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Highlights

  • Granite reported Q2 2025 net income of CAD 95.0 million, up from CAD 76.2 million in the prior-year period.
  • Five U.S. and Netherlands properties valued at CAD 310.5 million were classified as held for sale as of June 30.
  • The REIT acquired two fully leased Broward County facilities for CAD 49.5 million at a 5.0% in-going yield.

Granite Real Estate Investment Trust (NYSE: GRP.U) reported second quarter 2025 results, posting net income attributable to unitholders of CAD 95.0 million, a CAD 18.8 million increase from the prior-year period. The gain was driven by a CAD 6.6 million rise in net operating income (NOI), favorable fair value adjustments on investment properties, and a CAD 3.2 million increase in gains on financial instruments.

NOI rose to CAD 123.4 million in the quarter, up from CAD 116.8 million a year ago. Same property NOI on a cash basis grew by 4.6%, excluding currency fluctuations. Funds from operations (FFO) were CAD 85.4 million, or CAD 1.39 per unit, compared to CAD 83.5 million (CAD 1.32 per unit) last year. Adjusted funds from operations (AFFO) were CAD 75.1 million, or CAD 1.23 per unit, versus CAD 73.8 million (CAD 1.17 per unit) in Q2 2024. The AFFO payout ratio stood at 69%, slightly improved from 70% a year earlier.

Foreign exchange movements had a mixed impact. On a year-over-year basis, FX provided a favorable CAD 0.03 per unit tailwind on both FFO and AFFO. Quarter-over-quarter, FX movements had a net negative effect, reducing FFO by CAD 0.04 per unit and AFFO by CAD 0.03.

As of June 30, 2025, five income-producing properties in the U.S. and Netherlands were classified as held for sale with a combined fair value of CAD 310.5 million. The reclassification, along with a temporary increase in unsecured debt to support unit repurchases, raised Granite’s net leverage to 36%, up from 32% at the end of Q1.

Granite also completed the acquisition of two Broward County distribution properties totaling 0.1 million square feet for CAD 49.5 million (USD 36.4 million) on June 30. Constructed in 2021, both assets are fully leased with a weighted average remaining lease term of 6.6 years. The properties offer direct access to South Florida’s key highways and serve over 6.6 million residents within a 90-minute radius. The acquisition’s in-going yield of 5.0% is expected to rise more than 15% within two years.

Operationally, Granite executed new leases and renewals totaling 973,000 square feet during the quarter, achieving average rental rate spreads of 18% above expiring rents. This included new leases at previously vacant properties in Kentucky and Georgia, and a post-quarter lease commencement in Indiana set for September 30.

In terms of capital allocation, Granite repurchased 1,226,312 units during Q2 at an average cost of CAD 66.04 per unit, totaling CAD 81.0 million. For the first half of 2025, total repurchases reached 2,157,281 units for CAD 144.6 million at an average cost of CAD 67.01 per unit.