Allied Announces Third-Quarter Results

Core Insights - Allied Properties Real Estate Investment Trust reported mixed results for Q3 2025, with challenges in lease finalization and elevated interest expenses impacting performance [1][14][12] Operations - The portfolio consists of three urban workspace formats: Allied Heritage, Allied Modern, and Allied Flex, with leasing activity improving in Montréal and Vancouver, but overall occupancy rates falling short of the 90% target [2][4] - A total of 241 lease tours were conducted in Q3, with the average size of requirements per tour more than doubling compared to the previous quarter [3] - Occupied and leased areas were reported at 84% and 87.4%, respectively, with 62% of leases maturing in the quarter renewed [4][5] Financial Performance - Rental revenue for Q3 2025 was $147.932 million, a slight increase of 0.9% from $146.593 million in Q3 2024 [16] - Operating income decreased by 3.0% to $80.727 million, primarily due to property dispositions and known non-renewals [16][20] - Interest expense rose by 13.2% to $35.488 million, contributing to overall financial pressure [16] Portfolio Optimization - Allied has sold non-core properties in Edmonton, Vancouver, and Montréal for a total of $46 million, with additional sales expected to close by mid-November for $55 million [7][8] - The company is finalizing sales for three more properties in Montréal, anticipated to yield $85 million [8] Balance-Sheet Management - Allied raised $1.3 billion from the bond market to strengthen its balance sheet, retiring various loans and reducing short-term variable-rate debt [9][10] - As of Q3, Allied had $51 million drawn on its new $800 million unsecured revolving operating facility, with cash reserves of $63 million [11] Outlook - The company anticipates that the pace of lease finalization and debt reduction will occur later than initially expected due to ongoing market conditions [14][13] - Management expects the same asset NOI to decline approximately 1% for the year, with year-end occupancy rates projected to align with Q3 levels [15]