Allied Announces First-Quarter Results

• Allied Properties REIT reported Q1 2026 results characterized by progress on its strategic action plan and deleveraging objectives.
• Net Debt to EBITDA decreased to 12.3x from 12.9x in the previous quarter, indicating continued debt reduction efforts.
• Leasing activity remains strong with a new leasing pipeline increasing by 36% since the beginning of the year.
• Rental revenue declined 4.5% YoY to $143.9 million; Operating Income fell 14.3% YoY to $69.6 million.
• Funds From Operations (FFO) dropped 25.7% YoY to $45.5 million; Adjusted Funds From Operations (AFFO) plummeted 48.1% YoY to $33.7 million.
• Net Loss for Q1 was $146.7 million compared to a profit of $107.7 million in Q1 2025, driven by fair value adjustments and impairments.
• Disposition program is on track toward a $500 million target with $46 million closed in Q1 and $454 million remaining.
• Capital expenditure outlook for 2026 revised upward to $40M–$50M due to rising construction costs at the KING Toronto project.
• The KING Toronto development recorded an expected credit loss of $44 million on loans receivable and an impairment of residential inventory of $48 million.

• Deleveraging Progress: The reduction in Net Debt to EBITDA from 12.9x to 12.3x is a positive material development, confirming the efficacy of the February equity raise ($560M) and disposition strategy. This reduces solvency risk but remains above the <10x target.
• Earnings Deterioration: The nearly 50% decline in AFFO is a significant negative indicator for cash flow generation and potential distribution coverage, though likely partially priced in given prior Q4/FY2025 losses.
• Development Risks: The upward revision of capital expenditures and the $92 million combined impairment/credit loss on KING Toronto highlight execution risks and cost overruns that could delay revenue recognition from this asset.
• Market Context: The stock price has rallied significantly (from ~$2 to ~$10) since May 2025, suggesting the market has already priced in the deleveraging success; current news confirms the plan without offering new upside catalysts.

• Company: Allied Properties REIT is a Toronto-based real estate investment trust focused on office, retail, and mixed-use properties in King West Village.
• Flagship Project: KING Toronto (Mixed-use development comprising 440 condo units, 46,000 sq. ft. office, and 122,000 sq. ft. retail).
• Development Status: Condo project is 92% pre-sold; completion expected in the second half of 2027.
• Portfolio Metrics: Occupied Area at 85.0%; Leased Area at 87.1%. Sub-lease availability stands at 2.4% of GLA.