Advertisement
Allied Properties Real Estate Investment Trust (TSX: AP.UN) reported a 3% decline in operating income for the third quarter compared with the same period last year. The company attributed this to a slower pace of lease signings, which has limited occupancy growth across its portfolio. Higher interest expenses, up 13.2% year-on-year to CAD 35.5 million, further impacted earnings as property sales were delayed. The REIT expects its same-asset NOI to fall by 1% in 2025 and anticipates a 10% decline in diluted FFO and AFFO per unit, while confirming it will not meet its 90% occupancy goal by year-end.
Allied Properties Real Estate Investment Trust reported that its third-quarter operating income dropped 3% from a year earlier, mainly because of slower lease finalization. The company said this delay has affected its occupancy targets and weighed on quarterly results. Advertisement
Allied, which focuses on urban office and mixed-use spaces across major Canadian cities, stated that the total occupied and leased area is expected to remain unchanged through the rest of the year. Despite efforts to increase leasing activity, management noted that progress has been slower than anticipated, especially in the Toronto and Calgary markets.
The company was able to lease more vacant space in Montréal and Vancouver during the quarter, but those gains were not enough to offset lower occupancy elsewhere. Allied said its target of achieving a 90% occupancy rate by year-end will not be met.
Interest expenses rose 13.2% year-on-year to CAD 35.5 million, mainly because of delays in selling non-core assets. The company had earlier planned to use proceeds from these property sales to lower debt and interest costs. However, the postponement has increased financial pressure and reduced flexibility for reinvestment.
Looking ahead, Allied expects its same-asset net operating income to decline by around 1% in 2025. Diluted funds from operations (FFO) and adjusted funds from operations (AFFO) per unit are both projected to fall by nearly 10% next year. Management attributed these expected declines to higher financing costs and persistent softness in the leasing environment for office spaces.
Analyst sentiment around the stock remains cautious. The current average analyst rating is "hold," with four analysts recommending a "buy" or "strong buy," two maintaining a "hold," and three suggesting a "sell" or "strong sell." The median 12-month price target stands at CAD 18.75, roughly 1.8% below its recent closing price of CAD 18.42.
At present, Allied's shares trade at about 19 times projected earnings for the next 12 months, compared with a price-to-earnings ratio of 16 three months ago. The higher valuation reflects market expectations that leasing momentum could gradually recover as office demand stabilizes, though near-term challenges remain.
Allied's management acknowledged that slower lease signings have been the main reason behind weaker financial performance this year. The company continues to focus on leasing vacant properties in its major markets while also exploring selective asset sales to strengthen its balance sheet.
Source Reuters
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
