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Allied Properties Real Estate Investment Trust (“Allied”) (TSX: “AP.UN”) today announced results for the three
months ended March 31, 2023. “Despite continuing macroeconomic uncertainty, our operating income was up
14.5% in the rst quarter, in large part because of development completions and contribution from last year’s
portfolio acquisition,” said Michael Emory, President & CEO. “Our FFO per unit was slightly below forecast,
primarily because we capitalized less interest than anticipated. Our AFFO per unit was above forecast. Average
in-place net rent per occupied square foot continued to rise in the quarter, reaching $23.35 at quarter-end, and
we continued to achieve rent increases on renewal. As a result, NOI and same-asset NOI were a bit higher than
forecast for the quarter.”
FINANCIAL RESULTS
The following table summarizes GAAP nancial measures for the rst quarter:
TORONTO, APRIL 26, 2023
Allied Announces
First-Quarter Results
FOR THE THREE MONTHS ENDED MARCH 31
(In thousands) 2023 2022 CHANGE % CHANGE
Rental Revenue $138,490 $120,942 $17,548 14.5%
Property operating costs $(61,325) $(53,535) $(7,790) (14.6%)
Operating income $7 7,165 $67,407 $9,758 14.5%
Interest expense $(22,564) $(15,161) $(7,403) (48.8%)
General and administrative expenses $(6,170) $(6,882) $712 10.3%
Condominium marketing expenses $(120) $(113) $(7) (6.2%)
Amortization of other assets $(370) $(261) $(109) (41.8%)
Interest income $9,744 $7,024 $2,720 38.7%
Fair value loss on investment properties and investment
properties held for sale $(78,357) $(10,069) $(68,288) (678.2%)
Fair value (loss) gain on derivative instruments $(8,024) $19,198 $(27,222) (141.8%)
Net (loss) income from joint venture $(3,006) $7,731 $(10,737) (138.9%)
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Allied’s operating income was up 14.5% in the rst quarter, in large part because of development completions
and contribution from the portfolio (the “Portfolio”) acquired from Choice Properties REIT at the end of the
comparable quarter last year. Despite intervening macroeconomic uncertainty, Allied made measurable progress
with the Portfolio. While occupancy is only up slightly after a year of ownership, average in-place net rent per
occupied square foot increased by 5.5% from $24.74 to $26.11, the weighted average lease term increased by 21%
from 4.3 years to 5.2 years, annualized NOI increased by 3.9% from $33.6 million to $34.9 million and the IFRS
value increased by 4.8% from $775 million to $812 million.
Considerably higher interest expense in the rst quarter put downward pressure on Allied’s FFO per unit, which
was 58 cents for the quarter, slightly below internal forecast. AFFO per unit of 53 cents was above internal
forecast.
Allied recorded a fair value loss on investment properties of $78 million in the rst quarter. $29 million is the
result of modestly higher estimated cost-to-complete of development projects in Montréal. The balance reects
the fair-value impact of longer periods of turnover vacancy in Allied’s rental portfolio.
FOR THE THREE MONTHS ENDED MARCH 31
(In thousands) 2023 2022 CHANGE % CHANGE
Net (loss) income and comprehensive (loss) income from
continuing operations $(31,702) $68,874 $(100,576) (146.0%)
Net income and comprehensive income from discontinued
operations $18,019 $118,316 $(100,297) (84.8%)
Net (loss) income and comprehensive (loss) income $(13,683) $187,190 $(200,873) (107.3%)
The following table summarizes non-GAAP nancial measures for the rst quarter:
FOR THE THREE MONTHS ENDED MARCH 31
(In thousands except for per unit and % amounts)
(1)
2023 2022 CHANGE % CHANGE
Adjusted EBITDA $102,995 $91,722 $11,273 12.3%
Same asset NOI - rental portfolio $68,221 $68,086 $135 0.2%
Same Asset NOI - total portfolio $86,354 $87,367 $(1,013) (1.2%)
FFO $81,175 $77,340 $3,835 5.0%
FFO per unit (diluted) $0.581 $0.603 $(0.022) (3.6%)
FFO pay-out ratio 77.5% 72.4% — 5.1%
All amounts below are excluding condominium related
items and the mark-to-market adjustment on unit-based
compensation:
FFO $81,085 $77,573 $3,512 4.5%
FFO per unit (diluted) $0.580 $0.605 $(0.025) (4.1%)
FFO pay-out ratio 7 7.6% 72.1% — 5.5%
AFFO $74,482 $71,571 $2,911 4.1%
AFFO per unit (diluted) $0.533 $0.558 $(0.025) (4.5%)
AFFO pay-out ratio 84.4% 78.2% — 6.2%
(1) These non-GAAP measures include the results of the continuing operations and the discontinued operations (except for same asset NOI - rental
portfolio, which only includes continuing operations). Refer to the Non-GAAP Measures section below.
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The following table summarizes other nancial measures as at March 31, 2023 and March 31, 2022:
AS AT MARCH 31
(In thousands except for per unit and % amounts) 2023 2022 CHANGE % CHANGE
Investment properties and investment properties
held for sale
(1)
$11,052,110 $10,599,738 $452,372 4.3%
Unencumbered investment properties
and investment properties
held for sale
(2)
$9,749,760 $9,369,227 $380,533 4.1%
Total Assets
(1)
$11,968,357 $11,413,692 $554,665 4.9%
Cost of PUD as a % of GBV
(2)
11.5% 10.8% — 0.7%
NAV per unit $50.41 $50.92 $(0.51) (1.0)%
Debt
(1)
$4,340,919 $3,769,606 $571,313 15.2%
Total indebtedness ratio
(2)
36.5% 33.3% — 3.2%
Annualized Adjusted EBITDA
(2)
$411,980 $366,888 $45,092 12.3%
Net debt as a multiple of Annualized Adjusted EBITDA
(2)
10.5x 10.2x 0.3x —
Interest coverage ratio including interest capitalized and
excluding financing prepayment costs - three months trailing
(2)
2.4x 3.3x (0.9x) —
Interest coverage ratio including interest capitalized and
excluding financing prepayment costs - twelve months trailing
(2)
2.8x 3.4x (0.6x) —
(1) This measure is presented on an IFRS basis.
(2) This is a non-GAAP measure, and includes the results of the continuing operations and the discontinued operations. Refer to the Non-GAAP
Measures section below.
LEASING
Allied had 243 lease tours in its rental portfolio in the rst quarter, slightly higher than the 240 in the comparable
quarter last year and considerably higher than the 226 in the prior quarter. Allied’s occupancy and leased area
declined to 88.2% and 88.8%, respectively, though they were a bit better than forecast for quarter-end. The
modest decline from the prior quarter was driven by a non-renewal in Kitchener (with a large, long-time user
moving into an owned building) and the transition of The Lougheed Building in Calgary from PUD to the rental
portfolio. Allied is advanced in replacing the Kitchener user and working with an educational organization
toward leasing The Lougheed Building in its entirety.
Average in-place net rent per occupied square foot continued to rise in the rst quarter, reaching $23.35 at
quarter-end, and Allied continued to achieve rent increases on renewal (up 11% ending-to-starting base rent and
up 18% average-to-average base rent). As a result, NOI and same-asset NOI were slightly higher than forecast for
the quarter.
The leasing metrics for the three months ended March 31, 2023, and March 31, 2022 are set out in the table
below:
AS AT MARCH 31
2023 2022 CHANGE % CHANGE
Leased area
(1)
88.8% 89.3% — (0.5%)
Occupied area
(1)
88.2% 88.3% — (0.1%)
Average in-place net rent per occupied square foot -
excluding UDC in both periods $23.35 $22.52 $0.83 3.7%
(1) This metric excludes the assets held for sale based on the assets held for sale classiication at the end of each period.
Given the scale of Allied’s rental portfolio, upgrade activity is now constant in all markets, particularly Montréal,
Toronto and Vancouver. The goal of the upgrade activity is to serve users better and boost net rent per occupied
square foot over time. At the end of the rst quarter, Allied’s rental portfolio was comprised of (i) 14,047,591
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square feet of GLA in buildings that are largely stabilized and (ii) 375,061 square feet of GLA in buildings that are
undergoing active upgrade. The occupied area of the former was 88.8%, with leased area at 89.3%. The occupied
area of the latter was 68.7%, with leased area at 69.3%.
SALE OF UDC PORTFOLIO
Scotiabank and CBRE are well advanced in conducting a comprehensive sale process with respect to Allied’s UDC
portfolio. They contacted nearly 100 potential buyers worldwide in January, approximately 30% of which signed
Non-Disclosure Agreements and gained access to the Virtual Data Room. Allied received rst-round bids on
March 24 and narrowed the eld for the second round and again for a third round, at the end of which it expects
to receive rm bids. While Management cannot yet be certain as to the outcome, it expects a rm agreement and
closing within the parameters anticipated when Allied embarked on the process.
Allied’s principal motivation in selling the UDC portfolio is two-fold. First, Allied wants to rearm its mission
and pursue it over the next few years with low-cost capital. Second, it wants to supercharge its balance sheet and
reduce its dependence on the capital markets going forward.
Allied expects to use most of the sale proceeds to retire debt and the balance to fund current development
activity. Allied may elect to use a portion of the sale proceeds to buy back units under its NCIB. It does not expect
to use any of the proceeds to fund acquisitions, nor does it expect to engage in material acquisition activity in
2023.
OUTLOOK
Allied’s internal forecast for 2023 calls for low-to-mid-single-digit percentage growth in each of same asset NOI,
FFO per unit and AFFO per unit. Allied does not forecast NAV per unit growth in any given time period.
Allied continues to have deep condence in, and commitment to, its stratey of consolidating and intensifying
distinctive urban workspace in Canada’s major cities. Allied rmly believes that its stratey is underpinned by
the most important secular trends in Canadian and global real estate. Allied also rmly believes that it has the
properties, the nancial strength, the people and the platform necessary to execute its stratey for the ongoing
benet of its Unitholders and other constituents.
NONGAAP MEASURES
Management uses nancial measures based on International Financial Reporting Standards (“IFRS” or “GAAP”)
and non-GAAP measures to assess Allied’s performance. Non-GAAP measures do not have any standardized
meaning prescribed under IFRS, and therefore, should not be construed as alternatives to net income or cash
ow from operating activities calculated in accordance with IFRS. Refer to the Non-GAAP Measures section on
page 22 of the MD&A as at March 31, 2023, available on www.sedar.com, for an explanation of the composition
of the non-GAAP measures used in this press release and their usefulness for readers in assessing Allied’s
performance. Such explanation is incorporated by reference herein.
RECONCILIATIONS OF NONGAAP MEASURES
The following tables reconcile the non-GAAP measures to the most comparable IFRS measures for the three
months ended March 31, 2023, and the comparable period in 2022. These terms do not have any standardized
meaning prescribed under IFRS and may not be comparable to similarly titled measures presented by other
publicly traded entities.
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SAME ASSET NOI
Same asset NOI, a non-GAAP measure, is measured as the net operating income for the properties that Allied
owned and operated for the entire duration of both the current and comparative period. Same asset NOI of the
assets held for sale for the three months ended March 31, 2023, consists of ve investment properties.
THREE MONTHS ENDED CHANGE
MARCH 31,
2023
MARCH 31,
2022
$ %
Rental Portfolio - Same Asset NOI $68,221 $68,086 $135 0.2%
Assets Held for Sale - Same Asset NOI 13,522 16,279 (2,757) (16.9)
Rental Portfolio and Assets Held for Sale -
Same Asset NOI $81,743 $84,365 $(2,622) (3.1%)
Development Portfolio - Same Asset NOI $4,611 $3,002 $1,609 53.6%
Total Portfolio - Same Asset NOI $86,354 $87,367 $(1,013) (1.2%)
Acquisitions $9,030 $— $9,030
Dispositions — 435 (435)
Lease terminations 193 124 69
Development fees and corporate items 2,125 3,188 (1,063)
Total NOI $ 97,7 02 $91,114 $6,588 7.2%
ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION “ADJUSTED EBITDA”
The following table reconciles Allied’s net (loss) income and comprehensive (loss) income to Adjusted EBITDA, a
non-GAAP measure, for the three months ended March 31, 2023 and March 31, 2022.
THREE MONTHS ENDED
MARCH 31,
2023
MARCH 31,
2022
Net (loss) income and comprehensive (loss) income for the period $(13,683) $187,190
Interest expense 24,335 16,669
Amortization of other assets 370 261
Amortization of improvement allowances 8,368 7,900
Fair value loss (gain) on investment properties and investment properties held for sale
(1)
75,791 (101,220)
Fair value loss (gain) on derivative instruments 8,024 (19,198)
Mark-to-market adjustment on unit-based compensation (210) 120
Adjusted EBITDA
(2)
$102,995 $91,722
(1) Includes Allied’s proportionate share of the equity accounted investment’s fair value loss on investment properties of $4,023 for the three months ended March 31,
2023 (March 31, 2022 - fair value gain on investment properties of $7,292).
(2) Includes the Urban Data Centre segment which was classied as a discontinued operation starting in Q4 2022.
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FUNDS FROM OPERATIONS “FFO” AND ADJUSTED FUNDS FROM OPERATIONS “AFFO”
The following tables reconcile Allied’s net (loss) income and comprehensive (loss) income to FFO, FFO excluding
condominium related items and the mark-to-market adjustment on unit-based compensation, AFFO, and AFFO
excluding condominium related items and the mark-to-market adjustment on unit-based compensation, which are
non-GAAP measures, for the three months ended March 31, 2023, and March 31, 2022.
THREE MONTHS ENDED
MARCH 31,
2023
MARCH 31,
2022
CHANGE
Net (loss) income and comprehensive (loss) income from continuing
operations $(31,702) $68,874 $(100,576)
Net income and comprehensive income from discontinued operations 18,019 118,316 (100,297)
Adjustment to fair value of investment properties and investment
properties held for sale 71,768 (93,928) 165,696
Adjustment to fair value of derivative instruments 8,024 (19,198) 27,222
Incremental leasing costs 2,240 2,353 (113)
Amortization of improvement allowances 8,185 7,7 67 418
Amortization of property, plant and equipment
(1)
100 — 100
Adjustments relating to joint venture:
Adjustment to fair value on investment properties 4,023 (7,292) 11,315
Amortization of improvement allowances 183 133 50
Interest expense
(2)
335 315 20
FFO $81,175 $77,340 $3,835
Condominium marketing costs 120 113 7
Mark-to-market adjustment on unit-based compensation (210) 120 (330)
FFO excluding condominium related items and the mark-to-market
adjustment on unit-based compensation $81,085 $77,573 $3,512
Amortization of straight-line rents (1,993) (209) (1,784)
Regular leasing expenditures (1,126) (3,195) 2,069
Regular maintenance capital expenditures (33) (386) 353
Incremental leasing costs (related to regular leasing expenditures) (1,568) (1,647) 79
Recoverable maintenance capital expenditures (1,835) (315) (1,520)
Adjustment relating to joint venture:
Amortization of straight-line rents (48) (250) 202
AFFO excluding condominium related items and the mark-to-market
adjustment on unit-based compensation $74,482 $71,571 $2,911
Weighted average number of units
(3)
Basic 139,765,128 128,074,012 11,691,116
Diluted 139,765,128 128,279,982 11,485,146
Per unit - basic
FFO $0.581 $0.604 $(0.023)
FFO excluding condominium related items and the mark-to-market adjust-
ment on unit-based compensation $0.580 $0.606 $(0.026)
AFFO excluding condominium related items and the mark-to-market
adjustment on unit-based compensation $0.533 $0.559 $(0.026)
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THREE MONTHS ENDED
MARCH 31,
2023
MARCH 31,
2022
CHANGE
Per unit - diluted
FFO $0.581 $0.603 $(0.022)
FFO excluding condominium related items and the mark-to-market adjust-
ment on unit-based compensation $0.580 $0.605 $(0.025)
AFFO excluding condominium related items and the mark-to-market
adjustment on unit-based compensation $0.533 $0.558 $(0.025)
Pay-out Ratio
FFO 77.5% 72.4% 5.1%
FFO excluding condominium related items and the mark-to-market adjust-
ment on unit-based compensation 7 7.6% 72.1% 5.5%
AFFO excluding condominium related items and the mark-to-market
adjustment on unit-based compensation 84.4% 78.2% 6.2%
(1) Property, plant and equipment relates to owner-occupied property.
(2) This amount represents interest expense on Allied’s joint venture investment in TELUS Sky and is not capitalized under IFRS, but is allowed as an
adjustment under REALPAC’s deinition of FFO.
(3) The weighted average number of units includes Units and Exchangeable LP Units. The Exchangeable LP Units are classiied as equity in the
unaudited condensed consolidated inancial statements as non-controlling interests.
CAUTIONARY STATEMENTS
This press release may contain forward-looking statements with respect to Allied, its operations, stratey,
nancial performance and condition and the expected impact of the global pandemic and consequent economic
disruption. These statements generally can be identied by use of forward-looking words such as “forecast”,
“may”, “will”, “expect”, “estimate”, “anticipate”, “intends”, “believe” or “continue” or the negative thereof or
similar variations. Allied’s actual results and performance discussed herein could dier materially from those
expressed or implied by such statements. Such statements are qualied in their entirety by the inherent risks
and uncertainties surrounding future expectations, including the eect of the global pandemic and consequent
economic disruption. Important factors that could cause actual results to dier materially from expectations
include, among other things, general economic and market factors, competition, changes in government
regulations and the factors described under “Risk Factors” in Allied’s Annual Information Form which is
available at www.sedar.com. The cautionary statements qualify all forward-looking statements attributable to
Allied and persons acting on its behalf. Unless otherwise stated, all forward-looking statements speak only as of
the date of this press release, and Allied has no obligation to update such statements.
ABOUT ALLIED
Allied is a leading operator of distinctive urban workspace in Canada’s major cities and network-dense
UDC space in Toronto. Allied’s mission is to provide knowledge-based organizations with workspace that is
sustainable and conducive to human wellness, creativity, connectivity and diversity. Allied’s vision is to make a
continuous contribution to cities and culture that elevates and inspires the humanity in all people.
FOR FURTHER INFORMATION, PLEASE CONTACT:
MICHAEL EMORY
President & Chief Executive Ocer
(416) 9770643
memory@alliedreit.com
TOM BURNS
Executive Vice President &
Chief Operating Ocer
(416) 9779002
tburns@alliedreit.com
CECILIA WILLIAMS
Executive Vice President &
Chief Financial Ocer
(416) 9779002
[email protected]