Granite REIT Unveils C$800 Million Senior Debenture Offering
Granite REIT Launches Major Debenture Offering
Granite Real Estate Investment Trust (TSX: GRT.UN / NYSE: GRP.U) has recently announced a significant financial initiative aimed at raising C$800 million through its wholly owned subsidiary, Granite REIT Holdings Limited Partnership. This offering involves senior unsecured debentures structured across two series that will cater to both investor interest and corporate financial flexibility.
Details of the Offering
The offering will feature C$250 million of 3.999% Series 8 debentures maturing in 2029 and C$550 million of 4.348% Series 9 debentures maturing in 2031. Both series of debentures will be guaranteed by Granite and Granite REIT Inc., ensuring investors of the financial backing of this established entity. This approach typifies Granite's strategy of leveraging favorable interest rates while expanding its investment capabilities.
Role of Financial Institutions
An experienced syndicate of agents, co-led by Scotia Capital, TD Securities, and BMO Capital Markets, is facilitating this offering. They will assist in navigating the financial landscape to ensure a successful placement of the bonds. Credit rating agencies Morningstar DBRS and Moody’s Investor Service have been called upon to assign ratings of at least ‘BBB (high)’ and ‘Baa2’, respectively, reflecting the solid position of Granite in the marketplace.
Purpose and Strategic Use of Proceeds
The net proceeds from this offering will serve strategic purposes, primarily refinancing existing debt obligations. This includes the repayment of a US$185 million term loan due in 2024 and a US$400 million senior unsecured term facility maturing in 2025. Such refinancing will enhance Granite's liquidity profile and bolster its operational stability. Furthermore, these proceeds might be utilized in cash equivalents or bank deposits, maximizing the efficiency of Granite’s capital management policies until deployment.
Cross Currency Interest Rate Strategy
Granite LP has executed a cross currency interest rate swap that enables it to convert payments from Canadian dollars to Euros for the October 2029 debentures. This strategic move results in an effective interest rate of 3.494%, showcasing Granite's proactive management of its capital structure in fluctuating interest rate environments.
Granite's Market Presence
Granite operates as a prominent Canadian REIT, focusing on the acquisition, development, and management of logistics and industrial properties spread across North America and Europe. With 143 investment properties totaling approximately 63.3 million square feet, Granite is well-positioned within the real estate landscape to capitalize on growing market demands.
Investor Engagement and Information Access
For those interested in understanding more about Granite's financial standing and operational strategies, comprehensive information is made available through SEDAR+. This portal allows stakeholders to access financial reports, documents, and disclosures critical for making informed investment decisions.
Frequently Asked Questions
What is the purpose of Granite REIT's C$800 million offering?
The offering aims to refinance existing debt and support general corporate purposes.
What are the maturity dates of the debentures?
The Series 8 debentures mature in 2029, while the Series 9 debentures will mature in 2031.
Who is leading the offering?
A syndicate co-led by Scotia Capital, TD Securities, and BMO Capital Markets is leading the offering.
How will the proceeds be utilized?
The funds raised will be used to refinance existing loans and may be employed for investments in cash equivalents.
What are Granite's primary investment assets?
Granite invests in logistics, warehouse, and industrial properties, primarily within North America and Europe.
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