Allied Reports Q4 and Full-Year Results; Announces Leadership Update and Equity Financing

Executive Summary

• Allied Properties REIT reported Q4 and full‑year 2025 financial results, showing a net loss of C$1.33 bn year‑end driven by fair‑value losses and higher interest expense, but highlighted steady rental revenue (~C$592 m) and strong leasing activity (801 k sq ft in H2 2025).
• The company launched a $500 million equity recapitalization – a C$350 million marketed public offering plus a C$150 million private placement – with net proceeds earmarked primarily for repayment of its Series H debentures and further deleveraging.
• Management presented an Outlook through 2028, targeting occupied area of 84‑86% by year‑end 2026 (rising to 88‑90% by 2028), NOI of C$310‑320 m in 2026, FFO of C$185‑200 m, and a net‑debt/EBITDA ratio moving from the mid‑11x range toward low‑9x by 2028.

Key Details

• Q4 2025 Highlights
• Rental revenue: C$148.8 m (‑4.1% QoQ).
• Operating income: C$75.1 m (‑11.1% QoQ).
• Interest expense: C$36.5 m (‑14.9% QoQ).
• Net loss (comprehensive): C$1.01 bn for the quarter; C$1.33 bn for FY 2025.

• Fair‑value loss on investment properties: C$1.41 bn YoY.

• Full‑Year 2025 Financials

• Rental revenue: C$592.4 m (≈ flat YoY).
• Operating income: C$317.0 m (‑3.5% YoY).
• Interest expense: C$135.5 m (↑16.3% YoY).
• Net loss (comprehensive): C$1.33 bn (▲287%).

• Total assets declined to C$9.26 bn; NAV per unit fell to C$29.87 (‑27.6%).

• Leasing & Occupancy

• End‑2025 occupied area: 85.3%; leased area: 87.4% (stable vs 2024).
• New leasing activity FY 2025: 2,709,797 sq ft total (801 k sq ft in H2 2025 – strongest since 2020).

• Occupied‑area vacancy reduced to 2.6% of GLA from 5.7% year‑earlier.

• Non‑Core Property Dispositions

• FY 2025: $140 m gross proceeds from nine low‑yielding assets, all applied to debt reduction.

• Pipeline ~C$500 m; Q1 2026 closed $29 m, $17 m under firm agreement, remainder targeted for year‑end 2026.

• Equity Recapitalization (Offering)

• Total size: C$500 million (C$350 m public offering + C$150 m private placement).
• Proceeds to be used primarily to repay the $600 m Series H senior unsecured debentures and support further deleveraging.
• Underwriters: Scotiabank, CIBC Capital Markets, RBC Dominion Securities (public); same banks as placement agents for private placement (AIMCo).

• Expected closing: on or about February 18 2026; pricing to be determined at market.

• Outlook 2026‑2028 (Management Guidance)

• Occupied area year‑end 2026: 84%–86%; 2027: 86%–88%; 2028: 88%–90%.
• NOI 2026: C$310‑320 m.
• Same‑asset NOI growth (rental portfolio) 2026: –5.5% to –6.5%; rebound 12%‑16% in 2027, 9%‑13% in 2028.
• FFO 2026: C$185‑200 m; growth of 7%‑10% expected in 2027, 5%‑8% in 2028.

• Net‑debt/EBITDA: mid‑11x (2026) → low‑10x (2027) → low‑9x (2028).

• Leadership Update

• Executive Chair Michael Emory’s term will not be renewed; he will step back from day‑to‑day duties and will not stand for re‑election as a trustee.

• CEO Cecilia Williams continues in her role; board expressed confidence in senior management.

• Other Operational Items

• Completion of development pipeline: acquisition of M4 at Main Alley Campus (90% leased to Netflix, rent starting Q1 2026).
• KING Toronto condo project ~92% pre‑sold; expected completion H1 2027; proceeds (~C$245 m) earmarked for loan repayment.
• 150 West Georgia data‑center project: loan extension to Dec 31 2026, potential partial sale with minority retained interest.

Notable Quotes

• “While the return to historical occupancy levels has taken longer than expected, we’re seeing an increase in demand… These put Allied in a position of strength to benefit from the market recovery in 2026 and beyond.” – Cecilia Williams, President & CEO
• “On behalf of the Board of Trustees, I want to thank Michael for his vision, leadership, and lasting contributions as Allied’s Founder.” – Jennifer Tory, Lead Trustee

Materiality Assessment: Material – Neutral (the release contains full‑year financial results, a sizable equity offering, and forward‑looking guidance that are likely to influence investor decisions).