Allied Properties Real Estate Investment Trust (AP) Q2 2026 earnings summary

Executive summary

• Focus shifted to maximizing earnings potential through leasing execution, disciplined capital allocation, and portfolio optimization via selective asset dispositions.

• Leasing and occupancy rates exceeded expectations, with occupied and leased area at 84.4% and 86.7% respectively, driven by earlier lease-up activity.

• Completed or secured CAD 321 million in asset dispositions, reducing net debt to EBITDA to 12x.

• Market share in leasing activity exceeded portfolio share, indicating strong competitive positioning.

• Excluding a one-time $5.9 million severance expense, FFO per unit was CAD 0.24 and AFFO per unit was CAD 0.17, both impacted by the property tax assessment and lower interest income.

Financial highlights

• Rental revenue for Q2 2026 was $140.5 million, down 3.1% year-over-year; operating income fell 12.7% to $69.8 million.

• Net loss and comprehensive loss for Q2 2026 was $744.7 million, mainly due to a $759 million fair value loss on investment properties.

• Same asset NOI declined 12.6% year-over-year, below the expected 10% decline, due to a one-time retroactive property tax assessment.

• FFO per unit (diluted) was $0.243, down 50.8% year-over-year; AFFO per unit (diluted) was $0.172, down 62.1%.

• Adjusted EBITDA for Q2 2026 was $83.1 million, down 11.9% year-over-year.

Outlook and guidance

• Management reaffirmed confidence in its three-year outlook, with capital reallocated to support development completion and near-term leasing.

• 2026 Same Asset NOI forecast revised to (8.0)% to (9.0)% due to reduced capitalized expenses.

• Year-end 2026 guidance: occupied area 84%-86%, NOI $310-$320 million, FFO $185-$200 million, capital expenditures $220-$240 million.

• Disposition target of $500 million in 2026 remains on track, with all proceeds allocated to debt repayment.

• FFO and NOI expected to come in at the lower end of the guidance range.