Granite Real Estate Investment Trust has acquired two income-producing properties in the United States. In addition, the tenant of the development property in Texas that Granite has contractually committed to acquire has waived its purchase rights.
Closing on the development property is still expected to occur in the fourth quarter of 2019, subject to customary closing conditions. Collectively these acquisitions comprise approximately 3.5 million square feet at a combined purchase price of approximately $393 million (US$296 million), representing an in-going weighted average yield of approximately 5.6%. The properties are fully leased with a weighted average lease term of 14.8 years and will be immediately accretive to funds from operations and adjusted funds from operations.
Granite also announced it has extended and refinanced its US$185 million term loan to December 19, 2024 and entered into a new cross-currency interest rate swap resulting in Euro-denominated payments at a 0.522% fixed interest rate. In addition, the REIT announced Mr. Jon Sorg joined Granite’s senior leadership team as Head of U.S. and will be based out of a new Granite office in Dallas, Texas. Mr. Sorg has 19 years of investment, asset management and valuation experience in a variety of markets across the south and central U.S.
Kevan Gorrie, Granite’s President and CEO, commented that, “These acquisitions further advance our strategy of acquiring and developing modern e-commerce fulfillment and distribution facilities in Granite’s target markets in the U.S. We expect these acquisitions to further enhance the quality of our portfolio, deliver stable and growing cash flow and generate net asset value growth for our unitholders. 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. Lastly, we are very pleased to welcome Jon Sorg to the organization and advance our plan of establishing an active management platform in the U.S. Jon brings significant investment, asset management and development expertise to the team and will be a key driver of Granite’s U.S. strategy moving forward.”