2016 ANNUAL REPORT
Griffin Industrial Realty, Inc.
641 Lexington Avenue - 26th Floor
New York, NY 10022
(212) 218 - 7910
www.griffinindustrial.com
Corporate Directors and Officers
Directors
David R. Bechtel
Edgar M. Cullman, Jr.
Frederick M. Danziger
Executive Chairman
Michael S. Gamzon
Thomas C. Israel
Jonathan P. May
Albert H. Small, Jr.
President and Chief Executive Officer
Corporate Data
Executive Headquarters
Griffin Industrial Realty, Inc.
641 Lexington Avenue, 26th Floor
New York, NY 10022
Griffin Industrial, LLC
204 West Newberry Road
Bloomfield, Connecticut 06002
www.griffinindustrial.com
RSM US LLP
157 Church Street
New Haven, Connecticut 06510
Independent Registered Public Accountants
Stock Listing
Officers
Frederick M. Danziger
Executive Chairman
Michael S. Gamzon
President and Chief Executive Officer
Anthony J. Galici
Vice President, Chief Financial Officer and Secretary
Special Counsel
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Registrar and Transfer Agent
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
www.amstock.com (800) 937-5449
Griffin Industrial Realty, Inc. common stock
trades on the NASDAQ Stock Market under
the symbol GRIF.
Annual Meeting
The Annual Meeting of Stockholders of Griffin
Industrial Realty, Inc. will be held at 2:00 p.m.
on May 9, 2017 at the New York Hilton Hotel,
1335 Avenue of the Americas, New York,
NY 10019.
G R I F
The background on the front and back covers is 5210 and 5220 Jaindl Boulevard, Griffin’s two most
recently constructed industrial/warehouse buildings in the Lehigh Valley of Pennsylvania. Both 5210
Jaindl Boulevard, approximately 252,000 square feet, and 5220 Jaindl Boulevard, approximately
280,000 square feet, are currently fully leased.
GRIFFIN INDUSTRIAL REALTY, INC.
641 Lexington Avenue
26th Floor
New York, NY 10022
March 31, 2017
To Our Stockholders:
Our two thousand sixteen fiscal year continued the significant improvement shown by the
Company in the prior year, particularly in the increase in profit from leasing activities* which increased
from approximately $16.2 million in fiscal 2015 to approximately $18.2 million in fiscal 2016. This
improvement was due to the increase in space leased in our industrial/warehouse buildings and the
growth of our industrial/warehouse asset portfolio, which now comprises 87% of the Company’s total
square footage.
In fiscal 2016, the Company completed the construction of its fifth industrial/warehouse building in
the Lehigh Valley of Pennsylvania and entered into leases for the entire building. As a result, all five of
the Company’s Lehigh Valley industrial/warehouse buildings, which have an aggregate of 1,183,000
square feet, are now fully leased. Strong performance was also shown by the Company’s industrial/
warehouse properties in Connecticut which, giving effect to leases entered into in the first quarter of
fiscal 2017, are also essentially fully leased as compared to being 81% leased at the start of fiscal 2015.
The financial benefits of this increased space under lease are expected to be reflected principally in the
second half of fiscal 2017 as tenants take occupancy after tenant improvements are completed and rent
abatement periods are finished.
To maintain its strong progress, the Company is engaged in negotiations not only to expand its
presence in the Lehigh Valley through the acquisition of developable land, but is also seeking
completed buildings or developable land in other geographies. To aid in this effort, the Company has
added a Director of Acquisitions to identify new opportunities. In Connecticut, the Company is
planning to construct an approximately 137,000 square foot building in New England Tradeport
(‘‘Tradeport’’) in fiscal 2017, more than half of which is already committed for lease. This will be the
Company’s first new industrial/warehouse building in Connecticut since the 2009 completion of the
approximately 304,000 square foot building that is fully leased to Tire Rack. The Company also expects
to receive in the fiscal 2017 second or third quarter its final land development approvals for an
approximately 134,000 square foot warehouse on land in the Lehigh Valley of Pennsylvania that the
Company has under a purchase agreement. The Company intends to close on the land purchase and
commence construction, on speculation, of this building upon receipt of its final approvals, however
there is no guarantee that this land acquisition will be completed under its current terms, or at all.
Leasing of the Company’s office/flex space continues to be difficult as vacancy rates in the market
near our Griffin Center office park remain high with few substantial potential tenants seeking space.
The Company’s office/flex space, which comprises 13% of the Company’s total square footage, has a
current occupancy of approximately 71% (after giving effect to a lease for office/flex space that will be
terminating shortly). During fiscal 2016, two office tenants relocated within Company properties, one to
a reduced space in one of our multi-story Griffin Center office buildings and the other to a larger
space, taking over an entire industrial/warehouse building in Phoenix Crossing. One approximately
24,000 square foot single story office/flex building, which would have become vacant in the fiscal 2017
third quarter (the current tenant had informed the Company that it would not renew its lease) has
been leased to another tenant expected to take occupancy in the fiscal 2017 fourth quarter.
Land sales are always an unpredictable portion of the Company’s business. In fiscal 2016 the
Company closed on one such transaction, the sale of approximately 29 acres of undeveloped land in
Griffin Center for a new school for approximately $3.8 million. In fiscal 2016, the Company also
recognized most of the remaining deferred revenue and gain from the fiscal 2013 sale of undeveloped
Phoenix Crossing land for an Amazon warehouse, as improvements required under the terms of that
sale were substantially completed. Early in fiscal 2017, the Company entered into a contract to sell an
additional approximately 67 acres of its undeveloped Phoenix Crossing land for approximately
$10.25 million. Closing on the 67 acre sale is expected to take place in the fiscal 2017 second quarter,
but remains subject to certain approval contingencies.
The Company has continued to extend and enter into new mortgages. Since the start of fiscal
2016, new borrowings under nonrecourse mortgage loans, net of refinancings of existing mortgage
loans, aggregated approximately $36.4 million, including a new $12.0 million mortgage on 755 and
759 Rainbow Road in Tradeport that was put in place in March 2017 when a lease for all of the
remaining space in those buildings was signed. As a result of these financings, the Company’s weighted
average interest rate on its debt outstanding is approximately 4.42% and, at present, only approximately
$19.8 million (out of a total of approximately $122.0 million) of the Company’s mortgage debt is due
before 2025. After giving effect to the March financing of the 755 and 759 Rainbow Road buildings in
Tradeport and the sale, if completed, of Phoenix Crossing land, the Company will have cash of
approximately $45.0 million available principally for land purchases and new construction. We continue
to be disciplined in our approach to acquisitions of buildings and land and plan to pursue only those
opportunities that we believe have strategic merit and will generate an acceptable return on our capital.
Additionally, over the past year, the Company has repurchased nearly $5.0 million of its common stock.
We also intend to continue to return capital to shareholders in the form of dividends.
The following table shows the growth of our real estate business over the past ten years:
Total warehouse/industrial space square footage . .
Percentage of warehouse and industrial space
leased at year end . . . . . . . . . . . . . . . . . . . . . .
Total office/flex space square footage . . . . . . . . . .
Percentage of office and flex space leased at year
end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit from leasing activities* . . . . . . . . . . . . . . . .
Debt service on mortgages . . . . . . . . . . . . . . . . . .
Amortization of mortgage principal included in
debt service above . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .
Real estate assets at carrying cost
Real estate assets at carrying cost less mortgage
2006
2016
1,277,000
2,864,000
72%
433,000
96%
433,000
63%
74%
$
$
6.9 million
3.9 million
$ 18.2 million
7.3 million
$
0.9 million
$
$101.7 million
2.7 million
$
$175.3 million
debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 50.2 million
$ 64.1 million
Later this year, the Company will mark its 20th anniversary as a stand-alone public company. We
are proud of what we have accomplished over this period as our real estate portfolio has grown from
approximately 386,000 square feet at the time of Griffin’s spin-off from its former parent, to the
approximately 3,297,000 square feet we currently own. Our employees have been, and continue to be,
critical to our success and we greatly appreciate their contributions. We are excited by Griffin’s
prospects and continued growth in 2017 and over the next 20 years.
Frederick M. Danziger
Executive Chairman
15APR200403350245
6APR201214532889
Michael S. Gamzon
President and Chief Executive Officer
* Profit from leasing activities, which Griffin defines as rental revenue ($26.5 million in fiscal 2016,
$24.6 million in fiscal 2015 and $12.0 million in fiscal 2006) less operating expenses of rental
properties ($8.3 million in fiscal 2016, $8.4 million in fiscal 2015 and $5.1 million in fiscal 2006) is not
a financial measure in conformity with U.S. GAAP. It is presented because Griffin believes it is a
useful financial indicator for measuring results of its real estate leasing activities. However, it should
not be considered as an alternative to operating profit as a measure of operating income in
accordance with U.S. GAAP.
The information in the Letter to Stockholders includes ‘‘forward-looking’’ statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as
amended. These forward-looking statements include, but are not limited to, expectations regarding leasing
currently vacant space and re-leasing space that becomes vacant, the financial benefits of leasing vacant
space on profits and cash flows from leasing operations, conditions in the real estate industry, the
construction of an approximately 137,000 square foot building in Tradeport, expansion and property
acquisitions, including the closing on the purchase of land for the potential development of an
approximately 134,000 square foot warehouse in the Lehigh Valley, completion of an approximately 67 acre
land sale currently under contract, the payment of future dividends on its common stock, Griffin’s financial
position and anticipated future liquidity and other statements with the words ‘‘believes,’’ ‘‘anticipates,’’
‘‘plans,’’ ‘‘intends,’’ ‘‘expects’’ or similar expressions. Although Griffin believes that its plans, intentions and
expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such
plans, intentions or expectations will be achieved. The forward-looking statements made herein are based on
assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently
subject to significant business, economic, competitive and regulatory uncertainties and contingencies and
other important factors, many of which are beyond the control of Griffin and which could cause actual
results and events to differ materially from those anticipated in these forward-looking statements, Important
factors that could affect the outcome of the results and events described in these statements include those set
forth in Griffin’s Securities and Exchange Commission filings, including the ‘‘Business’’, ‘‘Risk Factors’’ and
‘‘Forward-Looking Information’’ sections in Griffin’s Annual Report on Form 10-K for the fiscal year ended
November 30, 2016. Griffin disclaims any obligation to update any forward-looking statements as a result of
developments occurring after the date of this letter except as required by law.
(cid:95)
(cid:134)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2016
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-12879
GRIFFIN INDUSTRIAL REALTY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
641 Lexington Avenue
New York, New York
(Address of principal executive offices)
06-0868496
(I.R.S. Employer
Identification No.)
10022 (Zip Code)
(212) 218-7910
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Title of Each Class
Common Stock $0.01 par value per share
Name of Each Exchange on Which Registered
The NASDAQ Stock Market LLC
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes (cid:134) No (cid:95)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:134) No (cid:95)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes (cid:95) No (cid:134)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes (cid:95) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. (cid:95)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer (cid:134)
Accelerated filer (cid:95)
Non-accelerated filer (cid:134)
smaller reporting company)
Smaller reporting company (cid:134)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:134) No (cid:95)
The aggregate market value of the Common Stock held by non-affiliates of the registrant was approximately $86,495,000 based on the
closing sales price on The NASDAQ Stock Market LLC on May 31, 2016, the last business day of the registrant’s most recently completed second
quarter. Shares of Common Stock held by each executive officer, director and persons or entities known to the registrant to be affiliates of the
foregoing have been excluded in that such persons may be deemed to be affiliates. This assumption regarding affiliate status is not necessarily a
conclusive determination for other purposes.
As of February 6, 2017, 5,028,535 shares of common stock were outstanding.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (the “Annual Report”) contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For this purpose,
any statements contained in this Annual Report that relate to future events or conditions, including without limitation, the
statements in Part I, Item 1. “Business” and Item 1A. “Risk Factors” and in Part II Item 7. “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” as well as located elsewhere in this Annual Report
regarding industry prospects or Griffin Industrial Realty, Inc.’s (“Griffin”) plans, expectations, or prospective results of
operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the
words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking
statements. Such forward-looking statements represent management’s current expectations and are inherently uncertain.
There are a number of important factors that could materially impact the value of Griffin’s common stock or cause actual
results to differ materially from those indicated by such forward-looking statements. Such factors include: adverse
economic conditions and credit markets; a downturn in the commercial and residential real estate markets; risks
associated with concentration of real estate holdings; risks associated with entering new real estate markets; risks
associated with competition with other parties for acquisition of properties; risks associated with the use of third-party
managers for day-to-day property management; risks relating to reliance on lease revenues; risks associated with
nonrecourse mortgage loans; risks of financing arrangements that include balloon payment obligations; risks associated
with failure to effectively hedge against interest rate changes; risks associated with volatility in the capital markets; risks
associated with increased operating expenses; potential environmental liabilities; governmental regulations; inadequate
insurance coverage; risks of environmental factors; risks associated with the cost of raw materials or energy costs; risks
of investing in a foreign company; risks associated with deficiencies in disclosure controls and procedures or internal
control over financial reporting; risks associated with information technology security breaches; litigation risks; and the
concentrated ownership of Griffin common stock by members of the Cullman and Ernst families. These and the
important factors discussed under the caption “Risk Factors” in Part I, Item 1A of this Annual Report for the fiscal year
ended November 30, 2016, among others, could cause actual results to differ materially from those indicated by
forward-looking statements made in this Annual Report and presented elsewhere by management from time to time. Any
such forward-looking statements represent management’s estimates as of the date of this Annual Report. While Griffin
may elect to update such forward-looking statements at some point in the future, Griffin disclaims any obligation to do
so, even if subsequent events cause Griffin’s views to change. These forward-looking statements should not be relied
upon as representing Griffin’s views as of any date subsequent to the date of this Annual Report.
2
ITEM 1. BUSINESS.
PART I
Griffin Industrial Realty, Inc. (“Griffin”) is a real estate business principally engaged in developing, managing
and leasing industrial/warehouse properties, and to a lesser extent, office/flex properties. Periodically, Griffin may sell
certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not
consistent with Griffin’s core development and leasing strategy. Griffin seeks to add to its property portfolio through the
acquisition and development of land or the purchase of buildings. Prior to May 13, 2015, Griffin was known as Griffin
Land & Nurseries, Inc. On May 13, 2015, Griffin changed its name to better reflect its ongoing real estate business and
focus on industrial/warehouse properties after the sale in fiscal 2014 of the landscape nursery business that Griffin had
operated through its wholly owned subsidiary, Imperial Nurseries, Inc. (see Landscape Nursery Business on page 10).
As of November 30, 2016, Griffin owned thirty-three buildings comprising approximately 3,297,000 square feet
that was 93% leased. Approximately 87% of Griffin’s currently owned square footage is industrial/warehouse space,
with the balance principally being office/flex space. As of November 30, 2016, approximately 96% of Griffin’s
industrial/warehouse space was leased and approximately 74% of Griffin’s office/flex space was leased. Subsequent to
November 30, 2016, Griffin completed the signing of two leases for industrial/warehouse space aggregating
approximately 104,000 square feet, resulting in Griffin’s total portfolio being approximately 96% leased, with
industrial/warehouse space being approximately 99% leased. As stated in “Item 2. Properties” below, Griffin uses
nonrecourse mortgages to finance some of its real estate development activities, and as of November 30, 2016,
approximately $111.1 million was outstanding under such loans. In fiscal 2016, Griffin’s profit from leasing activities
(which Griffin defines as rental revenue less operating expenses of rental properties)1 was approximately $18.2 million,
while debt service on Griffin’s nonrecourse mortgages was approximately $7.3 million.
Through fiscal 2009, all of Griffin’s buildings were located in the north submarket of Hartford, Connecticut. In
fiscal 2010, Griffin started the expansion of its real estate holdings to areas outside of Hartford by purchasing an
industrial building and undeveloped land in the Lehigh Valley of Pennsylvania (see Lehigh Valley on page 7). Griffin
expects to continue to seek to acquire and develop properties that are consistent with its core strategy of developing and
leasing industrial properties. Griffin expects that most of such potential acquisitions of either undeveloped land or land
and buildings will likely be located outside of the Hartford area.
A national real estate services company reported that as of December 31, 2016, there was approximately 73.5
million square feet of industrial/warehouse space in the greater Hartford market and that the overall vacancy rate in the
greater Hartford industrial market decreased from 12.3% at the end of 2014 to 9.2% at the end of 2016, with
approximately 1.0 million square feet of net absorption in 2016. The greater Hartford industrial market had been stagnant
in the years 2012 through 2014, but improved in 2015 and 2016. In the greater Hartford area, there are a number of fully
or partially vacant industrial/warehouse buildings that are competitive with Griffin’s industrial/warehouse buildings.
Griffin believes that it benefits from its reputation as a stable landlord with sufficient resources to meet its obligations
and deliver space to tenants timely and in accordance with the terms of their lease agreements.
A national real estate services company reported that as of December 31, 2016, there was approximately 74.2
million square feet of industrial/warehouse space in the Lehigh Valley region of Pennsylvania, and that the vacancy rate
in that market was 5.2% at that date, with a net absorption of approximately 7.6 million square feet in 2016. The Lehigh
Valley industrial market has experienced strong growth and leasing activity during the past two years with an increase of
approximately 11.5 million square feet of industrial/warehouse space.
All of Griffin’s office/flex space is in the north submarket of Hartford. A national real estate services company
reported that as of December 31, 2016, there was approximately 24.6 million square feet of office space in the greater
Hartford market, including approximately 14.9 million square feet of suburban office space. They also reported that the
overall vacancy rate has remained at approximately 16% over the past two years, with the vacancy rate in the north
submarket being 21% during that period. As of November 30, 2016, square footage of office/flex buildings comprised
approximately 13% of Griffin’s total square footage, and Griffin expects that its office/flex space will continue to
1 Profit from leasing activities is not a financial measure in conformity with U.S. GAAP. It is presented because Griffin believes it is a
useful financial indicator for measuring results of its real estate leasing activities. However, it should not be considered as an
alternative to operating income as a measure of operating results in accordance with U.S. GAAP.
3
become a smaller percentage of its total space as Griffin expects to focus on the growth of its industrial/warehouse
building portfolio either through acquisition of fully or partially leased buildings, development of buildings on land
currently owned or to be acquired, or both.
Additional capacity or an increase in vacancies in either the industrial or office markets could adversely affect
Griffin’s operating results by potentially resulting in longer times to lease vacant space, eroding lease rates in Griffin’s
properties or hindering renewals by existing tenants. There can be no assurances as to the directions of the Hartford and
Lehigh Valley real estate markets in the near future.
In fiscal 2016, Griffin completed and placed in service an approximately 252,000 square foot industrial building
(“5210 Jaindl”) in the Lehigh Valley of Pennsylvania, thus completing the development of an approximately 50 acre
parcel of undeveloped land acquired in December 2013. As of November 30, 2016, Griffin had entered into two leases
for 5210 Jaindl resulting in that building being fully leased. Both of those leases are expected to become effective in the
first half of fiscal 2017. In addition to the two leases at 5210 Jaindl, Griffin entered into several other leases aggregating
approximately 240,000 square feet in fiscal 2016, all but approximately 21,000 square feet of which was for
industrial/warehouse space. Included in the fiscal 2016 leasing activity was a lease for approximately 101,000 square feet
in 4270 Fritch Drive (“4270 Fritch”), an approximately 303,000 square foot industrial/warehouse building in the Lehigh
Valley built in fiscal 2014. As of November 30, 2016, Griffin’s five Lehigh Valley industrial/warehouse buildings
aggregating approximately 1,183,000 square feet were fully leased. In addition to the Lehigh Valley leasing, Griffin
completed several leases aggregating approximately 139,000 square feet for its Connecticut properties, including
approximately 118,000 square feet of industrial/warehouse space, mostly in New England Tradeport (“NE Tradeport”),
Griffin’s master-planned industrial park near Bradley International Airport and Interstate 91, located in Windsor and East
Granby, Connecticut. In fiscal 2016, Griffin also extended leases aggregating approximately 248,000 square feet, most of
which was NE Tradeport industrial/warehouse space. Also in fiscal 2016, leases for approximately 132,000 square feet
expired, which included a lease for an entire approximately 57,000 square foot NE Tradeport industrial/warehouse
building that was subsequently re-leased during the year. The net effect of these transactions was an increase of
approximately 410,000 square feet in industrial/warehouse space under lease as of November 30, 2016 as compared to
November 30, 2015 and a decrease of approximately 51,000 square feet in office/flex space under lease as of November
30, 2016 as compared to November 30, 2015.
In fiscal 2015, Griffin completed and placed in service an approximately 280,000 square foot industrial building
(“5220 Jaindl”) in the Lehigh Valley of Pennsylvania. The tenant that initially leased approximately 196,000 square feet
in 5220 Jaindl when the building was placed in service subsequently exercised its option under the lease to lease the
balance of the building. Rental revenue on the additional space commenced in fiscal 2016. In addition to fully leasing
5220 Jaindl in fiscal 2015, Griffin completed several other leases aggregating approximately 191,000 square feet, of
which approximately 90% was for industrial/warehouse space and approximately 10% was for office/flex space. In fiscal
2015, several leases aggregating approximately 52,000 square feet of office/flex space expired and were not renewed and
a lease of approximately 31,000 square feet of industrial/warehouse space was terminated early for which Griffin
received a lease termination fee. The net effect of these transactions was an increase of approximately 421,000 square
feet in industrial/warehouse space under lease as of November 30, 2015 as compared to November 30, 2014 and a
decrease of approximately 33,000 square feet in office/flex space under lease as of November 30, 2015 as compared to
November 30, 2014. In fiscal 2015, Griffin also renewed and extended several leases aggregating approximately 326,000
square feet of industrial/warehouse space and approximately 71,000 square feet of office/flex space.
In fiscal 2014, Griffin entered into three new leases of industrial/warehouse space for an aggregate of
approximately 371,000 square feet and three new leases of office/flex space for an aggregate of approximately 38,000
square feet. The leasing of industrial/warehouse space in fiscal 2014 included a five year lease for approximately
202,000 square feet at 4270 Fritch. In fiscal 2014, Griffin also entered into a ten year full building lease for
approximately 138,000 square feet in one of its industrial buildings in NE Tradeport. In fiscal 2014, leases of
industrial/warehouse space aggregating approximately 43,000 square feet expired and were not renewed, and a lease of
industrial/warehouse space increased by approximately 47,000 square feet as the remaining vacant space in the building
was added to the leased space in accordance with the lease terms. The net effect of these transactions was an increase of
approximately 374,000 square feet in industrial/warehouse space under lease during fiscal 2014, while office/flex space
under lease was essentially unchanged during fiscal 2014. Griffin also renewed and extended several leases aggregating
approximately 27,000 square feet of office/flex space and approximately 11,000 square feet of industrial/warehouse
space in fiscal 2014.
4
Periodically, Griffin may sell certain portions of its undeveloped land that it has owned for an extended time
period and the use of which does not fit into Griffin’s core strategy of developing and leasing industrial and commercial
properties. Such sale transactions may take place either before or after obtaining development approvals and building
basic infrastructure.
In fiscal 2016, Griffin completed one land sale for approximately $3.8 million. In each of fiscal 2015 and fiscal
2014, Griffin completed one land sale for approximately $0.6 million. In fiscal 2013, Griffin completed a sale of
approximately 90 acres of undeveloped land in Windsor, Connecticut (the “Windsor Land Sale”) for cash proceeds of
approximately $9.0 million, before transaction expenses. The land sold under the Windsor Land Sale is part of an
approximately 268 acre parcel of undeveloped land in Bloomfield and Windsor, Connecticut known as Phoenix Crossing
that has been held by Griffin for an extended time period. Under the terms of the Windsor Land Sale, Griffin and the
buyer were each required to construct roadways connecting the land parcel that was sold to existing town roads. The
roads constructed by the buyer and the road being constructed by Griffin will become new town roads, thereby providing
access to the remaining acreage in Griffin’s land parcel. As a result of Griffin’s continuing involvement with the land
sold, the Windsor Land Sale is being accounted for under the percentage of completion method, under which the revenue
and gain on sale are recognized as the costs related to the property sold are incurred. Griffin recognized revenue of
approximately $0.6 million, approximately $2.5 million and approximately $3.1 million from the Windsor Land Sale in
fiscal 2016, fiscal 2015 and fiscal 2014, respectively. As of November 30, 2016, approximately $0.1 million of revenue
from the Windsor Land Sale remains to be recognized.
The weakness in the residential real estate market has adversely affected Griffin’s residential real estate
development activities. The continued weakness of the residential real estate market could result in lower selling prices
for Griffin’s land intended for residential use or delay the sale of such land.
Griffin’s development of its land is affected by regulatory and other constraints. Subdivision and other
residential development may also be affected by the potential adoption of initiatives meant to limit or concentrate
residential growth. Industrial/warehouse development activities on Griffin’s undeveloped land may also be affected by
traffic considerations, potential environmental issues, community opposition and other restrictions to development
imposed by governmental agencies.
Griffin maintains a corporate website at www.griffinindustrial.com. Griffin’s Annual Report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and the proxy statement for Griffin’s Annual Meeting of
Stockholders can be accessed through Griffin’s website or through the SEC website at www.sec.gov. Griffin will provide
electronic or paper copies of its foregoing filings free of charge upon request. Griffin was incorporated in 1970.
Industrial/Warehouse Properties
Connecticut
A significant portion of Griffin’s industrial development in Connecticut has been focused on NE Tradeport,
where Griffin has built and currently owns thirteen industrial/warehouse buildings aggregating approximately 1,466,000
square feet, of which approximately 92% was leased as of November 30, 2016. Subsequent to November 30, 2016,
Griffin entered into two leases in NE Tradeport for industrial/warehouse space aggregating approximately 104,000
square feet, resulting in Griffin’s portfolio of industrial/warehouse space in Connecticut being approximately 99%
leased.
In NE Tradeport, Griffin holds the rights to 795,000 square feet available for development under the State
Traffic Certificate (“STC”) which relates to four approved building sites on approximately 70 acres and an approved
addition to one of Griffin’s existing buildings. Griffin owns an additional 95 acres of undeveloped land within NE
Tradeport, 60 acres of which are located in Windsor and the abutting 35 acres of which are located in East Granby. There
are no STC or other approvals currently in place (other than zoning in the case of Windsor) for the development of this
remaining land for industrial use. Griffin believes that additional infrastructure improvements, which may be significant,
may be required to obtain approvals to develop portions of this land, particularly the portions in East Granby. Griffin
expects to continue to direct much of its real estate efforts in Connecticut on the construction and leasing of its
industrial/warehouse facilities at NE Tradeport.
5
In fiscal 2016, Griffin leased approximately 87,000 square feet in NE Tradeport, including a new full building
lease of approximately 57,000 square feet that replaced an existing full building lease that expired and was not renewed
during fiscal 2016. Also in fiscal 2016, Griffin renewed several leases aggregating approximately 222,000 square feet.
The rental rates for leases in NE Tradeport that were renewed in fiscal 2016 were, on average, essentially unchanged
from the rental rates of the expiring leases. Management believes that the rental rates on the two NE Tradeport leases
aggregating approximately 33,000 square feet that are scheduled to expire in fiscal 2017 are slightly above the market
rates for similar space.
In addition to its industrial/warehouse buildings in NE Tradeport, Griffin owns a 165,000 square foot industrial
building (“1985 Blue Hills”) in Griffin Center, Griffin’s office park in Windsor and Bloomfield, Connecticut, that is
being used principally as a data center and call center, an approximately 31,000 square foot industrial/warehouse
building (“131 Phoenix”) in Bloomfield, Connecticut that is being used principally as a research and development
facility and an approximately 18,000 square foot industrial/warehouse building (“210 West Newberry”) in Griffin Center
South, Griffin’s office/flex park in Bloomfield, Connecticut. 131 Phoenix is on an approximately 5 acre site that is part
of Phoenix Crossing. In fiscal 2013, Griffin sold approximately 90 acres of undeveloped Phoenix Crossing land in the
Windsor Land Sale. As of November 30, 2016, Griffin owns approximately 159 acres of undeveloped land in Phoenix
Crossing that is zoned for industrial and commercial development. On December 23, 2016, Griffin entered into an
agreement to sell approximately 67 acres of its undeveloped land in Phoenix Crossing for approximately $10.25 million.
Completion of this transaction is subject to a number of factors, including the buyer obtaining all necessary final permits
from governmental authorities for development plans of the site and the buyer receiving municipal and state economic
development incentives it deems adequate. There is no guarantee that this transaction will be completed under its current
terms, or at all.
As of November 30, 2016, approximately $66.2 million was invested (net book value) by Griffin in its
Connecticut industrial/warehouse buildings, approximately $4.4 million was invested (net book value) by Griffin in the
undeveloped NE Tradeport land and approximately $4.2 million was invested in the undeveloped Phoenix Crossing land,
including the acreage under contract to be sold (see above). As of November 30, 2016, twelve of Griffin’s Connecticut
industrial/warehouse buildings were mortgaged for an aggregate of approximately $54.0 million and 210 West Newberry
was included in the collateral for Griffin’s $15.0 million revolving line of credit (see below). Subsequent to November
30, 2016, Griffin agreed to terms on a nonrecourse mortgage loan on two NE Tradeport industrial/warehouse buildings
aggregating approximately 275,000 square feet that were not mortgaged as of November 30, 2016. Completion of this
proposed new mortgage loan is subject to a number of contingencies, including the entry into a definitive loan
agreement. There is no guarantee that this transaction will be completed under its current terms, or at all.
A summary of Griffin’s Connecticut industrial/warehouse square footage owned and leased at the end of each
of the past three fiscal years and leases in Griffin’s Connecticut industrial/warehouse buildings scheduled to expire
during each of the next three fiscal years are as follows:
November 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
Square
Footage
Owned
1,681,000
1,681,000
1,681,000
Square
Footage
Leased
1,365,000
1,507,000
1,564,000
Percentage
Leased
81 %
90 %
93 %
2017
33,000
2018
116,000
2019
476,000
Square footage of leases expiring . . . . . . . . . . . . .
Percentage of total leased space at
1 %
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . .
Number of tenants with leases expiring . . . . . . . . .
2
Annual rental revenue of expiring leases . . . . . . . . $ 258,000
Annual rental revenue of expiring leases as a
percentage of Griffin’s total fiscal 2016 rental
revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 %
4 %
4
$ 877,000
16 %
5
$ 3,383,000
3 %
13 %
6
Lehigh Valley
In fiscal 2010, Griffin completed its first acquisition of property outside of the Hartford, Connecticut area, when
it acquired a fully leased approximately 120,000 square foot industrial building at 871 Nestle Way (“871 Nestle”) in
Breinigsville, Pennsylvania, which is located in the Lehigh Valley. Also in fiscal 2010, Griffin acquired approximately
51 acres of undeveloped land in Lower Nazareth, Pennsylvania, a major industrial area of the Lehigh Valley, which
Griffin named Lehigh Valley Tradeport I. In fiscal 2012, Griffin completed construction, on speculation, of 4275 Fritch
Drive (“4275 Fritch”), an approximately 228,000 square foot industrial building, the first of the two buildings built in
Lehigh Valley Tradeport I. In fiscal 2013, Griffin entered into a five-year full building lease of this building. In fiscal
2014, Griffin completed construction, also on speculation, of 4270 Fritch, an approximately 303,000 square foot
industrial building, that was the second of two buildings built in Lehigh Valley Tradeport I. In fiscal 2014, Griffin
entered into a five year lease of approximately 201,000 square feet of 4270 Fritch and the lease became effective in the
fiscal 2015 second quarter upon completion of tenant improvements. In fiscal 2016, Griffin leased the remaining
approximately 102,000 square feet of 4270 Fritch. In fiscal 2015, Griffin completed construction of 5220 Jaindl, the first
of the two industrial/warehouse buildings built on the undeveloped land in Hanover Township of the Lehigh Valley
acquired in December 2013, known as Lehigh Valley Tradeport II. In fiscal 2015, Griffin leased approximately 196,000
square feet of 5220 Jaindl. The lease commenced at the beginning of the fiscal 2015 fourth quarter, and in November
2015, the tenant exercised its option to lease the balance of the building. Rental revenue for the remaining space in 5220
Jaindl commenced in fiscal 2016. In fiscal 2016, Griffin completed construction of 5210 Jaindl, an approximately
252,000 square foot industrial/warehouse building that was the second building built in Lehigh Valley Tradeport II.
Griffin leased 5210 Jaindl in fiscal 2016, with rental revenue on the leases for 5210 Jaindl expected to begin in the first
half of fiscal 2017.
As of November 30, 2016, Griffin owned five fully leased industrial/warehouse buildings in the Lehigh Valley
aggregating approximately 1,183,000 square feet. Approximately $65.5 million was invested (net book value) in these
buildings as of November 30, 2016. All five Lehigh Valley industrial/warehouse buildings are mortgaged under three
separate nonrecourse mortgage loans for a total of approximately $51.1 million as of November 30, 2016.
A summary of Griffin’s Lehigh Valley industrial/warehouse square footage owned and leased at the end of each
of the past three fiscal years and leases in Griffin’s Lehigh Valley industrial/warehouse buildings scheduled to expire
during each of the next three fiscal years are as follows:
November 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
Square
Footage
Owned
651,000
931,000
1,183,000
Square
Footage
Leased
549,000
829,000
1,183,000
Square footage of leases expiring . . . . . . . . . . . . . .
Percentage of total leased space at
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of tenants with leases expiring . . . . . . . . . .
Annual rental revenue of expiring leases . . . . . . . . . $
Annual rental revenue of expiring leases as a
percentage of Griffin’s total fiscal 2016 rental
revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Percentage
Leased
84 %
89 %
100 %
2019
—
—
—
—
2017
—
2018
228,000
—
—
— $ 1,475,000 $
7 %
1
—
6 %
—
On March 23, 2016, Griffin entered into an Agreement of Sale and Purchase (the “East Allen Purchase
Agreement”) to acquire an approximately 31 acre site in East Allen Township, Northampton County, Pennsylvania for
development of an industrial/warehouse building. Subsequently, Griffin exercised its right to terminate the East Allen
Purchase Agreement based on its due diligence findings. After the East Allen Purchase Agreement was terminated,
Griffin has continued negotiations with the seller to reach a new agreement. Completion of a new purchase agreement is
uncertain at this time.
7
On May 4, 2016, Griffin entered into an Agreement of Sale and Purchase, as amended (the “Macungie Purchase
Agreement”), to acquire, for a purchase price of $1.8 million, an approximately 14 acre site in Upper Macungie
Township, Lehigh County, Pennsylvania for development of an approximately 134,000 square foot industrial/warehouse
building. A closing on the land acquisition contemplated by the Macungie Purchase Agreement is subject to significant
contingencies, including Griffin obtaining all governmental approvals for its planned development of the land that would
be acquired. There is no guarantee that the land acquisition as contemplated under the Macungie Purchase Agreement
will be completed under its current terms, or at all.
Griffin may seek to acquire additional properties and/or undeveloped land parcels to expand the
industrial/warehouse portion of its real estate business. Griffin continues to examine potential properties for acquisition
in New England, the Mid-Atlantic states and other areas.
Office/Flex Properties
Griffin’s office/flex properties are located in Griffin Center in Windsor and Bloomfield, Connecticut and
Griffin Center South in Bloomfield. In Griffin Center, Griffin currently owns two multi-story office buildings that have
an aggregate of approximately 161,000 square feet, a single story office building of approximately 48,000 square feet
and a small restaurant building of approximately 7,000 square feet. In Griffin Center South, Griffin currently owns eight
office/flex buildings with an aggregate of approximately 217,000 square feet of single story office/flex space. As of
November 30, 2016, approximately 319,000 square feet of Griffin’s office/flex square footage was leased, comprising
approximately 74% of Griffin’s total office/flex space.
In fiscal 2016, Griffin entered into two new leases for office/flex space aggregating approximately 21,000
square feet, including a lease for approximately 16,000 square feet in the single story Griffin Center office building that
resulted in that building becoming fully leased. Also in fiscal 2016, two leases of office/flex space aggregating
approximately 26,000 square feet were renewed, while leases aggregating approximately 72,000 square feet of
office/flex space expired. The tenant of one of the expired office/flex leases (approximately 21,000 square feet) did not
renew because they entered into a full building lease for 131 Phoenix, Griffin’s approximately 31,000 square foot
industrial/warehouse building in Phoenix Crossing. The rental rates for office/flex leases that were renewed in fiscal
2016 were, on average, approximately 5% lower than the rental rates of the expiring leases. Management believes that
the rental rates on the three leases of office/flex space aggregating approximately 49,000 square feet that are scheduled to
expire in fiscal 2017 are slightly above the market rates for similar space. Subsequent to November 30, 2016, Griffin
entered into a ten year full building lease for the approximately 23,000 square feet at 206 West Newberry Road. The full
building tenant there had previously informed Griffin that it would not be renewing its lease when it expires in fiscal
2017. The rental rate of the new lease is equivalent to the rate on the expiring lease; however, Griffin expects to incur
higher operating expenses in servicing the new tenant than have been incurred in servicing the existing tenant.
In the fiscal 2016 fourth quarter, Griffin closed on the sale of approximately 29 acres of an approximately 45
acre parcel of the undeveloped land in Griffin Center for approximately $3.8 million. An additional approximately 15
acres of that land parcel, much of which is wetlands with very limited development potential, was donated to an affiliate
of the purchaser at the time of the closing.
Currently there are approximately 162 acres of undeveloped land in Griffin Center and approximately 68 acres
of undeveloped land in Griffin Center South that are owned by Griffin. As of November 30, 2016, approximately
$18.4 million was invested (net book value) in Griffin’s office/flex buildings and approximately $1.6 million was
invested by Griffin in the undeveloped land in Griffin Center and Griffin Center South. Griffin’s two multi-story office
buildings in Griffin Center are mortgaged for approximately $6.0 million as of November 30, 2016, and Griffin’s single
story office building in Griffin Center and the eight single-story office/flex buildings and industrial/warehouse building
in Griffin Center South are the collateral for Griffin’s $15.0 million revolving line of credit. There were no borrowings
under the revolving line of credit as of November 30, 2016.
8
A summary of Griffin’s office/flex square footage owned and leased at the end of each of the past three fiscal
years and leases in Griffin’s office/flex buildings scheduled to expire (excluding the space where a replacement lease has
been secured) during each of the next three fiscal years are as follows:
November 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
Square
Footage
Owned
433,000
433,000
433,000
Square
Footage
Leased
403,000
370,000
319,000
Percentage
Leased
93 %
85 %
74 %
2017
27,000
2018
25,000
2019
40,000
Square footage of leases expiring . . . . . . . . . . . . . .
Percentage of total leased space at
1 %
November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of tenants with leases expiring . . . . . . . . . .
2
Annual rental revenue of expiring leases . . . . . . . . . $ 326,000
Annual rental revenue of expiring leases as a
percentage of Griffin’s total fiscal 2016 rental
revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 %
1 %
3
$ 437,000
1 %
2
$ 729,000
2 %
3 %
Residential Developments
Simsbury, Connecticut
Several years ago, Griffin filed plans for the creation of a residential community, called Meadowood, on a 363
acre site in the Town of Simsbury, Connecticut (“Simsbury”). After several years of litigation with the town regarding
this proposed residential development, a settlement was reached. The settlement terms included, among other things,
approval for up to 296 homes, certain remediation measures and offsite road improvements to be performed by Griffin
and the purchase by Simsbury of a portion of the Meadowood land for open space. The sale of land to Simsbury closed
in fiscal 2008. In fiscal 2012, Griffin performed a portion of the required remediation work on the site and completed the
required offsite road improvements. In fiscal 2014, Griffin completed the required remediation work. As of
November 30, 2016, the book value of the land for this development, including design, development and legal costs, was
approximately $8.5 million. Griffin is continuing to evaluate its plans for Meadowood.
Griffin owns another approximate 432 acres of undeveloped land in Simsbury, portions of which are zoned for
residential use and other portions of which are zoned for industrial use. Not all of this land is developable. The land
currently zoned for industrial use is probably more suited to commercial or mixed-use development. Griffin may seek to
develop or sell such land.
Suffield, Connecticut
In fiscal 2006, Griffin completed the infrastructure for a fifty lot residential subdivision in Suffield, Connecticut
called Stratton Farms. Griffin sold twenty-five residential lots in Stratton Farms to a local homebuilder in fiscal 2006 and
fiscal 2007. In fiscal 2010, Griffin entered into an agreement with a privately owned regional homebuilder under which
in exchange for a payment of $100,000, the homebuilder obtained an option to purchase the remaining twenty-five
residential lots of Stratton Farms. The option agreement terminated after four lots were sold. Subsequently, Griffin sold
one Stratton Farms residential lot in fiscal 2013. As of November 30, 2016, Griffin held twenty Stratton Farms
residential lots. The book value for Griffin’s Stratton Farms holdings was approximately $1.1 million at November 30,
2016.
Other
Concurrently with the sale of the landscape nursery business effective January 8, 2014, Imperial Nurseries, Inc.
(“Imperial”), Griffin and Monrovia Connecticut LLC (“Monrovia”) entered into a Lease and Option Agreement, which
was amended in fiscal 2016 (as amended, the “Imperial Lease”) pursuant to which Monrovia leased Imperial’s
production nursery located in Granby and East Granby, Connecticut (the “Connecticut Farm”) for a ten year period, with
9
options to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease also grants Monrovia
an option to purchase the land, land improvements and other operating assets that were used by Imperial on the
Connecticut Farm during the first thirteen years of the lease period for $9.5 million, or $7.0 million if only a certain
portion of the Connecticut Farm is purchased, subject in each case to certain adjustments as provided for in the Imperial
Lease.
Prior to the fiscal 2009 third quarter, Imperial operated a production nursery in Quincy, Florida (the “Florida
Farm”). In fiscal 2009, Imperial shut down its growing operations on the Florida Farm and leased that facility to a
grower of landscape nursery plants. In fiscal 2015, the tenant exercised its option to acquire the Florida Farm, but
subsequently informed Imperial that it would not close the acquisition. As a result, Griffin retained the tenant’s deposit
of $400,000 and the Florida Farm lease was extended through April 30, 2016. After the expiration of that lease, Griffin
then entered into a new lease of the Florida Farm with another grower of landscape nursery plants that started July 1,
2016. The new lease of the Florida Farm has a three year term and contains an option for the tenant to purchase the
Florida Farm at any time during the lease period for a purchase price between $3.4 million and $3.9 million depending
upon the date of sale.
In fiscal 2016, Griffin leased approximately 650 acres of undeveloped land in Connecticut and Massachusetts to
local farmers. Approximately 550 acres and 485 acres were leased to local farmers in fiscal 2015 and fiscal 2014,
respectively. The revenue generated from the leasing of farmland is not material to Griffin’s total revenue.
On January 25, 2016, Griffin entered into an Option Purchase Agreement (the “Option Agreement”) whereby
Griffin granted the buyer an exclusive option, in exchange for a nominal fee, to purchase approximately 280 acres of
undeveloped land in Simsbury for approximately $7.7 million. The buyer may extend the option period up to three years
upon payment of additional option fees. Subsequent to November 30, 2016, the buyer paid Griffin to extend the option
period. The land subject to the Option Agreement does not have any of the approvals that would be required for the
buyer’s planned use of the land. A closing on the land sale contemplated by the Option Agreement is subject to several
significant contingencies, including the buyer securing contracts under a competitive bidding process that would require
changes in the use of the land and obtaining local and state approvals for that planned use. There is no guarantee that the
sale of undeveloped land as contemplated under the Option Agreement will be completed under its current terms, or at
all.
Griffin is evaluating its other properties for development or sale in the future. Griffin anticipates that obtaining
subdivision approvals for residential development in many of the towns where it owns residentially-zoned land will be
an extended process.
Landscape Nursery Business
Through January 7, 2014, Imperial operated a landscape nursery business that grew containerized plants on the
Connecticut Farm for sale to independent retail garden centers and rewholesalers, whose main customers are landscape
contractors. Imperial discontinued its nursery operations on January 8, 2014, when Griffin, Imperial and Monrovia
entered into an Asset Purchase Agreement whereby Imperial’s inventory and certain of its assets were sold to Monrovia
for approximately $0.7 million in cash, before transaction and severance costs, and a non-interest bearing note receivable
(which Griffin subsequently collected) of $4.25 million (the “Imperial Sale”). Pursuant to the terms of the Imperial Sale,
Griffin and Imperial agreed to indemnify Monrovia for any potential environmental liabilities on the Connecticut Farm
relating to periods prior to the effective date of the Imperial Sale.
Investments
Centaur Media plc
Centaur Media plc (“Centaur Media”) is a publicly traded company listed on the London Stock Exchange. As of
November 30, 2016, Griffin held 1,952,462 shares of Centaur Media and accounts for its investment in Centaur Media as
an available-for-sale security. Accordingly, changes in the fair value of Griffin’s investment in Centaur Media, including
both changes in the stock price and changes in the foreign currency exchange rate, are not included in Griffin’s net
income but are included in Griffin’s other comprehensive income. As of November 30, 2016, the fair value of Griffin’s
investment in Centaur was approximately $1.0 million. In fiscal 2014, Griffin sold 500,000 shares of its Centaur Media
common stock for total cash proceeds of approximately $566,000, net of transaction costs. Griffin did not sell any of its
10
stock in Centaur Media in fiscal 2015 and fiscal 2016. Griffin expects that it will sell its Centaur Media common stock
when it believes sales terms are favorable.
Employees
As of November 30, 2016, Griffin employed 33 people on a full-time basis. Presently, none of Griffin’s
employees are represented by a union. Griffin believes that its relations with its employees are satisfactory.
Competition
The market for leasing industrial/warehouse space and office/flex space is highly competitive. Griffin competes
for tenants with owners of numerous properties located in the portions of Connecticut, Massachusetts and the Lehigh
Valley region of Pennsylvania in which Griffin’s real estate holdings are concentrated. Some of these competitors have
greater financial resources than Griffin. Griffin’s real estate business competes on the bases of location, price,
availability of space, convenience and amenities.
There is a great amount of competition for the acquisition of industrial/warehouse buildings and for the
acquisition of undeveloped land for construction of such buildings. Griffin competes for the acquisition of
industrial/warehouse properties with real estate investment trusts (“REITs”) and institutional investors, such as pension
funds, private real estate investment funds, insurance company investment accounts, public and private investment
companies, individuals and other entities engaged in real estate investment activities. Some of these competitors have
greater financial resources than Griffin, and may be able to accept more risk, including risk related to the
creditworthiness of tenants or the degree of leverage they may be willing to take on. Competitors for acquisitions may
also have advantages from a lower cost of capital or greater operating efficiencies associated with being a larger entity.
Regulation: Environmental Matters
Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may
be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property and
may be held liable to a governmental entity or to third parties for property damage and for investigation and cleanup
costs incurred by such parties in connection with contamination. The cost of investigation, remediation or removal of
such substances may be substantial, and the presence of such substances, or the failure to remediate properly such
substances, may adversely affect the owner’s ability to sell or rent such property or to borrow using such property as
collateral. In connection with the ownership (direct or indirect), operation, management and development of real estate
properties, Griffin may be considered an owner or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as
certain other related costs, including governmental fines and injuries to persons and property. The value of Griffin’s land
may be affected by the presence of residual chemicals from the prior use of the land for farming, principally on a portion
of the land that is intended for residential use. In the event that Griffin is unable to remediate adequately any of its land
intended for residential use, Griffin’s ability to develop such property for its intended purposes would be materially
affected.
Griffin periodically reviews its properties for the purpose of evaluating such properties’ compliance with
applicable state and federal environmental laws. In connection with the Imperial Sale, Griffin has incurred a small
amount of costs to remediate a small area of the Connecticut Farm that is leased to Monrovia under the Imperial Lease.
As of the date of this Annual Report on Form 10-K, Griffin is in discussions with the Connecticut Department of Energy
and Environmental Protection (“DEEP”) regarding the recent findings of exceedances of certain residual pesticides on a
limited portion of the Connecticut Farm being leased to Monrovia. At this time, Griffin does not anticipate experiencing,
in the next twelve months, any material expense in complying with such laws. Griffin may incur remediation costs in the
future in connection with its development operations. Such costs are not expected to be significant as compared to
expected proceeds from development projects or property sales.
ITEM 1A. RISK FACTORS.
Griffin’s real estate business has a number of risk factors. The risk factors discussed below are those that
management deems to be material, but they may not be the only risks facing Griffin. Additional risks not currently
known or currently deemed not to be material may also impact Griffin. If any of the following risks occur, Griffin’s
11
business, financial condition, operating results and cash flows could be adversely affected. Investors should also refer to
Griffin’s quarterly reports on Form 10-Q for any material updates to these risk factors.
Adverse Economic Conditions and Credit Markets
Griffin’s real estate business may be affected by market conditions and economic challenges experienced by the
U.S. economy as a whole, conditions in the credit markets or by local economic conditions in the markets in which its
properties are located. Such conditions may impact Griffin’s results of operations, financial condition or ability to
expand its operations as a result of the following:
(cid:120) The financial condition of Griffin’s tenants may be adversely affected, which may result in tenant defaults
under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;
(cid:120) A decrease in investment spending, the curtailment of expansion plans or significant job losses may
decrease demand for Griffin’s industrial/warehouse and office/flex space, causing market rental rates and
property values to be negatively impacted;
(cid:120) Griffin’s ability to borrow on terms and conditions that it finds acceptable, or at all, may be limited, which
could reduce its ability to pursue acquisition and development opportunities, refinance existing debt, and/or
increase future interest expense;
(cid:120) Reduced values of Griffin’s properties may limit its ability to obtain debt financing collateralized by its
properties or may limit the proceeds from such potential financings;
(cid:120) A weak economy may limit sales of land intended for commercial/industrial use;
(cid:120) Changes in supply or demand for similar or competing properties in an area may adversely affect Griffin’s
competitive position; and
(cid:120) Long periods of time may elapse between the commencement and the completion of Griffin’s projects.
Downturn in the Residential Real Estate Market
Weakness in the residential real estate market may adversely affect Griffin’s residential real estate development
activities, including lowering selling prices and/or delaying the development and/or sale of Griffin’s undeveloped land
intended for residential use.
Risks Associated with Concentration of Real Estate Holdings
Griffin’s real estate holdings are concentrated in the Hartford, Connecticut area and the Lehigh Valley of
Pennsylvania. Adverse changes in the local economies, state or local governmental regulations or real estate markets,
including the market’s ability to absorb newly constructed space, could impact Griffin’s real estate operations, including
Griffin’s ability to re-lease vacant space and have an adverse effect on rental rates.
Griffin’s real estate properties compete with other properties in the areas where it operates. The construction of
new facilities by competitors would increase capacity in the marketplace, and an increase in the amount of vacancies in
competitors’ properties and negative absorption of space could result in Griffin experiencing longer times to lease vacant
space, eroding lease rates or hindering renewals by existing tenants.
Additionally, real estate properties are not as liquid as other types of investments and this lack of liquidity could
limit Griffin’s ability to react promptly to changes in economic, financial, investment or other conditions.
Risks Associated with Entering New Real Estate Markets
Griffin expects to continue to seek to acquire properties either in the Lehigh Valley or other markets outside of
the Hartford, Connecticut area. Operating in a real estate market that is new for Griffin creates additional risks and
uncertainties to Griffin’s operations.
12
Competition with Other Parties for Property Investments
There is a great amount of competition for the acquisition of industrial/warehouse buildings and for the
acquisition of undeveloped land for construction of such buildings. Griffin competes for the acquisition of
industrial/warehouse properties with REITs and institutional investors, such as pension funds, private real estate
investment funds, insurance company investment accounts, public and private investment companies, individuals and
other entities engaged in real estate investment activities. Some of these competitors have greater financial resources
than Griffin, and may be able to accept more risk, including risk related to the creditworthiness of tenants or the degree
of leverage they may be willing to take on. Competitors for acquisitions may also have advantages from a lower cost of
capital or greater operating efficiencies associated with being a larger entity.
Risks Associated with the Use of Third Party Managers for Day-to-Day Property Management
Griffin currently utilizes a local third party manager for the day-to-day management of its Lehigh Valley
properties. To the extent that Griffin uses a third party manager, the cash flows from its Lehigh Valley properties may be
adversely affected if the property manager fails to provide quality services. Additionally, the third party manager
manages and owns other properties that may compete with Griffin’s properties, which may result in conflicts of interest
and decisions regarding the operation of Griffin’s properties that are not in Griffin’s best interests.
Risks Relating to Reliance on Lease Revenue
The substantial majority of Griffin’s revenue is derived from lease revenue from its industrial/warehouse and
office/flex buildings. Griffin’s revenue would be adversely affected if a significant number of Griffin’s tenants were
unable to meet their obligations to Griffin or if Griffin were unable to lease a significant amount of space in its properties
on economically favorable lease terms. In addition, there can be no assurance that any tenant whose lease expires in the
future will renew such lease or that Griffin will be able to re-lease space on economically favorable terms. Griffin’s
inability to re-lease space on economically favorable terms could adversely affect its financial condition and results of
operations.
Risks Associated with Nonrecourse Mortgage Loans
As of November 30, 2016, Griffin had indebtedness under nonrecourse mortgage loans of approximately
$111.1 million, collateralized by approximately 82% of the total square footage of its industrial/warehouse and
office/flex buildings. If a significant number of Griffin’s tenants were unable to meet their obligations to Griffin or if
Griffin were unable to lease a significant amount of space in its properties on economically favorable lease terms, there
would be a risk that Griffin would not have sufficient cash flow from operations for payments of required principal and
interest on these loans. If Griffin were unable to make such payments and were to default, the property collateralizing the
mortgage loan could be foreclosed upon, and Griffin’s financial condition and results of operations would be adversely
affected. In addition, two of Griffin’s nonrecourse mortgage loans contain cross default provisions. A default under a
mortgage loan that has cross default provisions may cause Griffin to automatically default on another loan.
Risks Associated with Financing Arrangements that Include Balloon Payment Obligations
Certain of Griffin’s nonrecourse mortgage loans require a lump-sum or “balloon” payment at maturity. Griffin’s
ability to make a balloon payment at maturity may be uncertain and may depend upon its ability to obtain additional
financing. At the time the balloon payment is due, Griffin may or may not be able to refinance the balloon payment on
terms as favorable as the original mortgage terms.
Risks Associated with Failure to Effectively Hedge Against Interest Rate Fluctuation
Griffin has entered into several interest rate swap agreements to hedge its interest rate exposures related to its
variable rate nonrecourse mortgages on certain of its industrial/warehouse and office/flex buildings. These agreements
have costs and involve the risks that these arrangements may not be effective in reducing Griffin’s exposure to interest
rate fluctuations and that a court could rule that such agreements are not legally enforceable. The failure to hedge
effectively against interest rate fluctuations may materially and adversely affect Griffin’s results of operations.
Additionally, any settlement charges incurred to terminate an interest rate swap agreement may result in increased
interest expense, which may also have an adverse effect on Griffin’s results of operations.
13
Risks Associated with Volatility in the Capital and Credit Markets
Volatility and disruption in the capital and credit markets could make it more difficult to borrow money. Market
volatility could hinder Griffin’s ability to obtain new debt financing or refinance maturing debt on favorable terms, or at
all. Any financing or refinancing issues could materially and adversely affect Griffin. Market turmoil and the tightening
of credit can lead to an increased lack of consumer confidence and widespread reduction of business activity in general,
which also could materially and adversely impact Griffin, including its ability to acquire and dispose of assets on
favorable terms, or at all.
Risks Associated with Increased Operating Expenses
Operating expenses such as real estate taxes, fuel, utilities, labor, repairs and maintenance, building materials
and insurance, are not fixed and may increase in the future. Griffin may not be able to pass these costs on to its tenants
and, therefore, any such increases could have an adverse effect on Griffin’s results of operations and cash flow.
Potential Environmental Liabilities
Griffin has extensive land holdings in Connecticut and Massachusetts and in fiscal 2010 started acquiring
properties in the Lehigh Valley of Pennsylvania. Under federal, state and local environmental laws, ordinances and
regulations, Griffin may be required to investigate and clean up the effects of releases of hazardous substances or
petroleum products at its properties because of its current or past ownership or operation of the real estate. If previously
unidentified environmental problems arise, Griffin may have to make substantial payments, which could adversely affect
its cash flow. As an owner or operator of properties, Griffin may have to pay for property damage and for investigation
and clean-up costs incurred in connection with a contamination. The law typically imposes cleanup responsibility and
liability regardless of whether the owner or operator knew of or caused the contamination. Changes in environmental
regulations may impact the development potential of Griffin’s undeveloped land or could increase operating costs due to
the cost of complying with new regulations.
Governmental Regulations
Griffin’s operations are subject to governmental regulations that affect real estate development, such as local
zoning ordinances. Any changes in such regulations may impact the ability of Griffin to develop its properties or
increase Griffin’s costs of development. Subdivision and other residential development may also be affected by the
potential adoption of initiatives meant to limit or concentrate residential growth. Commercial and industrial development
activities of Griffin’s undeveloped land may also be affected by traffic considerations, potential environmental issues,
community opposition and other restrictions to development imposed by governmental agencies.
Insurance Coverage Does Not Include All Potential Losses in the Real Estate Business
Griffin carries comprehensive insurance coverage, including property, fire, terrorism and loss of rental revenue.
The insurance coverage contains policy specifications and insured limits. However, there are certain losses that are not
generally insured against or that are not fully insured against. If an uninsured loss or a loss in excess of insured limits
occurs with respect to one or more of Griffin’s properties, Griffin could experience a significant loss of capital invested
and potential revenue from the properties affected.
Risks Associated with the Cost of Raw Materials and Energy Costs
Griffin’s construction activities and maintenance of its current portfolio could be adversely affected by
increases in raw materials or energy costs. As petroleum and other energy costs increase, products used in the
construction of Griffin’s facilities, such as steel, masonry, asphalt, cement and building products may increase. An
increase in the cost of building new facilities could negatively impact Griffin’s future operating results through increased
depreciation expense. An increase in construction costs would also require increased investment in Griffin’s real estate
assets, which may lower the return on investment in new facilities. An increase in energy costs could increase Griffin’s
building operating expenses and thereby lower Griffin’s operating results.
14
Investment in a Foreign Company
Griffin has an investment in Centaur Media plc, a public company based in the United Kingdom. The ultimate
liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign
currency exchange rates.
Risks Associated with Deficiencies in Disclosure Controls and Procedures or Internal Control over Financial
Reporting
Griffin’s design and effectiveness of disclosure controls and procedures and internal controls over financial
reporting may not prevent all errors, misstatements or misrepresentations. While Griffin continues to review the
effectiveness of its disclosure controls and procedures and internal controls over financial reporting, there can be no
guarantee that its internal controls over financial reporting will be effective in accomplishing all control objectives all of
the time. Deficiencies, including any material weakness or significant deficiency, in its internal controls over financial
reporting which may occur in the future could result in misstatements of Griffin’s results of operations, restatements of
its financial statements and a decline in its stock price, or otherwise materially adversely affect Griffin’s business,
reputation, results of operations, financial condition or liquidity.
Risks Associated with Information Technology (“IT”) Security Breaches
As part of Griffin’s normal business activities, it uses information technology and other computer resources to
carry out important operational activities and to maintain its business records. Griffin’s computer systems, including its
backup systems, are subject to interruption or damage from power outages, computers and telecommunications failures,
computer viruses, security breaches (including through cyber-attack and data theft), usage errors and catastrophic events,
such as fires, floods, tornadoes and hurricanes. If Griffin’s computer systems and its backup systems are compromised,
degraded, damaged or breached, or otherwise cease to function properly, Griffin could suffer interruptions in its
operations or unintentionally allow misappropriation of proprietary or confidential information, which could damage its
reputation and require Griffin to incur significant costs to remediate or otherwise resolve these issues. Although Griffin
makes efforts to maintain the security and integrity of its IT networks and related systems, there can be no assurance that
the security efforts and measures will be effective or that attempted security breaches or disruptions would not be
successful or damaging.
Griffin is Subject to Litigation That May Adversely Impact Operating Results
Griffin is, and may in the future be, a party to a number of legal proceedings and claims arising in the ordinary
course of business which could become significant. Given the inherent uncertainty of litigation, Griffin can offer no
assurance that a future adverse development related to existing litigation or any future litigation will not have a material
adverse impact on its business, consolidated financial position, results of operations or cash flows.
The Concentrated Ownership of Griffin Common Stock by Members of the Cullman and Ernst Families
Members of the Cullman and Ernst families (the “Cullman and Ernst Group”), which include Frederick M.
Danziger, Griffin’s Executive Chairman, Michael S. Gamzon, a director and Griffin’s President and Chief Executive
Officer and Edgar M. Cullman, Jr., a director of Griffin, members of their families and trusts for their benefit,
partnerships in which they own substantial interests and charitable foundations on whose boards of directors they sit,
owned, directly or indirectly, approximately 46.2% of the outstanding common stock of Griffin as of November 30,
2016. There is an informal understanding that the persons and entities included in the Cullman and Ernst Group will vote
together the shares owned by each of them. As a result, the Cullman and Ernst Group may effectively control the
determination of Griffin’s corporate and management policies and may limit other Griffin stockholders’ ability to
influence Griffin’s corporate and management policies.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
15
ITEM 2. PROPERTIES.
Land Holdings
Griffin is a major landholder in the state of Connecticut, owning approximately 2,907 acres. Griffin also owns
approximately 422 acres of land in Massachusetts, approximately 117 acres of land in Pennsylvania and approximately
1,066 acres in northern Florida. Griffin believes the fair market value of such land is substantially in excess of its book
value.
Listings of the locations of Griffin’s land holdings, a portion of which, principally in Bloomfield, East Granby
and Windsor, Connecticut and Breinigsville, Lower Nazareth Township and Hanover Township, Pennsylvania have been
developed, are as follows:
Location
Connecticut
Land Area
(in acres)
Bloomfield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
East Granby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
East Windsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granby. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Simsbury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Suffield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Windsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(a)
(b)
(b)
(a)
267
540
116
333
774
66
811
Florida
Quincy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,066 (c)
Massachusetts
Southwick . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
422
Pennsylvania
Lower Nazareth Township . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hanover Township . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Breinigsville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
49
17
(a) Includes approximately 67 acres of land in Bloomfield that is under an agreement for sale and approximately 280
acres of land in Simsbury that is under the Option Agreement.
(b) Includes approximately 424 acres of land in East Granby and 305 acres of land in Granby that had been used by
Imperial in its growing operation. Effective January 8, 2014, most of such acreage is leased to Monrovia under the
Imperial Lease.
(c) The acreage in Florida was used in Imperial’s landscape nursery business prior to fiscal 2009. Imperial shut down
that facility in fiscal 2009 and now leases that facility to another grower of containerized nursery plants.
16
Developed Properties
As of November 30, 2016, Griffin owned thirty-three buildings, comprised of twenty-one industrial/warehouse
buildings, eleven office/flex buildings and a small restaurant building. A listing of those facilities is as follows:
Connecticut Industrial/Warehouse Properties
100 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1985 Blue Hills Avenue, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . .
755 Rainbow Road, Windsor, CT** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
758 Rainbow Road, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
754 Rainbow Road, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
759 Rainbow Road, Windsor, CT** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16 International Drive, East Granby, CT* . . . . . . . . . . . . . . . . . . . . . . . . . .
25 International Drive, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 International Drive, East Granby, CT* . . . . . . . . . . . . . . . . . . . . . . . . . .
14 International Drive, East Granby, CT* . . . . . . . . . . . . . . . . . . . . . . . . . .
131 Phoenix Crossing, Bloomfield, CT . . . . . . . . . . . . . . . . . . . . . . . . . . . .
210 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
304,200 sq. ft.
165,000 sq. ft.
148,500 sq. ft.
138,400 sq. ft.
136,900 sq. ft.
126,900 sq. ft.
117,000 sq. ft.
99,800 sq. ft.
99,800 sq. ft.
97,600 sq. ft.
58,400 sq. ft.
57,200 sq. ft.
41,600 sq. ft.
40,100 sq. ft.
31,200 sq. ft.
18,400 sq. ft.
Pennsylvania Industrial/Warehouse Properties
4270 Fritch Drive, Lower Nazareth, PA* . . . . . . . . . . . . . . . . . . . . . . . . . . .
5220 Jaindl Blvd., Hanover Township, PA* . . . . . . . . . . . . . . . . . . . . . . . .
5210 Jaindl Blvd., Hanover Township, PA* . . . . . . . . . . . . . . . . . . . . . . . .
4275 Fritch Drive, Lower Nazareth, PA* . . . . . . . . . . . . . . . . . . . . . . . . . . .
871 Nestle Way, Breinigsville, PA* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302,600 sq. ft.
280,000 sq. ft.
252,000 sq. ft.
228,000 sq. ft.
119,900 sq. ft.
Office/Flex Properties
5 Waterside Crossing, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 Waterside Crossing, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29 - 35 Griffin Road South, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . .
21 Griffin Road North, Windsor, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55 Griffin Road South, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . . . . .
340 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
206 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
204 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
330 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
310 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
320 West Newberry Road, Bloomfield, CT* . . . . . . . . . . . . . . . . . . . . . . . .
1936 Blue Hills Avenue, Windsor, CT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80,500 sq. ft.
80,500 sq. ft.
57,500 sq. ft.
48,300 sq. ft.
40,300 sq. ft.
39,000 sq. ft.
22,800 sq. ft.
22,300 sq. ft.
11,900 sq. ft.
11,400 sq. ft.
11,100 sq. ft.
7,200 sq. ft.
* Included as collateral under one of Griffin’s nonrecourse mortgage loans or Griffin’s revolving line of credit as of
November 30, 2016.
** Subsequent to November 30, 2016, Griffin agreed to terms on a nonrecourse mortgage loan on these buildings.
Completion of this proposed new mortgage loan is subject to a number of contingencies, including entry into a
definitive loan agreement. There is no guarantee that this transaction will be completed under its current terms, or at
all.
Griffin subleases approximately 1,920 square feet in New York City for its executive offices from
Bloomingdale Properties, Inc. (“Bloomingdale Properties”), an entity that is controlled by certain members of the
17
Cullman and Ernst Group. The sublease with Bloomingdale Properties was approved by Griffin’s Audit Committee and
the lease rates under the sublease were at market rate at the time the sublease was signed.
As with many companies engaged in real estate investment and development, Griffin holds its real estate
portfolio subject to mortgage debt. See Note 5 to Griffin’s consolidated financial statements for information concerning
the mortgage debt associated with Griffin’s properties.
ITEM 3. LEGAL PROCEEDINGS.
Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the
opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters
is not expected to be material to Griffin’s financial position, results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
18
PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
The following are the high and low prices of Griffin’s common stock as traded on The NASDAQ Stock
Market LLC:
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
High
Low
High
Low
High
Low
High
Low
2016 . . . $
26.99 $
22.50 $
32.50 $
22.00 $ 32.60 $ 25.75 $ 32.00 $ 28.94
2015 . . . $
32.13 $
26.81 $
32.52 $
30.00 $ 32.75 $ 30.04 $ 32.62 $ 24.22
On February 6, 2017, the number of record holders of common stock of Griffin was approximately 174 which
does not include beneficial owners whose shares are held of record in the names of brokers or nominees. The closing
market price as quoted on The NASDAQ Stock Market LLC on such date was $31.26 per share.
Dividend Policy
Griffin’s dividend policy is to consider the payment of an annual dividend at the end of its fiscal year, which
enables the Board of Directors to evaluate both Griffin’s prior full year results and its cash needs for the succeeding year
when determining whether to declare an annual dividend. In fiscal 2016 and fiscal 2015, Griffin declared an annual
dividend of $0.30 per share.
Issuer Purchases of Equity Securities
Date
(a)
Total Number
of Shares
Purchased
(b)
Average Price Paid
per Share
(c)
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
(d)
Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or
Programs
September 1, 2016 –
September 30, 2016
October 1, 2016 –
October 31, 2016
November 1, 2016 –
November 30, 2016
_
_
45,000
_
$31.17
_
_
45,000
_
_
$1,646,150
_
On March 31, 2016, Griffin’s Board of Directors authorized a stock repurchase program whereby Griffin may
repurchase up to $5.0 million in outstanding shares of its common stock in privately negotiated transactions. The
repurchase program expires on May 10, 2017. The repurchase program does not obligate Griffin to repurchase any
specific number of shares, and may be suspended at any time at management’s discretion.
19
Stock Performance Graph
The following graph compares the total percentage changes in the cumulative total stockholder return (assuming
the reinvestment of dividends) on Griffin’s common stock with the cumulative total return of the Russell 2000 Index and
the Russell Microcap Index from December 3, 2011 to November 30, 2016. It is assumed in the graph that the value of
each investment was $100 at December 3, 2011. Griffin has selected an index of companies with a similar market
capitalization because, for the period from December 3, 2011 to January 8, 2014, when Griffin sold its landscape nursery
business, Griffin is not aware of any other company that substantially participated in both the landscape nursery and real
estate businesses, and would therefore be suitable for comparison to Griffin as a “peer issuer” within Griffin’s lines of
business. In addition, following the sale of the landscape nursery business, Griffin has not been able to identify issuers in
the real estate business that are comparable peers, as most of those companies are significantly larger in size or have real
estate holdings that either differ geographically or by type of property from Griffin’s holdings. Accordingly, Griffin
selected an index of companies with a similar market capitalization.
20
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected statement of operations data for fiscal years 2012 through 2016 and
balance sheet data as of the end of each fiscal year. The selected statement of operations data for fiscal 2014, fiscal 2015
and fiscal 2016 and the selected balance sheet data for fiscal 2015 and fiscal 2016 are derived from the audited
consolidated financial statements included in Item 8 of this Annual Report. The selected statement of operations data for
fiscal 2012 and fiscal 2013 and the balance sheet data for fiscal 2012, fiscal 2013 and fiscal 2014 were derived from the
audited consolidated financial statements for those years. This selected financial data should be read in conjunction with
the consolidated financial statements and accompanying notes, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and other financial information included elsewhere in this Annual Report.
Historical results are not necessarily indicative of future performance.
2016
2015
2014
(dollars in thousands, except per share data)
2013
2012
Statement of Operations Data:
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,851 $ 28,088 $ 24,219 $ 25,526 $ 24,215
6,303
Depreciation and amortization expense . . . . . . . . . . . . . .
3,386
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
196
Income (loss) from continuing operations . . . . . . . . . . . .
770
Income (loss) from discontinued operations (1) . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
966
Basic income (loss) per share from continuing
6,673
2,436
1,910
(7,731)
(5,821)
6,729
1,809
(1,248)
144
(1,104)
8,797
5,627
576
—
576
7,668
4,314
425
—
425
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.11
0.08
(0.24)
0.37
0.04
Basic income (loss) per share from discontinued
operations (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic net income (loss) per share . . . . . . . . . . . . . . . . . . .
Diluted income (loss) per share from continuing
—
0.11
—
0.08
0.03
(0.21)
(1.50)
(1.13)
0.15
0.19
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.11
0.08
(0.24)
0.37
0.04
Diluted income (loss) per share from discontinued
operations (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (loss) per share . . . . . . . . . . . . . . . . .
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage loans, net of debt issuance costs . . . . . . . . . . .
Stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per common share . . . . . . . . . .
—
0.11
—
0.08
0.03
(0.21)
(1.50)
(1.13)
0.15
0.19
223,623
109,697
90,803
0.30
208,050
89,185
94,809
0.30
185,690
69,481
95,879
0.20
183,958
65,939
98,115
0.20
179,216
58,591
104,146
0.20
(1) Fiscal years 2012 through 2014 include the results from the growing operations of the landscape nursery business,
which was sold on January 8, 2014. See “Business-Landscape Nursery Business.” Results of discontinued
operations in fiscal year 2012 also includes the results from the operations of a 308,000 square foot warehouse
facility in Manchester, Connecticut and the gain on the sale of that warehouse.
21
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Overview
Griffin Industrial Realty, Inc. (“Griffin”) is a real estate business principally engaged in developing, managing
and leasing industrial/warehouse properties, and to a lesser extent, office/flex properties. Periodically, Griffin may sell
certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not
consistent with Griffin’s core development and leasing strategy. Griffin seeks to add to its property portfolio through the
acquisition and development of land or the purchase of buildings. Prior to May 13, 2015, Griffin was known as Griffin
Land & Nurseries, Inc. On May 13, 2015, Griffin changed its name to better reflect its ongoing real estate business and
focus on industrial/warehouse properties after the sale in fiscal 2014 of the landscape nursery business that Griffin had
operated through its wholly owned subsidiary, Imperial Nurseries, Inc. (“Imperial”). Effective January 8, 2014, Griffin,
Imperial and Monrovia Connecticut LLC (“Monrovia”) entered into an Asset Purchase Agreement whereby Imperial’s
inventory and certain of its assets were sold to Monrovia for approximately $0.7 million in cash, before transaction and
severance costs, and a non-interest bearing note receivable (which Griffin subsequently collected) of $4.25 million (the
“Imperial Sale”).
The notes to Griffin’s consolidated financial statements included in Item 8 of this Annual Report contain a
summary of the significant accounting policies and methods used in the preparation of Griffin’s consolidated financial
statements. In the opinion of management, because of the relative magnitude of Griffin’s real estate assets, accounting
methods and estimates related to those assets are critical to the preparation of Griffin’s consolidated financial statements.
Griffin uses accounting policies and methods under accounting principles generally accepted in the United States of
America (“U.S. GAAP”). The following are the critical accounting estimates and methods used by Griffin:
Income taxes: In accounting for income taxes under Financial Accounting Standards Board (“FASB”)
ASC 740, “Income Taxes,” management estimates future taxable income from operations, the sale of
appreciated assets, the remaining years before the expiration of loss credit carryforwards, future reversals of
existing temporary differences and tax planning strategies in determining if it is more likely than not that Griffin
will realize the benefits of its deferred tax assets.
Impairment of long-lived assets: Griffin reviews annually, as well as when conditions may indicate, its
long-lived assets to determine if there are any indications of impairment, such as a prolonged vacancy in one of
Griffin’s rental properties. If indications of impairment are present, Griffin evaluates the carrying value of the
assets in relation to undiscounted cash flows or the estimated fair value of the underlying assets. Development
costs that have been capitalized are reviewed periodically for future recoverability.
Revenue and gain recognition: Revenue includes rental revenue from Griffin’s industrial and
commercial properties and proceeds from property sales. Rental revenue is accounted for on a straight-line basis
over the applicable lease term in accordance with the FASB ASC 840, “Leases.” Gains on property sales are
recognized in accordance with FASB ASC 360-20 “Property, Plant and Equipment-Real Estate Sales” based on
the specific terms of each sale. When the percentage of completion method is used to account for a sale of real
estate, costs included in determining the percentage of completion include the costs of the land sold, allocated
master planning costs, selling and transaction costs and estimated future costs related to the land sold.
Stock based compensation: Griffin determines stock based compensation based on the estimated fair
values of stock options as determined on their grant dates using the Black-Scholes option-pricing model. In
determining the estimated fair values of stock options issued, Griffin makes assumptions on expected volatility,
risk free interest rates, expected option terms and dividend yields.
Derivative instruments: Griffin evaluates each interest rate swap agreement to determine if it qualifies
as an effective cash flow hedge. Changes in the fair value of each interest rate swap agreement that management
determines to be an effective cash flow hedge are recorded as a component of other comprehensive income. The
fair value of each interest rate swap agreement is determined based on observable market participant data, such
as yield curves, as of the fair value measurement date.
22
Summary
In the fiscal year ended November 30, 2016 (“fiscal 2016”), Griffin had net income of approximately
$0.6 million as compared to net income of approximately $0.4 million in the fiscal year ended November 30, 2015
(“fiscal 2015”). The slightly higher net income in fiscal 2016 as compared to fiscal 2015 principally reflects an increase
of approximately $1.3 million in operating income in fiscal 2016 as compared to fiscal 2015 partially offset by an
increase of approximately $0.8 million in interest expense and an increase of approximately $0.3 million in income taxes
in fiscal 2016 as compared to fiscal 2015.
The approximately $1.3 million increase in operating income in fiscal 2016, as compared to fiscal 2015,
principally reflects an increase of approximately $2.0 million in profit from leasing activities (which Griffin defines as
rental revenue less operating expenses of rental properties)2 and an increase of approximately $0.7 million in gain on
property sales (revenue from property sales less costs related to property sales), partially offset by increases in
depreciation and amortization expense and general and administrative expenses of approximately $1.1 million and
approximately $0.3 million, respectively. The increase in profit from leasing activities in fiscal 2016, as compared to
fiscal 2015, was driven by an increase in rental revenue from more space being leased in fiscal 2016 than fiscal 2015.
The higher gain on property sales in fiscal 2016, as compared to fiscal 2015, principally reflects the gain of
approximately $3.2 million from the sale of undeveloped Griffin Center land that closed in fiscal 2016. The increase in
depreciation and amortization expense in fiscal 2016, as compared to fiscal 2015, principally reflects a full year of
depreciation expense in fiscal 2016, as compared to a partial year in fiscal 2015, on 5220 Jaindl Boulevard (“5220
Jaindl”), an approximately 280,000 square foot industrial/warehouse building in the Lehigh Valley of Pennsylvania that
was completed and placed in service at the end of the fiscal 2015 third quarter and depreciation expense on tenant
improvements related to new leases being higher in fiscal 2016 than fiscal 2015. The increase in general and
administrative expenses in fiscal 2016, as compared to fiscal 2015, principally reflects higher expenses related to
Griffin’s non-qualified deferred compensation plan.
The higher interest expense in fiscal 2016, as compared to fiscal 2015, principally reflects less interest
capitalized in fiscal 2016 than in fiscal 2015 and the higher amount of mortgage loans outstanding in fiscal 2016 as
compared to fiscal 2015. The higher income tax expense in fiscal 2016 as compared to fiscal 2015 reflects the higher
pretax income in fiscal 2016, as compared to fiscal 2015, and an increase in income tax expense related to the higher
pretax income in fiscal 2016 and a reduction in the valuation of certain state deferred tax assets.
Results of Operations
Fiscal 2016 Compared to Fiscal 2015
Total revenue increased to approximately $30.9 million in fiscal 2016 from approximately $28.1 million in
fiscal 2015, reflecting an increase of approximately $1.9 million in rental revenue and approximately $0.9 million in
revenue from property sales. Rental revenue increased to approximately $26.5 million in fiscal 2016 from approximately
$24.6 million in fiscal 2015 principally reflecting: (a) an increase of approximately $1.9 million from leasing previously
vacant space; and (b) an increase of approximately $1.6 million from leasing space in 5220 Jaindl, which was completed
and placed in service at the start of the fiscal 2015 fourth quarter; partially offset by (c) a decrease of approximately $1.5
million from leases that expired; and (d) a decrease of approximately $0.2 million of rental revenue from lower expense
reimbursements from tenants and other changes.
A summary of the total square footage and leased square footage of the buildings in Griffin’s real estate
portfolio is as follows:
As of November 30, 2016 . . . . . . . . . . . . . . . . . .
As of November 30, 2015 . . . . . . . . . . . . . . . . . .
Total
Square
Footage
3,297,000
3,045,000
Square
Footage
Leased
3,066,000
2,706,000
Percentage
Leased
93%
89%
2 Profit from leasing activities is not a financial measure in conformity with U.S. GAAP. It is presented because Griffin believes it is
a useful financial indicator for measuring results of its real estate leasing activities. However, it should not be considered as an
alternative to operating income as a measure of operating results in accordance with U.S. GAAP.
23
The increase in total square footage as of November 30, 2016, as compared to November 30, 2015, reflects the
construction in fiscal 2016 of 5210 Jaindl Boulevard (“5210 Jaindl”), an approximately 252,000 square foot
industrial/warehouse building which is the second of the two buildings built on an approximately 50 acre parcel of land
known as Lehigh Valley Tradeport II. 5210 Jaindl was completed in the 2016 third quarter and Griffin entered into two
leases for that building, resulting in 5210 Jaindl being fully leased as of November 30, 2016. Both of the new leases at
5210 Jaindl will become effective upon completion of tenant improvements, which are expected to be completed in the
first half of fiscal 2017. As a result of leasing 5210 Jaindl, Griffin now has five fully leased industrial/warehouse
buildings in the Lehigh Valley aggregating approximately 1,183,000 square feet.
The net increase of approximately 360,000 square feet leased as of November 30, 2016, as compared to
November 30, 2015, reflects the approximately 252,000 square feet leased at 5210 Jaindl and several new leases
aggregating approximately 240,000 square feet in other buildings, partially offset by several leases aggregating
approximately 132,000 square feet that expired. Included in the approximately 240,000 square feet of new leasing in
fiscal 2016 are a lease of approximately 101,000 square feet in 4270 Fritch Drive (“4270 Fritch”), one of Griffin’s other
industrial/warehouse buildings in the Lehigh Valley, a full building lease of 25 International Drive (“25 International”),
an approximately 57,000 square foot industrial/warehouse building in New England Tradeport (“NE Tradeport”),
Griffin’s industrial park in Windsor and East Granby, Connecticut, a full building lease of an approximately 31,000
square foot industrial/warehouse building in Bloomfield, Connecticut, and a lease of approximately 16,000 square feet in
a single story office building in Griffin Center. The new lease of 25 International replaced a lease that expired earlier in
the year. The tenant of the expired lease had, in fiscal 2014, entered into a ten year full building lease of 758 Rainbow
Road (“758 Rainbow”), an approximately 138,000 square foot building in NE Tradeport, while remaining in 25
International during its period of transition to the larger facility.
Also in the third quarter of fiscal 2016, Griffin entered into a new three year lease of its production nursery in
Quincy, Florida (the “Florida Farm”). The Florida Farm had been leased to a nursery grower since fiscal 2009, but that
lease ended in the fiscal 2016 second quarter. The new lease contains an option for the tenant to purchase the Florida
Farm for a purchase price between $3.4 million and $3.9 million depending upon the date of sale.
All of Griffin’s Connecticut industrial/warehouse and office/flex buildings are in the north submarket of
Hartford. The real estate market for industrial/warehouse space in the Hartford, Connecticut area has improved over the
last two years. A national real estate services company reported that the overall vacancy rate in the greater Hartford
industrial market decreased from 12.3% at the end of 2014 to 9.2% at the end of 2016, with approximately 1.0 million
square feet of net absorption in 2016. The Hartford office/flex market remained weak in 2016, with a national real estate
services company reporting that the overall vacancy rate has remained at approximately 16% over the past two years,
with vacancy in the north submarket of Hartford at approximately 21% over the past two years. Griffin’s office/flex
space was approximately 13% of Griffin’s total square footage as of November 30, 2016. Griffin expects that its
office/flex buildings will continue to become a smaller percentage of its total real estate portfolio as Griffin expects to
focus on the growth of its industrial/warehouse building portfolio either through acquisition of fully or partially leased
buildings, development of buildings on land currently owned or to be acquired or both. The real estate market for
industrial/warehouse space in the Lehigh Valley has experienced strong growth and leasing activity during the past two
years. The vacancy rate of Lehigh Valley industrial/warehouse properties as reported by a national real estate services
company was 5.2% at the end of the 2016, with a net absorption of approximately 7.6 million square feet in 2016. There
is no guarantee that an active or strong real estate market or an increase in inquiries from prospective tenants will result
in leasing space that was vacant as of November 30, 2016.
Griffin’s revenue from property sales increased to approximately $4.4 million in fiscal 2016 from
approximately $3.5 million in fiscal 2015. In fiscal 2016, Griffin completed one property sale of approximately 29 acres
of undeveloped land in Griffin Center (the “Griffin Center Land Sale”) for approximately $3.8 million in cash and a
pretax gain of approximately $3.2 million. In fiscal 2016, in addition to the Griffin Center Land Sale, Griffin recognized
revenue of approximately $0.6 million and a gain of approximately $0.4 million from the sale of approximately 90 acres
of undeveloped land in Windsor, Connecticut (the “Windsor Land Sale”) that closed in the fiscal year ended November
30, 2013 (“fiscal 2013”). Under the terms of the Windsor Land Sale, Griffin is required to construct roadways to connect
the land sold to existing town roadways. Accordingly, because of Griffin’s continuing involvement with the land that
was sold, the Windsor Land Sale is being accounted for under the percentage of completion method. From the closing of
the Windsor Land Sale in fiscal 2013 through November 30, 2016, Griffin has recognized approximately $8.8 million of
24
revenue from the Windsor Land Sale, reflecting approximately 99% of the total revenue to be recognized from such sale.
The balance of the revenue from the Windsor Land Sale, approximately $0.1 million, will be recognized as the
remaining costs, expected to be less than $0.1 million, of the required roadway construction are incurred, which is
expected to be in fiscal 2017. While management has used its best estimates, based on industry knowledge and
experience, in projecting the total costs of the required roadways being constructed, increases or decreases in future costs
as compared with current estimated amounts would reduce or increase the gain recognized in future periods.
The approximately $3.5 million of revenue from property sales in fiscal 2015 reflected: (a) approximately
$2.5 million from the recognition of revenue related to the Windsor Land Sale; (b) approximately $0.6 million from the
sale of land that had been part of the Connecticut farm used by Imperial but not part of the long-term lease to Monrovia;
and (c) $0.4 million from the retention of a deposit (the “Florida Farm Deposit”) related to the sale of the Florida Farm,
which did not close. Griffin received the Florida Farm Deposit in fiscal 2015 from the tenant that leased the Florida Farm
at that time in connection with the tenant giving notice to Griffin that it was exercising its option under the lease to
purchase the Florida Farm. The tenant subsequently notified Griffin that it would not close on the purchase and Griffin
retained the Florida Farm Deposit and entered into an agreement with the tenant to extend its lease through April 30,
2016. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be
indicative of any trends in Griffin’s real estate business.
Operating expenses of rental properties decreased to approximately $8.2 million in fiscal 2016 from
approximately $8.4 million in fiscal 2015. The slight decrease of approximately $0.2 million in operating expenses of
rental properties in fiscal 2016, as compared to fiscal 2015, principally reflects decreases of approximately $0.4 million
in snow removal expenses, due to less severe winter weather in fiscal 2016 than fiscal 2015, and approximately $0.3
million in utility expenses, partially offset by operating expense increases of approximately $0.3 million at 5220 Jaindl,
which was in service for the entire year in fiscal 2016 versus three months in fiscal 2015, approximately $0.1 million of
operating expenses at 5210 Jaindl, which was placed in service in fiscal 2016, and approximately $0.1 million for real
estate taxes.
Depreciation and amortization expense increased to approximately $8.8 million in fiscal 2016 from
approximately $7.7 million in fiscal 2015. The increase of approximately $1.1 million in depreciation and amortization
expense in fiscal 2016, as compared to fiscal 2015, reflects increases in depreciation and amortization expense of
approximately $0.6 million related to 5220 Jaindl, which was in service for the entire year in fiscal 2016 versus three
months in fiscal 2015, approximately $0.2 million related to 5210 Jaindl, which was placed in service in fiscal 2016, and
approximately $0.5 million for tenant improvements related to new leases, offset by lower depreciation expense of
approximately $0.2 million due to assets becoming fully depreciated.
Griffin’s general and administrative expenses increased to approximately $7.4 million in fiscal 2016 from
approximately $7.1 million in fiscal 2015. The increase of approximately $0.3 million in general and administrative
expenses in fiscal 2016, as compared to fiscal 2015, principally reflects an increase of approximately $0.2 million related
to Griffin’s non-qualified deferred compensation plan and approximately $0.1 million for an increase in incentive
compensation expense. The expense increase related to the non-qualified deferred compensation plan reflects the effect
of higher stock market performance on participant balances in fiscal 2016, as compared to fiscal 2015, that resulted in a
greater increase in Griffin’s non-qualified deferred compensation plan liability in fiscal 2016 as compared to fiscal 2015.
The increase in incentive compensation expense reflects Griffin’s improved results in fiscal 2016 with regards to profit
from leasing activities and gain on property sales as measured under Griffin’s incentive compensation plan.
Griffin’s interest expense increased to approximately $4.5 million in fiscal 2016 from approximately $3.7
million in fiscal 2015. The increase of approximately $0.8 million in interest expense in fiscal 2016, as compared to
fiscal 2015, principally reflects approximately $0.5 million less interest capitalized in fiscal 2016 than fiscal 2015 and an
increase in interest expense of approximately $0.4 million due to the increase in the amount of nonrecourse mortgage
loans in fiscal 2016 as compared to fiscal 2015. The lower amount of capitalized interest in fiscal 2016, as compared to
fiscal 2015, reflects the higher amount of construction activity in fiscal 2015 than fiscal 2016. The increase in
nonrecourse mortgage loans in fiscal 2016, as compared to fiscal 2015, reflects borrowings completed in the fiscal 2015
fourth quarter that were outstanding for the entire year in fiscal 2016, a new borrowing in fiscal 2016 on 5210 Jaindl, and
adding a previously unleveraged NE Tradeport building to a mortgage on several other NE Tradeport buildings in fiscal
2016.
25
Griffin’s income tax provision increased to approximately $0.7 million in fiscal 2016 from approximately $0.4
million in fiscal 2015. The increase of approximately $0.3 million reflects approximately $0.2 million as a result of the
higher pretax income in fiscal 2016 than fiscal 2015 and approximately $0.1 million related to decreases in the valuation
of certain state income tax benefits in fiscal 2016. In fiscal 2016, Griffin’s income tax provision included a charge of
approximately $0.2 million for the reduction of the expected realization rate of tax benefits from Connecticut state net
operating loss carryforwards as a result of a change in Connecticut tax law, effective for Griffin beginning in fiscal 2016,
that limits the future usage of loss carryforwards to 50% of taxable income. In fiscal 2015, Griffin’s income tax
provision included a charge of approximately $0.1 million for the reduction of the expected realization rate of tax
benefits from certain state net operating loss carryforwards and other temporary differences as a result of changes in the
expected utilization of such benefits. Griffin’s effective income tax rate increased to 56.1% in fiscal 2016 from 47.2% in
fiscal 2015. The higher effective tax rate in fiscal 2016, as compared to fiscal 2015, principally reflects the effect in
fiscal 2016 of a higher charge related to the reduction of certain state tax benefits.
Fiscal 2015 Compared to Fiscal 2014
Total revenue increased to approximately $28.1 million in fiscal 2015 from approximately $24.2 million in
fiscal 2014, reflecting an increase of approximately $4.1 million in rental revenue, partially offset by a decrease of
approximately $0.2 million in revenue from property sales. Rental revenue increased to approximately $24.6 million in
fiscal 2015 from approximately $20.5 million in fiscal 2014 principally due to an increase in space leased in Griffin’s
buildings. The increase in rental revenue principally reflected: (a) an increase of approximately $2.9 million of rental
revenue from leasing previously vacant space; (b) approximately $1.4 million of rental revenue from leasing space in
two Lehigh Valley industrial/warehouse buildings that were placed in service in fiscal 2014 and fiscal 2015; (c) an
increase of approximately $0.4 million of rental revenue in connection with agreements to terminate leases before their
scheduled termination dates; and (d) an increase in rental revenue of approximately $0.3 million from all other leases;
partially offset by (e) a decrease of approximately $0.9 million of rental revenue from leases that expired and were not
renewed.
A summary of the square footage of the buildings in Griffin’s real estate portfolio is as follows:
As of November 30, 2015 . . . . . . . . . . . . . . . . . .
As of November 30, 2014 . . . . . . . . . . . . . . . . . .
Total
Square
Footage
3,045,000
2,764,000
Square
Footage
Leased
2,706,000
2,317,000
Percentage
Leased
89%
84%
The increase in total square footage as of November 30, 2015 as compared to November 30, 2014 reflected
5220 Jaindl, the approximately 280,000 square foot industrial building completed and placed in service at the end of the
fiscal 2015 third quarter. 5220 Jaindl, located in the Lehigh Valley, was the first of two industrial buildings constructed
on Lehigh Valley Tradeport II, the approximately 50 acre parcel of undeveloped land acquired mostly in fiscal 2013.
The net increase of approximately 389,000 square feet in space leased as of November 30, 2015 as compared to
November 30, 2014 reflects leasing the entire approximately 280,000 square feet of 5220 Jaindl and several new leases
in other buildings aggregating approximately 191,000 square feet of previously vacant space, partially offset by several
leases aggregating approximately 52,000 square feet that expired and were not renewed and a lease of approximately
31,000 square feet that was terminated prior to its scheduled expiration date for which Griffin received a payment of
approximately $0.2 million. The leasing of 5220 Jaindl reflected a five year lease for approximately 196,000 square feet
that became effective at the start of the fiscal 2015 fourth quarter. In November 2015, the tenant in 5220 Jaindl exercised
its option to lease the balance of the building. Rental revenue on the additional space started in fiscal 2016. Most of the
approximately 191,000 square feet of previously vacant space that was leased in fiscal 2015 was industrial/warehouse
space in NE Tradeport. Griffin also extended several leases aggregating approximately 397,000 square feet that included
approximately 326,000 square feet of industrial/warehouse space in NE Tradeport and approximately 71,000 square feet
of office/flex space in Griffin Center and Griffin Center South. Subsequent to November 30, 2015, Griffin leased
approximately 102,000 square feet in 4270 Fritch. Had that lease been completed as of November 30, 2015, the
percentage of square footage leased in Griffin’s buildings as of that date would have been 92%.
Activity by prospective tenants where Griffin’s Connecticut properties are located (the north submarket of
Hartford) was muted in fiscal 2014; however, there was an increase in inquiries from prospective tenants, mostly for
26
industrial/warehouse space, in the latter part of fiscal 2014 that continued through fiscal 2015. Leasing activity in the
Lehigh Valley in fiscal 2015 was somewhat slower than the previous year; however, the reported overall vacancy rate
there continued to remain low in fiscal 2015.
Revenue from property sales decreased to approximately $3.5 million in fiscal 2015 from approximately
$3.7 million in fiscal 2014. Revenue from property sales in fiscal 2015 reflects: (a) the recognition of approximately
$2.5 million of revenue from the Windsor Land Sale; (b) approximately $0.6 million from the sale of land that had been
part of the Connecticut farm used by Imperial but not part of the long-term lease to Monrovia; and (c) $0.4 million from
the Florida Farm Deposit (see below). Property sales occur periodically, and changes in revenue from year to year from
those transactions may not be indicative of any trends in Griffin’s real estate business.
Under the terms of the Windsor Land Sale, Griffin is required to construct roadways that will connect the land
sold to existing town roadways. Accordingly, because of Griffin’s continuing involvement with the land that was sold,
the Windsor Land Sale is being accounted for under the percentage of completion method. Through November 30, 2015,
Griffin had recognized approximately $8.3 million of revenue from the Windsor Land Sale.
In the fiscal 2015 third quarter, Griffin received the Florida Farm Deposit from the tenant that leased the Florida
Farm in connection with the tenant giving notice to Griffin at that time that it was exercising its option under the lease to
purchase the Florida Farm. The tenant subsequently notified Griffin that it would not close on the purchase of the Florida
Farm. Griffin retained the Florida Farm Deposit and entered into an agreement with the tenant to extend the lease of the
Florida Farm through April 30, 2016.
Operating expenses of rental properties increased to approximately $8.4 million in fiscal 2015 from
approximately $7.8 million in fiscal 2014. The increase in operating expenses of rental properties of approximately
$0.6 million was due to a full year of operating expenses of 4270 Fritch in fiscal 2015 as compared to a partial year of
such expenses in fiscal 2014, as that building was placed in service in the fiscal 2014 third quarter, and operating
expenses of 5220 Jaindl, which was placed in service at the end of the fiscal 2015 third quarter. Operating expenses of all
other rental properties were essentially unchanged in fiscal 2015 as compared to fiscal 2014.
Depreciation and amortization expense increased to approximately $7.7 million in fiscal 2015 from
approximately $6.7 million in fiscal 2014. The increase of approximately $1.0 million in depreciation and amortization
expense in fiscal 2015 as compared to fiscal 2014 reflects approximately $0.4 million related to 4270 Fritch,
approximately $0.2 million related to 5220 Jaindl and an increase of approximately $0.3 million related to building
improvements and tenant improvements in Griffin’s other properties.
Griffin’s general and administrative expenses were essentially unchanged at approximately $7.1 million in both
fiscal 2015 and fiscal 2014. Increases of approximately $0.3 million of incentive compensation expense and
approximately $0.2 million in expenses in real estate taxes and other expenses related to Griffin’s undeveloped land,
which are included in general and administrative expenses, were essentially offset by decreases of approximately
$0.2 million in expenses related to Griffin’s non-qualified deferred compensation plan, approximately $0.2 million in
audit fee expenses and approximately $0.1 million in all other general and administrative expenses. The lower expense
related to Griffin’s non-qualified deferred compensation plan reflects lower stock market performance in fiscal 2015, as
compared to fiscal 2014, that resulted in a lower increase on participant balances in fiscal 2015 as compared to fiscal
2014.
Griffin’s interest expense increased to approximately $3.7 million in fiscal 2015 from approximately
$3.5 million in fiscal 2014. An increase in interest expense of approximately $0.5 million as a result of new mortgage
loans in fiscal 2015 was partially offset by decreases in interest expense of approximately $0.2 million due to a higher
amount of interest capitalized in fiscal 2015 as compared to fiscal 2014 and approximately $0.1 million from refinancing
a mortgage loan on three NE Tradeport buildings at a lower interest rate in fiscal 2015. The increase in the amount of
interest capitalized in fiscal 2015 as compared to fiscal 2014 principally reflects an increase in construction activities in
fiscal 2015 as compared to fiscal 2014, including the construction of 5220 Jaindl, which was completed and placed in
service at the end of the fiscal 2015 third quarter.
Investment income decreased to approximately $0.2 million in fiscal 2015 from approximately $0.3 million in
fiscal 2014. The decrease of approximately $0.1 million principally reflects lower interest income from the amortization
27
of the discount on the note receivable from Monrovia related to the Imperial Sale that closed in January 2014. The note
receivable from Monrovia was fully paid on June 1, 2015.
In fiscal 2014, Griffin reported an approximately $0.3 million gain from the sale of 500,000 shares of its
common stock in Centaur Media for cash proceeds of approximately $0.6 million. Griffin did not sell any of its Centaur
Media common stock in fiscal 2015. Griffin holds 1,952,462 shares of Centaur Media common stock and has not sold
any Centaur Media common stock subsequent to the end of fiscal 2014. Management expects that it will continue to sell
its Centaur Media common stock when it believes that sales terms are favorable. Also in fiscal 2014, Griffin incurred a
loss on debt extinguishment of approximately $0.1 million related to the refinancing of two mortgage loans.
Griffin’s effective income tax rate was 47.2% in fiscal 2015 as compared to 8.3% in fiscal 2014. The fiscal
2015 effective income tax rate reflects the federal statutory rate of 35% and state income taxes, including adjustments to
the expected realization rate that certain state tax benefits will provide to Griffin in future years. To the extent that actual
results differ from current projections, the projected realization rate would be different than the rate presently being used.
In fiscal 2014 there was an income tax provision as compared to a pretax loss because the effect of reductions to certain
state income tax benefits exceeded the federal income tax benefit, resulting in an overall income tax provision. The
reductions to certain state income tax benefits were based on management’s projections of the expected realization rate
that those state tax benefits will provide to Griffin.
Income from discontinued operations of approximately $0.1 million, net of tax, in fiscal 2014 reflected
approximately $0.3 million, net of tax, for the effect of the termination of Griffin’s postretirement benefits program and
reclassification of actuarial gains previously reflected in other comprehensive income into net income, partially offset by
approximately $0.2 million, net of tax, for the loss from the growing operations of the landscape nursery business
through the date of the Imperial Sale. As substantially all of the former participants in Griffin’s postretirement benefits
program had been employed in the growing operations of the landscape nursery business that was reported as a
discontinued operation, the reclassification of the actuarial gains is mostly included in the results of discontinued
operations in fiscal 2014.
Off Balance Sheet Arrangements
Griffin does not have any off balance sheet arrangements.
Liquidity and Capital Resources
Net cash provided by operating activities was approximately $7.2 million in fiscal 2016 as compared to
approximately $13.0 million in fiscal 2015. The approximately $5.8 million decrease in net cash provided by operating
activities in fiscal 2016, as compared to fiscal 2015, principally reflects a decrease of approximately $6.8 million of cash
from changes in assets and liabilities in fiscal 2016 as compared to fiscal 2015, partially offset by an increase of
approximately $1.1 million in cash generated from the increase in net income as adjusted for noncash expenses and
credits and gain on sale of properties in fiscal 2016 as compared to fiscal 2015, which principally reflects the increase in
profit from leasing activities in fiscal 2016, driven by the increase in rental revenue.
The decrease in cash from changes in assets and liabilities in fiscal 2016, as compared to fiscal 2015, principally
reflects fiscal 2016 having an approximately $0.7 million decrease in cash from the change in deferred revenue as
compared to an approximately $4.9 million increase in cash from the change in deferred revenue in fiscal 2015 and fiscal
2016 having an approximately $0.1 million increase in cash from the change in other assets as compared to an
approximately $1.1 million increase in cash from the change in other assets in fiscal 2015. The change in deferred
revenue of approximately $0.7 million in fiscal 2016 principally reflects the recognition of revenue from the Windsor
Land Sale. The change in deferred revenue in fiscal 2015 principally reflects approximately $6.4 million of cash received
from the tenant in 758 Rainbow for building and tenant improvements that is being recognized as additional rental
revenue over the lease term, offset by the reduction of deferred revenue from the recognition of approximately
$2.5 million of revenue from the Windsor Land Sale. The cash received by Griffin from the tenant in fiscal 2015 was
related to building and tenant improvements in connection with a ten year full building lease of 758 Rainbow that
commenced in the fourth quarter of fiscal 2014. The increase in cash from the change in other assets in fiscal 2015
principally reflected approximately $0.9 million from a reduction in lease receivables.
28
Net cash provided by operating activities increased to approximately $13.0 million in fiscal 2015 from
approximately $5.4 million in fiscal 2014. The approximately $7.6 million increase in net cash provided by operating
activities in fiscal 2015, as compared to fiscal 2014, principally reflects: (a) an increase of approximately $4.6 million of
cash generated from changes in assets and liabilities in fiscal 2015 as compared to fiscal 2014; and (b) an increase of
approximately $3.0 million in cash generated from continuing operations, including adjustments to reconcile income
(loss) from continuing operations to net cash provided by operating activities of continuing operations. The increase in
cash from changes in assets and liabilities in fiscal 2015, as compared to fiscal 2014, principally reflects approximately
$4.9 million of cash from an increase in deferred revenue in fiscal 2015 as compared to approximately $3.0 million of
cash in fiscal 2014 and approximately $1.1 million of cash from a change in other assets in fiscal 2015 as compared to an
approximately $0.6 million decrease in cash in fiscal 2014. The change in deferred revenue in fiscal 2015 includes cash
of approximately $6.4 million received from the tenant in 758 Rainbow for building and tenant improvements that is
being recognized as additional rental revenue over the lease term, offset principally by the reduction of deferred revenue
from the recognition of approximately $2.5 million of revenue from the Windsor Land Sale. The increase in cash from
the change in other assets in fiscal 2015 principally reflects approximately $0.9 million from a reduction in lease
receivables and approximately $0.4 million from a reduction in escrows related to Griffin’s mortgage loans.
Net cash used in investing activities was approximately $16.6 million in fiscal 2016 as compared to
approximately $29.7 million in fiscal 2015 and approximately $3.9 million in fiscal 2014. The net cash used in investing
activities in fiscal 2016 reflects cash payments of approximately $15.7 million for additions to real estate assets and
approximately $0.9 million for deferred leasing costs and other uses. The cash spent on deferred leasing costs and other
in fiscal 2016 principally reflects lease commissions paid to real estate brokers for new leases. The approximately $3.5
million of proceeds, net of transaction expenses, received from the Griffin Center Land Sale were placed in escrow for
potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code
of 1986, as amended.
Cash payments for additions to real estate assets in fiscal 2016 reflect the following:
New building construction (including site work) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9.2 million
Tenant and building improvements related to leasing . . . . . . . . . . . . . . . . . . . . . . $ 5.4 million
Development costs and infrastructure improvements . . . . . . . . . . . . . . . . . . . . . . . $ 0.6 million
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.5 million
Cash payments in fiscal 2016 for new building construction reflect the construction, on speculation, of 5210
Jaindl, which was started in the fiscal 2015 fourth quarter and completed in fiscal 2016. Through November 30, 2016,
Griffin has made total cash payments of approximately $12.0 million for the direct site work and building shell for 5210
Jaindl. Cash payments in fiscal 2016 for tenant and building improvements principally reflect tenant improvement work
related to leases signed in the latter part of fiscal 2015 and fiscal 2016. The cash spent on development costs and
infrastructure improvements in fiscal 2016 principally reflects road improvements related to the Windsor Land Sale.
The net cash used in investing activities of approximately $29.7 million in fiscal 2015 reflects cash payments of
approximately $31.2 million for additions to real estate assets and approximately $1.0 million for deferred leasing costs
and other uses, partially offset by $1.5 million of cash received from the second and final payment under the note
receivable from Monrovia and approximately $1.0 million of cash proceeds from property sales.
Cash payments for additions to real estate assets in fiscal 2015 reflect the following:
New building construction (including site work) . . . . . . . . . . . . . . . . . . . . . . . . . $ 14.5 million
Tenant and building improvements related to leasing . . . . . . . . . . . . . . . . . . . . . $ 14.4 million
Development costs and infrastructure improvements . . . . . . . . . . . . . . . . . . . . . . $ 2.1 million
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.2 million
Fiscal 2015 cash payments for new building construction, including site work, principally reflected the
construction, on speculation, of 5220 Jaindl and the start of site work for 5210 Jaindl. The fiscal 2015 cash payments for
tenant and building improvements related to leasing include approximately $7.8 million for improvements in connection
with the ten year full building lease of 758 Rainbow and approximately $2.9 million of improvements at 5220 Jaindl.
29
The cash payments for development costs and infrastructure improvements primarily reflected ongoing road construction
and other offsite improvements required under the terms of the Windsor Land Sale.
Proceeds from property sales in fiscal 2015 reflect approximately $0.6 million from the sale of land that had
been part of the Connecticut farm used by Imperial but not part of the long-term lease to Monrovia and approximately
$0.4 million from the deposit retained on the sale of the Florida Farm that did not close.
The net cash used in investing activities of approximately $3.9 million in fiscal 2014 reflects cash payments of
approximately $15.6 million for additions to real estate assets and approximately $1.2 million for deferred leasing costs
and other uses, substantially offset by: (a) cash proceeds of approximately $8.9 million from the Windsor Land Sale that
were returned from escrow; (b) cash proceeds of $2.75 million received from the first payment under the note receivable
from Monrovia; (c) cash proceeds of approximately $0.6 million from sales of Centaur Media common stock; (d) cash
proceeds of approximately $0.6 million, net of expenses, from property sales; and (e) cash proceeds of approximately
$0.2 million from the Imperial Sale. At the closing of the Windsor Land Sale in the fiscal 2013 fourth quarter, the
proceeds of approximately $8.9 million were placed in escrow for a potential acquisition of a replacement property in a
like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. As Griffin did not acquire a
replacement property, the cash proceeds were returned to Griffin in fiscal 2014.
Cash payments for additions to real estate assets in fiscal 2014 reflect the following:
New building construction (including site work) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.2 million
Development costs and infrastructure improvements . . . . . . . . . . . . . . . . . . . . . . . $ 3.0 million
Tenant and building improvements related to leasing . . . . . . . . . . . . . . . . . . . . . . $ 1.8 million
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.6 million
Fiscal 2014 cash payments for new building construction principally reflected the completion of construction of
4270 Fritch. Cash payments for development costs and infrastructure improvements in fiscal 2014 included
approximately $2.0 million for site work on a residential project and approximately $1.0 million for road construction
required under the terms of the Windsor Land Sale.
Net cash provided by financing activities was approximately $15.8 million in fiscal 2016 as compared to
approximately $18.0 million in fiscal 2015 and approximately $1.4 million in fiscal 2014. The net cash provided by
financing activities in fiscal 2016 reflects $45.5 million of proceeds from new mortgage debt (see below) and $0.6
million of mortgage proceeds released from escrow, partially offset by: (a) approximately $24.8 million of principal
payments on mortgage loans; (b) approximately $3.4 million paid for the repurchase of common stock (see below); (c) a
payment of approximately $1.5 million for a dividend on Griffin’s common stock that was declared in the fiscal 2015
fourth quarter and paid in fiscal 2016; and (d) approximately $0.6 million of payments for debt issuance costs. The
principal payments on mortgage loans include approximately $21.1 million for the repayment of two mortgage loans that
were refinanced (see below), approximately $2.7 million of recurring principal payments and a $1.0 million principal
repayment from mortgage proceeds that had been held in escrow.
The net cash of approximately $18.0 million provided by financing activities in fiscal 2015 reflected net
proceeds of approximately $40.4 million from three mortgage loans (see below) and approximately $0.1 million received
from the exercise of stock options, partially offset by: (a) approximately $20.1 million of payments of principal on
Griffin’s mortgage loans; (b) a payment of approximately $1.0 million for a dividend on Griffin’s common stock that
was declared in the fiscal 2014 fourth quarter and paid in fiscal 2015; (c) approximately $0.8 million of payments for
debt issuance costs related to the mortgage loans completed in fiscal 2015; and (d) approximately $0.6 million of
mortgage proceeds placed in escrow. The principal payments on mortgage loans included approximately $17.9 million
for the repayment of a mortgage loan that was refinanced (see below) and approximately $2.2 million of recurring
principal payments.
The net cash of approximately $1.4 million provided by financing activities in fiscal 2014 reflected proceeds of
approximately $5.5 million from a mortgage loan and approximately $0.1 million received from the exercise of stock
options, partially offset by: (a) approximately $2.0 million for recurring payments of principal on Griffin’s mortgage
loans; (b) a payment of approximately $1.0 million for a dividend on Griffin’s common stock that was declared in the
fiscal 2013 fourth quarter and paid in fiscal 2014; (c) $1.0 million of mortgage proceeds placed in escrow; and
(d) approximately $0.1 million of payments for debt issuance costs.
30
On November 17, 2016, Griffin closed on a nonrecourse mortgage (the “2016 Webster Mortgage”) for
approximately $26.7 million. The 2016 Webster Mortgage refinanced an existing mortgage with Webster Bank, N.A.
(“Webster”) which was due on September 1, 2025 and was collateralized by 5220 Jaindl (see below). The 2016 Webster
Mortgage is collateralized by the approximately 280,000 square foot industrial/warehouse building, 5220 Jaindl, along
with 5210 Jaindl, the adjacent approximately 252,000 square foot industrial building. Griffin received net proceeds of
$13.0 million (before transaction costs), net of approximately $13.7 million used to refinance the existing mortgage with
Webster. The 2016 Webster Mortgage has a ten year term with monthly principal payments based on a twenty-five year
amortization schedule. The interest rate for the 2016 Webster Mortgage is a floating rate of the one month LIBOR rate
plus 1.70%. At the time the 2016 Webster Mortgage closed, Griffin entered into an interest rate swap agreement with
Webster that, combined with two existing swap agreements with Webster, effectively fixes the rate of the 2016 Webster
Mortgage at 3.79% over the mortgage loan’s ten year term.
On September 1, 2015, Griffin closed on a $14.1 million nonrecourse mortgage loan (the “Webster Mortgage
Loan”) with Webster. The Webster Mortgage Loan was collateralized by 5220 Jaindl. At closing, Griffin received cash
proceeds from the Webster Mortgage Loan (before transaction costs) of $11.5 million. Subsequent to the closing of this
loan, the tenant that was leasing approximately 196,000 square feet in 5220 Jaindl exercised its option to lease the
balance of the building and Webster advanced the balance of the mortgage loan proceeds ($2.6 million) to Griffin on
December 10, 2015. The Webster Mortgage Loan had a floating interest rate of the one month LIBOR rate plus 1.65%,
but Griffin entered into an interest rate swap agreement with Webster Bank at closing to effectively fix the interest rate at
3.77% over the loan term on the loan proceeds received at closing. At the time Griffin received the additional proceeds
of $2.6 million, Griffin entered into a second interest rate swap agreement with Webster to effectively fix the interest rate
on those loan proceeds at 3.67% for the balance of the term of the loan.
On April 26, 2016, Griffin closed on a nonrecourse mortgage (the “2016 PUB Mortgage”) with People’s United
Bank, N.A. (“PUB”) and received mortgage proceeds of $14.35 million, before transaction costs. The 2016 PUB
Mortgage refinanced an existing mortgage (the “2009 PUB Mortgage”) with PUB that was due on August 1, 2019 and
was collateralized by four of Griffin’s NE Tradeport industrial/warehouse buildings totaling approximately 240,000
square feet (14, 15, 16 and 40 International Drive). The 2009 PUB Mortgage had a balance of approximately $7.4
million at the time of the refinancing and a floating interest rate of the one month LIBOR rate plus 3.08%. Griffin had
entered into an interest rate swap agreement with PUB to effectively fix the rate on the 2009 PUB Mortgage at 6.58% for
the term of that loan. The 2016 PUB Mortgage is collateralized by the same four properties as the 2009 PUB Mortgage
along with another approximately 98,000 square foot industrial/warehouse building (35 International Drive) in NE
Tradeport. At the closing of the 2016 PUB Mortgage, Griffin used a portion of the proceeds to repay the 2009 PUB
Mortgage. The 2016 PUB Mortgage has a ten year term with monthly principal payments based on a twenty-five year
amortization schedule. The interest rate for the 2016 PUB Mortgage is a floating rate of the one month LIBOR rate plus
2.0%. At the time the 2016 PUB Mortgage closed, Griffin entered into a second interest rate swap agreement with PUB
that, combined with the existing interest rate swap agreement with PUB, effectively fixes the interest rate of the 2016
PUB Mortgage at 4.17% over the loan term. The terms of the 2016 PUB Mortgage require that if either the tenant that
leases approximately 58,000 square feet in 40 International Drive or the tenant that leases approximately 40,000 square
feet in 14 International Drive does not extend its respective lease when it expires in fiscal 2021, a subsidiary of Griffin
will enter into a master lease of the vacated space. The master lease would be guaranteed by Griffin and be in effect until
either the space is re-leased to a new tenant or the due date of the 2016 PUB Mortgage Loan, whichever occurs first.
On December 31, 2014, Griffin closed on a nonrecourse mortgage loan (the “2025 KeyBank Mortgage”) on
4275 Fritch Drive (“4275 Fritch”) with First Niagara Bank, which was subsequently acquired by KeyBank. The 2025
KeyBank Mortgage refinanced an existing mortgage loan on 4275 Fritch and added 4270 Fritch to the collateral. Griffin
received mortgage proceeds of approximately $10.9 million (before transaction costs) in addition to approximately
$8.9 million used to refinance the existing mortgage on 4275 Fritch. The 2025 KeyBank Mortgage is collateralized by
4270 Fritch, an approximately 303,000 square foot industrial/warehouse building, and 4275 Fritch, an adjacent
approximately 228,000 square foot industrial/warehouse building. At the time of the mortgage closing, approximately
201,000 square feet of 4270 Fritch was leased. On December 11, 2015, Griffin received additional mortgage proceeds of
$1.85 million (the “KeyBank Earn-Out”) when the remaining vacant space of approximately 102,000 square feet was
leased. Griffin agreed that it would enter into a master lease with its subsidiaries that own 4270 Fritch and 4275 Fritch in
order to maintain a minimum net rent equal to the debt service on the 2025 KeyBank Mortgage. The master lease would
be co-terminus with the 2025 KeyBank Mortgage. The 2025 KeyBank Mortgage has a ten year term with monthly
31
principal payments based on a twenty-five year amortization schedule. The interest rate for the 2025 KeyBank Mortgage
is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2025 KeyBank Mortgage closed, Griffin
entered into an interest rate swap agreement that, combined with an existing interest rate swap agreement, effectively
fixed the rate of the 2025 KeyBank Mortgage at 4.43% over the mortgage loan’s ten year term. At the time the KeyBank
Earn-Out was received, Griffin entered into another interest rate swap agreement for a notional principal amount of
$1.85 million to fix the interest rate on the KeyBank Earn-Out at 3.88%. The combination of the three interest rate swap
agreements effectively fixes the interest rate on the 2025 KeyBank Mortgage at 4.39% over the remainder of the
mortgage loan’s ten year term.
On July 29, 2015, a subsidiary of Griffin closed on a new $18.0 million nonrecourse mortgage loan (the “40|86
Mortgage Loan”) with 40|86 Mortgage Capital, Inc. The 40|86 Mortgage Loan is collateralized by three industrial
buildings in NE Tradeport (75 International Drive, 754 and 758 Rainbow Road) aggregating approximately 392,000
square feet, has a fixed interest rate of 4.33% and a fifteen year term, with payments based on a thirty year amortization
schedule. At closing, Griffin received cash proceeds from the 40|86 Mortgage Loan (before financing costs) of
approximately $14.9 million, which were used in refinancing the maturing mortgage that had a principal balance of
approximately $17.9 million and an interest rate of 5.73%. The remaining approximately $3.1 million of mortgage
proceeds were deposited into escrow. As per the terms of the 40|86 Mortgage Loan, $2.5 million of the escrowed
proceeds were released to Griffin in fiscal 2015 when the tenant that was leasing approximately 88,000 square feet on a
month-to-month basis in 754 Rainbow entered into a long-term lease for that space and the remaining $0.6 million of
escrowed proceeds were released to Griffin in fiscal 2016 when tenant improvements for the full building tenant in
758 Rainbow was completed.
On July 22, 2016, Griffin entered into a two-year extension to its revolving credit line with Webster (the
“Webster Credit Line”) that was scheduled to expire on August 1, 2016. The terms of the extension increased the amount
of the credit line from $12.5 million to $15.0 million and Griffin has the option to further extend the credit line for an
additional year provided there is no default at the time such extension is requested. The interest rate on the credit line
extension remained at the one month LIBOR rate plus 2.75% and the collateral for the Webster Credit Line, Griffin’s
eight single-story office/flex buildings aggregating approximately 217,000 square feet in Griffin Center South, an
approximately 48,000 square foot single-story office building in Griffin Center, and an approximately 18,000 square foot
industrial/warehouse building in Griffin Center South also remained the same. There have been no borrowings under the
Webster Credit Line since its inception, however, the Webster Credit Line does secure certain unused standby letters of
credit aggregating approximately $1.8 million that are related to Griffin's development activities.
On March 31, 2016, Griffin’s Board of Directors authorized a program under which Griffin may repurchase up
to $5.0 million in outstanding shares of its common stock over a twelve month period in privately negotiated
transactions. The repurchase program does not obligate Griffin to repurchase any specific number of shares, and may be
suspended at any time at management’s discretion. In fiscal 2016, Griffin repurchased 105,000 shares of its common
stock for approximately $3.4 million. Subsequent to November 30, 2016, Griffin repurchased an additional 19,173
shares of its common stock for approximately $0.6 million, resulting in approximately $1.0 million available for
additional stock repurchases under the current repurchase program.
32
Griffin’s payments (including principal and interest) under contractual obligations as of November 30, 2016 are
as follows:
Total
Due Within Due From Due From Due in More
1 - 3 Years 3 - 5 Years Than 5 Years
One Year
(in millions)
Mortgage Loans . . . . . . . . . . . . . . . . . . $ 147.0 $
Revolving Line of Credit . . . . . . . . . .
Operating Lease Obligations . . . . . . .
Purchase Obligations (1) . . . . . . . . . . .
Other (2) . . . . . . . . . . . . . . . . . . . . . . . .
—
1.2
1.7
4.3
$ 154.2 $
13.9 $
—
0.1
1.7
—
15.7 $
24.2 $
16.0 $
—
0.3
—
—
—
0.2
—
—
24.5 $
16.2 $
92.9
—
0.6
—
4.3
97.8
(1) Includes obligations principally related to the development of Griffin’s real estate assets.
(2) Reflects the liability for Griffin’s non-qualified deferred compensation plan. The timing on the payment of
participant balances in the non-qualified deferred compensation plan is not determinable.
On January 25, 2016, Griffin entered into an Option Purchase Agreement (the “Option Agreement”) whereby
Griffin granted the buyer an exclusive option, in exchange for a nominal fee, to purchase approximately 280 acres of
undeveloped land in Simsbury for approximately $7.7 million. The buyer may extend the option period up to three years
upon payment of additional option fees. Subsequent to November 30, 2016, the buyer paid Griffin to extend the option
period. The land subject to the Option Agreement does not have any of the approvals that would be required for the
buyer’s planned use of the land. A closing on the land sale contemplated by the Option Agreement is subject to several
significant contingencies, including the buyer securing contracts under a competitive bidding process that would require
changes in the use of the land and obtaining local and state approvals for that planned use. There is no guarantee that the
sale of undeveloped land as contemplated under the Option Agreement will be completed under its current terms, or at
all.
On March 23, 2016, Griffin entered into an Agreement of Sale and Purchase (the “East Allen Purchase
Agreement”) to acquire an approximately 31 acre site in East Allen Township, Northampton County, Pennsylvania for
development of an industrial/warehouse building. Subsequently, Griffin exercised its right to terminate the East Allen
Purchase Agreement based on its due diligence findings. After the East Allen Purchase Agreement was terminated,
Griffin has continued negotiations with the seller to reach a new agreement. Completion of a new purchase agreement is
uncertain at this time.
On May 4, 2016, Griffin entered into an Agreement of Sale and Purchase, as amended (the “Macungie Purchase
Agreement”), to acquire, for a purchase price of $1.8 million, an approximately 14 acre site in Upper Macungie
Township, Lehigh County, Pennsylvania for development of an approximately 134,000 square foot industrial/warehouse
building. A closing on the land acquisition contemplated by the Macungie Purchase Agreement is subject to several
significant contingencies, including Griffin obtaining all governmental approvals for its planned development of the land
that would be acquired. There is no guarantee that the land acquisition as contemplated under the Macungie Purchase
Agreement will be completed under its current terms, or at all.
On December 23, 2016, Griffin entered into an agreement to sell approximately 67 acres of its undeveloped
land in Phoenix Crossing for approximately $10.25 million. Completion of this transaction is subject to a number of
factors, including the buyer obtaining all necessary final permits from governmental authorities for development plans of
the site it would acquire and the buyer receiving municipal and state economic development incentives it deems
adequate. There is no guarantee that this transaction will be completed under its current terms, or at all.
On January 20, 2017, Griffin agreed to terms on a nonrecourse mortgage loan of up to $12.0 million on two NE
Tradeport industrial/warehouse buildings aggregating approximately 275,000 square feet. Completion of this proposed
new mortgage loan is subject to a number of contingencies, including the entry into a definitive loan agreement. There is
no guarantee that this transaction will be completed under its current terms, or at all.
In the near-term, Griffin plans to continue to invest in its real estate business, including the construction of
additional buildings on its undeveloped land, expenditures for tenant improvements as new leases are signed,
33
infrastructure improvements required for future development of its real estate holdings and the potential acquisition of
additional properties and/or undeveloped land parcels in New England, the Mid-Atlantic states and other areas to expand
the industrial/warehouse portion of its real estate portfolio. Real estate acquisitions may or may not occur based on many
factors, including real estate pricing. Griffin may commence speculative construction projects on its undeveloped land
that is either currently owned or acquired in the future if it believes market conditions are favorable for such
development. Griffin may also construct a build-to-suit facility on its undeveloped land if lease terms are favorable.
As of November 30, 2016, Griffin had cash and cash equivalents of approximately $24.7 million. Management
believes that its cash and cash equivalents as of November 30, 2016, cash generated from operations, and borrowing
capacity under its $15.0 million revolving credit agreement with Webster will be sufficient to meet its working capital
requirements, the continued investment in real estate assets, completion of the acquisition of undeveloped land in Upper
Macungie Township, the repurchase of its common stock under the stock repurchase program currently in place, and the
payment of dividends on its common stock, when and if declared by the Board of Directors, for at least the next twelve
months. Griffin may also continue to seek additional financing secured by nonrecourse mortgage loans on its properties.
Griffin’s real estate portfolio currently includes four Connecticut buildings aggregating approximately 314,000 square
feet that are not mortgaged, however, Griffin has agreed to terms for a nonrecourse mortgage loan on two of those
buildings that combined are approximately 275,000 square feet. Completion of this proposed new mortgage loan is
subject to a number of contingencies, including the entry into a definitive loan agreement. There is no guarantee that this
transaction will be completed under its current terms, or at all.
Forward-Looking Information
The above information in Management’s Discussion and Analysis of Financial Condition and Results of
Operations includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act of 1934, as amended. These forward-looking statements include, but are
not limited to, Griffin’s expectations regarding the leasing of currently vacant space, the acquisition of additional
properties and/or undeveloped land parcels, the commencement of speculative construction, the ability to obtain
mortgage financing on Griffin’s unleveraged properties, completion of the acquisition of land in Upper Macungie
Township, completion of a new agreement to acquire land in East Allen Township, completion of the sale of
approximately 280 acres of undeveloped land in Simsbury, completion of the sale of approximately 67 acres of
undeveloped land in Phoenix Crossing, completion of a mortgage loan on two NE Tradeport buildings aggregating
approximately 275,000 square feet, Griffin’s anticipated future liquidity, and other statements with the words “believes,”
“anticipates,” “plans,” “expects” or similar expressions. Although Griffin believes that its plans, intentions and
expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans,
intentions or expectations will be achieved. The forward-looking statements made herein are based on assumptions and
estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business,
economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin.
Griffin’s actual results could differ materially from those anticipated in these forward-looking statements as a result of
various important factors, including those set forth under the heading Item 1A “Risk Factors” and elsewhere in this
Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative,
caused by fluctuations in interest rates, foreign exchange rates and equity prices. Changes in these factors could cause
fluctuations in earnings and cash flows.
For fixed rate mortgage debt, changes in interest rates generally affect the fair market value of the debt
instrument, but not earnings or cash flows. Griffin does not have an obligation to prepay any fixed rate debt prior to
maturity and, therefore, interest rate risk and changes in the fair market value of fixed rate debt should not have a
significant impact on earnings or cash flows until such debt is refinanced, if necessary. Griffin’s mortgage interest rates
and related principal payment requirements are described in Note 5 to the consolidated financial statements included in
Item 8. “Financial Statements and Supplementary Data.”
For variable rate debt, changes in interest rates generally do not impact the fair market value of the debt
instrument, but do affect future earnings and cash flows. As of November 30, 2016, Griffin had a total of approximately
34
$81.6 million of variable rate debt outstanding, for which Griffin has entered into interest rate swap agreements which
effectively fix the interest rates on that debt. There were no other variable rate borrowings outstanding as of
November 30, 2016.
Griffin is exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the
market values of Griffin’s cash equivalents. These investments generally consist of overnight investments that are not
significantly exposed to interest rate risk.
Griffin does not have foreign currency exposure in operations. However, Griffin does have an investment in a
public company, Centaur Media plc, based in the United Kingdom. The ultimate liquidation of that investment and
conversion of proceeds into United States currency is subject to future foreign currency exchange rates involving the UK
pound sterling. A 10% decrease in the foreign currency exchange rate at November 30, 2016 would have resulted in an
approximately $0.1 million reduction of the fair value of that investment.
35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
GRIFFIN INDUSTRIAL REALTY, INC.
Consolidated Balance Sheets
(dollars in thousands, except per share data)
ASSETS
Real estate assets at cost, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Real estate held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds held in escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
172,260 $
2,992
24,689
4,984
3,535
977
14,186
223,623 $
166,455
1,418
18,271
5,838
—
1,970
14,098
208,050
Nov. 30, 2016
Nov. 30, 2015
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans, net of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies
Stockholders' Equity
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 5,541,029
shares issued and 5,047,708 and 5,152,708 shares outstanding, respectively . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 493,321 and 388,321 shares, respectively . . . . . . . . . . . . . . . .
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
109,697 $
9,526
4,140
1,514
7,943
132,820
89,185
10,790
3,348
1,546
8,372
113,241
55
108,438
179
(1,049)
(16,820)
90,803
223,623 $
55
108,188
1,117
(1,085)
(13,466)
94,809
208,050
See Notes to Consolidated Financial Statements.
36
GRIFFIN INDUSTRIAL REALTY, INC.
Consolidated Statements of Operations
(dollars in thousands, except per share data)
For the Fiscal Years Ended
Nov. 30, 2016 Nov. 30, 2015 Nov. 30, 2014
Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Revenue from property sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,487 $
4,364
30,851
24,605 $
3,483
28,088
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses of rental properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs related to property sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,797
8,250
810
7,367
25,224
7,668
8,415
634
7,057
23,774
20,552
3,667
24,219
6,729
7,801
803
7,077
22,410
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,627
4,314
1,809
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of common stock in Centaur Media plc . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations, net of tax:
Income from landscape nursery business, net of tax, including loss on
(4,545)
122
107
—
—
1,311
(735)
576
(3,670)
—
161
—
—
805
(380)
425
(3,529)
—
301
318
(51)
(1,152)
(96)
(1,248)
sale of assets of $28, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
576 $
—
425 $
144
(1,104)
Basic net income (loss) per common share:
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . $
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic net income (loss) per common share . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.11 $
—
0.11 $
0.08 $
—
0.08 $
(0.24)
0.03
(0.21)
Diluted net income (loss) per common share:
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . $
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted net income (loss) per common share . . . . . . . . . . . . . . . . . . . . . . . . $
0.11 $
—
0.11 $
0.08 $
—
0.08 $
(0.24)
0.03
(0.21)
See Notes to Consolidated Financial Statements.
37
GRIFFIN INDUSTRIAL REALTY, INC.
Consolidated Statements of Comprehensive Income (Loss)
(dollars in thousands)
For the Fiscal Years Ended
Nov. 30, 2016 Nov. 30, 2015 Nov. 30, 2014
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
576 $
425 $
(1,104)
Other comprehensive income (loss), net of tax:
Reclassifications included in net income (loss) . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase in fair value of Centaur Media plc . . . . . . . . . . . . . . . . .
Unrealized loss on cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income (loss), net of tax . . . . . . . . . . . . . . . . . . .
Total comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
856
(646)
(174)
36
612 $
778
30
(1,058)
(250)
175 $
124
185
(695)
(386)
(1,490)
See Notes to Consolidated Financial Statements.
38
GRIFFIN INDUSTRIAL REALTY, INC.
Consolidated Statements of Changes in Stockholders’ Equity
For the Fiscal Years Ended November 30, 2016, November 30, 2015 and November 30, 2014
(dollars in thousands)
Shares of
Additional
Common Stock Common
Issued
5,534,687 $
Stock
Paid-in Retained
Capital Earnings
Accumulated Other
Comprehensive
Income (Loss)
Treasury
Stock
Total
55 $ 107,603 $ 4,372 $
(449) $ (13,466) $ 98,115
3,208
—
—
—
—
5,537,895
3,134
—
—
—
—
5,541,029
—
—
—
—
—
—
5,541,029 $
—
—
—
—
—
55
—
—
—
—
—
55
—
—
—
—
76
208
—
—
—
107,887
—
—
(1,030)
—
(1,104)
2,238
71
230
—
—
—
108,188
—
—
—
(1,546)
—
425
1,117
—
(17)
267
—
—
—
(1,514)
—
—
55 $ 108,438 $
—
—
—
576
179 $
—
—
—
(386)
—
(835)
—
—
—
—
—
(13,466)
76
208
(1,030)
(386)
(1,104)
95,879
—
—
—
(250)
—
(1,085)
—
—
—
—
—
—
(13,466)
(3,354)
71
230
(1,546)
(250)
425
94,809
(3,354)
—
—
—
—
—
—
(17)
267
(1,514)
36
—
36
576
(1,049) $ (16,820) $ 90,803
—
—
Balance at November 30, 2013 . . . . . . . . .
Exercise of stock options, net of reversal of
tax benefit on exercised stock options of
$4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . .
Dividend declared, $0.20 per share . . . . . .
Total other comprehensive loss, net of tax .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at November 30, 2014 . . . . . . . . .
Exercise of stock options, net of reversal of
tax benefit on exercised stock options of
$9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . .
Dividend declared, $0.30 per share . . . . . .
Total other comprehensive loss, net of tax .
Net income . . . . . . . . . . . . . . . . . . . . . . . .
Balance at November 30, 2015 . . . . . . . . .
Repurchase of common stock . . . . . . . . . .
Reversal of tax benefit on forfeited stock
options . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . .
Dividend declared, $0.30 per share . . . . . .
Total other comprehensive income, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . .
Balance at November 30, 2016 . . . . . . . . .
See Notes to Consolidated Financial Statements.
39
GRIFFIN INDUSTRIAL REALTY, INC.
Consolidated Statements of Cash Flows
(dollars in thousands)
For the Fiscal Years Ended
Nov. 30, 2016 Nov. 30, 2015 Nov. 30, 2014
576 $
425 $
—
576
—
425
Operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile income (loss) from continuing operations to net cash
provided by operating activities of continuing operations:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of discount on note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of common stock in Centaur Media plc . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities of continuing operations . . . . . . . . . . . . . .
Net cash provided by operating activities of discontinued operations . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,797
(3,554)
785
267
283
(122)
—
—
—
59
337
(656)
445
7,217
—
7,217
Investing activities:
Additions to real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of properties, net of expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from property sales (deposited in) returned from escrow, net . . . . . . . . . .
Deferred leasing costs and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from collection of note receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of common stock in Centaur Media plc . . . . . . . . . . . . . . . . . .
Proceeds from sale of business, net of expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,734)
3,536
(3,536)
(890)
—
—
—
(16,624)
7,668
(2,849)
297
230
226
—
(49)
—
—
1,124
475
4,924
490
12,961
—
12,961
(31,188)
994
—
(1,011)
1,500
—
—
(29,705)
Financing activities:
Proceeds from mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage proceeds returned from (deposited in) escrow . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
45,525
(24,822)
(3,354)
(1,546)
(578)
600
—
15,825
6,418
18,271
24,689 $
40,391
(20,123)
—
(1,030)
(762)
(600)
80
17,956
1,212
17,059
18,271 $
See Notes to Consolidated Financial Statements.
40
(1,104)
(144)
(1,248)
6,729
(2,864)
123
338
259
—
(165)
51
(318)
(631)
(276)
2,987
329
5,314
39
5,353
(15,583)
554
8,864
(1,171)
2,750
566
169
(3,851)
5,477
(2,017)
—
(1,029)
(133)
(1,000)
80
1,378
2,880
14,179
17,059
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements
(dollars in thousands unless otherwise noted, except per share data)
1. Summary of Significant Accounting Policies
Basis of Presentation
Griffin Industrial Realty, Inc. (“Griffin”) is a real estate business principally engaged in developing, managing
and leasing industrial and commercial properties. Griffin also seeks to add to its property portfolio through the
acquisition and development of land or purchase of buildings. Periodically, Griffin may sell certain portions of its
undeveloped land that it has owned for an extended time period and the use of which is not consistent with Griffin’s core
development and leasing strategy. Prior to May 13, 2015, Griffin was known as Griffin Land & Nurseries, Inc. Griffin
changed its name to better reflect its ongoing real estate business after the sale in fiscal 2014 of the landscape nursery
business that Griffin had operated through its wholly owned subsidiary, Imperial Nurseries, Inc. (“Imperial”).
Imperial was engaged in growing landscape nursery plants in containers for sale to independent retail garden
centers and rewholesalers, whose main customers are landscape contractors. Imperial's operations through January 8,
2014 are reflected in the accompanying consolidated financial statements as a discontinued operation due to the sale of
its inventory and certain of its assets (the “Imperial Sale”) to Monrovia Connecticut LLC (“Monrovia”), a subsidiary of
Monrovia Nursery Company (see Note 10). All intercompany transactions have been eliminated.
Fiscal Year
Griffin reports on a twelve month fiscal year that ends on November 30.
Real Estate Assets
Real estate assets are recorded at cost, except when real estate assets are acquired that meet the definition of a
business combination in accordance with Financial Accounting Standards Board (“FASB”) ASC 805-10, “Business
Combinations,” and are recorded at fair value. Interest, property taxes, insurance and other incremental costs (including
salaries) directly related to a project are capitalized during the construction period of major facilities and land
improvements. The capitalization period begins when activities to develop the parcel commence and ends when the asset
constructed is completed. The capitalized costs are recorded as part of the asset to which they relate and are amortized
over the asset's useful life. Depreciation is determined on a straight-line basis over the estimated useful asset lives for
financial reporting purposes and principally on accelerated methods for tax purposes. Repair and maintenance costs are
expensed as incurred.
Griffin classifies a property as “held for sale” when all of the following criteria for a plan of sale have been met:
(1) management, having the authority to approve the action, commits to a plan to sell the property; (2) the property is
available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) an active
program to locate a buyer and other actions required to complete the plan to sell, have been initiated; (4) the sale of the
property is probable and is expected to be completed within one year or the property is under a contract to be sold; (5)
the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6)
actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale.”
Depreciation of assets ceases upon designation of a property as “held for sale.”
Cash and Cash Equivalents
Griffin considers all highly liquid investments with an initial maturity of three months or less at the date of
purchase to be cash equivalents. At November 30, 2016 and 2015, $22,409 and $15,269, respectively, of the cash and
cash equivalents included on Griffin's consolidated balance sheets were held in cash equivalents.
41
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Investments
Griffin's investment in the common stock of Centaur Media plc (“Centaur Media”) is accounted for as an
available-for-sale security under FASB ASC 320-10, “Investments – Debt and Equity Securities” (“ASC 320-10”),
whereby increases or decreases in the fair value of this investment, net of income taxes, along with the effect of changes
in the foreign currency exchange rate, net of income taxes, are recorded as a component of other comprehensive income
(loss). Realized gains and losses on sales of available-for-sale securities are determined based on the average cost
method. Griffin is required to adopt FASB Accounting Standards Update No. 2016-01, “Financial Instruments –
Overall” (“ASU 2016-01”) in fiscal 2019. Upon adoption, the increases or decreases in the fair value of available-for-
sale securities will no longer be reflected as a component of other comprehensive income, but will be recognized through
net income (see Recent Accounting Pronouncements below).
Stock-Based Compensation
Griffin accounts for stock options at fair value in accordance with FASB ASC 718, “Compensation - Stock
Compensation” and FASB ASC 505-50, “Equity – Equity-Based Payments to Non-Employees.” For stock options that
have graded vesting features, Griffin recognizes compensation cost over the requisite service period separately for each
tranche of the award as though they were, in substance, multiple awards. Griffin determines its accumulated windfall tax
benefits using the short-cut method.
Postretirement Benefits
In fiscal 2014, Griffin terminated its postretirement benefit program (see Note 7). Griffin had accounted for
postretirement benefits in accordance with FASB ASC 715-10, “Compensation – Retirement Benefits” (“ASC 715-10”).
This guidance requires an employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the changes occur through other comprehensive income.
This guidance also requires an employer to measure the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions.
Impairment of Investments in Long-Lived Assets
Griffin reviews annually, as well as when conditions may indicate, its long-lived assets to determine if there are
indicators of impairment, such as a prolonged vacancy in one of its properties. If indicators of impairment are present,
Griffin evaluates the carrying value of the assets in relation to the operating performance and expected future
undiscounted cash flows or the estimated fair value based on expected future cash flows of the underlying assets. If the
undiscounted cash flows are less than the carrying value of an asset, Griffin would reduce the carrying value of a long-
lived asset to its fair value if that asset’s fair value is determined to be less than its carrying value.
Griffin also reviews annually, as well as when conditions may indicate, the recoverability of its development
costs, including expected remediation costs on projects that are included in real estate assets. To the extent that the
carrying value exceeds the fair value of a project, including development costs, an impairment loss would be recorded.
There were no impairment losses recorded in the fiscal years ended November 30, 2016, 2015 and 2014.
Revenue and Gain Recognition
Revenue includes rental revenue from Griffin's industrial and commercial properties and proceeds from
property sales. Rental revenue is accounted for on a straight line basis over the applicable lease term in accordance with
FASB ASC 840-10, “Leases.” Gains on property sales are recognized in accordance with FASB ASC 360-20, “Property,
42
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Plant, and Equipment – Real Estate Sales,” based on the specific terms of each sale. When the percentage of completion
method is used to account for a sale of real estate, costs included in determining the percentage of completion include the
costs of the land sold, allocated master planning costs, selling and transaction costs and estimated future costs related to
the land sold.
The growing operations of the landscape nursery business are reflected as a discontinued operation in the
consolidated statements of operations.
Income Taxes
Griffin provides for income taxes utilizing the asset and liability method, and records deferred tax assets and
liabilities based on the difference between the financial statement and tax bases of assets and liabilities as measured by
the tax rates that are anticipated to be in effect when these differences reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date.
A valuation allowance is established when it is necessary to reduce deferred tax assets to amounts for which realization
is more likely than not. Griffin and its subsidiaries file a consolidated federal income tax return.
Griffin evaluates each tax position taken in its tax returns and recognizes a liability for any tax position deemed
less likely than not to be sustained under examination by the relevant taxing authorities. Griffin has analyzed its federal
and significant state filing positions with respect to FASB ASC 740-10, “Income Taxes” (“ASC 740-10”). Griffin
believes that its income tax filing positions will be sustained on examination and does not anticipate any adjustments that
would result in a material change on its financial statements. As a result, no accrual for uncertain income tax positions
has been recorded pursuant to ASC 740-10.
Griffin’s policy for recording interest and penalties, related to uncertain tax positions, is to record such items as
part of its provision for federal and state income taxes.
Intangible Assets
Griffin accounts for intangible assets in accordance with FASB ASC 350-10 “Intangibles - Goodwill and
Other.” Griffin's intangible assets consist of: (i) the value of in-place leases; and (ii) the value of the associated
relationships with tenants. These intangible assets were recorded in connection with Griffin’s acquisitions of real estate
assets. Amortization of the value of in-place leases, included in depreciation and amortization expense, is on a straight-
line basis over the lease terms. Amortization of the value of customer relationships with tenants, included in depreciation
and amortization expense, is on a straight-line basis over the lease terms and anticipated renewal periods.
Environmental Matters
Environmental expenditures related to land and buildings are expensed or capitalized as appropriate, depending
upon their future economic benefit. Expenditures that relate to an existing condition caused by past operations, and that
do not have future economic benefit, are expensed. Expenditures that create future benefit or contribute to future revenue
generation are capitalized. Liabilities related to future remediation costs are recorded when environmental assessments
and/or cleanups are probable, and the costs can be reasonably estimated.
Interest Rate Swap Agreements
As of November 30, 2016, Griffin was a party to several interest rate swap agreements to hedge its interest rate
exposures. Griffin does not use derivatives for speculative purposes. Griffin applies FASB ASC 815-10, “Derivatives
and Hedging,” (“ASC 815-10”) as amended, which establishes accounting and reporting standards for derivative
43
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
instruments and hedging activities. ASC 815-10 requires Griffin to recognize all derivatives as either assets or liabilities
on its consolidated balance sheet and measure those instruments at fair value. The changes in the fair values of the
interest rate swap agreements are measured in accordance with ASC 815-10 and reflected in the carrying values of the
interest rate swap agreements on Griffin’s consolidated balance sheet. The estimated fair values are based primarily on
projected future swap rates.
Griffin applies cash flow hedge accounting to its interest rate swap agreements that are designated as hedges of
the variability of future cash flows from floating rate liabilities based on benchmark interest rates. The changes in fair
values of Griffin’s interest rate swap agreements are recorded as components of accumulated other comprehensive
income (loss) (“AOCI”) in stockholders’ equity, to the extent they are effective. Any ineffective portions of the changes
in fair values of these instruments would be recorded as interest expense or interest income.
Conditional Asset Retirement Obligations
Griffin accounts for its conditional asset retirement obligations in accordance with FASB ASC 410-10, “Asset
Retirement and Environmental Obligations,” which requires an entity to recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value can be reasonably estimated even though uncertainty exists about
the timing and/or method of settlement. The conditional asset retirement obligations relate principally to tobacco barns
and other structures on Griffin’s land holdings that contain asbestos, primarily in roofing materials. These structures
remain from the tobacco growing operations of former affiliates of Griffin, are not material to Griffin’s operations and
do not have any book value.
Treasury Stock
Treasury stock is recorded at cost as a reduction of stockholders’ equity on Griffin’s consolidated balance
sheets.
Income (Loss) Per Share
Basic income (loss) per common share is calculated by dividing income (loss) from continuing operations and
discontinued operations by the weighted average number of common shares outstanding during the year. The calculation
of diluted income (loss) per common share reflects adjusting Griffin’s outstanding shares assuming the exercise of all
potentially dilutive Griffin stock options.
Risks and Uncertainties
Griffin’s future results of operations involve a number of risks and uncertainties. Factors that could affect
Griffin’s future operating results and cause actual results to vary materially from historical results include, but are not
limited to, the geographical concentration of Griffin’s real estate holdings, credit risk and market risk.
Griffin's real estate holdings are concentrated in the Hartford, Connecticut area and in the Lehigh Valley of
Pennsylvania. The market and economic challenges experienced by the U.S. economy as a whole or the local economic
conditions in the markets in which Griffin holds properties may affect Griffin’s real estate business. Griffin’s results of
operations, financial condition or ability to expand may be adversely affected as a result of: (i) poor economic conditions
or unfavorable financial changes to Griffin’s tenants, which may lead to a curtailment of expansion plans or may result in
tenant defaults under leases; (ii) significant job losses, which could adversely affect the demand for rental space causing
market rental rates and property values to be negatively impacted; (iii) the ability of Griffin to borrow on terms and
conditions that it finds acceptable; and (iv) possibly reduced values of Griffin’s properties potentially limiting the
proceeds from a sale of its properties or from debt financing collateralized by its properties.
44
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Griffin conducts business based on evaluations of its prospective tenants’ financial condition and generally does
not require collateral. These evaluations require significant judgment and are based on multiple sources of information.
Griffin does not use derivatives for speculative purposes. Griffin applies ASC 815-10, which established
accounting and reporting standards for derivative instruments and hedging activities. This accounting guidance requires
Griffin to recognize all derivatives as either assets or liabilities on its consolidated balance sheet and to measure those
instruments at fair value. The estimated fair value is based primarily on projected future swap rates.
Griffin applies cash flow hedge accounting to its interest rate swap agreements designated as hedges of the
variability of future cash flows from floating rate liabilities due to the benchmark interest rates. Changes in the fair value
of these interest rate swaps are recorded as a component of AOCI in stockholders’ equity, to the extent they are effective.
Amounts recorded to AOCI are then reclassified to interest expense as interest on the hedged borrowing is recognized.
Any ineffective portion of the change in fair value of these instruments would be recorded to interest expense.
Griffin’s cash equivalents consist of overnight investments that are not significantly exposed to interest rate
risk.
Reclassifications
Certain prior year balances have been reclassified to conform to the current year’s presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and revenue
and expenses during the periods reported. Actual results could differ from those estimates. Griffin’s significant estimates
include the impairment evaluation of long-lived assets, deferred income taxes, derivative financial instruments, revenue
and gain recognition including the estimated costs to complete required offsite improvements related to land sold and
assumptions used in determining stock compensation.
Recent Accounting Pronouncements
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, “Compensation – Stock
Compensation: Improvements to Employee Share-Based Payment Accounting,” which relates to the accounting for
employee share-based payments. This Update addresses several aspects of the accounting for share-based payment
award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and
(c) classification on the statement of cash flows. This Update will become effective for Griffin in fiscal 2018. Early
adoption is allowed, but all of the guidance must be adopted in the same period. Griffin is evaluating the impact that the
application of this Update will have on its consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, “Leases,” which establishes a
right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all
leases with terms longer than twelve months. The accounting applied by lessors under this Update is largely unchanged
from that applied under current U.S. GAAP. Leases will be either classified as finance or operating, with classification
affecting the pattern of expense recognition in the income statement. This Update also requires significant additional
disclosures about the amount, timing and uncertainty of cash flows from leases. This Update will become effective for
Griffin in fiscal 2020 using a modified restatement approach for leases in effect as of and after the date of adoption.
Early adoption and practical expedients to measure the effect of adoption will also be allowed. Griffin is evaluating the
impact that the application of this Update will have on its consolidated financial statements.
45
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
In January 2016, the FASB issued ASU 2016-01, “Financial Instruments - Overall,” which requires all equity
investments to be measured at fair value with changes in the fair value recognized through net income (other than those
accounted for under the equity method of accounting or those that result in consolidation of the investee). ASU 2016-01
also requires an entity to present separately in other comprehensive income the portion of the total change in the fair
value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure
the liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 eliminates the
requirement for an entity to disclose the methods and significant assumptions used to estimate the fair value that is
required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business
entities. In addition, entities must assess the need for a valuation allowance on a deferred tax asset related to available-
for-sale securities in combination with the entity's other deferred tax assets. ASU 2016-01 will be effective for Griffin in
fiscal 2019. Early adoption is permitted for certain provisions. Upon adoption, changes in the fair value of Griffin’s
available-for-sale securities will be recognized through net income.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, “Interest-Imputation of Interest,”
(“ASU 2015-03”) which requires that debt issuance costs related to a recognized liability be presented on the balance
sheet as a direct reduction from the carrying amount of the associated debt liability, consistent with debt discounts. The
guidance must be applied on a retrospective basis and was adopted by Griffin in the fiscal 2016 fourth quarter. The
adoption of this guidance required Griffin to reclassify its debt issuance costs on nonrecourse mortgage loans from other
assets to mortgage debt on its statement of financial position but did not have an impact on Griffin's results of operations.
The effect of the reclassification on Griffin’s statement of financial position is quantified in Note 5.
In August 2015, the FASB issued Accounting Standards Update No. 2015-15, “Interest-Imputation of Interest:
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements -
Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting,” which addresses
line-of-credit arrangements that were omitted from ASU 2015-03 (see above). This Update states that the SEC staff
would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an
asset and subsequently amortizing those costs ratably over the term of the arrangement, regardless of whether there are
any outstanding borrowings on the line-of-credit arrangement. Griffin adopted this Update in the 2016 fourth quarter.
The adoption of this guidance did not have an impact on Griffin's consolidated financial statements.
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with
Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue arising from
contracts with customers and supersedes most current revenue recognition guidance, including industry specific
guidance. This standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the
transfer of promised goods or services to customers. Additionally, the Update requires improved disclosures to help
users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized.
The Update permits the use of either the retrospective or cumulative effect transition method. This Update will be
effective for Griffin in fiscal 2019 and early adoption is not permitted. Certain aspects of this new standard may affect
revenue recognition of Griffin. Griffin is evaluating the impact that the application of this Update will have on its
consolidated financial statements.
2. Fair Value
Griffin applies the provisions of FASB ASC 820, “Fair Value Measurement” (“ASC 820”), which establishes a
fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is
based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of
inputs that may be used to measure fair value, as follows:
46
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Level 1 applies to assets or liabilities for which there are quoted market prices in active markets for identical
assets or liabilities. Griffin’s available-for-sale securities are considered Level 1 within the fair value hierarchy.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1
that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active
markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which significant inputs are observable or can be derived
principally from, or corroborated by, observable market data. Level 2 assets and liabilities include Griffin's
interest rate swap derivatives (see Note 5). These inputs are readily available in public markets or can be
derived from information available in publicly quoted markets, therefore, Griffin has categorized these
derivative instruments as Level 2 within the fair value hierarchy.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that
are significant to the measurement of the fair value of the assets or liabilities.
During fiscal 2016, Griffin did not transfer any assets or liabilities in or out of Levels 1 and 2. The following are
Griffin’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:
November 30, 2016
Quoted Prices in Significant Significant
Active Markets for Observable Unobservable
Identical Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
Marketable equity securities . . . . . . . . . . . . . . . . . . . . $
Interest rate swap asset . . . . . . . . . . . . . . . . . . . . . . . . $
Interest rate swap liabilities . . . . . . . . . . . . . . . . . . . . $
— $
977 $
— $
207 $
— $ 1,892 $
—
—
—
November 30, 2015
Quoted Prices in Significant Significant
Active Markets for Observable Unobservable
Identical Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
Marketable equity securities . . . . . . . . . . . . . . . . . . . . $
Interest rate swap liabilities . . . . . . . . . . . . . . . . . . . . $
1,970 $
— $
— $ 2,766 $
—
—
The carrying and estimated fair values of Griffin’s financial instruments are as follows:
Fair Value
Hierarchy Carrying
Level
Value
November 30, 2015
Carrying
Estimated
Fair Value Value
Estimated
Fair Value
November 30, 2016
Financial assets:
Cash and cash equivalents . . . . .
Marketable equity securities . . .
Interest rate swap . . . . . . . . . . . .
Financial liabilities:
Mortgage loans . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . .
1
1
2
2
2
$ 24,689 $ 24,689 $ 18,271 $ 18,271
1,970
—
1,970
—
977
207
977
207
$ 109,697 $ 111,103 $ 89,185 $ 90,155
2,766
1,892
1,892
2,766
The amounts included in the financial statements for cash and cash equivalents, lease receivables from tenants
and accounts payable and accrued liabilities approximate their fair values because of the short-term maturity of these
instruments. The fair values of the available-for-sale securities are based on quoted market prices. The fair values of the
mortgage loans are estimated based on current rates offered to Griffin for similar debt of the same remaining maturities
47
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
and, additionally, Griffin considers its credit worthiness in determining the fair value of its mortgage loans. The fair
values of the interest rate swaps (used for purposes other than trading) are determined based on discounted cash flow
models that incorporate the cash flows of the derivatives as well as the current OIS rate and swap curve along with other
market data, taking into account current interest rates and the credit worthiness of the counterparty for assets and the
credit worthiness of Griffin for liabilities.
3. Real Estate Assets
Real estate assets consist of:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land improvements . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . .
Tenant improvements . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . .
Estimated
Useful Lives
10 to 30 years
10 to 40 years
Shorter of useful
life or terms of
related lease
3 to 20 years
Nov. 30, 2016 Nov. 30, 2015
17,895 $ 18,157
$
22,440
27,592
149,111
164,353
21,925
11,022
1,659
14,615
259,061
(86,801)
19,611
11,810
10,240
15,870
247,239
(80,784)
$ 172,260 $ 166,455
Total depreciation expense and capitalized interest related to real estate assets were as follows:
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $
November 30, November 30, November 30,
2015
6,539 $
2014
5,747
7,768 $
2016
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
274 $
777 $
580
On September 22, 2016, Griffin closed on the previously contracted sale of approximately 29 acres of an
approximately 45 acre land parcel in Griffin Center in Bloomfield, Connecticut for cash proceeds of $3,756 and a pretax
gain of $3,174. An additional approximately 15 acres of that land parcel, much of which is wetlands with very limited
development potential, was donated to an affiliate of the purchaser at the time of the closing. Griffin retained
approximately one acre, which is adjacent to other undeveloped land owned by Griffin. The net cash proceeds from the
sale of $3,536 were placed in escrow for the potential acquisition of a replacement property as part of a Section 1031
like-kind exchange for income tax purposes. If a replacement property is not purchased with the proceeds from this land
sale within the time frame required under IRS regulations regarding Section 1031 like-kind exchanges, the proceeds
placed in escrow would be returned to Griffin.
The farm in Quincy, Florida (the “Florida Farm”) that had been used by Imperial prior to being shut down in
fiscal 2009 was leased to a private company grower of landscape nursery products from fiscal 2009 until April 30, 2016.
In the 2015 second quarter, that tenant gave notice of its intent to exercise the purchase option for the Florida Farm under
the terms of its lease for approximately $4,100. On June 1, 2015, Griffin received a deposit of $400 as required under the
terms of the lease agreement. In August 2015, that tenant informed Griffin that it would not close on the purchase of the
Florida Farm. Imperial and the tenant subsequently entered into a Holdover and Settlement Agreement (the
“Agreement”) which permitted the tenant to continue to lease the Florida Farm at an agreed upon rental rate through
48
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
April 30, 2016. The Agreement also stipulated that Imperial was entitled to retain the deposit against the purchase price
made by the tenant when it exercised its option to purchase the Florida Farm; therefore, the $400 deposit is reflected as
revenue from property sales in Griffin's fiscal 2015 consolidated statement of operations. Subsequent to that lease
expiration, Griffin entered into a three year lease of the Florida Farm with a new tenant that includes an option for the
new tenant to purchase the Florida Farm for a purchase price between $3.4 million and $3.9 million depending upon the
date of sale.
In the 2013 fourth quarter, Griffin completed the sale of approximately 90 acres of undeveloped land for $8,968
in cash, before transaction costs (the “Windsor Land Sale”). The land sold is located in Windsor, Connecticut and is part
of an approximately 268 acre parcel of undeveloped land that straddles the town line between Windsor and Bloomfield,
Connecticut. Approximately 15 acres of that land parcel was donated to the town of Windsor, Connecticut subsequent to
the closing. Under the terms of the Windsor Land Sale, Griffin and the buyer were each required to construct roadways
connecting the land parcel sold with existing town roads. Once completed, the roads constructed by the buyer and the
road being constructed by Griffin will become new town roads, thereby providing public access to the remaining acreage
in Griffin’s land parcel. As a result of Griffin's continuing involvement with the land sold, the Windsor Land Sale is
being accounted for under the percentage of completion method. Accordingly, the revenue and pretax gain on the sale
are being recognized on a pro rata basis in a ratio equal to the percentage of the total costs incurred to the total
anticipated costs of sale, including the costs of the required roadwork. Costs included in determining the percentage of
completion include the cost of the land sold, allocated master planning costs and the cost of road construction. At the
closing of the Windsor Land Sale, cash proceeds of $8,860 were placed in escrow for the potential purchase of a
replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended (the
“IRC”). The proceeds placed in escrow were returned to Griffin in the second quarter of fiscal 2014, as a replacement
property was not acquired.
As of November 30, 2016, approximately 99% of the total costs related to the Windsor Land Sale have been
incurred; therefore, from the date of the Windsor Land Sale through November 30, 2016, approximately 99% of the total
revenue and pretax gain on the sale have been recognized in Griffin's consolidated statements of operations. Griffin’s
consolidated statement of operations for fiscal 2016 includes revenue of $608 and a pretax gain of $380 from the
Windsor Land Sale. Griffin's consolidated statement of operations for fiscal 2015 included revenue of $2,483 and a
pretax gain of $1,880 from the Windsor Land Sale. Griffin's consolidated statement of operations for fiscal 2014
included revenue of $3,105 and a pretax gain of $2,358 from the Windsor Land Sale. Griffin's consolidated statement of
operations for fiscal 2013 included revenue of $2,668 and a pretax gain of $1,990 from the Windsor Land Sale. The
balance of the revenue and pretax gain on sale will be recognized when the remaining costs are incurred, which is
expected to take place in fiscal 2017. Included on Griffin’s consolidated balance sheet as of November 30, 2016, is
deferred revenue of $104 that will be recognized as the remaining costs are incurred. The total pretax gain on the
Windsor Land Sale is expected to be approximately $6,686 after all revenue is recognized and all costs are incurred. In
the fiscal 2016 second quarter, Griffin increased its estimate of the total costs to complete the required road
improvements attributed to the Windsor Land Sale by $79, based upon changes received from the state of Connecticut’s
Department of Transportation that increased the scope of roadwork required to be completed by Griffin. The effect of the
estimated additional roadwork cost reduced the estimated total pretax gain on the Windsor Land Sale from the prior
estimate of approximately $6,765. While management has used its best estimates, based on industry knowledge and
experience, in projecting the total costs of the required roadways, increases or decreases in future costs as compared with
current estimated amounts would reduce or increase the pretax gain recognized in future periods.
Real estate assets held for sale consist of:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nov. 30, 2016 Nov. 30, 2015
78
264 $
1,340
1,418
2,728
2,992 $
$
49
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
4. Income Taxes
The income tax provision in continuing operations for fiscal 2016, fiscal 2015 and fiscal 2014 is summarized as
follows:
For the Fiscal Years Ended
Nov. 30,
Nov. 30,
2016
2015
Nov. 30,
2014
Current federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current state and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred state and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . $
50 $
—
(580)
(205)
(735) $
(83) $
—
(217)
(80)
(380) $
—
—
356
(452)
(96)
The income tax provision for fiscal 2016 includes a charge of approximately $180 for the effect of a change in
Connecticut tax law, effective for Griffin in fiscal 2016, whereby, the usage of state net operating loss carryforwards in
future years will be limited to 50% of taxable income. Therefore, in fiscal 2016, Griffin decreased its expected
realization of the tax benefit related to its Connecticut state net operating loss carryforwards. The decrease of the
realization rate is based on management's current projections of taxable income in Connecticut in future years that would
generate income taxes in excess of capital based taxes.
In fiscal 2015 and fiscal 2014, Griffin decreased its expected realization of the tax benefit related to its
Connecticut state net operating loss carryforwards and other Connecticut state temporary differences. These decreases
were based on management's projections in those years of taxable income attributable to the state of Connecticut in
future years that would generate income taxes in excess of capital based taxes. Charges of approximately $87 and $375
are reflected in the fiscal 2015 and fiscal 2014 tax provisions, respectively, for state taxes to reflect the expected lower
realization of certain state tax benefits.
Griffin did not recognize a current tax benefit in fiscal 2016, fiscal 2015 or fiscal 2014 from the exercise of
employee stock options. A benefit was not recorded in fiscal 2016 and fiscal 2014 because Griffin did not have taxable
income. In fiscal 2015, Griffin utilized net operating loss carryforwards to offset taxable income. As of November 30,
2016, Griffin has an unrecognized tax benefit of $1,176 for the effect of employee stock options exercised in fiscal years
2006 through 2015. In fiscal 2016, fiscal 2015 and fiscal 2014, the deferred tax asset related to non-qualified stock
options was reduced by $17, $9 and $4, respectively, as a result of exercises and forfeitures of those options.
Included in total income from discontinued operations, net of tax, is an income tax provision of $115 for fiscal
2014.
The income tax provision in fiscal 2016 is net of the effect of recording a charge related to valuation allowances
on certain state deferred tax assets (principally Connecticut) of $1,798, less a federal income tax benefit of $629. The
income tax provision in fiscal 2015 was net of the effect of recording a benefit related to valuation allowances on certain
state deferred tax assets of $76, less a federal income tax expense of $26. The income tax provision for discontinued
operations in fiscal 2014 was net of the effect of recording valuation allowances on certain state deferred tax assets for
state net operating losses of Imperial. The effect on the income tax provision for the valuation allowances in fiscal 2014
was a charge of $24, less a federal income tax benefit of $8. The establishment of the valuation allowances reflects
management’s determination that it is more likely than not that Griffin will not generate sufficient taxable income in the
future to fully utilize certain state net operating loss carryforwards.
50
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Other comprehensive income (loss) includes deferred tax (expense) benefit as follows:
For the Fiscal Years Ended
Nov. 30,
Nov. 30,
2016
2015
Nov. 30,
2014
Mark to market adjustment on Centaur Media plc . . . . . . . . $
Measurement of the funded status of the defined
postretirement program . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment of Griffin's cash flow hedges . . . . . . .
Total income tax (expense) benefit included in other
347 $
(16) $
17
—
(399)
—
164
181
37
comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . $
(52) $
148 $
235
The differences between the income tax provision at the United States statutory income tax rates and the actual
income tax provision on continuing operations for fiscal 2016, fiscal 2015 and fiscal 2014 are as follows:
For the Fiscal Years Ended
Nov. 30,
Nov. 30,
2016
2015
Nov. 30,
2014
Tax (provision) benefit at statutory rate . . . . . . . . . . . . . . . . $
State and local taxes, including valuation allowance, net of
federal tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(459) $
(282) $
403
(205)
(35)
(36)
(80)
(23)
5
(457)
(43)
1
Total income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(735) $
(380) $
(96)
The state and local income tax expense, net of federal tax effect, principally reflects a decrease in the realization
of the tax benefit related to Connecticut state net operating loss carryforwards and expected Connecticut state other
temporary differences for fiscal 2016, fiscal 2015 and fiscal 2014.
51
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
The significant components of Griffin’s deferred tax assets and deferred tax liabilities are as follows:
Nov. 30,
Nov. 30,
2016
2015
Deferred tax assets:
Federal net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . $
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement benefit plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . .
Non-qualified stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in Centaur Media plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charitable contribution carryforwards . . . . . . . . . . . . . . . . . . . . . . . . .
Conditional asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Real estate assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,037 $
3,068
1,675
1,537
892
623
309
127
112
46
12,426
(1,514)
10,912
2,673
3,587
1,547
554
847
1,022
(38)
179
112
51
10,534
(345)
10,189
(4,244)
(1,095)
(107)
(49)
(433)
(5,928)
4,984 $
(2,666)
(985)
(113)
(44)
(543)
(4,351)
5,838
At November 30, 2016, Griffin had federal net operating loss carryforwards of approximately $11,535 with
expirations ranging from fourteen to twenty years and state net operating loss carryforwards of approximately $358 with
expirations ranging from ten to twenty years. Management has determined that a valuation allowance is required for net
operating loss carryforwards in Connecticut related to Griffin and Imperial and for certain other states related to
Imperial. Griffin has evaluated the likelihood that it will realize the benefits of its deferred tax assets. Based on a
significant number of appreciated assets, primarily real estate, held by Griffin and the significant length of time expected
before Griffin’s deferred tax assets would expire, Griffin believes that it is more likely than not that it will utilize the
benefit of its remaining deferred tax assets.
Griffin evaluates each tax position taken in its tax returns and recognizes a liability for any tax position deemed
less likely than not to be sustained under examination by the relevant taxing authorities. Griffin believes that its income
tax filing positions will be sustained on examination and does not anticipate any adjustments that would result in a
material change on its financial statements. As a result, no accrual for uncertain income tax positions has been recorded
pursuant to ASC 740-10.
Federal income tax returns for fiscal 2012 through fiscal 2015 are open to examination by the Internal Revenue
Service. In fiscal 2014, the state of New York completed an examination of Griffin’s fiscal 2007, fiscal 2008 and fiscal
2009 tax returns. There were no significant adjustments made as a result of this examination. The remaining periods
subject to examination for Griffin’s significant state return, which is Connecticut, are fiscal 2008 through fiscal 2015.
52
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
5. Mortgage Loans
Griffin's mortgage loans, which are nonrecourse, consist of:
Variable rate, due October 2, 2017 * . . . . . . . . . . . . . . . . . . . . . . . $
Variable rate, due February 1, 2019 * . . . . . . . . . . . . . . . . . . . . . . .
Variable rate, due August 1, 2019 * . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate, due January 27, 2020 * . . . . . . . . . . . . . . . . . . . . . . .
Variable rate, due January 2, 2025 * . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate, due September 1, 2025 * . . . . . . . . . . . . . . . . . . . . .
Variable rate, due May 1, 2026 * . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate, due November 17, 2026 * . . . . . . . . . . . . . . . . . . . .
5.09%, due July 1, 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.09%, due July 1, 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.33%, due August 1, 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonrecourse mortgage loans prior to debt issuance costs . . . . . . . . .
Debt issuance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nov. 30, 2016 Nov. 30, 2015
6,217
10,610
7,501
3,729
19,385
11,457
—
—
7,385
6,226
17,926
90,436
(1,251)
89,185
6,034 $
10,313
—
3,606
20,744
—
14,187
26,725
7,001
4,905
17,624
111,139
(1,442)
Nonrecourse mortgage loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 109,697 $
(cid:13) Griffin entered into interest rate swap agreements to effectively fix the interest rates on these loans (see below).
The annual principal payment requirements under the terms of the nonrecourse mortgage loans for the fiscal
years 2017 through 2021 are $8,994, $3,100, $12,552, $6,077 and $3,004, respectively. The aggregate book value of
land and buildings that are collateral for the nonrecourse mortgage loans was approximately $125,600 at November 30,
2016.
As of November 30, 2016, Griffin retrospectively applied the provisions of ASU 2015-03, regarding the
reclassification of debt issuance costs (see Note 1). As a result of the adoption of ASU 2015-03, Griffin reclassified
$1,442 and $1,251, as of November 30, 2016 and 2015, respectively, from other assets to mortgage loans, as reflected in
the table above.
On November 17, 2016, Griffin closed on a nonrecourse mortgage (the “2016 Webster Mortgage”) for $26,725.
The 2016 Webster Mortgage refinanced an existing mortgage with Webster Bank, N.A. (“Webster”) which was due on
September 1, 2025 and was collateralized by an approximately 280,000 square foot industrial building (“5220 Jaindl”) in
the Lehigh Valley of Pennsylvania (see below). The 2016 Webster Mortgage is collateralized by 5220 Jaindl along with
an adjacent approximately 252,000 square foot industrial building (“5210 Jaindl”). Griffin received net proceeds of
$13,000 (before transaction costs), net of $13,725 used to refinance the existing mortgage with Webster. The 2016
Webster Mortgage has a ten year term with monthly principal payments based on a twenty-five year amortization
schedule. The interest rate for the 2016 Webster Mortgage is a floating rate of the one month LIBOR rate plus 1.70%. At
the time the 2016 Webster Mortgage closed, Griffin entered into an interest rate swap agreement with Webster that,
combined with two existing swap agreements with Webster, effectively fixes the rate of the 2016 Webster Mortgage at
3.79% over the balance of the mortgage loan’s ten year term.
On April 26, 2016, Griffin closed on a nonrecourse mortgage (“the 2016 PUB Mortgage”) with People’s United
Bank, N.A. (“PUB”) for $14,350, before transaction costs. The 2016 PUB Mortgage refinanced an existing mortgage
(the “2009 PUB Mortgage”) with PUB that was due on August 1, 2019 and was collateralized by four
industrial/warehouse buildings totaling approximately 240,000 square feet (14, 15, 16 and 40 International Drive) in
New England Tradeport (“NE Tradeport”), Griffin’s industrial park located in Windsor and East Granby, Connecticut.
The 2009 PUB Mortgage had a balance of $7,418 at the time of the refinancing and a variable interest rate of the one
month LIBOR rate plus 3.08%. At the time Griffin completed the 2009 PUB Mortgage, Griffin entered into an interest
53
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
rate swap agreement with PUB to effectively fix the rate on the 2009 PUB Mortgage at 6.58% for the term of that loan.
The 2016 PUB Mortgage is collateralized by the same four properties that collateralized the 2009 PUB Mortgage along
with another approximately 98,000 square foot NE Tradeport industrial/warehouse building. At the closing of the 2016
PUB Mortgage, Griffin received net mortgage proceeds of $6,932 (before transaction costs), which was net of the $7,418
used to repay the 2009 PUB Mortgage. The 2016 PUB Mortgage has a ten year term with monthly principal payments
based on a twenty-five year amortization schedule. The interest rate for the 2016 PUB Mortgage is a floating rate of the
one month LIBOR rate plus 2.0%. At the time the 2016 PUB Mortgage closed, Griffin entered into another interest rate
swap agreement with PUB that, combined with the existing interest rate swap agreement with PUB, effectively fixes the
interest rate of the 2016 PUB Mortgage at 4.17% over the term of the loan. The terms of the 2016 PUB Mortgage require
that if either the tenant that leases approximately 58,000 square feet in 40 International Drive or the tenant that leases
approximately 40,000 square feet in 14 International Drive does not extend its respective lease when it expires in fiscal
2021, a subsidiary of Griffin will enter into a master lease of the vacated space. The master lease would be guaranteed by
Griffin and be in effect until either the vacated space is re-leased to a new tenant or the due date of the 2016 PUB
Mortgage Loan, whichever occurs first.
On December 10, 2015, Griffin received additional mortgage proceeds of $2,600 (the “Webster Earn-Out”)
related to the mortgage (the “2015 Webster Mortgage”) obtained by one of its subsidiaries with Webster on its property
at 5220 Jaindl. The 2015 Webster Mortgage closed on September 1, 2015, at which time initial proceeds of $11,500
(before transaction costs) were received. At the time of the mortgage closing, Griffin had leased approximately 196,000
square feet of 5220 Jaindl. The Webster Earn-Out was subsequently received by Griffin when the tenant that leased that
space exercised its option to lease the balance of the building. The 2015 Webster Mortgage had a ten year term with
monthly principal payments based on a twenty-five year amortization schedule. The interest rate for the 2015 Webster
Mortgage was a floating rate of the one month LIBOR rate plus 1.65%. At the time the 2015 Webster Mortgage closed,
Griffin also entered into an interest rate swap agreement with Webster for a notional principal amount of $11,500 at
inception to fix the interest rate at 3.77% on the initial funds advanced under the 2015 Webster Mortgage. At the time the
Webster Earn-Out was received, Griffin entered into another interest rate swap agreement with Webster for a notional
principal amount of $2,600 to fix the interest rate on the Webster Earn-Out at 3.67%.
On December 11, 2015, Griffin received additional mortgage proceeds of $1,850 (the “KeyBank Earn-Out”)
related to the mortgage obtained by two of its subsidiaries with KeyBank (formerly First Niagara Bank) (the “2025
KeyBank Mortgage”) on its properties at 4270 Fritch Drive (“4270 Fritch”) and 4275 Fritch Drive (“4275 Fritch”) in the
Lehigh Valley of Pennsylvania. The 2025 KeyBank Mortgage closed on December 31, 2014, at which time proceeds of
$10,891 (before transaction costs) were received, in addition to $8,859 used to refinance the existing mortgage on 4275
Fritch with KeyBank. The 2025 KeyBank Mortgage is collateralized by 4270 Fritch, an approximately 303,000 square
foot industrial/warehouse building, and 4275 Fritch, an adjacent approximately 228,000 square foot industrial/warehouse
building. At the time of the mortgage closing, approximately 201,000 square feet of 4270 Fritch was leased. The
KeyBank Earn-Out was subsequently received by Griffin when the remaining vacant space of approximately 102,000
square feet was leased. Griffin agreed to enter into a master lease with its subsidiaries that own 4270 Fritch and 4275
Fritch in order to maintain a minimum net rent equal to the debt service on the 2025 KeyBank Mortgage. The master
lease would be co-terminus with the 2025 KeyBank Mortgage. The 2025 KeyBank Mortgage has a ten year term with
monthly principal payments based on a twenty-five year amortization schedule. The interest rate for the 2025 KeyBank
Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2025 KeyBank Mortgage closed,
Griffin entered into an interest rate swap agreement with KeyBank that, combined with an existing interest rate swap
agreement with KeyBank, effectively fixed the rate of the 2025 KeyBank Mortgage at 4.43% over the mortgage loan’s
ten year term. At the time the KeyBank Earn-Out was received, Griffin entered into another interest rate swap agreement
with KeyBank for a notional principal amount of $1,850 to fix the interest rate on the KeyBank Earn-Out at 3.88%. The
combination of the three interest rate swap agreements effectively fixes the interest rate on the 2025 KeyBank Mortgage
at 4.39% over the remainder of the mortgage loan’s ten year term.
54
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
On July 29, 2015, a subsidiary of Griffin closed on a new nonrecourse mortgage with 40|86 Mortgage Capital,
Inc. (“the 40|86 Mortgage”) for $18,000. The 40|86 Mortgage refinanced an existing 5.73% nonrecourse mortgage which
was due on August 1, 2015 and was collateralized by three industrial/warehouse buildings totaling approximately
392,000 square feet (“75 International,” “754 Rainbow” and “758 Rainbow”) in NE Tradeport. The 40|86 Mortgage is
collateralized by the same three properties. Griffin received proceeds of $14,875 at closing (before transaction costs),
which were used for the payoff of the maturing 5.73% nonrecourse mortgage of $17,891. The remaining $3,125 of loan
proceeds were placed in escrow at closing. In the 2015 fourth quarter, as per the terms of the 40|86 Mortgage, $2,500 of
the escrowed proceeds was released to Griffin when the tenant that was leasing approximately 88,000 square feet on a
month-to-month basis in 754 Rainbow extended into a long-term lease for that space and $25 of the escrowed proceeds
was also released to Griffin upon renewal of insurance coverage on the mortgaged properties. The remaining $600 of
mortgage proceeds in escrow was released to Griffin in the fiscal 2016 second quarter when tenant improvement work
for the full building tenant in 758 Rainbow was completed. The 40|86 Mortgage has a fifteen year term with monthly
payments based on a thirty year amortization schedule. The interest rate for the 40|86 Mortgage is 4.33%.
On June 6, 2014, a subsidiary of Griffin completed the refinancing of its nonrecourse mortgage loan (the “GCD
Mortgage Loan”) with Farm Bureau Life Insurance Company (“Farm Bureau”) that was due April 1, 2016. The GCD
Mortgage Loan is collateralized by a 165,000 square foot industrial building in Windsor, Connecticut. At the time of the
refinancing, the GCD Mortgage Loan had a balance of $3,391 and an interest rate of 8.13%. The refinancing increased
the loan amount to $7,868, reduced the interest rate to 5.09% and extended the loan term to fifteen years from the time of
the refinancing, with payments based on a fifteen year amortization schedule.
Also on June 6, 2014, a subsidiary of Griffin completed the refinancing of its nonrecourse mortgage loan (the
“TD Mortgage Loan”) with Farm Bureau that was due October 1, 2017. The TD Mortgage Loan is collateralized by an
approximately 100,000 square foot industrial building and a 57,000 square foot industrial building, both located in
Windsor, Connecticut. At the time of the refinancing, the TD Mortgage Loan had a balance of $5,632 and an interest rate
of 7.0%. The refinancing increased the loan amount to $6,632, reduced the interest rate to 5.09% and extended the loan
term to fifteen years from the time of the refinancing, with payments based on a fifteen year amortization schedule. The
mortgage loan proceeds of $1,000 from the refinancing of the TD Mortgage Loan were placed in escrow. The $1,000 of
proceeds held in escrow were used in fiscal 2016 to make a partial prepayment, without penalty, on the TD Mortgage
Loan in the fiscal 2016 fourth quarter. The GCD Mortgage Loan and the TD Mortgage Loan are cross-collateralized and
cross-defaulted with each other. The loans may not be voluntarily prepaid during the first seven years of the loan;
thereafter, any prepayment would require a prepayment fee and the simultaneous prepayment of both loans.
As of November 30, 2016, Griffin was a party to several interest rate swap agreements related to its variable
rate nonrecourse mortgages on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as
effective cash flow hedges (see Note 2). No ineffectiveness on the cash flow hedges was recognized as of November 30,
2016 and none is anticipated over the term of the agreements. Amounts in accumulated other comprehensive income
(loss) will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each
mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In fiscal 2016,
Griffin recognized a net gain, included in other comprehensive income, before taxes of $1,081 on its interest rate swap
agreements. In fiscal 2015 and fiscal 2014, Griffin recognized net losses, included in other comprehensive income (loss),
before taxes of $444 and $100, respectively, on its interest rate swap agreements.
As of November 30, 2016, $1,223 is expected to be reclassified over the next twelve months from accumulated
other comprehensive loss to interest expense. As of November 30, 2016, the net fair value of Griffin’s interest rate swap
agreements was $1,685, with $207 included in other assets and $1,892 included in other liabilities on Griffin’s
consolidated balance sheet. As of November 30, 2015, the fair value of Griffin’s interest rate swap agreements was
$2,766 and is included in other liabilities on Griffin’s consolidated balance sheet.
55
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
6. Revolving Credit Agreement
On July 22, 2016, Griffin entered into an amendment (the “Amendment”) to its revolving credit line (the
“Webster Credit Line”) with Webster Bank, N.A. that extends the Webster Credit Line for two years through July 31,
2018. The Amendment increased the amount of the Webster Credit Line from $12,500 to $15,000 and enables Griffin to
further extend the term of the Webster Credit Line for an additional year through July 31, 2019, provided there is no
default at the time such extension is requested. Per the terms of the Amendment, the interest rate on the Webster Credit
Line will remain at the one month LIBOR rate plus 2.75%.
The Webster Credit Line is collateralized by Griffin’s properties in Griffin Center South, aggregating
approximately 235,000 square feet, and an approximately 48,000 square foot single-story office building in Griffin
Center. The aggregate book value of land and buildings that are collateral for the Webster Credit Line was approximately
$10,210 at November 30, 2016. There have been no borrowings under the Webster Credit Line since its inception in
fiscal 2013. The Webster Credit Line secures certain standby letters of credit aggregating $1,827 that are related to
Griffin's development activities.
7. Retirement Benefits
Savings Plan
Griffin maintains the Griffin Industrial Realty, Inc. 401(k) Savings Plan (the “Griffin Savings Plan”) for its
employees, a defined contribution plan whereby Griffin matches 60% of each employee’s contribution, up to a maximum
of 5% of base salary. Griffin’s contributions to the Griffin Savings Plan in fiscal 2016, fiscal 2015 and fiscal 2014 were
$64, $60 and $64, respectively.
Deferred Compensation Plan
Griffin maintains a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for certain of
its employees who, due to IRC regulations, cannot take full advantage of the Griffin Savings Plan. Griffin’s liability
under its Deferred Compensation Plan at November 30, 2016 and 2015 was $4,334 and $3,981, respectively. These
amounts are included in other liabilities on Griffin’s consolidated balance sheets. The expense for Griffin’s matching
benefit to the Deferred Compensation Plan in fiscal 2016, fiscal 2015 and fiscal 2014 was $7, $22 and $28, respectively.
The Deferred Compensation Plan is unfunded, with benefits to be paid from Griffin’s assets. The liability for
the Deferred Compensation Plan reflects the amounts withheld from employees, Griffin’s matching benefit and any gains
or losses on participant account balances based on the assumed investment of amounts credited to participants’ accounts
in certain mutual funds. Participant balances are tracked and any gain or loss is determined based on the performance of
the mutual funds as selected by the participants.
Postretirement Benefits
Through March 10, 2014, Griffin maintained an unfunded postretirement benefits program that provided
principally health and life insurance benefits to certain of its employees. Only those employees who were employed by
Griffin’s predecessor company as of December 31, 1993 were eligible to participate in the postretirement benefits
program.
On March 11, 2014, Griffin terminated its postretirement benefits program. Accordingly, the remaining liability
under the postretirement benefits program was reversed and all actuarial gains under the postretirement program that had
been reflected in accumulated other comprehensive income were reclassified into net income in fiscal 2014. As
essentially all of the participants in the postretirement benefits program had been employees of Imperial, and charges
related to the postretirement benefits program had been included in the results of the landscape nursery business that is
56
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
now presented as a discontinued operation, the effect of the termination of the postretirement benefits program is mostly
reflected in the results of discontinued operations in Griffin’s consolidated statement of operations for fiscal 2014.
As a result of the Imperial Sale (see Note 10) prior to the termination of the postretirement benefit program, the
liability for postretirement benefits was reduced from $332 at November 30, 2013 to $23 in the 2014 first quarter. A
curtailment gain of $309 is included in the determination of the loss on the Imperial Sale.
Changes in the program's benefit obligation for the fiscal year ended November 30, 2014 are as follows:
Change in benefit obligation:
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
332
(14)
4
1
—
(14)
(309)
—
The components of Griffin’s postretirement benefits income for the fiscal year ended November 30, 2014 were
as follows:
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other changes in benefit obligations recognized in other comprehensive
loss:
Actuarial gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total recognized in net periodic benefit income and other comprehensive
loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1
4
(14)
(309)
(318)
(14)
(332)
A discount rate of 4.60% was used to compute the accumulated postretirement benefit obligations prior to the
program termination in fiscal 2014. The discount rate used was based on the spot rate of the Citigroup Pension Discount
Curve, which was used to discount the projected cash flows of the program. A discount rate of 4.60% was used to
compute the net periodic benefit expense for fiscal 2014 through the termination of the postretirement benefits program.
57
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
8. Stockholders’ Equity
Per Share Results
Basic and diluted results per share were based on the following:
Nov. 30,
2016
For the Fiscal Years Ended
Nov. 30,
2015
Nov. 30,
2014
Income (loss) from continuing operations for computation of basic and
diluted per share results, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
576 $
425 $
(1,248)
Income from discontinued operations for computation of basic and diluted
per share results, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
576 $
—
425 $
144
(1,104)
Weighted average shares outstanding for computation of basic per share
results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,117,000
6,000
Incremental shares from assumed exercise of Griffin stock options (a) . . . .
Adjusted weighted average shares for computation of diluted per share
5,151,000
17,000
5,148,000
—
results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,123,000
5,168,000
5,148,000
(a)
Incremental shares from the assumed exercise of Griffin stock options are not included in periods where inclusion
of such shares would be anti-dilutive. Such assessment is based on income (loss) from continuing operations when
net income includes discontinued operations. For the fiscal year ended November 30, 2014, the incremental shares
from the assumed exercise of stock options would have been 11,000 shares.
Griffin Stock Option Plan
The Griffin Industrial Realty, Inc. 2009 Stock Option Plan (the “2009 Stock Option Plan”) makes available
options to purchase 386,926 shares of Griffin common stock. The Compensation Committee of Griffin’s Board of
Directors administers the 2009 Stock Option Plan. Options granted under the 2009 Stock Option Plan may be either
incentive stock options or non-qualified stock options granted at fair market value on the date approved by Griffin’s
Compensation Committee. Vesting of all of Griffin’s stock options is solely based upon service requirements and does
not contain market or performance conditions.
Stock options granted expire ten years from the grant date. In accordance with the 2009 Stock Option Plan,
stock options granted to non-employee directors upon their initial election to the board of directors are fully exercisable
immediately upon the date of the option grant. Stock options granted to non-employee directors upon their reelection to
the board of directors vest on the second anniversary from the date of grant. Stock options granted to employees vest in
equal installments on the third, fourth and fifth anniversaries from the date of grant. None of the stock options
outstanding at November 30, 2016 may be exercised as stock appreciation rights.
58
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
The following options were granted by Griffin under the 2009 Stock Option Plan to employees and non-
employee directors either upon their initial election or their reelection to Griffin’s Board of Directors:
Nov. 30, 2016
Nov. 30, 2015
Nov. 30, 2014
For the Fiscal Years Ended
Employees . . . . . . . . . . . . . . . . .
Non-employee directors . . . . . .
Number of
Fair Value per
Option at
Grant Date
Number of
Shares
Fair Value per
Option at
Grant Date
Number of
Shares
Fair Value per
Option at
Grant Date
Shares
101,450 $ 7.51 - 11.65
11.30
8,409 $
109,859
- $
8,282 $
8,282
-
14.39
- $
8,532 $
8,532
-
12.42
The fair values were estimated as of the date of each grant using the Black-Scholes option-pricing model. The
following assumptions were used in determining the fair value of each option:
For the Fiscal Years Ended
Nov. 30, 2016
Nov. 30, 2015 Nov. 30, 2014
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . 32.9% to 41.1%
Risk free interest rates . . . . . . . . . . . . . . . . . . . . . 1.2% to 1.5%
Expected option term (in years) . . . . . . . . . . . . .
Annual dividend yield . . . . . . . . . . . . . . . . . . . . .
5 to 8.5
0.9%
40.8 %
2.0 %
8.5
0.7 %
38.9 %
2.2 %
8.5
0.7 %
Number of option holders at November 30, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
Compensation expense and related tax benefits for stock options were as follows:
For the Fiscal Years Ended
Compensation expense - continuing operations $
Compensation expense - discontinued
Nov. 30, 2016 Nov. 30, 2015 Nov. 30, 2014
338
230 $
267 $
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net compensation expense . . . . . . . . . . . . . . . . . $
—
267 $
—
230 $
(130)
208
Related tax benefit - continuing operations . . . . $
Related tax benefit - discontinued operations . .
Net related tax benefit . . . . . . . . . . . . . . . . . . . . . $
62 $
—
62 $
61 $
—
61 $
78
(15)
63
For all years presented, forfeiture rates used for directors were 0%, forfeiture rates used for executives ranged
from 17.9% to 22.6% and forfeiture rates used for employees ranged from 38.3% to 41.1%. These rates were utilized
based on the historical activity of the grantees.
59
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
As of November 30, 2016, the unrecognized compensation expense related to nonvested stock options that will
be recognized during future periods is as follows:
Fiscal 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Fiscal 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fiscal 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fiscal 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fiscal 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
311
279
198
102
28
The total grant date fair value of options vested during fiscal 2016, fiscal 2015 and fiscal 2014 was $457, $492
and $664, respectively. There were no options exercised in fiscal 2016. The intrinsic value of options exercised in fiscal
2015 and fiscal 2014 was $18 and $10, respectively.
A summary of the activity under the 2009 Griffin Stock Option Plan is as follows:
Outstanding at November 30, 2013 . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at November 30, 2014 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at November 30, 2015 . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at November 30, 2016 . . . . . . . . . . . . . . . . . . . . .
Options
239,677
8,532
(3,208)
(23,000)
222,001
8,282
(3,134)
(1,422)
225,727
109,859
(11,040)
324,546
Weighted Avg.
Exercise Price
30.35
28.12
24.94
30.27
30.35
31.38
25.53
28.12
30.47
26.83
30.73
29.23
$
$
$
$
$
$
$
$
$
$
$
$
Weighted Avg.
Remaining
Range of Exercise Prices for
Vested and Nonvested Options
$23.00 - $28.00 . . . . . . . . . . . . .
$28.00 - $32.00 . . . . . . . . . . . . .
$32.00 - $39.00 . . . . . . . . . . . . .
Outstanding at
November 30, 2016 Exercise Price
26.67
28.92
33.52
29.23
Weighted Avg. Contractual Life Total Intrinsic
(in years)
8.9
4.6
1.9
5.6
124,793 $
116,678 $
83,075 $
324,546 $
597
296
—
893
Value
$
$
Accumulated Other Comprehensive Loss
As of November 30, 2016, Griffin held 1,952,462 shares of common stock in Centaur Media and accounts for
its investment in Centaur Media as an available-for-sale security under ASC 320-10. Accordingly, the investment in
Centaur Media is carried at its fair value on Griffin’s consolidated balance sheet, with increases or decreases recorded,
net of tax, as a component of other comprehensive income (loss). Upon the sale of shares in Centaur Media, the change,
net of tax, in the value of the shares of Centaur Media that were sold during the time Griffin held those shares is
reclassified from accumulated other comprehensive income (loss) and included in Griffin’s consolidated statement of
operations. In fiscal 2014, $204 was reclassified from accumulated other comprehensive loss as a result of the sale of
500,000 shares of Centaur Media common stock. There were no sales of Centaur Media common stock in fiscal 2016
and fiscal 2015.
60
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Accumulated other comprehensive loss, and activity for fiscal 2016, fiscal 2015 and fiscal 2014, is comprised of
the following:
Unrealized Gain Unrealized Gain
(Loss) on Cash
Flow Hedges
(Loss) on Investment on Postretirement
in Centaur Media Benefit Program Total
Actuarial Gain
Balance at November 30, 2013 . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive (loss) income before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net activity for other comprehensive loss . . . . . . . . . . . .
Balance at November 30, 2014 . . . . . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income before
reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amounts reclassified . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net activity for other comprehensive loss . . . . . . . . . . . .
Balance at November 30, 2015 . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss before reclassifications . . . . .
Amounts reclassified . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net activity for other comprehensive income . . . . . . . . .
Balance at November 30, 2016 . . . . . . . . . . . . . . . . . . . . . $
(1,401) $
648 $
304 $
(449)
(695)
632
(63)
(1,464)
(1,058)
778
(280)
(1,744)
(174)
856
682
(1,062) $
185
(204)
(19)
629
30
—
30
659
(646)
—
(646)
13 $
—
(304)
(304)
—
(510)
124
(386)
(835)
(1,028)
—
778
—
(250)
—
(1,085)
—
(820)
—
856
—
—
36
— $ (1,049)
Changes in accumulated other comprehensive income (loss) are as follows:
November 30, 2016
Tax
(Expense)
For the Fiscal Years Ended
November 30, 2015
Tax
(Expense)
November 30, 2014
Tax
(Expense)
Pre-Tax Benefit
Net-of-Tax Pre-Tax Benefit
Net-of-Tax Pre-Tax Benefit
Net-of-Tax
Reclassifications included in net income
(loss):
Realized gain on sale of Centaur Media (gain
on sale) . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
— $
— $
— $
— $
(321) $
117 $
(204)
Termination of postretirement benefits
program ($283 net of tax to discontinued
operations, $21 net of tax to general and
administrative expenses) . . . . . . . . . . . . . .
—
Loss on cash flow hedges (interest expense) . 1,358
Total reclassifications included in net income
—
(502)
—
—
856 1,234
—
(456)
—
(485)
778 1,003
181
(371)
(304)
632
(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,358
(502)
856 1,234
(456)
778
197
(73)
124
Mark to market adjustment on Centaur Media
for the (decrease) increase in fair value . . .
Mark to market adjustment on Centaur Media
for the decrease in exchange gain . . . . . . .
Decrease in fair value adjustment on Griffin's
(763)
267
(496)
123
(43)
80
358
(125)
233
(230)
80
(150)
(77)
27
(50)
(73)
25
(48)
cash flow hedges . . . . . . . . . . . . . . . . . . .
(277)
Total change in other comprehensive loss . . . (1,270)
88 $
Total other comprehensive income (loss) . . . $
103
450
(52) $
(174) (1,678)
(820) (1,632)
(398) $
36 $
620
604
148 $
(1,058) (1,103)
(818)
(1,028)
(621) $
(250) $
408
308
235 $
(695)
(510)
(386)
Cash Dividends
In fiscal 2016 and fiscal 2015, Griffin declared annual cash dividends of $0.30 per common share in each year,
which were paid in the first quarter of fiscal 2017 and fiscal 2016, respectively. In fiscal 2014, Griffin declared an annual
cash dividend of $0.20 per common share, which was paid in the first quarter of fiscal 2015.
61
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Stock Repurchases
On March 31, 2016, Griffin’s Board of Directors authorized a stock repurchase program whereby Griffin may
repurchase up to $5,000 in outstanding shares of its common stock over a twelve month period in privately negotiated
transactions. The repurchase program expires on May 10, 2017. This repurchase program does not obligate Griffin to
repurchase any specific number of shares, and may be suspended at any time at management’s discretion. On October
20, 2016, Griffin repurchased 45,000 shares of its outstanding common stock for approximately $1,403 and on May 27,
2016, Griffin repurchased 60,000 shares of its outstanding common stock for approximately $1,951.
9. Operating Leases
Griffin's rental revenue reflects the leasing of industrial, flex and office space and the lease of the nursery
growing facilities in Connecticut and Florida previously used by Imperial. Future minimum rental payments, including
expected tenant reimbursements, to be received under noncancelable leases as of November 30, 2016 were:
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
25,676
23,637
20,350
17,694
11,896
24,824
124,077
All future minimum rental payments, principally for Griffin’s corporate headquarters, under noncancelable
leases, as lessee, as of November 30, 2016 were:
2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
126
126
125
121
122
642
1,262
Total rental expense for all operating leases, as lessee, in fiscal 2016, fiscal 2015 and fiscal 2014 was $194,
$201 and $210, respectively.
Effective October 1, 2016, Griffin entered into a ten year sublease for approximately 1,920 square feet in New
York City for its executive offices from Bloomingdale Properties, Inc. (“Bloomingdale Properties”), an entity that is
controlled by certain members of the Cullman and Ernst Group, which is considered a related party to Griffin. The
sublease with Bloomingdale Properties was approved by Griffin’s Audit Committee and the lease rates under the
sublease were at market rate at the time the sublease was signed. Rental expense for this lease in fiscal 2016 was $10,
which is included in general and administrative expenses.
10. Discontinued Operations
Effective January 8, 2014, in accordance with the terms of the Imperial Sale, Imperial sold its inventory and
certain assets for $732 in cash and a non-interest bearing note receivable of $4,250 (the “Promissory Note”). Net cash of
$732 was received from Monrovia in fiscal 2014 and Griffin paid $563 in severance and other expenses. The Promissory
Note was paid on schedule in two installments: $2,750 on June 1, 2014 and $1,500 on June 1, 2015. The Promissory
Note was discounted at 7% to $4,036, its present value at inception. Under the terms of the Imperial Sale, Griffin and
62
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Imperial agreed to indemnify Monrovia for any potential environmental liabilities relating to periods prior to the
effective date of the Imperial Sale and also agreed to certain non-competition restrictions for a four-year period.
Concurrent with the Imperial Sale, Imperial and River Bend Holdings, LLC, a wholly owned subsidiary of
Griffin, entered into a Lease and Option Agreement and an Addendum to such agreement, which was amended in fiscal
2016 (as amended, the “Imperial Lease”) with Monrovia, pursuant to which Monrovia is leasing Imperial’s Connecticut
production nursery for a ten-year period, with options to extend for up to an additional fifteen years exercisable by
Monrovia. The Imperial Lease provides for net annual rent payable to Griffin of $500 for each of the first five years with
rent for subsequent years determined in accordance with the Imperial Lease. The Imperial Lease also grants Monrovia an
option to purchase most of the land, land improvements and other operating assets that were used by Imperial in its
Connecticut growing operations during the first thirteen years of the lease period for $9,500, or $7,000 if only a certain
portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease.
Accordingly, the operating results of Imperial's growing operations are reflected as a discontinued operation in Griffin's
consolidated statements of operations for fiscal 2014.
In fiscal 2014, Imperial’s revenue and the pretax income, reflected as a discontinued operation in Griffin's
consolidated statements of operations, were as follows:
Net sales and other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Pretax income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
159
259
Imperial's pretax income in fiscal 2014 includes $451 for the reclassification of actuarial gains related to
Griffin's postretirement benefits program from other comprehensive income into pretax income as a result of the
termination of Griffin's postretirement benefits program (see Note 7).
The pretax loss from the Imperial Sale in fiscal 2014 was as follows:
Consideration received from Monrovia, reflecting cash of $732 and note
receivable of $4,036 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Carrying value of assets sold, principally inventory . . . . . . . . . . . . . . . . . . . . . .
Curtailment of employee benefit program (see Note 7) . . . . . . . . . . . . . . . . . . .
Severance and other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pretax loss on sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,768
(4,561)
309
(563)
(47)
11. Supplemental Financial Statement Information
Available-for-Sale Securities
Griffin’s investment in the common stock of Centaur Media is accounted for as an available-for-sale security
under ASC 320-10. Accordingly, changes in the fair value of Centaur Media, reflecting both changes in the stock price
and changes in the foreign currency exchange rate, are included, net of income taxes, in accumulated other
comprehensive income (see Note 8). Griffin's investment income includes dividend income from Centaur Media of $79,
$83 and $82 in fiscal 2016, fiscal 2015 and fiscal 2014, respectively.
At the beginning of fiscal 2014, Griffin held 2,452,462 shares of Centaur Media common stock. In fiscal 2014,
Griffin sold 500,000 shares of its Centaur Media common stock for total cash proceeds of $566 net of transaction costs.
The sale of Centaur Media common stock resulted in a pretax gain of $318 in fiscal 2014. Griffin has not sold any of its
Centaur Media common stock since the sales in fiscal 2014. Griffin held 1,952,462 shares of Centaur Media common
stock as of November 30, 2016.
63
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
The fair value, cost and unrealized gain of Griffin’s investment in Centaur Media are as follows:
Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized (loss) gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Nov. 30, 2016 Nov. 30, 2015
1,970
977 $
1,014
956
(37) $
1,014
Other Assets
Griffin's other assets are comprised of the following:
Deferred leasing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred rent receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage escrows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits and costs related to potential real estate acquisitions .
Lease receivables from tenants. . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred financing costs related to Webster Credit Line . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
Nov. 30, 2016 Nov. 30, 2015
4,376
4,087
2,157
2,229
27
401
221
305
13
282
14,098
4,746
4,474
2,333
717
497
369
280
247
117
406
14,186 $
Griffin’s intangible assets relate to the acquisition of real estate assets in previous years and consist of: (i) the
value of in-place leases; and (ii) the value of the associated relationships with tenants. Intangible assets are shown net of
amortization of $772 and $714 on November 30, 2016 and November 30, 2015, respectively.
Amortization expense of intangible assets is as follows:
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
For the Fiscal Years Ended
Nov. 30, 2016 Nov. 30, 2015 Nov. 30, 2014
178
201 $
58 $
Estimated amortization expense of intangible assets is $27 per year for each of the next five fiscal years.
Property and equipment, net reflects accumulated depreciation of $844 and $996 as of November 30, 2016 and
November 30, 2015, respectively. Total depreciation expense related to property and equipment in fiscal 2016, fiscal
2015 and fiscal 2014 was $90, $86 and $111, respectively.
64
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Accounts Payable and Accrued Liabilities
Griffin's accounts payable and accrued liabilities are comprised of the following:
Accrued construction costs and retainage . . . . . . . . . . . . . . . . . . $
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued salaries, wages and other compensation . . . . . . . . . . . .
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accounts payable and accrued liabilities . . . . . . . . . . . . . . $
Nov. 30, 2016 Nov. 30, 2015
1,278
422
615
361
672
3,348
1,252 $
1,060
725
390
713
4,140 $
Other Liabilities
Griffin's other liabilities are comprised of the following:
Deferred compensation plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest rate swap agreements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid rent from tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security deposits of tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conditional asset retirement obligations . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Nov. 30, 2016 Nov. 30, 2015
3,981
2,766
944
286
288
107
8,372
4,334 $
1,892
938
413
288
78
7,943 $
Supplemental Cash Flow Information
A decrease of $993 in fiscal 2016 in the fair value of Griffin’s Investment in Centaur Media reflects the mark to
market adjustment of this investment and did not affect Griffin’s cash. Increases of $46 and $285 in fiscal 2015 and
fiscal 2014, respectively, in the fair value of Griffin’s Investment in Centaur Media reflect the mark to market adjustment
of this investment and did not affect Griffin’s cash.
Accounts payable and accrued liabilities related to additions to real estate assets decreased by $32 and $632 in
fiscal 2016 and fiscal 2015, respectively.
Griffin received an income tax refund of $61 in fiscal 2014. Interest payments in fiscal 2016, fiscal 2015 and
fiscal 2014 were $4,507, $4,180 and $3,860, respectively, including capitalized interest of $274, $777 and $580 in fiscal
2016, fiscal 2015 and fiscal 2014, respectively.
12. Quarterly Results of Operations (Unaudited)
Summarized quarterly financial data are presented below:
Fiscal 2016 Quarters
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,682 $ 6,524 $ 7,265 $ 10,380 $ 30,851
5,627
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
576
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.11
Basic net income (loss) per common share . . . . . . . . . . . . . . . . .
0.11
Diluted net income (loss) per common share . . . . . . . . . . . . . . .
1,089
(49)
(0.01)
(0.01)
3,464
1,339
0.26
0.26
270
(379)
(0.07)
(0.07)
804
(335)
(0.07)
(0.07)
Total
2nd
3rd
4th
1st
65
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Fiscal 2015 Quarters
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,233 $ 6,196 $ 8,184 $ 7,475 $ 28,088
4,314
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
425
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.08
Basic net income (loss) per common share . . . . . . . . . . . . . . . . .
0.08
Diluted net income (loss) per common share . . . . . . . . . . . . . . .
2,641
1,203
0.23
0.23
1,413
164
0.03
0.03
473
(234)
(0.05)
(0.05)
(213)
(708)
(0.14)
(0.14)
Total
2nd
3rd
4th
1st
Property sales revenue in Griffin’s fiscal 2016 fourth quarter consolidated statement of operations includes
$3,756 for the sale of a land parcel in Bloomfield, Connecticut and $135 for the amount of revenue recognized on the
Windsor Land Sale.
Property sales revenue in Griffin's fiscal 2015 fourth quarter consolidated statement of operations includes $600
for the sale of a small land parcel in Simsbury, Connecticut and $236 for the amount of revenue recognized on the
Windsor Land Sale.
The sum of the four quarters earnings per share data may not equal the annual earnings per share data due to the
requirement that each period be calculated separately.
13. Commitments and Contingencies
As of November 30, 2016, Griffin had committed purchase obligations of approximately $1,677, principally
related to the development of Griffin’s real estate assets.
On January 25, 2016, Griffin entered into an Option Purchase Agreement (the “Option Agreement”) whereby
Griffin granted the buyer an exclusive option, which may be extended for up to three years upon payment of additional
option fees, to purchase approximately 280 acres of land for approximately $7,700. The land subject to the Option
Agreement is undeveloped and does not have any of the approvals that would be required for the buyer’s planned use of
the land. A closing on the land sale contemplated by the Option Agreement is subject to several significant
contingencies, including the buyer securing contracts under a competitive bidding process that would require changes in
the use of the land and obtaining local and state approvals for that planned use. There is no guarantee that the sale of land
as contemplated under the Option Agreement will be completed under its current terms, or at all.
On March 23, 2016, Griffin entered into an Agreement of Sale and Purchase (the “East Allen Purchase
Agreement”) to acquire an approximately 31 acre site in East Allen Township, Northampton County, Pennsylvania for
development of an industrial/warehouse building. Subsequently, Griffin exercised its right to terminate the East Allen
Purchase Agreement based on its due diligence findings. After the East Allen Purchase Agreement was terminated,
Griffin has continued negotiations with the seller to reach a new agreement. Completion of a new purchase agreement in
uncertain at this time.
On May 4, 2016, Griffin entered into an Agreement of Sale and Purchase, as amended (the “Macungie Purchase
Agreement”), to acquire, for a purchase price of $1,800, an approximately 14 acre site in Upper Macungie Township,
Lehigh County, Pennsylvania for development of an approximately 134,000 square foot industrial/warehouse building.
A closing on the land acquisition contemplated by the Macungie Purchase Agreement is subject to significant
contingencies, including Griffin obtaining all governmental approvals for its planned development of the land that would
be acquired. There is no guarantee that the land acquisition as contemplated under the Macungie Purchase Agreement
will be completed under its current terms, or at all.
Under its $5,000 stock repurchase program, as of November 30, 2016, Griffin was authorized to purchase, from
time to time, up to $1,646 in outstanding shares of its common stock through private transactions. The program to
repurchase common stock expires on May 10, 2017, does not obligate Griffin to repurchase any specific number of
shares, and may be suspended at any time at management’s discretion (see Note 8).
66
GRIFFIN INDUSTRIAL REALTY, INC.
Notes to Consolidated Financial Statements (Continued)
(dollars in thousands unless otherwise noted, except per share data)
Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the
opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters
is not expected to be material, individually or in the aggregate, to Griffin's consolidated financial statements.
14. Subsequent Events
In accordance with FASB ASC 855, “Subsequent Events,” Griffin has evaluated all events or transactions
occurring after November 30, 2016, the balance sheet date, and noted that there have been no such events or transactions
which would require recognition or disclosure in the consolidated financial statements as of and for the year ended
November 30, 2016, other than the disclosures herein.
On January 24, 2017, as part of its common stock repurchase program (see Notes 8 and 13), Griffin repurchased
19,173 shares of its outstanding common stock for approximately $595, resulting in approximately $1,051 remaining
available for additional stock repurchases under the current repurchase program.
On January 20, 2017, Griffin and People’s United Bank (“PUB”) agreed to terms for a new nonrecourse
mortgage on two of Griffin’s buildings in NE Tradeport. The parties agreed to a loan amount up to $12,000 with a ten
year term, principal payments based on a twenty-five year amortization schedule, and interest at the one month LIBOR
rate plus 1.95%. Griffin expects to enter into a new interest rate swap agreement with PUB that would fix the rate of this
new mortgage loan for its full term. There is no guarantee that this mortgage loan will be completed in accordance with
its current terms, or at all.
On December 23, 2016, Griffin entered into an agreement to sell approximately 67 acres of an approximately
268 acre business park master planned by Griffin that straddles the town line between Windsor and Bloomfield,
Connecticut. The purchase price is approximately $10,250 before transaction costs. Completion of this transaction is
contingent on a number of factors, including the buyer obtaining all necessary final permits from governmental
authorities for its development plans for the site it would acquire and the buyer receiving municipal and state economic
development incentives it deems adequate. Under the current terms, Griffin expects to record a material pretax gain on
this transaction. There is no guarantee that this transaction will be completed under the current terms, or at all.
67
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Griffin Industrial Realty, Inc.
We have audited the consolidated financial statements of Griffin Industrial Realty, Inc. and subsidiaries as of
November 30, 2016 and 2015 and for each of the three fiscal years in the period ended November 30, 2016 listed in the
index appearing under Item 15(a)(1). Our audits also included the financial statement schedules of Griffin Industrial
Realty, Inc. listed in Item 15(a)(2). These financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these financial statements and schedules
based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Griffin Industrial Realty, Inc. and subsidiaries as of November 30, 2016 and 2015, and the results of
their operations and their cash flows for each of the three fiscal years in the period ended November 30, 2016, in
conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in
all material respects the information set forth therein.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Griffin Industrial Realty, Inc. and subsidiaries’ internal control over financial reporting as of November
30, 2016, based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 10, 2017 expressed an
unqualified opinion on the effectiveness of Griffin Industrial Realty, Inc.’s internal control over financial reporting.
New Haven, Connecticut
February 10, 2017
68
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Changes in Internal Control Over Financial Reporting: There have been no changes in Griffin Industrial
Realty, Inc.’s (“Griffin” or the “Company”) internal control over financial reporting that occurred during the Company’s
most recent fiscal quarter ended November 30, 2016 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Disclosure Controls and Procedures: The Company maintains disclosure controls and procedures designed to
ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission
(“SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,
and such information is accumulated and communicated to management, as appropriate, to allow timely decisions
regarding required disclosure. The Company’s principal executive officer and principal financial officer have reviewed
and evaluated, with the participation of the Company’s management, the Company’s disclosure controls and procedures
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) as of the end of the period covered by this Annual Report (the “Evaluation Date”). Based on such evaluation, such
officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting: Management of the Company is
responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). Management of the Company, including its chief executive officer and chief financial
officer, has assessed the effectiveness of its internal control over financial reporting as of November 30, 2016, based on
the criteria established in the “2013 Internal Control—Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”) in 2013. Based on its assessment and those criteria, management
of the Company has concluded that, as of November 30, 2016, the Company’s internal control over financial reporting
was effective.
The Company’s independent registered public accounting firm, RSM US LLP, has audited the effectiveness of
the Company’s internal control over financial reporting as of November 30, 2016, as stated in their attestation report
appearing below.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and
procedures may deteriorate.
69
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Griffin Industrial Realty, Inc.
We have audited Griffin Industrial Realty, Inc. and subsidiaries’ (the Company) internal control over financial
reporting as of November 30, 2016, based on criteria established in Internal Control — Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission in 2013. The Company’s management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over
Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal control over financial reporting
includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, Griffin Industrial Realty, Inc. and subsidiaries maintained, in all material respects, effective
internal control over financial reporting as of November 30, 2016, based on criteria established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated financial statements of Griffin Industrial Realty, Inc. and subsidiaries as of November
30, 2016 and 2015 and for each of the three fiscal years in the period ended November 30, 2016 listed in the index
appearing under Item 15(a)(1) and our report dated February 10, 2017 expressed an unqualified opinion.
New Haven, Connecticut
February 10, 2017
70
ITEM 9B. OTHER INFORMATION.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth the information called for in this Item 10:
Name
Frederick M. Danziger . . . . . . . . . . . . .
Michael S. Gamzon . . . . . . . . . . . . . . . .
David R. Bechtel . . . . . . . . . . . . . . . . . .
Edgar M. Cullman, Jr. . . . . . . . . . . . . . .
Thomas C. Israel . . . . . . . . . . . . . . . . . .
Jonathan P. May . . . . . . . . . . . . . . . . . .
Albert H. Small, Jr. . . . . . . . . . . . . . . . .
Scott Bosco . . . . . . . . . . . . . . . . . . . . . .
Anthony J. Galici . . . . . . . . . . . . . . . . . .
Thomas M. Lescalleet . . . . . . . . . . . . . .
Age
76
47
49
70
72
50
60
50
59
54
Position
Executive Chairman of the Board of Directors
Director and President and Chief Executive Officer
Director
Director
Director
Director
Director
Vice President of Construction, Griffin Industrial, LLC
Vice President, Chief Financial Officer and Secretary
Senior Vice President, Griffin Industrial, LLC
Griffin’s directors are each elected for a term of one year.
Frederick M. Danziger has been the Chairman of the Board of Directors of Griffin since May 2012 and has
served in the Executive Chairman capacity since January 2016. Mr. Danziger was the Chief Executive Officer from
April 1997 to January 2016; was a Director and the President of Griffin from April 1997 to May 2012; and was a
Director of Culbro Corporation (“Culbro’) from 1975 until 1997. He was previously involved in the real estate
operations of Griffin in the early 1980s. Mr. Danziger was Of Counsel to the law firm of Latham & Watkins LLP from
1995 until 1997. From 1974 until 1995, Mr. Danziger was a Member of the law firm of Mudge Rose Guthrie
Alexander & Ferdon. Mr. Danziger also is a Director of Monro Muffler Brake, Inc. and Bloomingdale Properties, Inc.
Mr. Danziger is the father-in-law of Michael S. Gamzon. We believe that Mr. Danziger’s background as a lawyer and his
extensive experience and knowledge with respect to real estate and real estate financing provides a unique perspective to
the Board.
Michael S. Gamzon is a Director and the President and Chief Executive Officer of Griffin. Mr. Gamzon was
appointed as a Director on January 19, 2016 to replace Mr. David M. Danziger, who resigned from the Board effective
on that date. Mr. Gamzon succeeded Mr. Frederick M. Danziger as Griffin’s Chief Executive Officer effective January 1,
2016 and has been President of Griffin since May 2012. Mr. Gamzon was the Chief Operating Officer of Griffin from
September 2010 to January 2016; was Executive Vice President from September 2010 to May 2012; and was a Vice
President of Griffin from January 2008 through August 2010. Mr. Gamzon was an investment analyst with Alson Capital
Partners, LLC from April 2005 until January 2008 and an investment analyst with Cobalt Capital Management, LLC
from March 2002 until March 2005. Mr. Gamzon is the son-in-law of Frederick M. Danziger. We believe that
Mr. Gamzon’s experience and knowledge, with respect to real estate activities in his capacity as an executive of Griffin,
including leading Griffin’s efforts in expanding in the Lehigh Valley of Pennsylvania, provides a unique perspective to
the Board.
David R. Bechtel has been a Director of Griffin since May 2016. Mr. Bechtel has been a principal of Barrow
Street Holdings LLC since 2012; founder and managing member of Outpost Capital Management LLC since 2001; and
founder and manager of GP Management LLC since 2011. Mr. Bechtel has many years of general business experience
and expertise as a managing member, principal, and CFO of financial service and natural resource companies.
Edgar M. Cullman, Jr. has been a Director of Griffin since May 2015. Mr. Cullman, Jr. has been a managing
member of Culbro LLC, a private equity investment firm, since 2005 and was previously the President and Chief
Executive Officer of General Cigar Holdings from 1996 through April 2005. Mr. Cullman, Jr. is the brother-in-law of
Frederick M. Danziger. Mr. Cullman, Jr. has many years of general business experience and expertise as an executive of
71
a public company. Mr. Cullman, Jr. is familiar with Griffin’s real estate business from his experience as President and
Chief Executive Officer of Culbro when Griffin’s real estate operations were part of Culbro prior to the spinoff of Griffin
from Culbro in 1997.
Thomas C. Israel has been a Director of Griffin since July 2000. Mr. Israel was a Director of Culbro from 1989
until 1997 and a Director of General Cigar Holdings, Inc. from December 1996 until May 2000. Since 1966, Mr. Israel
has been Chairman of A.C. Israel Enterprises, Inc., an investment company. Mr. Israel has significant experience as a
member of Griffin’s Board of Directors, many years of general business experience, finance experience, and expertise as
an executive and board member of public companies.
Jonathan P. May has been a Director of Griffin since September 2012. Mr. May is the founder and has been the
co-managing partner of Floresta Ventures, LLC since March 2016, the Executive Director of Natural Capital Partners
(formerly known as The CarbonNeutral Company) a private company that is a leading provider of carbon reduction
programs for corporations since September 2015, and the Chief Operating Officer and Chief Financial Officer and a
Director of The CarbonNeutral Company from 2008 to September 2015. Mr. May was the founder and managing
Director of Catalytic Capital, LLC from 2004 to 2008. Mr. May has significant general business experience, finance
experience, and expertise as an executive.
Albert H. Small, Jr. has been a Director of Griffin since January 2009. Mr. Small, Jr. was President of
Renaissance Housing Corporation, a private company involved in residential real estate development from 1984 through
March 2005, and President of WCI Communities Mid-Atlantic Division from March 2005 through March 2008. From
March 2008 through the present, Mr. Small, Jr. has been active in the development and management of several
commercial and office developments in Washington D.C. Mr. Small, Jr. has significant experience in real estate
development and management that gives him unique insights into Griffin’s challenges, opportunities and operations.
Scott Bosco has been the Vice President of Construction of Griffin Industrial, LLC, a subsidiary of Griffin,
since July 2005.
Anthony J. Galici has been the Vice President, Chief Financial Officer and Secretary of Griffin since April
1997.
Thomas M. Lescalleet has been the Senior Vice President of Griffin Industrial, LLC, a subsidiary of Griffin,
since March 2002.
Code of Ethics
Griffin’s board of directors has adopted a Code of Ethics that applies to all of its directors, officers and
employees, which is available on our website at www.griffinindustrial.com in the “Investors” section under “Corporate
Governance.” Griffin intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment
to, or waiver from, a provision of our Code of Ethics, as well as NASDAQ’s requirement to disclose waivers with
respect to directors and executive officers, by posting such information on our website at the address and location
specified above.
Audit Committee
Griffin’s Audit Committee consists of David R. Bechtel, Thomas C. Israel and Jonathan P. May with Mr. Israel
serving as Chairman. Mr. Bechtel was appointed to the Audit Committee on May 10, 2016 replacing Mr. Small, Jr. The
Audit Committee meets the NASDAQ composition requirements, including the requirements regarding financial
literacy. The Board has determined that each member of the Audit Committee is independent under the listing standards
of NASDAQ and the rules of the SEC regarding audit committee membership. In addition, Mr. Israel qualifies as a
financially sophisticated Audit Committee member under the NASDAQ rules based on his employment experience in
finance. None of the members of the Audit Committee are considered a financial expert as defined by Item 407(d)(5) of
Regulation S-K of the Securities and Exchange Act of 1934 (an “audit committee financial expert”). Griffin does not
have an audit committee financial expert because it believes the members of its Audit Committee have sufficient
financial expertise and experience to provide effective oversight of Griffin’s accounting and financial reporting processes
and the audits of Griffin’s financial statements in accordance with generally accepted accounting principles and
72
NASDAQ rules. In addition, since January 31, 2012, the Audit Committee has engaged directly a former audit partner in
a public accounting firm who is a certified public accountant with extensive experience in auditing the financial
statements of public and private companies. The Audit Committee had previously engaged the public accounting firm of
which he was a partner as an advisor to the Audit Committee. The Audit Committee believes that this engagement
provides it with additional expertise comparable to what would be provided by an audit committee financial expert.
On November 24, 2015, the Audit Committee approved a proposed transaction whereby Griffin would enter
into a ten year sublease of office space for its New York City corporate headquarters from Bloomingdale Properties, Inc.
(“Bloomingdale Properties”), an entity that is controlled by certain members of the Cullman and Ernst Group. The
proposed sublease with Bloomingdale Properties is at market rates for such space and would enable either Griffin or
Bloomingdale Properties to terminate the sublease agreement upon a change in control (as defined) of either Griffin or
Bloomingdale Properties. The sublease of office space from Bloomingdale Properties reduced the occupancy costs for
Griffin’s corporate headquarters.
The Audit Committee approves all auditing and non-auditing services, reviews audit reports and the scope of
audit by Griffin’s independent registered public accountants and related matters pertaining to the preparation and
examination of Griffin’s financial statements. From time to time, the Audit Committee makes recommendations to the
Board of Directors with respect to the foregoing matters. The Audit Committee held four meetings in fiscal 2016.
Board of Directors’ Role in Oversight of Risk
Management is responsible for Griffin’s day-to-day risk management activities, and the Board’s role is to
engage in informed risk oversight. In fulfilling this oversight role, Griffin’s Board of Directors focuses on understanding
the nature of Griffin’s enterprise risks, including operations and strategic direction, as well as the adequacy of Griffin’s
overall risk management system. There are a number of ways the Board performs this function, including the following:
(cid:120)
(cid:120)
(cid:120)
at its regularly scheduled meetings, the Board receives management updates on Griffin’s business
operations, financial results and strategy, and discusses risks related to its businesses;
the Audit Committee assists the Board in its oversight of risk management by discussing with management,
particularly the Chief Executive Officer and the Chief Financial Officer, Griffin’s major risk exposures and
the steps management has taken to monitor and control such exposures; and
through management updates and committee reports, the Board monitors Griffin’s risk management
activities, including the risk management process, risks relating to Griffin’s compensation programs, and
financial and operational risks being managed by Griffin.
The Board does not believe that its role in the oversight of Griffin’s risk affects the Board’s leadership structure.
Compensation Risk
The Compensation Committee reviews compensation policies and practices affecting employees in addition to
those applicable to executive officers. The Compensation Committee has determined that it is not reasonably likely that
Griffin’s compensation policies and practices for its employees would have a material adverse effect on Griffin.
Nominating Committee
Griffin’s Nominating Committee consists of David R. Bechtel, Thomas C. Israel, Jonathan P. May and Albert
H. Small, Jr. Mr. Bechtel was appointed to the Nominating Committee on May 10, 2016. Prior to July 12, 2016, Mr.
Israel served as Chairman. On July 12, 2016, the Board of Directors approved a change in the Nominating Committee
whereby Mr. May became Chairman with Mr. Israel remaining on the Committee. As Mr. Israel is the Chairman of the
Audit Committee, this change more evenly distributes the committee chairmanships amongst the independent members
of Griffin’s Board. All four members of the Nominating Committee are independent directors. The Nominating
Committee reviews candidates for appointment to the Griffin Board of Directors. In searching for qualified director
candidates, the Board may solicit current directors and ask them to pursue their own business contacts for the names of
potentially qualified candidates. The Nominating Committee may consult with outside advisors or retain search firms to
assist in the search for qualified candidates. The Nominating Committee will also consider suggestions from
73
stockholders for nominees for election as directors. The Nominating Committee does not have a policy on the
consideration of board nominees recommended by stockholders. The Board believes such a policy is unnecessary, as the
Nominating Committee will consider a nominee based on his or her qualifications, regardless of whether the nominee is
recommended by stockholders. Any stockholder who wishes to recommend a candidate to the Nominating Committee
for consideration as a director nominee should submit the recommendation in writing to the Secretary of Griffin in
accordance with the procedures in Griffin’s Amended and Restated By-Laws for stockholder nominations of directors to
permit the Nominating Committee to complete its review in a timely fashion. The Nominating Committee operates under
a written charter adopted by the Board of Directors in 2014, which is publicly available in the “Corporate Governance”
section of the “Investors” section of Griffin’s website located at www.griffinindustrial.com. The Nominating Committee
held one meeting in fiscal 2016.
Board Diversity; Selection and Evaluation of Director Candidates
The Board does not have a formal policy with respect to Board nominee diversity. There are no specific
minimum qualifications that the Nominating Committee believes must be met for a person to serve on the Board. When
identifying nominees for director, the Nominating Committee focuses on relevant subject matter expertise, depth of
knowledge in key areas that are important to Griffin, and the background, perspective and experience of the nominee.
The Nominating Committee is charged with building and maintaining a board that has an ideal mix of talent and
experience to achieve Griffin’s business objectives in the current environment.
Board Leadership Structure
The Board believes that there is no single, generally accepted approach to providing Board leadership, and that
each of the possible leadership structures for a board must be considered in the context of the individuals involved and
the specific circumstances facing a company at any given time. Accordingly, the optimal board leadership structure for
Griffin may vary as circumstances change. Griffin’s Board was led by a Non-Executive Chairman through 2011, as
separate individuals held the positions of Chairman of the Board and Chief Executive Officer, and the Chairman of the
Board was not an employee. In May 2012, the Board appointed Mr. Frederick M. Danziger as Chairman of the Board.
Mr. Danziger had been Chief Executive Officer since 1997. In making that appointment, the Board concluded that
Griffin and its stockholders were best served by having Mr. Danziger serve as Chairman of the Board and Chief
Executive Officer. The Board believed that Mr. Danziger’s combined role as Chairman of the Board and Chief Executive
Officer promoted unified leadership and a single, clear focus and direction for management to execute Griffin’s strategy
and business plans. Effective January 1, 2016, the positions of Chairman of the Board and Chief Executive Officer have
been held by separate individuals, Mr. Frederick M. Danziger and Mr. Michael S. Gamzon, respectively. The Board
determined that Mr. Danziger should continue to serve as Executive Chairman to continue to provide Board leadership
continuity.
Communication with the Board of Directors or Nominating Committee
Stockholders who wish to communicate with the Board of Directors or the Nominating Committee should
address their communications to Jonathan P. May, Chairman of the Nominating Committee, via first class mail, at
Griffin Industrial Realty, Inc., 641 Lexington Avenue, 26th Floor, New York, New York, 10022. Such communication
will be distributed to the specific director(s) requested by the stockholders, or if generally to the Board of Directors, to
other members of the Board of Directors as may be appropriate depending on the material outlined in the stockholder
communication.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires Griffin’s officers and directors, and persons who own
more than ten percent of its common stock, to file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Such persons are required by regulation to furnish Griffin with copies of all Section 16(a) forms
they file. Based on its involvement in the preparation of certain such forms, and a review of copies of other such forms
received by it, Griffin believes that with respect to fiscal 2016, all such Section 16(a) filing requirements were satisfied.
74
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the material elements of compensation awarded to,
earned by, or paid to each of Griffin’s named executive officers (the “Named Executive Officers”) during the last
completed fiscal year. The Named Executive Officers for the fiscal year ended November 30, 2016 were as follows:
Frederick M. Danziger . . . . . . . . . Executive Chairman of the Board (“Executive Chairman”) of Griffin
Michael S. Gamzon . . . . . . . . . . . Director, President and Chief Executive Officer (“CEO”) of Griffin
Anthony J. Galici . . . . . . . . . . . . . Vice President, Chief Financial Officer and Secretary of Griffin
Thomas M. Lescalleet . . . . . . . . . Senior Vice President of Griffin Industrial, LLC
Scott Bosco . . . . . . . . . . . . . . . . . . Vice President of Construction, Griffin Industrial, LLC
Compensation Philosophy and Overview
Griffin’s compensation programs are designed to attract, motivate and retain the management talent that Griffin
believes is necessary to achieve its financial and strategic goals. Griffin’s Compensation Committee strives to pay for
performance by rewarding each of its Named Executive Officers for team results and their individual contributions to
Griffin’s success. In this way, Griffin believes that the interests of its executives align with the interests of its
stockholders.
Design and Implementation
With these objectives in mind, Griffin’s Compensation Committee has built an executive compensation
program that consists of three principal elements:
1. Base Salary
2. Annual Incentive Compensation Programs
3. Long-Term Incentive Program
Griffin also contributes to a 401(k) savings plan and a non-qualified deferred compensation plan on behalf of its
Named Executive Officers. These contributions, however, comprise a relatively minor portion of Griffin’s Named
Executive Officers’ compensation packages. Griffin’s Compensation Committee reviews the Named Executive Officers’
compensation package each year and makes decisions on each component thereof in order to better align with its
compensation philosophy.
Elements of Compensation
Base Salary
Griffin pays base salaries to its Named Executive Officers in order to provide a consistent, minimum level of
pay that sustained individual performance warrants. Griffin also believes that a competitive annual base salary is
important to attract and retain an appropriate caliber of talent for each position over time.
The annual base salaries of Griffin’s Named Executive Officers are determined by the Executive Chairman and
the CEO (except with regard to their salaries) and approved annually by the Compensation Committee. The annual base
salaries of the Executive Chairman and the CEO are determined by the Compensation Committee. All salary decisions
are based on each Named Executive Officer’s level of responsibility, experience and recent and past performance, as
determined by the Executive Chairman, the CEO and the Compensation Committee, as applicable. Griffin does not
benchmark its base salaries in any way, nor does Griffin employ the services of a compensation consultant.
Annual Incentive Compensation Programs
Griffin’s annual incentive programs are designed to recognize short-term performance against established
annual performance goals, as explained below. These performance goals and target amounts for fiscal 2016 were
developed by the Executive Chairman and the CEO and approved or modified, as necessary, by the Compensation
75
Committee. Additionally, the Compensation Committee retains the discretion to adjust any awards made to Griffin’s
executives, including making awards in the absence of the attainment of any of the performance goals under Griffin’s
annual incentive compensation plans. Any such adjustment may only be to the benefit of the participants. The
Compensation Committee made a discretionary increase in the aggregate amount of $35,000 to the incentive
compensation pools ($25,000 and $10,000 to the Griffin Industrial, LLC and the Griffin Industrial Realty, Inc. incentive
compensation pools, respectively) under the Griffin Industrial Realty, Inc. Incentive Compensation Plan (“Griffin
Industrial Realty Incentive Plan”) for fiscal 2016. The discretionary increase was made to the Property Sales component
of the Griffin Industrial Realty Incentive Plan in recognition of a certain large property sale. Griffin makes annual
incentive payments, if any, in the year following the year in which they are earned.
Griffin Industrial Realty Incentive Plan
Under the Griffin Industrial Realty Incentive Plan, incentive compensation was awarded based on certain
defined components as described below:
Incentive Compensation
Component
Griffin Industrial, LLC
Incentive Compensation Pool
Griffin Industrial Realty, Inc.
Incentive Compensation Pool
(i) Achieving adjusted funds from
operations (“FFO”) targets (as defined
in the Griffin Industrial Realty
Incentive Plan) . . . . . . . . . . . . . . . . . .
$37,500 to $168,750 of incentive
compensation will be accrued under this
component if FFO is between 90% and
105% of FFO target.
$75,000 to $337,500 of incentive
compensation will be accrued under this
component if FFO is between 90% and
105% of FFO target.
(ii) Property Sales (as defined in the
Griffin Industrial Realty Incentive
Plan) . . . . . . . . . . . . . . . . . . . . . . . . . .
(iii) Build-to-suit project
a.
b.
for build-to-suit projects in
Connecticut completed in fiscal
2016 . . . . . . . . . . . . . . . . . . . . . .
for build-to-suit projects outside
Connecticut completed in fiscal
2016 . . . . . . . . . . . . . . . . . . . . . .
(iv) Buildings built on speculation
a.
for buildings built on speculation
in Connecticut . . . . . . . . . . . . . .
10% of the pretax gain on property sales
where improvements and/or development
activities have taken place and 5% of pretax
gain on property sales where no
improvements or development activities
have taken place. A maximum of $100,000
of incentive compensation may be accrued
under this component. Incentive
compensation on large property sales (as
defined) would be at the discretion of
management and the Compensation
Committee and be in addition to any
incentive compensation accrued under the
formula this component.
40% of the incentive compensation from
property sales that is accrued into the
Griffin Industrial, LLC incentive
compensation pool will be accrued.
Incentive compensation on large property
sales (as defined) would be at the
discretion of management and the
Compensation Committee and be in
addition to any incentive compensation
accrued under the formula for this
component.
10% of the incremental value created, as
defined in the Griffin Industrial Realty
Incentive Plan, with a maximum of
$100,000 of incentive compensation that
may be accrued under this component.
25% of the incentive compensation from
build-to-suit projects in Connecticut
completed in fiscal 2016 that is accrued
into the Griffin Industrial, LLC incentive
compensation pool will be accrued.
10% of the incremental value created, as
defined in the Griffin Industrial Realty
Incentive Plan, with a maximum of $75,000
of incentive compensation that may be
accrued under this component.
100% of the incentive compensation from
build-to-suit projects outside Connecticut
completed in fiscal 2016 that is accrued
into the Griffin Industrial, LLC incentive
compensation pool will be accrued.
10% of the incremental value created, as
defined in the Griffin Industrial Realty
Incentive Plan, with a maximum of
$100,000 of incentive compensation that
may accrued under this component.
25% of the incentive compensation from
buildings built on speculation in
Connecticut that is accrued into the
Griffin Industrial, LLC incentive
compensation pool will be accrued.
76
b.
for buildings built on speculation
outside Connecticut . . . . . . . . . .
10% of the incremental value created, as
defined in the Griffin Industrial Realty
Incentive Plan, with a maximum of $75,000
of incentive compensation that may be
accrued under this component.
100% of the incentive compensation from
buildings built on speculation outside
Connecticut that is accrued into the
Griffin Industrial, LLC incentive
compensation pool will be accrued.
(v) Leasing of vacant space
a.
b.
leasing of vacant space in
Connecticut . . . . . . . . . . . . . . . .
A maximum of $150,000 of incentive
compensation may be accrued under this
component.
There will be no incentive compensation
accrued for leasing of vacant space in
Connecticut.
leasing of vacant space outside
Connecticut . . . . . . . . . . . . . . . .
A maximum of $75,000 of incentive
compensation may be accrued under this
component.
There will be no incentive compensation
accrued for leasing of vacant space
outside Connecticut.
(vi) Renewal or extension of leases
a.
b.
renewal or extension of leases in
Connecticut . . . . . . . . . . . . . . . .
A maximum of $50,000 of incentive
compensation may be accrued under this
component.
There will be no incentive compensation
accrued for renewal or extension of leases
in Connecticut.
extension of leases outside of
Connecticut . . . . . . . . . . . . . . . .
A maximum of $25,000 of incentive
compensation may be accrued under this
component.
There will be no incentive compensation
accrued for extension of leases outside of
Connecticut.
These objectives are designed to reward management for increasing Griffin’s operating cash flow and increase
in value of Griffin’s real estate assets.
Over the past three years, achievement of the components of the Griffin Industrial Realty Incentive Plan has
been as follows:
Incentive Plan Component
Fiscal 2016
Funds From Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Achieved
Profit from property sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Achieved
Value generated from build-to-suit projects . . . . . . . . . . . . . . . . . . . . . Not Achieved Not Achieved Not Achieved
Value generated from buildings built on speculation . . . . . . . . . . . . . . Achieved
Not Achieved
Leasing of vacant space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Achieved
Achieved
Renewal or extension of leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Achieved
Not Achieved
Fiscal 2014
Not Applicable
Achieved
Achieved
Achieved
Achieved
Fiscal 2015
Achieved
Achieved
77
Amounts earned under each objective are accrued into the Griffin Industrial, LLC and the Griffin Industrial
Realty, Inc. incentive compensation pools up to a maximum incentive compensation amount, which in fiscal 2016 was
$918,750 and $577,500, respectively. The maximum compensation amounts and amounts accrued under each objective
for fiscal 2016, based on the level of achievement of each incentive plan component for Griffin Industrial, LLC and
Griffin Industrial Realty, Inc., is shown in the following table.
Griffin Industrial Realty Incentive Compensation Plan
(cid:3)
(cid:3)
(cid:3) (cid:3)
(cid:3)
Incentive Plan Component
(i) Funds From Operations -FFO
(ii) Property Sales
(iii) Build-To-Suit Buildings
a. Connecticut Properties
b. Non- CT Properties
(iv) Buildings Built on Speculation
a. Connecticut Properties
b. Non- CT Properties
(v) Leasing of Vacant Space
a. Connecticut Properties
b. Non- CT Properties
(vi) Renewal or extension of leases
a. Connecticut Properties
b. Non- CT Properties
(cid:3)
Amount Accrued into
(cid:3)
(cid:3)
Amount Accrued into (cid:3)
the Griffin Industrial,
Griffin Industrial,
LLC Incentive
LLC Maximum
Compensation Pool
Compensation (cid:3) Based on Level of
(cid:3)
Achievement
Amount
$
168,750 $
100,000
162,575
$
75,000 (1)
Maximum
Realty, Inc.
Griffin Industrial the Griffin Industrial (cid:3)
Realty, Inc. Incentive (cid:3)
Compensation Pool (cid:3)
(cid:3)
Based on Level of
(cid:3)
325,149 (cid:3)
30,000 (1)
337,500 $
40,000
Compensation
Achievement
Amount
(cid:3)
100,000
75,000
100,000
75,000
150,000
75,000
—
—
—
32,895
92,798
30,650
25,000
75,000
25,000
75,000
—
—
50,000
25,000
918,750 $
$
50,000
—
443,918
$
—
—
577,500 $
(cid:3)
— (cid:3)
— (cid:3)
(cid:3)
— (cid:3)
32,895 (cid:3)
(cid:3)
— (cid:3)
— (cid:3)
(cid:3)
— (cid:3)
— (cid:3)
388,044 (cid:3)
(1) Amount described herein includes the Compensation Committee’s discretionary increase of $25,000 and
$10,000 to the Griffin Industrial, LLC and the Griffin Industrial Realty, Inc. incentive compensation pools,
respectively.
Griffin Industrial Realty Incentive Compensation—Griffin Industrial, LLC Payout
The Griffin Industrial, LLC portion of the Griffin Industrial Realty Incentive Plan for 2016 consisted of an
incentive compensation pool divided among executives and employees of Griffin Industrial, LLC. The amounts earned
by Griffin Industrial, LLC employees under the incentive compensation pools of the Griffin Industrial Realty Incentive
Plan may be increased at the discretion of the Compensation Committee. The Compensation Committee made a
discretionary increase in the amount $25,000 to the Property Sales component of the Griffin Industrial, LLC incentive
compensation pool for fiscal 2016.
As a result of the achievement of the incentive plan components noted above, and in accordance with the
Griffin Industrial Realty Incentive Plan, $443,918, which includes the Compensation Committee’s discretionary increase
of $25,000, was accrued into the Griffin Industrial, LLC incentive compensation pool for fiscal 2016. In accordance with
the Griffin Industrial Realty Incentive Plan, Mr. Lescalleet, Griffin Industrial, LLC’s Senior Vice President and Mr.
Bosco, Griffin Industrial, LLC’s Vice President of Construction were allocated $133,175 (30%) and $55,490 (12.5%) of
the total accrued into Griffin Industrial, LLC’s incentive compensation pool, respectively. In addition to the above,
Griffin’s Executive Chairman, its President and CEO and the Compensation Committee also awarded an additional
$10,000 to Mr. Bosco from the unallocated portion of the Griffin Industrial, LLC incentive compensation pool for his
78
performance related to construction activities in both Connecticut and Pennsylvania in fiscal 2016. No other Named
Executive Officers received a discretionary allocation from the Compensation Committee.
Griffin Industrial Realty Incentive Compensation—Griffin Industrial Realty, Inc. Payout
The Griffin Industrial Realty, Inc. portion of the Griffin Industrial Realty Incentive Plan for 2016 was designed
to reward Griffin Industrial Realty, Inc. employees, including Mr. Danziger, Griffin’s Executive Chairman, Mr. Gamzon,
Griffin’s President and CEO and Mr. Galici, Griffin’s Vice President, Chief Financial Officer and Secretary, based on
the results of Griffin’s operations, consistent with Griffin’s goal to award for performance through team results.
As a result of the achievement of the incentive plan components noted above, and in accordance with the
Griffin Industrial Realty Incentive Plan, $388,044, which includes the Compensation Committee’s discretionary increase
of $10,000 (40% of the Compensation Committee’s discretionary increase of $25,000 to the Griffin Industrial, LLC
incentive compensation pool), was accrued into the Griffin Industrial Realty, Inc. incentive compensation pool for fiscal
2016. Messrs. Danziger, Gamzon and Galici were allocated $58,207 (15%), $116,413 (30%) and $58,207 (15%) of the
Griffin Industrial Realty, Inc. incentive compensation pool, respectively. Messrs. Danziger, Gamzon and Galici did not
receive a discretionary allocation from the Compensation Committee.
Long-Term Incentive Program—Equity Awards
Griffin believes that equity ownership in Griffin is important to provide its Named Executive Officers with
long-term incentives to build value for Griffin’s stockholders. In addition, the equity program is designed to attract and
retain the executive management team. The Griffin equity program consists entirely of stock option awards. Stock
options have value only if the stock price increases over time and, therefore, provide executives with an incentive to
build Griffin’s value. This characteristic ensures that the Named Executive Officers may have a meaningful portion of
their compensation tied to future stock price increases. If Griffin’s stock price increases, stock options have the potential
to provide high returns to its executives, thus helping Griffin to attract and retain management. However, the realizable
value of the stock options can fall to zero if the stock price is lower than the exercise price established on the date of
grant.
Stock option awards to Named Executive Officers are entirely discretionary. The Executive Chairman and the
President and CEO recommend whether and how many stock options should be awarded to the other Named Executive
Officers or others, and the Compensation Committee approves or, if necessary, modifies their recommendations. The
Compensation Committee solely determines whether and how many stock options should be awarded to the Executive
Chairman and the President and CEO. In making stock option award determinations, the Executive Chairman and the
President and CEO and the Compensation Committee consider the prior contribution of participants and their expected
future contributions to the growth of Griffin. In fiscal 2016, 101,450 stock options were awarded to employees, including
the Named Executive Officers, to further support Griffin’s pay for performance objectives.
The Griffin Industrial Realty, Inc. 2009 Stock Option Plan (the “2009 Stock Option Plan”) makes available
options to purchase 386,926 shares of Griffin common stock. The Compensation Committee of Griffin’s Board of
Directors or, with respect to awards to non-employee directors, the Board of Directors administers the 2009 Stock
Option Plan. Options granted under the 2009 Stock Option Plan may be either incentive stock options or non-qualified
stock options issued at fair market value of a share of common stock on the date the award is approved by Griffin’s
Compensation Committee. Vesting of all of Griffin’s previously issued stock options is solely based upon service
requirements and does not contain market or performance conditions.
In accordance with the 2009 Stock Option Plan, stock options granted to non-employee directors upon their
initial election to the board of directors are fully exercisable immediately upon the date of the option grant. Stock options
granted to non-employee directors upon their re-election to the board of directors vest on the second anniversary from
the date of grant. Stock options granted to employees vest in equal installments on the third, fourth and fifth
anniversaries from the date of grant. Stock options granted to employees and non-employee directors have a maximum
term of ten years from the date of grant.
Of the 386,926 shares of common stock reserved for issuance under the 2009 Stock Option Plan, as of
November 30, 2016, 218,392 shares were subject to outstanding options and 168,534 shares were available for future
79
awards (which includes certain shares that again became available following the forfeiture of outstanding options). In
addition to options outstanding under the 2009 Stock Option Plan, as of November 30, 2016, 107,573 shares were
subject to outstanding options granted under Griffin’s prior stock option plan. For more information on stock options, see
the Summary Compensation Table, Grants of Plan-Based Awards Table, Outstanding Equity Awards Table, Equity
Compensation Plan Information Table and their footnotes.
Perquisites and Other Benefits
Griffin’s Named Executive Officers are eligible for the same health and welfare programs and benefits as the
rest of its employees. In addition, Griffin’s Vice President, Chief Financial Officer and Secretary receives an automobile
allowance of $8,000 per year and Griffin Industrial, LLC’s Senior Vice President receives a medical insurance allowance
of $3,300 per year.
Griffin’s Named Executive Officers are entitled to participate in and receive employer contributions to Griffin’s
401(k) Savings Plan. In addition, Griffin has established a non-qualified Deferred Compensation Plan (the “Deferred
Compensation Plan”) that allows eligible participants, including the Named Executive Officers, to defer portions of their
annual base salary, as well as receive employer matching contributions with respect to deferrals that would exceed IRS
limits under the Griffin 401(k) Savings Plan. For more information on employer contributions to the Griffin 401(k)
Savings Plan and the Deferred Compensation Plan, see the Summary Compensation Table and its footnotes.
Analysis
Base Salary
The following table presents the base salaries for Griffin’s Named Executive Officers in 2016 and the
percentage increase/(decrease) over their 2015 base salaries.
Mr. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350,000 (1)
Mr. Gamzon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500,000 (2)
Mr. Galici . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 296,000
Mr. Lescalleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 259,018
Mr. Bosco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 168,300
(36) %
42 %
2 %
2 %
2 %
Annual Salary % Increase
(1) Effective January 1, 2016, Mr. Danziger’s annual salary is $350,000 in his position as Executive Chairman. Mr.
Danziger’s annual salary was $550,800 in his position as Chairman and CEO through December 31, 2015.
(2) Effective January 1, 2016, Mr. Gamzon’s annual salary is $500,000 in his position as President and CEO. Mr.
Gamzon’s annual salary was $351,900 in his position as President and COO through December 31, 2015.
Annual Incentive Compensation Program
The following table presents the total annual incentive payments made to the Named Executive Officers for
fiscal 2016, which consisted solely of amounts of annual incentive compensation awarded under Griffin’s annual
80
incentive compensation plan (including allocations of any unallocated portions of applicable incentive compensation
pools). No discretionary bonuses were awarded to the Named Executive Officers in fiscal 2016.
Incentive Plan Discretionary Total Annual Incentive
Payments
Bonus Payments
Payments
Mr. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . $
58,207
Mr. Gamzon . . . . . . . . . . . . . . . . . . . . . . . . . . $ 116,413
Mr. Galici . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
58,207
Mr. Lescalleet . . . . . . . . . . . . . . . . . . . . . . . . $ 133,175
65,490
Mr. Bosco . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
— $
— $
— $
58,207
116,413
58,207
133,175
65,490
Griffin Industrial, LLC
Mr. Lescalleet was awarded $133,175 (30% of the total Griffin Industrial, LLC incentive compensation pool of
$443,918) in annual incentive compensation for fiscal 2016 based on the formula under the Griffin Industrial Realty
Incentive Plan. Mr. Lescalleet received no discretionary allocation from the Compensation Committee. Mr. Bosco was
awarded $65,490 in annual incentive compensation for fiscal 2016 which is comprised of: (a) 12.5% of the total Griffin
Industrial, LLC incentive compensation pool of $443,918 based on the formula under the Griffin Industrial Realty
Incentive Plan; and (b) $10,000 from the unallocated portion of the Griffin Industrial, LLC incentive compensation pool
awarded by Griffin’s Executive Chairman, its President and CEO and the Compensation Committee.
Griffin Industrial Realty, Inc.
Mr. Danziger, Griffin’s Executive Chairman, was awarded $58,207 (15% of the total Griffin Industrial Realty,
Inc. incentive compensation pool of $388,044) in annual incentive compensation for 2016 based on the formula under
the Griffin Industrial Realty Incentive Plan for amounts accrued into the Griffin Industrial Realty, Inc. incentive
compensation pool. Mr. Gamzon, Griffin’s President and CEO in fiscal 2016, was awarded $116,413 (30% of the total
Griffin Industrial Realty, Inc. incentive compensation pool of $388,044) in annual incentive compensation for fiscal
2016 based on the formula under the Griffin Industrial Realty Incentive Plan for amounts accrued into the Griffin
Industrial Realty, Inc. incentive compensation pool. Mr. Galici, Griffin’s Vice President, Chief Financial Officer and
Secretary was awarded $58,207 (15% of the total Griffin Industrial Realty, Inc. incentive compensation pool of
$388,044) in annual incentive compensation for fiscal 2016 based on the formula under the Griffin Industrial Realty
Incentive Plan for amounts accrued into the Griffin Industrial Realty, Inc. incentive compensation pool. The
Compensation Committee did not exercise its discretion to alter the amounts earned based on the formulas set forth in
the Griffin Industrial Realty Incentive Plan. Messrs. Danziger, Gamzon and Galici received no discretionary allocation
from the Compensation Committee.
Long-Term Incentive Program – Equity Awards Compensation Plan Information Table
The following table presents the number of shares subject to stock options granted to Griffin’s Named
Executive Officers in 2016.
Mr. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Gamzon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Galici . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Lescalleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mr. Bosco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
Stock Options
-
55,000
12,500
12,500
7,000
Shareholder Say-on-Pay Votes
At Griffin’s 2016 annual meeting of stockholders, Griffin’s stockholders were given the opportunity to cast an
advisory vote on Griffin’s executive compensation. Approximately 99.7% of the votes cast on this “2016 say-on-pay
vote” were voted in favor of the proposal. Griffin has considered the 2016 say-on-pay vote and believes that the support
for the 2016 say-on-pay vote proposal indicates that Griffin’s stockholders casting votes are supportive of the approach
81
to executive compensation. Thus, Griffin did not make changes to its executive compensation arrangements in response
to the 2016 say-on-pay vote. In the future, Griffin will continue to consider the outcome of the say-on-pay votes when
making compensation decisions regarding its Named Executive Officers.
Accounting and Tax Considerations
Griffin does not believe it need now adopt any policy with respect to the $1,000,000 deduction cap of
Section 162(m) of the Internal Revenue Code. While the Compensation Committee will give due consideration to the
deductibility of compensation payments on compensation arrangements with Griffin’s executive officers, the
Compensation Committee will make its compensation decisions based on an overall determination of what it believes to
be in the best interests of Griffin and its stockholders, and deductibility will be only one among a number of factors used
by the Compensation Committee in making its compensation decisions.
Section 4999 and Section 280G of the Internal Revenue Code provide that certain executives could be subject to
significant excise taxes if they receive payments or benefits that exceed certain limits in connection with a change in
ownership or change in effective control of Griffin and that Griffin or its successors could lose an income tax deduction
with respect to the payments subject to the excise tax. Griffin has not entered into any agreements with any executives
that provide for a tax “gross up” or other reimbursement for taxes the executive might be required to pay pursuant to
Section 4999 of the Internal Revenue Code.
Section 409A of the Internal Revenue Code imposes significant additional taxes and interest on underpayments
of taxes in the event an employee or other service provider defers compensation under a plan or agreement that does not
meet the requirements of Section 409A of the Internal Revenue Code. Griffin has generally structured its programs and
individual arrangements in a manner intended to be exempt from or comply with the requirements of Section 409A of
the Internal Revenue Code.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management Griffin’s Compensation
Discussion and Analysis, and based upon this review and discussion, has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Form 10-K and Griffin’s Proxy Statement for its 2017 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission.
Albert H. Small, Jr. (Chairman)
Thomas C. Israel
Jonathan P. May
82
Summary Compensation Table
The following table presents information regarding compensation of each of Griffin’s Named Executive
Officers for services rendered during fiscal years 2016, 2015 and 2014.
Non-Equity
Salary
($)
Bonus
Option
Incentive Plan
Awards (2) Compensation (3) Compensation
($)
All Other
($)
($)
Year
Name and Principal Position
— $
— $
Frederick M. Danziger . . . . . . . . . 2016 $ 369,308 $
— $
— $
Executive Chairman . . . . . . . 2015 $ 549,762 $
— $
— $
of Griffin (1) . . . . . . . . . . . . . . 2014 $ 539,269 $
— $ 640,750 $
Michael S. Gamzon . . . . . . . . . . . 2016 $ 485,760 $
— $
— $
President and Chief . . . . . . . . 2015 $ 351,237 $
— $
— $
Executive Officer of Griffin (1) 2014 $ 344,477 $
— $ 135,375 $
Anthony J. Galici . . . . . . . . . . . . . 2016 $ 295,442 $
— $
Vice President, Chief . . . . . . . 2015 $ 289,652 $
— $
Financial Officer and . . . . . . . 2014 $ 284,069 $ 15,000 $
— $
Secretary of Griffin
Thomas M. Lescalleet . . . . . . . . . 2016 $ 258,530 $
Senior Vice President, . . . . . . 2015 $ 253,460 $
Griffin Industrial, LLC . . . . . . 2014 $ 248,584 $
Scott Bosco . . . . . . . . . . . . . . . . . 2016 $ 167,983 $
Vice President of Construction, 2015 $ 162,870 $
Griffin Industrial, LLC . . . . . . 2014 $ 142,636 $
— $ 135,375 $
— $
— $
— $
— $
— $ 75,810 $
— $
— $
— $
— $
58,207 $
81,500 $
26,868 $
116,413 $
100,000 $
39,368 $
58,207 $
40,750 $
13,434 $
133,175 $
118,400 $
45,700 $
65,490 $
59,350 $
20,800 $
Total
($)
($)
2,893 (4) $ 430,408
$ 648,808
17,546
16,278
$ 582,415
13,781 (5) $ 1,256,704
$ 462,962
11,725
$ 394,348
10,503
16,948 (6) $ 505,972
$ 348,344
17,942
$ 329,332
16,829
12,213 (7) $ 539,293
10,671 (8) $ 382,531
10,998
$ 305,282
5,819 (9) $ 315,102
4,889 (10) $ 227,109
$ 167,945
4,509
(1) Effective January 1, 2016, Mr. Gamzon succeeded Mr. Danziger as Chief Executive Officer. Mr. Danziger remains
Executive Chairman of Griffin.
(2) The amounts shown for Option Awards reflects the grant date fair value of options granted in fiscal 2016. For a
discussion of the assumptions and methodologies used to calculate the amounts referred to above, please see the
discussion of stock option awards contained in Part II, Item 8, “Financial Statements and Supplementary Data” of
this Form 10-K in Note 8 of the Notes to Consolidated Financial Statements.
(3) Messrs. Danziger, Gamzon and Galici are beneficiaries of the Griffin Industrial Realty, Inc. incentive compensation
pool of the Griffin Industrial Realty Incentive Plan. Messrs. Bosco and Lescalleet are beneficiaries of the Griffin
Industrial, LLC incentive compensation pool of the Griffin Industrial Realty Incentive Plan.
(4) Represents life insurance premiums of $137, matching contributions related to the Griffin 401(k) Savings Plan of
$1,169 and matching contributions related to the Deferred Compensation Plan of $1,587.
(5) Represents life insurance premiums of $228, matching contributions related to the Griffin 401(k) Savings Plan of
$7,722 and matching contributions related to the Deferred Compensation Plan of $5,831.
(6) Represents life insurance premiums of $401, matching contributions related to the Griffin 401(k) Savings Plan of
$7,180, matching contributions related to the Deferred Compensation Plan of $1,367 and an automobile allowance
of $8,000.
(7) Represents life insurance premiums of $228, matching contributions related to the Griffin 401(k) Savings Plan of
$8,685 and a medical insurance allowance of $3,300.
(8) Represents life insurance premiums of $216, matching contributions related to the Griffin 401(k) Savings Plan of
$6,747, matching contributions related to the Deferred Compensation Plan of $408 and a medical insurance
allowance of $3,300. The amount of the matching contributions related to the Deferred Compensation Plan earned in
2015 was reduced by $1,677 to reflect the absence of matching contributions in calendar year 2015 based on Mr.
Lescalleet’s level of participation in the Griffin 401(k) Savings Plan.
(9) Represents life insurance premiums of $228 and matching contributions related to the Griffin 401(k) Savings Plan of
$5,591.
83
(10) Represents life insurance premiums of $216, matching contributions related to the Griffin 401(k) Savings Plan of
$3,834 and matching contributions related to the Deferred Compensation Plan of $839. The amount of the matching
contributions related to the Deferred Compensation Plan earned in 2015 was reduced by $481 to reflect the absence
of matching contributions in calendar year 2015 based on Mr. Bosco’s level of participation in the Griffin 401(k)
Savings Plan.
Grants of Plan-Based Awards
The following table presents information regarding the incentive awards granted to Griffin’s Named Executive
Officers for fiscal 2016.
Grant
Name
Date
Frederick M. Danziger (1) . . . . . . . . . . . —
Michael S. Gamzon (1) . . . . . . . . . . . . . —
Approval Target
Maximum Options
Date
—
—
($)
($)
$ 58,207 $ 86,625
$ 116,413 $ 173,250
Anthony J. Galici (1) . . . . . . . . . . . . . . . —
—
$ 58,207 $ 86,625
5/13/2016 4/27/2016
—
—
5/13/2016 4/27/2016
—
—
Thomas M. Lescalleet (2) . . . . . . . . . . . —
—
$ 133,175 $ 275,625
5/13/2016 4/27/2016
—
—
Scott Bosco (2) . . . . . . . . . . . . . . . . . . . . —
—
$ 65,490 $ 114,844
5/13/2016 4/27/2016
—
—
Estimated
Future Payouts
Under Non-Equity
Incentive Plan Awards
Option
Grant Date
Awards:
Number of Exercise Fair Value of
Securities Price of Stock and
Underlying Option
Option
Awards Awards
(#)
($)
— —
($/sh)
— —
— —
—
—
55,000 $ 26.89 $ 640,750
—
12,500 $ 26.89 $ 135,375
—
12,500 $ 26.89 $ 135,375
—
7,000 $ 26.89 $ 75,810
— —
— —
(1) The Griffin Industrial Realty Incentive Plan has no threshold or target levels; however, there is a maximum amount
payable to Messrs. Danziger, Gamzon and Galici under the Griffin Industrial Realty Incentive Plan as shown in the
Maximum column. The amounts shown for Messrs. Danziger, Gamzon and Galici in the Target column reflect the
amounts payable to them under the Griffin Industrial Realty Incentive Plan based on Griffin’s performance in fiscal
2016. The Compensation Committee did not exercise its discretion to award Messrs. Danziger, Gamzon, or Galici
any additional incentive bonus for fiscal 2016. Messrs. Danziger, Gamzon and Galici’s maximum of $86,625,
$173,250 and $86,625, respectively, is calculated assuming all goals of the Griffin Industrial Realty Incentive Plan
are met at the maximum level of each, which would result in an accrual of $577,500 into the Griffin Industrial
Realty, Inc. incentive compensation pool of the Griffin Industrial Realty Incentive Plan (excluding any additional
amount included in the incentive compensation pool and distributed at the discretion of the Compensation
Committee). Messrs. Danziger, Gamzon and Galici are entitled to 15%, 30% and 15%, respectively, of the Griffin
Industrial Realty, Inc. incentive compensation pool of the Griffin Industrial Realty Incentive Plan related to the FFO,
property sales, speculative buildings and build-to-suit components. Messrs. Danziger, Gamzon and Galici are not
specifically entitled to any portion of the incentive compensation pool that is distributed at the discretion of the
Compensation Committee and such amounts are not included in the maximum bonus amount.
(2) The Griffin Industrial Realty Incentive Plan has no threshold or target levels; however, there is a maximum amount
payable to Messrs. Lescalleet and Bosco under the Griffin Industrial Realty Incentive Plan as shown in the
Maximum column. The amount in the Target column for Mr. Lescalleet reflects the amount payable of $133,175
based on Griffin Industrial, LLC’s performance during fiscal 2016. The amount in the Target column for Mr. Bosco
reflects the amount payable of $65,490 based on Griffin Industrial, LLC’s performance during fiscal 2016 including
$10,000 from the unallocated portion of the Griffin Industrial, LLC incentive compensation pool awarded by
Griffin’s Executive Chairman, its President and CEO and the Compensation Committee. Messrs. Lescalleet’s and
Bosco’s maximums of $275,625 and $114,844, respectively, are calculated assuming all goals of the Griffin
Industrial Realty Incentive Plan are met at the maximum level of each, which would result in an accrual of $918,750
into the Griffin Industrial, LLC incentive compensation pool of the Griffin Industrial Realty Incentive Plan
(excluding any amount included in the incentive compensation pool and distributed at the discretion of the
Compensation Committee). Messrs. Lescalleet and Bosco are entitled to 30% and 12.5%, respectively, of the Griffin
84
Industrial, LLC incentive compensation pool of the Griffin Industrial Realty Incentive Plan (excluding any
additional amount included in the incentive compensation pool and distributed at the discretion of the Compensation
Committee). Messrs. Lescalleet and Bosco are not specifically entitled to any portion of the incentive compensation
pool that is distributed at the discretion of the Compensation Committee and such amounts are not included in the
maximum bonus amount.
Outstanding Equity Awards at Fiscal Year-End
The following table presents information with respect to each unexercised stock option held by Griffin’s Named
Executive Officers as of November 30, 2016. There are no restricted stock awards.
Option Awards
Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised Unexercised
Options
Options
(#)
(#)
Option
Exercise
Price
Exercisable Unexercisable (1)
($)
Option
Expiration
Date
End (2)
($)
Exercisable
Value of
Value of
Unexercised
Unexercised
In-the-Money In-the-Money
Options at
Fiscal Year
Name
Frederick M. Danziger . . . . . . . . . . . . .
Michael S. Gamzon . . . . . . . . . . . . . . . .
Anthony J. Galici . . . . . . . . . . . . . . . . . .
Thomas M. Lescalleet . . . . . . . . . . . . . .
Scott Bosco . . . . . . . . . . . . . . . . . . . . . .
15,000
25,000
40,000
25,000
7,500
25,000
—
57,500
7,500
12,500
—
20,000
7,500
12,500
—
20,000
5,000
5,000
—
10,000
— $ 33.07 1/20/2019 $
— $ 28.77 1/19/2021 $
—
$
— $ 34.04 1/9/2018 $
— $ 33.07 1/20/2019 $
— $ 28.77 1/19/2021 $
55,000 $ 26.89 5/13/2026 $
$
55,000
— $ 33.07 1/20/2019 $
— $ 28.77 1/19/2021 $
12,500 $ 26.89 5/13/2026
12,500
$
— $ 33.07 1/20/2019 $
— $ 28.77 1/19/2021 $
12,500 $ 26.89 5/13/2026
12,500
$
— $ 33.07 1/20/2019 $
— $ 28.77 1/19/2021 $
7,000 $ 26.89 5/13/2026 $
$
7,000
— (3) $
67,000 $
67,000 $
— (3) $
— (3) $
67,000 $
Options at
Fiscal Year
End (2)
($)
Unexercisable
—
—
—
—
—
—
— $ 250,800
67,000 $ 250,800
—
—
57,000
57,000
—
—
57,000
57,000
—
—
31,920
31,920
— (3) $
33,500 $
—
33,500 $
— (3) $
33,500 $
—
33,500 $
— (3) $
13,400 $
— $
13,400 $
(1) Stock options issued to employees vest in equal installments on the third, fourth and fifth anniversaries from the date
of grant (which is ten years prior to the applicable option expiration date).
(2) The amounts presented in this column have been calculated based upon the difference between the fair market value
of $31.45 per share (the closing price of Griffin’s common stock on November 30, 2016) and the exercise price of
each stock option.
(3) There is no amount stated because the exercise price of the stock options is greater than the fair market value of
$31.45 per share (the closing price of Griffin’s common stock on November 30, 2016).
85
Non-Qualified Deferred Compensation
Griffin maintains a Deferred Compensation Plan for certain of its employees who, due to Internal Revenue
Service guidelines, cannot take full advantage of the Griffin 401(k) Savings Plan. A portion of an eligible employee’s
salary may be deferred under the Deferred Compensation Plan. The investment options in the Deferred Compensation
Plan currently mirror those of the Griffin 401(k) Savings Plan. The Deferred Compensation Plan is unfunded, with
benefits to be paid from Griffin’s assets. Performance results of an employee’s balance in the Deferred Compensation
Plan are based on the returns of the mutual funds and one common collective trust fund that may be selected by the
employee as if the amounts deferred were invested in the selected mutual funds and the common collective trust fund.
Distributions from the Deferred Compensation Plan generally may occur at termination of employment, change in
control and/or at the time of qualifying hardship events. The following table presents information with respect to the
Deferred Compensation Plan for Griffin’s Named Executive Officers as of November 30, 2016.
Executive
Contributions Contributions Earnings in Balance as of
Aggregate Aggregate
Griffin
Name
Frederick M. Danziger . . . . . . . . . . . . $
Michael S. Gamzon . . . . . . . . . . . . . . . $
Anthony J. Galici . . . . . . . . . . . . . . . . $
Thomas M. Lescalleet . . . . . . . . . . . . . $
Scott Bosco . . . . . . . . . . . . . . . . . . . . . $
for FYE
for FYE
FYE
11/30/2016 11/30/2016 (1) 11/30/2016
FYE
11/30/2016
9,472 $
27,889 $
46,176 $
— $
2,525 $
1,587 $ 129,053 $ 1,731,129
5,831 $ 24,853 $ 303,850
1,367 $ 67,543 $ 877,934
— $ 4,611 $ 117,439 (2)
82,131 (2)
— $ 3,840 $
(1) Griffin’s contributions to the Deferred Compensation Plan are included in the “All Other Compensation” column of
the Summary Compensation Table. No earnings from the Deferred Compensation Plan are included in the “All
Other Compensation” column of the Summary Compensation Table.
(2) These amounts include reductions to the Executive and Griffin Contributions earned for FYE 11/30/15 to the
Deferred Compensation Plan as a result of the Named Executive Officers’ level of participation in the Griffin 401(k)
Savings Plan in calendar year 2015.
86
Potential Payments Upon a Termination or Change in Control
As of November 30, 2016, Griffin was not a party to any employment, change in control or other agreement
with any Named Executive Officers that was expected to obligate Griffin to provide for payments at, following, or in
connection with a termination of employment, change in control or change in the Named Executive Officer’s
responsibilities. However, participants of Griffin’s Deferred Compensation Plan may elect to have their balances paid
out in lump sum or annual installments upon termination of employment or a change in control of Griffin. The deferred
compensation balance for each such Named Executive Officer, as of November 30, 2016, is set forth in the
“Non-Qualified Deferred Compensation” table above. Additionally, pursuant to the 2009 Stock Option Plan, if option
grants are assumed by a successor corporation (or a parent or subsidiary thereof) in connection with a change in control,
the vesting of such grants will be accelerated upon termination of a Named Executive Officer’s employment upon or
within twelve months following such change in control. As of November 30, 2016, the exercise price for 167,000 of the
outstanding options held by Named Executive Officers exceeded the closing market price of $31.45 per share of Griffin
common stock. The aggregate value of such options (based on the excess of the closing price of Griffin’s common stock,
as of November 30, 2016, over the exercise price) is $611,120. The following table presents information regarding the
value of such options to each of Griffin’s Named Executive Officers following a termination of employment upon or
within twelve months following such change in control (assuming such termination occurred on November 30, 2016):
Name
Frederick M. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael S. Gamzon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anthony J. Galici . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas M. Lescalleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scott Bosco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated Value of
In-the-Money
Options Following
Termination Upon or
Within Twelve Months
Following A
Change In Control (1)
$
$
$
$
$
67,000
317,800
90,500
90,500
45,320
(1) Stock option values are calculated based on the difference between $31.45, the November 30, 2016 closing price of
Griffin’s common stock, and the option exercise price, multiplied by the total number of stock options.
87
Director Compensation
The following table represents information regarding the compensation paid during fiscal 2016 to members of
Griffin’s Board of Directors who are not also employees (the “Non-Employee Directors”). The compensation paid to
Messrs. Frederick M. Danziger and Michael S. Gamzon is presented above in the Summary Compensation Table and the
related explanatory notes. Messrs. Frederick M. Danziger and Michael S. Gamzon did not receive compensation related
to their activities as members of the Board of Directors.
Fees
Earned or
Paid in Cash
($)
Option
Awards
($)
Total
($)
Name
David R. Bechtel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,107 (2) $ 25,911 (1) $ 58,018
Winston J. Churchill, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 22,679 (3) $ 149,539 (4) $ 172,218
Edgar M. Cullman, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,500 $ 17,278 (1) $ 57,778
1,566 (5) $ 90,962 (6) $ 92,528
David M. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
Frederick M. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Michael S. Gamzon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
—
Thomas C. Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,325 $ 17,278 (1) $ 79,603
Jonathan P. May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,390 $ 17,278 (1) $ 74,668
Albert H. Small, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 57,000 $ 17,278 (1) $ 74,278
— $
— $
— $
— $
(1) The amount shown for Option Awards reflects the grant date fair value of options granted in fiscal 2016. For a
discussion of the assumptions and methodologies used to calculate the amounts referred to above, please see the
discussion of stock option awards contained in Part II, Item 8, “Financial Statements and Supplementary Data” of
this Form 10-K in Note 8 of the Notes to Consolidated Financial Statements.
(2) David R. Bechtel was elected to the Board of Directors on May 10, 2016. The fees reported are for the period
May 10 through November 30, 2016.
(3) Winston J. Churchill, Jr. did not seek re-election to the Board of Directors at the May 10, 2016 Annual Meeting. The
fees reported are for the period December 1, 2015 through May 9, 2016.
(4) Winston J. Churchill, Jr. did not receive a stock option award in fiscal 2016. However, the exercise period for each
of Mr. Churchill’s vested options outstanding as of his retirement on May 9, 2016 was extended through the tenth
anniversary of the applicable date of grant. The amount shown for Option Awards reflects the incremental fair value
of options so modified in fiscal 2016. For a discussion of the assumptions and methodologies used to calculate the
amounts referred to above, please see the discussion of stock option awards contained in Part II, Item 8, “Financial
Statements and Supplementary Data” of this Form 10-K in Note 8 of the Notes to Consolidated Financial
Statements.
(5) David M. Danziger resigned from the Board of Directors on January 19, 2016. The fees reported are for the period
December 1, 2015 through January 18, 2016. Michael S. Gamzon was appointed to the Board of Directors to replace
Mr. David M. Danziger.
(6) David M. Danziger did not receive a stock option award in fiscal 2016. However, the exercise period for each of
Mr. David M. Danziger’s vested options outstanding as of his resignation on January 19, 2016 was extended through
the tenth anniversary of the applicable date of grant. The amount shown for Option Awards reflects the incremental
fair value of options so modified in fiscal 2016. For a discussion of the assumptions and methodologies used to
calculate the amounts referred to above, please see the discussion of stock option awards contained in Part II, Item 8,
“Financial Statements and Supplementary Data” of this Form 10-K in Note 8 of the Notes to Consolidated Financial
Statements.
88
The following table represents the number of outstanding and unexercised stock option awards held by each of
the Non-Employee Directors as of November 30, 2016:
Number of Shares
Director
David R. Bechtel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Winston J. Churchill, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Edgar M. Cullman, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David M. Danziger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas C. Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jonathan P. May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Albert H. Small, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subject to
Outstanding Options
as of 11/30/2016
2,293
10,927
3,441
7,277
13,730
7,447
13,251
Members of the Board of Directors who are not employees of Griffin receive $30,000 per year and $1,500 for
each Board or Committee meeting they attend. A non-employee Chairman of the Board of Directors receives an annual
fee of $15,000. The Chairmen of the Audit and Compensation Committees each receive an annual fee of $10,000 per
year. The Nominating Committee Chairman receives an annual fee of $5,000 per year. Audit and Compensation
Committee members, excluding the Chairmen, each receive $5,000 per year for their service on the Committees.
Members of the Nominating Committee, excluding the Chairman, each receive $2,500 per year for their service on the
Committee. Annual retainers are paid in quarterly installments. Upon the initial election of a Non-Employee Director to
the Board of Directors, the Non-Employee Director is granted options exercisable for shares of common stock at an
exercise price that is the fair market value of a share of common stock at the time of the grant. The number of shares
subject to options granted to Non-Employee Directors at the time of initial election to the Board of Directors is equal to
$60,000 divided by the fair market value per share of Griffin common stock at the time of grant. Griffin granted
Mr. Bechtel options exercisable for 2,293 shares of common stock at the time of his initial election to the Board of
Directors. The 2009 Stock Option Plan also provides that Non-Employee Directors annually receive options exercisable
for shares of common stock at an exercise price that is the fair market value of a share of common stock at the time of
grant. Under the 2009 Stock Option Plan, the number of shares, subject to options, granted to Non-Employee Directors
upon their reelection to the Board of Directors, is equal to $40,000 divided by the fair market value per share of Griffin
common stock at the time of grant. Stock options granted to Non-Employee Directors upon their re-election to the Board
of Directors vest on the second anniversary of the date of grant. In 2016, Griffin granted Messrs. Cullman, Jr., Israel,
May and Small, Jr. each options exercisable for 1,529 shares of common Stock upon their reelection to the Board of
Directors. Mr. Churchill, Jr. did not stand for reelection to the Board of Directors and Mr. David M. Danziger resigned
from the Board of Directors on January 19, 2016, therefore, they did not receive any additional option grants in 2016. In
connection with Mr. Churchill, Jr.’s retirement and Mr. David M. Danziger’s resignation, however, Griffin elected to
extend the exercisability of their outstanding vested options through the tenth anniversary of the applicable grant date
thereof.
Compensation Committee Interlocks and Insider Participation
During fiscal 2016, Messrs. Churchill, Jr., Israel, May and Small, Jr. served as members of Griffin’s
Compensation Committee. Mr. Churchill retired from the Board of Directors on May 9, 2016. Mr. May was appointed to
the Compensation Committee on May 10, 2016. No member of the Compensation Committee has been an officer or
employee of Griffin. None of Griffin’s executive officers have served as a director or member of the compensation
committee of any entity whose executive officers served as a director of Griffin or as a member of Griffin’s
Compensation Committee.
89
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table lists the number of shares and options to purchase shares of common stock of Griffin
beneficially owned or held by: (i) each person known by Griffin to beneficially own more than 5% of the outstanding
shares of common stock; (ii) each director; (iii) the Named Executive Officers (as defined in Item 11); and (iv) all
directors and executive officers of Griffin, collectively. Unless otherwise indicated, information is provided as of
January 31, 2017.
Name and Address (1)
Cullman and Ernst Group (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Edgar M. Cullman, Jr. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Frederick M. Danziger (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael S. Gamzon (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David R. Bechtel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Brookside Park
Greenwich, CT 06831
Shares
Beneficially
Owned (2)
Percent
of Total
2,443,559
1,058,615
308,289
143,656
3,387
47.5
21.0
6.1
2.8
*
Thomas C. Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40,147
Ingleside Investors
12 East 49th Street
New York, NY 10017
Jonathan P. May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,644
116 East 95th Street
New York, NY 10128
Albert H. Small, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,448
7311 Arrowood Road
Bethesda, MD 20817
Anthony J. Galici . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,023
Griffin Industrial Realty, Inc.
204 West Newberry Road
Bloomfield, CT 06002
Thomas M. Lescalleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22,500
Griffin Industrial, LLC
204 West Newberry Road
Bloomfield, CT 06002
Scott Bosco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,000
Griffin Industrial, LLC
204 West Newberry Road
Bloomfield, CT 06002
*
*
*
*
*
*
Gabelli Funds, LLC et al (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,837,262
36.5
Gabelli Funds, LLC
One Corporate Center
Rye, NY 10580
All directors and executive officers collectively, consisting of 10 persons (5)
1,642,709
31.6
* Less than 1%
(1) Unless otherwise indicated, the address of each person named in the table is 641 Lexington Avenue, New York, NY
10022.
(2) This information reflects the definition of beneficial ownership adopted by the Securities and Exchange Commission
(the “Commission”). Beneficial ownership reflects sole investment and voting power, unless otherwise indicated in
the footnotes to this table. Where more than one person shares investment and voting power in the same shares, such
shares may be shown more than once. Such shares are reflected only once, however, in the total for all directors and
executive officers. Includes stock options granted pursuant to the 2009 Stock Option Plan, as amended, that are
90
exercisable within 60 days of January 31, 2017 as follows: Edgar M. Cullman, Jr—1,912 options; Frederick M.
Danziger—40,000 options; Michael S. Gamzon—57,500 options; David R. Bechtel—2,293 options; Thomas C.
Israel—10,927 options; Jonathan P. May—4,644 options; Albert H. Small, Jr.—10,448 options; Anthony J. Galici—
20,000 options; Thomas M. Lescalleet—20,000 options; and Scott Bosco—10,000 options.
(3) Based on Schedule 13D/A filed with the Commission on February 15, 2012 on behalf of the Cullman and Ernst
Group and Griffin’s records. Included in the shares held by the Cullman and Ernst Group are the following:
Shares
Beneficially Dispositive
Owned
Name
Cullman Jr., Edgar M. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,058,615
919,558
Cullman, Susan R. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
741,053
Danziger, Lucy C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
489,659
Danziger, David M. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
408,483
Gamzon, Rebecca D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
380,955
Ernst, John L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
360,481
Cullman, Georgina D. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
354,029
Sicher, Carolyn B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
345,781
Cullman, Elissa F. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
344,525
Cullman, Samuel B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
342,190
Cullman III, Edgar M. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
308,289
Danziger, Frederick M.. . . . . . . . . . . . . . . . . . . . . . . . . . . .
233,792
B Bros. Realty LLC (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .
143,656
Gamzon, Michael S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116,037
Fabrici, Carolyn S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,428
Ernst, Alexandra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,134
Ernst, Jessica P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39,548
Estate of Louise B. Cullman (b) . . . . . . . . . . . . . . . . . . . . .
21,777
Ernst, Margot P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,176
Ernst, Matthew L. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,730
Kirby, John J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Power
Shares with
Shares with
Sole Voting and Shared Voting
and Dispositive
Power
983,748
870,609
677,731
458,805
397,933
373,606
350,931
332,607
330,931
330,931
330,931
204,755
—
81,156
116,037
92,680
43,884
—
21,777
3,526
—
74,867
48,949
63,322
30,854
10,550
7,349
9,550
21,422
14,850
13,594
11,259
103,534
233,792
62,500
—
1,748
1,250
39,548
—
1,650
4,730
(a) Susan R. Cullman and John Ernst are managing members.
(b) Edgar M. Cullman, Jr., Susan R. Cullman and Lucy C. Danziger are executors.
The Schedule 13D/A states that there is no formal agreement governing the Cullman and Ernst Group’s holding and
voting of shares held by members of the Cullman and Ernst Group but that there is an informal understanding that
the persons and entities included in the group will hold and vote together with respect to shares owned by each of
them in each case subject to any applicable fiduciary responsibilities. None of the shares held by members of the
Cullman and Ernst Group are pledged.
(4) Griffin has received a copy of Schedule 13D/A as filed with the Commission by Gabelli Funds, LLC et al, reporting
ownership of these shares as of September 1, 2015. As reported in said Schedule 13D/A, Gabelli Funds, LLC reports
sole dispositive power with respect to 579,367 shares, GAMCO Asset Management Inc. (“GAMCO”) reports sole
voting power with respect to 997,160 of these shares and sole dispositive power with respect to 1,062,495 of these
shares and Teton Advisors, Inc. (“Teton Advisors”) reports sole voting and dispositive power with respect to
195,400 of these shares. The securities have been acquired by GGCP, Inc. (“GGCP”), and certain of its direct and
indirect subsidiaries, including GAMCO Investors, Inc. (“GBL”), on behalf of their investment advisory clients.
Mario Gabelli, as the controlling stockholder, Chief Executive Officer and a director of GGCP, Chairman and Chief
Executive Officer of GBL, and the controlling shareholder of Teton Advisors, is deemed to have beneficial
ownership of the shares owned beneficially by Gabelli Funds, LLC, GAMCO and Teton Advisors. GBL and GGCP
are deemed to have beneficial ownership of the shares beneficially owned by each of the foregoing persons other
than Mario Gabelli and the Gabelli Foundation, Inc. For the shares held by Gabelli Funds, LLC, with respect to the
55,000 shares held by the Gabelli Capital Asset Fund, the 56,000 shares held by the Gabelli Equity Trust, the
104,000 shares held by the Gabelli Asset Fund, the 122,000 shares held by the Gabelli Value 25 Fund, Inc., the
91
230,068 shares held by the Gabelli Small Cap Growth Fund, the 10,000 shares held by the Gabelli Equity Income
Fund, and the 2,299 shares held by the Gabelli Global Small and Mid Cap Value Trust, the proxy voting committee
of each such fund has taken and exercises in its sole discretion the entire voting power with respect to the shares
held by such funds.
(5) Excluding shares held by certain charitable foundations, the officers and/or directors of which include certain
officers and directors of Griffin.
Equity Compensation Plan Information
Number of
securities to be
issued upon
exercise of
outstanding
options
(a)
Weighted
average
exercise price
of outstanding
options
(b)
Number of securities
remaining available for future
issuance under the equity
compensation plan (excluding
securities reflected in
column (a))
(c)
324,546 $
29.23
168,534
Plan Category
Equity compensation plan approved by security holders .
Note: There are no equity compensation plans that were not approved by security holders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
Review and Approval of Related Person Transactions
Griffin reviews any relationships and transactions in which Griffin and its directors and executive officers or
their immediate family members are participants to determine whether such persons have a direct or indirect material
interest. Griffin’s corporate staff is primarily responsible for the development and implementation of processes and
controls to obtain information from the directors and executive officers with respect to related person transactions and
for then determining, based on the facts and circumstances, whether a related person has a direct or indirect material
interest in the transaction. As required under SEC rules, transactions that are determined to be directly or indirectly
material to a related person are disclosed in Griffin’s Annual Report on Form 10-K and proxy statement.
On November 24, 2015, the Audit Committee approved a proposed transaction whereby Griffin entered into a
ten year sublease of approximately 1,920 square feet of office space for its New York City corporate headquarters from
Bloomingdale Properties, Inc. (“Bloomingdale Properties”), an entity controlled by certain members of the Cullman and
Ernst Group (see “Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters”). The sublease with Bloomingdale Properties is at market rates for such space and enables either Griffin or
Bloomingdale Properties to terminate the sublease agreement upon a change in control (as defined) of either Griffin or
Bloomingdale Properties. The sublease of office space from Bloomingdale Properties reduced the occupancy costs for
Griffin’s corporate headquarters.
Board Independence
Under NASDAQ rules, an “independent director” of a company means a person who is not an officer or
employee of the company or its subsidiaries and, in the opinion of the company’s board of directors, does not have a
relationship with the company that would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. The Board has determined that Messrs. Bechtel, Israel, May and Small, Jr. qualify as
independent directors under NASDAQ rules. All of the members of the Audit, Compensation and Nominating
Committees are independent directors under the applicable NASDAQ and SEC rules.
92
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a summary of the fees incurred by Griffin for professional services rendered by RSM US LLP
(“RSM US”) for fiscal 2016 and fiscal 2015:
Fiscal
2015 Fees
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 423,682 $ 422,686
20,420
Audit-related fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,685
Tax fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 489,262 $ 500,791
20,200
45,380
—
2016 Fees
Fiscal
Audit fees consist of fees incurred for professional services rendered for the audit of Griffin’s consolidated
financial statements and for the review of Griffin’s interim consolidated financial statements. Audit-related fees include
fees incurred for professional services rendered for the audit of Griffin’s 401(k) Savings Plan by RSM US. Tax fees
consist of fees incurred for professional services performed by RSM US relating to tax compliance, tax reporting and tax
planning. There were no consulting fees paid to RSM US in fiscal 2016 or fiscal 2015.
The Audit Committee’s policy is to pre-approve all audit, audit-related and tax services to be provided by the
independent registered public accountants. During fiscal 2016, Griffin’s Audit Committee pre-approved all audit,
audit-related and tax services. The Audit Committee has considered the non-audit services provided by RSM US and
determined that the services provided were compatible with maintaining the independence of RSM US.
93
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)(1) Financial Statements of Griffin Industrial Realty, Inc. See Item 8.
PART IV
Consolidated Balance Sheets as of November 30, 2016 and November 30, 2015
Consolidated Statements of Operations for the Fiscal Years Ended November 30, 2016,
November 30, 2015 and November 30, 2014
Consolidated Statements of Comprehensive Income (Loss) for the Fiscal Years Ended
November 30, 2016, November 30, 2015 and November 30, 2014
Consolidated Statements of Changes in Stockholders’ Equity for the Fiscal Years Ended
November 30, 2016, November 30, 2015 and November 30, 2014
Consolidated Statements of Cash Flows for the Fiscal Years Ended November 30, 2016,
November 30, 2015 and November 30, 2014
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
II—Valuation and Qualifying Accounts and Reserves
III—Real Estate and Accumulated Depreciation
(a)(3) Exhibits
36
37
38
39
40
41
S-1
S-2/S-3
94
EXHIBIT INDEX
Incorporated by Reference
Exhibit
Number
Exhibit Description
2.1 Asset Purchase Agreement, dated January 6, 2014,
effective January 8, 2014, among Monrovia
Connecticut LLC as Buyer, Monrovia Nursery Company
as Guarantor, Imperial Nurseries, Inc. as Seller and Griffin
Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.) as Owner
Form File No.
8-K
001-12879 2.1
Exhibit
Filing
Date
1/14/14
Filed/
Furnished
Herewith
2.2 Letter Agreement, dated January 6, 2014, among Imperial
8-K
001-12879 2.2
1/14/14
Nurseries, Inc., River Bend Holdings, LLC, Monrovia
Connecticut LLC and Monrovia Nursery Company
3.1 Amended and Restated Certificate of Incorporation of
10-Q 001-12879 3.1
10/10/13
Griffin Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.)
3.2 Certificate of Amendment to Amended and Restated
Certificate of Incorporation of Griffin Industrial
Realty, Inc. (f/k/a Griffin Land & Nurseries, Inc.)
8-K
001-12879 3.2
5/13/15
3.3 Amended and Restated By-laws of Griffin Industrial
8-K
001-12879 3.3
5/13/15
Realty, Inc.
10.1† Form of 401(k) Plan of Griffin Industrial Realty, Inc.
10
001-12879 10.7
4/8/97
(f/k/a Griffin Land & Nurseries, Inc.)
10.2† Griffin Industrial Realty, Inc. (f/k/a Griffin Land &
10-K 001-12879 10.2
2/13/14
Nurseries, Inc.) 2009 Stock Option Plan
10.3† Form of Stock Option Agreement under Griffin Industrial
10-K 001-12879 10.3
2/13/14
Realty, Inc. (f/k/a Griffin Land & Nurseries, Inc.) 2009
Stock Option Plan
10.4 Mortgage Deed, Security Agreement, Financing Statement
and Fixture Filing with Absolute Assignment of Rents and
Leases dated September 17, 2002 between Tradeport
Development I, LLC and Farm Bureau Life Insurance
Company
10-Q 001-12879 10.21 10/11/02
10.5 Mortgage Deed and Security Agreement dated
10-K 001-12879 10.24 2/28/02
December 17, 2002 between Griffin Center
Development IV, LLC and Webster Bank, N.A.
10.6 Secured Installment Note and First Amendment of
10-Q 001-12879 10.28 7/13/04
Mortgage and Loan Documents dated April 16, 2004
among Tradeport Development I, LLC, and Griffin
Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.) and Farm Bureau Life Insurance
Company
10.7 Mortgage Deed Security Agreement, Fixture Filing,
10-Q 001-12879 10.29 11/2/05
Financing Statement and Assignment of Leases and Rents
dated July 6, 2005 by Tradeport Development II, LLC in
favor of First Sunamerica Life Insurance Company
10.8 Promissory Note dated July 6, 2005
10-Q 001-12879 10.30 11/2/05
95
Exhibit
Number
Exhibit Description
10.9 Guaranty Agreement as of July 6, 2005 by Griffin
Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.) in favor of Sunamerica Life Insurance
Company
Incorporated by Reference
Form File No.
10-Q 001-12879 10.31 11/2/05
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10.10 Amended and Restated Mortgage Deed Security
10-K 001-12879 10.32 2/15/07
Agreement, Fixture Filing, Financing Statement and
Assignment of Leases and Rents dated November 16,
2006 by Tradeport Development II, LLC in favor of First
Sunamerica Life Insurance Company
10.11 Amended and Restated Promissory Note dated
November 16, 2006
10-K 001-12879 10.33 2/15/07
10.12 Guaranty Agreement as of November 16, 2006 by Griffin
10-K 001-12879 10.34 2/15/07
Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.) in favor of Sunamerica Life Insurance
Company
10.13 Construction Loan and Security Agreement dated
10-Q 001-12879 10.36 10/6/10
February 6, 2009 by and between Tradeport
Development III, LLC, Griffin Industrial Realty, Inc.
(f/k/a Griffin Land & Nurseries, Inc.), and Berkshire Bank
10.14 $12,000,000 Construction Note dated February 6, 2009
10.15 Loan and Security Agreement dated July 9, 2009 between
Griffin Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.) and People’s United Bank
10.16 $10,500,000 Promissory Note dated July 9, 2009
10.17 Mortgage and Security Agreement dated January 27, 2010
10-Q 001-12879 10.37 4/9/09
10-Q 001-12879 10.40 10/8/09
10-Q 001-12879 10.41 10/8/09
10-Q 001-12879 10.42 10/6/10
between Riverbend Crossings III Holdings, LLC and
NewAlliance Bank
10.18 $4,300,000 Promissory Note dated January 27, 2010
10.19 First Modification of Promissory Note, Mortgage Deed
10-Q 001-12879 10.43 4/8/10
10-K 001-12879 10.44 2/10/11
and Security Agreement and Other Loan Documents
between Riverbend Crossings III Holdings, LLC and New
Alliance Bank dated October 27, 2010
10.23 Third Modification Agreement between Griffin Center
8-K
001-12879 10.48 6/20/12
Development IV, LLC, Griffin Center Development
V, LLC, Griffin Industrial Realty, Inc. (f/k/a Griffin
Land & Nurseries, Inc.) and Webster Bank, N.A. dated
June 15, 2012
10.24 Second Amendment to Mortgage Deed and Security
10-Q 001-12879 10.49 6/1/13
Agreement and other Loan Documents between
Riverbend Crossings III Holdings, LLC and First Niagara
Bank dated April 1, 2013
10.25 Amended and Restated Term Note dated April 1, 2013
10.26 Revolving Line of Credit Loan Agreement with Webster
10-Q 001-12879 10.50 7/11/13
10-Q 001-12879 10.51 6/1/13
Bank, N.A. dated April 24, 2013
10.27 Revolving Line of Credit Note dated April 24, 2013
10-Q 001-12879 10.52 6/1/13
96
Exhibit
Number
Exhibit Description
10.28 Mortgage and Security Agreement between Riverbend
Bethlehem Holdings I, LLC and First Niagara Bank, N.A.
effective August 28, 2013
Incorporated by Reference
Form File No.
10-Q 001-12879 10.53 10/10/13
Exhibit
Filing
Date
Filed/
Furnished
Herewith
10-Q 001-12879 10.54 10/10/13
6/9/14
8-K
001-12879 10.1
10.29 $9,100,000 Term Note effective August 28, 2013
10.31 First Modification of Mortgage and Loan Documents
between Griffin Center Development I, LLC, Griffin
Industrial Realty, Inc. (f/k/a Griffin Land &
Nurseries, Inc.), Tradeport Development I, LLC and Farm
Bureau Life Insurance Company, dated June 6, 2014
10.32 Amended and Restated Secured Installment Note of
8-K
001-12879 10.2
6/9/14
Griffin Center Development I, LLC to Farm Bureau Life
Insurance Company, dated June 6, 2014
10.33 Second Modification of Mortgage and Loan Documents
8-K
001-12879 10.3
6/9/14
between Tradeport Development I, LLC, Griffin Industrial
Realty, Inc. (f/k/a Griffin Land & Nurseries, Inc.), Griffin
Center Development I, LLC and Farm Bureau Life
Insurance Company, dated June 6, 2014
10.34 Amended and Restated Secured Installment Note of
Tradeport Development I, LLC to Farm Bureau Life
Insurance Company, dated June 6, 2014
8-K
001-12879 10.4
6/9/14
10.35 Mortgage and Security Agreement between Riverbend
10-K 001-12879 10.35 2/13/15
Bethlehem Holdings I, LLC and First Niagara Bank, N.A.
effective December 31, 2014
10.36 $21,600,000 Term Note effective December 31, 2014
10.37 Mortgage, Assignment of Rents and Security Agreement
10-K 001-12879 10.37 2/13/15
10-Q 001-12879 10.38 10/9/15
dated July 29, 2015 between Tradeport
Development II, LLC and 40|86 Mortgage Capital, Inc.
10.38 $18,000,000 Promissory Note dated July 29, 2015
10.39 Open-End Mortgage, Assignment of Leases and Rents and
10-Q 001-12879 10.39 10/9/15
10-Q 001-12879 10.40 10/9/15
Security Agreement by Riverbend Hanover Properties
II, LLC as Mortgagor to and for the benefit of Webster
Bank, N.A. as Mortgagee dated August 28, 2015 and
effective as of September 1, 2015
10.40 $14,100,000 Promissory Note dated September 1, 2015
10.41† Letter Agreement by and between Griffin Industrial
10-Q 001-12879 10.41 10/9/15
10-K 001-12879 10.41 2/12/16
Realty, Inc. and John J. Kirby, Jr. dated July 22, 2015
10.42† Letter Agreement by and between Griffin Industrial
10-Q 001-12879 10.42 4/8/16
Realty, Inc. and David M. Danziger dated March 8, 2016
10.43† Letter Agreement by and between Griffin Industrial
10-Q 001-12879 10.43 7/8/16
Realty, Inc. and Winston J. Churchill, Jr. dated May 16,
2016
10.44 $14,350,000 Promissory Note dated April 26, 2016
10.45 Loan and Security Agreement between Griffin Industrial
Realty, Inc. and People’s United Bank, N.A. dated April
26, 2016
10-Q 001-12879 10.44 7/8/16
10-Q 001-12879 10.45 7/8/16
10.46 First Amendment to Revolving Line of Credit Loan
10-Q 001-12879 10.46 7/8/16
Agreement with Webster Bank, N.A. dated April 26, 2016
97
Filed/
Furnished
Herewith
*
*
*
*
*
*
*
**
**
*
*
*
*
*
*
Exhibit
Number
Exhibit Description
10.47 Second Amendment to Revolving Line of Credit Loan
Agreement by and between Griffin Industrial Realty, Inc.
and Webster Bank, N.A. dated July 22, 2016
10.48 Amended and Restated Revolving Line of Credit Note
with Webster Bank, N.A. dated July 22, 2016
10.49 $26,724,948.03 Promissory Note dated November 17,
Incorporated by Reference
Form File No.
10-Q 001-12879 10.47 10/7/16
Exhibit
Filing
Date
10-Q 001-12879 10.48 10/7/16
2016
10.50 Open-End Mortgage, Assignment of Leases and Rents and
Security Agreement by Riverbend Hanover Properties
I, LLC as Mortgagor to and for the benefit of Webster
Bank, N.A. as Mortgagee dated November 14, 2016 and
effective as of November 17, 2016
10.51 Open-End Mortgage, Assignment of Leases and Rents and
Security Agreement by Riverbend Hanover Properties
II, LLC as Mortgagor to and for the benefit of Webster
Bank, N.A. as Mortgagee dated November 14, 2016 and
effective as of November 17, 2016
21 Subsidiaries of Griffin Industrial Realty, Inc.
23.1 Consent of Independent Registered Public Accounting
Firm
31.1 Certifications of Chief Executive Officer Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended
31.2 Certifications of Chief Financial Officer Pursuant to
Rules 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended
32.1 Certifications of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350
32.2 Certifications of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase
Document
† A management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to
Item 15(a)(3) of Form 10-K.
* Filed herewith.
** Furnished herewith.
ITEM 16. FORM 10-K SUMMARY.
N/A
98
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Signatures
Date: February 10, 2017
Date: February 10, 2017
GRIFFIN INDUSTRIAL REALTY, INC.
BY:
BY:
/s/ MICHAEL S. GAMZON
Michael S. Gamzon
President and Chief Executive Officer
/s/ ANTHONY J. GALICI
Anthony J. Galici
Vice President, Chief Financial Officer and
Secretary, Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date
Name
Title
February 10, 2017
/s/ DAVID R. BECHTEL
David R. Bechtel
February 10, 2017
/s/ EDGAR M. CULLMAN, JR.
Edgar M. Cullman, Jr.
Director
Director
February 10, 2017
/s/ FREDERICK M. DANZIGER
Frederick M. Danziger
Executive Chairman of the Board of Directors
February 10, 2017
/s/ ANTHONY J. GALICI
Anthony J. Galici
Vice President, Chief Financial Officer and Secretary,
Principal Accounting Officer
February 10, 2017
/s/ MICHAEL S. GAMZON
Michael S. Gamzon
Director and President and Chief Executive Officer
February 10, 2017
February 10, 2017
/s/ THOMAS C. ISRAEL
Thomas C. Israel
/s/ JONATHAN P. MAY
Jonathan P. May
February 10, 2017
/s/ ALBERT H. SMALL, JR.
Albert H. Small, Jr.
Director
Director
Director
99
Corporate Directors and Officers
Directors
David R. Bechtel
Edgar M. Cullman, Jr.
Frederick M. Danziger
Executive Chairman
Michael S. Gamzon
President and Chief Executive Officer
Thomas C. Israel
Jonathan P. May
Albert H. Small, Jr.
Corporate Data
Executive Headquarters
Griffin Industrial Realty, Inc.
641 Lexington Avenue, 26th Floor
New York, NY 10022
Griffin Industrial, LLC
204 West Newberry Road
Bloomfield, Connecticut 06002
www.griffinindustrial.com
Independent Registered Public Accountants
RSM US LLP
157 Church Street
New Haven, Connecticut 06510
Officers
Frederick M. Danziger
Executive Chairman
Michael S. Gamzon
President and Chief Executive Officer
Anthony J. Galici
Vice President, Chief Financial Officer and Secretary
Special Counsel
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
Registrar and Transfer Agent
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
www.amstock.com (800) 937-5449
Stock Listing
Griffin Industrial Realty, Inc. common stock
trades on the NASDAQ Stock Market under
the symbol GRIF.
Annual Meeting
The Annual Meeting of Stockholders of Griffin
Industrial Realty, Inc. will be held at 2:00 p.m.
on May 9, 2017 at the New York Hilton Hotel,
1335 Avenue of the Americas, New York,
NY 10019.
G R I F
The background on the front and back covers is 5210 and 5220 Jaindl Boulevard, Griffin’s two most
recently constructed industrial/warehouse buildings in the Lehigh Valley of Pennsylvania. Both 5210
Jaindl Boulevard, approximately 252,000 square feet, and 5220 Jaindl Boulevard, approximately
280,000 square feet, are currently fully leased.
2016 ANNUAL REPORT
Griffin Industrial Realty, Inc.
641 Lexington Avenue - 26th Floor
New York, NY 10022
(212) 218 - 7910
www.griffinindustrial.com