New leasing pipeline increased by 36%
Disposition program on track
Deleveraging on track
TORONTO, April 29, 2026 (GLOBE NEWSWIRE) -- Allied Properties Real Estate Investment Trust ("Allied") (TSX: "AP.UN") today announced results for the three months ended March 31, 2026.
"Our first-quarter results were in line with the expectations we set at year-end, reflecting progress on our action plan," said Allied President and CEO Cecilia Williams. "Our portfolio continues to demonstrate resilience and relevance, positioning us to serve high-quality users. We're focused on leasing execution, disciplined capital allocation and deleveraging to deliver on our three-year targets."
Q1 2026 Highlights
Allied's first-quarter results were in line with expectations and reflected continued execution of its strategic priorities.
Key items:
Occupied and leased area of 85.0% and 87.1%, respectively, in line with our expectations.
Rental revenue of $144 million and operating income of $70 million, in line with our expectations.
Delivered 323,632 square feet of new leasing activity in the rental portfolio in Q1 2026.
Debt to EBITDA is down to 12.3x from the previous quarter of 12.9x, in line with our expectations.
Of the ~$500 million disposition pipeline, $46 million dispositions closed in Q1 2026 and the remaining assets are in various stages of marketing.
Subsequent to quarter-end, Allied went firm on the disposition of (i) eight properties in Toronto for total expected proceeds of $123 million and (ii) one property in Montréal for total expected proceeds of $78 million, the latter being subject to Competition Act approval. These, along with interest in other non-core properties, give Allied confidence that the $500 million disposition target is attainable.
Outlook
Allied updated its three-year outlook for one item in 2026. Capital expenditures are expected to be higher in 2026, in the range of $40 million to $50 million, due to the higher construction costs to complete at KING Toronto. All other targeted metrics for 2026-2028 remain within the previously communicated ranges.
The table below details management's outlook for year-end 2026:
Actuals
Previously Published
Revised
Metric
Three months endedMarch 31, 2026
2026 Outlook
2026 Outlook
Occupied area by year-end
85.0%
84% to 86%(1)
On track - no change
NOI*
$76.5 million
$310 million to $320 million
On track - no change
Growth/(decline) in Same Asset NOI*(rental portfolio)
(10.4)%
(5.5)% to (6.5)%
On track - no change
FFO*(2)
$47.9 million
$185 million to $200 million(3)
On track - no change
Interest expense(4)
$39.4 million
$145 million to $155 million
On track - no change
Capital expenditures
$67.5 million
$180 million to $190 million (development, residential inventory, recurring rental portfolio)
$220 million to $240 million (development, residential inventory, recurring rental portfolio)
Non-core, low-yielding property dispositions
$46 million
~ $500 million aggregate gross proceeds
On track - no change
Net debt to EBITDA(5)
12.3x
Mid-11x range
On track - no change
(1) ~82% at the end of Q2 due to non-renewals.(2) Excluding condominium-related items, financing prepayment costs, and the mark-to-market adjustment on unit-based compensation.(3) This includes $20 million of interest income from loans receivable on KING Toronto and 150 West Georgia.(4) Interest expense before capitalized interest and excluding distributions on Exchangeable LP Units is expected to be $175 million to $185 million.(5) Net debt as a multiple of Annualized Adjusted EBITDA* by year-end.
*This is a non-GAAP measure. Refer to the Non-GAAP Measures section below.
Q1 2026 Results
Operations
At the end of Q1 2026, Allied's occupied and leased area was 85.0% and 87.1%, respectively. This is modestly ahead of our expectations due to earlier occupancy from lease-up and delayed non-renewals.
At the end of Q1 2026, space available for sub-lease in Allied's portfolio represented 2.4% of GLA (351,170 square feet).
Allied leased a total of 529,250 square feet of GLA in Q1 2026, 518,556 square feet in its rental portfolio and 10,694 square feet in its development portfolio. Of the 518,556 square feet Allied leased in its rental portfolio, 210,989 square feet were vacant at the beginning of the year, 121,482 square feet matured in the period and 186,085 square feet represent future maturities. Including relocations and early renewals related to maturities in Q1 2026, Allied leased 62.9% of the expiring GLA. Rental rates on renewal increased by 1.2% ending-to-starting base rent and 7.7% average-to-average base rent, in line with expectations.
133,020 square feet of space leased in Q1 2026 involved expansion by existing users. 190,612 square feet of space leased in Q1 2026 involved new users to the portfolio. Allied continues to see strong demand from existing users for expansion space.
Allied's total leasing pipeline including leasing and renewals increased 20% since the beginning of the year and our new leasing pipeline increased 36%.
Property Dispositions
Allied has a disposition pipeline of ~$500 million and continues to evaluate additional properties for sale to support deleveraging objectives and optimize the portfolio composition.
In Q1 2026, of the ~$500 million pipeline, Allied completed the sale of four properties, generating total gross proceeds of $46 million. The remaining pipeline of ~$454 million includes two substantial rental-residential assets and is at various stages of marketing, with dispositions targeted to close by year-end 2026.
In addition, Allied has identified other non-core properties for disposition to support deleveraging efforts and optimize the portfolio composition. Nine properties are firm for total expected proceeds of approximately $201 million and are expected to close in Q2 2026.
Completion of Development Pipeline
The final committed development, KING Toronto at 489-539 King Street West, will comprise 440 condominium units of which 92% are pre-sold, 46,000 square feet of office space, and 122,000 square feet of retail space. Completion of the commercial and residential components is expected in the second half of 2027. Whole Foods Market is the anchor tenant for the retail portion and is committed to occupying 32,878 square feet in August 2027. With the project encountering various complexities, Allied is taking proactive steps and now fully oversees onsite construction management.
Allied recorded an expected credit loss of $44 million in relation to the loan receivable and impairment of residential inventory of $48 million on KING Toronto in Q1 2026. This reflects the higher estimated costs to complete and the delay in construction completion of the residential component.
Management does not intend to initiate any new development projects in the foreseeable future.
Financial Measures
The following tables summarize GAAP financial measures for the three months ended March 31, 2026, and 2025:
For the three months ended March 31
(in thousands except for % amounts)
2026
2025
Change
% Change
Rental revenue
$
143,931
$
150,636
$
(6,705
)
(4.5)%
Property operating costs
$
(74,322
)
$
(69,401
)
$
(4,921
)
(7.1)%
Operating income
$
69,609
$
81,235
$
(11,626
)
(14.3)%
Interest income
$
10,247
$
10,095
$
152
1.5
%
Interest expense
$
(39,437
)
$
(30,684
)
$
(8,753
)
(28.5)%
General and administrative expenses
$
(6,308
)
$
(6,283
)
$
(25
)
(0.4)%
Condominium marketing expenses
$
(34
)
$
(8
)
$
(26
)
(325.0)%
Amortization of other assets
$
(464
)
$
(373
)
$
(91
)
(24.4)%
Transaction costs
$
(1,879
)
$
—
$
(1,879
)
(100.0)%
Mark-to-market expense on unit-based compensation
$
(2,397
)
$
(423
)
$
(1,974
)
(466.7)%
Fair value loss on investment properties and investment properties held for sale
$
(134,357
)
$
(164,099
)
$
29,742
18.1
%
Fair value gain on Exchangeable LP Units
$
49,480
$
8,975
$
40,505
451.3
%
Fair value gain (loss) on derivative instruments
$
911
$
(6,095
)
$
7,006
114.9
%
Expected credit loss on loans and notes receivable
$
(44,000
)
$
—
$
(44,000
)
(100.0)%
Impairment of residential inventory
$
(48,065
)
$
—
$
(48,065
)
(100.0)%
Net loss and comprehensive loss(1)
$
(146,694
)
$
(107,660
)
$
(39,034
)
(36.3)%
(1) For the three months ended March 31, 2026, includes interest income on loans receivable on KING Toronto and 150 West Georgia of 9,583 (March 31, 2025 - $8,527). An expected credit loss on loans receivable of $44,000 (March 31, 2025 - $nil) was recognized for the three months ended March 31, 2026.
Operating income reflects non-renewals, dispositions, and decapitalization of operating costs as space becomes ready for its intended use.
Interest expense reflects lower capitalized interest from the completion of development and upgrade projects, and the disposition of properties under development.
Fair value loss on investment properties and investment properties held for sale was due to construction cost increases and delays in the development portfolio, and adjustments to land values in Toronto based on recent sales in the market.
Expected credit loss on loans receivable was recorded in the period to adjust the balance expected to be recovered.
The following table summarizes other financial measures as at March 31, 2026, and 2025:
As at March 31
(in thousands except for per unit and % amounts)
2026
2025
Change
% Change
Investment properties(1)
$
7,993,164
$
9,322,162
$
(1,328,998
)
(14.3)%
Unencumbered investment properties(2)
$
7,184,974
$
8,178,802
$
(993,828
)
(12.2)%
Total Assets(1)
$
9,018,846
$
10,477,229
$
(1,458,383
)
(13.9)%
Cost of PUD as a % of GBV(2)
5.5%
8.6%
—
(3.1)%
NAV per unit(3)
$
22.90
$
39.99
$
(17.09
)
(42.7)%
Debt(1)
$
4,130,291
$
4,475,769
$
(345,478
)
(7.7)%
Total indebtedness ratio(2)
45.9%
42.9%
