Currently have an $84.00 target. GLTA
GRANITE REIT Q4/23 First Look: In Line With A Strong Outlook
Q4/23 FFO of $1.27/unit was relatively in line with our estimate and
consensus. Occupancy declined sequentially from 95.6% to 95.0%, reflecting
the U.S. segment (~110 bps sequential decline). Renewals, however, reflect
healthy blended spreads of ~24%. Along with the quarter, GRT released its
2024 outlook for 7%-10% Y/Y growth in FFO/unit. During the quarter, the
REIT repurchased ~393k units at an average ~$68.73 per unit.
Conference Call: Thursday, February 29 at 11:00 a.m. ET; 1 (800) 926-4951.
2024 Outlook
GRT is forecasting 2024 FFO/unit of $5.30 to $5.45, representing a 7% to
10% Y/Y increase, coming in ~3% ahead of consensus of $5.22 at the mid-
point. AFFO/unit is forecast at $4.65-$4.80, a 3%-7% Y/Y increase and in
line with consensus at the mid-point. GRT is also forecasting SPNOI growth
(ex. FX) to be in the 7% to 8% range (2023 SPNOI growth was 5.1%).
Organic Growth & Operations
Cash SPNOI came in at 6.8% on higher rents from CPI indexation, fixed rent
increases, renewals and re-leasing in the U.S., Canada, and Netherlands,
favourable foreign exchange, and certain expansion and development
properties. The increase in SPNOI was partially offset by six vacancies in
Canada, the U.S. and the Netherlands. Constant currency SPNOI was up
4.7%. By region (and excluding FX), growth was led by 9.8% in Netherlands,
7.7% in Canada, 5.9% in Germany, and 3.9% in the U.S. Austria grew by
0.6%.
GRT completed ~3.78MM sq. ft. of renewals at a spread of ~24% over
expiring rents. Canadian leasing spreads came in at 176% (two GTA leases)
and the U.S. achieved leasing spreads of 15% on ~2MM sq. ft.
Development Progress
Subsequent to the quarter, GRT completed construction of its ~410k sq. ft.
Brantford, ON property with a lease now in place on a ~19-year term. The
REIT also signed a ~10-year lease for ~30k sq. ft. of the 555 Beck Crescent
Ajax expansion, with construction expected to be completed in Q2/24.
Q/Q Cap Rate Moves:
• Canada: 3.87% from 3.73%.
• U.S.: 5.24% from 5.16%.
• Austria: 8.17% from 8.05%.
• Germany: 5.71% from 5.65%.
• The Netherlands: 5.09% from 5.02%.