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Granite Real Estate (TSE:GRT.UN)
TSX:GRT.UN
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Granite Real Estate
(TSX:GRT.UN)
Rating:76Outperform
Price Target:
C$76.00
▲(7.06%Upside)
Positive Factors
Earnings
Granite REIT reported impressive year-end results that were ahead of expectations, with FFO per unit jumping 16% in the quarter.
Share Repurchase
Management has been taking advantage of the weak unit price to repurchase units and has acquired $46 million of units so far in 2025.
Stock Value
Granite currently trades at an implied cap rate of 6.7% or a 25.7% discount to the NAV estimate, which suggests potential upside.
Negative Factors
Interest Expense
Greater interest expense from refinancing debt at higher interest rates partially offsets positive factors.
Occupancy Rates
Occupancy dropped 10 bps sequentially and dropped 20 bps year-over-year to 94.8%.
Granite Real Estate (GRT.UN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$4.30B
Dividend Yield4.79%
Average Volume (3M)82.45K
Price to Earnings (P/E)13.9
Beta (1Y)0.90
Revenue Growth10.23%
EPS Growth47.96%
CountryCA
Employees70
SectorReal Estate
Sector Strength52
IndustryREIT - Industrial
Share Statistics
EPS (TTM)0.70
Shares Outstanding61,320,496
10 Day Avg. Volume85,527
30 Day Avg. Volume82,454
Financial Highlights & Ratios
PEG Ratio-1.08
Price to Book (P/B)0.74
Price to Sales (P/S)0.00
P/FCF Ratio11.39
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$80.00Price Target Upside12.69% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Granite Real Estate Business Overview & Revenue Model
Company DescriptionGranite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of logistics, warehouse and industrial properties in North America and Europe. Granite owns 108 investment properties representing approximately 45.3 million square feet of leasable area.
How the Company Makes MoneyGranite Real Estate makes money primarily through the leasing of its industrial, warehouse, and logistics properties to tenants. The company generates revenue through rental income, which is typically derived from long-term lease agreements with tenants. These leases often include provisions for rent escalations, which provide a steady and growing income stream over time. In addition to rental income, Granite Real Estate may also earn money through property management fees and strategic property sales. The company's earnings are further supported by its ability to acquire and develop new properties, enhancing its portfolio and increasing potential rental income. Key factors contributing to its revenue include the strategic location of its properties, high occupancy rates, and the financial stability of its tenant base.
Granite Real Estate Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q3-2024)
| % Change Since: 14.89%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive performance with strong NOI growth, increased FFO and AFFO, successful leasing and expansions, and significant ESG achievements. However, challenges such as increased G&A expenses, occupancy declines, tenant bankruptcy, and potential economic policy impacts were also highlighted.Q3-2024 Updates
Positive Updates
Strong NOI Growth
Granite posted results ahead of Q2 and in line with annual forecast, largely driven by strong NOI growth. Same-property NOI increased 6.2% on a constant currency basis and 8% with foreign currency effects.
Increase in FFO and AFFO
FFO per unit in Q3 was $1.35, a 2.3% increase from Q2 and an 8.9% increase relative to the same quarter last year. AFFO per unit increased by $0.05 relative to Q2 and $0.13 relative to the same quarter last year.
Successful Leasing and Developments
Achieved an average rental rate increase of 55% over expiring rents. Completed expansions in Ajax, Ontario, and the Netherlands with strong leasing spreads.
ESG Achievements
Ranked #1 by GRESB among North American industrial REITs. Solar PV systems capacity reached over 45 megawatts, with 44% of properties achieving green building certification.
Refinancing Success
Completed $800 million of bond offerings, extending the weighted average debt term to maturity to 4.6 years and maintaining a stable interest expense outlook.
Negative Updates
Increased G&A Expenses
G&A for the quarter was $13.2 million, $5.5 million higher than Q2, mainly due to $5.6 million of unfavorable fair value variance in non-cash compensation liabilities.
Occupancy Challenges
Occupancy slightly declined by 20 bps to 94.5% in Q3. Expected year-end occupancy revised to closer to 95%, down from an earlier forecast of 96% to 97%.
Chapter 11 Filing by Tenant
True Value Company, a tenant, filed for Chapter 11 proceedings. Although they remain current on rent, the outcome is uncertain.
Potential Impact from U.S. Economic Policies
Uncertainty surrounding U.S. economic policies, particularly related to tariffs, may affect future demand and tenant decisions.
Company Guidance
In the Q3 2024 earnings call for Granite REIT, the company provided guidance indicating a promising financial trajectory with several key metrics highlighted. The Funds from Operations (FFO) per unit for the quarter was reported at $1.35, a 2.3% increase from Q2, and an 8.9% increase from the previous year, aligning with the annual guidance. The Adjusted Funds from Operations (AFFO) per unit increased to $1.22, up $0.05 from Q2 and $0.13 from the same quarter last year. The Net Operating Income (NOI) showed robust growth due to favorable leasing spreads and expansion projects, although slightly offset by new vacancies. Same-property NOI grew by 6.2% on a constant currency basis, with an 8% increase when foreign currency effects were considered. The guidance for 2024 was updated, maintaining the FFO per unit range between $5.30 to $5.40, while the AFFO per unit forecast was revised to $4.65 to $4.75 due to reduced capital expenditure estimates. The company's balance sheet remained strong with total assets of $9.3 million and a weighted average cap rate of 5.3% on in-place NOI. Granite's liquidity was bolstered to approximately $1.4 billion, with no borrowings under its credit facility. Overall, Granite REIT's strategic refinancing and leasing activities underscore a stable outlook with anticipated continued growth in NOI and cash flow for 2024.Granite Real Estate Financial Statement Overview
Summary
Granite Real Estate demonstrates strong financial health with robust profitability margins and stable revenue growth. The balance sheet is solid with moderate leverage, though ROE could be improved. Cash flow generation is a key strength, offering flexibility for future growth and financial stability. Continued focus on enhancing equity efficiency and maintaining profitability will be crucial for sustained success.Income Statement
Granite Real Estate has shown consistent revenue growth, with the TTM (Trailing-Twelve-Months) revenue up by 2.76% compared to the previous year. The company maintains strong margins, with a TTM gross profit margin of 82.54% and a net profit margin of 53.91%. These robust margins demonstrate effective cost management and profitability. However, the decline in net income from 2024 to the TTM period suggests a potential concern that requires monitoring.80
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.55, indicating moderate leverage. The equity ratio is strong at 58.83%, showcasing a solid equity foundation. However, the return on equity (ROE) has decreased in the TTM period to 5.57%, suggesting a decline in the efficiency of equity utilization. Overall, the balance sheet supports financial stability but highlights the need to enhance ROE.75
Positive
Cash Flow
The company exhibits strong cash flow generation with a positive free cash flow growth rate of 7.37% in the TTM period. The operating cash flow to net income ratio is 1.15, indicating efficient cash conversion from net income. The free cash flow to net income ratio is high at 1.15, reflecting strong cash flow relative to net profits. This cash flow strength provides flexibility for future investments and debt servicing.85
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 584.86M | 569.14M | 521.25M | 455.58M | 393.49M | 340.20M |
| Gross Profit | 482.79M | 471.99M | 435.24M | 380.36M | 332.68M | 293.04M |
| EBITDA | 434.63M | 480.48M | 203.14M | 346.73M | 293.51M | 260.98M |
| Net Income | 315.36M | 360.61M | 136.66M | 155.77M | 1.31B | 429.80M |
Balance Sheet | ||||||
| Total Assets | 9.07B | 9.62B | 9.07B | 9.28B | 8.57B | 6.75B |
| Cash, Cash Equivalents and Short-Term Investments | 116.13M | 126.17M | 116.13M | 135.08M | 402.51M | 831.28M |
| Total Debt | 3.10B | 3.11B | 3.10B | 3.07B | 2.46B | 2.21B |
| Total Liabilities | 3.78B | 3.88B | 3.78B | 3.80B | 3.25B | 2.83B |
| Stockholders Equity | 5.28B | 5.73B | 5.28B | 5.48B | 5.32B | 3.92B |
Cash Flow | ||||||
| Free Cash Flow | 363.48M | 338.48M | 312.90M | 276.69M | 261.68M | 179.03M |
| Operating Cash Flow | 363.56M | 338.61M | 313.18M | 277.50M | 262.26M | 244.32M |
| Investing Cash Flow | -63.10M | -65.46M | -128.13M | -766.56M | -1.03B | -1.07B |
| Financing Cash Flow | -322.54M | -267.50M | -203.11M | 214.56M | 333.48M | 1.36B |
Granite Real Estate Technical Analysis
Positive
70.99
Price Trends
67.17
Positive
65.95
Positive
68.90
Positive
Market Momentum
0.63
Positive
66.56
Neutral
84.06
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GRT.UN, the sentiment is Positive. The current price of 70.99 is above the 20-day moving average (MA) of 69.57, above the 50-day MA of 67.17, and above the 200-day MA of 68.90, indicating a bullish trend. The MACD of 0.63 indicates Positive momentum. The RSI at 66.56 is Neutral, neither overbought nor oversold. The STOCH value of 84.06 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:GRT.UN.
Granite Real Estate Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | C$3.81B | 8.58 | 11.23% | 5.94% | 4.54% | 68.32% | |
78 Outperform | C$4.41B | 18.75 | 4.75% | 7.14% | 10.06% | -19.26% | |
76 Outperform | C$4.30B | 13.95 | 5.70% | 4.79% | 10.23% | 47.96% | |
74 Outperform | C$3.95B | 18.41 | 5.40% | 4.78% | 3.11% | ― | |
72 Outperform | C$3.39B | 14.91 | 4.92% | 5.86% | 6.68% | 14.72% | |
69 Neutral | C$2.76B | ― | -0.49% | 5.92% | 6.96% | 85.15% | |
59 Neutral | C$1.24B | 0.83 | -8.20% | 5.11% | 9.89% | -25.14% |
* Real Estate Sector Average
Performance Comparison
TSE:GRT.UN
Granite Real Estate
70.99
4.77
7.20%
TSE:CRR.UN
Crombie Real Estate ate
15.04
2.95
24.40%
TSE:CRT.UN
CT Real Estate Investment
15.96
3.27
25.77%
TSE:DIR.UN
Dream Industrl REIT
11.95
-0.20
-1.65%
TSE:FCR.UN
First Capital Realty
18.60
4.22
29.35%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.90
4.87
23.16%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.