Allied Properties REIT’s distinctive portfolio of urban workspace properties provides exposure to Canada’s most economically vibrant cities, where knowledge-based organizations increasingly cluster to access talent, amenities, and collaborative ecosystems that suburban locations cannot replicate.
The strategic initiatives directly address investor concerns while positioning for value realization. The $300+ million non-core asset disposition program targets lower-yielding properties in secondary locations, with proceeds earmarked for debt reduction that will improve leverage metrics and lower interest costs.
Operational momentum is building across key markets. Recent leasing successes (including major expansions in Montreal and strategic leases at Vancouver trophy assets) demonstrate tenant demand for this REIT’s unique workspace offerings.
Meanwhile, while a distribution cut is possible, the units trade at just 7.1 times the company’s projected 2025 cash flow per unit.
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST (Toronto symbol AP.UN; www.alliedreit.com) owns 186 office buildings, including eight properties under development. All are in seven urban markets—Montreal, Ottawa, Toronto, Kitchener, Calgary, Edmonton and Vancouver. The overall occupancy rate is 87.2%.
Allied aims to distinguish itself with workspace innovation—including through technology. The REIT says light harvesting has made great strides, as has fresh air delivery. Raised-floor systems have made aesthetic and practical contributions in recent years. Aesthetically, they declutter the workspace and obviate the need for drop-ceilings. Practically, they improve air circulation by pressurizing the underfloor area and depressurizing the actual work environment.
The trust’s composition remains strategically focused on three urban workspace formats: Allied Heritage, Allied Modern, and Allied Flex. This diversified approach to workspace solutions positions Allied to capture varying tenant preferences and market demands across different sectors and company sizes.
Allied Properties REIT’s Balance sheet may need more asset sales or a distribution cut
Allied has already executed several critical strategic initiatives in 2025 that significantly strengthen its financial foundation and growth prospects. Most notably, the company completed a $400 million offering of senior unsecured debentures in April 2025, consisting of $150 million in Series L floating-rate debentures and $250 million in Series M fixed-rate debentures, both maturing in April 2027. This refinancing successfully addressed the company’s $400 million unsecured term loan that was scheduled to mature in October 2025, effectively extending the debt maturity profile and providing enhanced financial flexibility.
[ofie_ad]
Revenue in the quarter ended June 30, 2025, fell 1.2%, to $145.0 million from $146.8 million a year earlier. Higher costs and interest expenses cut cash flow by 5.9%, to $69.2 million, or $0.494 per unit, from $73.5 million, or $0.526.
In 2025, Allied seeks to sell non-core properties for at least $300 million. It will apply the proceeds to its total debt of $4.56 billion (as of June 30, 2025).
Going forward, the REIT should continue to benefit as more workers return to offices, particularly in Toronto, Montreal and Vancouver, in the wake of the COVID-19 lockdowns.
The company’s units trade at just 7.1 times Allied’s projected 2025 cash flow of $2.08 a unit.
Allied last raised your monthly distribution with the January 2023 payment by 2.9%. The current annual rate of $1.80 a unit yields a very high 11.8%. Payments accounted for 90.9% of its cash flow in the latest quarter
Meantime, the REIT is considering a number of options to pay down its high debt, which may include a distribution cut in 2026 to strengthen the balance sheet. Still, even with a cut, Allied’s yield would remain very high, and its longer-term growth prospects would still be attractive.
Recommendation in Canadian Wealth Advisor: Allied Properties REIT is a buy.
