Granite Real Estate Investment Trust Announces over C$564 Million in Acquisitions Closed or Under Negotiation and a C$250 Million Bought Deal Equity Offering

TORONTO, Nov. 17, 2020 (GLOBE NEWSWIRE) — Granite Real Estate Investment Trust (“Granite” or “the REIT”) (TSX: GRT.UN / NYSE: GRP.U) announced today that it has completed or entered into exclusive negotiations on over C$564 million in acquisitions of four assets in the United States and four assets in the Netherlands, including the previously announced acquisition of a warehouse distribution facility located on 8500 Tatum Road, Atlanta, Georgia for C$107 million (US$80.3 million) which closed on November 12, 2020 (the “Acquisitions”). The properties are located in Granite’s core distribution and logistics markets in the United States and Europe, with a total gross leasable area of approximately 5 million square feet.

The REIT and Granite REIT Inc. also announced they have entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and TD Securities Inc. (the “Underwriters”) on a bought deal basis 3,340,000 stapled units (“Units”) at a price of C$75.00 per Unit (the “Offering Price”) for gross proceeds of approximately C$250 million (the “Offering”). The REIT intends to use the net proceeds from the Offering to fund the REIT’s acquisition pipeline, commitments under the REIT’s existing development projects and for general trust purposes.

Kevan Gorrie, Granite’s President and CEO, commented that, “These acquisition opportunities are highly compelling and consistent with our stated growth strategy – high quality distribution and logistics facilities that will strengthen our presence in our key target markets in the U.S. and Europe. We will continue to pursue our robust acquisition pipeline to capitalize on the strong fundamentals of the industrial sector. The equity offering keeps the REIT’s balance sheet well positioned to execute on strategic acquisition opportunities, as well as our current development pipeline. Our balance sheet remains strong with an estimated pro forma liquidity of approximately C$578 million.”

Acquisition and Development Update

The total purchase price of the Acquisitions is expected to be approximately C$564 million, excluding transaction costs. Subject to satisfactory due diligence, the REIT expects to complete the remaining Acquisitions in the fourth quarter of 2020. Key highlights of the Acquisitions include:

• High Quality Distribution and Warehouse Properties – All assets are highly functional, with most having been developed within the past five years with an average age of 4.5 years.
• Strategic Locations – Properties are well located within major e-commerce distribution nodes in the United States and the Netherlands and in close proximity to critical distribution infrastructure.
• Strong Occupancy and Long Lease Terms – The Acquisitions are 95% occupied with a weighted average lease term of approximately 14.3 years to a strong tenant base.
• Attractive Pricing – Total purchase price represents a going-in capitalization rate of approximately 4.6% and a stabilized capitalization rate of approximately 5.0%.

In addition, Granite expects to invest up to C$136 million in 2021 in existing properties under development and expansion projects across the REIT’s core markets.

• Properties Under Development – The REIT’s estimated development expenditures for 2021 amount to approximately C$121 million. Development of the initial phase for two distribution/warehouse facilities on 50 acres of a site in Houston, Texas is expected to commence in the second half 2021. The REIT has also commenced the development of a distribution/light industrial property on its 13 acre site in Altbach, Germany. In addition, the REIT will move forward with the development of a distribution/warehouse facility on the 36 acres of land in Fort Worth, Texas that it acquired in June 2020.
• Expansions – Granite’s expansion initiatives in 2021 constitute approximately C$15 million in capital commitments at two assets located in the Greater Toronto Area.

Estimated capital requirements for the Acquisitions and development commitments totals over C$700 million, which, together, are expected to add over 6.6 million square feet of gross leasable area to Granite’s current portfolio.

Equity Offering

The REIT and Granite REIT Inc. announced they have entered into an agreement to sell to the Underwriters on a bought deal basis 3,340,000 Units at a price of C$75.00 per Unit for gross proceeds of approximately C$250 million. In addition, the REIT and Granite REIT Inc. have granted the Underwriters an option, exercisable in whole or in part at any time up to 30 days following closing of the Offering, to purchase up to an additional 501,000 Units at the Offering Price to cover over-allotments, if any (the “Over-Allotment Option”) which, if exercised in full, would increase the gross proceeds of the Offering to approximately C$288 million. Each Unit is comprised of one trust unit of the REIT and one common share of Granite REIT Inc. The Offering is expected to close on or about November 24, 2020 and is subject to certain customary conditions including the approval of the Toronto Stock Exchange. The Units will be offered in Canada pursuant to a prospectus supplement filed under Granite’s short form base shelf prospectus dated September 12, 2019. The prospectus supplement will be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.

ABOUT GRANITE

Granite 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 109 investment properties representing approximately 46.3 million square feet of gross leasable area.

OTHER INFORMATION

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act.

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 Teresa Neto, Chief Financial Officer, at 647-925-7560 or Andrea Sanelli, Manager, Legal & Investor Services, at 647-925-7504.

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 expected closing date of the Offering, Granite’s intended use of the net proceeds of the Offering to fund the REIT’s acquisition pipeline, commitments under the REIT’s existing development projects and for general trust purposes, Granite’s intention and ability to close the Acquisitions or make future investments and acquisitions on satisfactory terms, Granite’s pro forma liquidity position assuming completion of the Offering, 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”, “objective” 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 Offering, Granite’s intended use of the net proceeds of the Offering, Granite’s intention and ability to acquire and develop properties on satisfactory terms, or other events, performance or results and will not necessarily be accurate indications of whether or the times at or by which future 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 Real Estate Investment Trust and Granite REIT Inc. dated March 4, 2020 (the “Annual Information Form”) and management’s discussion and analysis of results of operations and financial position for the three months ended September 30, 2020 (“Q3 MD&A”).  The “Risk Factors” section of the Annual Information Form and the Q3 MD&A also contain 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.