Allied Properties Real Estate Investment Trust (AP) Q4 2024 earnings summary

Executive summary

• Outperformed urban markets in occupancy, with national leased area stable at 87.2% and occupancy at 85.9%, except Vancouver, and improved retention rate to 69% in 2024; targeting at least 90% occupied and leased area by end of 2025.

• Strong user engagement survey results, with a Net Promoter Score 150% above the index average and a 30% year-over-year increase, supporting leasing activity.

• Completed CAD 229 million in non-core asset dispositions above target, all proceeds used for debt repayment; acquired CAD 677 million in strategic assets, temporarily increasing debt-to-EBITDA.

• Management expects to increase occupied and leased area and drive rent growth in 2025, supported by rising demand in major Canadian cities.

Financial highlights

• Net operating income increased 6.5% year-over-year in Q4 2024; average in-place net rent per occupied sq ft rose 5.4% to CAD 25.41.

• Rental revenue for Q4 2024 was CAD 155.1 million, up 2.8% year-over-year; full-year rental revenue was CAD 592.0 million, up 5.0%.

• Operating income for Q4 2024 was CAD 84.4 million, up 3.1% year-over-year; full-year operating income was CAD 328.5 million, up 3.6%.

• Same-asset NOI for the total portfolio grew 2.2% for the year; development completions added CAD 26 million to 2024 EBITDA and CAD 14 million to FFO.

• FFO per unit (diluted, excluding adjustments) for Q4 2024 was CAD 0.535, down 12.9% year-over-year; full-year was CAD 2.174, down 8.7%.

Outlook and guidance

• Targeting at least 90% occupied and leased area by end of 2025, with most gains expected in Montreal and Toronto.

• Disposition target for 2025 increased to at least CAD 300 million, with proceeds to be used for debt reduction.

• Net debt-to-EBITDA targeted below 10x by end of 2025, despite a temporary increase in early 2025.

• Same-asset NOI for the rental portfolio expected to rise 2%, and total portfolio by 4.8% in 2025, with growth back-end weighted.

• FFO and AFFO projected to contract by approximately 4% in 2025 due to lower interest income and higher interest expense.