Granite Real Estate Investment Trust (GRT-UN) Q2 2024 earnings summary

Executive summary

• Q2 2024 results showed NOI and FFO growth, with NOI up CAD 2.3 million (2%) over Q1 and FFO per unit rising to CAD 1.32, marking the twelfth consecutive quarter of NOI growth.

• Portfolio includes 138 income-producing and 5 development properties, totaling 63.3M SF with 94.5% committed occupancy and $9.0B in property value.

• Focus on long-term total return, conservative capital structure, and active asset management, with 13 consecutive annual distribution increases.

• ESG leadership recognized by top GRESB rankings, $1.2B green bond spend, and release of the 2023 ESG+R report.

• Net income attributable to unitholders increased to $76.2M from $62.5M, aided by fair value gains and higher NOI.

Financial highlights

• Revenue for Q2 2024 was $140.3M, up from $130.3M year-over-year; same-property NOI increased 6% year-over-year on a constant currency basis.

• LTM AFFO payout ratio at 70%, improved from 73% year-over-year; net leverage ratio at 32%.

• Market capitalization of ~$4.6B and enterprise value of ~$7.6B as of August 2, 2024.

• Interest expense increased by CAD 0.6 million from Q1; net debt to EBITDA dropped to 7.1x.

• Average rental rate spreads of 25% achieved on 890,000 sq ft of new leases and renewals.

Outlook and guidance

• 2024 FFO per unit guidance narrowed to $5.30–$5.40 (7%-9% growth vs. 2023); AFFO per unit to $4.60–$4.70 (2%-4% growth).

• 2024 same-property NOI growth forecast revised to 6%-6.5% due to new vacancy and revised leasing assumptions.

• Maintenance CapEx, leasing costs, and tenant allowances expected at $28 million for 2024.

• Committed occupancy expected to finish 2024 between 96%-97%, excluding re-leasing of the Ohio vacancy.

• Same-property NOI growth expected to accelerate in 2025.