Allied Properties REIT (AP-UN-T) has announced a plan to raise $500 million in equity as it works to improve its balance sheet in the face of a billion-dollar writedown on its property values in Q4 and an accompanying billion-dollar net loss.

The trust also announced founder Michael Emory will depart his position as executive chair of Allied's board in the spring. Emory had already stepped down from the roles of CEO and president in 2023, when current leader Cecilia Williams took the reins.

During a brief earnings call Wednesday morning, Williams thanked Emory for his support and guidance.

"I feel truly grateful to have had the opportunity to work with and learn from Michael over the past 11 years," she said. "Having been CEO for almost three years now, I know the team is ready for this..."

The net loss reported for Q4, as well as its full-year net loss of $1.328 billion, are related to the property writedowns on the REIT's mainly office and commercial portfolio across Canada. The Q4 reduction in its portfolio valuations brought its full-year writedowns to a total of $1.408 billion.

"These results are unsatisfactory and below our expectations. As a result we began executing an action plan focused on strengthening the balance sheet," Williams said.

The Toronto-based REIT has a portfolio of 191 properties (over 14 million square feet of leasable space) plus development projects valued at approximately $8.4 billion, and total assets of $9.3 billion. It has a total debt of $4.7 billion, for an indebtedness ratio of 50.7 per cent.

For the full-year 2025, rental revenues rose slightly to $592,379 from $592,040 in 2024. Operating income dipped from $328 million to $317 million.

Allied's units slumped over 28 per cent, to just above $10, on the news in late-morning trading Wednesday on the TSX.

Slow recovery in Canadian office sector

These figures are reflective of a slow but steady recovery in the Canadian office leasing landscape during 2025, and came despite Allied selling several assets as part of a previously announced campaign to reduce debt.

At the end of 2025, Allied’s occupied and leased area was 85.3 per cent and 87.4 per cent, respectively, steady from Q4 2024 when those figures were 85.9 per cent and 87.2 per cent, respectively. Allied reported 801,000 square feet of leasing activity in the second half of 2025, its strongest performance since 2020.

“While 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,” Williams said in the release accompanying Allied's financial reports. “Against this backdrop we’re executing an action plan to strengthen our balance sheet and improve financial flexibility. 

"This includes our previously announced distribution reset, advancing a growing non-core disposition pipeline, and pursuing a $500 million equity offering. These put Allied in a position of strength to benefit from the market recovery in 2026 and beyond.”

Allied had already reduced its distributions by 60 per cent, to 72 cents annually or six cents per month, in December.

Action plan and equity raise

The equity raise will comprise two offerings, a $350-million marketed public offering and $150-million concurrent private placement of units, with the proceeds allocated to debt repayment.

"While we recognize that the equity offering, if completed, will have a dilutive impact based on our assessment of available offerings we determined that proceeding with the offering was an appropriate step to support the company's capital structure," Williams said on the call.

Allied's senior management did not take questions during the call, due to the equity offering.

Allied announced several other actions to strengthen its balance sheet, including a disposition pipeline of approximately $500 million. It has closed on $29 million in sales so far in 2026, and is firm on an additional $17 million of properties.

The remaining pipeline includes the recent addition of two "substantial rental-residential assets." The hope is to sell these properties during 2026, though Williams admitted on the call, "the timing of such transactions is not entirely within our control."

The REIT also offered an outlook for the next couple of years, forecasting slight dips in occupancy and operating income in 2026, with a gradual rise in occupancy to 88 to 90 per cent by 2028. On the debt front, after a significant rise from 10.8x to 12.9x this year, it projects net debt as a multiple of EBITDA to decline to the 11x range this year and to the low 9x range by 2028.

Allied's major developments

On the development front, Allied noted "increased capital intensity" during the past two years, which has elevated its debt.

The REIT acquired full ownership of M4 at Main Alley Campus in Vancouver, which is 90 per cent leased primarily to Netflix, in Q3 2025. Rental payments are to commence this quarter.

Allied's final committed development, KING Toronto at 489-539 King St. W., will comprise 440 condominiums (92 per cent pre-sold), 46,000 square feet of office, and 122,000 square feet of retail. Completion is expected in 2027.

Whole Foods Market is the retail anchor tenant, committed to occupy 32,878 square feet in August 2027. Allied is now responsible for onsite construction management of the development.

At 150 West Georgia, a municipally approved downtown Vancouver site, plans are in place for a 10-storey AI data centre, with BC Hydro committed to providing 39 MW of power and potential for up to 100 MW.

Allied extended Westbank’s loan on 150 West Georgia to Dec. 31, 2026, with additional security, as the project shifted from office to data centre. Allied and Westbank aim to sell a major portion of the site to a Canadian operator, partially repaying Allied’s loan while the REIT would retain a minority interest.