TORONTO, April 30, 2024 (GLOBE NEWSWIRE) -- Allied Properties Real Estate Investment Trust ("Allied") (TSX: "AP.UN") today announced results for the three months ended March 31, 2024. Results In the first quarter, Allied's operating income from continuing operations was $78 million, up 2% from the comparable quarter last year. Allied's net loss and comprehensive loss was $19 million, in large part due to a fair value loss on investment properties flowing from declines in development-property valuations in Toronto, Edmonton and Montréal ($31 million) and declines in rental-property valuations in Toronto ($88 million). FFO(1) was $81 million (57.8 cents per unit), in-line with $81 million (58.0 cents per unit) in the comparable quarter last year. AFFO(1) was $75 million (53.7 cents per unit), up slightly from $74 million (53.3 cents per unit) in the comparable quarter last year. This resulted in FFO and AFFO pay-out ratios(1) in the first quarter of 77.8% and 83.8%, respectively. Same Asset NOI(1) from Allied's rental portfolio was down 2.0% while Same Asset NOI from its total portfolio was up 2.9%, reflecting the productivity of its upgrade and development portfolio. Operations Knowledge-based organizations continue to prefer distinctive workspace in mixed-use, amenity-rich urban neighbourhoods in Canada's major cities. As a result, demand for Allied's workspace across the country continues to be evident and quantifiable. Allied conducted 300 lease tours in its rental portfolio in the first quarter. Allied's occupied and leased area at the end of the quarter was 85.9% and 87.0%, respectively. Allied leased a total of 538,923 square feet of GLA in the first quarter, 526,684 square feet in its rental portfolio and 12,239 square feet in its development portfolio. Of the 526,684 square feet Allied leased in its rental portfolio, 192,303 square feet were vacant space, 164,649 square feet were maturing in the quarter and 169,732 square feet were maturing after the quarter. Average in-place net rent per occupied square foot held in the first quarter at $24.10. Allied continued to achieve rent increases on renewal (up 4.7% ending-to-starting base rent and up 9.7% average-to-average base rent). Allied continues to focus on user experience with a view to ensuring that its properties remain conducive to human wellness, creativity, connectivity and diversity for the tens of thousands of people in Canada's major cities who use Allied workspace daily. Allied completed its fourth consecutive annual user-experience assessment with Grace Hill KingsleySurveys in late 2023. All rating areas improved over the prior year, and Allied exceeded industry averages materially in most rating areas, including the all-important net promoter score, which Allied exceeded by 250%. Management expects these strong and quantifiable results to support Allied's ongoing leasing efforts in 2024. Portfolio Optimization While not minimizing the importance of near-term results, Allied remains intensely focused on the longer-term aspects of its commercial real estate business in a manner that Management believes is in full alignment with equity and debt investors. Management continues to believe strongly in urban intensification and humanistic operation and is managing Allied's assets accordingly. As part of a two-fold strategic objective in 2024, Allied will (i) continue the ongoing upgrade of its urban workspace portfolio and (ii) establish its urban rental-residential portfolio. In furtherance of this objective, Management pursued three transactions in the first quarter (TELUS Sky in Calgary, 400 West Georgia in Vancouver and 19 Duncan in Toronto), two of which closed at the onset of the second quarter and the third of which is expected to close late in the second quarter. As part of a related strategic objective in 2024, Allied will sell less-strategic properties in its portfolio at IFRS value for aggregate proceeds of up to $200 million. In furtherance of this objective, Management initiated the sale of less-strategic properties in Montréal and Toronto in response to unsolicited offers to purchase, with three properties in Montréal expected to be sold early in the third quarter for aggregate closing proceeds of approximately $64 million plus a potential residential density bonus of up to $16 million on final rezoning of one of the properties. For Allied, a less strategic property is generally one that is smaller in size and not an integral part of a major concentration or assembly of distinctive urban workspace in its portfolio. Outlook Allied owns and operates three categories of distinctive urban workspace in Canada's major cities: Allied Heritage (Class I workspace); Allied Modern (workspace developed or redeveloped in the last decade); and Allied Flex (workspace in buildings on underutilized land to be redeveloped in the next decade). In the first quarter, Management experienced strong and quantifiable demand for all three categories of office space, as well as strong and quantifiable engagement among users of Allied workspace generally. Management expects this to underpin operating results in 2024 that will fully support Allied's current distribution commitment. Allied expects to continue (i) the ongoing upgrade of its urban workspace portfolio, (ii) the ongoing establishment of its urban rental-residential portfolio and (iii) the sale of less-strategic properties in its portfolio. Management expects that these portfolio optimization efforts will (i) materially enhance the productivity of Allied's national portfolio of urban income-producing properties and (ii) continue the ongoing strengthening of Allied's debt-metrics, to which Allied remains deeply committed. Financial Measures The following table summarizes GAAP financial measures for the first quarter:   For the three months ended March 31 (in thousands except for % amounts)   2024     2023   Change % Change Continuing operations         Rental revenue $ 143,577   $ 138,490   $ 5,087   3.7 % Property operating costs $ (65,106 ) $ (61,325 ) $ (3,781 ) (6.2 )% Operating income $ 78,471   $ 77,165   $ 1,306   1.7 % Interest income $ 14,759   $ 9,744   $ 5,015   51.5 % Interest expense $ (23,431 ) $ (22,564 ) $ (867 ) (3.8 )% General and administrative expenses $ (6,498 ) $ (6,170 ) $ (328 ) (5.3 )% Condominium marketing expenses $ (35 ) $ (120 ) $ 85   70.8 % Amortization of other assets $ (378 ) $ (370 ) $ (8 ) (2.2 )% Net income (loss) from joint venture $ 752   $ (3,006 ) $ 3,758   125.0 % Fair value loss on investment properties and investment properties held for sale $ (119,192 ) $ (78,357 ) $ (40,835 ) (52.1 )% Fair value gain on Exchangeable LP Units $ 29,641   $ —   $ 29,641   100.0 % Fair value gain (loss) on derivative instruments $ 7,148   $ (8,024 ) $ 15,172   189.1 % Net loss and comprehensive loss from continuing operations $ (18,763 ) $ (31,702 ) $ 12,939   40.8 % Net income and comprehensive income from discontinued operations $ —   $ 18,019   $ (18,019 ) (100.0 )% Net loss and comprehensive loss $ (18,763 ) $ (13,683 ) $ (5,080 ) (37.1 )%           The following table summarizes other financial measures as at March 31, 2024, and March 31, 2023:   As at March 31 (in thousands except for per unit and % amounts)   2024     2023   Change % Change Investment properties (1) $ 9,303,305   $ 9,691,030   $ (387,725 ) (4.0 )% Unencumbered investment properties (2) $ 8,634,755   $ 8,388,680   $ 246,075   2.9 % Total Assets (1) $ 10,475,397   $ 11,968,357   $ (1,492,960 ) (12.5 )% Cost of PUD as a % of GBV (2)   11.1 %   11.5 %   —   (0.4 )% NAV per unit (3) $ 44.84   $ 50.41   $ (5.57 ) (11.0 )% Debt (1) $ 3,719,172   $ 4,340,919   $ (621,747 ) (14.3 )% Total indebtedness ratio (2)   35.9 %   36.5 %   —   (0.6 )% Annualized Adjusted EBITDA (2) $ 386,012   $ 411,980   $ (25,968 ) (6.3 )% Net debt as a multiple of Annualized Adjusted EBITDA (2) 9.4x 10.5x (1.1x) —   Interest coverage ratio including interest capitalized and excluding financing prepayment costs - three months trailing (2) 2.8x 2.4x 0.4x —   Interest coverage ratio including interest capitalized and excluding financing prepayment costs - twelve months trailing (2) 2.6x 2.8x (0.2x) —   (1) This ...