An analyst at CIBC, Tal Woolley, has adjusted the price target for Allied Properties (APYRF, Financial), lowering it to C$17 from a previous target of C$17.50. The analyst maintains a Neutral rating on the stock following the transition of coverage. This revision reflects the ongoing challenges that Allied Properties faces amid the increasing trend towards remote work following the COVID-19 pandemic, which has impacted the company's portfolio. This environment continues to pose difficulties for the real estate sector as companies and employees adapt to new working models.
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.
