maintains a profit margin above 12%. Funds from operations, a key REIT metric, came in at $0.31 per unit for the quarter. That was flat compared to the previous year, which shows stability even in a shaky environment.
Creating income
Another thing that makes Primaris appealing is how conservatively it manages its payout. The current distribution of $0.07 per unit per month adds up to $0.84 per year. That works out to a yield of about 5.7% at recent prices. But with a payout ratio of just 43%, there’s plenty of cushion. Many other REITs are pushing above 80% or even 90%, which becomes dangerous if earnings take a dip. That’s not the case here. Primaris is comfortably covering its dividend with room to spare. And right now, a $7,000 investment could bring in about $400 in annual income!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| PMZ.UN | $15.11 | 463 | $0.86 | $398.18 | Monthly | $6,996.93 |
What’s especially interesting about this REIT, though, is the discount it trades at. As of writing, the unit price sits at around $15.11. That’s well below its estimated net asset value, or NAV, which analysts peg closer to $21. That means the REIT is trading at roughly a 29% discount to the value of its properties. In other words, you can buy the underlying real estate at a big markdown. And in today’s market, that’s rare.
Considerations
The trust also recently completed a normal course issuer bid, which is a fancy way of saying it bought back some of its own units. That’s a positive signal; it means management believes the units are undervalued. It also helps support the unit price over time and improves the per-unit earnings picture for remaining investors.
Of course, investing in retail-focused REITs does come with some risks. Consumer spending could slow further, especially with higher mortgage payments and ongoing economic pressure. According to TD’s latest survey, 73% of Canadians facing mortgage renewals in the next year are planning to tighten their budgets. That could translate to less foot traffic and lower sales for retailers. But Primaris has a few key advantages. Its tenants are mainly essential service providers, think grocery stores, pharmacies, and discount retailers. These are the kinds of stores people still visit, even when they’re pinching pennies.
Bottom line
For long-term investors looking for passive income and a potential rebound in value, Primaris looks hard to ignore. It offers a rare mix of steady dividends, conservative management, and significant upside. While the short-term outlook for the retail sector is mixed, this REIT seems well-positioned to ride out any storm and come out stronger on the other side. So if you’re hunting for income and value in a market full of uncertainty, this TSX star could be one of the smartest places to look. The yield is strong, the discount is real, and the opportunity might not last forever.
