EXHIBIT 1

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LOGO  Granite Real Estate Investment Trust  Annual Information Form   March 5, 2014


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TABLE OF CONTENTS

PageGENERAL MATTERS

1CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

1GRANITE  CORPORATE STRUCTURE

2Granite REIT

2Granite GP

2Organizational Structure and Subsidiaries

3GENERAL DEVELOPMENT OF THE BUSINESS

4Three-Year History

4BUSINESS OVERVIEW

6Geographic Breakdown

6Property Types

7Tenant Base

7Improvement and Expansion Projects

8Profile of Our Real Estate Portfolio

8Principal Markets in Which We Operate

9Leasing Arrangements

11Our Business Strengths

12Government Regulation

12Employees

12Business and Operations of Magna, Our Principal Tenant

12INVESTMENT GUIDELINES AND OPERATING POLICIES OF GRANITE REIT

13Investment Guidelines

13Operating Policies

14Amendments to Investment Guidelines and Operating Policies

15RISK FACTORS

15Risks Relating to Granite's Business

15Risks Relating to Taxation

21Risks Relating to the Stapled Unit Real Estate Investment Trust Structure

24DESCRIPTION OF STAPLED UNITS

27Support Agreement

27DECLARATION OF TRUST AND DESCRIPTION OF REIT UNITS

28REIT Units

28Allotment and Issue of REIT Units

29Transferability and Stapling of REIT Units

29Purchases of REIT Units

29Trustees

30REIT Unit Redemption Right

32Meetings of REIT Unitholders

34Limitations on Non-Resident Ownership of REIT Units

35Amendments to the Declaration of Trust

35Term of Granite REIT

37Acquisition Offers

37Information and Reports

37Conflict of Interest Provisions

37GRANITE GP CAPITAL STRUCTURE

38CREDIT FACILITY AND INDEBTEDNESS

38Credit Facility

38Other Unsecured Indebtedness

39Other Secured Indebtedness

39Credit Ratings

40DISTRIBUTION AND DIVIDEND POLICY

41Distribution Policy of Granite REIT and Granite GP

41Distributions of Granite REIT

41Dividends of Granite Co.

41MARKET FOR SECURITIES

42TRUSTEES AND MANAGEMENT OF GRANITE REIT

43AUDIT COMMITTEE

49Composition of the Audit Committee

49Pre-Approval Policies and Procedures

50Audit Committee's Charter

50Audit Fees

50INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

50AUDITORS, REGISTRAR AND TRANSFER AGENT

51LEGAL PROCEEDINGS

51MATERIAL CONTRACTS

52Agreements in Connection with the 2011 Arrangement

52Other Material Contracts

52ADDITIONAL INFORMATION

52APPENDIX A  GRANITE REIT AUDIT COMMITTEE CHARTER

A-1APPENDIX B  GRANITE GP AUDIT COMMITTEE CHARTER

B-1


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GENERAL MATTERS

Granite Real Estate Investment Trust ("Granite REIT") and Granite REIT Inc.
("Granite GP") are the reporting issuer successors to Granite Real Estate Inc.
("Granite Co."), which completed a conversion from a corporate structure to a "stapled unit" real estate investment trust structure pursuant to a
plan of arrangement under theBusiness Corporations Act(Québec) on January 3, 2013 (the "2013
Arrangement"). Under the 2013 Arrangement, the holders of common shares of Granite Co. exchanged their common shares, in a series of steps, for stapled units
("Stapled Units"), each consisting of one trust unit of Granite REIT (each a "REIT Unit") and one common
share of Granite GP (each a "GP Share"), on a one-for-one basis. The Stapled Units are listed on the Toronto Stock Exchange
(the "TSX") under the symbol "GRT.UN" and on the New York Stock Exchange
(the "NYSE") under the symbol "GRP.U." Immediately after completion of the 2013 Arrangement, Granite REIT and Granite GP, through Granite
REIT Holdings Limited Partnership ("Granite LP") and its subsidiaries, owned, directly and indirectly, all the shares of the (reorganized)
Granite Co. and all of the subsidiaries, business and assets previously held by Granite Co.

This
annual information form ("Annual Information Form" or "AIF") contains information
about both Granite REIT and Granite GP, and financial information of Granite REIT and Granite GP is presented on a combined bases as permitted under exemptions granted by applicable
Canadian securities regulatory authorities. Accordingly, throughout this Annual Information Form, unless otherwise specified or the context otherwise indicates,
"we", "us", "our" and
"Granite" refer to the combined Granite REIT and Granite GP and their subsidiaries and investees and, for periods prior to implementation of the
2013 Arrangement on January 3, 2013, their predecessor Granite Co. and its predecessors and subsidiaries.

When
we use the term "annualized lease payments" or "ALP" in this Annual Information Form, we mean, for any fiscal year, the total annual rent payable to Granite if the lease payments as
at the last day of such fiscal year were in place for the entire fiscal year or for a period which is less than a year if non-renewal or termination notices have been provided or the disposal of a
property is anticipated. Accordingly, any revenue changes from future contractual rent adjustments, renewal and re-leasing activities or expansion and improvement projects to be completed are not
reflected in annualized lease payments as at December 31, 2013. In determining ALP, rents denominated in foreign currencies are converted to Canadian dollars based on exchange rates in effect
as at the last day of the reporting period. These amounts do not conform to revenue recognition policies under International Financial Reporting Standards.

In
this Annual Information Form, we refer to Canadian dollars as "dollars", "$" or
"Cdn.$", United States dollars as "U.S.$" or
"U.S. dollars" and euros as "EUR". We publish our financial statements in Canadian dollars.

When
we use the term "Magna", unless indicated otherwise, we are referring to Magna International Inc., its operating divisions and
subsidiaries and other controlled entities. References herein to leases with Magna include leases with operating subsidiaries of Magna International Inc., and when we refer to the tenant at
certain of our properties being Magna, we are referring to Magna International Inc. or one of its operating subsidiaries.

When
we use the term "capital" in the context of the proportionate amount invested in Magna or in the calculation of a leverage ratio, we
define capital as the carrying value of Granite's investment properties as reported on its combined balance sheet.

When
we use the term "leverage", unless otherwise noted, we define leverage as total debt divided by total capital as
defined above.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Information Form and the documents incorporated by reference herein contain statements that, to the extent they are not
recitations of historical fact, constitute "forward-looking statements" or "forward looking information" within the meaning of applicable securities legislation, including the United States Securities Act of
1933, as amended, theUnited States Securities Exchange Act of
1934, as amended, and applicable Canadian securities legislation. Forward-looking statements and forward-looking information may include, among others, statements regarding
Granite's future plans, goals, strategies, intentions, beliefs, estimates, costs, objectives, capital structure, cost of capital, tenant base, tax consequences, economic performance or expectations,
or the

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assumptions
underlying any of the foregoing. In particular, this Annual Information Form contains forward-looking statements and forward-looking information regarding Granite's relationships with its
tenants, the expansion and diversification of Granite's real estate portfolio and expected increases in leverage. Words such as "may", "would", "could", "will", "likely", "expect", "anticipate",
"believe", "intend", "plan", "forecast", "project", "estimate", "seek" and similar expressions are used to identify forward-looking statements and forward-looking information. Forward-looking
statements and forward-looking information should not be read as guarantees of future events, performance or results and will not necessarily be accurate indications of whether or the times at or by
which such future performance will be achieved. Undue reliance should not be placed on such statements. There can also be no assurance that intended developments in Granite's relationships with its
tenants, the expansion and diversification of Granite's real estate portfolio and the expected increases in leverage can be achieved in a timely manner, with the expected impact or at all.
Forward-looking statements and forward-looking information are based on information available at the time and/or management's good faith assumptions and analyses made in light of our perception of
historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances, and are subject to known and unknown risks,
uncertainties and other unpredictable factors, many of which are beyond Granite's control, that could cause actual events or results to differ materially from such forward-looking statements and
forward-looking information. Important factors that could cause such differences include, but are not limited to: the risk of changes to tax or other laws that may adversely affect Granite REIT's
mutual fund trust status under theIncome Tax Act(Canada) (the "Tax Act") or the
effective tax rate in other jurisdictions in which Granite operates; economic, market and competitive conditions and other risks that may adversely affect Granite's ability to achieve desired
developments in its relationships with its tenants, expand and diversify its real estate portfolio and increase its leverage; and the risks set forth in this Annual Information Form in the "Risk
Factors" section, which investors are strongly advised to review. The "Risk Factors" section also contains information about the material factors or assumptions underlying such forward-looking
statements and forward-looking information. Forward-looking statements and forward-looking information speak only as of the date the statements were made and unless otherwise required by applicable
securities laws, Granite expressly disclaims any intention and undertakes no obligation to update or revise any forward-looking statements contained in this Annual Information Form to reflect
subsequent information, events or circumstances or otherwise.

GRANITE  CORPORATE STRUCTURE

Granite's business is carried on directly and indirectly by Granite LP, all of the partnership units of which are owned by
Granite REIT and Granite GP.

Granite REIT

Granite REIT is an unincorporated, open-ended, limited purpose trust established under and governed by the laws of the Province of
Ontario pursuant to an amended and restated
declaration of trust (the "Declaration of Trust") dated January 3, 2013. Although it is intended that Granite REIT qualify as a "mutual
fund trust" pursuant to the Tax Act, Granite REIT is not a mutual fund under applicable securities laws. The principal office and centre of administration of Granite REIT is located at
77 King Street West, Suite 4010, P.O. Box 159, Toronto-Dominion Centre, Toronto, Ontario, M5K 1H1.

Granite GP

Granite GP was incorporated on September 28, 2012 under theBusiness Corporations
Act(British Columbia) (the "BCBCA"). On January 4, 2013, the Articles of Granite GP were altered to remove
a class of non-voting shares that had been used for certain steps of the 2013 Arrangement. The head office of Granite GP is located at 77 King Street West, Suite 4010,
P.O. Box 159, Toronto-Dominion Centre, Toronto, Ontario, M5K 1H1 and the registered office of Granite GP is Suite 2600, Three Bentall Centre, 595 Burrard
Street P.O. Box 49314, Vancouver, British Columbia, V7X 1L3.

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Organizational Structure and Subsidiaries

The following chart summarizes Granite's structure.

GRAPHIC

Granite LP's
material subsidiaries and their respective jurisdictions of incorporation or formation are listed below. Parent/subsidiary relationships are identified by
indentation. The percentages of the votes attaching to all voting securities beneficially owned by Granite LP or over which Granite exercises control or direction, directly or indirectly, are
also indicated. Subsidiaries not listed individually each represent less than 10% of Granite's total 2013 combined revenues and total combined assets as at December 31, 2013 and, in the
aggregate, represent less than 20% of Granite's total 2013 combined revenues and total combined assets as at December 31, 2013. Granite LP's percentage voting interest is equivalent to
its economic interest in each
subsidiary listed below. The voting securities of each subsidiary are held in the form of common shares or, in the case of limited partnerships and their foreign equivalents, share quotas or
partnership interests.

Ownership of
Voting Securities

Jurisdiction of
Incorporation or
FormationGranite Canadian Realty LP


100%

OntarioGranite US Master LP


100%

DelawareGranite US Holdco LP


100%

DelawareGranite REIT America Inc.


100%

DelawareGranite Real Estate Inc.


100%

QuebecMI Developments de Mexico, S.A. de C.V.


100%

MexicoGranite Austria GmbH


100%

AustriaGranite Thondorf RE GmbH & Co KG


100%

AustriaGranite Austria GmbH & Co KG


100%

AustriaMagna Vierte Beteiligungs-GmbH


99.74%

GermanyGranite Germany Real Estate GmbH & Co. KG


99.74%

Germany


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GENERAL DEVELOPMENT OF THE BUSINESS

Three-Year History

2011

On June 30, 2011, Granite Co., the predecessor of Granite REIT and Granite GP, completed a court-approved plan of
arrangement (the "2011 Arrangement") under theBusiness Corporations Act(Ontario), which eliminated Granite Co.'s dual class share capital
structure through which Mr. Frank Stronach and his family (the "Stronach Shareholder") had previously controlled Granite Co. Immediately following the completion of the 2011 Arrangement,
an entirely new board of directors, elected as post-closing directors at Granite Co.'s annual general and special meeting of shareholders on March 29, 2011, commenced their term of office.On October 25, 2011, Granite Co. announced that it had completed a strategic review process and that the board of
directors had unanimously approved a strategic plan encompassing five major elements and objectives:1.

Convert Granite Co. from a Canadian corporation to a real estate investment trust.2.

Increase Granite Co.'s quarterly dividend to U.S.$0.50 per share to reflect a targeted annualized dividend of U.S.$2.00 per
share.3.

Fortify Granite Co.'s relationship with Magna by selectively investing in Granite Co. properties and opportunistically
growing with Magna in new strategic locations.4.

Diversify by significantly increasing the lease revenue derived from new industrial tenants and reducing the proportion of
capital invested in Magna properties to less than 50% within approximately three years.5.

Increase leverage to 40% to 50% of total capital.Co-incident with the October 25, 2011 strategic plan announcement, the Board implemented the second component of the plan,
increasing Granite Co.'s quarterly dividend to U.S.$0.50 per share.For the year ended December 31, 2011, Granite:(i)

renewed or extended 5 leases, representing an aggregate of approximately 370,000 square feet, with annualized
lease payments of approximately $1.9 million; and(ii)

incurred capital expenditures totalling $48.2 million in the completion of ten expansion projects for a total of
$38.8 million and one improvement project for a total of $0.2 million, and the partial completion of three additional projects. The ten expansion projects contributed an aggregate of approximately
469,000 square feet of leasable area.2012

On June 13, 2012, Granite Co. changed its name from MI Developments Inc. to Granite Real Estate Inc. On
September 25, 2012, Granite Co. was continued from under theBusiness Corporations Act(Ontario) to under theBusiness Corporations Act(Québec), as previously approved by its shareholders.On November 15, 2012, Granite Co.'s shareholders approved the 2013 Arrangement and on November 20, 2012, the
Superior Court of Québec approved the 2013 Arrangement.


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For the year ended December 31, 2012, Granite:(i)

renewed or extended 16 leases, representing an aggregate of approximately 2.4 million square feet, with
annualized lease payments of approximately $10 million; and(ii)

incurred capital expenditures totalling $33.6 million in the completion of three expansion projects for a total of
$22.3 million and seven improvement projects for a total of $6.2 million, and the partial completion of five additional projects. The three expansion projects contributed an aggregate of approximately
264,000 square feet of leasable area.2013

On January 3, 2013, Granite Co. completed the 2013 Arrangement. On January 4, 2013, the Stapled Units began trading
on the TSX under the symbol "GRT.UN" and on the NYSE under the symbol "GRP.U".On February 1, 2013, Granite established a new unsecured revolving credit facility in the amount of $175 million. See
"Credit Facility and Indebtedness  Credit Facility".In February 2013, Granite commenced monthly distributions of $0.175 per Stapled Unit, to reflect a targeted annualized
distribution of $2.10 per Stapled Unit. This reflected an increase from the previously targeted annualized dividend of $2.00 per Stapled Unit.On October 2, 2013, Granite LP issued at par $200 million of 4.613% Series 1 senior debentures ("2018 Debentures") due October 2, 2018. On October 7, 2013, Granite entered into a cross currency interest rate swap to exchange the $200 million proceeds and related 4.613% interest payments from the
2018 Debentures to euro 142 million and euro denominated interest payments at a 3.56% interest rate. See "Credit Facility and Indebtedness  Other Unsecured Indebtedness".For the year ended December 31, 2013, Granite:(i)

renewed, extended or entered into 21 leases, representing an aggregate of approximately 4.8 million square feet,
with annualized lease payments of approximately $25.5 million;(ii)

acquired 12 income properties and two development properties with an aggregate purchase price to Granite of
$284 million, representing $23.4 million in new annualized lease payments and 21 new tenants, with such properties being located in the United States, Germany and the Netherlands; and(iii)

sold four properties for net proceeds in aggregate of $16.8 million, with such properties being located in Canada, the
United States, Poland and the United Kingdom.See "Business Overview  Property Types".On December 17, 2013, Granite REIT announced an increase to its monthly distribution policy to $0.183 per Stapled Unit, up
from $0.175 per Stapled Unit, to reflect a targeted annualized distribution of Cdn.$2.20 per Stapled Unit. This reflected an increase from the previously targeted annualized distribution of $2.10 per Stapled Unit.


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BUSINESS OVERVIEW

Granite is engaged in the ownership and management of predominantly industrial, warehouse and logistics properties in North America and
Europe. As at December 31, 2013, Granite's real estate portfolio includes 112 income-producing properties representing approximately 32 million square feet of leasable area
with a fair value of approximately $2.3 billion.

Granite
provides holders of REIT Units ("REIT Unitholders") with stable cash flow generated by revenue it derives from the ownership of
and investment in income-producing real estate properties. It strives to maximize long term unit value through active management of its portfolio, the acquisition of additional income-producing
properties, selected sales of properties and the development and construction of projects and properties which enhance the quality, diversification and value of its real estate portfolio.

One
of Granite's three remaining objectives from its 2011 strategic plan is to reduce the proportion of total capital invested in Magna-tenanted properties to less than 50% and thereby
increase the percentage of lease revenue earned from non-Magna tenants. In 2013, Granite successfully executed key components of its diversification strategy: new acquisitions, selected dispositions,
asset repositioning and selected development. While realization of the targeted diversification outcome may take longer than the originally estimated three years, Granite continues to pursue that
outcome. It has reduced the proportion of total capital invested in Magna-tenanted properties from 95% on December 31, 2011 to 82% and the Magna tenant concentration from 97% on
December 31, 2011 to 85%, based on annualized lease payments. See "Profile of Our Real
Estate Portfolio  Historical Growth of Our Real Estate Portfolio". As discussed under " Improvement and Expansion Projects", Granite is
also selectively investing in Magna properties, which is another of the remaining objectives from the 2011 strategic plan. The third of Granite's remaining objectives from the 2011 strategic plan is
to increase its leverage to a range of 40% to 50% of Granite's total capital. As at December 31, 2013, Granite's leverage was 24% of total capital, up from 14% of total capital as at
January 1, 2012.

Geographic Breakdown

Granite's properties are located in nine countries: Canada, the United States, Mexico, Austria, Germany, the Netherlands, the
Czech Republic, the United Kingdom and Spain. The lease payments are primarily denominated in three currencies: the euro, the Canadian dollar and the U.S. dollar. The following charts
show the geographic breakdown of Granite's income-producing properties by number and approximate square footage.

Geographic Breakdown

GRAPHIC

GRAPHIC


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The
following table shows the geographic breakdown of Granite's income-producing properties by fair value as at December 31, 2013.

Real Estate Assets

Location

Income-Producing
Property Portfolio
Fair Value(in millions)North AmericaCanada

$
701.1U.S.

$
425.2Mexico

$
111.7EuropeAustria

$
674.6Germany

$
276.2The Netherlands

$
101.5Other

$
35.3Total

$
2,325.6


Property Types

Granite's income-producing properties can be categorized generally as (i) multi-purpose facilities, which are tenantable by a
wide variety of potential users, or (ii) special purpose facilities.

The
chart below illustrates the division of Granite's income-producing properties between multi-purpose facilities and special purpose facilities as at December 31, 2013.

Multi-Purpose vs. Special Purpose Income-Producing Facilities
by Annualized Lease Payments (ALP)

GRAPHIC

Tenant Base

As at December 31, 2013, Magna, a diversified global automotive supplier, was the tenant at 82 of Granite's
112 income-producing properties and lease payments under those leases represented approximately 85% of Granite's annualized lease payments. See " Business and
Operations of Magna, Our Principal Tenant".

As
a result of its acquisition strategy, Granite has a growing list of other tenants that currently includes: ALSO Actebis, Cardinal Health, DB Schenker, Dole, HH Gregg, Kate Spade and
Company (formerly known as Fifth & Pacific Companies Inc.), Kuhne + Nagel, Meyer & Meyer, Peer 1 Networks, Ricoh, Sears, Siemens Canada, Tchibo and Van
Uden Logistic.

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Granite
believes that its existing portfolio of Magna-tenanted properties provides a level of stability for its business. Granite's 16 special purpose properties are occupied
exclusively by Magna in locations around the world. The special purpose attributes of these properties cause them to have a higher risk profile, but they also present the opportunity for an enhanced
and stable rental income stream. See " Business and Operations of Magna, Our Principal Tenant".

Improvement and Expansion Projects

For the year ended December 31, 2013, Granite completed four improvement or expansion projects at Magna-tenanted facilities, two
in the U.S., one in Germany and one in the Czech Republic, representing a total cost of approximately $10.1 million and approximately 0.2 million square feet of additional
leasable area at two of the facilities. These improvement or expansion projects did not attract additional leasing commission costs. Certain of these expansion or improvement projects increased
annualized lease payments by $1.1 million. Granite also completed three improvement projects at non-Magna-tenanted facilities for the year ended December 31, 2013, two in Canada and one
in the U.S, representing a
total cost of approximately $5.6 million. One of these improvement projects attracted additional leasing commission costs of $0.2 million and two of these projects increased annualized
lease payments by $1.7 million.

As
at December 31, 2013, Granite had seven active expansion or improvement projects in Canada, U.S. and Austria, with aggregate anticipated costs of approximately
$10.3 million. Granite expects to complete each of these projects before the end of 2014.

For
most construction projects, Granite uses its experience and local expertise to construction-manage specific elements of a project to maximize returns and minimize construction costs.
On the remainder of its projects, Granite outsources design and construction. Depending on the nature and location of the project, Granite either manages construction with regular on-site supervision
by its employees, or remotely through cost, scope of work and other management control systems. Granite does not have long-term contractual commitments with its contractors, subcontractors,
consultants or suppliers of materials, who are generally selected on a competitive bid basis.

Development Projects

For the year ended December 31, 2013, Granite incurred $10.3 million of capital expenditures (excluding the cost of
acquisition) pertaining to two development properties in the United States.

Profile of Our Real Estate Portfolio

Historical Growth of Our Real Estate Portfolio

Granite's income-producing property portfolio has grown from 106 properties totalling approximately 24 million
square feet of leasable area in 2003 to 112 properties totalling approximately 32 million square feet of leasable area as at December 31, 2013.

The
following chart shows the historical growth in total leasable area (net of dispositions) and number of properties within Granite's income-producing property portfolio.

Income-Producing Property Portfolio
Total Leasable Area and Number of Properties

GRAPHIC

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The
following chart shows Granite's historical capital expenditures for its real estate portfolio, including (i) improvements and expansions, (ii) acquisitions, and
(iii) development.

Annual Capital Expenditures

GRAPHIC

Schedule of Lease Expiries

The weighted average remaining term to expiry based on leased area for income-producing properties was as follows for the following
years ended December 31:

December 31,
2013  4.8 years;

December 31,
2012  4.8 years;

December 31,
2011  5.4 years;

December 31,
2010  6.1 years;

December 31,
2009  6.7 years.

Principal Markets in Which We Operate

Geographic Diversification

The following chart shows a breakdown of Granite's $221.9 million of annualized lease payments by country as at
December 31, 2013.

Income-Producing Property Portfolio
Breakdown of Annualized Lease Payments at December 31, 2013 by Country
(in millions of Cdn. Dollars)

GRAPHIC

Income-Producing Properties in Canada

Granite's 42 Canadian income-producing properties are located in Ontario. 36 properties representing approximately 76% of
the Canadian income-producing properties based on annualized lease payments as at December 31, 2013 are located in the Greater Toronto Area. The remaining six properties in the Canadian
portfolio are located in Southwestern Ontario. The lease payments for properties in Canada are denominated in Canadian dollars.

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Income-Producing Properties in the United States

Granite's income-producing property portfolio includes 28 properties in the United States. Approximately 26% of the
annualized lease payments as at December 31, 2013 from Granite's income-producing properties in the United States is derived from properties located in Michigan, 18% is derived from a
property in Kentucky, 20% is derived from a property in South Carolina and 6% is derived from properties located in Iowa. The remainder of Granite's annualized lease payments from the
United States are derived from properties located in Tennessee, Illinois, Indiana, Missouri, New Jersey, Georgia, Ohio, Oregon and Maryland. The lease payments for properties in the
United States are denominated in U.S. dollars.

Development Properties in the United States

Granite has two development properties in its real estate portfolio. One of the properties is located in Kentucky, United States
and is currently under development, while the second property is a land parcel in Pennsylvania, United States that is currently being held in inventory for future build-to-suit opportunities
and/or future speculative development.

Income-Producing Properties in Mexico

Granite's income-producing property portfolio includes eight properties in Mexico, which are located in the states of Puebla, Coahuila
and Nuevo Leon. The lease payments for properties in Mexico are denominated in U.S. dollars.

On
March 5, 2014, Granite entered into an asset purchase agreement with Magna for the sale to Magna of Granite's portfolio of Mexican properties for a purchase price of
U.S.$105 million. The sale is subject to the satisfaction of several closing conditions, some of which involve action by governmental entities in Mexico.

Income-Producing Properties in Austria

Granite's income-producing property portfolio includes 12 properties in Austria. Approximately 97% of the Austrian
income-producing properties based on annualized lease payments as at December 31, 2013 are located in the Province of Styria. Magna's Eurostar and Thondorf plants (Granite's two largest
income-producing properties globally, accounting for approximately 17% of Granite's total annualized lease payments) are located in the city of Graz, which is located approximately
170 kilometres south of Vienna. The lease payments for properties in Austria are denominated in euros.

Income-Producing Properties in Germany

Granite's income-producing property portfolio includes 16 properties in Germany. The properties are primarily located in the
states of Baden-Württemberg, Hessen, Bavaria, Thüringen/Thuringia, Saarland, Nordrhein-Westfalen and Niedersachsen/Lower Saxony. The lease payments for properties located
in Germany are denominated in euros.

Income-Producing Properties in the Netherlands

Granite's income-producing property portfolio includes three properties in the Netherlands, which are located in the states of
Noord-Brabant, Gelderland and Zuid-Holland. The lease payments for properties located in the Netherlands are denominated in euros.

Income-Producing Properties in Other European Locations

Granite's income-producing property portfolio also includes a property in the United Kingdom. The lease payments for this
property are denominated in British pounds.

Granite
also has one income-producing property in each of Spain and the Czech Republic. The lease payments for these properties are denominated in euros.

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Foreign Exchange

As at December 31, 2013, approximately 71% of Granite's annual lease payments were denominated in the euro and the
U.S. dollar and, accordingly, foreign exchange can have a significant impact on results.

Leasing Arrangements

Leases

Granite's leases generally provide that the tenant is responsible for all costs of occupancy, including operating costs, property
taxes, the costs of maintaining insurance in respect of the property, maintenance costs and non-structural replacements costs. The tenant is not responsible for income taxes or capital taxes charged
to us.

Granite's
leases generally provide that Granite is responsible, at its own expense, for structural repairs and replacements relating to the structural non-process related elements of its
properties. For certain components of a property, such as the roof membrane, paved areas and non-process related HVAC systems, some of Granite's leases provide that Granite pays for the costs of
replacement as necessary and, in most of those cases, recovers such costs, plus interest, from the tenant over the expected useful life of the item replaced, as additional rent during the course of
the lease.

Contractual Step-Ups in Rental Rates

A majority of Granite's existing leases provide for periodic rent escalations based either on fixed-rate step increases or on the basis
of a consumer price index adjustment.

Renewal Options

A majority of Granite's existing leases include built-in renewal options, generally tied to either market rental rates or to the
existing rent plus an increase based upon a consumer price index adjustment (generally limited to 10% over five years), with the latter generally pertaining to Granite's special purpose properties. In
cases where the renewal is linked to market rates, the determination of market rent is, failing agreement, generally subject to arbitration.

Obligation to Restore Premises

Granite's leases generally provide that the tenant is obligated to restore the premises to a condition consistent with the condition on
the commencement date of the lease, subject to reasonable wear and tear. The majority of Granite's leases provide that, if requested by the landlord, the tenant is obligated to remove any alterations
to the premises carried out over the term of the lease.

Environmental Obligations

Granite's leases also generally provide that the tenants must maintain the properties in accordance with applicable laws, including
environmental laws, and that the tenant must remove all hazardous and toxic substances from the premises when and as required by applicable laws,
regulations and ordinances and, in any event, prior to the termination of its occupation of the premises. The leases generally also contain indemnities in Granite's favour with respect to
environmental matters. Those indemnities expire after a specified number of years following the termination of the lease. The leases generally provide that Granite may conduct environmental
assessments and audits from time to time at its sole expense. See " Government Regulation".

On
occasion, tenants' operations and Granite's properties may become the subject of complaints from adjacent landowners, or inquiries or investigations by environmental regulators
(see "Risk Factors"). Almost all of the costs relating to such complaints, inquiries or investigations to date have been incurred by Granite's tenants pursuant to the terms of the relevant
leases. In the past, Granite has engaged consultants and incurred minimal costs with respect to environmental matters arising from adjacent or nearby properties in order to protect the condition and
marketability of our properties.

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Restrictions on Sales and Tenant Rights of Refusal

Most of Granite's significant leases include a right of refusal in favour of the tenant with respect to the sale of the property in
question. This right typically provides the tenant with a right to match any third party offer within a prescribed period of time, failing which Granite is free to accept the offer and complete the
sale to the third party. Some of our leases with Magna provide that so long as the tenant is controlled, directly or indirectly, by Magna International Inc., Granite may not sell the property
to a competitor of the tenant without the tenant's consent.

Tenant Assignment Rights

Granite's leases generally include a restriction on assignment by the tenant without Granite's consent, other than to affiliates or
associates of the tenant. Granite's leases do not generally restrict a change of control of the tenant.

Our Business Strengths

Granite believes that it has a significant number of important key strengths,
including:



Government Regulation

Granite is subject to a wide range of laws and regulations imposed by governmental authorities, including zoning, building and similar
regulations that affect our real estate holdings and tax laws and regulations in the various jurisdictions in which Granite operates. See "Risk Factors  Risks
Relating to Taxation."

As
an owner and developer of real property, Granite is also subject to environmental laws and regulations relating to air emissions, soil and ground water quality, noise emissions,
wastewater discharge, waste management and storage of hazardous substances. Granite's leases permit it to conduct environmental assessments and audits from time to time at its own expense.
Substantially all of Granite's leases also require the tenant to assume the costs of environmental compliance, including remediation or clean-up of any contamination that they have caused or
contributed to on the leased premises. Despite the tenants' obligation to indemnify Granite, Granite is also responsible under applicable law for ensuring that its properties are in compliance with
environmental laws. See "Risk Factors".

Employees

As at December 31, 2013, Granite employed 58 people, the majority of whom are based at its headquarters in Toronto, and
the balance of whom are located in the United States, Austria, the Netherlands, Iceland and Luxembourg. Granite is not party to any collective bargaining agreements with any of
its employees.

Business and Operations of Magna, Our Principal Tenant

As at December 31, 2013 Magna is the tenant of 82 of Granite's 112 income-producing properties. Magna is a diversified
global automotive supplier. Magna designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components, and engineers and assembles complete vehicles,

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primarily
for sale to original equipment manufacturers of cars and light trucks. Magna's product capabilities span a number of major automotive areas, including interior systems, seating systems,
closure systems, body and chassis systems, vision systems, electronic systems, exterior systems, powertrain systems, roof systems, hybrid electric vehicles/systems and complete vehicle engineering and
assembly. According to Magna's public disclosure, as at December 31, 2013, Magna had 316 manufacturing operations and 84 product development, engineering and sales centres, in
29 countries.

Magna
is a public company, with its common shares listed for trading on the TSX and NYSE. For information on the conditions affecting the automotive industry and Magna's results of
operations, we encourage you to consult Magna's public disclosure, including its most recent Management's Discussion and Analysis of Results of Operations and Financial Position and Annual Information
Form. None of those
documents or their contents, however, shall be deemed to be incorporated by reference into this Annual Information Form unless specifically otherwise noted in this Annual Information Form.

According
to its public disclosure, Magna's success is primarily dependent upon the levels of North American and European car and light truck production by Magna's customers and the
relative amount of content Magna has in the various programs. The ongoing challenge of the automotive industry, and other factors, have resulted in Magna seeking to take advantage of growing markets
and consolidating, moving, closing and/or selling operating facilities to align its capacity utilization and manufacturing footprint with vehicle production and consumer demand. Magna has disclosed
that it has significant ongoing activities in its "Rest of World" segment, including a number of facilities in Asia and South America. Granite management expects Magna to continuously seek to optimize
its global manufacturing footprint and consequently, Magna may not renew leases for facilities currently under lease at their expiries.

INVESTMENT GUIDELINES AND OPERATING POLICIES OF GRANITE REIT

Investment Guidelines

The Declaration of Trust provides certain guidelines on investments which may be made directly or indirectly by Granite REIT. The
assets of Granite REIT may be invested only in accordance with such guidelines including, among others, those summarized below:



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Operating Policies

The Declaration of Trust provides that the operations and activities of Granite REIT shall be conducted in accordance with the policies
summarized below:



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Amendments to Investment Guidelines and Operating Policies

Pursuant to the Declaration of Trust, all of Granite REIT's investment guidelines and the operating policies of Granite REIT set out in
paragraphs (a), (c), (d), (f) and (g) under the heading " Operating Policies" may be amended only with the approval of two-thirds of the votes cast at a
meeting of REIT Unitholders. The remaining operating policies set out under the heading
" Operating Policies" may be amended with the approval of a majority of the votes cast at a meeting of REIT Unitholders.

Notwithstanding
the foregoing paragraph, if at any time a government or regulatory authority having jurisdiction over Granite REIT or any property of Granite REIT shall enact any law,
regulation or requirement which is in conflict with any investment guideline or operating policy of Granite REIT then in force, such guideline or policy in conflict shall, if the Trustees on the
advice of legal counsel to Granite REIT so resolve, be deemed to have been amended to the extent necessary to resolve any such conflict and, notwithstanding anything to the contrary in the Declaration
of Trust, any such resolution of the Trustees shall not require the prior approval of REIT Unitholders.

RISK FACTORS

Investing in securities of Granite involves a high degree of risk. In addition to the other information contained in this Annual
Information Form, you should carefully consider the following risk factors before investing in securities of Granite. The occurrence of the following risk factors could have a material adverse effect
on our business, financial condition, operating results and prospects. In addition, other risks and uncertainties that are not known to us or that we currently believe are not material, may also have
a material adverse effect on our business, financial condition, operating results and prospects.

Risks Relating to Granite's Business

A large majority of our revenue comes from payments that we receive under leases with Magna, so factors affecting Magna's businesses will also affect us.

Although one element of our strategic plan is to diversify by increasing the lease revenue that we derive from new tenants, as at
December 31, 2013, 82 of our 112 income-producing properties were leased to operating subsidiaries of Magna. For the year ended December 31, 2013, payments under leases with Magna
represented approximately 85% of our annualized lease payments.

We
encourage you to consult Magna's public disclosure for information on factors affecting the business of Magna, including the factors described in the section entitled "Industry Trends
and Risks" in Magna's Management's Discussion and Analysis of Results of Operations and Financial Position for the three months
and year ended December 31, 2013, which section, excluding any forward-looking information contained therein expressly referring to Magna's beliefs, is incorporated by reference into
this AIF.

The level of business we have received from Magna has declined and beyond our existing lease agreements, we have no agreement with Magna that it will continue to do business
with us in the same manner as it has in the past or at all.

We may experience reductions in the amount of expansion-related business that Granite receives from Magna as Magna pursues its
disclosed significant ongoing activities in its "Rest of the World" segment. Although we have acted as the developer, real estate advisor, property manager and owner of a significant number of the
industrial facilities for Magna since our inception, we have no assurance that we will continue to be able to do so.

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Although
we intend to continue to diversify by significantly increasing the lease revenue that we derive from new tenants, most of the historical growth of our rental portfolio has been
dependent on our relationship with Magna as tenant of our income-producing properties and as the customer for our development projects.

We may be unable to renew leases on favourable terms or find new tenants for vacant properties.

Our tenants have in the past determined, and may in the future determine, not to lease certain properties from us and not to renew
certain leases on terms as favourable to us as our existing arrangements with them, or at all. We may be unable to lease a vacant property in our portfolio on economically favourable terms,
particularly properties that are considered to be special purpose in nature and were designed and built with unique features or are located in secondary or rural markets.

In
addition, we may not be able to renew an expiring lease or to find a new tenant for the property for which the lease has expired, in each case on terms at least as favourable as the
expired lease or at all. Renewal options are generally based on changes in the consumer price index or prevailing market rates. Market rates may be lower at the time of the renewal options, and
accordingly, leases may be renewed at lower levels of rent than are currently in place. Our tenants may fail to renew their leases if they need to relocate their operations as a result of changes in
location of their customers' operations or if they choose to discontinue operations as a result of the loss of business. Many factors will affect our ability to lease vacant
properties, and we may incur significant costs in making property modifications, improvements or repairs required by a new tenant.

Our operating and net income and the value of our property portfolio depend on the credit and financial
stability of our tenants.

We would be adversely affected if a significant number of tenants were to become unable to meet their obligations to us. In addition,
we may incur substantial costs in protecting our investments in leased properties, particularly if we experience delays and limitations in enforcing our rights against defaulting tenants. Furthermore,
if one of our significant tenants rejects or terminates a lease under the protection of bankruptcy, insolvency or similar laws, our cash flow could be materially adversely affected. The failure to
maintain a significant number of our income-producing properties under lease would have a material adverse effect on our financial condition and operating results.

Additionally,
the tenants for the majority of our properties are non-public subsidiaries of Magna International Inc., which does not guarantee the obligations of its subsidiaries
under their leases with us. As a result, we may not have the contractual right to proceed directly against Magna International Inc. in the event that one of these subsidiaries defaulted on its
lease with us. We could be materially adversely affected if any Magna subsidiaries became unable to meet their respective financial obligations under their leases, and if Magna
International Inc. was unwilling or unable to provide funds to such subsidiaries for the purpose of enabling them to meet such obligations.

Our international operations expose us to additional risks that may materially adversely affect our business.

During 2013, 31% of our revenue was generated in Canada, 30% of our revenue was generated in Austria, 20% of our revenue was generated
in the United States, 10% of our revenue was generated in Germany, 7% of our revenue was generated in Mexico and our remaining revenue was generated in five other countries. Operating in
different regions and countries exposes us to political, economic and other risks as well as multiple foreign regulatory requirements that are subject to change,
including:



The
effects of these risks may, individually or in the aggregate, materially adversely affect our business.

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Foreign currency fluctuations could reduce our revenues and increase our costs, and any future hedging transactions may limit our gains or result in losses for us.

A majority of our current property portfolio is located outside of Canada and generates lease payments that are not denominated in
Canadian dollars. Since we currently report our financial results in Canadian dollars and do not currently hedge all of our non-Canadian dollar rental revenues, we are subject to foreign currency
fluctuations that could, from time to time, have an adverse impact on our financial position or operating results.

From
time to time, we may attempt to minimize or hedge our exposure to the impact that changes in foreign currency rates or interest rates may have on our revenue and liabilities through
the use of derivative financial instruments. The use of derivative financial instruments, including forwards, futures, swaps and options, in our risk management strategy carries certain risks,
including the risk that losses on a hedge position will reduce our profits and the cash available for development projects or dividends. A hedge may not be effective in eliminating all the risks
inherent in any particular position. Our profitability may be adversely affected during any period as a result of the use of derivatives.

We are subject to risks affecting the automotive parts industry.

Since Magna operates in the automotive parts industry, our business is, and for the foreseeable future will be, subject to conditions
affecting the automotive industry generally. Although we intend to continue to increase the lease revenue we derive from tenants other than Magna, it is likely that our dependence on the automotive
industry will continue to be significant.

The
global automotive industry is cyclical. A worsening of economic and political conditions, including through rising interest rates or inflation, high unemployment, increasing energy
prices, declining real estate values, increased volatility in global capital markets, international conflicts, sovereign debt concerns, an increase in protectionist measures and/or other factors, may
result in lower consumer confidence, which has a significant impact on consumer demand for vehicles. Vehicle production is closely related to consumer demand. The continuation of economic uncertainty
or a deterioration of the global economy for an extended period of time could have a material adverse effect on the profitability and financial condition of participants in the automotive parts
industry. While the North American automotive industry appears to have stabilized following the 2008-2009 recession, there is no certainty regarding the long-term financial health of Magna's customers
and suppliers. The bankruptcy or insolvency of a major customer or supplier of Magna could have a material adverse effect on our profitability and financial position. A decrease in the long-term
profitability or viability of the automotive industry and the automotive parts sector in particular would have a material adverse impact on the financial condition of our tenants and could therefore
adversely impact the value of our properties and our operating results.

Environmental compliance costs and liabilities with respect to our real estate may adversely affect us.

Our tenants operate certain manufacturing facilities that use environmentally sensitive processes and hazardous materials. Under
various federal, state, provincial and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or
remediation of hazardous or toxic substances on, under or in an affected property. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence
of such hazardous or toxic substances. In addition, the presence of hazardous or toxic substances, or the failure to remediate properly, may materially impair the value of our real property assets or
adversely affect our ability to borrow by using such real property as collateral. Certain environmental laws and common law principles could be used to impose liability for releases of hazardous
materials, including asbestos-containing materials, into the environment, and third parties may seek recovery from owners or operators of real properties for personal injury associated with exposure
to released asbestos-containing materials or other hazardous materials. As an owner of properties, we are subject to these potential liabilities.

Capital
and operating expenditures necessary to comply with environmental laws and regulations, to defend against claims of liability or to remediate contaminated property may have a
material adverse effect on our results of operations and financial condition. To date, environmental laws and regulations have not had a
material adverse effect on our operations or financial condition. However, changes in these laws and regulations

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are
ongoing and we may become subject to more stringent environmental standards as a result of changes to environmental laws and regulations, compliance with which may have a material adverse effect
on our results of operations and financial condition. We cannot predict future costs that we may be required to incur to meet environmental obligations.

Moreover,
environmental laws may impose restrictions on the manner in which a property may be used or transferred or in which businesses may be operated, limiting development or
expansion of our property portfolio or requiring significant expenditures.

We are subject to competition for the acquisition of new properties and we may not compete successfully, which would limit our ability to invest in and develop
new properties.

In each of the real estate markets in which we operate, we compete for suitable real estate investments with many other parties,
including real estate investment trusts, pension funds, insurance companies, private investors and other investors (both Canadian and foreign), which are currently seeking, or which may seek in the
future, real estate investments similar to those desired by us. Some of our competitors may have greater financial resources, or lower required return thresholds than we do, or operate with different
investment guidelines and operating policies. Accordingly, we may not be able to compete successfully for these investments. Increased competition for real estate investments resulting, for example,
from increases in the availability of investment funds or reductions in financing costs would tend to increase purchase prices and reduce the yields from the investments.

Real estate investments are subject to numerous risks that could adversely affect our operating results, many of which are beyond our control.

Because we own, lease and develop real property in multiple jurisdictions, we are subject to the risks generally incident to
investments in real property, which risk may vary by jurisdiction. The investment returns available from investments in real estate depend in large part on the amount of income earned and capital
appreciation generated by the properties, as well as the expenses incurred. We may experience delays and incur substantial costs in enforcing our rights as lessor under defaulted leases, including
costs associated with being unable to rent vacant properties to new tenants on a timely basis or with making improvements or repairs required by a new tenant.

In
addition, a variety of other factors outside of our control affect income from properties and real estate values, including environmental laws and other governmental regulations, real
estate, zoning, tax and eminent domain laws, interest rate levels and the availability of financing. For example, new or existing environmental, real estate, zoning or tax laws can make it more
expensive or time consuming to develop real property or expand, modify or renovate existing structures. When interest rates increase, the cost of acquiring, developing, expanding or renovating real
property increases and real property values may decrease as the number of potential buyers decreases. In addition, real estate investments are often difficult to sell quickly. Similarly, if financing
becomes less available, it becomes more difficult both to acquire and to sell real property. Moreover, governments can, under eminent domain laws, take real property. Sometimes this taking is for less
compensation than the owner believes the property is worth.

Real estate development is subject to timing, budgeting and other risks that could adversely affect our operating results.

Subject to compliance with the Declaration of Trust, we intend to develop properties as suitable opportunities arise, taking into
consideration the general economic climate. Real estate development has a number of risks, including risks associated with:



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Our
development projects may not be completed on time or within budget, and there may be difficulty in securing tenants for the development, which could adversely affect our operating
results.

Real property investments are relatively illiquid and are subject to volatile valuations.

Real estate investments are relatively illiquid. This may limit our ability to adjust or adapt our portfolio promptly in response to
changing economic or investment conditions. If for whatever reason liquidation of assets is required, there is a significant risk that we would realize sale proceeds of less than the current fair book
value of our real estate investments.

Additionally,
many of our significant leases provide our tenants with rights of first refusal, which may adversely affect the marketability and market value of our income-producing
property portfolio. These rights of first refusal may deter third parties from incurring the time and expense that would be necessary for them to bid on our properties in the event that we desire to
sell those properties. Accordingly, these rights of first refusal may adversely affect our ability to sell our properties or the prices that we receive for them upon any sale. See "Business
Overview  Leasing Arrangements  Restrictions on Sales and Tenant Rights of Refusal".

We may be unable to successfully implement our remaining objectives from our strategic plan, or may fail to realize benefits which are currently targeted to result from the
implementation of that plan.

The remaining objectives from our strategic plan are subject to known and unknown risks, uncertainties and other unpredictable factors
which, in addition to those discussed in this document, include: adverse changes to foreign or domestic tax or other laws; changes in economic, market and competitive conditions; and other risks that
may adversely affect our ability to optimize our relationship with Magna, expand and diversify our lease portfolio and increase our leverage.

We may be unable to obtain necessary future financing.

Our access to third-party financing will be subject to a number of factors, including general market conditions; our credit rating; the
market's perception of our stability and growth potential; our current and future cash flow and earnings; our ability to renew certain long term leases; and compliance with the Declaration of Trust.
There is no assurance that capital will be available when needed or on favourable terms. Our failure to access required capital on acceptable terms could adversely affect our investments, cash flows,
operating results or financial condition. Additionally, as a result of global economic volatility, we may have restricted access to capital and increased borrowing costs. As future acquisitions and
capital expenditures will be financed out of cash generated from operations, borrowings and possible future debt or equity security issuances, our ability to do so is dependent on, among other
factors, the overall state of capital markets and investor appetite for investments in the real estate sector and automotive industry and in our securities in particular.

To
the extent that external sources of capital become limited or unavailable or available on onerous terms, our ability to make acquisitions and capital investments and maintain existing
assets may be impaired, and our assets, liabilities, business, financial condition and results of operations may be materially and adversely affected as a result.

We may face unexpected risks relating to acquisitions.

We expect to continue to acquire new properties and may also acquire going-concern businesses. It is our operating policy to conduct
such diligence as is commercially reasonable in the circumstances on each real property or business that we intend to acquire and obtain a report with respect to the physical condition of real

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properties
from an independent and experienced consultant. Integrating acquired properties and businesses involves a number of risks that could materially and adversely affect our business,
including:



Furthermore,
the properties and businesses acquired may have undisclosed liabilities for which we may not be entitled to any recourse against the vendor, and any contractual, legal,
insurance or other remedies may be insufficient. The discovery of any material liabilities subsequent to the closing of the acquisition for any property or business could have a material adverse
effect on our cash flows, financial condition and results of operations.

We may incur significant capital expenditures and other fixed costs.

Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges,
must be made throughout the period of ownership of real property, regardless of whether the property is producing sufficient income to pay such expenses. In order to retain desirable rentable space
and to generate adequate revenue over the long term, we must maintain or, in some cases, improve each property's condition to meet market demand.

Maintaining
a rental property in accordance with market standards over its useful life can entail costs, which we may not be able to recover from our tenants. Such costs may include a
new roof, paved areas or structural repairs. Numerous factors, including the age of the building structure, the material and substances used at the time of construction or currently unknown building
code violations, could result in substantial unbudgeted costs for refurbishment or modernization. If the actual costs of maintaining or upgrading a property exceed our estimates, or if hidden defects
are discovered during maintenance or upgrading, which are not covered by insurance or contractual warranties, or if we are not permitted to raise the rents due to legal constraints, we will incur
additional and unexpected costs. If competing properties of a similar type are built in the area where one of our properties is located, or similar properties located in the vicinity of one of our
properties are substantially refurbished, the net operating income derived from, and the value of, such property could be reduced.

Any
failure by us to undertake appropriate maintenance and refurbishment work in response to the factors described above could adversely affect the rental income we earn from such
properties.

Potential losses to our properties may not be covered by insurance or may exceed our policy coverage limits.

It is our policy to obtain and maintain, or cause to be obtained and maintained, at all times, insurance coverage in respect of our
potential liabilities and the accidental loss of value of our assets from risks, in amounts, with such insurers, and on such terms as the Trustees consider appropriate, taking into account all
relevant factors including the practices of owners of comparable properties.

We
do not carry insurance for generally uninsured losses, such as losses from riots, certain environmental hazards, war or terrorist attacks.

If
we experience a loss which is uninsured or which exceeds our policy coverage limits, we could lose the capital invested in the damaged properties as well as the anticipated future
cash flows from those properties. In addition, it is difficult to evaluate the stability and net assets or capitalization of insurance companies and any insurer's ability to meet its claim payment
obligations. A failure of an insurance company to make
payments to us upon an event of loss covered by an insurance policy could have a material adverse effect on our business and financial condition.

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Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal
fees and other costs.

We are sometimes the subject of complaints or litigation from tenants, employees or other third parties for various actions. The
damages sought against us in these litigation claims can be substantial. If one or more valid and substantiated claims were to greatly exceed our liability insurance coverage limits or if our
insurance policies do not cover such a claim, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. Additionally, we are subject to
numerous federal, provincial, state and local laws and governmental regulations relating to environmental protections, product quality standards, and building and zoning requirements. If we fail to
comply with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital
expenses could increase due to remediation measures that may be required if we are found to be noncompliant with any existing or future laws or regulations.

Controls over Financial Reporting

We maintain information systems, procedures and controls to ensure all information disclosed externally is as complete, reliable and
timely as possible. Such internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial
statements for external purposes in accordance with IFRS.

Because
of the inherent limitations in all control systems, including well-designed and operated systems, no control system can provide complete assurance that the objectives of the
control system will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues, including instances of fraud, if any, will be detected or prevented. These
inherent limitations include, without limitation, the possibility that management's assumptions and judgments may ultimately prove to be incorrect under varying conditions and circumstances and the
impact of isolated errors.

Additionally,
controls may be circumvented by the unauthorized acts of individuals, by collusion of two or more people, or by management override. The design of any system of controls is
also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
conditions.

Risks Relating to Taxation

Changes to tax laws

Granite operates in multiple foreign jurisdictions. Accordingly, it is subject to the tax laws and related tax treaties in each of
those jurisdictions and the risk that those tax laws and treaties may change in the future. Any such changes could adversely affect the taxes payable, including withholding taxes, the effective tax
rate in the jurisdictions in which Granite operates and the portion of distributions which would be income for Canadian income tax purposes.

Tax authorities may disagree with the positions taken by us in our tax filings.

Tax provisions, including current and deferred tax assets and liabilities in our financial statements, and tax filing positions require
estimates and interpretations of federal, provincial and foreign tax rules and regulations, and judgments as to their interpretation and application to our specific situation. In addition, there can
be no assurance that federal, provincial or foreign tax agencies will agree with our tax filing positions or will not change their administrative practices to the detriment of us and our
securityholders. Our multi-jurisdictional organizational structure is complex, including as a result of our conversion to a stapled unit real estate investment trust structure pursuant to the 2013
Arrangement. The computation of income and other taxes payable as a result of various transactions that we have completed involves many complex factors as well as our interpretation of and compliance
with relevant tax legislation and regulations. While we believe that our tax filing positions are appropriate and supportable under applicable law, they are always subject to review and assessment by
the relevant taxation authorities. Therefore, it is possible that additional taxes could be payable by

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us,
that the ultimate value of our tax assets and liabilities could change in the future and that such additional taxes and changes to such amounts could be materially adverse to us.

Canada



Granite REIT may cease to qualify as a mutual fund trust for purposes of the Tax Act. If Granite REIT did not qualify as a
mutual fund trust for such purposes continuously throughout a taxation year, it would be subject to adverse tax consequences which likely would materially reduce its ability to make distributions on
REIT Units. Furthermore, if Granite REIT was considered not to have been established primarily for the benefit of Canadian-resident Unitholders (or, under proposals to amend the Tax Act
publicly announced by the Minister of Finance (Canada) quite a number of years ago, it became even temporarily majority-owned by non-resident persons and/or partnerships which had one or more
non-resident members), Granite REIT would be permanently disqualified from qualifying as a mutual fund trust for such purposes.



Granite REIT would be subject to Canadian income tax (under the so-called "SIFT" tax rules) on a similar basis to a Canadian public
corporation on its income for a year unless it qualifies in that year as a real estate investment trust for purposes of the Tax Act (the "REIT
Exception"). The conditions for satisfying the REIT Exception are onerous, and include various numerical tests (including tests entailing valuations or measurement of various
revenue streams) which must be satisfied throughout the year in question. Therefore, financial results for a year, or developments occurring during the year, that were not anticipated earlier in the
year, amendments to the Tax Act which adversely affect the availability to Granite REIT of the REIT Exception or challenges by the Canada Revenue Agency
(the "CRA") to valuations made by or on behalf of management to interpretations adopted in applying the REIT Exception, or to other calculations,
that are relevant to the application of the REIT Exception, could result in the REIT Exception not being available for the year.

Accordingly,
there is a risk (for example, as a result of unanticipated developments) that Granite REIT will not qualify under the REIT Exception as a real estate investment trust
under the Tax Act for one or more of its taxation years after 2012. Were this to occur, the level of monthly cash distributions made on the REIT Units could be materially reduced.



In circumstances specified in the Tax Act, Granite Co., Granite Netherlands C.V. ("Granite
Netherlands"), or US Holdco LP, would be required to include in computing its income the amount of income of its non-resident subsidiaries considered under the
Tax Act to be "foreign accrual property income," or "FAPI." Substantially all of the income of Granite Netherlands and Granite US Holdco LP for purposes of the Tax Act, including
any FAPI, must be included in computing the income of Granite REIT, as an indirect partner. Depending on the circumstances, significant asset dispositions by such non-resident subsidiaries of such
partnerships or of Granite Co., or maturity of intercompany loans or advances, could result in the recognition of FAPI. This would result in an increase in the taxable income of
Granite Co. or Granite REIT which, in turn, could result in a corresponding income tax liability of Granite Co. or an increase in the level of taxable income to be distributed and
allocated to REIT Unitholders (or, to the extent not distributed, subjected to taxation in the hands of Granite REIT).



If the proportion of the real estate assets indirectly held by Granite REIT as Canadian real estate assets were to increase
significantly, this could cause return-of-capital distributions made by Granite REIT to non-resident REIT Unitholders to become subject to withholding tax of 15% under Part XIII.2 of the
Tax Act.

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In the case of distributions paid by Granite REIT to REIT Unitholders who otherwise would qualify for reduced rates of withholding
under the Canada-United States Income Tax Convention (the "U.S. Treaty"), it is uncertain as to whether the rate of Canadian
withholding tax imposed on such distributions is 25%, or whether such rate of withholding tax is reduced to 15% or 0% (based on the
geographic source of the distribution) by virtue of the U.S. Treaty. Granite REIT currently withholds on such distributions made by it from time to time at a rate of 25% based on its
understanding of the current views of the CRA. There can be no assurance that a U.S.-resident REIT Unitholder could receive a refund of any portion or such withholding tax on application to
the CRA.



As discussed in part above, there are potential legal and factual uncertainties as to the rate at which Granite REIT should withhold
tax on distributions made by it to Non-Residents. If Granite REIT were to withhold at too low a rate and were later assessed for such failure by CRA, Granite REIT very well might not be able as a
practical matter to recover most of the amount of such assessment from the non-residents to whom it had made such distributions (and would not have even a legal right to so recover interest or
penalties). In such event, the cash available for subsequent distributions to both resident and non-resident REIT Unitholders could be reduced.

United States Taxation



In compliance with U.S. Treasury Department Circular 230, which provides rules governing certain conduct of
U.S. tax advisors giving advice with respect to U.S. tax matters: (i) any U.S. federal tax advice contained in this AIF is not intended to be used and cannot be used by you
or any other person for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code (the "Code");
(ii) such advice was prepared in the expectation that it may be used in connection with the promotion or marketing (within the meaning of U.S. Treasury Department Circular 230) of
Stapled Units; and (iii) REIT Unitholders should seek advice based on their particular circumstances from an independent tax advisor.



Because Granite REIT is expected to be treated as a partnership for U.S. federal income tax purposes, U.S.-resident REIT
Unitholders will be required to recognize income in accordance with Granite REIT's recognition and allocation of such income. Granite REIT may derive taxable income from investments that is not
matched by a corresponding distribution of cash. It is also possible that the U.S. federal income tax liability of a U.S.-resident REIT Unitholder with respect to its allocable share of Granite
REIT's income for a particular taxable year could exceed the cash distribution to the U.S.-resident REIT Unitholder for the year.



Granite REIT's status as a partnership for U.S. federal income tax purposes requires that 90% or more of Granite REIT's gross
income for every taxable year consists of qualifying income, and that Granite REIT not be registered under the Investment Company Act. Qualifying income generally includes dividends, interest, capital
gains from the sale or other disposition of stocks and securities and certain other forms of investment income. Granite REIT expects that it will be able to utilize the qualifying income exception in
each taxable year, but Granite REIT could cease to be treated as a partnership for U.S. federal income tax purposes under certain circumstances, resulting in materially reduced distributions if
Granite REIT is subject to U.S. corporate level income tax or increased U.S. withholding tax on dividend distributions from its US subsidiaries.

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Granite Co., certain of Granite Co.'s subsidiaries, Granite GP, or subsidiaries of Granite REIT may be considered
a PFIC for U.S. federal income tax purposes. U.S.-resident REIT Unitholders directly or indirectly owning an interest in a PFIC may experience adverse U.S. tax consequences.



Granite REIT expects to be considered to be "regularly traded" for purposes of the Foreign Investment in Real Property Tax Act
of 1980 ("FIRPTA"), but this determination is made on a quarterly basis. If for any quarter Granite REIT is not considered to be "regularly traded" all
Non-U.S.-resident REIT Unitholders, including those holding 5% or smaller interests, would be subject to U.S. federal income tax and U.S. filing requirements upon the disposition of
REIT Units.



Granite REIT intends to manage its affairs so that recognition of a FIRPTA Gain is minimized. However, if Granite REIT recognizes
FIRPTA Gain, Non-U.S.-resident REIT Unitholders will be subject to U.S. federal income tax and U.S. income tax return filing obligations.



Treaty-reduced rates of withholding tax on Fixed, Determinable, Annual, Periodical (FDAP) payments are not available under the Treaty
if REIT Unitholders are not considered the beneficial owners of the income earned by Granite REIT or are not considered to have derived such income within the meaning of the applicable Treasury
Department regulations. Granite REIT believes that REIT Unitholders will be treated as deriving the income earned by Granite REIT and as the beneficial owners of such income. If REIT Unitholders were
not considered the beneficial owners of Granite REIT's income for these purposes, distributions from Granite REIT America Inc. ("Granite
America"), an indirect Delaware subsidiary of Granite REIT that holds the U.S. assets of Granite REIT and that will elect to be treated as a REIT for U.S. federal
income tax purposes, as of January 1, 2013, to Granite REIT would not be eligible for a reduced rate of withholding tax.



Under section 269B of the Code certain entities that are treated as "stapled entities" are subject to adverse effects.
Granite GP should not be treated as stapled to Granite America under current law. If Granite GP nevertheless were treated as stapled to Granite America for these purposes, Granite
America and Granite GP could be treated as one entity, which could potentially result in Granite
America failing to qualify as a REIT and could reduce the amount of available distributions to Granite REIT (and ultimately to REIT Unitholders).



As of January 1, 2013, Granite America qualified as a REIT for U.S. federal income tax purposes. REITs are subject to
numerous requirements, including requirements relating to the character of their income and assets. If Granite America fails to qualify as a REIT for U.S. federal income tax purposes in 2013 or
in a future year, it would be subject to U.S. federal income tax as an entity, and distributions to Granite REIT (and ultimately to REIT Unitholders) could be reduced.

Risks Relating to the Stapled Unit Real Estate Investment Trust Structure

Cash Distributions Are Not Guaranteed and will Fluctuate with the Performance of the Business

Although Granite intends to distribute the majority of the consolidated income it earns, less expenses and amounts, if any, paid by
Granite REIT in connection with the redemption of REIT Units, the actual amount of distributions paid in respect of the REIT Units will depend upon numerous factors, all of which are susceptible to a
number of risks and uncertainties beyond the control of Granite. We may also determine to retain cash reserves in certain of our subsidiaries for the proper conduct of our business. Adding to these
reserves in any

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year
would reduce the amount of distributable cash and, hence, of cash available for distributions in that year. Accordingly, there can be no assurance regarding the actual levels of distributions
by Granite.

Structural Subordination of the REIT Units

In the event of a bankruptcy, liquidation or reorganization of Granite LP or its subsidiaries, holders of certain of their
indebtedness (including financial institutions and holders of 2016 Debentures and 2018 Debentures) and certain trade creditors will generally be entitled to payment of their claims from the assets
from such entities before any assets are made available for upstream distribution, eventually to Granite REIT or Granite GP. GP Shares and REIT Units will be effectively subordinated to
the credit facilities and most of the other indebtedness and liabilities of Granite LP and its subsidiaries. None of Granite LP or its subsidiaries will be limited (other than pursuant
to their credit facilities or other debt instruments, including the Credit Facilities (as defined under "Credit Facility and Indebtedness  Credit
Facility"), the 2004 Indenture and 2013 Indenture (each as defined under "Credit Facility and Indebtedness  Other Unsecured Indebtedness") in their respective
ability to incur secured or unsecured indebtedness.

Limitation on Non-Resident Ownership

The Declaration of Trust imposes various restrictions on holders of REIT Units (which apply regardless of whether the REIT Units are
held in the form of Stapled Units). REIT Unitholders that are Non-Residents (as defined below) are prohibited from beneficially owning more than 49% of REIT Units (on a non-diluted and
fully-diluted basis). These restrictions may limit (or inhibit the exercise of) the rights of certain persons, including persons who are not residents of Canada for purposes of the
Tax Act ("Non-Residents") and non-Canadians, to acquire Stapled Units or REIT Units, to exercise their rights as REIT Unitholders and to initiate
and complete take-over bids in respect of the Stapled Units or REIT Units. As a result, these restrictions may limit the demand for Stapled Units or REIT Units from certain persons and thereby
adversely affect the liquidity and market value of the Stapled Units or REIT Units held by the public. See "Declaration of Trust and Description of REIT
Units  Limitations on Non-Resident Ownership of REIT Units".

Non-Canadian Holders of Stapled Units will be subject to foreign currency risk associated with our distributions.

Holders of Stapled Units residing in countries where the Canadian dollar is not the functional currency will be subject to foreign
currency risk associated with our distributions, which are denominated in Canadian dollars.

Dependence on Granite LP

Granite REIT is an open-ended, limited purpose trust which is, for purposes of its income, entirely dependent on Granite LP, and
in turn on its subsidiaries. Although Granite REIT intends to distribute the majority of the consolidated income earned by Granite REIT, less expenses and amounts, if any, paid by Granite REIT in
connection with the redemption of REIT Units, there can be no assurance regarding Granite REIT's ability to make distributions, which remains dependent upon the ability of Granite LP to pay
distributions or returns of capital in respect of the Granite LP Units, which ability, in turn, is dependent upon the operations and assets of Granite LP's subsidiaries.

Unpredictability and Volatility of Stapled Unit Price

A publicly-traded real estate investment trust will not necessarily trade at values determined by reference to the underlying value of
its business. The prices at which the Stapled Units (or REIT Units, after an Event of Uncoupling) will trade cannot be predicted. The market price of the Stapled Units (or REIT Units,
after an Event of Uncoupling) could be subject to significant fluctuations in response to variations in quarterly operating results, distributions and other factors. The annual yield on the Stapled
Units (or REIT Units, after an Event of Uncoupling) as compared to the annual yield on other financial instruments may also influence the price of Stapled Units (or REIT Units, after an
Event of Uncoupling) in the public trading markets. In addition, the securities markets have in the past experienced and may in the future experience significant price and volume fluctuations from
time to time unrelated or disproportionate to the operating performance of particular issuers.

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These
broad fluctuations may adversely affect the market price of the Stapled Units (or REIT Units, after an Event of Uncoupling).

Nature of REIT Units

Granite REIT's principal assets are limited partnership interests in Granite LP. Each REIT Unit represents an equal, undivided,
beneficial interest in Granite REIT and does not represent a direct investment in Granite REIT's assets and should not be viewed by investors as direct securities of Granite REIT's assets.

The
REIT Units are not "deposits" within the meaning of theCanada Deposit Insurance Corporation Actand are not insured under the
provisions of that Act or any other legislation. Furthermore, Granite REIT is not a trust company and, accordingly, is not registered under any trust and loan company legislation as it does not carry
on or intend to carry on the business of a trust company. In addition, although Granite REIT is intended to qualify as a "mutual fund trust" as defined by the Tax Act, Granite REIT will not be
a "mutual fund" as defined by applicable securities legislation.

Securities
like the REIT Units are hybrids in that they share certain attributes common to both equity securities and debt instruments. The REIT Units do not represent a direct
investment in the business of Granite LP and should not be viewed by investors as shares or interests in such entity or any other company. The REIT Units do not represent debt instruments and
there is no principal amount owing to REIT Unitholders under the REIT Units.

The
rights of REIT Unitholders are based primarily on the Declaration of Trust. There is no statute governing Granite REIT's affairs equivalent to the BCBCA or which sets out the rights
and entitlements of shareholders of corporations in various circumstances. As such, REIT Unitholders will not have the statutory rights with respect to Granite REIT normally associated with ownership
of shares of a corporation including, for example, the right to bring "oppression" or "derivative" actions. As well, Granite REIT may not be a recognized entity under certain existing insolvency
legislation such as theBankruptcy and Insolvency Act(Canada) and theCompanies Creditors' Arrangement
Act(Canada) and thus the treatment of REIT Unitholders upon an insolvency is uncertain.

Redemption Right

It is anticipated that the redemption right will not be the primary mechanism for holders of Stapled Units to liquidate their
investment. Upon a redemption of REIT Units, the Trustees may distribute cash or Unit Redemption Assets (as defined under "Declaration of Trust and Description of REIT
Units  REIT Unit Redemption Right") to the redeeming REIT Unitholders, subject to obtaining any required regulatory approvals and complying with the requisite
terms and conditions of such approvals. The property so distributed may not be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds,
registered disability savings plans, registered education savings plans, tax-free savings accounts and deferred profit sharing plans, each within the meaning of the Tax Act (collectively,
"Exempt Plans") depending upon the circumstances at the time.

Additionally,
such securities, if any, are not expected to be listed on any stock exchange and no established market is expected to develop in such securities and they may be subject to
resale restrictions under applicable securities laws.

Dilution

Granite may issue an unlimited number of Stapled Units for the consideration and on those terms and conditions as are established by
the Trustees of Granite REIT and the Directors of Granite GP without the approval of any holders of Stapled Units. Any further issuance of Stapled Units will dilute the interests of existing
holders.

REIT Unitholder Liability

The Declaration of Trust provides that no REIT Unitholders, in such capacity, will be subject to any liability for, among other things,
the obligations, liabilities or activities of Granite REIT. In addition, legislation has been

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enacted
in the Province of Ontario and certain other provinces that is intended to provide REIT Unitholders in those provinces with limited liability. However, there remains a risk, which management
of Granite REIT considers to be remote in the circumstances, that a REIT Unitholder could be held personally liable for the obligations of Granite REIT to the extent that claims are not satisfied out
of the assets of Granite REIT.

Uncoupling of Stapled Units

An "Event of Uncoupling" shall occur only: (a) in the event that REIT Unitholders vote in favour of the uncoupling of REIT Units
and GP Shares such that the two securities will trade separately; or (b) at the sole discretion of the Trustees or the directors of Granite GP, but only in the event of the
bankruptcy, insolvency, winding-up or reorganization (under an applicable law relating to insolvency) of Granite REIT or Granite GP or the taking of corporate action by Granite REIT or
Granite GP in furtherance of any such action or the admitting in writing by Granite REIT or Granite GP of its inability to pay its debts generally as they become due. As a result of
changes in applicable Canadian, U.S. or other foreign tax laws, or otherwise, it may become desirable to uncouple REIT Units and GP Shares such that the two securities trade separately. There
can be no guarantee that such an uncoupling will be accomplished in a timely manner, or at all, and we may incur significant expenditures related to administrative expenses, legal and tax advice, in
respect of holding a meeting of REIT Unitholders or otherwise to effect an uncoupling of REIT Units and GP Shares. The market value of the Stapled Units may decline significantly if a desirable
uncoupling cannot be effected in a timely manner, or at all.

DESCRIPTION OF STAPLED UNITS

The Stapled Units consist of one REIT Unit and one GP Share. The Declaration of Trust and Articles of Granite GP each
contain provisions to achieve the "stapling" of the REIT Units and the GP Shares until such time as an Event of Uncoupling occurs. See "Declaration of Trust and Description of REIT
Units  Allotment and Issue of REIT Units", "Declaration of Trust and Description of REIT Units  Transferability and
Stapling of REIT Units" and "Granite GP Capital Structure".

An
"Event of Uncoupling" shall occur only: (a) in the event that REIT Unitholders vote in favour of the uncoupling of REIT Units and GP Shares such that the two securities
will trade separately; or (b) at the sole discretion of the Trustees or the directors of Granite GP, but only in the event of the bankruptcy, insolvency, winding-up or reorganization
(under an applicable law relating to insolvency) of Granite REIT or Granite GP or the taking of corporate action by Granite REIT or Granite GP in furtherance of any such action or the
admitting in writing by Granite REIT or Granite GP of its inability to pay its debts generally as they become due.

Support Agreement

The following is a summary of certain provisions of the Support Agreement and does not purport to be complete
and is subject to, and is qualified in its entirety, by reference to the Support Agreement, as filed on SEDAR.

Pursuant
to the Declaration of Trust and the Articles of Granite GP, at all times, each REIT Unit must be "stapled" to a GP Share unless there is an Event of Uncoupling. As
part of the 2013 Arrangement, Granite REIT and Granite GP entered into a support agreement dated as of January 3, 2013 (the "Support
Agreement") which contains provisions that facilitate the Stapled Unit structure.

Among
other things, the Support Agreement provides for:



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Under
the Support Agreement, the parties have agreed to keep each other informed of potential issues of securities, consult with each other and cooperate in connection with such an
issue. The Support Agreement provides for coordination and cooperation of the parties in the event of any repurchase of, or offer to repurchase, Stapled Units, and prevents Granite GP from
repurchasing, or offering to repurchase, GP Shares, and Granite REIT from repurchasing, or offering to repurchase, REIT Units, unless the other party simultaneously repurchases, or offers to
repurchase, its component part of the applicable Stapled Units.

The
Support Agreement contains provisions to facilitate the preparation and filing of combined financial statements of Granite REIT and Granite GP and other public disclosure
documents containing disclosure about Granite REIT and Granite GP. The parties are required to cooperate with each other in the preparation of combined financial statements and other public
disclosure documents; provide relevant financial and other information to each other; maintain a consistent financial presentation, to the extent appropriate and practicable in accordance with
applicable accounting principles; and maintain the same fiscal year end. The Support Agreement also provides for the cooperation and coordination of the parties in calling and holding meetings of
holders of REIT Units and GP Shares, respectively, including having the
same record dates and meeting dates, holding concurrent or sequential meetings and cooperating in the preparation of a management information circular and other meeting materials.

DECLARATION OF TRUST AND DESCRIPTION OF REIT UNITS

The following is a summary of certain provisions of the Declaration of Trust and does not purport to be
complete and is subject to, and is qualified in its entirety, by reference to the Declaration of Trust, as filed on SEDAR.

REIT Units

The beneficial interests in Granite REIT are represented and constituted by a single class of "trust units". An unlimited number of
REIT Units may be issued pursuant to the Declaration of Trust. Each REIT Unit represents an equal undivided beneficial interest in any distributions by Granite REIT, whether of net income, net
realized capital gains or other amounts and, in the event of termination of Granite REIT, in the net assets of Granite REIT remaining after satisfaction of all liabilities, and no REIT Unit has any
preference or priority over any other.

No
REIT Unitholder is entitled to call for any partition or division of Granite REIT's property or for a distribution of any particular asset forming part of Granite REIT's property or
of any particular monies or funds received by the Trustees. The legal ownership of the property of Granite REIT and the right to conduct the activities and operations of Granite REIT are vested
exclusively in the Trustees, and no REIT Unitholder has or is deemed to have any right of ownership in any of the property of Granite REIT, except as a beneficiary of Granite REIT and as specifically
provided in the Declaration of Trust.

REIT
Unitholders may attend and vote at all meetings of the REIT Unitholders, either in person or by proxy, and each REIT Unit is entitled to one vote at all such meetings or in respect
of any written resolution of REIT Unitholders.

Subject
to applicable regulatory approval, the issued and outstanding REIT Units may be subdivided or consolidated from time to time by the Trustees without REIT Unitholder approval,
provided that if an Event of Uncoupling has not occurred, the REIT Units shall not be subdivided or consolidated unless immediately following such subdivision or consolidation there will be issued and
outstanding an equal number of REIT Units and GP Shares.

The
REIT Units are not "deposits" within the meaning of theCanada Deposit Insurance Corporation Actand are not insured under the
provisions of such Act or any other legislation. Furthermore, Granite REIT is not

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a
trust company and, accordingly, is not registered under any trust and loan company legislation as it does not carry on the business of a trust company.

Allotment and Issue of REIT Units

The consideration for any REIT Unit must be paid in one or more of money, property or past services performed for or for the direct or
indirect benefit of Granite REIT, the value of which consideration received by Granite REIT, as determined by the Trustees, equals or exceeds the issue price set for the REIT Unit. Subject to the
foregoing and the restrictions noted at " Limitations on Non-Resident Ownership of REIT Units", the Trustees may allot and issue REIT Units at such time or times and in such
manner (including pursuant to any reinvestment plan relating to distributions of Granite REIT or dividends of Granite GP, equity-based compensation plans of Granite REIT, Granite GP or
their respective affiliates or pursuant to a unitholder rights plan of Granite REIT and/or shareholder rights plan of Granite GP), and for such consideration and to such person, persons or
class of persons as the Trustees in their sole discretion shall determine, provided that, if an Event of Uncoupling has not occurred, no REIT Unit may be issued to any person unless
(a) a GP Share is simultaneously issued to such person or (b) Granite REIT has arranged that REIT Units will be consolidated (subject to any applicable regulatory approval)
immediately after such issuance, such that each holder of a REIT Unit will hold an equal number of REIT Units and GP Shares immediately following such consolidation. REIT Units may be issued
and sold on an instalment basis, in which event beneficial ownership of such REIT Units may be represented by instalment receipts, but shall otherwise be non-assessable. REIT Units may also be issued
in satisfaction of any non-cash distribution by Granite REIT to the REIT Unitholders.

The
Trustees may also create and issue rights, warrants or options or other instruments or securities (including, subject to the provisions summarized under "Investment Guidelines and
Operating Policies of Granite REIT", debt securities) exercisable for, convertible into, exchangeable for or otherwise pursuant to which a holder may subscribe for, acquire or receive payment in,
fully paid REIT Units and, provided that an Event of Uncoupling has not occurred, Stapled Units.

Transferability and Stapling of REIT Units

Provided that an Event of Uncoupling has not occurred, each REIT Unit may be transferred only together with a GP Share and, in
the event that Granite GP (a) subdivides, re-divides or changes the then outstanding GP Shares into a greater number of GP Shares, (b) reduces, combines,
consolidates or changes the then outstanding GP Shares into a lesser number of GP Shares, or (c) reclassifies or otherwise changes the GP Shares, Granite REIT (subject to
any applicable regulatory approval) shall cause a corresponding change to simultaneously be made to, or in, REIT Units unless such event does not result in a holder of a GP Share holding an
unequal number of GP Shares and REIT Units (including if a dividend or distribution by Granite GP in the form of GP Shares, or issuance by Granite GP of GP Shares,
which, in each case, is followed immediately by a consolidation after which each holder of a REIT Unit holds an equal number of GP Shares). See also " Limitations on
Non-Resident Ownership of REIT Units".

No
transfer of REIT Units shall be effective as against the Trustees or shall be in any way binding upon the Trustees until the transfer has been recorded on the register to be
maintained by Granite REIT's registrar and transfer agent.

Purchases of REIT Units

Granite REIT may purchase or otherwise acquire at any time, in each case for cancellation, the whole or from time to time any part of
the outstanding REIT Units, at a price per REIT Unit and on a basis determined by the Trustees in compliance with all applicable securities laws, regulations or policies and the policies of any
applicable stock exchange, provided that, if an Event of Uncoupling has not occurred, Granite GP simultaneously purchases the GP Shares stapled to the REIT Units that Granite REIT seeks
to purchase or otherwise acquire.

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Trustees

Number of Trustees and Quorum

The Declaration of Trust provides that Granite REIT will have a minimum of three and a maximum of fifteen Trustees.

The
number of Trustees may be fixed within such limits, from time to time, and increased or decreased within such limits, from time to time, by resolution of the Trustees. If the number
of Trustees so fixed is increased, the Trustees may, from time to time appoint one or more additional Trustees to fill such a vacancy, provided that the number of additional Trustees so appointed must
not at any time exceed: (a) one-third of the number of Trustees in office upon completion of the 2013 Arrangement, if, at the time of the appointments, one or more of the Trustees in office
upon completion of the 2013 Arrangement have not yet completed their first term of office; or (b) in any other case, one-third of the number of the current Trustees who were elected or
appointed as Trustees other than pursuant to the foregoing.

Trustee Power and Authority

The Trustees, subject only to the specific limitations contained in the Declaration of Trust, including without limitation those
described in "Investment Guidelines and Operating Policies of Granite REIT" and " Amendments to the Declaration of Trust  Amendments by
REIT Unitholders", shall have, without further or other authorization, action or consent and free from any control or direction on the part of REIT Unitholders, full, absolute and exclusive power,
control and authority over the assets of Granite REIT and over the activities and operations of Granite REIT to the same extent as if the Trustees were the sole and absolute legal and beneficial
owners of such assets in their own right, to do all such acts and things as in their sole judgment and discretion are necessary or incidental to, or desirable for, the carrying out of any of the
purposes of Granite REIT or the conducting of the activities and operations of Granite REIT.

In
particular, the Trustees have the power and authority to, among other things: (a) retain, invest and re-invest the capital or other funds of Granite REIT in real or personal
property of any kind; (b) possess and exercise all the rights, powers and privileges appertaining to the ownership of the property of Granite REIT; (c) increase the capital of Granite
REIT at any time by the issuance of additional REIT Units; (d) invest in, purchase or otherwise acquire and hold for investment the entire or any participating interest in notes, debentures,
bonds or other obligations which are secured by any mortgages; (e) sell, rent, lease, hire, exchange, release, partition, assign, mortgage, pledge, hypothecate, grant security interests in,
encumber, negotiate, convey, transfer or otherwise dispose of any or all of the property of Granite REIT; (f) enter into leases, contracts, obligations and other agreements; (g) issue
any type of debt securities or convertible debt securities and borrow money or incur any other form of indebtedness for the purpose of carrying out the purposes, activities and operations of Granite
REIT; (h) guarantee, indemnify or act as surety with respect to payment or performance of obligations of other persons, to the extent, in the opinion of the Trustees, necessary or incidental to
or desirable for the carrying out of any of the purposes of Granite REIT or conducting the activities and operations of Granite REIT; (i) lend money or other property of Granite REIT;
(j) elect, appoint, engage or employ officers for Granite REIT who may be removed or discharged at the discretion of the Trustees; (k) collect, sue for and receive sums of money coming
due to Granite REIT; (l) renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of Granite REIT; (m) to the extent permitted by law,
indemnify, or enter into agreements with respect to the indemnification of, the Trustees; (n) except as prohibited by law or the Declaration of Trust, delegate any of the powers and duties of
the Trustees; and (o) do all such other acts and things as are incidental to the foregoing, and exercise all powers which are necessary or useful to carry on the activities and operations of
Granite REIT, to promote any of the purposes for which Granite REIT is formed and to carry out the provisions of the Declaration of Trust.

Term of Trustees

Trustees elected or appointed hold office for a term that, subject to the terms of the Declaration of Trust, expires at the conclusion
of the next annual meeting of REIT Unitholders or until their successors are elected or appointed, and shall be eligible for election or re-election.

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Residency of Trustees and Quorum

A majority of the Trustees must be resident in Canada for purposes of the Tax Act ("Resident
Canadians"). If at any time a majority of the Trustees are not Resident Canadians because of the resignation, removal, death or change in circumstance of any Trustee who was a
Resident Canadian, or there are no Trustees who are Resident Canadians, the Trustee or Trustees who are not Resident Canadians shall, immediately before that time, be deemed to have resigned and shall
cease to be Trustees with effect from the time of such deemed resignation.

A
quorum of the Trustees will be a majority of the Trustees then holding office, provided that a majority of Trustees present are Resident Canadians.

A
majority of meetings of the Trustees in each calendar year must be held in Canada.

Resignation, Removal and Death of Trustees

A Trustee may resign at any time and such resignation shall take effect on the date notice is given or at any later time specified in
the notice. A Trustee may be removed at any time (a) with or without cause by a majority of the votes cast at a meeting of REIT Unitholders or (b) by the other Trustees if the Trustee is
convicted of an indictable offence, or if the Trustee ceases to be qualified to act as a trustee of Granite REIT and does not promptly resign. Any removal of a Trustee shall take effect immediately
following the aforesaid vote or resolution.

Vacancies

The resignation, deemed resignation, removal or death of a Trustee, or failure of the REIT Unitholders to elect some, but not all, of
the required number of Trustees, shall cause a vacancy to occur and a majority of the Trustees continuing in office may fill such a vacancy; provided that, if such vacancy arises as a result of
removal of a Trustee by REIT Unitholders, such vacancy may be filled by the REIT Unitholders electing a replacement Trustee at the meeting at which the Trustee is removed. If REIT Unitholders fail to
elect any Trustees, the Trustees then in office will continue to hold office, subject to the terms of the Declaration of Trust.

Until
vacancies resulting from the resignation, deemed resignation, removal or death of a Trustee are filled (through election by REIT Unitholders, appointment by the remaining Trustees
or otherwise in accordance with the Declaration of Trust), the remaining Trustee or Trustees (even if less than a quorum) may exercise the powers of the Trustees under the Declaration of Trust.

If
at any time the number of Trustees is less than the required number and the remaining Trustee or Trustees fail or are unable to appoint one or more additional Trustees or if, upon the
deemed resignation of one or more Trustees there would be no Trustees, then the Trustees then in office shall promptly call a special meeting of REIT Unitholders to fill the vacancies
(and conduct such other business, if any, that may be dealt with at that meeting) and, if they fail to call a meeting or if there are no Trustees then in office, the meeting may be called by
any REIT Unitholder.

Standard of Care of Trustees, Indemnification and Limitations of Liability

The Declaration of Trust provides that that the Trustees shall exercise their powers and carry out their functions thereunder honestly
and in good faith with a view to the best interests of Granite REIT and the REIT Unitholders and that in connection therewith the Trustees shall exercise the care, diligence and skill that a
reasonably prudent individual would exercise in comparable circumstances.

The
Declaration of Trust provides that the Trustees shall at all times be indemnified and saved harmless out of the property of Granite REIT from and against losses which the Trustees
may suffer, sustain, incur or be required to pay as a result of, or in connection with any claim for or in respect of any act, deed, matter or thing whatsoever made, done, acquiesced in or omitted in
or about or in relation to the execution of their duties as Trustees and also from and against all other losses which they sustain or incur in or about or in relation to the activities and operations
of Granite REIT, unless: (a) at the time that the indemnity or payment is made, Granite REIT was prohibited from giving the indemnity or paying the expenses by the then governing declaration of

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trust;
(b) in relation to the subject matter of any proceeding or investigation for which indemnification is sought, the Trustee did not act honestly and in good faith with a view to the best
interests of Granite REIT and the REIT Unitholders; or (c) in the case of any criminal or administrative action or proceeding that is enforced by a monetary penalty, the Trustee did not have
reasonable grounds for believing that the Trustee's conduct in respect of which the proceeding was brought was lawful. The Declaration of Trust also provides, in certain circumstances, for the advance
of funds to a Trustee and repayment of such funds to Granite REIT.

Pursuant
to the Declaration of Trust none of the Trustees or any agent of Granite REIT shall be liable to Granite REIT or any REIT Unitholder or former REIT Unitholder for (a) any
action taken in good faith in reliance on any documents that are, prima facie, properly executed, (b) any depreciation of, or loss to, Granite REIT incurred by reason of the sale of any
security, (c) the loss or disposition of monies or securities, or (d) any other action or failure to act, including the failure to compel in any way any former or acting Trustee to
redress any breach of trust or any failure by any person to perform obligations or pay monies owed to Granite REIT, except for a breach of the duties and standard of care, diligence and skill set out
above. If the Trustees have retained an appropriate expert or advisor with respect to any matter connected with their duties under the Declaration of Trust, the Trustees may in good faith act or
refuse to act based on the advice of such expert or advisor and, notwithstanding any provision of the Declaration of Trust, including the duties and standard of care, diligence and skill set out
above, the Trustees will not be liable for any action or refusal to act in good faith based on the advice of any such expert or advisor which it is reasonable to conclude is within the expertise of
such expert or advisor to give. The Declaration of Trust further provides that (a) subject to the duties and standard of care, diligence and skill set out above, none of the Trustees nor any
agent of Granite REIT shall be subject to any liability in their personal capacities for any debts, liabilities, obligations, claims, demands, judgments, costs, charges or expenses (including legal
expenses) against or with respect to Granite REIT or in respect to the activities of Granite REIT, (b) other than the property and assets of Granite REIT, no property or assets of the Trustees,
owned in their personal capacity or otherwise, will be subject to any levy, execution or other enforcement procedure with regard to any obligations of Granite REIT under the Declaration of Trust or
under any other agreements and no recourse with respect to such obligations may be had or taken, directly or indirectly, against the Trustees in any capacity other than their capacity as trustees of
Granite REIT or against any successor, heir, executor, administrator or legal representative of the Trustees and (c) Granite REIT shall be solely liable therefor and resort shall be had solely
to the property and assets of Granite REIT for payment or performance thereof.

The
Declaration of Trust also provides that the foregoing matters in this paragraph will apply mutatis mutandis to each individual who: (a) is or was an officer of Granite REIT;
(b) was a Trustee; (c) is or was, or holds or held a position equivalent to that of, a director or officer of Granite GP or of a person at a time when that person is or was an
affiliate of Granite REIT or of Granite GP; (d) at the request of Granite REIT or Granite GP, is or was, or holds or held a position equivalent to that of, a director or officer
of a person; and (e) the heirs and personal or other legal representatives of any of the foregoing individuals or an individual who is a Trustee. Granite REIT shall also indemnify any such
persons in such other circumstances as the Declaration of Trust or law permits or requires.

REIT Unit Redemption Right

REIT Units are redeemable at any time on demand by the holders thereof; provided that, prior to an Event of Uncoupling, a REIT Unit may
only be redeemed together with retraction by the holder of a GP Share forming part of the applicable Stapled Unit. A REIT Unitholder who wishes to exercise the redemption right is required to
duly complete and properly execute a notice, in a form approved by the Trustees, requiring Granite REIT to redeem that number of REIT Units specified in the notice, which notice shall be sent to the
head office of Granite REIT or any principal office of the transfer agent in respect of REIT Units. No form or manner of completion or execution of a notice shall be sufficient unless the same is in
all respects satisfactory to the Trustees and is accompanied by any further evidence that the Trustees may reasonably require with respect to the identity, capacity or authority of the person giving
such notice.

On
Granite REIT's acceptance of the notice to redeem REIT Units, the REIT Unitholder shall thereafter cease to have any rights with respect to the REIT Units tendered for redemption
(other than to receive the redemption payment therefor) including the right to receive any distributions thereon which are declared

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payable
to the REIT Unitholders of record on a date which is subsequent to the day of receipt by Granite REIT of such notice. REIT Units shall be deemed to be tendered for redemption on the date
(the "Unit Redemption Date") that Granite REIT has, to the satisfaction of the Trustees, received the notice and other required documents or
evidence. All REIT Units redeemed by Granite REIT will be cancelled.

A
REIT Unitholder shall, upon Granite REIT's receipt of a valid redemption notice, be entitled to be paid, in respect of each REIT Unit so tendered for redemption an amount per REIT Unit
(the "Unit Redemption Price") equal to:



exceeds
the retraction price of a GP Share on the Unit Redemption Date; or



For
the purposes of the foregoing,



The
aggregate cash redemption price payable by Granite REIT in respect of all REIT Units tendered for redemption during any calendar month shall be satisfied by way of a cash payment on
or before the last day of the calendar month following the month in which the REIT Units were tendered for redemption, provided that such entitlement to receive cash shall not be applicable to REIT
Units tendered for redemption by a REIT Unitholder, if:



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If
a REIT Unitholder is not entitled to receive its entire redemption price in cash upon the redemption of REIT Units as a result of one or more of the foregoing limitations, then each
REIT Unit tendered for redemption will, subject to any applicable regulatory approvals, be paid and satisfied by way of a distribution in specie to such REIT Unitholder consisting of notes of
Granite LP or another subsidiary of Granite LP having a net asset value in excess of $50 million, having a maturity date of 10 years from their date of issue, a principal
amount equal to the applicable Unit Redemption Price and an interest rate which, as determined by the general partner of Granite LP, (or, following an Event of Uncoupling, by the Trustees),
will result in such notes having a fair market value equal to their principal amount (such notes, the "Unit Redemption Assets"). The Unit Redemption
Price payable in respect of such REIT Units tendered for redemption during any month shall be paid by the transfer of the Unit Redemption Assets, to or to the order of the REIT Unitholder who
exercised the right of redemption, on or before the last business day of the calendar month following the month in which the REIT Units were tendered for redemption. No principal amount of
Redemption Assets that is not an integral multiple of $10 will be distributed and, where Redemption Assets to be received by a former REIT Unitholder include a principal amount that is not an integral
multiple of $10, the principal amount of such Redemption Assets shall be rounded to the nearest integral multiple of $10 (with $5 being rounded up).

Meetings of REIT Unitholders

The Declaration of Trust provides that there shall be an annual meeting of the REIT Unitholders at such time and place in Canada as the
Trustees shall prescribe for the purpose of electing Trustees, appointing the auditors of Granite REIT and transacting such other business as the Trustees may determine or as may properly be brought
before the meeting. The annual meeting of REIT Unitholders may be held at the same time and place as the annual meeting of holders of GP Shares.

A
meeting of REIT Unitholders may be convened at any time and place and for any purpose by the Granite REIT Trustees and must be convened (subject to, and on the same terms, conditions
and exceptions which apply to a corporation governed by the BCBCA), if requisitioned by REIT Unitholders holding in the aggregate not less than 5% of the outstanding REIT Units.

REIT
Unitholders may attend and vote at all meetings of the REIT Unitholders either in person or by proxy and a proxyholder need not be a REIT Unitholder. The quorum of REIT Unitholders
for the transaction of business at a meeting of REIT Unitholders shall exist where two or more REIT Unitholders holding REIT Units carrying not less than 25% of the number of votes attached to all
REIT Units entitled to be voted at such meeting are present in person or represented by proxy. The Declaration of Trust contains further provisions as to quorum, the notice required and other
procedures with respect to the calling and holding of meetings of REIT Unitholders.

The
Declaration of Trust provides that none of the following shall occur unless the same has been duly approved by the REIT Unitholders at a meeting duly called
and held:



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Except
with respect to the matters specified above or as noted under " Amendments to the Declaration of Trust  Amendments
by REIT Unitholders", no vote of the REIT Unitholders will in any way bind the Trustees.

Limitations on Non-Resident Ownership of REIT Units

At no time may more than 49% (on either a basic or fully-diluted basis) of the REIT Units be held for the benefit of any
Non-Residents or partnerships that are not Canadian partnerships within the meaning of the Tax Act ("Non-Resident Beneficiaries"). The Trustees
may require declarations as to the jurisdictions in which beneficial owners of REIT Units are resident or declarations from holders of REIT Units as to whether such REIT Units are held for the benefit
of Non-Resident Beneficiaries. If the Trustees become aware that more than 49% (on either a basic or fully-diluted basis) of the REIT Units then outstanding are, or may be, held for the benefit
of Non-Resident Beneficiaries or that such a situation is imminent, the Trustees may cause Granite REIT to make a public announcement thereof and shall not accept a subscription for REIT Units from or
issue or register a transfer of REIT Units to a person unless the person provides a declaration that the person is not a Non-Resident (or, in the discretion of the Trustees, that the person is not a
Non-Resident Beneficiary) and does not hold its REIT Units for a Non-Resident Beneficiary. If, notwithstanding the foregoing, the Trustees determine that more than 49% of the REIT Units
(on either a basic or fully-diluted basis) are held for the benefit of Non-Resident Beneficiaries, the Trustees may cause Granite REIT to send a notice to Non-Resident holders of REIT Units,
chosen in inverse order to the order of acquisition or registration or in such manner as the Trustees may consider equitable and practicable, requiring them to sell their REIT Units or a portion
thereof within a specified period of not more than 60 days. If the REIT Unitholders receiving such notice have not sold the specified number of REIT Units or provided the Trustees with
satisfactory evidence that they are not Non-Residents and do not hold their REIT Units for the benefit of Non-Resident Beneficiaries within such period, the Trustees may cause Granite REIT to sell
such REIT Units on behalf of such REIT Unitholders and, in the interim, the voting and distribution rights attached to such REIT Units shall be suspended. Upon
such sale the affected holders shall cease to be holders of REIT Units and their rights shall be limited to receiving the net proceeds from such sale.

Amendments to the Declaration of Trust

Amendments by REIT Unitholders

Except as noted below, the Declaration of Trust may be amended by the vote of a majority of the votes cast at a meeting of REIT
Unitholders called for that purpose.

The
Declaration of Trust provides that none of the following shall occur unless the same has been duly approved by the affirmative vote of at least two-thirds of the votes cast at a
meeting of REIT Unitholders duly called and held:



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Amendments by Trustees

The Declaration of Trust provides that the Trustees may make the following amendments to the Declaration of Trust in their sole
discretion and without the approval of REIT Unitholders:



Written Resolutions of REIT Unitholders

Pursuant to the Declaration of Trust, a resolution signed in writing by REIT Unitholders will be effective, as if it had been passed at
a meeting of REIT Unitholders, if: (a) in the case of a resolution of REIT Unitholders that may be approved by the affirmative vote of a majority of the votes cast at a meeting of REIT
Unitholders, such resolution is, after being submitted to all of the REIT Unitholders, consented to in writing by REIT Unitholders who, in the aggregate, hold not less than two-thirds of the
outstanding Units; and (b) in the case of a resolution of REIT Unitholders that may be
approved by the affirmative vote of at least two-thirds of the votes cast at a meeting of REIT Unitholders, such resolution is consented to in writing by all of the REIT Unitholders.

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Term of Granite REIT

Granite REIT has been established for a term that will continue for so long as any of the Granite REIT property is held by the
Trustees, unless earlier terminated by the REIT Unitholders (see " Amendments to the Declaration of Trust  Amendments by REIT
Unitholders").

The
Declaration of Trust provides that upon the termination of Granite REIT, the liabilities of Granite REIT will be discharged or provided for with due speed and the net assets of
Granite REIT will be liquidated and the proceeds distributed proportionately to the REIT Unitholders, unless some other procedure is provided for by resolution of REIT Unitholders in compliance with
the Declaration of Trust. Such distribution may be made in cash or in kind or partly in each, all as the Trustees in their sole discretion may determine.

Acquisition Offers

The Declaration of Trust contains provisions (consistent with those applicable to Granite GP under the BCBCA) to the effect that
if an offer is made to acquire Stapled Units and, within four months after the making of the offer, the offer is accepted by REIT Unitholders who, in aggregate, hold at least 90% of the Stapled Units,
other than Stapled Units already held at the date of the offer by, or by a nominee of, the offeror or its affiliates, the offeror will be entitled to acquire the REIT Units held by REIT Unitholders
who did not accept the offer, on the terms on which the offeror acquired REIT Units from REIT Unitholders who accepted the offer.

Information and Reports

The Declaration of Trust provides that within such time period as is acceptable under National
Instrument 51-102 Continuous Disclosure Obligations, as amended from time to time (or other
equivalent applicable regulations or successors thereto), upon a REIT Unitholder's request or otherwise as required by applicable law, the Trustees will send or make available to REIT Unitholders the
audited comparative financial statements for each fiscal year required to be sent or made available to REIT Unitholders under applicable securities laws (including any exemption therefrom, and
including combined financial statements of Granite REIT and Granite GP, if and as applicable). Within such time period as is acceptable under National
Instrument 51-102 Continuous Disclosure Obligations, as amended from time to time (or other
equivalent applicable regulations or successors thereto) after the end of each of the first three fiscal quarters of each year, upon a REIT Unitholder's request or otherwise as required by applicable
law, the Trustees will also send or make available the unaudited comparative financial statements for the period then ended required to be sent or made available to REIT Unitholders under applicable
securities laws (including any exemption therefrom, and including combined financial statements of Granite REIT and Granite GP, if and as applicable).

The
Trustees will supply REIT Unitholders with any information that may be required by them in connection with their obligations under the Tax Act and equivalent provincial
legislation.

Conflict of Interest Provisions

The Declaration of Trust contains "conflict of interest" provisions that serve to protect REIT Unitholders without creating undue
limitations on Granite REIT. The Declaration of Trust contains provisions, similar to those contained in the BCBCA, that require disclosure from a Trustee or officer of Granite REIT in respect of a
contract or transaction that (a) is material to Granite REIT, (b) Granite REIT has entered, or proposes to enter, into, and (c) either: (i) the Trustee or officer of
Granite REIT has a material interest in; or (ii) is with a person of which the Trustee or officer of Granite REIT is a director or officer or in which the Trustee or officer of Granite REIT has
a material interest (each a
"Disclosable Interest"). Similar to the BCBCA, the Declaration of Trust provides that a Trustee or officer of Granite REIT does not hold a Disclosable
Interest in a contract or transaction merely because, among other reasons: (a) the contract or transaction is an arrangement by way of security granted by Granite REIT for money loaned to, or
obligations undertaken by, the Trustee or officer of Granite REIT, or a person in whom the Trustee or officer of Granite REIT has a material interest, for the benefit of Granite REIT or an affiliate
of Granite REIT; (b) the contract or transaction relates to an indemnity or insurance for one or more Trustees or officers of Granite REIT in accordance with the Declaration of Trust;
(c) the contract or transaction relates to the remuneration of the Trustee or officer of Granite REIT in that

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person's
capacity as a trustee (or director), officer, employee or agent of Granite REIT or of an affiliate of Granite REIT; (d) the contract or transaction relates to a loan to Granite
REIT, and the Trustee or officer of Granite REIT, or a person in whom the Trustee or officer of Granite REIT has a material interest, is or is to be a guarantor of some or all of the loan; or
(e) the contract or transaction has been or will be made with or for the benefit of a person that is affiliated with Granite REIT and the Trustee or officer of Granite REIT is also a trustee,
director or officer of that person or an affiliate of that person. Notwithstanding any of the foregoing, prior to an Event of Uncoupling, no Trustee or officer of Granite REIT will have a Disclosable
Interest in a contract or transaction or proposed contract or transaction with Granite REIT solely by virtue of such person being a director or officer of Granite GP or Granite LP or any
of their affiliates. The Declaration of Trust will also provide that a Trustee who has such a Disclosable Interest in a contract or transaction into which Granite REIT has entered or proposes to enter
is not entitled to vote on any resolution to approve that contract or transaction, unless all the Trustees have such a Disclosable Interest in that contract or transaction, in which case any or all of
the Trustees may vote on such resolution, however, subject to certain exceptions, the Trustees will be liable to account to Granite REIT for any profit that accrues to the Trustee under or as a result
of such a contract or transaction.

GRANITE GP CAPITAL STRUCTURE

Granite GP's authorized share capital consists of an unlimited number of GP Shares without par value. Until an Event of
Uncoupling occurs, GP Shares will trade together with REIT Units as Stapled Units.

Holders
of GP Shares are entitled to: (a) one vote per share at all meetings of shareholders (except for meetings of holders of another specified class or series of
Granite GP shares); (b) receivepari passuwith other holders of GP Shares, any dividends as and when declared by the
directors of Granite GP; and (c) receive pari passu with other holders of GP Shares the remaining assets of Granite GP available for distribution to
Granite GP shareholders in the event of the liquidation, dissolution or winding-up of Granite GP.

Prior
to the occurrence of an Event of Uncoupling, holders of GP Shares can require Granite GP to redeem their GP Shares provided that Stapled Units are in existence
at the time at which redemption is sought, and
that the holder simultaneously tenders to Granite REIT for redemption an equal number of REIT Units held by the holder. In order to exercise this right of retraction, a holder of GP Shares will
have to give the required notice to Granite GP and will be entitled to receive a redemption price per share equal to 0.001% of the lesser of 95% of the "Market Price" and "Closing Market Price"
of the Stapled Units, as described above under "Declaration of Trust and Description of REIT Units  REIT Unit Redemption Right".

Prior
to the occurrence of an Event of Uncoupling, (A) a GP Share may only be transferred together with a REIT Unit, and (B) no GP Share may be issued unless
(x) it is issued in conjunction with the concurrent issue of a REIT Unit to form a Stapled Unit, or (y) Granite GP has arranged that the GP Shares will be
consolidated (subject to any applicable regulatory approval) immediately after such issuance, such that each holder of a GP Share will hold an equal number of GP Shares and REIT Units
immediately following such consolidation.

CREDIT FACILITY AND INDEBTEDNESS

Credit Facility

Granite LP is the borrower in respect of an unsecured senior revolving credit facility
(the "Facility") in the amount of $175 million (which may be increased with the consent of lenders participating in such increase provided
that no increase beyond $250 million is permitted without the consent of all of the lenders under the Facility). The Facility has been guaranteed by Granite REIT, Granite GP, Granite
Canadian Realty LP, Granite US Holdco LP and certain other affiliates of Granite LP. The Facility was established on February 1, 2013 and matures on February 1,
2015, although Granite LP has the option to extend the maturity date by one year to February 1, 2016, subject to the agreement of lenders in respect of a minimum of 662/3%
of the aggregate amount committed under the Facility. Granite LP is permitted to borrow under the Facility by way of Canadian dollar, U.S. dollar or euro denominated loans or letters of
credit. Interest on drawn amounts is calculated based on an applicable margin determined by reference to the external credit rating of Granite REIT and Granite GP, as is a commitment fee in
respect of undrawn amounts. Although Granite LP is the borrower under the Facility, the

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financial
covenants which must be satisfied on the basis of the combined and consolidated financial statements of Granite REIT and Granite GP.

As
at December 31, 2013, U.S.$50 million was drawn under the Facility. Granite LP, Granite REIT and Granite GP are in compliance with all of their covenants
under the Facility.

Other Unsecured Indebtedness

Granite Co. issued $265 million outstanding principal amount of 6.05% senior unsecured debentures, series 1 due
December 22, 2016 (the "2016 Debentures") under an indenture dated as of December 22, 2004 (as amended, supplemented or
otherwise modified from time to time, the "2004 Indenture"). Under the 2013 Arrangement, (i) the 2016 Debenture obligations were transferred to
Granite LP, and Granite LP and Granite Europe Limited Partnership ("Fin LP") agreed to be bound by the terms of the 2004 Indenture
and of the 2016 Debentures as co-principal debtors, in place of Granite Co., (ii) Granite Co. guaranteed all amounts payable under the 2016 Debentures,
(iii) Granite Co. agreed to remain bound as a co-principal debtor, and (iv) Granite REIT and Granite GP guaranteed amounts payable under the 2016 Debentures. Pursuant to
the terms of the 2004 Indenture, there are various financial covenants which must be satisfied, which are tested on the basis of the consolidated financial statements of Granite Co. In
connection with the foregoing, Granite Co., Granite REIT, Granite GP, Granite LP and Fin LP and BNY Trust Company of Canada, as trustee, entered into a supplemental
indenture dated January 3, 2013 (the "Supplemental Indenture") to the 2004 Indenture to implement the foregoing.

On
October 2, 2013, Granite LP issued $200 million of 4.613% Series 1 senior unsecured debentures due October 2, 2018
(the "2018 Debentures") under a trust indenture as supplemented by a supplemental indenture providing for, among other things, the creation and
issue of the 2018 Debentures (together, the "2013 Indenture"). The 2018 Debentures rank equally with all of Granite REIT's and Granite GP's
existing and future unsubordinated and unsecured indebtedness and are fully and unconditionally guaranteed by Granite REIT, Granite GP and certain subsidiaries of Granite LP as to the
payment of principal, premium (if any) and interest thereon and certain other amounts when and as the same become due and payable pursuant to the 2013 Indenture. Pursuant to the terms of the
2013 Indenture, there are various financial covenants which must be satisfied, which are tested on the basis of the combined and consolidated financial statements of Granite REIT and
Granite GP. BNY Trust Company is the trustee for the 2018 Debentures.

On
October 7, 2013, Granite LP entered into a cross currency interest rate swap to exchange the $200 million proceeds and 4.613% interest payments from the 2018
Debentures to euro 142 million at 3.56%. Under the terms of the swap, Granite LP will repay the principal proceeds received of euro 142 million for
$200 million on October 2, 2018. The proceeds from the 2018 Debentures and corresponding cross currency interest rate swap were used to finance the European acquisitions.

As
at December 31, 2013, all 2018 Debentures and 2016 Debentures remained outstanding. For further details relating to the attributes and characteristics of the 2018 Debentures
and 2016 Debentures, including provisions relating to payments of interest and principal, redemption and purchase for cancellation, covenants, successor companies, defeasance, modification and waiver,
please see the full text of the 2013 Indenture and the 2004 Indenture available on SEDAR at www.sedar.com.

Other Secured Indebtedness

In connection with the acquisition on February 13, 2013 of a 90% interest in two income-producing properties in Logan,
New Jersey and Savannah, Georgia, Granite obtained a first mortgage loan from Wells Fargo Bank, National Association, in the amount of U.S.$23.9 million (100% interest). The loan is
secured by a first mortgage and deed of trust (and ancillary security) against each of the Savannah and Logan properties. The loan bears interest at a variable rate, adjusted monthly,
calculated as 2.5% plus the one-month London InterBank Offered Rate ("LIBOR"), and is repayable by monthly payments of interest only which commenced on
March 10, 2013 and end on February 10, 2015, and by monthly payments of interest and principal which commence on March 10, 2015 and end on June 10, 2017. To mitigate the
interest rate risk associated with the loan, the subsidiary purchased an interest rate cap relating to 100% of the amount of the loan limiting its

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exposure
to increases in LIBOR to a maximum of 1.50% over the term of the loan. The loan matures on June 10, 2017.

In
connection with the acquisition on May 10, 2013 of a 95% interest in an income-producing property in Portland, Oregon, Granite obtained a first mortgage loan from Wells Fargo
Bank, National Association, in the amount of U.S.$12.6 million (100% interest). The loan is secured by a first mortgage and deed of trust (and ancillary security) against the acquired
property. The loan bears interest at a variable rate, adjusted monthly, calculated as 2.5% plus LIBOR and is repayable by monthly payments of interest only which commenced on June 10, 2013 and
end on May 10, 2018, and by monthly payments of interest and principal commencing on May 10, 2014. To mitigate the interest rate risk associated with the loan, Granite purchased an
interest rate cap relating to 100% of the amount of the loan limiting its exposure to increases in LIBOR to a maximum of 1.50% over the term of the loan. The loan matures on
May 10, 2018.

In
connection with the acquisition on May 8, 2013 of a 90% interest in development land in Shepherdsville, Kentucky, Granite obtained a construction loan on July 25, 2013
from U.S. Bank National Association in the amount of U.S.$17 million (100% interest). The loan is secured by the acquired property. The proceeds of the loan are intended to be used to
pay costs associated with the construction of a building at the property. The maximum amount available under the construction loan may be increased to U.S.$19 million, subject to satisfaction
of certain terms and conditions. The construction loan bears interest at a variable rate, adjusted monthly, calculated as 2.25% plus LIBOR. Prior to maturity, interest on the loan will be funded out
of loan proceeds. The entire principal of the construction loan matures on July 25, 2016 but there is an option to extend the maturity date for two successive periods to July 25, 2017
and 2018, subject to certain terms and conditions. As at December 31, 2013, U.S.$3.1 million was drawn under the construction loan.

Credit Ratings

As of March 5, 2014, the 2016 Debentures and the 2018 Debentures each have investment grade ratings of "BBB" with a "Stable"
trend, from DBRS Limited ("DBRS") and "Baa3" with a "Positive" outlook, from Moody's Investors Service, Inc.
("Moody's"). Ratings may be subject to revision or withdrawal at any time by the rating organization.

According
to the DBRS rating system, long-term debt rated BBB is of adequate credit quality. The ability and capacity to meet the payment of financial obligations is considered
acceptable though the organization may be vulnerable to future events. The DBRS long-term rating scale provides an opinion on the risk of default. That is, the risk that an issuer will fail to satisfy
its financial obligations in accordance with the terms under which an obligation has been issued. Ratings are based on quantitative and qualitative considerations relevant to the issuer, and the
relative ranking of claims. All rating categories other than AAA and D also contain subcategories "(high)" and "(low)". The absence of either a "(high)" or "(low)" designation indicates the rating is
in the middle of the category.

According
to the Moody's rating system, debt securities rated Baa3 are subject to moderate credit risk and are considered medium grade and as such may possess certain speculative
characteristics. Numerical modifiers 1, 2 and 3 are applied to each rating category, with 1 indicating that the obligation ranks in the higher end of the category, 2 indicating a
mid-range ranking and 3 indicating a ranking in the lower end of the category. Moody's long-term ratings are opinions of the relative credit risk of financial obligations with an original
maturity of one year or more. They address the possibility that a financial obligation will not be honoured as promised. Such ratings use Moody's Global Scale and reflect both the likelihood of
default and any financial loss suffered in the event of default.

Credit
ratings and stability ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. A rating accorded to any securities is not
a recommendation to buy, sell, or hold such securities and may be subject to revision or withdrawal at any time by the rating organization which granted such ratings. To our knowledge, as of
March 5, 2014, there is no announcement or proposed announcement that is to be made by a rating organization to the effect that the organization is reviewing or intends to revise or withdraw a
rating previously assigned.

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Granite
has made customary payments of rating fees to DBRS and Moody's in connection with the above-mentioned ratings assigned to the 2016 Debentures and 2018 Debentures, and will
continue to make such payments to DBRS and Moody's in the ordinary course from time to time in connection with the confirmation of such ratings and future offerings of certain debt securities of
Granite, if any.

DISTRIBUTION AND DIVIDEND POLICY

Distribution Policy of Granite REIT and Granite GP

Pursuant to the Declaration of Trust, Granite REIT may make distributions as declared from time to time by the Trustees. Any
distributions declared in respect of a calendar month (or such other period as determined by the Trustees) will be paid to REIT Unitholders of record as at the close of business on the last
business day of the calendar month immediately preceding the month in which the distribution is to be paid (or such other time and date fixed by the Trustees in accordance with the Declaration
of Trust). The distribution for any applicable period will be paid on or about the 15th day of the immediately following month (or on such other date as determined by the Trustees in
their discretion). In addition, the Declaration of Trust provides that the total amount of distributions due and payable on or before December 31 of any calendar year shall not be less than the
amount necessary to ensure that Granite REIT will not be liable to pay income tax under Part I of the Tax Act for such year. The amount, if any, which is required to be distributed to
comply with the preceding sentence shall be due and payable, on the earlier of the last distribution date in respect of each year and December 31 of such year, to REIT Unitholders of record on
that date, and such amount will be payable in cash unless the Trustees determine in their absolute discretion to pay such amount in REIT Units.

Where
the Trustees determine that Granite REIT does not have available cash in an amount sufficient to pay the full amount of any distribution or where the Trustees otherwise determine
in their absolute discretion that all or a portion of a distribution should not be paid in cash, the payment may, at the option of the Trustees, include the issuance of additional REIT Units, or
fractions of REIT Units, if necessary, having a fair market value as determined by the Trustees equal to the difference between the amount of such distribution and the amount of cash which either has
been determined by the Trustees in their absolute discretion to be available, or which the Trustees have otherwise determined shall be distributed in their absolute discretion, as the case may be, for
the payment of such distribution. The Declaration of Trust further provides that immediately after a distribution made in REIT Units in accordance with the foregoing, the number of outstanding REIT
Units will be consolidated so that each REIT Unitholder will hold after the consolidation the same number of REIT Units as the REIT Unitholder held before the REIT Unit distribution.

Currently,
Granite REIT intends to make monthly distributions in the estimated amount of $0.183 per REIT Unit.

The
portion of distributions by Granite REIT for 2014 which will be income for Canadian income tax purposes is estimated to be in the range of 75% to 85%. This estimate could change by
the end of 2014. In light of its nominal anticipated earnings (if any), it is not expected that Granite GP will pay dividends in 2014.

Distributions of Granite REIT

In 2013, Granite REIT declared eleven monthly distributions of $0.175 per Stapled Unit and one monthly distribution of $0.183 per
Stapled Unit.

Dividends of Granite Co.

In 2012, Granite Co. declared one quarterly dividend of U.S.$0.50 per common share and three quarterly dividends of Cdn.$0.50
per common share.

In
2011, Granite Co. declared two quarterly dividends of U.S.$0.10 per Class A Subordinate Voting Share and Class B Share, one quarterly dividend of U.S.$0.10 per
common share and one quarterly dividend of U.S.$0.50 per common share.

41

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MARKET FOR SECURITIES

Trading Price and Volume

Granite's Stapled Units are listed for trading on the TSX under the symbol "GRT.UN" and on the NYSE under the symbol "GRP.U". The
volume of trading and the high and low trading price of Granite's Stapled Units on the TSX for each month of the year ended December 31, 2013 are set forth in the following table:

Stapled UnitsTSX
2013

High
($)

Low
($)

Traded
VolumeJanuary


39.67


37.31


7,604,351February


39.89


38.58


2,467,976March


40.00


38.27


2,064,711April


39.99


37.86


1,447,361May


40.22


37.82


1,867,710June


38.26


34.74


3,486,191July


37.31


34.08


1,420,825August


37.02


33.89


1,439,508September


37.75


35.10


1,109,274October


37.51


35.80


1,190,189November


36.93


35.00


1,521,111December


38.66


34.46


1,859,962


Source: TSX Market Data


Prior Sales

On October 2, 2013, Granite LP issued the 2018 Debentures at a price of $100.00 per $100.00 principal amount of 2018
Debentures. See "Credit Facility and Indebtedness  Other Unsecured Indebtedness".

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TRUSTEES AND MANAGEMENT OF GRANITE REIT

The following tables provide the name, province or state and country of residence, the position and office held with each of Granite
REIT and Granite GP and the principal occupation (if not with Granite REIT or Granite GP) of each of Granite's trustees and officers and Granite GP's directors and
officers, and the date since which such trustee/director has served on the board, or such individual was appointed as an officer, of the predecessor of Granite REIT and Granite GP,
Granite Co.:

Name, Province/State
and Country of Residence

Position and Office Held
with each of Granite REIT and
Granite GP (as applicable)

Present Principal Occupation
(if not with Granite)

Trustee/Director/Officer
SinceG. WESLEY VOORHEIS(1)
Ontario, Canada

Trustee and Chairman
Director and Chairman

Managing Director of VC & Co. Incorporated

June 30, 2011MICHAEL BRODY(1)(2)(4)
New Jersey, USA

Trustee
Director

Consultant

June 30, 2011PETER DEY(1)(2)
Ontario, Canada

Trustee and Vice-Chairman
Director and Vice-Chairman

Chairman of Paradigm Capital Inc.

June 30, 2011BARRY GILBERTSON(2)(3)(4)
Bath, Somerset,
United Kingdom

Trustee
Director

Real Estate Specialist Professional

June 30, 2011THOMAS HESLIPOntario, Canada

Trustee and Director
Chief Executive Officer



December 1, 2011GERALD MILLER(2)(3)
British Columbia, Canada

Trustee
Director

Corporate Director

June 30, 2011SCOTT ORAN(1)(3)(4)
Massachusetts, USA

Trustee
Director

Managing Director of Dinosaur Capital Partners LLC

June 30, 2011MICHAEL FORSAYETHOntario, Canada

Chief Financial Officer



August 12, 2011JENNIFER TINDALEOntario, Canada

Executive Vice President,
General Counsel and Secretary



June 30, 2011JOHN DE ARAGONOntario, Canada

Executive Vice President,
Real Estate Investment



February 27, 2012LORNE KUMEROntario, Canada

Executive Vice President,
Real Estate Portfolio and Asset Management



February 13, 2010STEFAN WIERZBINSKIVienna, Austria

Executive Vice President
Europe



February 6, 2013


Notes: (1)Member
of the Corporate Governance and Nominating Committee of Granite GP chaired by G. Wesley Voorheis(2)Member
of the Compensation Committee of Granite GP chaired by Peter Dey(3)Member
of the Audit Committee of each of Granite REIT and Granite GP, each chaired by Gerald Miller(4)Member
of the Real Estate Investment Committee of Granite GP chaired by Barry Gilbertson.


As at December 31, 2013, the trustees, directors and executive officers of Granite, as a group, beneficially owned, directly or indirectly,
or exercised control or direction over 23,129 stapled units of Granite, representing less than one percent of the total number of Stapled Units outstanding before giving effect to the exercise
of options or other convertible securities held by such trustees and officers.

43

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The
term of office of each trustee and director expires at the time of Granite REIT's and Granite GP's Joint Annual General Meeting, which for 2014 is expected to be held on
June 11, 2014. In the event that successors are not elected, the trustees and directors will remain in office until their successors are elected or appointed in accordance with applicable law
and the constating documents of Granite REIT and Granite GP.

Officers
serve at the pleasure of the Board of Trustees of Granite REIT or Board of Directors of Granite GP, as applicable. Certain background concerning the current trustees,
directors and officers of Granite REIT and Granite GP, including their principal occupations over the last five years, is summarized below.

G. Wesley Voorheis  Trustee and Chairman of Granite REIT; Director and Chairman of Granite GP

Since 1995 Mr. Voorheis has been the Managing Director of VC & Co. Incorporated and a Partner of
Voorheis & Co. LLP, which act as strategic and other advisors to institutional, private equity, and other shareholders with respect to their investments in Canadian public and
private companies.

Mr. Voorheis
has been a director and Chairman of the Board of HudBay Minerals Inc. since March 2009 and a director of RONA inc. since January 2013. He
was a director and member of the Audit Committee of Coventree Inc. from April 2008 to February 2012 and a director of Easyhome Ltd. from April 2010 to
December 2011. Mr. Voorheis has acted as the Chief Executive Officer and a director of Hollinger Inc. and as the Chairman of the Board of YBM Magnex International Inc.,
following the reconstitutions of the boards of these companies. He has also served as Chairman of a number of special board committees and as a director of various other Canadian publicly traded
companies.

Prior
to the establishment of VC & Co. Incorporated and Voorheis & Co. LLP in 1995, Mr. Voorheis was a partner at a major Toronto
law firm.

Michael Brody  Trustee of Granite REIT; Director of Granite GP

Mr. Brody has 30 years of experience in commercial real estate, evenly divided between the capital markets and property
sectors. Mr. Brody is a senior advisor providing non-executive consulting services to The Blackstone Group L.P., a NYSE-listed company. From May 2008 to August 2011,
Mr. Brody was the President and Chief Operating Officer of Loeb Partners Realty, LLC, a privately-held real estate company headquartered in New York. From July 2009 to
December 2010, Mr. Brody served on the Board of Rock US Joint Ventures, a Lloyds Banking Group/HBOS-controlled entity. From 2002 to 2008, Mr. Brody served as a Managing Director
and Head of CMBS Origination for Merrill Lynch & Co. Prior to that, Mr. Brody acted as Senior Vice President and Chief Credit Officer of GMAC Commercial Mortgage and a Managing
Director for Nomura Securities in New York and San Francisco, where he was part of the commercial mortgage-backed securities team. Mr. Brody began his career as a leasing broker with
Cushman & Wakefield and has acted as a Vice President of Asset Management for the Mack Company and as a Vice President of Goldfarb Properties.

Mr. Brody
received a Bachelor of Arts degree from Cornell University and a Masters in Business Administration in finance from Columbia University.

Peter Dey  Trustee and Vice Chairman of Granite REIT; Director and Vice-Chairman of Granite GP

Mr. Dey has been the Chairman of Paradigm Capital Inc., an investment dealer, since November 2005. Until
February 2012, he had been a director of Coventree Inc. since April 2008. He has been a director of Goldcorp Inc. since June 2006, a director of Enablence
Technologies Inc. from October 2011 to October 2013, and a director of Caracal Energy Inc. since March 2013. Mr. Dey was a Partner of the Toronto law firm
Osler, Hoskin & Harcourt LLP, where he specialized in corporate board issues and mergers and acquisitions, from 2001 to 2005, and prior to that from 1985 to 1994 and from 1973 to 1983.
From 1994 to 2001, Mr. Dey was Chairman of Morgan Stanley Canada Limited, where he helped develop the Canadian investment banking business and the overall strategic direction of Morgan Stanley
in Canada. From 1993 to 1995, Mr. Dey chaired The Toronto Stock Exchange Committee on Corporate Governance in Canada that released the December 1994 report entitled "Where Were the
Directors?", known as the Dey Report. Mr. Dey has also served as Chairman of the Ontario Securities Commission and was Canada's representative to the OECD Task Force that developed the OECD
Principles of Corporate Governance released in May of 1999.

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Mr. Dey
is Chairman of the Private Sector Advisory Group of the Global Corporate Governance Forum, established by the World Bank and the Organization for Economic Cooperation and
Development. He is also a director of the Massachusetts Museum of Contemporary Art.

Mr. Dey
attended Queen's University, where he earned his Bachelor of Science in 1963 and Dalhousie University, where he earned his Bachelor of Laws degree in 1966. He received his
Master of Laws degree from Harvard University in 1967.

Barry Gilbertson  Trustee of Granite REIT; Director of Granite GP

Mr. Gilbertson is a real estate specialist professional who has been Managing Director of Tigger Limited, trading as Barry
Gilbertson Consultancy, since August 2010. He has been a director of RONA inc. since January 2013. Until March 2012, he served as a non-executive consultant at Knight
Frank LLP, the international real estate advisory firm, and he was a partner at PricewaterhouseCoopers LLP ("PwC") from 1996 until 2011,
where he focussed on business recovery, turnaround and corporate finance projects from international multi-bank work to single lender work in the United Kingdom. At PwC, Mr. Gilbertson
led the work-out of the U.S.$8 billion real estate investment portfolio owned (as well as the corporate property occupied in the United Kingdom and Europe) by Lehman Brothers
(In Administration), together with other significant turnaround projects, such as Rock, a real estate group in New York. Mr. Gilbertson has led or worked on projects, or spoken at
conferences, in 34 countries.

Mr. Gilbertson
was global President of The Royal Institution of Chartered Surveyors (RICS) (from 2004 to 2005), a member of The Bank of England Property Forum (from 2003 to 2010),
the founder Chairman of NARA (the Non-Administrative Receivers Association), the co-founder Vice Chair of WAVO (the World Association of Valuation Organisations), the Chair of Valuation
for the United Nations Real Estate Advisory Group (as an individual member of UN REAG from 2000 to 2005), and has been a Counselor of Real Estate (CRE) since 1998. Mr. Gilbertson has
been Visiting Professor at The University of Northumbria at Newcastle, United Kingdom (since 2003), a Visiting Lecturer at 17 other universities in China, Germany, Kenya, the
United Kingdom and the United States, and has in excess of 100 published articles to his name.

Mr. Gilbertson
has served as a Trustee and Board Director at the College of Estate Management since 2004, is a Founding Fellow of the Institute of Continuing Professional
Development, a Freeman of the City of London, United Kingdom and holds Honorary Membership designations from four professional bodies  in South Africa, in
Romania and in the United Kingdom.

Gerald Miller  Trustee of Granite REIT; Director of Granite GP

Mr. Miller was Executive Vice President, Finance and Chief Financial Officer of West Fraser Timber Co. Ltd.
("West Fraser") from January 2009 until his retirement in July 2011. Mr. Miller has been a director of West Fraser since
April 2012. From February 2007 to December 2008, Mr. Miller's principal occupation was Executive Vice President, Operations of West Fraser. Prior to that, since 1986,
Mr. Miller held several other senior finance, administration and operations offices at West Fraser, including Vice-President, Corporate Controller; Vice-President, Administration; and Executive
Vice-President, Pulp and Paper.

Mr. Miller
is an experienced CPA, CA and has been a member of the Chartered Professional Accountants of British Columbia and the Chartered Professional Accountants of Canada for
over 30 years. Prior to joining West Fraser in 1986, he was a Senior Audit and Tax Manager with one of the major Canadian Chartered Professional Accounting firms.

Mr. Miller
holds a Bachelor of Commerce degree from the University of British Columbia.

Scott Oran  Trustee of Granite REIT; Director of Granite GP

Mr. Oran has been Managing Director of Dinosaur Capital Partners LLC, a real estate investment and advisory firm, since
November 2009. Mr. Oran was a member of Gordon Brothers Group, an advisory and financial services company, from May 2009 to November 2009. From November 2003
until January 2009, Mr. Oran served as Executive Director of Morgan Stanley, where he was responsible for its real estate investing activities in New England and the mid-Atlantic
United States.

45

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Mr. Oran
has 25 years of experience in the real estate industry. Earlier in his career, Mr. Oran was Partner and Regional Director of TA Associates Realty and Vice
President of Fleet Bank in Boston. Mr. Oran has also acted as Director of Acquisitions for Unihab, a real estate developer. He began his career at Booz, Allen & Hamilton, a management
consulting firm.

Mr. Oran
graduated from Princeton University with a Bachelor of Science in Engineering degree in civil engineering and received his Masters in Business Administration from Harvard
Business School.

Thomas Heslip  Trustee and Chief Executive Officer of Granite REIT; Director and Chief Executive Officer of Granite GP

Mr. Heslip has been our CEO since December 1, 2011 and has had a 30-year career covering commercial property development,
investment, management and operations in Canada, the United States, Asia and Europe. Mr. Heslip was most recently with GWL Realty Advisors in Toronto and prior to that served as
President and CEO of Realex Properties Corporation until Realex's sale to Dundee Real Estate Investment Trust in February 2011. He has previously held senior management positions with Goldman
Sachs, CIBC Development Corp. and Cadillac Fairview Limited. For 12 years Mr. Heslip was an adjunct professor at McMaster University and the University of Toronto.

Mr. Heslip
holds a Masters of Arts degree in Economics and Public Administration and a Bachelor of Arts degree in Economics and Business Administration from the University
of Guelph.

Michael Forsayeth  Chief Financial Officer of Granite REIT; Chief Financial Officer of Granite GP

Mr. Forsayeth has been our Chief Financial Officer since August 12, 2011. From June 2007 to July 2011,
Mr. Forsayeth was Chief Financial Officer of Intrawest. Over the course of his 30 plus-year career, Mr. Forsayeth has held senior executive financial and operating positions in
several public and private Canadian companies, including Cara Operations Ltd, Laidlaw Inc., Derlan Industries Limited and
Bank of Montreal. Mr. Forsayeth is a CPA, CA and also spent nine years with Coopers & Lybrand (now PricewaterhouseCoopers) in various areas including the audit practice, the
insolvency group, as well as a secondment in their London, England office.

Mr. Forsayeth
graduated from Queen's University in Kingston, Ontario with an Honours Bachelor of Commerce degree.

Jennifer Tindale  Executive Vice-President, General Counsel and Secretary of Granite REIT; Executive Vice-President, General Counsel
and Secretary of Granite GP

Ms. Tindale is our Executive Vice-President, General Counsel and Secretary and has been an officer of Granite since
June 30, 2011. Prior to that Ms. Tindale was most recently Vice President, Associate General Counsel & Corporate Secretary at Biovail Corporation
("Biovail"). In this role, Ms. Tindale managed the company's legal matters and was a member of its executive management team. Over her four years
at Biovail, Ms. Tindale provided leadership on numerous corporate acquisitions, licensing transactions, two proxy contests and a merger transaction.

Prior
to joining Biovail in 2006, Ms. Tindale was a partner at Blake, Cassels & Graydon LLP, practicing corporate securities law in the Toronto office.

Ms. Tindale
holds a Bachelor of Arts and a Bachelor of Laws from the University of Western Ontario.

John De Aragon  Executive Vice-President, Real Estate Investment of Granite REIT; Executive Vice-President, Real Estate Investment of
Granite GP

Mr. De Aragon oversees Granite's investment activities (acquisitions and dispositions) in connection with its real estate
diversification strategy. As a member of our senior management team, he is also directly involved in the overall integration and alignment of our diversified investments with the activities
(expansions, lease strategies, acquisitions and dispositions) of our existing and future Magna-tenanted properties.

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Mr. De
Aragon has over 23 years of experience in the real estate industry, covering all aspects from finance and accounting to acquisitions, mergers and asset management.
His experience covers a wide variety of real estate sectors (retail, office and industrial), markets, investors and operating companies. He has held senior positions in real estate and investment in
Canada and worldwide. These include having been Managing Director of a New York private equity firm (responsible for real estate portfolios in Canada, the U.S. and Europe) from 2005 to 2009,
Vice President of Bentall Kennedy and Senior Director Investment and Development at CIBC Development Corp.

Mr. De
Aragon graduated from the University of Guelph with a Bachelor of Arts in Management Economics.

Lorne Kumer  Executive Vice-President, Real Estate Portfolio and Asset Management of Granite REIT; Executive Vice-President, Real
Estate Portfolio and Asset Management of Granite GP

Mr. Kumer oversees all aspects of Granite's North American portfolio and asset management activities. These include asset
strategies and business plans, property operations activities, leasing and expansions for both the Granite's Magna-tenanted properties as well as the Granite's diversified portfolio.

Mr. Kumer
also plays a key role in providing direction and support to the overall investment activities (acquisitions and dispositions) of Granite. As a member of our senior
management team, he is a key leader in the overall integration and alignment of our existing and future Magna-tenanted portfolio and our diversified real estate strategy and portfolio.

Mr. Kumer
has over 22 years of experience in the real estate industry working for both public and private development companies. His experience includes acquisitions, due
diligence, leasing, land use and development approvals, sales and construction. For the past 10 years, Mr. Kumer has worked for Granite in various roles including the management of the
Granite's significant land development portfolio and leasing within the income-producing properties portfolio. Prior to Granite, Mr. Kumer held senior positions in the real estate industry
including Vice President at C. Hunter Real Estate Corporation in Toronto and Vice President with Peregrine Hunter Properties Ltd.

Mr. Kumer
hold a Bachelor of Arts (Honours), business administration, from the Richard Ivy School of Business at the University of Western Ontario.

Stefan Wierzbinski  Executive Vice President Europe of Granite REIT; Executive Vice President Europe of Granite GP

Mr. Stefan Wierzbinski is our Executive Vice President Europe. Mr. Wierzbinski is responsible for acquisition,
development, leasing and management of Granite's industrial real estate portfolio in Europe. He joined Granite in 2001.

From
1997 to 2001, Mr. Wierzbinski worked with Arthur Andersen in Vienna, Austria as tax consultant and auditor in several industries including construction and
real estate.

Mr. Wierzbinski
holds an M.B.A. from the University of Business Administration in Vienna, Austria.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of Granite, except as set out below, no trustee, director or executive officer
of Granite:



47

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To
the knowledge of Granite, except as set out below, no trustee, director or executive officer of Granite or a unitholder or shareholder holding a sufficient number of securities to
affect materially the control of Granite REIT or Granite GP, respectively:



From
on or about July 1, 2009 to December 31, 2010, Mr. Brody was a director of Rock U.S. Holdings Inc. and its subsidiary entities. During that
period, two single-asset subsidiary entities, Rock New York (183 Madison Avenue) LLC and Rock New York (100-104 Fifth Avenue) LLC voluntarily filed for
bankruptcy protection under U.S. bankruptcy legislation in the U.S. Bankruptcy Court of Delaware. The properties were sold through court-approved pre-petition auction process.

From
on or about September 18, 2003 until June 24, 2004, Mr. Voorheis was a director of Atlas Cold Storage Holdings Inc.
("Atlas"), the entity through which Atlas Cold Storage Income Trust ("Atlas Income Trust") carried on
its business. From on or about January 2004 to June 2004, Mr. Dey was a director of Atlas and a trustee of Atlas Income Trust. The Ontario Securities Commission
(the "OSC") issued a management cease trade order relating to any trading in securities of Atlas Income Trust as a result of Atlas Income Trust
not having filed its 2003 third quarter financial statements by the required deadline. The order was made against the trustees of Atlas Income Trust, certain members of the board of directors of Atlas
and certain officers and former officers of Atlas. The cease trade order related to conduct that occurred before Mr. Dey became a trustee of Atlas Income Trust and Mr. Voorheis and
Mr. Dey became members of the board of directors of Atlas. The cease trade order remained in effect until May 11, 2004, following the remediation of the filing default.

Mr. Voorheis
was a director of Hollinger Inc. ("Hollinger") from May 2006 to June 2008 and its chief executive
officer from April 2007 to June 2008. Mr. Voorheis agreed to join the Hollinger board at the request of a shareholder to deal with certain management misconduct. Prior to
Mr. Voorheis' involvement in Hollinger (on May 18, 2004), the OSC issued a temporary cease trade order that prohibited certain directors, officers and insiders of Hollinger from
trading in securities of Hollinger, subject to certain exceptions, as a result of Hollinger's failure to file financial statements on a timely basis as required under Ontario securities laws. On
June 1, 2004, the OSC issued a management cease trade order (the "MCTO") (later varied on March 8, 2005, August 10, 2005 and
April 28, 2006). The April 28, 2006 variation added the then current directors and officers of Hollinger to the list of persons subject to the MCTO. The MCTO was later revoked on
April 10, 2007 by an OSC order, after remediation by Hollinger of its historical continuous disclosure record on March 7, 2007. Related cease trade orders were also issued by securities
regulatory authorities in British Columbia on May 31,

48

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2004
and Alberta on June 10, 2004 but were revoked, or expired, following the revocation of the MCTO by the OSC.

On
August 1, 2007, Hollinger obtained an initial order for creditor protection from the court under theCompanies' Creditors Arrangement
Act(Canada) and made a concurrent application for a companion order under Chapter 15 of the United States Bankruptcy Code. These proceedings included Hollinger
and its wholly-owned subsidiaries, Sugra Limited and 4322525 Canada Inc. The initial order and the U.S. proceedings provided for an initial stay period of 30 days, and were
subsequently extended. On May 26, 2008, the Court approved an agreement (announced by Hollinger on May 14, 2008) between Hollinger and its two principal creditors addressing matters in
dispute among those parties and which stated that Mr. Voorheis would be resigning as an officer and director of Hollinger. On June 17, 2008, Mr. Voorheis resigned as a director
and officer of Hollinger. Hollinger's Series II preference shares and the common shares are subject to a cease trader order issued by the OSC on July 23, 2008. Hollinger has stated that
the cease trade order was issued as a result of Hollinger's determination, in the interests of reducing its costs for the benefit of its stakeholders, not to prepare and file annual audited financial
statements and other annual disclosure documents in respect of Hollinger's financial year ended March 31, 2008. Consequently, following June 30, 2008, Hollinger has been in default of
its continuous disclosure filing requirements under Canadian securities laws.

Mr. Voorheis
was a director of Sun Times Media Group, Inc. ("Sun Times") from August 2007 to June 2008.
Mr. Voorheis agreed to join the Sun Times board at the request of a Hollinger shareholder to deal with certain management misconduct. On March 31, 2009, Sun Times and its domestic
subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code.

Mr. Voorheis
and Mr. Dey were appointed directors of Coventree Inc. ("Coventree") in April 2008. On
December 7, 2009, the OSC commenced proceedings against Coventree and certain of its officers in connection to events which occurred prior to Mr. Voorheis and Mr. Dey's
involvement with Coventree. The proceedings relate to whether Coventree complied with its disclosure obligations in its prospectus relating to the initial public offering of its shares, and its timely
disclosure obligations in 2007 prior to the market for certain asset-backed commercial paper freezing up on August 13, 2007 (collectively "Coventree
Proceedings"). On November 8, 2011, the OSC issued orders in connection with the Coventree Proceedings which included an order that until its winding up is completed,
trading in any securities by Coventree cease and that any Ontario securities law exemptions not apply to Coventree, provided that this order will not prevent the winding up of Coventree or trades in
securities reasonably related to that winding up. Coventree appealed the OSC order at the Ontario Divisional Court in late 2012. On March 19, 2013, the decision of the OSC was upheld by the
Ontario Divisional Court. On September 17, 2013, leave to appeal to the Court of Appeal for Ontario was denied.

On
June 30, 2010, the shareholders of Coventree approved a special resolution authorizing the winding up of Coventree and the distribution of its remaining assets, if any, to
shareholders pursuant to the plan of liquidation and distribution. The Liquidation Plan commenced on February 15, 2012, when a liquidator was appointed for the purposes of winding up the
Coventree's affairs and Mr. Voorheis and Mr. Dey resigned as directors, and Mr. Voorheis became an inspector of the company's liquidation on that date.

AUDIT COMMITTEE

Composition of the Audit Committee

Each of Granite REIT and Granite GP has a separately designated standing audit committee (each an "Audit
Committee") composed of Messrs. Miller (Chairman), Gilbertson and Oran, each of whom has been determined by the Board of Trustees, in the case of Granite REIT, or the
Board of Directors, in the case of Granite GP, to be "independent" and "financially literate", as such terms are defined in Multilateral
Instrument 52-110 Audit Committeesand "independent" under the corporate governance standards of the NYSE
applicable to audit committees. As well, Mr. Miller has been determined to be a "financial expert" within the meaning of the rules of the United States Securities and Exchange Commission
(the "SEC") under theSarbanes-Oxley Act of 2002. The education and experience of each Audit
Committee member that is relevant to the performance of his responsibilities as a member of each Audit
Committee is set forth in their respective biographies above under the heading "Management of Granite REIT".

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Pre-Approval Policies and Procedures

Each Audit Committee is responsible for the appointment, compensation, retention and oversight of the work of the external auditor,
Deloitte LLP for fiscal 2013. Each Audit Committee has established a policy to pre-approve all audit and permitted non-audit services provided to us by the external auditor, as well as the
related fees to be paid to the external auditor.

Under
such policy, the respective Audit Committee shall approve in advance any retainer of the external auditor to provide any non-audit service to Granite REIT or Granite GP, as
the case may be, in accordance with applicable law, the rules and regulations of the NYSE, and policies and procedures approved by the Board of Trustees or Board of Directors, as applicable. Each
Audit Committee may delegate pre-approval authority to any of its members. The decisions of any member of an Audit Committees to whom this authority has been delegated must be presented to the full
committee at its next scheduled committee meeting.

Audit Committee's Charter

The charter of the Audit Committee of Granite REIT is attached as Appendix A to this Annual Information Form. The charter
of the Audit Committee of Granite GP is attached as Appendix B to this Annual Information Form. Each charter is also available at www.granitereit.com.

Audit Fees

The following table sets forth the fees billed to Granite by Deloitte LLP and its affiliates for professional services rendered
for the fiscal year ended December 31, 2013. Prior to January 1, 2013, Ernst & Young LLP billed fees to Granite Co. for the fiscal years ended
December 31, 2012.

Fees

2013

2012Audit Fees(1)

$
828,400

$
929,990Audit-Related Fees(2)

$
150,000

$
310,040Tax Fees(3)

$


$
336,738All Other Fees(4)

$
2,300

$
6,125Total

$
980,700

$
1,582,893


Notes: (1)Audit
Fees consist of fees billed for the annual audit and quarterly review of our combined or consolidated financial statements and services that are
normally provided in connection with our statutory and regulatory filings, including the auditor attestation requirements of the Sarbanes-Oxley Act.(2)Audit-Related
Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our
financial statements and that are not included in category (1) above. They include consultations concerning financial accounting and reporting standards, audit of subsidiary financial
statements, review of security controls and operational effectiveness of systems.(3)Tax
Fees include fees billed for tax compliance, tax advice and tax planning services, including the preparation and review of tax returns.(4)All
Other Fees capture fees in respect of all services not falling under any of the foregoing categories.


INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Except as otherwise disclosed herein, no trustee, director or executive officer of Granite REIT or Granite GP, nor any person or
company that beneficially owns, or controls or directs, directly or indirectly, more than 10 percent of any class or series of Granite REIT's or Granite GP's voting securities, or an
associate or affiliate thereof, has any material interests, directly or indirectly in any transaction within the three most recently completed financial years or during the current financial year that
has materially affected or is reasonably expected to materially affect Granite REIT or Granite GP.

In
2011, Granite agreed to pay reasonable legal and advisory fees of certain Class A Shareholders incurred in connection with the 2011 Arrangement, which closed on June 30,
2011. In this respect, a $2.1 million payment

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was
made to a company owned by Mr. G. Wesley Voorheis, who became Chairman of the board of directors of Granite Co. following the completion of the 2011 Arrangement, for legal and
advisory services relating to the 2011 Arrangement.

AUDITORS, REGISTRAR AND TRANSFER AGENT

The auditors of Granite REIT and Granite GP are Deloitte LLP, located at Brookfield Place, Suite 1400,
181 Bay Street, Toronto, Ontario, M5J 2V1. The registrar and transfer agent of Stapled Units is Computershare Investor Services Inc. at its principal offices in Toronto, Ontario.
The co-transfer agent and co-registrar of Stapled Units in the United States is Computershare Trust Company, N.A. at its offices in Golden, Colorado.

Deloitte LLP
is independent of Granite REIT and Granite GP within the meaning of the Rules of Professional Conduct of CPA Ontario and the rules and Standards of the Public
Company Accounting Oversight Board and the securities laws and regulations administered by the SEC.

LEGAL PROCEEDINGS

Granite is party to various legal actions and claims arising in the ordinary course of its business, such as litigation with
contractors, suppliers, governmental authorities, sellers and purchasers. We believe that none of these actions or claims, either individually or in combination, has had or, in the case of current
actions and claims, will have, a material adverse effect on our financial condition or results of operations.

The Maryland Jockey Club Complaint

Under the terms of the 2011 Arrangement, Granite received an indemnity from the Stronach Shareholder and certain related parties
against all losses suffered by Granite in relation to claims pertaining to Granite's former racing and gaming business for the period prior to, on and after the effective date of the transfer of
June 30, 2011. Accordingly, Granite provided the Stronach Shareholder with the required disclosure notice under that indemnity referencing the racing and gaming-related litigation described
below. Granite retained independent counsel to monitor this litigation on its behalf.

On
February 15, 2011, Power Plant Entertainment Casino Resorts Indiana, LLC, PPE Casino Resorts Maryland, LLC and The Cordish Company
(the "Plaintiffs") sued, among other defendants, certain subsidiary entities and joint ventures of Granite Co., including The Maryland
Jockey Club and certain of its subsidiaries (collectively, the "MJC Entities"), as well as Granite Co.'s former Chairman and Chief Executive
Officer, Mr. Frank Stronach, in the Circuit Court for Baltimore City in Baltimore, Maryland. The claims asserted in the Plaintiffs' complaint against Granite Co., the MJC Entities and
Mr. Stronach (the "Complaint") are alleged to have arisen from events that occurred in Maryland in connection with the referendum
conducted in
November 2010 concerning the award of a gaming license to one of the Plaintiffs to conduct alternative gaming at the Arundel Mills Mall. The Complaint asserted a number of claims against all
defendants including, among other allegations, that Granite Co. and Mr. Stronach, along with other defendants, engaged in actions to defame the Plaintiffs by distributing allegedly false
information concerning the Plaintiffs and their operations of a gaming facility in Indiana, Indianapolis Downs, LLC operating as Indiana Live. Plaintiffs' claims against Granite Co., the
MJC Entities and Mr. Stronach were for alleged civil conspiracy, false light, invasion of privacy and defamation. The Complaint sought an award of damages against all defendants in the amount
of U.S.$300 million in compensatory damages and U.S.$300 million in punitive damages.

Effective
January 8, 2014, Granite entered into a Confidential Settlement Agreement and Mutual Release (the "Settlement")
that resolved all claims and potential claims by the Plaintiffs. In accordance with the above-referenced indemnity, the Settlement did not require any payment from Granite.

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MATERIAL CONTRACTS

Agreements in Connection with the 2011 Arrangement

In connection with the 2011 Arrangement, Granite Co., the Stronach Shareholder and the Stronach Trust entered into an
Arrangement Agreement on January 31, 2011. Under the Arrangement Agreement, the parties agreed to effect certain transactions in connection with the implementation of the Arrangement. The
Arrangement Agreement contains covenants, representations and warranties of and from each of Granite, the Stronach Shareholder and the Stronach Trust and various conditions precedent, both mutual and
with respect to each party. Concurrently with the entering into of the Arrangement Agreement, each of Granite Co., the Stronach Shareholder, the Stronach Trust and the Initiating Shareholders
entered into the Agreement with Initiating Shareholders. The Agreement with the Initiating Shareholders, among other things, provides the Initiating Shareholders with the ability to compel Granite,
the Stronach Shareholder and the Stronach Trust to comply with certain obligations under the Arrangement Agreement. Each of the Arrangement Agreement and the Agreement with Initiating Shareholders are
described in detail in the Management Information Circular of Granite Co. dated February 22, 2011 and such descriptions are hereby incorporated by reference herein. Copies of the
Arrangement Agreement and the Agreement with Initiating Shareholders are available on SEDAR at www.sedar.com.

Immediately
prior to the implementation of the 2011 Arrangement, a transfer agreement between Granite Co., the Stronach Shareholder, certain subsidiaries of the Stronach
Shareholder and the Stronach Trust (the "Transfer Agreement") providing for the transfer to that purchaser of certain assumed liabilities
relating to the Assets, substantially in the form attached as Schedule C to the Arrangement Agreement was declared effective. In addition, also prior to the implementation of the 2011
Arrangement, Granite Co. entered into a forbearance agreement pursuant to which Granite became restricted from entering into the horseracing or gaming business, making any debt or equity
investment in, or otherwise giving financial assistance to, any entity primarily engaged in the horseracing or gaming business or entering into any transactions with, or providing any services or
personnel to, any entity primarily engaged in the horseracing or gaming business, substantially in the form attached as Schedule D to the Arrangement Agreement. Each of the Transfer
Agreement and the Forbearance Agreement are described in the Management Information Circular of Granite Co. dated February 22, 2011 and such descriptions are hereby incorporated by
reference herein. Copies of the forms of Transfer Agreement and Forbearance Agreement are available on SEDAR at www.sedar.com.

Other Material Contracts

The following additional material contracts have been entered into by Granite and are still
in effect:



Copies
of the material contracts listed above may be found on SEDAR at www.sedar.com.

ADDITIONAL INFORMATION

Additional information relating to Granite REIT and Granite GP may be found on SEDAR at
www.sedar.com under their respective SEDAR profiles. Additional information, including trustees', directors' and executive officers' remuneration and indebtedness,
principal holders of securities and securities authorized for issuance under the equity compensation plans will be contained in the joint Management Information Circular/Proxy Statement of Granite
REIT and Granite GP for the annual general meetings of the unitholders of Granite REIT and shareholders of Granite GP expected to be held on June 11, 2014. Additional financial
information is provided in the Audited Combined Financial Statements and related Management's Discussion and Analysis for the year ended December 31, 2013 of Granite.

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APPENDIX A  GRANITE REIT AUDIT COMMITTEE CHARTER        GRANITE REAL ESTATE INVESTMENT TRUSTAUDIT COMMITTEE CHARTER

As
of May 8, 2013

I.     Purpose and Scope

The audit committee (the "Committee") of Granite Real Estate Investment Trust
(the "Trust") is a committee of the Board of Trustees (the "Board"). The Committee shall
oversee the accounting and financial reporting
processes of the Trust and the audits of the Trust's financial statements and exercise the responsibilities and duties set out in this Charter.

II.    Membership

1.Number of Members

The Committee shall be composed of three or more members of the Board.

2.Independence

Each member of the Committee must be independent in accordance with applicable law and the applicable rules and regulations of the Canadian Securities
Administrators, the United States Securities and Exchange Commission, the New York Stock Exchange and any other regulator or authority having jurisdiction over the Trust from time to
time (the "Applicable Requirements").

3.Financial Literacy

Each member of the Committee shall be financially literate and shall have such accounting or financial management expertise as is required to comply with the
Applicable Requirements.

4.Term

The members of the Committee shall be appointed annually by the Board. Each member of the Committee shall serve at the pleasure of the Board until the member
resigns, is removed or ceases to be a member of the Board.

5.Chair

At the time of the annual appointment of the members of the Committee, the Board shall appoint a member of the Committee as Chair of the Committee.

III.  Duties and Responsibilities

The Committee shall have the functions and responsibilities set out below as well as any other functions that are specifically delegated to the Committee by the
Board and that the Board is authorized to delegate by applicable laws and regulations. In addition to these functions and responsibilities, the Committee shall perform the duties required of an audit
committee by any Applicable Requirements.

1.Financial Reports



The Committee is responsible for overseeing the Trust's financial statements and financial disclosures. Management is responsible for the preparation,
presentation and integrity of the Trust's financial statements and financial disclosures and for the appropriateness of the accounting principles and the reporting policies used by the Trust. The
auditors are responsible for auditing the Trust's annual consolidated financial statements and for reviewing the Trust's unaudited interim financial statements.

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The Committee shall review the annual audited combined financial statements of the Trust and Granite REIT Inc., the external auditor's report thereon and
the related management's discussion and analysis of financial condition and results of operation ("MD&A"). After completing its review, if advisable,
the Committee shall recommend for Board approval such annual financial statements and the related MD&A.



The Committee shall review the interim combined financial statements of the Trust and Granite REIT Inc., the external auditor's review report thereon and
the related MD&A. After completing its review, if advisable, the Committee shall recommend for Board approval such interim financial statements and the related MD&A.



In conducting its review of the annual financial statements or the interim financial statements, the Committee shall:



The Committee shall review and, if advisable, recommend for Board approval financial disclosure in a prospectus or other securities offering document of the
Trust, press releases disclosing, or based upon, financial results of the Trust and any other material financial disclosure in a document that is publicly disseminated.



The Committee shall review and, if advisable, recommend for Board approval any material future-oriented financial information or financial outlook and endeavour
to ensure that there is a reasonable basis for drawing any conclusions or making any forecasts and projections set out in such disclosures.

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2.Auditors



The Committee shall be responsible for oversight of the work of the auditors, including the external auditor's work in preparing or issuing an audit report,
performing other audit, review or attest services or any other related work. The external auditor will report directly to the Committee.



The Committee shall review and, if advisable, select and recommend for Board approval the external auditor to be nominated and the compensation of such external
auditor. The Committee shall have ultimate authority to approve all audit engagement terms and fees, including the external auditor's audit plan.



The Committee shall resolve any disagreements between management and the auditors as to financial reporting matters brought to its attention.



The Committee shall periodically discuss with the external auditor such matters as are required by applicable auditing standards to be discussed by the external
auditor with the Committee.



The Committee shall periodically review a summary of the external auditor's annual audit plan. The Committee shall consider and review with the external auditor
any material changes to the scope of the plan.



Before the external auditor issues its report on the annual financial statements, the Committee shall obtain from the external auditor a formal written statement
describing all relationships between the external auditor and the Trust; discuss with the external auditor any disclosed relationships or services that may affect the objectivity and independence of
the external auditor; and obtain written confirmation from the external auditor that it is objective and independent within the meaning of the applicable Rules of Professional Conduct/Code of Ethics
adopted by the provincial institute or order of chartered accountants to which the external auditor belongs and other Applicable Requirements. The Committee shall take appropriate action to oversee
the independence of the external auditor.



The Committee shall periodically review the qualifications and performance of the lead partner(s) of the external auditor.



The Committee shall approve in advance any retainer of the external auditor to provide any non-audit service to the Trust in accordance with Applicable
Requirements and Board approved policies and procedures. The Committee may delegate pre-approval authority to any member of the Committee. The decisions of any member of the Committee to whom this
authority has been delegated must be presented to the full Committee at its next scheduled Committee meeting.



The Committee shall review and approve the Trust's hiring policies regarding partners, employees and former partners and employees of the present and former
external auditors of the Trust and the Committee shall be responsible for specified reporting and pre-approval functions thereunder.

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3.Internal Controls



The Committee shall review the Trust's system of internal controls.



The Committee shall require management to implement and maintain appropriate systems of internal controls in accordance with Applicable Requirements, including
internal controls over financial reporting and disclosure, and shall review, evaluate and approve these procedures. The Committee shall periodically consider and review with management and
the auditors:



4.Internal Audit Function

The Committee shall periodically review and approve the internal audit function, including its plan, budget and resources. The Committee shall direct management
to make changes it deems advisable in respect of the internal audit function.

5.Internal Reporting Procedures

The Committee shall establish procedures (the "Internal Reporting Procedures") for (a) the receipt,
retention, and treatment of complaints received by the Trust regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by employees
of concerns regarding questionable accounting or auditing matters. Any such complaints or concerns that are received shall be reviewed by the Committee and, if the Committee determines that the matter
requires further investigation, it will direct the Chair of the Committee to engage outside advisors, as necessary or appropriate, to investigate the matter and will work with management and the
General Counsel to reach a satisfactory conclusion. The Committee shall review investigations and any resolutions of complaints received and report to the Board thereon. The Committee shall be
responsible for approving exceptions to the Internal Reporting Procedures.

6.Risk Management

The Committee shall be responsible for overseeing the identification and assessment of the principal risks to the operations of the Trust and the establishment
and management of appropriate systems to manage such risks with a view to achieving a proper balance between risks incurred and potential return to holders of securities of the Trust and to the
long-term viability of the Trust. In this regard, the Committee shall require management to report periodically to the Committee, and the Committee shall report periodically to the Board, on the
principal risks faced by the Trust and the steps implemented by manage to management these risks.

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7.Compliance with Legal and Regulatory Requirements

The Committee shall review reports from management members on: legal or compliance matters that may have a material impact on the Trust; the effectiveness of the
Trust's compliance policies; and any material communications received from regulators. The Committee shall review management's evaluation of and representations relating to compliance with specific
applicable law and guidance, and management's plans to remediate any deficiencies identified. The Committee shall be responsible for granting waivers to the Code of Conduct and Ethics of the Trust and
Granite REIT Inc.

8.Audit Committee Disclosure

The Committee shall prepare, review and recommend for Board approval any audit committee disclosures required by Applicable Requirements in the Trust's disclosure
documents.

9.Financial Executives

The Committee shall review and discuss with management the appointment of key financial executives and recommend qualified candidates to the Board,
as appropriate.

10.Charter Review

The Committee shall review and assess the adequacy of this Charter from time to time, as required, to ensure compliance with Applicable Requirements and recommend
to the Board for its approval any modifications to this Charter as are considered appropriate.

IV.    Meetings

1.Procedure

The time and place of the meetings of the Committee, the calling of meetings of the Committee and the procedure at such meetings in all respects shall be
determined by the Committee; provided, however, that a majority of the members of the Committee shall constitute a quorum.

2.Reporting to the Board

The Chair shall provide a report to the Board on material matters considered by the Committee.

3.In Camera Sessions

The Committee shall hold meetings, or portions of meetings, at which management is not present. The Committee shall also periodically meet separately with
management, the internal auditors and the external auditors.

V.     Delegation

The Committee may, to the extent permissible by Applicable Requirements, designate a sub-committee to review any matter within this Charter as the Committee deems
appropriate.

VI.   Outside Advisors

The Committee shall have the authority to retain external legal counsel, consultants or other advisors to assist it in fulfilling its responsibilities and to set
and pay the respective compensation for these advisors. The Trust shall provide appropriate funding, as determined by the Committee, for the services of these advisors.

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APPENDIX B  GRANITE GP AUDIT COMMITTEE CHARTER        GRANITE REIT INC.AUDIT COMMITTEE CHARTER

As
of May 8, 2013

I.     Purpose and Scope

The audit committee (the "Committee") of Granite REIT Inc.
(the "Company") is a committee of the Board of Directors (the "Board"). The Committee
shall oversee the accounting and financial reporting processes of
the Company and the audits of the Company's financial statements and exercise the responsibilities and duties set out in this Charter.

II.    Membership

1.Number of Members

The Committee shall be composed of three or more members of the Board.

2.Independence

Each member of the Committee must be independent in accordance with applicable law and the applicable rules and regulations of the Canadian Securities
Administrators, the United States Securities and Exchange Commission, the New York Stock Exchange and any other regulator or authority having jurisdiction over the Company from time to
time (the "Applicable Requirements").

3.Financial Literacy

Each member of the Committee shall be financially literate and shall have such accounting or financial management expertise as is required to comply with the
Applicable Requirements.

4.Term

The members of the Committee shall be appointed annually by the Board. Each member of the Committee shall serve at the pleasure of the Board until the member
resigns, is removed or ceases to be a member of the Board.

5.Chair

At the time of the annual appointment of the members of the Committee, the Board shall appoint a member of the Committee as Chair of the Committee.

III.  Duties and Responsibilities

The Committee shall have the functions and responsibilities set out below as well as any other functions that are specifically delegated to the Committee by the
Board and that the Board is authorized to delegate by applicable laws and regulations. In addition to these functions and responsibilities, the Committee shall perform the duties required of an audit
committee by any Applicable Requirements.

1.Financial Reports



The Committee is responsible for overseeing the Company's financial statements and financial disclosures. Management is responsible for the preparation,
presentation and integrity of the Company's financial statements and financial disclosures and for the appropriateness of the accounting principles and the reporting policies used by the Company. The
auditors are responsible for auditing the Company's annual consolidated financial statements and for reviewing the Company's unaudited interim financial statements.

B-1

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The Committee shall review the annual audited combined financial statements of the Company and Granite Real Estate Investment Trust, the external auditor's report
thereon and the related management's discussion and analysis of financial condition and results of operation ("MD&A"). After completing its review, if
advisable, the Committee shall recommend for Board approval such annual financial statements and the related MD&A.



The Committee shall review the interim combined financial statements of the Company and Granite Real Estate Investment Trust, the external auditor's review report
thereon and the related MD&A. After completing its review, if advisable, the Committee shall recommend for Board approval such interim financial statements and the related MD&A.



In conducting its review of the annual financial statements or the interim financial statements, the Committee shall:



The Committee shall review and, if advisable, recommend for Board approval financial disclosure in a prospectus or other securities offering document of the
Company, press releases disclosing, or based upon, financial results of the Company and any other material financial disclosure in a document that is publicly disseminated.



The Committee shall review and, if advisable, recommend for Board approval any material future-oriented financial information or financial outlook and endeavour
to ensure that there is a reasonable basis for drawing any conclusions or making any forecasts and projections set out in such disclosures.

B-2

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2.Auditors



The Committee shall be responsible for oversight of the work of the auditors, including the external auditor's work in preparing or issuing an audit report,
performing other audit, review or attest services or any other related work. The external auditor will report directly to the Committee.



The Committee shall review and, if advisable, select and recommend for Board approval the external auditor to be nominated and the compensation of such external
auditor. The Committee shall have ultimate authority to approve all audit engagement terms and fees, including the external auditor's audit plan.



The Committee shall resolve any disagreements between management and the auditors as to financial reporting matters brought to its attention.



The Committee shall periodically discuss with the external auditor such matters as are required by applicable auditing standards to be discussed by the external
auditor with the Committee.



The Committee shall periodically review a summary of the external auditor's annual audit plan. The Committee shall consider and review with the external auditor
any material changes to the scope of the plan.



Before the external auditor issues its report on the annual financial statements, the Committee shall obtain from the external auditor a formal written statement
describing all relationships between the external auditor and the Company; discuss with the external auditor any disclosed relationships or services that may affect the objectivity and independence of
the external auditor; and obtain written confirmation from the external auditor that it is objective and independent within the meaning of the applicable Rules of Professional Conduct/Code of Ethics
adopted by the provincial institute or order of chartered accountants to which the external auditor belongs and other Applicable Requirements. The Committee shall take appropriate action to oversee
the independence of the external auditor.



The Committee shall periodically review the qualifications and performance of the lead partner(s) of the external auditor.



The Committee shall approve in advance any retainer of the external auditor to provide any non-audit service to the Company in accordance with Applicable
Requirements and Board approved policies and procedures. The Committee may delegate pre-approval authority to any member of the Committee. The decisions of any member of the Committee to whom this
authority has been delegated must be presented to the full Committee at its next scheduled Committee meeting.



The Committee shall review and approve the Company's hiring policies regarding partners, employees and former partners and employees of the present and former
external auditors of the Company and the Committee shall be responsible for specified reporting and pre-approval functions thereunder.

B-3

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3.Internal Controls



The Committee shall review the Company's system of internal controls.



The Committee shall require management to implement and maintain appropriate systems of internal controls in accordance with Applicable Requirements, including
internal controls over financial reporting and disclosure, and shall review, evaluate and approve these procedures. The Committee shall periodically consider and review with management and
the auditors:



4.Internal Audit Function

The Committee shall periodically review and approve the internal audit function, including its plan, budget and resources. The Committee shall direct management
to make changes it deems advisable in respect of the internal audit function.

5.Internal Reporting Procedures

The Committee shall establish procedures (the "Internal Reporting Procedures") for (a) the receipt,
retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing matters. The Internal Reporting Procedures shall also be available for reports of breaches of the Code of Conduct and Ethics. Any
such complaints or concerns that are received shall be reviewed by the Committee and, if the Committee determines that the matter requires further investigation, it will direct the Chair of the
Committee to engage outside advisors, as necessary or appropriate, to investigate the matter and will work with management and the General Counsel to reach a satisfactory conclusion. The Committee
shall review investigations and any resolutions of complaints received and report to the Board thereon. The Committee shall be responsible for approving exceptions to the Internal Reporting
Procedures.

6.Risk Management

The Committee shall be responsible for overseeing the identification and assessment of the principal risks to the operations of the Company and the establishment
and management of appropriate systems to manage such risks with a view to achieving a proper balance between risks incurred and potential return to holders of

B-4

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securities
of the Company and to the long-term viability of the Company. In this regard, the Committee shall require management to report periodically to the Committee, and the Committee shall report
periodically to the Board, on the principal risks faced by the Company and the steps implemented by management to manage these risks.

7.Compliance with Legal and Regulatory Requirements

The Committee shall review reports from management members on: legal or compliance matters that may have a material impact on the Company; the effectiveness of
the Company's compliance policies; and any material communications received from regulators. The Committee shall review management's evaluation of and representations relating to compliance with
specific applicable law and guidance, and management's plans to remediate any deficiencies identified. The Committee shall be responsible for granting waivers to the Code of Conduct and Ethics of the
Company and Granite Real Estate Investment Trust.

8.Audit Committee Disclosure

The Committee shall prepare, review and recommend for Board approval any audit committee disclosures required by Applicable Requirements in the Company's
disclosure documents.

9.Financial Executives

The Committee shall review and discuss with management the appointment of key financial executives and recommend qualified candidates to the Board,
as appropriate.

10.Charter Review

The Committee shall review and assess the adequacy of this Charter from time to time, as required, to ensure compliance with Applicable Requirements and recommend
to the Board for its approval any modifications to this Charter as are considered appropriate.

IV.    Meetings

1.Procedure

The time and place of the meetings of the Committee, the calling of meetings of the Committee and the procedure at such meetings in all respects shall be
determined by the Committee; provided, however, that a majority of the members of the Committee shall constitute a quorum.

2.Reporting to the Board

The Chair shall provide a report to the Board on material matters considered by the Committee.

3.In Camera Sessions

The Committee shall hold meetings, or portions of meetings, at which management is not present. The Committee shall also periodically meet separately with
management, the internal auditors and the external auditors.

V.     Delegation

The Committee may, to the extent permissible by Applicable Requirements, designate a sub-committee to review any matter within this Charter as the Committee deems
appropriate.

VI.   Outside Advisors

The Committee shall have the authority to retain external legal counsel, consultants or other advisors to assist it in fulfilling its responsibilities and to set
and pay the respective compensation for these advisors. The Company shall provide appropriate funding, as determined by the Committee, for the services of these advisors.

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