TORONTO, Oct. 21, 2019 /PRNewswire/ - Granite Real Estate
Investment Trust ("Granite" or the "REIT") (TSX: GRT.UN / NYSE:
GRP.U) announced today that it has acquired two income-producing
properties in the United States.
In addition, the tenant of the development property in Texas that Granite has contractually committed
to acquire has waived its purchase rights. Closing on the
development property is still expected to occur in the fourth
quarter of 2019, subject to customary closing conditions.
Collectively these acquisitions (the "Acquisitions") comprise
approximately 3.5 million square feet ("SF") at a combined purchase
price of approximately C$393 million
(US$296 million), representing an
in-going weighted average yield of approximately 5.6%. The
properties are fully leased with a weighted average lease term of
14.8 years and will be immediately accretive to funds from
operations and adjusted funds from operations.
Granite also announced it has extended and refinanced its
US$185 million term loan ("U.S. Term
Loan") to December 19, 2024 and
entered into a new cross-currency interest rate swap resulting in
Euro-denominated payments at a 0.522% fixed interest rate. In
addition, the REIT announced Mr. Jon
Sorg joined Granite's senior leadership team as Head of U.S.
and will be based out of a new Granite office in Dallas, Texas. Mr. Sorg has 19 years of
investment, asset management and valuation experience in a variety
of markets across the south and central U.S.
Kevan Gorrie, Granite's President
and CEO, commented that, "These acquisitions further advance our
strategy of acquiring and developing modern e-commerce fulfillment
and distribution facilities in Granite's target markets in the U.S.
We expect these acquisitions to further enhance the quality of our
portfolio, deliver stable and growing cash flow and generate net
asset value growth for our unitholders. Further, as evidenced by
the recent refinancing outlined herein, we continue to leverage our
unique access to lower cost Euro-denominated debt to enhance our
returns and cash flow. Lastly, we are very pleased to welcome
Jon Sorg to the organization and
advance our plan of establishing an active management platform in
the U.S. Jon brings significant investment, asset management and
development expertise to the team and will be a key driver of
Granite's U.S. strategy moving forward."
The Acquisitions
Greenpointe Logistics Center, Greenwood, Indiana
On October 4, 2019, Granite
acquired 831 North Graham Road, a 496,416 SF, newly constructed,
36' clear height modern distribution centre, situated on 31.4 acres
of land in Greenwood (Indianapolis), Indiana. This
state-of-the-art facility was completed in 2018 and is 100% leased
to Spreetail, a private e-commerce provider of home and garden
consumer goods, for a remaining lease term of 7.0 years.
Greenwood is a desirable
industrial node situated 15 miles from the FedEx Air Hub and the
Indianapolis International Airport
and also benefits from easy access to the I-65, which connects the
property to Louisville and the UPS
Worldport Air Hub.
100 Clyde Alexander Lane,
Savannah, Georgia
On October 18, 2019, Granite
acquired 100 Clyde Alexander Lane, a 689,400 SF, 32' clear height
distribution centre situated on 48.3 acres of land in Pooler (Savannah), Georgia, adjacent to Granite's existing
property at 101 Clyde Alexander Lane. The subject property is 100%
leased to Best Choice Products, an e-commerce provider with a focus
on home furnishings, toys and appliances, for a remaining lease
term of 3.1 years. The property is situated close to major
distribution modes, including the Port of Savannah, the Savannah-Hilton International
Airport, the CSX Intermodal Yard and the I-95 and I-16 interstate
highways.
1301 Chalk Hill Road, Dallas,
Texas
1301 Chalk Hill Road is a state-of-the-art 2.3 million SF,
multi-level e-commerce fulfillment centre, situated on 101 acres of
land in Dallas, Texas. The newly
constructed property is 100% leased to a leading global e-commerce
provider for an initial lease term of 20 years. Key physical
attributes include 41' clear height, white TPO roof, air
conditioning throughout, interior and exterior LED lighting, 2,500
auto parking spaces, 300 trailer spaces and a site coverage ratio
of 19.3%. The site is strategically located within Dallas' Pinnacle/Turnpike submarket,
approximately 7 miles west of downtown Dallas. The property benefits from exceptional
access to Interstate 30 and Dallas' extensive air and road logistics
systems, as well as a population base and labour force ideal for
last mile and regional service.
The two Acquisitions that have been completed were financed
using cash on hand, and the acquisition of the property in
Dallas, Texas will also
be financed with cash on hand.
Refinancing and extension of US$185M Term Loan
On October 10, 2019, Granite
extended and refinanced its US$185
million U.S. Term Loan. The U.S. Term Loan, with an original
maturity date of December 19, 2022,
has been extended two years to December 19,
2024. The previously existing cross-currency interest rate
swap relating to the U.S Term Loan was terminated on September 24, 2019 and blended into a new
cross-currency interest rate swap commencing October 21, 2019 resulting in Euro-denominated
payments at a 0.522% fixed interest rate, approximately 70 basis
points lower than the previous rate. The refinancing is expected to
result in interest expense savings of approximately C$1.6 million or C$0.03 per stapled unit of adjusted funds from
operations, annually.
New Granite Head of U.S.
On October 14, 2019, Mr.
Jon Sorg joined Granite's senior
leadership team as Head of U.S. and will be based out of a new
Granite office in Dallas, Texas.
Mr. Sorg has 19 years of investment, asset management and
underwriting experience in a variety of markets across the south
and central U.S. Prior to joining Granite, Mr. Sorg spent 12
years at Prologis, where most recently he served as Senior Vice
President, Capital Deployment. In that role, he was
responsible for investment activities across various markets in the
central U.S. Prior to Prologis, Mr. Sorg held various leasing,
underwriting and valuation roles at Duke Realty.
About Granite
Granite is a Canadian-based REIT engaged in the acquisition,
development, ownership and management of industrial, warehouse and
logistics properties in North
America and Europe. Granite
owns over 80 rental income properties representing approximately
38.5 million square feet of leasable area.
Other Information
Copies of financial data and other publicly filed documents
about Granite are available through the internet on the Canadian
Securities Administrators' Systems for Electronic Document Analysis
and Retrieval (SEDAR) which can be accessed at
www.sedar.com and on the United States Securities and Exchange
Commission's Electronic Data Gathering, Analysis and Retrieval
System (EDGAR) which can be accessed at www.sec.gov.
For further information, please see our website at
www.granitereit.com or contact Teresa
Neto, Chief Financial Officer, at 647-925-7560 or
Andrea Sanelli, Manager, Legal &
Investor Services, at 647-925-7504.
Forward Looking Statements
This press release may contain statements that, to the extent
they are not recitations of historical fact, constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities legislation, including
the United States Securities Act of 1933, as amended, the United
States Securities Exchange Act of 1934, as amended, and applicable
Canadian securities legislation. Forward-looking statements and
forward-looking information may include, among others, statements
regarding the closing of the acquisition of the property in
Dallas, Texas the expected impact
of the Acquisitions on Granite's funds from operations and adjusted
funds from operations per unit, net asset value and cash flow
growth, the expected impact of the refinancing of the U.S. Term
Loan on Granite's returns and cash flow, Granite's intention and
ability to make future investments and acquisitions and Granite's
plans, goals, strategies, intentions, beliefs, estimates, costs,
objectives, economic performance, expectations, or foresight or the
assumptions underlying any of the foregoing. Words such as "may",
"would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate",
"seek", "objective" and similar expressions are used to identify
forward-looking statements and forward-looking information.
Forward-looking statements and forward-looking information should
not be read as guarantees of the closing of the acquisition of the
property in Dallas, Texas, the
expected impact of the Acquisitions on Granite's funds from
operations and adjusted funds from operations per unit, net asset
value and cash flow growth, the expected impact of the refinancing
of the U.S. Term Loan on Granite's returns and cash flow, Granite's
intention and ability to make future investments and acquisitions
or other events, performance or results and will not necessarily be
accurate indications of whether or the times at or by which such
impact of the acquisitions or other events or performance will be
achieved. Undue reliance should not be placed on such
statements. Forward-looking statements and forward-looking
information are based on information available at the time and/or
management's good faith assumptions and analyses made in light of
its perception of historical trends, current conditions and
expected future developments, as well as other factors management
believes are appropriate in the circumstances, and are subject to
known and unknown risks, uncertainties and other unpredictable
factors, many of which are beyond Granite's control, that could
cause actual events or results to differ materially from such
forward-looking statements and forward-looking information.
Important factors that could cause such differences include, but
are not limited to, the risks set forth in the annual information
form of Granite Real Estate Investment Trust and Granite REIT Inc.
dated March 6, 2019 (the "Annual
Information Form"). The "Risk Factors" section of the Annual
Information Form also contains information about the material
factors or assumptions underlying such forward-looking statements
and forward-looking information. Forward-looking statements
and forward-looking information speak only as of the date the
statements and information were made and unless otherwise required
by applicable securities laws, Granite expressly disclaims any
intention and undertakes no obligation to update or revise any
forward-looking statements or forward-looking information contained
in this press release to reflect subsequent information, events or
circumstances or otherwise.
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SOURCE Granite Real Estate Investment Trust