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 Nov 10, 2022 9:30am

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Post# 35087962

RBC

November 9,2022

Granite Real Estate Investment Trust
Q3 in line, 3% divvy hike, and steady organic growth; IFRS NAV up modestly

TSX: GRT.UN | CAD 74.45 | Outperform | Price Target CAD 100.00

Sentiment: Neutral

Our view: GRT reported Q3/22 FFOPU of $1.08, relatively in line with RBC/Street at $1.09E/$1.09E, and up from $0.99 last year (+9% YoY). The slight variance to our forecast was mainly from lower NOI. Organic growth remains healthy, although the YTD clip is tracking below GRT’s +3.5-4.5% 2022 SP NOI guidance. However, as GRT noted last quarter, we expect the pace to pick-up in Q4. The 3% distribution hike is in line with our call, but nonetheless sends a confident signal amid broader economic turbulence. Good progress was also made on development leasing and the NCIB was active. The IFRS NAV increased 2% QoQ. Conference call Nov-10 at 11 am ET (1-800-748-2715).

Highlights:

• Distribution raised 3.2% to annualized $3.20/unit effective Dec. (payable in Jan-2023), in line with our $3.19 2023E.
• SP NOI (constant currency) +3.2% YoY (+2.7% YTD), mainly from higher rents via contractual increases (CPI and fixed) and re- leasing and renewals in Canada, the US, and Germany. Europe led (+4.8% YoY SP NOI), followed by Canada (+3.8%) and the US

(+1.9%). Including F/X impacts, Q3 SP NOI was +1% YoY (+0.6% YTD).
• Occupancy rose to 99.1% (+130 bps QoQ, -10 bps YoY). The gain was mainly driven by the US (+230 bps QoQ to 99.2%).
• IFRS BVPU (pre-tax) increased to $97.28 (+2% QoQ, +15% YoY). GRT’s IFRS cap rate increased to 4.68% (+20 bps QoQ, -9 bps

YoY) vs. our 4.8% NAV cap rate/5.4% implied cap. In Q3, GRT booked $229MM ($3.50/unit; ~3% of portfolio value) of net FV losses on the portfolio for higher discount and terminal cap rates, partly offset by higher market rents and net $318MM ($4.85/ unit) of unrealized F/X gains.

NCIB was active with $126MM of unit repurchases (1.8MM units @ $70.27/unit) in Q3 and post-Q3.
Modest acquisition activity. In Q3, GRT completed $109MM of acquisitions, including the previously announced purchase of a Tilburg, Netherlands property for $102MM (3.2% cap rate).

• Good progress on development leasing. In Q3, GRT signed a ~10-year lease with annual rent steps with a specialized producer of commercial vehicles for 0.8MM sf at its spec development site in Murfreesboro, TN (Q4/22 completion). In Oct., GRT completed a 10-year lease with annual rent steps for the remaining 0.2MM sf at its Altbach, Germany project (Q4/22 occupancy). • Net debt/GAV at 29% (+100 bps QoQ, +600 bps YoY). Available liquidity: $1.3B

• Magna exposure declined to 26% of revenue (-200 bps QoQ, -500 bps YoY).