Bullboard - Stock Discussion Forum 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... see more

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TSX:GRT.UN - Post Discussion

Granite Real Estate Investment Trust > RBC

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Post by retiredcf on Nov 07, 2024 7:12am

RBC

November 6, 2024

Granite Real Estate Investment Trust Q3 in line; FFO guidance intact, distribution hiked 3%

TSX: GRT.UN | CAD 73.80 | Outperform | Price Target CAD 89.00

Sentiment: Neutral

Our view: GRT reported Q3/24 FFOPU of $1.35, in line with RBC/Street at $1.35E/$1.35E, vs. $1.24 last year (+9% YoY). Versus our forecast, NOI was ahead, offset by higher interest costs. Stepping back, our read is largely neutral. SP NOI growth guidance was tweaked to the low end of the prior range and in-place occupancy slipped, although both were relatively minor in our view. As well, 2024 FFOPU guidance is intact (mid-point implies +8% YoY), committed occupancy has increased in Q4 to date on US leasing, and renewal leasing spreads accelerated. The distribution was also hiked 3%, marking GRT’s 14th consecutive annual increase. Conference call Nov-7 (11 am ET; 1-800-579-2543, ID: REIT).

Highlights:

2024 FFOPU guidance range intact at $5.30-5.40, in line with our $5.33E (Street’s at $5.29E). AFFOPU guidance range raised $0.05 (+1%) to $4.65-4.75 (vs. RBC/Street $4.68E/$4.72E) on lower capex. Guidance for 2024 quarterly average SP NOI growth trimmed to approx. +6%, low end of prior +6-6.5%, implying approx. +6.6% growth in Q4/24. Revised outlook reflects updated vacancy and leasing assumptions.
Q3 constant currency SP NOI +6.2% YoY (+4.2% YTD) from higher rents, partly offset by higher vacancy. Canada led (+14.1% YoY SP NOI), followed by Europe (+5.3%), and the US (+4.5%). Including F/X impacts, Q3 SP NOI +8% YoY (+5.3% YTD).
In-place occupancy down slightly to 94.3% (-20 bps QoQ, -130 bps YoY). The sequential slip was driven by Netherlands (97.8%, -40 bps QoQ), Canada (97.6%, -30 bps QoQ), and the US (91.4%, -20 bps QoQ), while Austria (100%) and Germany (100%) were stable. At Nov-6, committed occupancy is 94.7% on a new 308K sf lease in Olive Branch, MS (US committed at 92.2%).
Q3 new/renewal leasing spreads accelerated to +31% (+15% YTD), including +142% in Canada, +14% in the US, and +2% in Europe (contractual and short-term renewals).
IFRS BVPU (pre-tax) stable at $95.84 (flat QoQ, +3% YoY). IFRS cap rate 5.27% (-6 bps QoQ, +14 bps YoY) vs. our 5.6% NAV cap rate/6.2% implied. In Q3, GRT booked $43MM of fair value gains, mainly for a GTA lease renewal and higher US market rents.
Distribution hiked 3% to annualized $3.40/unit from $3.30, effective Dec (payable Jan-2025), in line with our 2025E.
Net debt/GAV at 32% (flat QoQ and YoY), D/EBITDA 7.3x (flat QoQ, -0.5x YoY). Available liquidity at $1.1B.
Financing activity picks up. On Oct-4/24, GRT issued $800MM of unsecured debentures, including $250MM, 3.999% due

Oct-4/29 (3.494% effective fixed rate after EUR swaps) and $550MM, 4.348% due Oct-4/31. Proceeds are being used to prepay US$400MM term loan (due Sept-2025) and US$185MM non-revolving term facility in Dec-2024.