Granite Real Estate Investment TrustNYSE: GRP.UN

We had rated Granite REIT as a buy in our previous coverage. The REIT had a strong Q2-2024, though there was one notable weakness. We update our outlook for this one and give you our verdict.

Bullish on Granite as GARP play with attractive valuation. Market sentiment improving with supply pipeline contracting. Units up 5%, trading at attractive levels, downgraded to Buy from Strong Buy due to recent rally.

TORONTO--(BUSINESS WIRE)--Granite Real Estate Investment Trust (“Granite”) (TSX: GRT.UN / NYSE: GRP.U) announced today that its board of trustees has declared a distribution of CDN $0.275 per stapled unit for the month of August 2024. The distribution will be paid by Granite on Monday, September 16, 2024 to stapled unitholders of record at the close of trading on Friday, August 30, 2024. Granite confirms that no portion of the distribution constitutes effectively connected income for U.S. feder.

We are upgrading Granite REIT to Strong Buy due to an anticipated rebound in leasing fundamentals and its historically low valuation. Q1 earnings showed modest rent and revenue growth, stable occupancy, and healthy FFO/AFFO growth. Valuation is compelling with low P/AFFO multiple relative to peers and historical averages, and potential 29-30% upside to NAVPU estimate.

TORONTO--(BUSINESS WIRE)--Granite Real Estate Investment Trust (“Granite”) (TSX: GRT.UN / NYSE: GRP.U) expects to announce its financial results for the second quarter ended June 30, 2024 after the close of markets on Wednesday, August 7, 2024. Granite will hold a conference call and live audio webcast to discuss its financial results. The conference call will be chaired by Kevan Gorrie, President and Chief Executive Officer. Conference Call:       Date: Thursday, August 8, 2024 at 11:00 a.m. (.

Granite REIT's Q1-2024 report shows positive growth in revenue, NOI, and FFO. US side occupancy levels are at the low end of what we have seen for the last decade. We go over why Granite is about two years ahead of both Prologis and Rexford Industrial in terms of valuation compression.

Granite Real Estate Investment Trust ("Granite") has declared a distribution of CDN $0.275 per stapled unit for May 2024. The distribution will be paid on June 14, 2024 to stapled unitholders of record as of May 31, 2024. It is confirmed that no part of the distribution is considered effectively connected income for U.S. federal tax purposes.

Granite REIT reported a strong Q4 '23 with impressive portfolio performance and rent growth. FFO and AFFO per unit increased, largely driven by one-time items such as favorable FX and elevated interest income. However, cash FFO and AFFO were flat and up ~1%, respectively. Granite is trading at a reasonable intrinsic valuation and highly attractive multiple compared to its industrial peers, with potential for upside through development completions and near-term expiries.

Granite Real Estate Investment Trust is a Canadian REIT with a diversified portfolio of industrial assets in Canada, the US, Austria, Germany, and the Netherlands. Strong operating performance and thoughtful capital allocation have enabled Granite to preserve and increased unitholder value despite rising rates and supply challenges. We believe current prices offer an attractive entry point for a long-term holding.