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Stock ideas - Granite Announces 2024 First Quarter Results

Granite Announces 2024 First Quarter Results

Business WireMay 8, 2024 5:00 PM EDT
Granite Announces 2024 First Quarter Results

Granite Real Estate Investment Trust and Granite REIT Inc. (TSX: GRT.UN; NYSE: GRP.U) (“Granite” or the “Trust”) announced today its combined results for the three month period ended March 31, 2024.

FIRST QUARTER 2024 HIGHLIGHTS

Highlights for the three month period ended March 31, 2024 are set out below:

Financial:

  • Granite's net operating income ("NOI") was $114.5 million in the first quarter of 2024 compared to $107.4 million in the prior year period, an increase of $7.1 million primarily as a result of the completion of developments and expansions beginning in the first quarter of 2023, contractual rent adjustments and consumer price index based increases and renewal leasing activity;
  • Same property NOI - cash basis (4) increased by 4.9% for the first quarter of 2024, excluding the impact of foreign exchange;
  • Funds from operations ("FFO") (1) was $82.4 million ($1.30 per unit) in the first quarter of 2024 compared to $79.6 million ($1.25 per unit) in the first quarter of 2023;
  • Adjusted funds from operations ("AFFO") (2) was $77.9 million ($1.22 per unit) in the first quarter of 2024 compared to $75.1 million ($1.18 per unit) in the first quarter of 2023;
  • During the three month period ended March 31, 2024, the Canadian dollar weakened and strengthened slightly against the Euro and the US dollar, respectively, relative to the prior year period. There was no impact of foreign exchange on FFO and AFFO on a per unit basis for the three month period ended March 31, 2024;
  • AFFO payout ratio (3) was 67% for the first quarter of 2024 compared to 68% in the first quarter of 2023;
  • Occupancy as at March 31, 2024 was 95.0% and committed occupancy as at May 8, 2024 is 95.4%;
  • Granite recognized $12.7 million in net fair value gains on investment properties in the first quarter of 2024, which were primarily attributable to the stabilization of a development property in Brantford, Canada, which was completed and transferred to income-producing properties during the first quarter of 2024, partially offset by the expansion in discount and terminal capitalization rates across selective Granite assets largely due to market conditions. The value of investment properties was further increased by unrealized foreign exchange gains of $117.2 million in the first quarter of 2024 primarily resulting from the relative weakening of the Canadian dollar against the US dollar and Euro, as at March 31, 2024; and
  • Granite's net income in the first quarter of 2024 was $89.1 million in comparison to a net income of $9.8 million in the prior year period primarily due to a positive change in the fair value on investment properties of $85.7 million and a $7.1 million increase in net operating income as noted above, partially offset by a $16.3 million increase in income tax expense.

Developments:

  • During the first quarter of 2024, Granite signed a lease for 124,500 square feet of one of its recently developed properties in Lebanon, Tennessee, commencing in June 2024 for a 5.3 year term.

Operations:

  • During the first quarter of 2024, Granite achieved average rental rate spreads of 10% over expiring rents representing approximately 6,394,000 square feet of new leases and renewals completed in the quarter.
  • Subsequent to the first quarter of 2024, Granite signed a lease for 148,144 square feet at one of its properties in Houston, Texas, commencing in May 2024 for a 3.3 year term.

Financing:

  • On March 27, 2024, Granite amended its existing unsecured revolving credit facility agreement to extend the maturity date for a new five-year term to March 31, 2029.
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A more detailed discussion of Granite’s combined financial results for the three month periods ended March 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 unaudited condensed 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 .

2024 OUTLOOK

For 2024 outlook, Granite’s forecast for FFO per unit remains unchanged from the outlook Granite provided on February 28, 2024, which is estimated to be within a range of $5.30 to $5.45. For AFFO per unit, Granite is adjusting downward its forecast range by $0.05 to $4.60 to $4.75 due to revised estimates for maintenance capital expenditures, leasing commissions and tenant allowances (collectively “AFFO-related capital expenditures”) which were initially expected to occur in 2023. 

Granite is forecasting an increase in AFFO-related capital expenditures of approximately $3.0 million to approximately $28.0 million for fiscal year 2024. Granite has not made any changes to foreign currency exchange rate assumptions pertaining to the forecast period from April to December 2024. The high and low ranges continue to reflect foreign currency exchange rate assumptions where the high end of the range estimates the Canadian dollar to Euro exchange rate of 1.48 and the Canadian dollar to US dollar exchange rate of 1.38. On the low end of the range, we are assuming exchange rates of the Canadian dollar to Euro of 1.43 and the Canadian dollar to US dollar of 1.32. With respect to constant currency same property NOI – cash basis guidance, Granite is maintaining its forecast range of 7.0% to 8.0%, based on a four-quarter average over 2024, and it is forecasted to skew to the lower end of the range based on revised leasing assumptions on certain existing availabilities. Granite’s 2024 outlook assumes no acquisitions and dispositions.

Non-IFRS measures are included in Granite’s 2024 forecasts above (see “NON-IFRS 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.

Date:

Thursday, May 9, 2024 at 11:00 a.m. (ET)

Telephone:

North America (Toll-Free): 1-800-579-2543

International (Toll): 1-785-424-1699

Conference ID/Passcode:

REIT

Webcast:

To access the live audio webcast in listen-only mode, please visit https://events.q4inc.com/attendee/751825028 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.

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Granite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. The vast majority of the company's assets are logistics and distribution warehouses and multipurpose buildings split fairly evenly amongst Canadian, Austrian, and U.S. locations. Granite derives nearly all of its revenue in the form of rental income from its properties. The company's largest tenant is Magna International, an automotive parts and systems manufacturer, which accounts for the majority of Granite's lease income.
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Source

https://money.tmx.com/quote/GRT.UN/news/8569470931738222/Granite_Announces_2024_First_Quarter_Results

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