TORONTO, Jan. 17, 2018 /PRNewswire/ - Granite Real
Estate Investment Trust ("Granite") (TSX: GRT.UN / NYSE: GRP.U)
announced today that it has achieved an important strategic
milestone, by entering into agreements for the sale of ten
properties for a total sales price of approximately $400 million (the "Transactions").The
Transactions are subject to customary closing conditions and are
expected to close within the next several weeks.
Three of the ten properties are characterized by Granite as
special purpose; two of the special purpose properties are located
in St. Thomas, Ontario
representing approximately 1.5 million square feet, and one is
located in Bowling Green,
Kentucky, representing approximately 1.2 million square
feet. The total sales price for these three properties is
expected to be approximately $334
million and, with a combined net operating income ("NOI") of
approximately $24 million, the
capitalization rate on the sale is estimated to be 7.0% for the
Bowling Green property and 7.3%
for the two St. Thomas
properties.
The remaining seven properties are all contiguous, and located
in the Greater Toronto Area
("GTA") in Newmarket, Ontario, and
together represent approximately 0.6 million square feet on 45
acres of land. The total sales price for these seven assets
is $63 million and, with a combined
NOI of $2.8 million, the
capitalization rate on the sale is estimated to be 4.5%.
Michael Forsayeth, Granite's CEO,
commented that "The sale of these properties is another major value
creation milestone for Granite. It significantly reduces Granite's
exposure to Magna and the special purpose properties which are key
strategic objectives of Granite. These tax efficient
transactions are accretive to Granite's net asset value by
approximately $1.50 per stapled unit.
We believe that these transactions unlock the embedded value and
demonstrate the liquidity potential of these assets, and that the
halo effect of these transactions will have meaningful positive
valuation implications on Granite's remaining special purpose
properties as well as its properties located in the GTA. With
our net leverage reduced to approximately 10%, our
opportunity to deploy the balance sheet clearly increases and
we remain committed to and confident in our ability to
effectively allocate capital in the best interests of Granite's
unitholders; including accelerating growth through more
acquisitions similar to the high quality portfolio acquired in
October 2017."
The benefits and highlights of these Transactions are summarized
below:
- The total sales price of approximately $400 million for these ten properties represents
nearly $70 million, or $1.50 per stapled unit, in excess of the values
reported for them in Granite's 2017 third quarter
report.
- Pro-forma, upon completion of the Transactions and based on
gross leasable area:
-
- Granite's Magna concentration will reduce from approximately
65% to 61%;
- the proportion of Granite's portfolio comprising of high
quality warehouse and logistics properties is expected to increase
by 3% to approximately 31%; and
- the special purpose properties will reduce by 5% to
approximately 36% of Granite's total portfolio.
- Post completion of the Transactions, Granite's estimated net
debt-to-gross book value will be approximately 10%.
- No change is anticipated to Granite's monthly distribution to
its unitholders as a result of the Transactions.
ABOUT GRANITE
Granite is a Canadian-based REIT engaged in the ownership and
management of predominantly industrial, warehouse and logistics
properties in North America and
Europe. Granite owns approximately
32 million square feet in over 90 rental income properties. Our
tenant base includes Magna International Inc. and its operating
subsidiaries as our largest tenants, in addition to tenants from
other industries.
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 Michael Forsayeth, Chief
Executive Officer, at 647-925-7600 or Ilias
Konstantopoulos, Chief Financial Officer, at
647-925-7540.
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 intention of Granite and the
purchaser to complete the Transactions on the terms and conditions
described herein, the expected timing of closing of the
Transactions, the impact of the Transactions on the valuation of
Granite's remaining special purpose and GTA properties and on
Granite's concentration of Magna-tenanted properties; special
purpose properties and high quality warehouse and logistics
properties; the impact of the Transactions on Granite's net
asset value, cash balance and net debt-to-gross book value ratio;
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" 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 Transactions on the terms and conditions described
herein, the expected impact of the Transactions as described
herein, or other events, performance or results and will not
necessarily be accurate indications of whether or the times at or
by which such closing of the Transactions, impact of the
Transactions, 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 REIT and
Granite GP dated March 1, 2017 (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.
SOURCE Granite REIT Holdings LP