Allied Properties Real Estate Investment Trust (AP) Q3 2025 earnings summary

Executive summary

• Leasing activity reached its highest level in five years, with 882,000 sq ft leased and an 81% conversion rate, reflecting strong demand for large format and expansion space.

• Debt profile strengthened and progress made on developments and non-core property sales, though occupancy and leasing growth lagged expectations, impacting results.

• Urban office fundamentals are improving, but targeted occupancy of 90% by year-end will not be achieved.

• Portfolio resilience continues, but 90% occupancy and 10x debt-to-EBITDA targets are now expected beyond year-end, with line of sight to achievement in 2026.

• Development projects, including M4 Vancouver (90% leased) and KING Toronto, are progressing, with all upgrades on track for completion by end of 2026.

Financial highlights

• Rental revenue for Q3 2025 was $147.9M, up 0.9% year-over-year; operating income fell 3.0% to $80.7M.

• Net loss for Q3 2025 was $113.4M, a 20.4% increase in loss year-over-year, mainly due to higher fair value losses.

• Same-asset NOI increased 0.2% for the quarter, supported by development completions.

• Liquidity rose to $903 million, up $168 million sequentially, with 89% of the portfolio unencumbered.

• Series N debenture issued for $450 million at 4.6%, 5x oversubscribed, contributing to $1.3 billion total issuance for the year.

Outlook and guidance

• 90% leased area and 10x debt-to-EBITDA targets are expected by end of 2026.

• Same asset NOI projected to decline by about 1% for 2025; FFO and AFFO per unit expected to contract by about 10%.

• Dispositions and loan repayments are expected to generate $500–675 million in proceeds by mid-2026, all to be used for debt reduction.

• Distribution cut is under consideration for 2026 to further strengthen the balance sheet.

• Net debt to annualized adjusted EBITDA target of below 10x will take longer to achieve due to delayed asset sales.