Granite Real Estate Investment Trust T.GRT.UN

Alternate Symbol(s): GRP.U

Granite Real Estate Investment Trust (the Trust) is a Canada-based real estate investment trust. The Trust is engaged in the acquisition, development, ownership and management of logistics, warehouse and industrial properties in North America and Europe. The Trust owns 143 investment properties representing approximately 63.3 million square feet of leasable area. The Trust’s investment properties consist of income-producing properties, and development properties. The income-producing properties consist primarily of logistics, e-commerce and distribution warehouses, and light industrial and heavy industrial manufacturing properties. The Trust has approximately 38 industrial properties in Canada, 66 in the United States, 16 in the Netherlands, 14 in Germany and nine in Australia. All of its income-producing properties are for industrial use and can be categorized as distribution/e-commerce, industrial/warehouse, flex/office or special purpose properties.

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Granite Real Estate Investment Trust

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Post by retiredcfon Jun 09, 2021 1:56pm

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Post# 33356061

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Raise their target by 3 bucks to $92.00. GLTA

Granite REIT

(GRT.UN-T, GRP.U-N) C$81.50 | US$67.27

$316mm Equity Offering Funds Increased Development Activity Event

Resuming coverage following completion of a $316mm equity offering (3,979,000 units, $79.50/unit), including the over-allotment option.

Impact: SLIGHTLY POSITIVE

Granite announced $368mm of new acquisitions, including six income-producing properties for $170mm ($131/sf). The remaining $198mm is for four development assets, including forward-purchases of two projects (completions H2/22) where Granite is responsible for lease-up and expects above-market returns, and two GTA West land parcels (1.8mmsf of potential development). We believe most of these acquisitions were off-market and resulted from existing Granite relationships (including the GTA land, estimated to cost <$1mm/acre or <$55/sf buildable).
Including estimated future costs to develop the GTA lands, we estimate these acquisitions represent well over $600mm of incremental portfolio growth concentrated in state-of-the-art quality assets with potential for above-market yields. These investments also represent the opportunity for Granite to ultimately grow its portfolio in the strong GTA market by 40% (Q1/21: 19% of fair value).
Development Pipeline Enhanced (Exhibit 2): The new GTA land parcels and two U.S. forward-funding development investments together increase the REIT's total development pipeline to 5.4mmsf, versus 2.2mmsf at Q1/21. Most projects are scheduled for completion during 2022, except projects on the GTA lands in 2023 at the earliest. We see this increased development focus supporting continued strong future NAV/unit growth (12% CAGR over the past five years).
Forecast Revision: We forecast a two-year AFFO/unit CAGR of 8%, despite 2021 F/X headwinds. Our 2021/2022 AFFO/unit estimates slipped 3.0%/1.5%, on temporary higher cash balances and increased investment in development projects not yet cash-flowing (e.g. Q4/21E $275mm vs. $115mm previously). We include $600mm of future unannounced acquisitions (pipeline remains robust at $1bln).

TD Investment Conclusion

We continue to recommend Granite as a high-quality industrial REIT with a solid track record and diversified exposure across several strong markets. We see attractive relative value currently, with Granite's trading valuation (at 23.0x/19.9x 2021E/2022E P/AFFO and 105% P/NAV) being near the bottom of the global peer group range despite our favourable fundamental outlook.