Allied Properties Real Estate Investment Trust (AP) Q2 2025 earnings summary

Executive summary

• Achieved resilient operating results and advanced long-term portfolio optimization, with strong leasing momentum and positive same-asset NOI despite macroeconomic headwinds.

• Leased area increased to 87.2% with average net rent per occupied sq ft up 1% year-over-year to CAD 25.32.

• Non-core property sales accelerated, with CAD 200 million in sales closed or under contract in Q2 and a target of CAD 300 million for the year.

• Maintained focus on strengthening the balance sheet, ample liquidity, and improving debt metrics, with a clear deleveraging plan.

• Progressed on development and upgrade projects, including M4 Vancouver (77% leased, now 100% owned) and Toronto House (48% lease-up), with all projects on track for completion by end of 2026.

Financial highlights

• Asset NOI of the rental portfolio grew by 1.1% year-over-year, driven by development completions and stabilization.

• Q2 2025 rental revenue was CAD 145.0 million, down 1.2% year-over-year; operating income was CAD 79.95 million, down 3.0%.

• Net loss for Q2 was CAD 94.7 million, compared to net income of CAD 28.1 million in Q2 2024, mainly due to higher fair value losses on investment properties.

• FFO and AFFO per unit experienced short-term pressure due to higher interest costs from 2024 acquisitions; FFO per unit (diluted) was 0.494, down 4.3%, and AFFO per unit (diluted) was 0.454, down 2.8%.

• Completed projects contributed CAD 60 million in annualized NOI; incremental NOI of CAD 3 million expected in H2 2025 and CAD 10 million in 2026.

Outlook and guidance

• Targeting net debt to EBITDA below 10x by year-end 2025 and below 9x by end of 2026.

• FFO and AFFO per unit are expected to contract by about 4% in 2025 due to higher interest costs from 2024 acquisitions.

• Occupancy target of 90% by year-end, driven by continued lease-up and positive leasing momentum.

• Management expects Same Asset NOI growth of approximately 2% in 2025.

• Uncertain macroeconomic conditions may impact the ability to achieve these goals within the estimated timeframe.