In short: Raised as the counter-example to selling into a take-under: H&R "spun out a few years ago the mall business and they put a new CEO in there, ex-Bay Street analyst, which was very smart, and he's done a great job with it." The host supplies the names — Primaris, Alex Avery — and his conclusion is a suggestion for the assets still in play: "maybe one of the options is to spin out Avery's division with a new management, young with energy, and let's grow this thing." No ownership and no investment view on Primaris itself is stated.
18:21very smart, and he's done a great job with it. It's actually very — You're talking Primaris. Yes. Alex Avery. — So maybe one of the options is to spin out Avery's division with a new management, young with energy, and let's grow this thing. But okay. So we didn't own that many shares when they announced and the stock went down.
In short: The supply-down/demand-up mall thesis, sourced as a second-derivative read from his apparel work ("it's getting harder to find space"). CEO Alex Avery bought 10,000 shares on June 30 before blackout, at a 52-week high; still trades at a discount to NAV on an ~8% cap and far below replacement value. Hudson's Bay going to zero was the overhang — and the chance to upgrade tenants (grocery, TJX/Winners). "A very conservative compounder"; a Simon-style cross-border takeout "would not surprise" him.
Primaris owns Canadian shopping malls — not the trophy ones. The consensus view is that malls are dying. Morrison's view came in sideways: while researching clothing retailers last year he kept hearing the same complaint from every chain — it's getting hard to find space. That's the setup he hunts for, "supply down, demand up."
No one builds malls anymore, and in a post-COVID world of expensive concrete and labour it would cost far more to build one than the market is valuing Primaris's existing ones at (a "discount to replacement value"). The shares also trade below the appraised value of the properties ("discount to net asset value") on roughly an 8% capitalisation rate — the rent yield you'd earn buying the buildings outright. Meanwhile the thing that scared everyone away, Hudson's Bay going bankrupt, actually helps: a weak tenant that couldn't pay is replaced with a grocer or a TJX/Winners with a stronger balance sheet, at market rent.
The signal he points to is the CEO buying 10,000 shares of his own company on June 30, just before the reporting blackout, with the stock at a 52-week high — insiders don't usually buy strength unless they think the gap to value is still wide. He calls it "a very conservative compounder," and notes that if Simon Property (the largest US mall owner, valued far more richly, with a strong US dollar against a weak Canadian one) wanted to expand north, Primaris is the obvious target.
34:06before they went into blackout period, right? So the CEO stepped in and he bought 10,000 shares. That's, he has nearly $10 million when you read the proxy. And, stocks trade discounts. It's an 8% cap. they've been I think they can still consolidate that space, excuse the pun, but the point being is that I think the malls have been oversold.
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