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

Executive summary

• Outperformed urban markets in occupancy, except Vancouver, with national leased area steady year-over-year at 85.9% occupied and 87.2% leased.

• Improved retention rate to 69% in 2024, up from 61% in 2023, with expectations to approach 75% historical average in 2025.

• Significant acquisitions in 2024 included three triple-A urban properties for $677 million and the sale of seven non-core properties for $229 million, with proceeds allocated to debt repayment.

• Leasing activity accelerated in H2 2024, with a 55% conversion rate and 41% increase in new leasing year-over-year.

• 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% in Q4 2024 compared to Q4 2023.

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

• Average in-place net rent per occupied sq ft rose 5.4% to CAD 25.41.

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

• Development completions added CAD 26 million to 2024 EBITDA and CAD 14 million to FFO.

Outlook and guidance

• Targeting at least 90% occupied and leased area by end of 2025, with gains back-end weighted.

• Expecting same-asset NOI for rental portfolio to increase by 2% and total portfolio by 4.8% in 2025.

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

• Targeting net debt-to-EBITDA below 10x by end of 2025.

• Year-end 2025 goals include selling at least $300M of non-core properties.