Allied Properties Real Estate Investment Trust AP-UN-T reinforced its financial foundations on Tuesday by launching a $500-million equity offering to pay down debt, and announced its founder will depart this spring.
Toronto-based Allied, one of the country’s largest publicly traded office building owners, plans to sell $350-million of units to investors in a marketed offering and raise an additional $150-million by selling units in a private placement.
Allied owes lenders $4.7-billion. In December, the REIT surprised analysts and investors by cutting its monthly distributions by 60 per cent, a move that was also driven by the need to pay down debt. In 2023, Allied tried to defuse debt concerns by selling data centres in downtown Toronto for $1.35-billion.
Over the past five years, the price of Allied units declined by 61 per cent.
On Tuesday, Allied chief executive Cecilia Williams said in a press release the company is raising money because “the return to historical occupancy levels has taken longer than expected.”
“We’re seeing an increase in demand and limited new supply on the horizon,” Ms. Williams said. “Against this backdrop we’re executing an action plan to strengthen our balance sheet and improve financial flexibility.”
Allied’s debt repayment strategy also includes raising $500-million from property sales by the end of 2026. So far this year, the company has reached deals on the sale of $46-million in properties.
Allied had tenants paying leases on 87.4 per cent of its rentable space at the end of December, with occupancy rates almost unchanged from a year earlier.
Allied Properties REIT slashes distribution by 60 per cent as units trade near financial-crisis lows
Allied named Ms. Williams as CEO in May, 2023. She took over from founder Michael Emory, who became executive chairman.
On Tuesday, Allied announced Mr. Emory will step down as of May 2 at the REIT’s annual meeting.
The REIT said Mr. Emory’s planned departure “reflects the independent trustees’ confidence in Allied’s CEO and senior management team.”
In the past three years, private equity funds acquired several REITs on expectations of a rebound in office and residential real estate. Tricon Residential Inc. was acquired by Blackstone Inc. in April, 2024. InterRent Real Estate Investment Trust was slated to be purchased by its founder and Singapore’s GIC last year and is in the process of getting final approvals.
