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Granite Real Estate (TSE:GRT.UN)
TSX:GRT.UN
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Granite Real Estate
(TSX:GRT.UN)
74Outperform
Positive Factors
Distribution Increase
Granite's distribution increase represents the 14th consecutive year of raising distributions, equating to a yield of 4.6%.
Earnings Growth
Granite REIT reported impressive year-end results that were ahead of expectations, with FFO per unit jumping 16% in the quarter.
Negative Factors
Interest Expense
Greater interest expense from refinancing debt at higher interest rates partially offsets positive factors.
Granite Real Estate (GRT.UN) vs. S&P 500 (SPY)
Market Cap
C$4.24B
Dividend Yield4.86%
Average Volume (3M)144.04K
Price to Earnings (P/E)11.9
Beta (1Y)0.90
Revenue Growth9.19%
EPS Growth166.98%
CountryCA
Employees69
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)5.73
Shares Outstanding62,265,785
10 Day Avg. Volume129,943
30 Day Avg. Volume144,041
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)N/A
Price to Sales (P/S)7.54
Price to Cash Flow (P/CF)15.10
P/FCF Ratio12.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$86.00Price Target Upside26.28% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Granite Real Estate Business Overview & Revenue Model
Company DescriptionGranite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. The vast majority of the company's assets are logistics and distribution warehouses and multipurpose buildings split fairly evenly amongst Canadian, Austrian, and U.S. locations. Granite derives nearly all of its revenue in the form of rental income from its properties. The company's largest tenant is Magna International, an automotive parts and systems manufacturer, which accounts for the majority of Granite's lease income.
How the Company Makes MoneyGranite Real Estate Investment Trust generates revenue primarily through leasing its industrial and logistics properties to tenants. The company earns rental income from long-term lease agreements, which provide a steady and predictable cash flow. Additionally, Granite Real Estate may engage in property development and acquisition to enhance its portfolio, potentially increasing rental income over time. The trust also benefits from capital appreciation of its property assets. Partnerships with strong tenants like Magna International contribute significantly to its revenue, providing a stable base of reliable income. Furthermore, Granite Real Estate may explore strategic property disposals to realize capital gains, which can supplement its rental income.
Granite Real Estate Financial Statement Overview
Summary
Granite Real Estate exhibits strong financial health with robust revenue growth and efficient cash flow management. The balance sheet reflects a stable financial position despite a slight increase in leverage. The company's focus on maintaining high margins and growing equity bodes well for its future prospects, though monitoring EBIT performance is advisable.Income Statement
Granite Real Estate has demonstrated strong revenue growth over the years, with a notable increase from $455.6M in 2022 to $569.1M in 2024. The gross profit margin is consistently high, at 82.9% for 2024, indicating efficient cost management. However, the absence of EBIT in 2024 is a concern, though it's offset by a strong EBITDA margin of 84.4%.85
Very Positive
Balance Sheet
The company's balance sheet is stable with a moderate debt-to-equity ratio of 0.54 in 2024. Stockholders' equity has grown from $3.92B in 2020 to $5.73B in 2024, which is a positive sign. However, the equity ratio has slightly decreased from 58.2% in 2020 to 59.5% in 2024, indicating a balanced approach to leveraging assets.78
Positive
Cash Flow
Granite Real Estate has consistently positive operating cash flow, with a significant increase in free cash flow from $276.7M in 2022 to $338.5M in 2024. The operating cash flow to net income ratio is strong at 0.94 in 2024, showing efficient cash generation relative to net income.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 569.14M | 521.25M | 455.58M | 393.49M | 340.20M | Gross Profit |
| 471.99M | 435.24M | 380.36M | 332.68M | 293.04M | EBIT |
| 0.00 | 394.79M | 345.14M | 292.19M | 259.82M | EBITDA |
| 480.48M | 203.14M | 346.73M | 293.51M | 260.98M | Net Income Common Stockholders |
| 360.61M | 136.66M | 155.77M | 1.31B | 429.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 126.17M | 116.13M | 135.08M | 402.51M | 831.28M | Total Assets |
| 9.62B | 9.07B | 9.28B | 8.57B | 6.75B | Total Debt |
| 3.11B | 3.10B | 3.07B | 2.46B | 2.21B | Net Debt |
| 2.99B | 2.98B | 2.93B | 2.06B | 1.38B | Total Liabilities |
| 3.88B | 3.78B | 3.80B | 3.25B | 2.83B | Stockholders Equity |
| 5.73B | 5.28B | 5.48B | 5.32B | 3.92B |
| Cash Flow | Free Cash Flow | |||
| 338.48M | 312.90M | 276.69M | 261.68M | 179.03M | Operating Cash Flow |
| 338.61M | 313.18M | 277.50M | 262.26M | 244.32M | Investing Cash Flow |
| -65.46M | -128.13M | -766.56M | -1.03B | -1.07B | Financing Cash Flow |
| -267.50M | -203.11M | 214.56M | 333.48M | 1.36B |
Granite Real Estate Technical Analysis
Neutral
68.10
Price Trends
68.30
Negative
70.65
Negative
71.16
Negative
Market Momentum
-0.34
Negative
51.02
Neutral
51.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GRT.UN, the sentiment is Neutral. The current price of 68.1 is above the 20-day moving average (MA) of 67.59, below the 50-day MA of 68.30, and below the 200-day MA of 71.16, indicating a neutral trend. The MACD of -0.34 indicates Negative momentum. The RSI at 51.02 is Neutral, neither overbought nor oversold. The STOCH value of 51.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:GRT.UN.
Granite Real Estate Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | C$4.29B | 18.90 | 4.50% | 7.35% | 9.46% | -42.77% | |
74 Outperform | C$4.24B | 11.90 | 6.55% | 4.86% | 9.19% | 166.98% | |
71 Outperform | C$6.71B | 24.12 | 3.20% | 3.56% | 4.45% | ― | |
61 Neutral | $4.76B | 18.68 | -3.83% | 10.24% | 6.25% | -20.78% |
* Real Estate Sector Average
Performance Comparison
TSE:GRT.UN
Granite Real Estate
68.10
-2.94
-4.14%
RIOCF
RioCan Real Estate Investment
12.89
0.34
2.71%
TSE:CAR.UN
Canadian Apartment
41.30
-5.63
-12.00%
TSE:SRU.UN
SmartCentres Real Estate Investment Trust
25.17
4.12
19.57%
DRETF
Dream Office Real Estate Investment
11.88
0.74
6.64%
APYRF
Allied Properties Real Estate Investment Trust
11.60
>-0.01
-0.09%
Granite Real Estate Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 0.07% | Next Earnings Date: May 7, 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.Highlights
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.
Lowlights
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.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.