TORONTO, Nov. 17, 2020 (GLOBE NEWSWIRE) — Granite Real Estate Investment Trust (“Granite” or “the REIT”) (TSX: GRT.UN / NYSE: GRP.U) announced today that it has completed or entered into exclusive negotiations on over C$564 million in acquisitions of four assets in the United States and four assets in the Netherlands, including the previously announced acquisition of a warehouse distribution facility located on 8500 Tatum Road, Atlanta, Georgia for C$107 million (US$80.3 million) which closed on November 12, 2020 (the “Acquisitions”). The properties are located in Granite’s core distribution and logistics markets in the United States and Europe, with a total gross leasable area of approximately 5 million square feet.
The REIT and Granite REIT Inc. also announced they have entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and TD Securities Inc. (the “Underwriters”) on a bought deal basis 3,340,000 stapled units (“Units”) at a price of C$75.00 per Unit (the “Offering Price”) for gross proceeds of approximately C$250 million (the “Offering”). The REIT intends to use the net proceeds from the Offering to fund the REIT’s acquisition pipeline, commitments under the REIT’s existing development projects and for general trust purposes.
Kevan Gorrie, Granite’s President and CEO, commented that, “These acquisition opportunities are highly compelling and consistent with our stated growth strategy – high quality distribution and logistics facilities that will strengthen our presence in our key target markets in the U.S. and Europe. We will continue to pursue our robust acquisition pipeline to capitalize on the strong fundamentals of the industrial sector. The equity offering keeps the REIT’s balance sheet well positioned to execute on strategic acquisition opportunities, as well as our current development pipeline. Our balance sheet remains strong with an estimated pro forma liquidity of approximately C$578 million.”
Acquisition and Development Update
The total purchase price of the Acquisitions is expected to be approximately C$564 million, excluding transaction costs. Subject to satisfactory due diligence, the REIT expects to complete the remaining Acquisitions in the fourth quarter of 2020. Key highlights of the Acquisitions include:
- High Quality Distribution and Warehouse Properties – All assets are highly functional, with most having been developed within the past five years with an average age of 4.5 years.
- Strategic Locations – Properties are well located within major e-commerce distribution nodes in the United States and the Netherlands and in close proximity to critical distribution infrastructure.
- Strong Occupancy and Long Lease Terms – The Acquisitions are 95% occupied with a weighted average lease term of approximately 14.3 years to a strong tenant base.
- Attractive Pricing – Total purchase price represents a going-in capitalization rate of approximately 4.6% and a stabilized capitalization rate of approximately 5.0%.
In addition, Granite expects to invest up to C$136 million in 2021 in existing properties under development and expansion projects across the REIT’s core markets.
- Properties Under Development – The REIT’s estimated development expenditures for 2021 amount to approximately C$121 million. Development of the initial phase for two distribution/warehouse facilities on 50 acres of a site in Houston, Texas is expected to commence in the second half 2021. The REIT has also commenced the development of a distribution/light industrial property on its 13 acre site in Altbach, Germany. In addition, the REIT will move forward with the development of a distribution/warehouse facility on the 36 acres of land in Fort Worth, Texas that it acquired in June 2020.
- Expansions – Granite’s expansion initiatives in 2021 constitute approximately C$15 million in capital commitments at two assets located in the Greater Toronto Area.
Estimated capital requirements for the Acquisitions and development commitments totals over C$700 million, which, together, are expected to add over 6.6 million square feet of gross leasable area to Granite’s current portfolio.
The REIT and Granite REIT Inc. announced they have entered into an agreement to sell to the Underwriters on a bought deal basis 3,340,000 Units at a price of C$75.00 per Unit for gross proceeds of approximately C$250 million. In addition, the REIT and Granite REIT Inc. have granted the Underwriters an option, exercisable in whole or in part at any time up to 30 days following closing of the Offering, to purchase up to an additional 501,000 Units at the Offering Price to cover over-allotments, if any (the “Over-Allotment Option”) which, if exercised in full, would increase the gross proceeds of the Offering to approximately C$288 million. Each Unit is comprised of one trust unit of the REIT and one common share of Granite REIT Inc. The Offering is expected to close on or about November 24, 2020 and is subject to certain customary conditions including the approval of the Toronto Stock Exchange. The Units will be offered in Canada pursuant to a prospectus supplement filed under Granite’s short form base shelf prospectus dated September 12, 2019. The prospectus supplement will be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.
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 109 investment properties representing approximately 46.3 million square feet of gross leasable area.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act.
Copies of financial data and other publicly filed documents about Granite are available through the internet on the Canadian Securities Administrators’ Systems for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com 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, Manager, 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 the expected closing date of the Offering, Granite’s intended use of the net proceeds of the Offering to fund the REIT’s acquisition pipeline, commitments under the REIT’s existing development projects and for general trust purposes, Granite’s intention and ability to close the Acquisitions or make future investments and acquisitions on satisfactory terms, Granite’s pro forma liquidity position assuming completion of the Offering, and Granite’s 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 the closing of the Offering, Granite’s intended use of the net proceeds of the Offering, Granite’s intention and ability to acquire and develop properties on satisfactory terms, or other events, performance or results and will not necessarily be accurate indications of whether or the times at or by which future 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 Real Estate Investment Trust and Granite REIT Inc. dated March 4, 2020 (the “Annual Information Form”) and management’s discussion and analysis of results of operations and financial position for the three months ended September 30, 2020 (“Q3 MD&A”). The “Risk Factors” section of the Annual Information Form and the Q3 MD&A also contain 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.
Drugmaker Merck divests investment in Moderna – TheChronicleHerald.ca
(Reuters) – U.S. drugmaker Merck & Co said on Wednesday it has sold its equity investment in Moderna Inc, after benefiting from a surge in the stock price of the vaccine developer this year.
Merck did not disclose the details of the sale proceeds, but said it expects to record a small gain from the sale in the fourth quarter of 2020. (https://bit.ly/3og5kil)
Moderna’s shares have risen more than seven-fold this year, valuing the company at $55.80 billion as of Tuesday’s closing price.
Moderna is one of the front-runners in the race to develop a coronavirus vaccine, and on Monday filed for U.S. emergency use authorization of its vaccine.
Merck, which had invested $50 million in Moderna in 2015, said it would retain exposure to the company indirectly through its investment in venture funds.
(Reporting by Manas Mishra in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)
Amid slump, BMO exiting energy investment banking outside of Canada – The Globe and Mail
Bank of Montreal is reshaping its investment and corporate banking division in a major way by winding down its energy sector coverage outside of its home market.
Going forward the bank’s investment dealer, BMO Nesbitt Burns, will devote its energy sector resources to the Canadian market, employees were told Monday. The move is expected to affect the bank’s long-standing Houston office, and the news comes amid a prolonged slump in the energy sector – particularly for U.S. shale producers.
“We’re allocating our resources to businesses where we are well-positioned from a market share position and to deliver strong returns now and in the future,” BMO said in a statement to the Globe. “As part of these efforts, we’ve made the financial decision for an orderly wind-down of our non-Canadian investment and corporate banking energy business.”
The bank’s energy business, which includes investment banking and corporate lending, will now focus on the Canadian market where BMO said its “competitive positioning is strongest, our financial opportunity is most attractive, and we have a deep and long-standing commitment to supporting clients.”
BMO has a rich history in Houston, having opened its doors there in the early 1960s. Former chief executive Bill Downe, who retired in 2017, spent his early days as a credit analyst and corporate lender in the energy-focused Houston office.
The bank’s American energy business has been known for its acquisitions and divestitures arm, which focused on trading land assets. BMO has also advised on large U.S. deals, including serving as Spectra Energy Corp.’s financial adviser on its $37-billion sale to Enbridge in 2016.
But in recent years the outlook for U.S. energy has shifted dramatically, as the boom supported by shale oil and gas flamed out. Many producers created a bubble by overpaying for shale assets, often with a lot of debt, only to find out many of the wells are not as prolific as once hoped.
At the same time, the outlook for energy prices has taken a hit. Not only has the pandemic altered energy demand, but there has also been an oversupply of oil, which is expected to suppress prices for the near future.
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There is no alternative to staying invested – The Globe and Mail
The current investment landscape is not an easy one to navigate. Technology stocks are trading at record highs; value stocks have been underperforming for years, although they have recently shown signs of life; bond rates are close to zero; and holding cash is a money-loser once inflation is taken into account. So, what are financial advisors and investors to do?
While the current investment environment is very challenging, the biggest risk that most investors with a long-term horizon face is not losing money, but not having enough of it. That’s why there’s no alternative to staying invested in a well-diversified portfolio.
Although there’s no magic formula, there are some prudent steps that can be taken to get through these challenging times. Here are three simple and proven investment strategies to consider:
1. Avoid extremes
There’s a growing group of investors who think they should concentrate their portfolios on a few big technology stocks – especially because of their strong performance during the COVID-19 crisis. That’s because the dopamine hit investors get when they make a correct bet on the market direction is often very stimulating.
That effect becomes difficult for investors to control and, as long as it’s working, they’re encouraged to take on more and more extreme bets on the market’s direction. They will consider it a better strategy than diversification.
The problem with this approach is that no stock or sector outperforms the market all the time. One day, something else will replace the performance generated by the big technology stocks – and nobody knows what that will be.
That’s why good advisors preach diversification even if it makes many investors feel remorseful in the short term. These advisors will also remind investors that diversification means getting the good, missing out on the extraordinary, but preventing the tragic.
For investors who are adamant on making such bets, advisors can suggest that they set up a “fun portfolio” in which they can place a smaller amount of money in a self-directed account. That will allow them to attempt to time the market without putting all of their assets at risk.
It’s an easy way for investors to fulfill that urge while ensuring most of their assets remain in well-diversified portfolios.
2. Prevent the default to cash
Faced with one of the most challenging investment environments in decades, some investors will shy away from investing altogether and default to cash. Although a global pandemic and growing geopolitical tension are two very good reasons to stay on the sidelines right now, there’s a big risk in doing so.
Holding too much cash in a portfolio leads to a vicious cycle. When the market goes up, investors tell themselves they’ll wait for the next correction; then, when the market goes down, they’ll say that they’ll wait for it to drop further. As such, investors who succumbed to a “cash addiction” in 2000, 2008, or even this past March paid a heavy price. Of course, it’s easy to look back at these dates in hindsight and say that investing during these periods was a no-brainer, but that’s never the case.
Finally, the accompanying table shows the lousy returns cash has provided to investors during the past 10 years. It’s very difficult for investors to reach their life goals if they get a negative real rate of return 10 years in a row. That’s why advisors help fight the addiction to cash among some investors by focusing on their financial plans, making sure they stay invested, and by helping them manage the inevitable cycles of fear and greed.
3. Focus on preparation more than predictions
Predictions are about trying to forecast the future while preparation is about setting the right expectations for whatever may hold. Investing has a lot more to do with preparation as it’s very difficult to foresee what will happen in the future correctly.
Good advisors can help investors prepare by performing a “pre-mortem” of their investment portfolios to know what could go wrong and how they should react if those scenarios were to happen. For example, advisors can help investors prepare for a situation in which tech stocks could fall by 25 per cent in a short time – and whether they should buy more shares or liquidate their positions.
Preparing for these situations ahead of time allows investors to follow a process instead of their emotions when these events happen. That leads to better results in the long term.
Jonathan Durocher is president of National Bank Financial Wealth Management.
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