Allied Announces Second-Quarter Results

Executive Summary

• Allied Properties Real Estate Investment Trust reported financial results for the three and six months ended June 30, 2025, showing a significant decline in net income due to fair value adjustments, while Same Asset NOI grew by approximately 1.5% for the quarter.
• The company achieved strong leasing activity in Q2, leasing over 588,000 square feet of GLA, with average in-place net rent per square foot increasing 1.0% year-over-year to $25.32.
• Allied is actively pursuing its portfolio optimization strategy, having closed the sale of a non-core property in Edmonton and placing nine additional non-core properties under contract for approximately $200 million, with a full-year sales target of at least $300 million to fund equity components of recent acquisitions and reduce leverage.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Net Income/Loss: $(94.7) million (vs $28.1 million profit in prior year).
  • Rental Revenue: $145.0 million (down 1.2%).
  • Operating Income: $79.9 million (down 3.0%).
  • Adjusted EBITDA: $94.3 million (down 1.5%).
  • Same Asset NOI (Total Portfolio): $86.9 million (up 1.5%).
  • FFO per unit (diluted): $0.494 (down 4.3% from $0.516).
  • AFFO per unit (diluted): $0.454 (down 2.8% from $0.467).
• Financial Performance (Six Months Ended June 30, 2025):
  • Net Income/Loss: $(202.4) million (vs $9.3 million profit in prior year).
  • Rental Revenue: $295.7 million (up 1.8%).
  • Adjusted EBITDA: $188.9 million (down 1.8%).
  • Same Asset NOI (Total Portfolio): $164.7 million (up 1.4%).
  • FFO per unit (diluted): $1.002 (down 8.6% from $1.096).
  • AFFO per unit (diluted): $0.918 (down 8.7% from $1.006).
• Leasing and Occupancy Metrics:
  • Occupied Area: 84.9% at quarter-end.
  • Leased Area: 87.2% at quarter-end.
  • Total Leased GLA in Q2: 588,373 sq ft (546,437 sq ft in rental portfolio; 41,936 sq ft in development portfolio).
  • Vacant Space Leased: 224,651 sq ft (including 74,584 sq ft of expansion by existing users).
  • Renewals: 54% of leases maturing in Q2 renewed; H1 renewal rate was 69%.
  • Average In-Place Net Rent: $25.32 per sq ft (up 1.0% YoY).
  • Rent Increases: Renewal base rent up 3.1% ending-to-starting; average-to-average base rent up 13.2%.
• Portfolio Optimization and Sales:
  • Q2 Sales: Closed sale of one non-core property in Edmonton; placed nine non-core properties under contract (6 in Montréal, 1 in Toronto, 2 in Vancouver) for aggregate proceeds of ~$200 million.
  • 2025 Sales Target: Intends to sell non-core properties for at least $300 million to fund equity for 400 West Georgia and 19 Duncan acquisitions and strengthen debt metrics.
  • Recent Acquisitions Status:
    • 400 West Georgia (Vancouver): Finalizing long-term lease for remaining 63,772 sq ft of office space.
    • 19 Duncan (Toronto): Leased 222 of 464 residential units.
    • Calgary House: 312 of 326 residential units leased (approaching full occupancy).
  • Development Updates:
    • M4: Netflix and other tenants building out; rent commences early next year.
    • KING Toronto: International retailer anchoring commercial component (28,291 sq ft below grade, 4,587 sq ft at grade); expected completion end of next year.
    • 150 West Georgia: Monetization efforts underway.
• Balance Sheet and Liquidity:
  • Total Debt: $4.57 billion (as of June 30, 2025).
  • Total Indebtedness Ratio: 44.0%.
  • Net Debt to Annualized Adjusted EBITDA: 11.9x.
  • Revolving Facility: $800 million unsecured facility; $167.7 million drawn at quarter-end, $120 million drawn as of release date.
  • NAV per Unit: $38.97 (down 12.3% from $44.43 in prior year).
• Outlook:
  • Management expects Same Asset NOI growth of ~2% in 2025.
  • Management expects FFO and AFFO per unit to contract by ~4% in 2025 due to higher interest costs from 2024 acquisitions.
  • Year-End 2025 Goals:
    • Occupied/Leased area of at least 90%.
    • Sell non-core properties for at least $300 million at or above IFRS value.
    • Fully monetize loan receivable secured by 150 West Georgia.
    • Net debt to Annualized Adjusted EBITDA below 10x.

Notable Quotes

• “Operations in the second quarter were encouraging in all respects,” said Cecilia Williams, President & CEO. “Our leased area increased slightly, our average net rent per square foot held steady, our non-core property sales accelerated, and our balance-sheet management progressed.”
• “We’re in the final stages of completing the large, multi-city development pipeline we initiated in 2012,” said Michael Emory, Founder and Executive Chair.