INDUS REALTY TRUST, INC. - Annual Report: 2015 (Form 10-K)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 1-12879

GRIFFIN INDUSTRIAL REALTY, INC.
(Exact name of registrant as specified in its charter)

(212) 218-7910
(Registrant's telephone number, including area code)

         SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:

         SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: None

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $88,513,000 based on the closing sales price on The NASDAQ Stock Market LLC on May 29, 2015, the last business day of the registrant's most recently completed second quarter. Shares of common stock held by each executive officer, director and persons or entities known to the registrant to be affiliates of the foregoing have been excluded in that such persons may be deemed to be affiliates. This assumption regarding affiliate status is not necessarily a conclusive determination for other purposes.

         As of February 5, 2016, 5,152,708 shares of common stock were outstanding.

FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K (the "Annual Report") contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). For this purpose, any statements contained in this Annual Report that relate to future events or conditions, including without limitation, the statements in Part I, Item 1. "Business" and Item 1A. "Risk Factors" and in Part II Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as located elsewhere in this Annual Report regarding industry prospects or Griffin Industrial Realty, Inc.'s ("Griffin") plans, expectations, or prospective results of operations or financial position, may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believes," "anticipates," "plans," "expects," and similar expressions are intended to identify forward-looking statements. Such forward-looking statements represent management's current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of Griffin's common stock or cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include: adverse economic conditions and credit markets; a downturn in the commercial and residential real estate markets; risks associated with concentration of real estate holdings; risks associated with entering new real estate markets; risks relating to reliance on lease revenues; risks associated with nonrecourse mortgage loans; potential environmental liabilities; competition and governmental regulations; inadequate insurance coverage; risks of environmental factors; risks associated with the cost of raw materials or energy costs; regulatory risks; risks of investing in a foreign company; litigation risks; and the concentrated ownership of Griffin common stock by members of the Cullman and Ernst families. These and the important factors discussed under the caption "Risk Factors" in Part I, Item 1A of this Annual Report for the fiscal year ended November 30, 2015, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Annual Report and presented elsewhere by management from time to time. Any such forward-looking statements represent management's estimates as of the date of this Annual Report. While Griffin may elect to update such forward-looking statements at some point in the future, Griffin disclaims any obligation to do so, even if subsequent events cause Griffin's views to change. These forward-looking statements should not be relied upon as representing Griffin's views as of any date subsequent to the date of this Annual Report.

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PART I

ITEM 1.    BUSINESS.

        On May 13, 2015, Griffin Land & Nurseries, Inc. changed its name to Griffin Industrial Realty, Inc. ("Griffin") to reflect better Griffin's ongoing real estate business that is principally engaged in developing, managing and leasing industrial and commercial properties. Griffin also seeks to add to its property portfolio through the acquisition and development of land or purchase of buildings. Periodically, Griffin may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not consistent with Griffin's core development and leasing strategy.

        Until January 8, 2014, Griffin also operated a landscape nursery business through its wholly owned subsidiary, Imperial Nurseries, Inc. ("Imperial"). Imperial was engaged in the growing of containerized plants for sale principally to independent retail garden centers and rewholesalers, whose main customers are landscape contractors. On January 8, 2014, Griffin and Imperial entered into an Asset Purchase Agreement pursuant to which Imperial's inventory and certain of its assets were sold to Monrovia Connecticut LLC ("Monrovia"), a subsidiary of Monrovia Nursery Company, for approximately $0.7 million in cash, before transaction and severance costs, and a non-interest bearing note receivable of $4.25 million (the "Imperial Sale"). Monrovia paid $2.75 million of the note receivable on June 1, 2014 and the remaining balance on June 1, 2015. Concurrently with the Imperial Sale, Imperial and River Bend Holdings, LLC, another wholly owned subsidiary of Griffin, entered into a Lease and Option Agreement and an Addendum to such agreement (the "Imperial Lease," and together with the Imperial Sale, the "Imperial Transaction") with Monrovia, pursuant to which Monrovia is leasing Imperial's Connecticut production nursery for a ten year period, with options to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease also grants Monrovia an option to purchase the land, land improvements and other operating assets that were used by Imperial in its Connecticut growing operations during the first thirteen years of the lease period for $10.5 million, or $7.0 million if only a certain portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease.

        Through fiscal 2009, all of Griffin's real estate assets, including buildings and undeveloped land, were located in the north submarket of Hartford, Connecticut. In fiscal 2010, Griffin started the expansion of its real estate holdings to areas outside of Hartford by purchasing an industrial building and undeveloped land in the Lehigh Valley of Pennsylvania (see Lehigh Valley on page 9). Griffin expects to continue to seek to acquire and develop properties that are consistent with its core strategy of developing and leasing industrial and commercial properties. Griffin expects that most of such potential acquisitions of either undeveloped land or land and buildings will likely be located outside of the Hartford area.

        The greater Hartford industrial market had been slow in recent years, but experienced some recovery in 2014 and 2015. A national real estate services company reported that the overall vacancy rate in the greater Hartford industrial market decreased from 12.3% at the end of 2014 to 9.6% at the end of 2015. The greater Hartford office market remained weak in 2015 with a national real estate services company reporting that the overall vacancy rate increased from 15.8% at the end of 2014 to 16.7% at the end of 2015. In the greater Hartford area, there are a number of warehouse facilities and office buildings, some of which are fully or partially vacant, that are competitive with Griffin's industrial/warehouse buildings and office/flex buildings. Griffin believes that it benefits from its reputation as a stable landlord with sufficient resources to meet its obligations and deliver space to tenants timely and in accordance with the terms of their lease agreements.

        The industrial/warehouse market in the Lehigh Valley region of Pennsylvania has experienced a fairly strong level of leasing activity during the past several years, reported vacancy rates are low and rental rates have generally increased over the past five years. A national real estate services company reported that the overall vacancy rate in the Lehigh Valley industrial market was less than 5% in 2014

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and 2015. As a result of the relatively strong market, there has been an increase in the construction of industrial/warehouse buildings in the Lehigh Valley.

        Additional capacity or an increase in vacancies in either the industrial or office market could adversely affect Griffin's operating results by potentially resulting in longer times to lease vacant space, eroding lease rates in Griffin's properties or hindering renewals by existing tenants. There can be no assurances as to the directions of the Hartford and Lehigh Valley real estate markets in the near future.

        As of November 30, 2015, Griffin owned thirty-two buildings comprising approximately 3.0 million square feet. Approximately 86% of this square footage is industrial/warehouse space, with the balance principally being office/flex space. As of November 30, 2015, approximately 89% of Griffin's industrial/warehouse space was leased and approximately 85% of Griffin's office/flex space was leased. Subsequent to November 30, 2015, Griffin leased approximately 102,000 square feet in 4270 Fritch Drive ("4270 Fritch Drive"), a 303,000 square foot industrial/warehouse building developed by Griffin in fiscal 2014 on land in the Lehigh Valley acquired in fiscal 2010. Had that lease been completed as of November 30, 2015, the percentage of industrial/warehouse space leased as of that date would have been 92%. As stated in "Item 2. Properties" below, Griffin uses nonrecourse mortgages to finance some of its real estate development activities, and as of November 30, 2015, approximately $90.4 million was outstanding under such loans. In fiscal 2015, Griffin's rental revenue less operating expenses of rental properties was approximately $16.2 million, while debt service on Griffin's nonrecourse mortgages was approximately $6.4 million.

        In fiscal 2015, Griffin completed and placed in service an approximately 280,000 square foot industrial building ("5220 Jaindl Boulevard") in the Lehigh Valley of Pennsylvania. The tenant that initially leased approximately 196,000 square feet in 5220 Jaindl Boulevard at the start of the fiscal 2015 fourth quarter when the building was placed in service subsequently exercised its option under the lease to lease the balance of the building. Rental revenue on the additional space will commence in fiscal 2016. In addition to leasing the approximately 280,000 square feet in 5220 Jaindl Boulevard in fiscal 2015, Griffin completed several other leases aggregating approximately 191,000 square feet, of which approximately 90% was for industrial/warehouse space and approximately 10% was for office/flex space. In fiscal 2015, several leases aggregating approximately 52,000 square feet of office/flex space expired and were not renewed and a lease of approximately 31,000 square feet of industrial/warehouse space was terminated early for which Griffin received a lease termination fee. The net effect of these transactions was an increase of approximately 421,000 square feet in industrial/warehouse space under lease as of November 30, 2015 as compared to November 30, 2014 and a decrease of approximately 33,000 square feet in office/flex space under lease as of November 30, 2015 as compared to November 30, 2014. In fiscal 2015, Griffin also renewed and extended several leases aggregating approximately 326,000 square feet of industrial/warehouse space and approximately 71,000 square feet of office/flex space.

        In fiscal 2014, Griffin entered into three new leases of industrial/warehouse space for an aggregate of approximately 371,000 square feet and three new leases of office/flex space for an aggregate of approximately 38,000 square feet. The leasing of industrial/warehouse space in fiscal 2014 included a five year lease for approximately 201,000 square feet at 4270 Fritch Drive. In fiscal 2014, Griffin also entered into a ten year full building lease for approximately 138,000 square feet in one of its industrial buildings in New England Tradeport ("NE Tradeport"), Griffin's industrial park in Windsor and East Granby, Connecticut. In fiscal 2014, leases of industrial/warehouse space aggregating approximately 43,000 square feet expired and were not renewed, and a lease of industrial/warehouse space increased by approximately 47,000 square feet as the remaining vacant space in the building was added to the leased space in accordance with the lease terms. The net effect of these transactions was an increase of approximately 374,000 square feet in industrial/warehouse space under lease as of November 30, 2014 as compared to November 30, 2013, while office/flex space under lease was essentially unchanged at

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November 30, 2014 as compared to November 30, 2013. Griffin also renewed and extended several leases aggregating approximately 27,000 square feet of office/flex space and approximately 11,000 square feet of industrial/warehouse space in fiscal 2014.

        In fiscal 2013, Griffin entered into three new leases of industrial/warehouse space for an aggregate of approximately 259,000 square feet and several new leases of office/flex space for an aggregate of approximately 49,000 square feet. The new leasing of industrial/warehouse space reflected a five year full building lease of an approximately 228,000 square foot industrial building ("4275 Fritch Drive") in the Lehigh Valley and approximately 31,000 square feet in Griffin's NE Tradeport industrial/warehouse buildings. Also in fiscal 2013, several leases of industrial/warehouse space aggregating approximately 168,000 square feet expired and were not renewed. In fiscal 2013, two leases for office/flex space aggregating approximately 24,000 square feet expired and were not renewed or terminated early. In fiscal 2013, Griffin renewed and extended several leases aggregating approximately 116,000 square feet of industrial/warehouse space and approximately 20,000 square feet of office/flex space. Included in the fiscal 2013 lease renewals was a full building lease of approximately 100,000 square feet that was scheduled to expire in fiscal 2014 but was extended for ten years.

        Periodically, Griffin may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which does not fit into Griffin's core strategy of developing and leasing industrial and commercial properties. Such sale transactions may take place either before or after obtaining development approvals and building basic infrastructure.

        In fiscal 2015, Griffin completed one land sale for approximately $0.6 million. In fiscal 2014, Griffin also completed one land sale for approximately $0.6 million. In fiscal 2013, Griffin completed three land sales, the principal one of which was the sale of approximately 90 acres of undeveloped land in Windsor, Connecticut (the "Windsor Land Sale") for cash proceeds of approximately $9.0 million, before transaction expenses. The land sold under the Windsor Land Sale is part of an approximately 253 acre parcel of undeveloped land that had been held by Griffin for an extended time period. Under the terms of the Windsor Land Sale, Griffin and the buyer were each required to construct roadways connecting the land parcel that was sold to existing town roads. The roads constructed by the buyer and the road being constructed by Griffin will become new town roads, thereby providing access to the remaining acreage in Griffin's land parcel. As a result of Griffin's continuing involvement with the land sold, the Windsor Land Sale is being accounted for under the percentage of completion method, under which the revenue and gain on sale are recognized as the total costs related to the property sold are incurred. Griffin also closed on two smaller land sales in fiscal 2013 for aggregate net cash proceeds of approximately $0.3 million.

        The weakness in the residential real estate market has adversely affected Griffin's residential real estate development activities. The continued weakness of the residential real estate market could result in lower selling prices for Griffin's land intended for residential use or delay the sale of such land.

        Griffin's development of its land is affected by regulatory and other constraints. Subdivision and other residential development may also be affected by the potential adoption of initiatives meant to limit or concentrate residential growth. Industrial and commercial development activities on Griffin's undeveloped land may also be affected by traffic considerations, potential environmental issues, community opposition and other restrictions to development imposed by governmental agencies.

        Griffin does not maintain a corporate website. Griffin's Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and the proxy statement for Griffin's Annual Meeting of Stockholders can be accessed through the SEC website at www.sec.gov. Griffin will provide electronic or paper copies of its foregoing filings free of charge upon request. Griffin was incorporated in 1970.

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Commercial and Industrial Developments

New England Tradeport

        A significant portion of Griffin's commercial and industrial development effort has been focused on NE Tradeport, a master-planned industrial park near Bradley International Airport and Interstate 91, located in Windsor and East Granby, Connecticut. Within NE Tradeport, Griffin has built and currently owns approximately 1,466,000 square feet of warehouse/industrial space in thirteen buildings, of which approximately 90% was leased as of November 30, 2015.

        Within NE Tradeport, Griffin holds the rights to 795,000 square feet available for development under the State Traffic Certificate ("STC") which relates to four approved building sites on approximately 70 acres and an approved addition to one of Griffin's existing buildings. Griffin owns an additional 95 acres of undeveloped land within NE Tradeport, 60 acres of which are located in Windsor and the abutting 35 acres of which are located in East Granby. There are no STC or other approvals currently in place (other than zoning in the case of Windsor) for the development of this remaining land for industrial use. Griffin believes that additional infrastructure improvements, which may be significant, may be required to obtain approvals to develop portions of this land, particularly the portions in East Granby. In connection with a land sale in fiscal 2012, a sewer line was brought to an accessible point near the edge of this 95 acre combined parcel. Griffin intends to continue to direct much of its real estate efforts in Connecticut on the construction and leasing of its industrial/warehouse facilities at NE Tradeport.

        In fiscal 2015, Griffin leased approximately 172,000 square feet of previously vacant space in NE Tradeport and renewed several leases aggregating approximately 326,000 square feet. The rental rates for leases in NE Tradeport that were renewed in fiscal 2015 were, on average, approximately 8% lower than the rental rates of the expiring leases. Management believes that the rental rates on the two NE Tradeport leases aggregating approximately 62,000 square feet that are scheduled to expire in fiscal 2016 are above the market rates for similar space.

        As of November 30, 2015, approximately $60.5 million was invested (net book value) in buildings owned by Griffin that are located in NE Tradeport and approximately $4.4 million was invested (net book value) by Griffin in the undeveloped NE Tradeport land. As of November 30, 2015, ten of Griffin's NE Tradeport buildings were mortgaged for an aggregate of approximately $42.3 million. Two NE Tradeport buildings built in fiscal 2007 and an older NE Tradeport building, aggregating, for the three buildings, approximately 373,000 square feet, currently are not mortgaged. A summary of Griffin's square footage owned and leased in NE Tradeport at the end of each of the past three fiscal years and leases in NE Tradeport scheduled to expire during each of the next three fiscal years are as follows:

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Griffin Center and Griffin Center South

        Griffin's other substantial commercial development in Connecticut is the combination of its buildings in Griffin Center in Windsor and Bloomfield, Connecticut and Griffin Center South in Bloomfield. Griffin owns approximately 617,000 of the 2,165,000 square feet of developed space in these master planned developments.

Griffin Center

        Within Griffin Center, Griffin owns two multi-story office buildings that have an aggregate of approximately 161,000 square feet, a single story office building of approximately 48,000 square feet, a 165,000 square foot industrial building ("1985 Blue Hills Avenue"), which is used principally as office, data center and call center space and a small restaurant building.

        In fiscal 2015, two leases aggregating approximately 33,000 square feet in Griffin Center expired and were not renewed, and two leases aggregating approximately 25,000 square feet were renewed. The rental rates for leases in Griffin Center that were renewed in fiscal 2015 were essentially the same as the rental rates of the expiring leases. Management believes that the rental rates on the two Griffin Center leases aggregating approximately 46,000 square feet that are scheduled to expire in fiscal 2016 are slightly above the market rates for similar space.

        Currently there are approximately 207 acres of undeveloped land in Griffin Center owned by Griffin. In the fiscal 2014 third quarter, Griffin entered into an agreement to sell approximately 30 acres of an approximately 45 acre land parcel of the undeveloped land in Griffin Center for a purchase price of a minimum of $3.25 million, subject to adjustment based on the actual number of acres conveyed. Completion of this transaction is subject to significant contingencies, including the satisfactory completion of due diligence by the purchaser (a public educational authority in the state of Connecticut) and the purchaser obtaining a commitment from the State of Connecticut to fund the land acquisition and develop the property as planned by the purchaser. If this sale were to be completed, the development potential of the remaining approximately 15 acres, much of which are wetlands, of that land parcel will be severely limited. In fiscal 2015, the purchaser's due diligence period was extended through September 15, 2016. There is no guarantee that this transaction will be completed under its current terms, or at all.

        As of November 30, 2015, approximately $16.1 million was invested (net book value) in Griffin's buildings in Griffin Center and approximately $0.8 million was invested by Griffin in the undeveloped land there. Griffin's two multi-story office buildings and 1985 Blue Hills Avenue in Griffin Center are separately mortgaged for an aggregate of approximately $13.6 million, and Griffin's single story office building is included as collateral under Griffin's $12.5 million revolving line of credit. There were no borrowings under the revolving line of credit as of November 30, 2015.

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        As of November 30, 2015, approximately 324,000 square feet of Griffin's buildings in Griffin Center were leased, comprising approximately 85% of Griffin's total space in Griffin Center. A summary of Griffin's square footage owned and leased in Griffin Center at the end of each of the past three fiscal years and leases in Griffin Center scheduled to expire during each of the next three fiscal years are as follows:

Griffin Center South

        Griffin currently owns nine buildings in Griffin Center South with an aggregate of approximately 235,000 square feet, of which approximately 217,000 square feet is single story office and flex space and approximately 18,000 square feet is storage space. As of November 30, 2015, the amount of space leased in Griffin Center South was the same as it was as of November 30, 2014, as the overall effect on space under lease of a lease termination, a new lease and a tenant relocating within Griffin Center South was neutral. In fiscal 2015, Griffin also renewed three leases aggregating approximately 45,000 square feet of office/flex space in Griffin Center South. The rental rates for leases in Griffin Center South that were renewed in fiscal 2015 were essentially the same as the rental rates of the expiring leases. Management believes that the rental rates on the three Griffin Center South leases aggregating approximately 44,000 square feet that are scheduled to expire in fiscal 2016 are consistent with market rates for similar space.

        As of November 30, 2015, approximately $7.7 million was invested (net book value) in Griffin's buildings in Griffin Center South and approximately $0.7 million was invested by Griffin in the undeveloped land there. As of November 30, 2015, Griffin's nine properties in Griffin Center South are included as collateral under Griffin's $12.5 million revolving line of credit. There were no borrowings under the revolving line of credit as of November 30, 2015. Additionally, Griffin owns approximately 68 acres of undeveloped land in Griffin Center South.

        As of November 30, 2015, approximately 227,000 square feet of space in the Griffin Center South buildings owned by Griffin was leased, comprising 97% of Griffin's total space in Griffin Center South. In fiscal 2014, Griffin received notice from a tenant that has a full building lease for approximately 40,000 square feet in Griffin Center South that it was exercising its early termination option and will terminate its lease in fiscal 2016 (three years earlier than the original lease expiration date). In accordance with the lease terms, Griffin received approximately $557,000 from the tenant when the early termination notice was rendered. A summary of Griffin's square footage owned and leased in

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Griffin Center South at the end of each of the past three fiscal years and leases in Griffin Center South scheduled to expire during each of the next three fiscal years are as follows:

Lehigh Valley Industrial Properties and Other Property

Lehigh Valley

        In fiscal 2010, Griffin completed its first acquisition of property outside of the Hartford, Connecticut area, when it acquired a fully leased approximately 120,000 square foot industrial building ("871 Nestle Way") in Breinigsville, Pennsylvania, which is located in the Lehigh Valley. Subsequent to the purchase of 871 Nestle Way, Griffin and the tenant in that building agreed to a nine year extension of the lease, through 2025. Also in fiscal 2010, Griffin acquired approximately 51 acres of undeveloped land in Lower Nazareth, Pennsylvania, a major industrial area of the Lehigh Valley, which Griffin named Lehigh Valley Tradeport I. The land acquired had approvals for the development of two industrial buildings totaling approximately 530,000 square feet. In fiscal 2012, Griffin completed construction, on speculation, of 4275 Fritch Drive, an approximately 228,000 square foot industrial building, the first of two buildings built in Lehigh Valley Tradeport I. In fiscal 2013, Griffin entered into a five-year full building lease of this building. In fiscal 2014, Griffin completed construction, also on speculation, of 4270 Fritch Drive, an approximately 303,000 square foot industrial building, the second of two buildings in Lehigh Valley Tradeport I. In fiscal 2014, Griffin entered into a five year lease of approximately 201,000 square feet of 4270 Fritch Drive and the lease became effective in the fiscal 2015 second quarter upon completion of tenant improvements. Subsequent to the end of fiscal 2015, Griffin leased the remaining approximately 102,000 square feet of 4270 Fritch Drive. That new lease is expected to become effective in the fiscal 2016 second quarter.

        In fiscal 2015, Griffin built an approximately 280,000 square foot industrial/warehouse building ("5220 Jaindl Boulevard") on undeveloped land in Hanover Township of the Lehigh Valley acquired in December 2013, known as Lehigh Valley Tradeport II. 5220 Jaindl Boulevard, completed at the end of the fiscal 2015 third quarter, is the first of two industrial/warehouse buildings to be built in Lehigh Valley Tradeport II. In fiscal 2015, Griffin leased approximately 196,000 square feet of 5220 Jaindl Boulevard. The lease commenced at the beginning of the fiscal 2015 fourth quarter, and in November 2015, the tenant exercised its option to lease the balance of the building. Rental revenue for the remaining space in 5220 Jaindl Boulevard is expected to commence in fiscal 2016. Subsequent to the end of fiscal 2015, Griffin started construction of 5210 Jaindl Boulevard, an approximately 252,000 square foot industrial/warehouse building to be developed in Lehigh Valley Tradeport II. Construction of the building shell of 5210 Jaindl Boulevard is expected to be completed in the fiscal 2016 second quarter.

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        As of November 30, 2015, Griffin owned four industrial/warehouse buildings in the Lehigh Valley aggregating approximately 931,000 square feet with a fifth building under construction. Including the new lease in 4270 Fritch Drive completed subsequent to November 30, 2015, Griffin's four Lehigh Valley industrial/warehouse buildings are fully leased. Approximately $56.8 million was invested (net book value) in these buildings as of November 30, 2015. The four completed Lehigh Valley buildings are mortgaged under three separate nonrecourse mortgage loans for a total of approximately $34.6 million as of November 30, 2015. Subsequent to November 30, 2015, Griffin received additional mortgage proceeds of $2.6 million as a result of the tenant exercising its option to lease the balance of 5220 Jaindl Boulevard and additional mortgage proceeds of $1.85 million upon leasing the approximately 102,000 square feet in 4270 Fritch Drive that had been vacant.

        A summary of Griffin's square footage owned and leased in Griffin's Lehigh Valley properties at the end of each of the past three fiscal years and leases in Griffin's Lehigh Valley properties scheduled to expire during each of the next three fiscal years are as follows:

Other Property

        Griffin owns a 31,000 square foot warehouse building in Bloomfield, Connecticut on an approximately 5 acre site that is part of an approximately 253 acre land parcel known as Phoenix Crossing, located in Bloomfield and Windsor, Connecticut. In fiscal 2015, Griffin and the tenant in the warehouse building agreed to an early termination of the tenant's lease in exchange for a payment of $222,000. The building was vacant as of November 30, 2015, but subsequent to November 30, 2015, Griffin leased the entire building to a tenant that will expand and relocate from space it currently leases in one of Griffin's multi-story office buildings in Griffin Center. In fiscal 2013, Griffin sold approximately 90 acres of the Phoenix Crossing land in the Windsor Land Sale. Griffin owns the remaining approximately 159 acres of undeveloped land in Phoenix Crossing which is zoned for industrial and commercial development.

        Griffin may seek to acquire additional properties and/or undeveloped land parcels to expand the industrial/warehouse portion of its real estate business. Griffin continues to examine potential properties in the northeast and mid-Atlantic areas for potential acquisition.

Residential Developments

Simsbury

        Several years ago, Griffin filed plans for the creation of a residential community, called Meadowood, on a 363 acre site in the Town of Simsbury, Connecticut ("Simsbury"). After several years of litigation with the town regarding this proposed residential development, a settlement was reached.

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The settlement terms included, among other things, approval for up to 296 homes, certain remediation measures and offsite road improvements to be performed by Griffin and the purchase by Simsbury of a portion of the Meadowood land for open space. The sale of land to Simsbury closed in fiscal 2008. In fiscal 2012, Griffin performed a portion of the required remediation work on the site and completed the required offsite road improvements. In fiscal 2014, Griffin completed the required remediation work. As of November 30, 2015, Griffin has reclassified the costs related to the Meadowood development from real estate held for sale to real estate assets on its consolidated balance sheet because this development no longer met the criteria for real estate held for sale. As of November 30, 2015, the book value of the land for this development, including design, development and legal costs, was approximately $8.5 million. Griffin is continuing to evaluate its plans for Meadowood, including how best to position this property for sale.

        Griffin owns another approximate 432 acres of undeveloped land in Simsbury, portions of which are zoned for residential use and other portions of which are zoned for industrial use. Not all of this land is developable. The land currently zoned for industrial use is probably more suited to commercial or mixed-use development. Griffin may seek to develop or sell such land.

Suffield

        In fiscal 2006, Griffin completed the infrastructure for a fifty lot residential subdivision in Suffield, Connecticut called Stratton Farms. Griffin sold twenty-five residential lots in Stratton Farms to a local homebuilder in fiscal 2006 and fiscal 2007. In fiscal 2010, Griffin entered into an agreement with a privately owned regional homebuilder under which in exchange for a payment of $100,000, the homebuilder obtained an option to purchase the remaining twenty-five residential lots of Stratton Farms. The option agreement terminated after four lots were sold. Subsequently, Griffin sold one Stratton Farms residential lot in fiscal 2013. As of November 30, 2015, Griffin held twenty Stratton Farms residential lots. The book value for Griffin's Stratton Farms holdings was approximately $1.1 million at November 30, 2015.

Other

        In fiscal 2015, Griffin leased approximately 500 acres of undeveloped land in Connecticut and Massachusetts to local farmers. Approximately 424 acres and 512 acres were leased to local farmers in fiscal 2014 and fiscal 2013, respectively. The revenue generated from the leasing of farmland is not material to Griffin's total revenue.

        On January 25, 2016, Griffin entered into an Option Purchase Agreement (the "Option Agreement") whereby Griffin granted the buyer an exclusive three month option, in exchange for a nominal fee, to purchase approximately 280 acres of land for approximately $7.7 million. The buyer may extend the option period up to three years upon payment of additional option fees. The land subject to the Option Agreement is undeveloped and does not have any of the approvals that would be required for the buyer's planned use of the land. A closing on the land sale contemplated by the Option Agreement is subject to several significant contingencies, including the buyer securing contracts under a competitive bidding process that would require the use of the land and obtaining local and state approvals for that planned use. There is no guarantee that the sale of land as contemplated under the Option Agreement will be completed under its current terms, or at all.

        Griffin is evaluating its other properties for development or sale in the future. Griffin anticipates that obtaining subdivision approvals for residential development in many of the towns where it owns residentially-zoned land will be an extended process.

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Landscape Nursery Business

        Griffin and Imperial entered into a Purchase Agreement with Monrovia, effective January 8, 2014, pursuant to which Imperial's inventory and certain of its assets were sold to Monrovia for approximately $0.7 million in cash (before transaction and severance costs) and a non-interest bearing note receivable (the "Promissory Note") of $4.25 million. The Promissory Note was paid off on schedule, with $2.75 million received on June 1, 2014 and $1.5 million received on June 1, 2015. Pursuant to the terms of the Imperial Sale, Griffin and Imperial agreed to indemnify Monrovia for any potential environmental liabilities relating to periods prior to the effective date of the Purchase Agreement.

        Concurrently with the completion of the Imperial Sale, Imperial and River Bend Holdings, LLC, a wholly owned subsidiary of Griffin, entered into the Imperial Lease with Monrovia, pursuant to which Monrovia agreed to lease Imperial's Connecticut production nursery for a ten year period, with an option to extend for up to an additional fifteen years exercisable by Monrovia. The Imperial Lease provides for a net annual rent payable to Griffin of $500,000 for each of the first five years, with rent for subsequent years determined in accordance with the Imperial Lease. The Imperial Lease also grants Monrovia an option to purchase the land, land improvements and other operating assets that were used by Imperial in its Connecticut growing operations, during the first thirteen years of the lease period for $10.5 million, or $7.0 million if only a certain portion of the land is purchased, subject in each case to certain adjustments as provided for in the Imperial Lease.

        Imperial's Florida farm is also being leased to another private company grower of landscape nursery plants. Imperial shut down its growing operations on its Florida farm in fiscal 2009 and entered into a six year lease of that facility. The lease, with annual rent of $600,000 during its last three years, was scheduled to terminate on July 31, 2015. In June 2015, the tenant exercised its option under the lease to purchase the facility and paid a deposit of $400,000 to Griffin. However, the tenant subsequently informed Griffin that it would not close on the purchase. Griffin and the tenant then entered into a Holdover and Settlement Agreement that permitted the tenant to continue to occupy the farm through April 2016 at an agreed upon rate and Griffin to retain the deposit. Griffin expects to seek a sale or lease of the Florida farm at the conclusion of the tenant's occupancy.

Investments

Centaur Media plc

        Centaur Media plc ("Centaur Media") is a publicly traded company listed on the London Stock Exchange. As of November 30, 2015, Griffin held 1,952,462 shares of Centaur Media and accounts for its investment in Centaur Media as an available-for-sale security. Accordingly, changes in the fair value of Griffin's investment in Centaur Media, including both changes in the stock price and changes in the foreign currency exchange rate, are not included in Griffin's net income but are included in Griffin's other comprehensive income. In fiscal 2014, Griffin sold 500,000 shares of its Centaur Media common stock for total cash proceeds of approximately $566,000. Griffin did not sell any of its stock in Centaur Media in fiscal 2015.

Shemin Nurseries Holding Corp.

        Shemin Nurseries Holding Corp. ("SNHC") is a privately held company that operates a landscape nursery distribution business. At the beginning of fiscal 2013, Griffin held an approximately 14% equity interest in SNHC and accounted for its investment in SNHC under the cost method of accounting for investments. In fiscal 2013, Griffin sold its entire investment in SNHC for cash proceeds of approximately $3.4 million.

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Employees

        As of November 30, 2015, Griffin employed 34 people on a full-time basis. Presently, none of Griffin's employees are represented by a union. Griffin believes that its relations with its employees are satisfactory.

Competition

        Numerous real estate developers operate in the portions of Connecticut, Massachusetts and the Lehigh Valley region of Pennsylvania in which Griffin's real estate holdings are concentrated. Some of these competitors have greater financial resources than Griffin. Griffin's real estate business competes on the bases of location, price, availability of space, convenience and amenities.

Regulation: Environmental Matters

        Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to remediate properly such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. In connection with the ownership (direct or indirect), operation, management and development of real estate properties, Griffin may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property. The value of Griffin's land may be affected by the presence of residual chemicals from the prior use of the land for farming, principally on a portion of the land that is intended for residential use. In the event that Griffin is unable to remediate adequately any of its land intended for residential use, Griffin's ability to develop such property for its intended purposes would be materially affected.

        Griffin periodically reviews its properties for the purpose of evaluating such properties' compliance with applicable state and federal environmental laws. In connection with the Imperial Transaction, Griffin has incurred a small amount of costs to remediate a small area of the Connecticut farm that is leased to Monrovia under the Imperial Lease. As of the date of this Annual Report on Form 10-K, Griffin is in discussions with the Connecticut Department of Energy and Environmental Protection ("DEEP") regarding the recent findings of exceedances of certain residual pesticides on a limited portion of the Connecticut farm being leased to Monrovia. At this time, Griffin does not anticipate experiencing, in the next twelve months, any material expense in complying with such laws. Griffin may incur remediation costs in the future in connection with its development operations. Such costs are not expected to be significant as compared to expected proceeds from development projects or property sales.

ITEM 1A.    RISK FACTORS.

        Griffin's real estate business has a number of risk factors. The risk factors discussed below are those that management deems to be material, but they may not be the only risks facing Griffin. Additional risks not currently known or currently deemed not to be material may also impact Griffin.

Adverse Economic Conditions and Credit Markets

        Griffin's real estate business may be affected by market conditions and economic challenges experienced by the U.S. economy as a whole, conditions in the credit markets or by local economic

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conditions in the markets in which its properties are located. Such conditions may impact Griffin's results of operations, financial condition or ability to expand its operations as a result of the following:

•

The financial condition of Griffin's tenants may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;



•

A decrease in investment spending, the curtailment of expansion plans or significant job losses may decrease demand for Griffin's industrial and office space, causing market rental rates and property values to be negatively impacted;



•

Griffin's ability to borrow on terms and conditions that it finds acceptable, or at all, may be limited, which could reduce its ability to pursue acquisition and development opportunities, refinance existing debt, and/or increase future interest expense;



•

Reduced values of Griffin's properties may limit its ability to obtain debt financing collateralized by its properties or may limit the proceeds from such potential financings; and



•

A weak economy may limit sales of land intended for commercial/industrial use.

Downturn in the Residential Real Estate Market

        Weakness in the residential real estate market may adversely affect Griffin's residential real estate development activities, including delaying the development and/or sale of Griffin's undeveloped land intended for residential use. The continued weakness of the residential real estate market could result in lower selling prices for Griffin's land intended for residential use or delay the sale of such land.

Risks Associated with Concentration of Real Estate Holdings

        Griffin's real estate holdings are concentrated primarily in the Hartford, Connecticut area and the Lehigh Valley of Pennsylvania. Adverse changes in the local economies, state or local governmental regulations or real estate markets, including the market's ability to absorb newly constructed space, could impact Griffin's real estate operations, including Griffin's ability to re-tenant vacant space and have an adverse effect on rental rates.

        Griffin's real estate properties compete with other properties in the areas where it operates. The construction of new facilities by competitors would increase capacity in the marketplace, and an increase in the amount of vacancies in competitors' properties and negative absorption of space could result in Griffin experiencing longer times to lease vacant space, eroding lease rates or hindering renewals by existing tenants.

Risks Associated with Entering New Real Estate Markets

        Griffin expects to continue to seek to acquire properties either in the Lehigh Valley or other markets outside of the Hartford, Connecticut area. Operating in a real estate market that is new for Griffin creates additional risks and uncertainties to Griffin's operations.

Risks Relating to Reliance on Lease Revenues

        The substantial majority of Griffin's revenues are derived from lease revenues from real property. Griffin's revenues would be adversely affected if a significant number of Griffin's tenants were unable to meet their obligations to Griffin or if Griffin were unable to lease a significant amount of space in its properties on economically favorable lease terms. In addition, there can be no assurance that any tenant whose lease expires in the future will renew such lease or that Griffin will be able to re-lease space on economically favorable terms. Griffin's inability to re-lease space on economically favorable terms could adversely affect its financial condition and results of operations.

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Risks Associated with Nonrecourse Mortgage Loans

        Griffin has indebtedness under nonrecourse mortgage loans of approximately $90.0 million, collateralized by approximately 77% of the total square footage of its real estate properties. If a significant number of Griffin's tenants were unable to meet their obligations to Griffin or if Griffin were unable to lease a significant amount of space in its properties on economically favorable lease terms, there would be a risk that Griffin would not have sufficient cash flow from operations for payments of required principal and interest on these loans. If Griffin is unable to make such payments and were to default, the property collateralizing the mortgage loan would be foreclosed upon, and Griffin's financial condition and results of operations would be adversely affected. In addition, certain of Griffin's mortgage loans contain cross default provisions. A default under a mortgage loan that has cross default provisions may cause Griffin to automatically default on another loan.

Potential Environmental Liabilities

        Griffin has extensive land holdings in Connecticut and Massachusetts and in fiscal 2010 started acquiring properties in the Lehigh Valley of Pennsylvania. Under federal, state and local environmental laws, ordinances and regulations, Griffin may be required to investigate and clean up the effects of releases of hazardous substances or petroleum products at its properties because of its current or past ownership or operation of the real estate. If previously unidentified environmental problems arise, Griffin may have to make substantial payments, which could adversely affect its cash flow. As an owner or operator of properties, Griffin may have to pay for property damage and for investigation and clean-up costs incurred in connection with a contamination. The law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination. Changes in environmental regulations may impact the development potential of Griffin's undeveloped land or could increase operating costs due to the cost of complying with new regulations.

Governmental Regulations

        Griffin's operations are subject to governmental regulations that affect real estate development, such as local zoning ordinances. Any changes in such regulations may impact the ability of Griffin to develop its properties or increase Griffin's costs of development. Subdivision and other residential development may also be affected by the potential adoption of initiatives meant to limit or concentrate residential growth. Commercial and industrial development activities of Griffin's undeveloped land may also be affected by traffic considerations, potential environmental issues, community opposition and other restrictions to development imposed by governmental agencies.

Insurance Coverage Does Not Include All Potential Losses in the Real Estate Business

        Griffin carries comprehensive insurance coverage, including property, fire, terrorism and loss of rental revenue. The insurance coverage contains policy specifications and insured limits. However, there are certain losses that are not generally insured against or that are not fully insured against. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of Griffin's properties, Griffin could experience a significant loss of capital invested and potential revenue from the properties affected.

Risks Associated with the Cost of Raw Materials and Energy Costs

        Griffin's construction activities could be adversely affected by increases in raw materials or energy costs. As petroleum and other energy costs increase, products used in the construction of Griffin's facilities, such as steel, masonry, asphalt, cement and building products may increase. An increase in the cost of building new facilities could negatively impact Griffin's future operating results through increased depreciation expense. An increase in construction costs would also require increased

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investment in Griffin's real estate assets, which may lower the return on investment in new facilities. An increase in energy costs could increase Griffin's building operating expenses and thereby lower Griffin's operating results.

Investment in a Foreign Company

        Griffin has an investment in Centaur Media plc, a public company based in the United Kingdom. The ultimate liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign currency exchange rates.

Griffin is Subject to Litigation That May Adversely Impact Operating Results

        Griffin is, and may in the future be, a party to a number of legal proceedings and claims arising in the ordinary course of business which could become significant. Given the inherent uncertainty of litigation, Griffin can offer no assurance that a future adverse development related to existing litigation or any future litigation will not have a material adverse impact on its business, consolidated financial position, results of operations or cash flows.

The Concentrated Ownership of Griffin Common Stock by Members of the Cullman and Ernst Families

        Members of the Cullman and Ernst families (the "Cullman and Ernst Group"), which include Frederick M. Danziger, Griffin's Executive Chairman, Michael S. Gamzon, a director and Griffin's President and Chief Executive Officer and Edgar M. Cullman, Jr., a director of Griffin, members of their families and trusts for their benefit, partnerships in which they own substantial interests and charitable foundations on whose boards of directors they sit, owned, directly or indirectly, approximately 45.7% of the outstanding common stock of Griffin as of November 30, 2015. There is an informal understanding that the persons and entities included in the Cullman and Ernst Group will vote together the shares owned by each of them. As a result, the Cullman and Ernst Group may effectively control the determination of Griffin's corporate and management policies and may limit other Griffin stockholders' ability to influence Griffin's corporate and management policies.

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

        Not applicable.

ITEM 2.    PROPERTIES.

Land Holdings

        Griffin is a major landholder in the state of Connecticut, owning approximately 2,950 acres. Griffin also owns approximately 422 acres of land in Massachusetts, approximately 117 acres of land in Pennsylvania and approximately 1,066 acres in northern Florida. Griffin believes the fair market value of such land is substantially in excess of its book value.

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        Listings of the locations of Griffin's land holdings, a portion of which, principally in Bloomfield, East Granby and Windsor, Connecticut and Breinigsville, Lower Nazareth Township and Hanover Township, Pennsylvania have been developed, are as follows:

Land Holdings

Developed Properties

        As of November 30, 2015, Griffin owned thirty-two buildings, comprised of twenty industrial/warehouse buildings, eleven office/flex buildings and a small restaurant building. A listing of those facilities is as follows:

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        Griffin leases approximately 2,300 square feet in New York City for its executive offices.

        As with many companies engaged in real estate investment and development, Griffin holds its real estate portfolio subject to mortgage debt. See Note 6 to Griffin's consolidated financial statements for information concerning the mortgage debt associated with Griffin's properties.

ITEM 3.    LEGAL PROCEEDINGS.

        Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters is not expected to be material to Griffin's financial position, results of operations or cash flows.

ITEM 4.    MINE SAFETY DISCLOSURES.

        Not applicable.

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PART II

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

        The following are the high and low prices of common shares of Griffin Industrial Realty, Inc. as traded on The NASDAQ Stock Market LLC:

        On February 5, 2016, the number of record holders of common stock of Griffin was approximately 190 which does not include beneficial owners whose shares are held of record in the names of brokers or nominees. The closing market price as quoted on The NASDAQ Stock Market LLC on such date was $23.96 per share.

Dividend Policy

        Griffin's dividend policy is to consider the payment of an annual dividend at the end of its fiscal year, which enables the Board of Directors to evaluate both Griffin's prior full year results and its cash needs for the succeeding year when determining whether to declare an annual dividend. In fiscal 2015, Griffin declared an annual dividend of $0.30 per share. In fiscal 2014, Griffin declared an annual dividend of $0.20 per share.

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Stock Performance Graph

        The following graph compares the total percentage changes in the cumulative total stockholder return (assuming the reinvestment of dividends) on Griffin's common stock with the cumulative total return of the Russell 2000 Index and the Russell Microcap Index from November 27, 2010 to November 30, 2015. It is assumed in the graph that the value of each investment was $100 at November 27, 2010. Griffin has selected an index of companies with a similar market capitalization because, for the period from November 27, 2010 to January 8, 2014, when Griffin sold its landscape nursery business, Griffin is not aware of any other company that substantially participated in both the landscape nursery and real estate businesses, and would therefore be suitable for comparison to Griffin as a "peer issuer" within Griffin's lines of business. In addition, following the sale of the landscape nursery business, Griffin has not been able to identify issuers in the real estate business that are comparable peers, as most of those companies are significantly larger in size or have real estate holdings that either differ geographically or by type of property from Griffin's holdings. Accordingly, Griffin selected an index of companies with a similar market capitalization.

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ITEM 6.    SELECTED FINANCIAL DATA.

        The following table sets forth selected statement of operations data for fiscal years 2011 through 2015 and balance sheet data as of the end of each fiscal year. The selected statement of operations data for fiscal 2013, fiscal 2014 and fiscal 2015 and the selected balance sheet data for fiscal 2014 and fiscal 2015 are derived from the audited consolidated financial statements included in Item 8 of this Annual Report. The selected statement of operations data for fiscal 2011 and fiscal 2012 and the balance sheet data for fiscal 2011, fiscal 2012 and fiscal 2013 were derived from the audited consolidated financial statements for those years. This selected financial data should be read in conjunction with the consolidated financial statements and accompanying notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information included elsewhere in this Annual Report. Historical results are not necessarily indicative of future performance.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

        On May 13, 2015, Griffin Land & Nurseries, Inc. changed its name to Griffin Industrial Realty, Inc. ("Griffin") to reflect better Griffin's ongoing real estate business that is principally engaged in developing, managing and leasing industrial and, to a lesser extent, commercial properties. Griffin's consolidated financial statements reflect its real estate business after Griffin sold the growing operations of Imperial Nurseries, Inc. ("Imperial"), its landscape nursery business, in fiscal 2014. Imperial's growing operations are reflected as a discontinued operation in Griffin's consolidated financial statements for fiscal 2014 and fiscal 2013 as a result of the sale (the "Imperial Sale") of Imperial's growing operations to Monrovia Connecticut, LLC ("Monrovia") and the lease of Imperial's Connecticut farm to Monrovia (the "Imperial Lease," and together with the Imperial Sale, the "Imperial Transaction") that became effective January 8, 2014.

        The notes to Griffin's consolidated financial statements included in Item 8 of this Annual Report contain a summary of the significant accounting policies and methods used in the preparation of Griffin's consolidated financial statements. In the opinion of management, because of the relative magnitude of Griffin's real estate assets, accounting methods and estimates related to those assets are critical to the preparation of Griffin's consolidated financial statements. Griffin uses accounting policies and methods under accounting principles generally accepted in the United States of America ("U.S. GAAP"). The following are the critical accounting estimates and methods used by Griffin:

        Income taxes: In accounting for income taxes under Financial Accounting Standards Board ("FASB") ASC 740, "Income Taxes," management estimates future taxable income from operations, the sale of appreciated assets, the remaining years before the expiration of loss credit carryforwards, future reversals of existing temporary differences and tax planning strategies in determining if it is more likely than not that Griffin will realize the benefits of its deferred tax assets.

        Impairment of long-lived assets: Griffin reviews annually, as well as when conditions may indicate, its long-lived assets to determine if there are any indications of impairment, such as a prolonged vacancy in one of Griffin's rental properties. If indications of impairment are present, Griffin evaluates the carrying value of the assets in relation to undiscounted cash flows or the estimated fair value of the underlying assets. Development costs that have been capitalized are reviewed periodically for future recoverability.

        Revenue and gain recognition: Revenue includes rental revenue from Griffin's industrial and commercial properties and proceeds from property sales. Rental revenue is accounted for on a straight-line basis over the applicable lease term in accordance with the FASB ASC 840, "Leases." Gains on property sales are recognized in accordance with the FASB ASC 360-20 "Property, Plant and Equipment-Real Estate Sales" based on the specific terms of each sale. When the percentage of completion method is used to account for a sale of real estate, costs included in determining the percentage of completion include the costs of the land sold, allocated master planning costs, selling and transaction costs and estimated future costs related to the land sold.

        Stock based compensation: Griffin determines stock based compensation based on the estimated fair values of stock options as determined on their grant dates using the Black-Scholes option-pricing model. In determining the estimated fair values of stock options issued, Griffin makes assumptions on expected volatility, risk free interest rates, expected option terms and dividend yields.

        Derivative instruments: Griffin evaluates each interest rate swap agreement to determine if it qualifies as an effective cash flow hedge. Changes in the fair value of each interest rate swap

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agreement that management determines to be an effective cash flow hedge are recorded as a component of other comprehensive income. The fair value of each interest rate swap agreement is determined based on observable market participant data, such as yield curves, as of the fair value measurement date.

Summary

        In the fiscal year ended November 30, 2015 ("fiscal 2015"), Griffin had net income of approximately $0.4 million as compared to a net loss of approximately $1.1 million in the fiscal year ended November 30, 2014 ("fiscal 2014"). The net income in fiscal 2015 as compared to the net loss incurred in fiscal 2014 principally reflects an increase of approximately $2.5 million in operating income in fiscal 2015 as compared to fiscal 2014, partially offset by: (a) a gain of approximately $0.3 million in fiscal 2014 on the sale of common stock in Centaur Media plc ("Centaur Media"); (b) a decrease of approximately $0.1 million in investment income; (c) an increase of approximately $0.2 million in interest expense; (d) an increase of approximately $0.3 million in the income tax provision; and (e) a gain of approximately $0.1 million from discontinued operations in fiscal 2014. The increase in operating income in fiscal 2015 as compared to fiscal 2014 principally reflects an increase in profit from rental properties (rental revenue less operating expenses of rental properties) from approximately $12.8 million in fiscal 2014 to approximately $16.2 million in fiscal 2015, partially offset by an increase of approximately $1.0 million in depreciation and amortization expense. Gain on property sales (revenue from property sales less costs related to property sales) of approximately $2.9 million in fiscal 2015 was essentially unchanged from fiscal 2014 and general and administrative expenses were approximately $7.1 million in both fiscal 2015 and fiscal 2014.

        Griffin's income from discontinued operations, net of tax, in fiscal 2014 reflects the results of the growing operations of Imperial's landscape nursery business through the date they were sold and the loss on sale.

Results of Operations

Fiscal 2015 Compared to Fiscal 2014

        Total revenue increased from approximately $24.2 million in fiscal 2014 to approximately $28.1 million in fiscal 2015, reflecting an increase of approximately $4.1 million in rental revenue, partially offset by a decrease of approximately $0.2 million in revenue from property sales. Rental revenue increased from approximately $20.5 million in fiscal 2014 to approximately $24.6 million in fiscal 2015 principally due to an increase in spaced leased in Griffin's buildings. The increase in rental revenue principally reflects: (a) an increase of approximately $2.9 million of rental revenue from leasing previously vacant space; (b) approximately $1.4 million of rental revenue from leasing space in two new Lehigh Valley buildings that were placed in service in fiscal 2014 and fiscal 2015; (c) an increase of approximately $0.4 million of rental revenue in connection with agreements to terminate leases before their scheduled termination dates; and (d) an increase in rental revenue of approximately $0.3 million from all other leases; partially offset by (e) a decrease of approximately $0.9 million of rental revenue from leases that expired and were not renewed.

        A summary of the square footage of the buildings in Griffin's real estate portfolio is as follows:

        The increase in total square footage as of November 30, 2015 as compared to November 30, 2014 reflects an approximately 280,000 square foot industrial building ("5220 Jaindl Boulevard") completed

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and placed in service at the end of the fiscal 2015 third quarter. 5220 Jaindl Boulevard, located in the Lehigh Valley of Pennsylvania, is the first of two industrial buildings being developed on an approximately 50 acre parcel of undeveloped land, known as Lehigh Valley Tradeport II, acquired mostly in fiscal 2013.

        The net increase of approximately 389,000 square feet in space leased as of November 30, 2015 as compared to November 30, 2014 reflects leasing the entire approximately 280,000 square feet of 5220 Jaindl Boulevard and several new leases in other buildings aggregating approximately 191,000 square feet of previously vacant space, partially offset by several leases aggregating approximately 52,000 square feet that expired and were not renewed and a lease of approximately 31,000 square feet that was terminated prior to its scheduled expiration date for which Griffin received a payment of approximately $0.2 million. The leasing of 5220 Jaindl Boulevard reflects a five year lease for approximately 196,000 square feet that became effective at the start of the fiscal 2015 fourth quarter. In November 2015, the tenant in 5220 Jaindl Boulevard exercised its option to lease the balance of the building. Rental revenue on the additional space will commence in fiscal 2016. Most of the approximately 191,000 square feet of previously vacant space that was leased in fiscal 2015 was industrial/warehouse space in New England Tradeport ("NE Tradeport"), Griffin's industrial park in Windsor and East Granby, Connecticut. In fiscal 2015, Griffin also extended several leases aggregating approximately 397,000 square feet that included approximately 326,000 square feet of industrial/warehouse space in NE Tradeport and approximately 71,000 square feet of office/flex space in Griffin Center and Griffin Center South. Subsequent to November 30, 2015, Griffin leased approximately 102,000 square feet in 4270 Fritch Drive ("4270 Fritch Drive"). Had that lease been completed as of November 30, 2015, the percentage square footage leased in Griffin's buildings as of that date would have been 92%.

        Activity by prospective tenants where Griffin's Connecticut properties are located (the north submarket of Hartford) was muted in fiscal 2014; however, there was an increase in inquiries from prospective tenants, mostly for industrial/warehouse space, in the latter part of fiscal 2014 that continued through fiscal 2015. Leasing activity in the Lehigh Valley in fiscal 2015 has been somewhat slower than the previous year; however, the reported overall vacancy rate there continued to remain low in fiscal 2015. There is no guarantee that an increase in inquiries by prospective tenants or an active real estate market will result in leasing space that was vacant as of November 30, 2015.

        Revenue from property sales decreased from approximately $3.7 million in fiscal 2014 to approximately $3.5 million in fiscal 2015. Revenue from property sales in fiscal 2015 reflects: (a) the recognition of approximately $2.5 million of revenue from the sale of approximately 90 acres of undeveloped land in Windsor, Connecticut (the "Windsor Land Sale") that closed in fiscal 2013; (b) approximately $0.6 million from the sale of land that had been part of the Connecticut farm used by Imperial but not part of the long-term lease to Monrovia; and (c) $0.4 million from the retention of a deposit related to the sale of the Florida Farm, which did not close (see below). Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in Griffin's real estate business.

        Under the terms of the Windsor Land Sale, Griffin is required to construct roadways that will connect the land sold to existing town roadways. Accordingly, because of Griffin's continuing involvement with the land that was sold, the Windsor Land Sale is being accounted for under the percentage of completion method. Through November 30, 2015, Griffin has recognized approximately $8.3 million of revenue from the Windsor Land Sale. The balance of the revenue from the Windsor Land Sale, approximately $0.7 million, will be recognized as the remaining costs of the required roadway construction are incurred, which is expected to be in fiscal 2016.

        In the fiscal 2015 third quarter, Griffin received a deposit of $0.4 million from the tenant that leases Imperial's production nursery in Quincy, Florida (the "Florida Farm") in connection with the

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tenant giving notice to Griffin that it was exercising its option under the lease to purchase the Florida Farm. The tenant subsequently notified Griffin that it would not close on the purchase of the Florida Farm. Griffin retained the deposit and entered into an agreement that permits the tenant to continue to lease the Florida Farm at an agreed upon rental rate through April 30, 2016.

        Operating expenses of rental properties increased from approximately $7.8 million in fiscal 2014 to approximately $8.4 million in fiscal 2015. The increase in operating expenses of rental properties of approximately $0.6 million was due to a full year of operating expenses of 4270 Fritch Drive in fiscal 2015 as compared to a partial year of such expenses in fiscal 2014, as that building was placed in service in the fiscal 2014 third quarter, and operating expenses of 5220 Jaindl Boulevard, which was placed in service at the end of the fiscal 2015 third quarter. Operating expenses of all other rental properties were essentially unchanged in fiscal 2015 as compared to fiscal 2014.

        Depreciation and amortization expense increased from approximately $6.7 million in fiscal 2014 to approximately $7.7 million in fiscal 2015. The increase of approximately $1.0 million in depreciation and amortization expense in fiscal 2015 as compared to fiscal 2014 reflects approximately $0.4 million related to 4270 Fritch Drive, approximately $0.2 million related to 5220 Jaindl Boulevard and an increase of approximately $0.3 million related to building improvements and tenant improvements in Griffin's other properties.

        Griffin's general and administrative expenses were essentially unchanged at approximately $7.1 million in both fiscal 2015 and fiscal 2014. Increases of approximately $0.3 million of incentive compensation expense and approximately $0.2 million in expenses in real estate taxes and other expenses related to Griffin's undeveloped land, which are included in general and administrative expenses, were essentially offset by decreases of approximately $0.2 million in expenses related to Griffin's non-qualified deferred compensation plan, approximately $0.2 million in audit fee expenses and approximately $0.1 million in all other general and administrative expenses. The lower expense related to Griffin's non-qualified deferred compensation plan reflects the effect on participant balances of the lower stock market performance in fiscal 2015 as compared to fiscal 2014.

        Griffin's interest expense increased from approximately $3.5 million in fiscal 2014 to approximately $3.7 million in fiscal 2015. An increase in interest expense of approximately $0.5 million as a result of new mortgage loans in fiscal 2015 (see Liquidity and Capital Resources) was partially offset by decreases in interest expense of approximately $0.2 million due to a higher amount of interest capitalized in fiscal 2015 as compared to fiscal 2014 and approximately $0.1 million from refinancing a mortgage loan on three NE Tradeport buildings at a lower interest rate in fiscal 2015. The increase in the amount of interest capitalized in fiscal 2015 as compared to fiscal 2014 principally reflects an increase in construction activities in fiscal 2015 as compared to fiscal 2014, including the construction of 5220 Jaindl Boulevard, which was completed and placed in service at the end of the fiscal 2015 third quarter.

        Investment income decreased from approximately $0.3 million in fiscal 2014 to approximately $0.2 million in fiscal 2015. The decrease of approximately $0.1 million principally reflects lower interest income from the amortization of the discount on the note receivable from Monrovia related to the Imperial Sale that closed in January 2014. The note receivable from Monrovia was fully paid on June 1, 2015.

        In fiscal 2014, Griffin reported an approximately $0.3 million gain from the sale of 500,000 shares of its common stock in Centaur Media for cash proceeds of approximately $0.6 million. Griffin holds 1,952,462 shares of Centaur Media common stock and has not sold any Centaur Media common stock subsequent to the end of fiscal 2014. Management expects that it will continue to sell its Centaur Media common stock when it believes that sales terms are favorable. Also in fiscal 2014, Griffin incurred a loss on debt extinguishment of approximately $0.1 million related to the refinancing of two mortgage loans.

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        Griffin's effective income tax rate was 47.2% in fiscal 2015 as compared to 8.3% in fiscal 2014. The fiscal 2015 effective income tax rate reflects the federal statutory rate of 35% and state income taxes, including adjustments to the expected realization rate that certain state tax benefits will provide to Griffin in future years. To the extent that actual results differ from current projections, the projected realization rate would be different than the rate presently being used. In fiscal 2014 there was an income tax provision as compared to a pretax loss because the effect of reductions to certain state income tax benefits exceeded the federal income tax benefit, resulting in an overall income tax provision. The reductions to certain state income tax benefits were based on management's projections of the expected realization rate that those state tax benefits will provide to Griffin.

        Income from discontinued operations of approximately $0.1 million, net of tax, in fiscal 2014 reflects approximately $0.3 million, net of tax, for the effect of the termination of Griffin's postretirement benefits program and reclassification of actuarial gains previously reflected in other comprehensive income into net income, partially offset by approximately $0.2 million, net of tax, for the loss from the growing operations of the landscape nursery business through the date of the Imperial Sale. As substantially all of the former participants in Griffin's postretirement benefits program had been employed in the growing operations of the landscape nursery business that was reported as a discontinued operation, the reclassification of the actuarial gains is mostly included in the results of discontinued operations in fiscal 2014.

Fiscal 2014 Compared to Fiscal 2013

        Total revenue decreased from approximately $25.5 million in the fiscal year ended November 30, 2013 ("fiscal 2013") to approximately $24.2 million in fiscal 2014, reflecting a decrease of approximately $1.8 million in revenue from property sales, partially offset by an increase of approximately $0.5 million in rental revenue in fiscal 2014 as compared to fiscal 2013.

        The net increase of approximately $0.5 million in rental revenue in fiscal 2014 as compared to fiscal 2013 reflects occupancy changes that resulted in: (a) an increase of approximately $1.8 million of rental revenue from leasing previously vacant space; (b) approximately $0.5 million in revenue from the Imperial Lease; and (c) an increase of approximately $0.1 million in revenue from work done for tenants; partially offset by (d) a decrease in rental revenue of approximately $1.9 million from leases that expired and were not renewed. The increase in rental revenue due to leasing previously vacant space includes an increase in rental revenue of approximately $0.9 million from the full building lease of the 228,000 square foot industrial building in the Lehigh Valley of Pennsylvania that was completed in fiscal 2012 and leased in fiscal 2013.

        A summary of the square footage of Griffin's real estate portfolio is as follows:

        The increase in total square footage as of November 30, 2014 as compared to November 30, 2013 reflects the completion in fiscal 2014 of 4270 Fritch Drive, an approximately 303,000 square foot industrial/warehouse building in the Lehigh Valley of Pennsylvania that was built on speculation. This building is located adjacent to the 228,000 square foot building built in fiscal 2012 ("4275 Fritch Drive") and fully leased in fiscal 2013. These two industrial buildings comprise Lehigh Valley Tradeport I, which was developed on land acquired in fiscal 2010. In the fiscal 2014 fourth quarter, Griffin entered into a five year lease for approximately 201,000 square feet of 4270 Fritch Drive and subsequent to November 30, 2015 leased the balance of that building.

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        The increase in leased square footage as of November 30, 2014 as compared to November 30, 2013 principally reflects the leasing of approximately 201,000 square feet described above and a full building lease of an approximately 138,000 square foot building within NE Tradeport with a tenant that is leasing an approximately 57,000 square foot NE Tradeport industrial building under a short-term lease after its long-term lease in that building expired on August 31, 2014. In addition, the increase in space leased also reflects an increase of approximately 47,000 square feet leased to Tire Rack, Inc. ("Tire Rack") in a NE Tradeport industrial building. Under the terms of the existing lease with Tire Rack, effective August 1, 2014, Tire Rack was required to lease the entire building in which it is located. The balance in the change in leased square footage as of November 30, 2014 as compared November 30, 2013 reflects leasing approximately 31,000 square feet of previously vacant industrial/warehouse space and the expiration of leases aggregating approximately 43,000 square feet that were not renewed.

        Revenue from property sales decreased from approximately $5.5 million in fiscal 2013 to approximately $3.7 million in fiscal 2014. Property sales revenue in fiscal 2014 includes the recognition of approximately $3.1 million of revenue related to the Windsor Land Sale. Through fiscal 2014, Griffin had recognized approximately $5.8 million of the approximately $9.0 million of total revenue that will be recognized on the Windsor Land Sale when all of the required road work is completed. In addition to the revenue recognized from the Windsor Land Sale, property sales revenue in fiscal 2014 also included approximately $0.6 million from the sale of a land parcel that was once part of Imperial's growing operations in Connecticut but was not part of the Imperial Lease.

        Revenue from property sales in fiscal 2013 included: (a) approximately $2.7 million from the initial recognition of revenue from the Windsor Land Sale; (b) approximately $2.5 million from the recognition of revenue from the sale of approximately 93 acres of undeveloped land in NE Tradeport to Dollar Tree Distribution, Inc. (the "Dollar Tree Sale") that closed in fiscal 2012; and (c) approximately $0.3 million from two sales of small parcels of undeveloped land. Under the terms of the Dollar Tree Sale, Griffin was required to construct a sewer line to service the property sold. Accordingly, because of Griffin's continuing involvement with the land that was sold, Griffin accounted for the Dollar Tree Sale using the percentage of completion method. All of the revenue from the Dollar Tree Sale was recognized as of the end of fiscal 2013 as the required construction of the sewer line was completed. Property sales occur periodically, and changes in revenue from year to year from those transactions may not be indicative of any trends in Griffin's real estate business.

        Operating expenses of rental properties increased from approximately $7.5 million in fiscal 2013 to approximately $7.8 million in fiscal 2014. The net increase of approximately $0.3 million principally reflects an increase of approximately $0.2 million in property maintenance expenses, principally snow removal, and increases in real estate taxes and utility expenses aggregating approximately $0.2 million in fiscal 2014 as compared to fiscal 2013, partially offset by a net decrease of approximately $0.1 million in all other expenses. The increase in snow removal expenses reflected more severe winter weather in fiscal 2014 as compared to fiscal 2013. The increase in real estate taxes principally reflects real estate taxes being fully assessed on 4275 Fritch Drive.

        Depreciation and amortization expense was approximately $6.7 million in both fiscal 2013 and fiscal 2014. Depreciation and amortization expense increased by approximately $0.2 million in fiscal 2014 as compared to fiscal 2013 due to tenant improvements related to the full building lease of 4275 Fritch Drive that commenced in fiscal 2013 and approximately $0.2 million related to 4270 Fritch Drive, which was completed and placed in service in fiscal 2014. These increases were essentially offset by decreases in depreciation and amortization expense on tenant improvements of approximately $0.3 million related to leases that expired and approximately $0.1 million of real estate assets becoming fully depreciated.

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        Griffin's general and administrative expenses decreased from approximately $7.8 million in fiscal 2013 to approximately $7.1 million in fiscal 2014. The lower general and administrative expenses in fiscal 2014 as compared to fiscal 2013 principally reflect a decrease of approximately $0.5 million of expenses related to Griffin's non-qualified deferred compensation plan and a decrease in donation and contributions expense of approximately $0.2 million, partially offset by a net increase of approximately $0.1 million in all other general and administrative expenses. The decrease in expenses of the non-qualified deferred compensation plan reflects the effect on participant balances of generally lower stock market performance during fiscal 2014 as compared to fiscal 2013.

        Griffin's total gain from the sale of investments decreased from approximately $4.5 million in fiscal 2013 to approximately $0.3 million in fiscal 2014. In fiscal 2013, the gain reflected the sale of Griffin's investment in Shemin Nurseries Holding Corp. ("SNHC") and the sale of a portion of Griffin's holdings in Centaur Media. In fiscal 2013, Griffin completed the sale of its investment in SNHC and received cash proceeds of approximately $3.4 million. Because of the low carrying cost of its investment in SNHC, Griffin's gain on sale was also approximately $3.4 million. Also in fiscal 2013, Griffin sold 2,824,688 shares of its common stock of Centaur Media for cash proceeds of approximately $2.5 million and a gain of approximately $1.1 million. In fiscal 2014, Griffin's approximately $0.3 million gain from the sale of investments reflected the sale of 500,000 shares of its common stock in Centaur Media for cash proceeds of approximately $0.6 million.

        Griffin's interest expense decreased from approximately $3.8 million in fiscal 2013 to approximately $3.5 million in fiscal 2014. The decrease of approximately $0.3 million in fiscal 2014 as compared to fiscal 2013 is principally due to: (a) approximately $0.6 million of interest that was capitalized in fiscal 2014 as compared to approximately $0.1 million of interest that was capitalized in fiscal 2013; and (b) a decrease of approximately $0.1 million of interest expense on mortgage loans outstanding in both years, due to the payment of principal; partially offset by (c) an increase of approximately $0.3 million of interest expense related to a full year's interest in fiscal 2014 from a nonrecourse mortgage loan on 4275 Fritch Drive that was outstanding for only one quarter in fiscal 2013.

        Griffin's loss on debt extinguishment decreased from approximately $0.3 million in fiscal 2013 to approximately $0.1 million in fiscal 2014. In fiscal 2013, Griffin incurred a loss on debt extinguishment related to a loan modification agreement on a mortgage loan with First Niagara Bank ("First Niagara") due in January 2020 (the "2020 First Niagara Mortgage"). On April 1, 2013, Griffin and First Niagara entered into an agreement that reduced the interest rate on the 2020 First Niagara Mortgage from a fixed rate of 5.25% to a variable rate of the one month LIBOR rate plus 2.5%. Because the difference between the present value of future payments under the existing loan was greater than 10% of the present value of the payments under the modified loan, the loan modification was accounted for as a debt extinguishment. As such, all deferred costs related to the existing 2020 First Niagara Mortgage (approximately $0.2 million) and the fee paid to First Niagara for the loan modification (approximately $0.1 million) are reflected as a loss on debt extinguishment. Concurrent with that agreement, Griffin also entered into an interest rate swap agreement with First Niagara to effectively fix the interest rate on the 2020 First Niagara Mortgage at 3.91% for the remainder of the loan term.

        The loss on debt extinguishment in fiscal 2014 was related to the refinancing of two nonrecourse mortgage loans by two of Griffin's subsidiaries with Farm Bureau Life Insurance Company ("Farm Bureau"). The mortgage loans that were refinanced had original maturity dates of April 1, 2016 and October 2, 2017 and interest rates of 8.13% and 7.0%, respectively. The refinancings generated additional mortgage proceeds, reduced the interest rates to 5.09% for both mortgage loans and extended the maturities of both mortgage loans for fifteen years from the date of the refinancing. The two loan refinancings with Farm Bureau were also accounted for as debt extinguishments and new financings. As such, all of the deferred costs related to the existing mortgage loans with Farm Bureau were reflected as a loss on debt extinguishment in Griffin's fiscal 2014 consolidated statement of operations.

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        Griffin's effective tax rate was 8.3% in fiscal 2014 as compared to 34.2% in fiscal 2013. The lower effective tax rate in fiscal 2014 as compared to fiscal 2013 principally reflects the effect in fiscal 2014 of reductions to certain state income tax benefits based on management's projections of the expected realization rate that those state tax benefits will provide to Griffin. As a result of such adjustments, the amount of the state income tax provision exceeded the federal income tax benefit, resulting in an overall income tax provision for fiscal 2014.

        Income from discontinued operations, net of tax, of approximately $0.1 million in fiscal 2014 principally reflects the effect of the termination of Griffin's postretirement benefits program and reclassification of actuarial gains previously reflected in other comprehensive income into net income, partially offset by the loss from the growing operations of the landscape nursery business through the date of the Imperial Sale and the loss on the Imperial Sale. As substantially all of the former participants in Griffin's postretirement benefits program were previously employed in the growing operations of the landscape nursery business that is now reported as a discontinued operation, most of the amount of the reclassification of the actuarial gains is included in the results of discontinued operations in fiscal 2014. The loss from discontinued operations, net of tax, of approximately $7.7 million in fiscal 2013 principally reflects the loss from the growing operations of the landscape nursery business in fiscal 2013, including a pretax charge of $10.4 million to reduce inventory that was sold in the Imperial Sale to fair value, which was the net realizable value based on the terms of the Imperial Sale.

Off Balance Sheet Arrangements

        Griffin does not have any off balance sheet arrangements.

Liquidity and Capital Resources

        Net cash provided by operating activities increased from approximately $5.4 million in fiscal 2014 to approximately $13.0 million in fiscal 2015. The approximately $7.6 million increase in net cash provided by operating activities in fiscal 2015 as compared to fiscal 2014 principally reflects: (a) an increase of approximately $4.6 million of cash generated from changes in assets and liabilities in fiscal 2015 as compared to fiscal 2014; and (b) an increase of approximately $3.0 million in cash generated from continuing operations, including adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities of continuing operations.

        The increase in cash from changes in assets and liabilities in fiscal 2015 as compared to fiscal 2014 principally reflects: (a) approximately $4.9 million of cash from a change in deferred revenue in fiscal 2015 as compared to approximately $3.0 million of cash in fiscal 2014; (b) an approximately $1.1 million increase in cash from a change in other assets in fiscal 2015 as compared to an approximately $0.6 million decrease in cash in fiscal 2014; and (c) an increase in cash of approximately $0.5 million from a change in accounts payable and accrued liabilities in fiscal 2015 as compared to a decrease in cash of approximately $0.3 million from a change in accounts payable and accrued liabilities in fiscal 2014. The change in deferred revenue in fiscal 2015 includes approximately $6.4 million of cash received from the tenant in 758 Rainbow Road, for tenant improvements, that is being recognized as additional rental revenue over the lease term, offset principally by the reduction of deferred revenue from the recognition of approximately $2.5 million of revenue from the Windsor Land Sale. The increase in cash from the change in other assets in fiscal 2015 principally reflects approximately $0.9 million from a reduction in lease receivables and approximately $0.4 million from a reduction in escrows related to Griffin's mortgage loans.

        Net cash provided by operating activities was approximately $5.4 million in fiscal 2014 as compared to net cash provided by operating activities of approximately $0.7 million in fiscal 2013. Net cash provided by operating activities of continuing operations was approximately $5.3 million in fiscal 2014,

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as compared to approximately $2.5 million in fiscal 2013. The increase in net cash provided by operating activities of continuing operations in fiscal 2014 as compared to fiscal 2013 principally reflected an increase of approximately $3.2 million in deferred revenue in fiscal 2014 as compared to fiscal 2013, including cash of approximately $2.4 million received in fiscal 2014 from the tenant in 758 Rainbow Road, for tenant improvements, that is being recognized as additional rental revenue over the lease term. The cash received was used for Griffin's investment in tenant improvements in 758 Rainbow Road that are included in additions to Griffin's real estate assets (see below). In addition, the increase in cash provided by operating activities of continuing operations in fiscal 2014 as compared to fiscal 2013 reflects higher income from continuing operations, including adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities of continuing operations.

        Net cash used in investing activities was approximately $29.7 million in fiscal 2015 as compared to approximately $3.9 million in fiscal 2014 and approximately $2.4 million in fiscal 2013. The net cash used in investing activities in fiscal 2015 reflects cash payments of approximately $31.2 million for additions to real estate assets and approximately $1.0 million for deferred leasing costs and other uses, partially offset by $1.5 million of cash received from the second and final payment under the note receivable from Monrovia and approximately $1.0 million of cash proceeds from property sales.

        Cash payments for additions to real estate assets in fiscal 2015 reflect the following:

        Fiscal 2015 cash payments for new building construction, including site work, principally reflect the construction, on speculation, of 5220 Jaindl Boulevard in Lehigh Valley Tradeport II and the site work for 5210 Jaindl Boulevard, an approximately 252,000 square foot industrial/warehouse building that will be the second of two buildings that comprise Lehigh Valley Tradeport II. In the fiscal 2015 fourth quarter, Griffin started construction of 5210 Jaindl Boulevard and expects to complete the building shell in the fiscal 2016 second quarter. Griffin expects to make cash payments of approximately $8.4 million in fiscal 2016 for the site work and building shell of 5210 Jaindl Boulevard.

        The cash payments for tenant and building improvements related to leasing include approximately $7.8 million for improvements in connection with the ten year full building lease of 758 Rainbow Road in NE Tradeport and approximately $2.9 million of improvements at 5220 Jaindl Boulevard, as the tenant took occupancy of 196,000 square feet in that new building at the beginning of the fiscal 2015 fourth quarter. The cash payments for development costs and infrastructure improvements primarily reflected ongoing road construction and other offsite improvements required under the terms of the Windsor Land Sale.

        Proceeds from property sales in fiscal 2015 reflect approximately $0.6 million from the sale of land that had been part of the Connecticut farm used by Imperial but not part of the long-term lease to Monrovia and approximately $0.4 million from the deposit retained on the sale of the Florida Farm that did not close.

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        The net cash used in investing activities of approximately $3.9 million in fiscal 2014 reflects cash payments of approximately $15.6 million for additions to real estate assets and approximately $1.2 million for deferred leasing costs and other uses, substantially offset by: (a) cash proceeds of approximately $8.9 million from the Windsor Land Sale that were returned from escrow; (b) cash proceeds of approximately $2.8 million received from the first payment under the note receivable from Monrovia; (c) cash proceeds of approximately $0.6 million from sales of Centaur Media common stock; (d) cash proceeds of approximately $0.6 million from property sales; and (e) cash proceeds of approximately $0.2 million from the Imperial Sale. At the closing of the Windsor Land Sale in the fiscal 2013 fourth quarter, the proceeds of approximately $8.9 million were placed in escrow for a potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as amended. As Griffin did not acquire a replacement property, the cash proceeds were returned to Griffin in fiscal 2014.

        Cash payments for additions to real estate assets in fiscal 2014 reflect the following:

        Fiscal 2014 cash payments for new building construction principally reflected the completion of construction of 4270 Fritch Drive in Lehigh Valley Tradeport I. Approximately 201,000 square feet in 4270 Fritch Drive was leased in fiscal 2014, and subsequent to November 30, 2015, Griffin leased the remaining approximately 102,000 square feet in 4270 Fritch Drive. Cash payments for development costs and infrastructure improvements in fiscal 2014 included approximately $2.0 million for site work on a residential project and approximately $1.0 million for road construction required under the terms of the Windsor Land Sale.

        The net cash used in investing activities in fiscal 2013 principally reflected cash payments of approximately $13.5 million for additions to real estate assets, net of approximately $2.8 million of cash deposited in escrow and approximately $1.4 million of cash used for deferred leasing costs and other uses, partially offset by approximately $9.4 million of proceeds from property sales, approximately $3.4 million of proceeds from the sale of Griffin's investment in Shemin Nurseries Holding Corp. and approximately $2.5 million of proceeds from the sale of Centaur Media common stock.

        Cash payments for additions to real estate assets in fiscal 2013 reflect the following:

        The cash payment for the purchase of undeveloped land in fiscal 2013 reflected the acquisition of an approximately 49 acre parcel that became Lehigh Valley Tradeport II using the cash returned from escrow from the Dollar Tree Sale. Fiscal 2013 cash payments for new building construction principally reflected the start of construction, on speculation, of 4270 Fritch Drive in Lehigh Valley Tradeport I. Cash payments for development costs and infrastructure improvements in fiscal 2013 included approximately $0.8 million for construction of a sewer line related to the Dollar Tree Sale and master planning costs for Lehigh Valley Tradeport II.

        The cash deposited into escrow in fiscal 2013 reflected the approximately $8.9 million of proceeds from the Windsor Land Sale that were placed in escrow for a potential acquisition of a replacement property in a like-kind exchange under Section 1031 of the Internal Revenue Code of 1986, as

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amended, and approximately $0.9 million of cash deposited in escrow to be used for a portion of the road construction related to the Windsor Land Sale; offset by approximately $6.9 million of cash that was returned from escrow from the Dollar Tree Sale and used for the land acquisition described above.

        Net cash provided by financing activities was approximately $18.0 million in fiscal 2015 as compared to approximately $1.4 million in fiscal 2014. The net cash provided by financing activities in fiscal 2015 reflects net proceeds of approximately $40.4 million from three mortgage loans (see below) and approximately $0.1 million received from the exercise of stock options, partially offset by: (a) approximately $20.1 million of payments of principal on Griffin's mortgage loans; (b) a payment of approximately $1.0 million for a dividend on Griffin's common stock that was declared in the fiscal 2014 fourth quarter and paid in fiscal 2015; (c) approximately $0.8 million of payments for debt issuance costs related to the mortgage loans completed in fiscal 2015; and (d) approximately $0.6 million of mortgage proceeds placed in escrow.

        The net cash provided by financing activities in fiscal 2014 reflected proceeds of approximately $5.5 million from a mortgage loan and approximately $0.1 million received from the exercise of stock options, partially offset by: (a) approximately $2.0 million of payments of principal on Griffin's mortgage loans; (b) a payment of approximately $1.0 million for a dividend on Griffin's common stock that was declared in the fiscal 2013 fourth quarter and paid in fiscal 2014; (c) $1.0 million of mortgage proceeds placed in escrow; and (d) approximately $0.1 million of payments for debt issuance costs. The net cash provided by financing activities in fiscal 2013 reflects proceeds of approximately $9.1 million from a mortgage loan and approximately $0.1 million from the exercise of stock options, partially offset by: (e) approximately $1.9 million of payments of principal on Griffin's mortgage loans; (f) a payment of approximately $1.0 million for the dividend on Griffin's common stock that was declared in the fiscal 2012 fourth quarter and paid in fiscal 2013; (g) approximately $0.4 million for payment of debt issuance costs related to the new mortgage loan and Griffin's revolving credit agreement, both of which closed in fiscal 2013; and (h) approximately $0.1 million related to the modification of a mortgage loan with First Niagara.

        Griffin has a $12,500 revolving credit line with Webster Bank (the "Webster Credit Line") that expires May 1, 2016. The Webster Credit Line was scheduled to expire on May 1, 2015, however, prior to that date Griffin exercised its option to extend the Webster Credit Line for one year. Interest on borrowings under the Webster Credit Line is at the one month LIBOR rate plus 2.75%. The Webster Credit Line is collateralized by Griffin's properties in Griffin Center South, aggregating approximately 235,000 square feet, and an approximately 48,000 square foot single-story office building in Griffin Center. There have been no borrowings under the Webster Credit Line since its inception. The Webster Credit Line secures certain unused standby letters of credit aggregating approximately $4.1 million that are related to Griffin's development activities.

        On December 31, 2014, two subsidiaries of Griffin closed on a new $21.6 million nonrecourse mortgage loan (the "2025 First Niagara Mortgage") with First Niagara. The 2025 First Niagara Mortgage refinanced an existing mortgage loan with First Niagara on 4275 Fritch Drive and added 4270 Fritch Drive, the other Lehigh Valley Tradeport I industrial building, to the collateral. The existing mortgage loan with First Niagara had a maturity date of September 1, 2023 and a floating rate of the one month LIBOR rate plus 1.95%. Griffin had entered into an interest rate swap agreement with First Niagara that effectively fixed the rate on that loan at 4.79%. Griffin received net cash proceeds from the 2025 First Niagara Mortgage of approximately $10.9 million at closing (before transaction costs), in addition to approximately $8.9 million used to refinance the existing mortgage loan with First Niagara and $1.85 million that was advanced by First Niagara, subsequent to November 30, 2015, when the approximately 102,000 square feet in 4270 Fritch Drive that had been vacant at the time the 2025 First Niagara Mortgage closed, was leased. The 2025 First Niagara Mortgage has a ten year term with monthly payments based on a twenty-five year amortization schedule. The interest rate for the 2025 First Niagara Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the

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2025 First Niagara Mortgage closed, Griffin entered into an interest rate swap agreement that, combined with the existing interest rate swap agreement with First Niagara and the interest rate swap agreement on the additional mortgage proceeds received subsequent to November 30, 2015, effectively fixes the rate of the 2025 First Niagara Mortgage at 4.39% over the remainder of the mortgage loan's ten year term.

        On July 29, 2015, a subsidiary of Griffin closed on a new $18.0 million nonrecourse mortgage loan (the "40--86 Mortgage Loan") with 40--86 Mortgage Capital, Inc. The 40--86 Mortgage Loan is collateralized by three industrial buildings in NE Tradeport (75 International Drive, 754 and 758 Rainbow Road) aggregating approximately 392,000 square feet, has a fixed interest rate of 4.33% and a fifteen year term, with payments based on a thirty year amortization schedule. At closing, Griffin received cash proceeds from the 40--86 Mortgage Loan (before financing costs) of approximately $14.9 million, which were used to refinance the maturing mortgage that had a principal balance of approximately $17.9 million and an interest rate of 5.73%. The remaining approximately $3.1 million of mortgage proceeds were deposited into escrow. As per the terms of the 40--86 Mortgage Loan, $2.5 million of the escrowed proceeds were released to Griffin in the fiscal 2015 fourth quarter when the tenant that was leasing approximately 88,000 square feet on a month-to-month basis in 754 Rainbow Road entered into a long-term lease for that space. The remaining $0.6 million of mortgage proceeds from the 40--86 Mortgage Loan that were deposited into escrow is expected to be released to Griffin in fiscal 2016 when tenant improvement work for the full building tenant in 758 Rainbow Road is completed and all payments for such work have been made.

        On September 1, 2015, a subsidiary of Griffin closed on a new $14.1 million nonrecourse mortgage loan (the "Webster Mortgage Loan") with Webster Bank. The Webster Mortgage Loan is collateralized by the newly constructed approximately 280,000 square foot industrial/warehouse building at 5220 Jaindl Boulevard in Hanover Township in the Lehigh Valley of Pennsylvania. At closing, Griffin received cash proceeds from the Webster Mortgage Loan (before financing costs) of $11.5 million. On November 24, 2015, the tenant that is leasing approximately 196,000 square feet in 5220 Jaindl Boulevard exercised its option to lease the balance of the building. Subsequent to November 30, 2015, Webster Bank advanced to Griffin the balance of the mortgage loan proceeds ($2.6 million). The Webster Mortgage Loan has a floating interest rate of the one month LIBOR rate plus 1.65%, but Griffin entered into an interest rate swap agreement with Webster Bank at closing to effectively fix the interest rate at 3.77% over the loan term on the loan proceeds received at closing. At the time Griffin received the additional proceeds of $2.6 million, Griffin entered into a second interest rate swap agreement with Webster Bank to effectively fix the interest rate on those loan proceeds at 3.67% for the balance of the term of the loan. Together, the two interest rate swap agreements effectively fix the interest rate on the Webster Mortgage Loan at 3.75% for the remainder of the term of the loan. The Webster Mortgage Loan has a ten year term, with payments based on a twenty-five year amortization schedule.

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        Griffin's payments (including principal and interest) under contractual obligations as of November 30, 2015 are as follows:

        On June 27, 2014, Griffin entered into an agreement to sell approximately 30 acres of an approximately 45 acre land parcel in Griffin Center in Bloomfield, Connecticut for a minimum purchase price of $3.25 million, subject to adjustment based on the actual number of acres conveyed. Completion of this transaction is subject to significant contingencies, including the satisfactory completion of due diligence by the purchaser (a public educational authority in the state of Connecticut) and the purchaser obtaining a commitment from the State of Connecticut to fund the land acquisition and develop the property as planned by the purchaser. If this sale were to be completed, the development potential of the land parcel's remaining 15 acres, much of which is wetlands, will be severely limited. In fiscal 2015, the purchaser's due diligence period was extended through September 15, 2016. There is no guarantee that this transaction will be completed under its current terms, or at all.

        In the near-term, Griffin plans to continue to invest in its real estate business, including the construction of additional buildings on its undeveloped land, expenditures for tenant improvements as new leases are signed, infrastructure improvements required for future development of its real estate holdings and the potential acquisition of additional properties and/or undeveloped land parcels in New England or the Mid-Atlantic states to expand the industrial/warehouse portion of its real estate portfolio. Real estate acquisitions may or may not occur based on many factors, including real estate pricing. Griffin does not expect to commence any speculative construction projects for its Connecticut real estate portfolio in the near term, but would construct a build-to-suit facility on its undeveloped land in Connecticut if lease terms are favorable.

        As of November 30, 2015, Griffin had cash and cash equivalents of approximately $18.3 million. Management believes that its cash and cash equivalents as of November 30, 2015, cash generated from operations, additional mortgage proceeds received subsequent to November 30, 2015 and borrowing capacity under its $12.5 million revolving credit agreement with Webster Bank will be sufficient to meet its working capital requirements, the continued investment in real estate assets, and the payment of dividends on its common stock, when and if declared by the Board of Directors, for at least the next twelve months. Griffin may also continue to seek additional financing secured by nonrecourse mortgage loans on its properties. Griffin's real estate portfolio currently includes five buildings located in Connecticut aggregating approximately 411,000 square feet that are not mortgaged.

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Forward-Looking Information

        The above information in Management's Discussion and Analysis of Financial Condition and Results of Operations includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. These forward-looking statements include, but are not limited to, Griffin's expectations regarding the leasing of currently vacant space, receiving mortgage proceeds currently held in escrow, the timing of completion and the cost of construction of 5210 Jaindl Boulevard, the acquisition of additional properties and/or undeveloped land parcels, the ability to obtain mortgage financing on Griffin's unleveraged properties, the completion of the sale of approximately 30 acres of an approximately 45 acre land parcel in Griffin Center that is under contract as of November 30, 2015, Griffin's anticipated future liquidity, and other statements with the words "believes," "anticipates," "plans," "expects" or similar expressions. Although Griffin believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. The forward-looking statements made herein are based on assumptions and estimates that, while considered reasonable by Griffin as of the date hereof, are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of Griffin. Griffin's actual results could differ materially from those anticipated in these forward-looking statements as a result of various important factors, including those set forth under the heading Item 1A "Risk Factors" and elsewhere in this Annual Report.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices. Changes in these factors could cause fluctuations in earnings and cash flows.

        For fixed rate mortgage debt, changes in interest rates generally affect the fair market value of the debt instrument, but not earnings or cash flows. Griffin does not have an obligation to prepay any fixed rate debt prior to maturity and, therefore, interest rate risk and changes in the fair market value of fixed rate debt should not have a significant impact on earnings or cash flows until such debt is refinanced, if necessary. Griffin's mortgage interest rates and related principal payment requirements are described in Note 6 to the consolidated financial statements included in Item 8. "Financial Statements and Supplementary Data."

        For variable rate debt, changes in interest rates generally do not impact the fair market value of the debt instrument, but do affect future earnings and cash flows. As of November 30, 2015, Griffin had a total of approximately $58.9 million of variable rate debt outstanding, for which Griffin has entered into interest rate swap agreements which effectively fix the interest rates on that debt. There were no other variable rate borrowings outstanding as of November 30, 2015.

        Griffin is exposed to market risks from fluctuations in interest rates and the effects of those fluctuations on the market values of Griffin's cash equivalents. These investments generally consist of overnight investments that are not significantly exposed to interest rate risk.

        Griffin does not have foreign currency exposure in operations. However, Griffin does have an investment in a public company, Centaur Media plc, based in the United Kingdom. The ultimate liquidation of that investment and conversion of proceeds into United States currency is subject to future foreign currency exchange rates involving the UK pound sterling. A 10% decrease in the foreign currency exchange rate at November 30, 2015 would have resulted in an approximately $0.2 million reduction of the fair value of that investment.

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8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

GRIFFIN INDUSTRIAL REALTY, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

See Notes to Consolidated Financial Statements.

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GRIFFIN INDUSTRIAL REALTY, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

See Notes to Consolidated Financial Statements.

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GRIFFIN INDUSTRIAL REALTY, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

See Notes to Consolidated Financial Statements.

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GRIFFIN INDUSTRIAL REALTY, INC.

Consolidated Statements of Changes in Stockholders' Equity

For the Fiscal Years Ended November 30, 2015, November 30, 2014 and November 30, 2013

(dollars in thousands)