Ms. Teresa Neto reports

GRANITE ANNOUNCES FOURTH QUARTER AND YEAR END RESULTS FOR 2023 AND THE APPOINTMENT OF A NEW TRUSTEE

Granite Real Estate Investment Trust has released its combined results for the three-month period and year ended Dec. 31, 2023, and has appointed Robert D. Brouwer to its board of trustees and board of directors.

Fourth quarter 2023 highlights

Highlights for the three-month period and year ended Dec. 31, 2023, are set out herein.

Financial:

• Granite's net operating income (NOI) was $110.0-million in the fourth quarter of 2023 compared with $102.4-million in the prior-year period, an increase of $7.6-million primarily as a result of the completion of developments and expansions beginning in the fourth quarter of 2022, contractual rent adjustments and consumer price index based increases and renewal leasing activity.
• Same property NOI -- Cash basis increased by 4.7 per cent for the fourth quarter of 2023, excluding the impact of foreign exchange.
• Funds from operations (FFO) was $81.2-million ($1.27 per unit) in the fourth quarter of 2023 compared with $77.2-million ($1.20 per unit) in the fourth quarter of 2022.
• FFO was $317.6-million ($4.97 per unit) for the year ended Dec. 31, 2023, as compared with $289.3-million ($4.43 per unit) for the year ended Dec. 31, 2022.
• Adjusted funds from operations (AFFO) was $73.2-million ($1.15 per unit) in the fourth quarter of 2023 compared with $67.0-million ($1.05 per unit) in the fourth quarter of 2022.
• AFFO was $287.4-million ($4.50 per unit) for the year ended Dec. 31, 2023, as compared with $264.2-million ($4.05 per unit) for the year ended Dec. 31, 2022.
• During the three-month period and year ended Dec. 31, 2023, the Canadian dollar weakened against the United States dollar and the euro relative to the prior-year period. The impact of foreign exchange, excluding any fair value gains or losses realized on foreign exchange collars, on FFO for the three-month period and year ended Dec. 31, 2023, relative to the same period in 2022, was two cents per unit and 21 cents per unit, respectively, and for AFFO, the impact of foreign exchange was two cents per unit and 20 cents per unit, respectively.
• AFFO payout ratio was 70 per cent for the fourth quarter of 2023 compared with 75 per cent in the fourth quarter of 2022.
• Granite recognized $33.0-million in net fair value losses on investment properties in the fourth quarter of 2023 ($229.9-million for the year ended Dec. 31, 2023), which were primarily attributable to the expansion in discount and terminal capitalization rates across selective Granite markets largely due to market conditions, partially offset by fair market rent increases primarily in selective U.S. and European markets. The value of investment properties was further decreased by unrealized foreign exchange losses of $73.3-million in the fourth quarter of 2023 primarily resulting from the relative strengthening of the Canadian dollar against the U.S. dollar, partially offset by the relative weakening of the Canadian dollar against the euro as at Dec. 31, 2023.
• Granite's net income in the fourth quarter of 2023 was $31.4-million in comparison with a net loss of $126.3-million in the prior-year period primarily due to a decrease in the fair value losses on investment properties of $196.9-million and a $7.6-million increase in net operating income as noted herein, partially offset by a $23.9-million decrease in income tax recovery and a $17.5-million increase in fair value losses on financial instruments.

Developments:

• Subsequent to quarter-end, Granite achieved contractual completion of its approximately 410,000-square-foot, 40-foot-clear height, state-of-the-art modern distribution facility in Brantford, Ont., and the lease with a global chocolate producer commenced with an approximate 19-year term.
• Subsequent to quarter-end, Granite signed a lease for approximately 30,000 square feet of the expansion of its property at 555 Beck Cr. in Ajax, Ont. The lease will commence upon completion of the property which is expected to occur in the second quarter of 2024 for a 10-year term with annual escalations.

Operations:

• During the fourth quarter of 2023, Granite achieved average rental rate spreads of 24 per cent over expiring rents representing approximately 3.78 million square feet of renewals completed in the quarter.
• Today, Granite released its green bond use of proceeds report with respect to the allocation of net proceeds of the 3.062 per cent $500.0-million Series 4 senior debentures due 2027, the 2.194 per cent $500.0-million Series 6 senior debentures due 2028 and the 6.074 per cent $400.0-million Series 7 senior debentures due 2029. As at Dec. 31, 2023, Granite has allocated a total of $1,161.3-million of net green bond proceeds to eligible green projects, as defined in Granite's Green Bond Framework, representing 100 per cent, 100 per cent and 42.0 per cent of the net proceeds of the 2027 green bond, the 2028 green bond and the 2029 green bond, respectively. Sustainalytics, a leading provider of ESG (environmental, social and governance) and corporate governance research and ratings to investors, conducted the verification of Granite's green bond use of proceeds. The green bond use of proceeds report can be found on Granite's website.

Financing:

• On Nov. 30, 2023, Granite repaid in full the outstanding $400.0-million aggregate principal amount of its debentures due Nov. 30, 2023, using proceeds from the issuance of the $400.0-million Series 7 debentures due April 12, 2029. In conjunction with the repayment, the mark to market liability of $18.5-million relating to the 2023 cross currency interest rate swap was settled.
• During the quarter, pursuant to Granite's normal course issuer bid (NCIB), Granite repurchased 392,700 stapled units at an average stapled unit cost of $68.73 for total consideration of $27.0-million, excluding commissions.
• On Feb. 21, 2024, Granite filed and obtained a receipt for new base shelf prospectuses for both equity and debt securities. Granite has filed the shelf prospectuses to maintain financial flexibility and to have the ability to offer securities and debt on an accelerated basis pursuant to the filing of prospectus supplements. There is no certainty any securities or debt will be offered or sold under the shelf prospectuses. The shelf prospectuses are valid for a 25-month period, during which time Granite may offer and issue, from time to time, stapled units, stapled convertible debentures, stapled subscription receipts, stapled warrants, units or any combination thereof, having an aggregate offering price of up to $1.5-billion or debt securities having an aggregate offering price of up to $1.75-billion. Each offering under the shelf prospectuses will require the filing of a prospectus supplement that will include the specific terms of the securities being offered at that time.

A more detailed discussion of Granite's combined financial results for the three months and years ended Dec. 31, 2023, and 2022 is contained in Granite's management's discussion and analysis of results of operations and financial position (MD&A) and the audited combined financial statements for those periods and the notes thereto, which are available through the internet on the Canadian Securities Administrators' System for Electronic Data Analysis and Retrieval Plus (SEDAR+) and can be accessed at the SEDAR+ website and on the United States Securities and Exchange Commission's Electronic Data Gathering, Analysis and Retrieval System (EDGAR).

2024 outlook

For 2024, Granite forecasts FFO per unit within a range of $5.30 to $5.45, representing a 7-per-cent to 10-per-cent increase over 2023, and Granite forecasts AFFO per unit to be within a range of $4.65 to $4.80, representing an increase of 3 per cent to 7 per cent over 2023. The high and low ranges are driven by foreign currency exchange rate assumptions where for the high end of the range Granite is assuming foreign exchange rates of the Canadian dollar to Euro of 1.48 and the Canadian dollar to United States dollar of 1.38. On the low end of the range, the company is assuming exchange rates of the Canadian dollar to euro of 1.43 and the Canadian dollar to United States dollar of 1.32. Granite forecasts constant currency same property NOI -- cash basis to be within a range of 7 per cent to 8 per cent, based on a four-quarter average over 2024. Granite's 2024 forecasts assume no acquisitions and dispositions.

Trustee appointment

On Feb. 15, 2024, Granite appointed Robert D. Brouwer to its board of trustees and board of directors and Mr. Brouwer was also appointed to Granite's audit committees. Mr. Brouwer most recently served as the vice-chairman of KPMG Canada and regional head of markets for KPMG in the Americas through 2023. Mr. Brouwer has over 30 years of experience as an executive relationship partner and audit partner for a wide range of public and private companies with operations in Canada and internationally, and in a range of industries. He served as Canadian managing partner, clients and markets, KPMG Canada's senior accounting technical partner and for many years national director of KPMG's mining practice in Canada. Mr. Brouwer has also served on the board of the Institute of Corporate Directors, as a chair of the ICD Ontario Chapter Executive and continues to serve as a faculty for the ICD Directors Education Program. Mr. Brouwer is an FCPA and received his bachelor of arts in economics from the University of Toronto and is a member of the Institute of Corporate Directors (ICD.D).

Gerald Miller, a trustee and director since June, 2011, will not be standing for re-election at Granite's next annual general meeting in June, 2024.

Conference call

Granite will hold a conference call on Thursday, Feb. 29, 2024, at 11 a.m. ET. The toll-free number to use for this call is 1-800-926-4951. For international callers, please call 1-416-981-9004. Please dial in at least 10 minutes prior to the commencement of the call. The conference call will be chaired by Kevan Gorrie, president and chief executive officer. To hear a replay of the scheduled call, please dial 1-800-558-5253 (North America) or 1-416-626-4100 (international) and enter reservation No. 22028905. The replay will be available until Monday, March 11, 2024.

Other information

Additional property statistics as at Dec. 31, 2023, have been posted to the trust's website. Copies of financial data and other publicly filed documents are available through the internet on SEDAR+ and on EDGAR.

Granite has filed its annual report on Form 40-F for the year ended Dec. 31, 2023, with the SEC. The Form 40-F, including the audited combined financial statements, included therein, is available at Granite's website and on EDGAR. Hard copies of the audited combined financial statements are available free of charge on request by calling 647-925-7500.

About Granite Real Estate Investment Trust

Granite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of logistics, warehouse and industrial properties in North America and Europe. Granite owns 143 investment properties representing approximately 62.9 million square feet of leasable area.

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