Granite Announces Renewal of Normal Course Issuer Bid
Granite Real Estate Investment Trust and Granite GP announced the Toronto Stock Exchange has accepted their Notice of Intention to Make a Normal Course Issuer Bid (NCIB). Granite plans to purchase up to 6,273,168 of its stapled units, approximately 10% of its public float, over the next 12 months. As of May 15, 2024, Granite had already bought 768,300 stapled units at an average price of $69.0523 per unit under a previous NCIB. The new NCIB will commence on May 24, 2024, and end by May 23, 2025, with daily purchase limits of 23,113 units. The purchases will be managed by Granite's broker, even during blackout periods.
- Granite plans to repurchase up to 6,273,168 stapled units, approximately 10% of its public float.
- Repurchases under the NCIB are aimed at prices below Granite's view of intrinsic value, potentially enhancing shareholder value.
- As of May 15, 2024, Granite has successfully repurchased 768,300 stapled units at an average price of $69.0523 per unit.
- All repurchased stapled units will be canceled, potentially reducing the number of outstanding shares and benefiting shareholders.
- The repurchase plan may signal that Granite does not see better uses for its capital, potentially indicating growth opportunities.
- Repurchasing 6,273,168 stapled units may require significant capital expenditure, which could impact Granite's liquidity and financial flexibility.
- If the repurchase prices do not reflect a genuine intrinsic value, there could be potential for financial misallocation.
Insights
Granite's renewal of its Normal Course Issuer Bid (NCIB) demonstrates a commitment to repurchasing its own shares, reflecting confidence in the intrinsic value of the company's stock. Share buybacks are often perceived positively by investors as they can reduce the number of shares outstanding, potentially leading to an increase in earnings per share (EPS) and shareholder value. By proposing to repurchase up to 10% of its public float, Granite signals a strong belief in its market valuation and a strategic use of capital.
However, investors should remain mindful of the implications. While buybacks can signal financial health, they also mean that the company is allocating significant resources towards repurchasing shares rather than potentially investing in growth opportunities or paying down debt. Given the weighted average purchase price of $69.0523 per Stapled Unit, the estimated capital outlay for the proposed share repurchase could be substantial, which is important to consider in the context of Granite’s financial position and capital allocation strategy.
Moreover, the automatic securities purchase plan is a notable feature. This allows Granite to repurchase shares even during blackout periods, ensuring flexibility and continuous execution of the buyback strategy. This mechanism can support stock price stability during volatile market conditions.
In conclusion, while the NCIB can enhance shareholder returns and convey management's confidence in the company's value, it warrants a balanced view considering potential opportunity costs and alternative uses of capital. Investors should keep a close watch on Granite's financials and market conditions to gauge the long-term impact of this buyback plan.
The renewal of Granite's NCIB aligns with a broader market trend where companies leverage share buybacks to drive value. This strategy may enhance the stock's appeal in the short term by creating an immediate demand for shares and potentially supporting the stock price. Long-term impact, however, depends on whether the market perceives Granite's intrinsic value as higher than the current trading price.
The limit of 23,113 Stapled Units for daily purchases, based on 25% of the average daily trading volume, strategically manages Granite's influence in the market, ensuring gradual and controlled buybacks without causing significant price disruptions. This is important to maintain market integrity and prevent undue volatility in Granite's share price.
From an investor’s perspective, such buybacks can be interpreted as a signal of management's confidence in future growth prospects and undervaluation of shares. However, it is equally important to analyze broader market conditions and Granite's competitive positioning within the Real Estate Investment Trust (REIT) sector. The timing and extent of these buybacks will be important in defining their success and impact on Granite’s overall market performance.
In essence, while the NCIB indicates Granite’s proactive approach to managing its stock performance, the actual benefits to investors will depend on execution and prevailing market dynamics. Investors should keep an eye on sector trends and any macroeconomic factors that could influence REIT valuations.
The NCIB will commence on May 24, 2024 and will conclude on the earlier of the date on which purchases under the bid have been completed and May 23, 2025. Daily purchases made by Granite through the TSX may not exceed 23,113 Stapled Units, being
Granite intends to enter into an automatic securities purchase plan with a broker as of the date on which the NCIB commences in order to facilitate repurchases of the Stapled Units under the NCIB during Granite’s scheduled blackout periods. Under the automatic securities purchase plan, Granite’s broker may repurchase Stapled Units under the NCIB in accordance with any advance instructions that Granite may elect to deliver, including without limitation repurchases made at times when Granite would ordinarily not be permitted to repurchase Stapled Units due to regulatory restrictions or self-imposed blackout periods. Purchases will be made by Granite’s broker based upon the parameters under the NCIB and the terms of the parties’ written agreement.
The Board of Trustees of Granite REIT and the Board of Directors of Granite GP believe that the potential purchases at prices below Granite’s view of intrinsic value are in the best interests of Granite and are a desirable use of Granite’s funds. All Stapled Units that are purchased under the NCIB will be cancelled.
ABOUT GRANITE
Granite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of logistics, warehouse and industrial properties in
OTHER INFORMATION
Copies of financial data and other publicly filed documents about Granite are available through the internet on the Canadian Securities Administrators’ Systems for Electronic Data Analysis and Retrieval+ (SEDAR+) which can be accessed at www.sedarplus.ca 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, Associate Director, 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 Granite’s future distributions, Stapled Unit repurchases, 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 future Stapled Unit repurchases, events, performance or results and will not necessarily be accurate indications of whether or the times at or by which such future Stapled Unit repurchases, 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 REIT and Granite GP dated February 28, 2024 (the “Annual Information Form”). The “Risk Factors” section of the Annual Information Form also contains 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.
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Teresa Neto
Chief Financial Officer
647-925-7560
Andrea Sanelli
Associate Director, Legal & Investor Services
647-925-7504
Source: Granite Real Estate Investment Trust
FAQ
What is the NCIB announced by Granite REIT?
When will Granite's NCIB commence and end?
How many stapled units does Granite plan to repurchase under the NCIB?
What is the daily repurchase limit for Granite's NCIB?
What was the average purchase price of stapled units repurchased by Granite as of May 15, 2024?
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What is the purpose of Granite's NCIB?
