Granite Real Estate Investment Trust has acquired two income producing properties and has agreed to acquire three development properties, together comprising approximately 2.5 million square feet at a combined purchase price of approximately C$246.7 million. Collectively, the acquisitions represent an anticipated stabilized yield of approximately 5.1%.
Granite also announced it has extended its C$300 million term loan to December 11, 2026 and refinanced the related cross-currency interest rate swap resulting in Euro-denominated payments at a 1.355% fixed interest rate.
In addition, Granite revealed that it has completed the acquisition of the development property in Dallas, Texas that it had contractually committed to acquire. Further, on December 4, 2019, Granite completed the disposition of its five western Michigan assets that were held for sale for gross proceeds of US$29.5 million.
Kevan Gorrie, Granite’s President and CEO, commented that, “consistent with our strategy of acquiring and developing modern e-commerce and distribution facilities in Granite’s target markets, we expect these acquisitions to further enhance the quality of our portfolio, deliver stable and growing cash flow and generate net asset value growth. Further, as evidenced by the recent refinancing outlined herein, we continue to leverage our unique access to lower cost Euro-denominated debt to enhance our returns and cash flow. Following these commitments, we estimate our pro forma liquidity to be approximately C$650 million.”
330 & 440 E. Stateline Rd., Southaven, Mississippi, USA
Granite has acquired 330 & 440 E. Stateline Road, two multi-tenant modern distribution buildings totaling 1.7 million SF, featuring 32’ clear height and situated on 95 acres of land in Southaven, Mississippi for US$87.9 million. Constructed in 2005 and 2007, the properties are 81% leased to established tenants for a remaining weighted average lease term of 5.6 years. The acquisition closed on December 19, 2019.
The properties are located within 2.0 miles of Memphis International Airport, the world’s busiest cargo airport and home to the FedEx World Hub and UPS Airport Facility. The properties benefit from superior access to Interstate 55, Interstate 22 and the BNSF Memphis Intermodal Facility.
De Kroonstraat 1 (Tilburg), Francis Baconstraat 4 (Ede), Oude Graaf 15 (Weert)
Granite has agreed to acquire three state-of-the-art facilities in the Netherlands for approximately €89 million. Currently under construction, the properties will be delivered mid-2020, with the 488,000 SF Tilburg property being delivered in two phases, including a 142,000 SF second phase to be delivered in the first quarter of 2021. The properties have a combined leasable floor area of approximately 852,000 SF and include approximately 1.8 acres of additional land for potential future expansion. The properties are 100% leased to three prominent European tenants for a weighted average lease term of approximately 11 years.
In line with Granite’s European strategy, the properties are located in highly-desirable distribution nodes along the main supply corridor from Rotterdam, Europe’s largest port, to Germany and continental Europe. Furthermore, the assets are situated in one of the most densely populated areas in Europe, making them attractive e-commerce locations. The design of these build-to-suit properties incorporates several sustainability features, leading management to expect the properties to receive a BREEAM “Very Good” certification.
Extension of $300M term loan and refinancing of related cross-currency interest rate swap
On November 27, 2019, Granite extended its C$300 million term loan (the “Term Loan”) and refinanced the related cross-currency interest rate swap (the “Euro Swap”). The Term Loan, with an original maturity date of December 12, 2025, has been extended for one year, on the same terms, to December 11, 2026. Concurrently, the previously existing Euro Swap was terminated and Granite entered into a new seven-year cross-currency interest rate swap resulting in Euro-denominated payments at a 1.355% fixed interest rate, approximately 85 basis points lower than the previous rate. The refinancing is expected to result in interest expense savings of approximately C$2.3 million, or C$0.04 of funds from operations per unit, annually.
1301 Chalk Hill Road, Dallas, Texas
On November 19, 2019, Granite acquired 1301 Chalk Hill Road, a state-of-the-art, 2.3 million SF, multi-level e-commerce fulfillment centre, situated on 101 acres of land in Dallas, Texas. The newly constructed property is 100% leased to a leading global e-commerce provider for an initial lease term of 20 years. The previously-announced acquisition closed on November 19, 2019.
The completed acquisitions were funded using cash on hand and the acquisition of the European properties will be funded from Granite’s available liquidity.