Raymond James' analyst, Brad Sturges, has revised the price target for Allied Properties (APYRF, Financial), reducing it slightly from C$16.50 to C$16.25. Despite this adjustment, the firm maintains a Market Perform rating on the company’s stock.
APYRF Key Business Developments
Release Date: May 01, 2025
- Net Operating Income Increase: 6.5% increase in Q4 2024 compared to Q4 2023.
- Average In-Place Net Rent: Increased by 5.4% from $24.10 to $25.41 per occupied square foot.
- Same-Store NOI Increase: 2.2% increase for the year 2024.
- Development Completions Contribution: Added approximately $26 million to 2024 EIA.
- Dispositions: Completed $229 million in 2024, above the target of $200 million.
- Acquisitions: $677 million of strategic assets acquired in 2024.
- Liquidity: Ended 2024 with $863 million available.
- Leased Area Stability: Held steady for the 3rd consecutive quarter in Q4 2024.
- Leasing Activity Increase: 14% increase in total square feet leased in 2024 compared to 2023.
- Retention Rate: Improved to 69% in 2024, up from 61% in 2023.
- Net Promoter Score: Increased by 30% year over year, 150% above the index average.
- Targeted Dispositions for 2025: At least $300 million.
- Net Debt to EBITDA Target: Below 10 times by the end of 2025.
- Same-Store NOI Increase for 2025: Expected to increase by approximately 4.8%.
- FFO and AFFO Contraction: Expected contraction of approximately 4% due to lower interest income and higher interest expense.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Allied Properties Real Estate Investment Trust (APYRF, Financial) achieved a 6.5% increase in net operating income in Q4 2024 compared to Q4 2023.
- The company improved its retention rate to 69% in 2024, up from 61% in 2023, with expectations to reach historical rates of 75% in 2025.
- Leasing activity showed significant improvement, with a 41% increase in new leasing activity in 2024 compared to the prior year.
- Development completions in 2025 are expected to add $13 million to the annual EBITDA run rate, enhancing operating performance.
- The balance sheet was strengthened by completing $229 million in dispositions of non-core assets in 2024, exceeding the target of $200 million, with proceeds allocated to debt repayment.
Negative Points
- The company anticipates a 4% contraction in FFO and AFFO in 2025 due to lower interest income and higher interest expenses.
- The timing of 2024 acquisitions resulted in short-term downward pressure on debt metrics, with a temporary increase in debt expected in early 2025.
- Net interest expense is expected to increase in 2025 due to 2024 acquisitions and lower capitalized interest.
- The company faces challenges in achieving its target of at least 90% occupied and leased area by the end of 2025, with a slow start expected in the first half of the year.
- There is uncertainty regarding the timing of the repayment of the 150 West Georgia loan, which is tied to the sale of data center air rights.
