Allied Properties REIT (AP-UN-T) will offer up to $345 million in units to raise equity for its ongoing acquisitions and extensive value-add programs. The offering is designed to help Allied remain leverage-neutral during a year when it has committed about $1 billion to those efforts.
To date in 2019, Allied has made about $600 million in acquisitions and allocated $400 million to its value-add program. During that time, it has acquired 16 properties and has been working to develop or redevelop eight assets across the country.
Allied also announced agreements for three additional acquisitions in the same release, calling them “strategic infill properties” in Montreal, Toronto and Calgary. The aggregate price for the three properties will be $53 million.
The Montreal acquisition will augment one of Allied’s concentrations on Saint-Laurent Boulevard. The Toronto acquisition will augment Allied’s assembly between Front Street East and The Esplanade, while the Calgary acquisition expands Allied’s extensive portfolio along the Beltline.
All three acquisitions are scheduled to close late in 2019 or early in 2020.
Allied Properties financing
When the latest acquisitions and offerings are complete, Allied says it will have funded approximately 87 per cent of its 2019 acquisition and value-add programs with equity, the remaining 13 per cent with debt.
The trust expects to inject additional funds to both programs over the remainder of 2019 and into 2020. This would mean that by early 2020, Allied expects its funding will be essentially leverage-neutral compared to the end of Q3 2019.
In its quarterly report, Allied said its total indebtedness ratio at that time was 28.1 per cent.
The unit offering will be led by Scotiabank, RBC Capital Markets and Goldman Sachs Canada Inc., issuing on a bought-deal basis 5,700,000 units at a per-unit price of $52.70 to raise about $300 million.
An over-allotment option will make available an additional 855,000 units on the same terms and conditions, accounting for the remaining $45 million.
The offering is expected to close on or about Dec. 4, 2019.
Allied Properties also issued a successful $230-million offering earlier this year. It closed in March.
Allied’s 2019 activities
As reported in its Q3 2019 financial statements, the 16 new properties it has acquired so far this year have added 1.9 million square feet of leaseable space to Allied’s portfolio and contributed to a bottom line increase in its assets from $6.7 billion to $7.8 billion.
It has purchased properties in Kitchener, Montreal, Calgary and Vancouver, some outright and others in partnership. Allied has not sold any properties in 2019.
Eight of the acquisitions fall into the office/retail sectors and eight into multiresidential. The largest is the 700 de la Gauchetiere office building in Montreal, a million-square-foot property which cost Allied $335,714,000.
Among its properties currently under development are (each is listed at Allied’s share): The Well in Toronto (746,000 square feet of office and retail), TELUS Sky in Calgary (218,000 square feet of office/retail/residential), 425 Viger in Montreal (315,000 square feet of office and retail) and Breithaupt Phase III in Kitchener (147,000 square feet of office).
On completion, Allied’s share will total 1,857,000 square feet of GLA.
Allied also completed work on 620 King West in Toronto in early 2019.
During the Q3 2019 period, Allied’s net income remained steady at 47 cents per unit on a year-over-year basis. Its quarterly distribution rose from 39 to 40 cents per unit.
Toronto-based Allied is a leading owner, manager and developer of:
* distinctive urban workspace in Canada’s major cities;
* and network-dense urban data centres in Toronto forming Canada’s hub for global connectivity.
Allied owns and operates a 191-property portfolio in seven Canadian markets – Montreal, Ottawa, Toronto, Kitchener, Calgary, Edmonton and Vancouver.