Matt Kornack

Matt Kornack asked if Granite's high retention rate might indicate leaving rent on the table, whether the 'flight to quality' trend is driven more by building attributes or location, and about potential expansion opportunities across Granite's existing portfolio or if acquiring existing buildings with expansion potential is preferred over raw land.

Answer

Kevan Gorrie, President and CEO, defended Granite's 45% average rent lift on renewals as strong. He explained that 'flight to quality' is a mix of both building attributes and location, driven by tenant consolidation and modernization, particularly in stronger submarkets. Kevan Gorrie stated that while there are no specific expansion plans for 2026, future opportunities for densification exist, and acquiring existing buildings with expansion potential is indeed an attractive characteristic for Granite.

Matt Kornack asked if Granite's high retention rate implies leaving rent on the table, whether the 'flight to quality' trend is driven by building attributes, location, or both, if there are meaningful expansion opportunities across the existing portfolio, and if acquiring existing buildings with expansion potential is more attractive than raw land.

Answer

President and CEO Kevan Gorrie defended the 45% rent lift as a strong, competitive number. He confirmed that 'flight to quality' is a mix of both building attributes and location, driven by tenant consolidation and modernization, with leasing activity concentrated in stronger submarkets. Mr. Gorrie stated there are no expansion plans for 2026 but future opportunities to densify properties exist, and they are looking to build up their land base. He affirmed that acquiring existing buildings with expansion opportunities is 'absolutely' more attractive than raw land and is a key consideration for IPP acquisitions.

Matt Kornack of National Bank Financial asked if low-cap-rate transactions in Toronto affect their acquisition strategy and if they have considered capital recycling. He also asked for key forward-looking indicators for a U.S. storage market rebound.

Answer

CEO H. Michael Schwartz stated they are focused on long-term growth in Canada, not short-term sprints influenced by low-cap deals. CFO James Barry described their Maple Bond issuance as a form of capital recycling, leveraging the Canadian portfolio at low rates to fund higher-yielding U.S. acquisitions. For U.S. indicators, Schwartz pointed to the normalization of new supply and the company's own operational sophistication as key factors for future performance, even without a full housing recovery.