Granite REIT Announces Fourth Quarter and Year End Results for 2024
TORONTO--(BUSINESS WIRE)--February 26, 2025--
Granite Real Estate Investment Trust (TSX: GRT.UN; NYSE: GRP.U) ("Granite" or the "Trust") announced today its consolidated combined results for the three month period and year ended December 31, 2024.
FOURTH QUARTER 2024 HIGHLIGHTS
Highlights for the three month period and year ended December 31, 2024 are set out below:
Financial:
--
Granite's net operating income ("NOI") was $121.2 million in the fourth
quarter of 2024 compared to $110.0 million in the prior year period, an
increase of $11.2 million primarily as a result of the lease commencement
of two expansion projects in Canada and Netherlands completed in the
third quarter of 2024 as well as two development projects in Canada and
the United States completed in the first half of 2024, contractual rent
adjustments and consumer index based increases, renewal and re-leasing
activity;
--
Same property NOI - cash basis(4) increased by 6.3% for the fourth
quarter of 2024, excluding the impact of foreign exchange. The four
quarter average constant currency same property NOI - cash basis achieved
in 2024 was an increase of 5.9%;
--
Funds from operations ("FFO")(1) was $92.7 million ($1.47 per unit) in
the fourth quarter of 2024 compared to $81.2 million ($1.27 per unit) in
the fourth quarter of 2023;
--
FFO was $343.9 million ($5.44 per unit) for the year ended December 31,
2024 as compared to $317.6 million ($4.97 per unit) for the year ended
December 31, 2023;
--
Adjusted funds from operations ("AFFO")(2) was $78.8 million ($1.25 per
unit) in the fourth quarter of 2024 compared to $73.2 million ($1.15 per
unit) in the fourth quarter of 2023;
--
AFFO was $307.1 million ($4.86 per unit) for the year ended December
31, 2024 as compared to $287.4 million ($4.50 per unit) for the year
ended December 31, 2023;
--
During the three month period and year ended December 31, 2024, the
Canadian dollar weakened against the Euro and the US dollar, respectively,
relative to the prior year periods. The impact of foreign exchange on FFO
for the three month period and year ended December 31, 2024, relative to
the same periods in 2023, was $0.03 per unit and $0.07 per unit,
respectively, and for AFFO, the impact of foreign exchange relative to
the same period in 2023 was $0.03 per unit and $0.07 per unit,
respectively;
--
AFFO payout ratio(3) was 66% for the fourth quarter of 2024 compared to
70% in the fourth quarter of 2023;
--
Occupancy as at December 31, 2024 and committed occupancy as at
February 26, 2025 are 94.9% and 95.0%, respectively;
--
Granite recognized $1.5 million in net fair value losses on investment
properties in the fourth quarter of 2024. Granite recognized $53.0
million in net fair value gains on investment properties in the year
ended December 31, 2024. The value of investment properties was further
increased by unrealized foreign exchange gains of $287.5 million in the
fourth quarter of 2024 ($464.6 million for the year ended December 31,
2024) primarily resulting from the relative weakening of the Canadian
dollar against the Euro and US dollar, respectively, as at December 31,
2024; and
--
Granite's net income attributable to unitholders in the fourth quarter
of 2024 was $83.7 million in comparison to $31.4 million in the prior
year period primarily due to a positive change in the fair value losses
on investment properties of $31.5 million, a $28.0 million increase in
fair value gains on financial instruments, and an $11.2 million increase
in net operating income as noted above, partially offset by a $13.6
million increase in foreign exchange losses and $3.6 million increase in
income tax expense.
Developments:
--
Subsequent to the fourth quarter of 2024, Granite signed a 12-year
lease agreement with a leading global consumer food product company for
approximately 391,000 square feet to be constructed as the third phase of
the development site in Houston, Texas for approximately US$50.0 million.
The lease will commence upon completion of the property, which is
expected to occur in the fourth quarter of 2026 and is expected to
generate a stabilized development yield of approximately 7.5%.
Operations:
--
During the fourth quarter of 2024, Granite achieved average rental rate
spreads of 14% over expiring rents representing approximately 1,066,000
square feet of new leases and renewals completed in the quarter;
--
During the fourth quarter of 2024, Granite signed a lease for 118,000
square feet at one of its vacant units at a property in Antioch, Illinois
that commenced in December 2024 for a lease term of 5.5 years;
--
Subsequent to the fourth quarter of 2024, Granite signed a lease for
57,000 square feet at one of its completed development properties in
Lebanon, Tennessee, commencing in March 2025 for a lease term of 5.2
years; and
--
Today, Granite released its Green Bond use of proceeds report with
respect to the allocation of net proceeds of the 3.062% $500.0 million
Series 4 Senior Debentures due 2027 (the "2027 Green Bond"), the 2.194%
$500.0 million Series 6 Senior Debentures due 2028 (the "2028 Green
Bond") and the 6.074% $400.0 million Series 7 Senior Debentures due 2029
(the "2029 Green Bond"). As at December 31, 2024, Granite has allocated a
total of $1,185.5 million of net Green Bond proceeds to Eligible Green
Projects, as defined in Granite's Green Bond Framework, representing 100%,
100% and 48.1% of the net proceeds of the 2027 Green Bond, the 2028 Green
Bond and the 2029 Green Bond, respectively. Morningstar Sustainalytics, a
globally-recognized provider of ESG research, ratings and data, conducted
the limited assurance review of Granite's Green Bond use of proceeds. The
Green Bond use of proceeds report can be found on Granite's website at
https://www.granitereit.com/sustainability.
Financing:
--
On November 27, 2024, following the completion of the uncoupling of
Granite's stapled unit structure and replacement with a conventional REIT
trust unit structure, Granite REIT filed and obtained a receipt for a new
base shelf prospectus for equity securities (the "Equity Shelf
Prospectus") relying on the well-known seasoned issuer exemption. Granite
REIT has filed the Equity Shelf Prospectus to maintain financial
flexibility and to have the ability to offer securities on an accelerated
basis pursuant to the filing of prospectus supplements. There is no
certainty any securities will be offered or sold under the Equity Shelf
Prospectus. The Equity Shelf Prospectus is valid for a 25-month period,
during which time Granite REIT may offer and issue, from time to time,
units, convertible debentures, subscription receipts, warrants,
securities comprised of more than one of units, convertible debentures,
subscription receipts and/or warrants offered together as a unit, or any
combination thereof. Each offering under the Equity Shelf Prospectus will
require the filing of a prospectus supplement that will include the
specific terms of the securities being offered at that time;
--
During the fourth quarter of 2024, Granite repurchased 23,000 units
under the normal course issuer bid ("NCIB") at an average unit cost of
$69.08 for total consideration of $1.6 million, excluding commissions and
taxes on net repurchases of units;
--
Subsequent to December 31, 2024, Granite repurchased 459,100 units
under the NCIB at an average unit cost of $68.75 for total consideration
of $31.6 million, excluding commissions and taxes on net repurchases of
units;
--
Subsequent to the fourth quarter of 2024, on January 16, 2025, Moody's
withdrew all credit ratings of Granite at Granite's request. The outlook
prior to the withdrawal was stable;
--
Subsequent to the fourth quarter of 2024, on February 4, 2025, Granite
REIT Holdings Limited Partnership ("Granite LP") completed an offering of
$300.0 million aggregate principal amount of Series 10 senior unsecured
debentures bearing interest at Daily Compounded CORRA plus 0.77% per
annum, payable quarterly in arrears, and maturing on December 11, 2026
(the "2026 Debentures"). The 2026 Debentures are guaranteed by Granite
and Granite REIT Inc. Morningstar DBRS assigned the credit rating on the
2026 Debentures as BBB(high) with a stable trend. Through an existing
cross currency interest rate swap, Granite LP has exchanged the Canadian
dollar denominated principal and floating rate interest payments related
to the 2026 Debentures for Euro denominated principal and fixed interest
payments, resulting in an effective fixed interest rate of 0.27% per
annum for the term of the 2026 Debentures; and
--
Also on February 4, 2025, Granite LP repaid in full, without penalty,
the outstanding $300.0 million aggregate principal amount of its senior
unsecured non-revolving term facility, which had a maturity date of
December 11, 2026, using the net proceeds from the offering of the 2026
Debentures.
GRANITE'S FINANCIAL, OPERATING AND PROPERTY HIGHLIGHTS
Three Months Ended Years Ended
December 31, December 31,
---------------------- --------------------------
(in millions,
except as noted) 2024 2023 2024 2023
----------------- ----- ----- ------- -------
Revenue $148.0 $129.8 $ 569.1 $ 521.2
Net operating
income ("NOI") $121.2 $110.0 $ 472.0 $ 435.2
Net income
attributable to
unitholders $ 83.7 $ 31.4 $ 360.6 $ 136.7
Funds from
operations
("FFO")(1) $ 92.7 $ 81.2 $ 343.9 $ 317.6
Adjusted funds
from operations
("AFFO")(2) $ 78.8 $ 73.2 $ 307.1 $ 287.4
Diluted FFO per
unit(1) $ 1.47 $ 1.27 $ 5.44 $ 4.97
Diluted AFFO per
unit(2) $ 1.25 $ 1.15 $ 4.86 $ 4.50
Monthly
distributions
paid per unit $ 0.83 $ 0.80 $ 3.30 $ 3.20
AFFO payout
ratio(3) 66% 70% 68% 71%
As at December
31, 2024 2023
----------------- ---------- ---------- ------- -------
Fair value of
investment
properties $9,397.3 $8,808.1
Cash and cash
equivalents $ 126.2 $ 116.1
Total debt(5) $3,087.8 $2,998.4
Net leverage
ratio(6) 32% 33%
Number of
income-producing
properties 138 137
Gross leasable
area ("GLA"),
square feet 63.3 62.9
Occupancy, by GLA 94.9% 95.0%
Committed
occupancy, by
GLA(9) 95.0% NA
Magna as a
percentage of
annualized
revenue(8) 26% 26%
Magna as a
percentage of
GLA 19% 19%
Weighted average
lease term in
years, by GLA 5.7 6.2
Overall
capitalization
rate(7) 5.3% 5.2%
----------------- ---------- ---------- ------- -------
A more detailed discussion of Granite's consolidated combined financial results for the three months and years ended December 31, 2024 and 2023 is contained in Granite's Management's Discussion and Analysis of Results of Operations and Financial Position ("MD&A") and the audited consolidated combined financial statements for those periods and the notes thereto, which are available through the internet on the Canadian Securities Administrators' System for Electronic Data Analysis and Retrieval Plus ("SEDAR+") and can be accessed at www.sedarplus.ca and on the United States Securities and Exchange Commission's (the "SEC") Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"), which can be accessed at www.sec.gov.
2025 OUTLOOK
For 2025, Granite forecasts FFO per unit within a range of $5.70 to $5.85, representing an approximate 5% to 8% increase over 2024, and Granite forecasts AFFO per unit to be within a range of $4.80 to $4.95, representing an increase of approximately flat to 2% over 2024. The FFO per unit forecast includes assumptions of some new leasing of vacant space primarily in the second half of 2025. In terms of AFFO-related capital expenditures, Granite is assuming expenditures of approximately $40.0 million which is higher than actual AFFO-related capital expenditures of $25.1 million in 2024. The increase in AFFO-related capital expenditures is related mostly to additional roofing and parking lot work planned for 2025 as well as additional forecasted spend on tenant allowances in support of leasing activity. The high and low ranges are driven by foreign currency exchange rate assumptions where for the high end of the range Granite is assuming foreign exchange rates of the Canadian dollar to Euro of 1.50 and the Canadian dollar to US dollar of 1.45. On the low end of the range, Granite is assuming exchange rates of the Canadian dollar to Euro of 1.45 and the Canadian dollar to US dollar of 1.40. Granite forecasts constant currency same property NOI -- cash basis to be within a range of 4.5% to 6.0%, based on a four-quarter average over 2025. Granite's 2025 forecasts assume no acquisitions and dispositions, and assume no favourable reversals of tax provisions relating to prior years which cannot be determined at this time.
Non-GAAP performance measures are included in Granite's 2025 forecasts above (see "NON-GAAP PERFORMANCE MEASURES"). See also "FORWARD-LOOKING STATEMENTS".
CONFERENCE CALL
Granite will hold a conference call and live audio webcast to discuss its financial results. The conference call will be chaired by Kevan Gorrie, President and Chief Executive Officer.
Thursday, February 27, 2025 at 11:00 a.m.
Date: $(ET)$
Telephone: North America (Toll-Free): 1-800-549-8228
International (Toll): 1-289-819-1520
Conference ID/Passcode: 77638
Webcast: To access the live audio webcast in
listen-only mode, please visit
https://events.q4inc.com/attendee/736306720
or
https://granitereit.com/events.
To hear a replay of the webcast, please visit https://granitereit.com/events. The replay will be available for 90 days.
OTHER INFORMATION
Additional property statistics as at December 31, 2024 have been posted to our website at https://granitereit.com/property-statistics-q4-2024. Copies of financial data and other publicly filed documents are available through the internet on SEDAR+, which can be accessed at www.sedarplus.ca and on EDGAR, which can be accessed at www.sec.gov.
Granite has filed its annual report on Form 40-F for the year ended December 31, 2024 with the SEC. The Form 40-F, including the audited consolidated combined financial statements, included therein, is available at http://www.granitereit.com and on EDGAR at http://www.sec.gov. Hard copies of the audited consolidated combined financial statements are available free of charge on request by calling (647) 925 - 7500 or writing to:
Investor Inquiries
77 King Street West, Suite 4010, P.O. Box 159
Toronto-Dominion Centre
Toronto, Ontario
M5K 1H1
Granite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of logistics, warehouse and industrial properties in North America and Europe. Granite owns 143 investment properties representing approximately 63.3 million square feet of leasable area.
For further information, please see our website at www.granitereit.com or contact Teresa Neto, Chief Financial Officer, at (647) 925-7560.
NON-GAAP PERFORMANCE MEASURES, RATIOS AND RECONCILIATIONS
Readers are cautioned that certain terms used in this press release such as FFO, AFFO, FFO payout ratio, AFFO payout ratio, same property NOI - cash basis, constant currency same property NOI - cash basis, total debt and net debt, net leverage ratio, and any related per unit amounts used by management to measure, compare and explain the operating results and financial performance of the Trust do not have standardized meanings prescribed under IFRS$(R)$ Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards" or "GAAP") and, therefore, should not be construed as alternatives to net income, cash provided by operating activities or any other measure calculated in accordance with IFRS Accounting Standards. Additionally, because these terms do not have a standardized meaning prescribed by IFRS Accounting Standards, they may not be comparable to similarly titled measures presented by other publicly traded entities.
(1) FFO is a non-GAAP performance measure that is widely used by the real estate industry in evaluating the operating performance of real estate entities. Granite calculates FFO as net income attributable to unitholders excluding fair value gains (losses) on investment properties and financial instruments, gains (losses) on sale of investment properties including the associated current income tax, foreign exchange gains (losses) on certain monetary items not forming part of a net investment in a foreign operation, deferred income taxes, corporate restructuring costs and certain other items, net of non-controlling interests in such items. The Trust's determination of FFO follows the definition prescribed by the Real Property Association of Canada ("REALPAC") guidelines on Funds From Operations & Adjusted Funds From Operations for IFRS Accounting Standards dated January 2022 ("REALPAC Guidelines") except for the exclusion of corporate restructuring costs. Granite considers FFO to be a meaningful supplemental measure that can be used to determine the Trust's ability to service debt, fund capital expenditures and provide distributions to unitholders. FFO is reconciled to net income, which is the most directly comparable GAAP measure (see table below). FFO should not be construed as an alternative to net income or cash flow provided by operating activities determined in accordance with IFRS Accounting Standards.
(2) AFFO is a non-GAAP performance measure that is widely used by the real estate industry in evaluating the recurring economic earnings performance of real estate entities after considering certain costs associated with sustaining such earnings. Granite calculates AFFO as net income attributable to unitholders including all adjustments used to calculate FFO and further adjusts for actual maintenance capital expenditures that are required to sustain Granite's productive capacity, leasing costs such as leasing commissions and tenant allowances incurred and non-cash straight-line rent and tenant incentive amortization, net of non-controlling interests in such items. The Trust's determination of AFFO follows the definition prescribed by the REALPAC Guidelines except for the exclusion of corporate restructuring costs as noted above. Granite considers AFFO to be a meaningful supplemental measure that can be used to determine the Trust's ability to service debt, fund expansion capital expenditures, fund property development and provide distributions to unitholders after considering costs associated with sustaining operating earnings. AFFO is also reconciled to net income, which is the most directly comparable GAAP measure (see table below). AFFO should not be construed as an alternative to net income or cash flow provided by operating activities determined in accordance with IFRS Accounting Standards.
Three Months
Ended December Years Ended
31, December 31,
--------------- ------------------
(in millions,
except per unit
amounts) 2024 2023 2024 2023
------------------- -------- ----- ---- ----- -----
Net income attributable to
unitholders $ 83.7 $31.4 $360.6 $136.7
Add (deduct):
Fair value losses (gains)
on investment properties,
net 1.5 33.0 (53.0) 172.7
Fair value (gains) losses
on financial instruments,
net (12.6) 15.4 (5.2) 17.3
Foreign exchange losses on
certain monetary
items(1) 16.7 -- 16.7 --
Loss on sale of investment
properties -- -- -- 1.5
Deferred tax expense
(recovery) 3.7 0.9 22.2 (16.2)
Fair value remeasurement
of the Executive Deferred
Unit Plan (0.7) (0.4) (0.2) 3.1
Fair value remeasurement
of the Directors Deferred
Unit Plan (1.5) 0.4 (0.9) 0.8
Corporate restructuring
costs(2) 1.7 -- 3.5 --
Non-controlling interests
relating to the above 0.2 0.5 0.2 1.7
----------------------------- ----- ---- ----- -----
FFO [A] $ 92.7 $81.2 $343.9 $317.6
Add (deduct):
Maintenance or improvement
capital expenditures
incurred (4.3) (0.9) (14.4) (7.7)
Leasing costs (5.4) (1.0) (7.5) (4.1)
Tenant allowances (1.6) (4.1) (3.2) (6.5)
Tenant incentive
amortization -- 1.1 0.1 4.4
Straight-line rent
amortization (2.6) (3.1) (11.8) (16.7)
Non-controlling interests
relating to the above -- -- -- 0.4
----------------------------- ----- ---- ----- -----
AFFO [B] $ 78.8 $73.2 $307.1 $287.4
------------------- -------- ----- ---- ----- -----
Basic FFO per unit [A]/[C] $ 1.48 $1.28 $ 5.46 $ 4.99
Diluted FFO per
unit [A]/[D] $ 1.47 $1.27 $ 5.44 $ 4.97
Basic AFFO per unit [B]/[C] $ 1.26 $1.15 $ 4.87 $ 4.51
Diluted AFFO per
unit [B]/[D] $ 1.25 $1.15 $ 4.86 $ 4.50
Basic weighted
average number of
units [C] 62.7 63.6 63.0 63.7
Diluted weighted
average number of
units [D] 63.0 63.8 63.2 63.9
------------------- -------- ----- ---- ----- -----
(1) Effective October 1, 2024, and in accordance with the REALPAC
Guidelines, Granite amended its definition of Funds From Operations
(FFO) to exclude foreign exchange (gains) losses on certain monetary
items not forming part of a net investment in a foreign operation that
represent capital transactions impacting profit and loss (refer to
"NON-GAAP PERFORMANCE MEASURES"). For the three months ended December
31, 2024, the losses relate to the de-designation of the US$185 million
senior unsecured non-revolving term facility and the related forward
contract hedging its maturity.
(2) Effective January 1, 2024, Granite amended its definition of Funds From
Operations (FFO) to exclude corporate restructuring costs associated
with the uncoupling of the Trust's stapled unit structure (refer to
"NON-GAAP PERFORMANCE MEASURES"). See also "SIGNIFICANT MATTERS -
STAPLED UNIT STRUCTURE". Granite views these restructuring costs as
non-recurring, as they are solely related to this specific transaction
and do not reflect normal operating activities.
(3) The FFO and AFFO payout ratios are calculated as monthly distributions, which exclude special distributions, declared to unitholders divided by FFO and AFFO (non-GAAP performance measures), respectively, in a period. FFO payout ratio and AFFO payout ratio may exclude revenue or expenses incurred during a period that can be a source of variance between periods. The FFO payout ratio and AFFO payout ratio are supplemental measures widely used by investors in evaluating the sustainability of the Trust's monthly distributions to unitholders.
Three Months Ended Years Ended
December 31, December 31,
-------------------- ----------------------
(in millions,
except as
noted) 2024 2023 2024 2023
-------------- -------- ---- ---- ----- -----
Monthly
distributions
declared to
unitholders [A] $52.2 $51.3 $208.2 $204.3
FFO [B] 92.7 81.2 343.9 317.6
AFFO [C] 78.8 73.2 307.1 287.4
FFO payout
ratio [A]/[B] 56% 63% 61% 64%
AFFO payout
ratio [A]/[C] 66% 70% 68% 71%
-------------- -------- ---- ---- ----- -----
(4) Same property NOI -- cash basis refers to the NOI -- cash basis (NOI excluding lease termination and close-out fees, and the non-cash impact from straight-line rent and tenant incentive amortization) for those properties owned by Granite throughout the entire current and prior year periods under comparison. Same property NOI -- cash basis excludes properties that were acquired, disposed of, classified as development properties or assets held for sale during the periods under comparison. Granite believes that same property NOI -- cash basis is a useful supplementary measure in understanding period-over-period organic changes in NOI -- cash basis from the same stock of properties owned.
Three Months Ended Years Ended
December 31, December 31,
------------- -------------------------------------- ------------- --------------------------------------
Sq ft(1) (in % Sq ft(1) (in %
millions) 2024 2023 $ change change millions) 2024 2023 $ change change
-------------- ------------- ----- ----- ---------- -------- ------------- ----- ----- ---------- --------
Revenue $148.0 $129.8 18.2 $569.1 $521.2 47.9
Less: Property
operating
costs 26.8 19.8 7.0 97.1 86.0 11.1
-------------- ------------- ----- ----- ----- --- -------- ------------- ----- ----- ------ --------
NOI $121.2 $110.0 11.2 10.2% $472.0 $435.2 36.8 8.5%
Add (deduct):
Lease
termination
and close-out
fees -- -- -- (0.5) -- (0.5)
Straight-line
rent
amortization (2.6) (3.1) 0.5 (11.8) (16.7) 4.9
Tenant
incentive
amortization -- 1.1 (1.1) 0.1 4.4 (4.3)
-------------- ------------- ----- ----- ----- -------- ------------- ----- ----- ------ --------
NOI - cash
basis 63.3 $118.6 $108.0 10.6 9.8% 63.3 $459.8 $422.9 36.9 8.7%
Less NOI -
cash basis
for:
Acquisitions -- -- -- -- 1.0 1.1 0.5 0.6
Developments 0.5 (1.5) -- (1.5) 2.8 (16.3) (2.0) (14.3)
Dispositions
and assets
held for
sale -- -- -- -- -- -- (0.2) 0.2
-------------- ------------- ----- ----- ----- --- -------- ------------- ----- ----- ------ --------
Same property
NOI - cash
(MORE TO FOLLOW) Dow Jones Newswires
February 26, 2025 17:01 ET (22:01 GMT)
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