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Granite to spend $368M for 10 industrial properties, dev. sites

Granite REIT (GRT-UN-T) says it has plans to acquire six industrial properties and four industria...

LOGO: Granite REIT.Granite REIT (GRT-UN-T) says it has plans to acquire six industrial properties and four industrial development sites in Canada and the United States in coming weeks for a total purchase price of $368.3 million.

If it closes on all the transactions, it will add 1.2 million feet of current space and up to 3.2 million feet of potential development to its portfolio.

“The acquisition opportunities represent a combination of income-producing properties and development assets that are critical to our stated external growth strategy,” said Kevan Gorrie, Granite’s president and CEO, in the announcement Wednesday afternoon.

“We are pleased to add to our portfolio in the Greater Toronto Area, which is one of the strongest industrial markets in North America, as well as to our U.S. portfolio within our target markets, which continue to demonstrate strong industrial fundamentals.”

Granite is currently conducting due diligence on all the properties.

Offering to raise up to $316 million

The REIT and Granite REIT Inc. also announced a bought-deal unit offering which would raise up to $316 million. The offering is for 3.46 million units at a price of $79.50 via a syndicate of underwriters led by BMO Capital Markets and TD Securities. It also includes a 15 per cent overallotment.

Proceeds would be used to fund acquisitions, development commitments and other trust purposes.

The six income-producing properties include four in the United States totalling 1.2 million square feet and two smaller properties in the Greater Toronto Area comprising about 100,000 square feet. All the properties are scheduled to close during Q2 and Q3 2021.

Granite will invest $170 million in these acquisitions.

The development properties are valued at $198.3 million and are:

– approximately 100 acres in the GTA capable of supporting approximately 1.8 million square feet of distribution/warehouse space, expected to close in Q3;

– and  forward funding of two properties supporting four modern distribution buildings in the United States, totalling 1.4 million square of gross leasable area. Substantial completion of the buildings is expected in the second half of 2022.

Granite REIT development projects

In addition, Granite has five ongoing development projects, to which is is committing over $132 million.

“The pending acquisitions of land and development properties in the Greater Toronto Area and the U.S. demonstrate our commitment to build on our robust development pipeline across our target markets,” Gorrie explained in the statement.

“The equity offering also enables us to maintain our conservative capital ratios and positions the REIT to continue to execute on our strategic growth initiatives to generate strong NAV growth and total returns for our unitholders over the long term.”

In Canada, the REIT is expanding existing facilities in Mississauga, where construction has commenced, and in Ajax where it is seeking permits for a 50,000-square-foot addition. Both are in the Greater Toronto Area.

In the U.S., Granite has developments underway in Houston and Forth Worth, Texas, which combined will provide 1.3 million square feet of space. Both are scheduled for completion of the major construction work by Q1 2022.

In addition, a project on its 13-acre site in Altbach, Germany has commenced and is also expected to complete in Q1 2022. It will deliver about 290,000 square feet of leasable space.

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