TSX:GRT.UN - Post Discussion
Post by
retiredcf on Jul 11, 2023 8:12am
Ink Research
Coincidental timing. GLTA
July 11, 2023
Morning Report: Some solid CEO buying in the REIT space
We revisit industrial property focused Granite REIT (GRT.UN), last featured here on September 30th, 2022. At the time, the REIT was selling off due to rising interest rates. However, the Granite bears may not have been counting on the REIT to raise its monthly distribution in the new year to $0.2667 per unit ($3.20 annualized), about a 3.2% increase in its distribution. The higher distribution plus ongoing funds flow growth helped drive the REIT up 17.3% since our last report. On May 5th, Granite reported Q1 funds flow from operations (FFO) of $79.6 million or $1.25 per unit, up from $69.4 million or $1.05 per unit a year earlier. The jump was driven by rising net operating income which more than offset rising interest costs. The REIT reported a Q1 FFO payout ratio of 64%. At Q1 end, it had just under $2.952 billion in total debt with a weighted average cost of 2.29% and a weighted average term-to-maturity of 3.9 years. As at May 10th, excluding assets held for sale, Granite owned 142 investment properties in 5 countries (66 in the US) consisting of 62.8 million square feet of gross leasable area.
Granite had been consolidating after some sharp gains in January. The rally made the REIT's valuations more expensive which helped to push it down the INK Edge rankings into mixed territory. As Granite slipped last month along with the broad REIT complex, valuations became a bit cheaper. That, combined with recent insider buying and a recovery from its June lows helped fuel Granite back up the rankings into the mostly sunny category. For those that believe REIT gloom has been overdone over the past year, Granite seems like a solid name to consider given its recent relative outperformance.
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