Allied Properties REIT recorded a net loss of $342.53 million in 2024, down 18.6 per cent from a year earlier, as president and CEO Cecilia Williams said the company is optimistic about the coming year.

The biggest drain on the balance sheet was a $557.57-million fair value loss on investment properties and investment properties held for sale. Still, that number was down 27.8 per cent from 2023.

Allied’s rental revenue rose by five per cent from the previous year to $592.04 million while operating income improved by 3.6 per cent to $328.47 million. Total net operating income fell by 4.3 per cent to $361.1 million.

Despite some of these numbers, however, Williams cited several reasons for optimism in 2025 during its annual investor and analyst conference call to present Allied’s results.

Improvements in leasing activity

Allied conducted 255 lease tours in its rental portfolio in the fourth quarter ended Dec. 31, and its occupied and leased areas were 85.9 per cent and 87.2 per cent respectively. Allied leased 571,298 square feet of gross leasable area in the fourth quarter.

“Our national portfolio’s leased area remained steady over the year and, with challenges starting to ease, we’re focused on improving both occupied and leased areas to at least 90 per cent by the end of 2025,” Williams said.

She expects Allied to outperform the market and for the bulk of the occupancy gains to come from Montreal and Toronto.

“Another positive metric in 2024 was our improved retention rate to 69 per cent, up from 61 per cent in 2023. We expect retention to continue improving in 2025, getting closer to our historical rate of 75 per cent.”

“We are currently engaged in discussions with 29 existing users that are exploring expansion options, representing approximately 150,000 to 200,000 square feet of net new leasing in aggregate,” said senior vice-president of national operations J.P. MacKay, who added that he’s seen a shift toward larger space requirements among prospective users.

Leasing activity under negotiation

Allied has 933,000 square feet of leasing activity under negotiation or at the prospect stage, of which 61 per cent represents new leasing requirements and 39 per cent represents renewals.

The primary uses represented by those touring properties continue to be firms in the technology, media, professional services, education and medical-related sectors.

Deals continue to take longer due to the availability of options in both the sublease market and in direct vacancy, but those timelines are expected to shorten as sublease space is absorbed and direct vacancies fall.

It’s helpful there’s no major new urban office building supply on the horizon beyond this year, with the last delivery being the second tower of Toronto’s CIBC Square.

Average in-place net rent per occupied square foot continued its steady improvement, ending Q4 up 5.4 per cent from a year earlier at $25.41.

Acquisitions and dispositions

Allied ended the year with total assets valued at $10.6 billion.

The trust acquired three class-AAA urban properties for $677 million in 2024:

• 400 West Georgia in Vancouver;
• the remaining 50 per cent interest in 19 Duncan in Toronto;
• and an additional 16.7 per cent interest in the residential component of TELUS Sky (now known as Calgary House), bringing its ownership to 50 per cent.

The aggregate acquisition price was below development and replacement cost.

Allied sold seven lower-yielding, non-core properties — four in Montreal, one in Toronto, one in Ottawa and one in Calgary — for $229 million. That figure was above its target of $200 million.

The proceeds from those sales were allocated to debt repayment in the fourth quarter. Allied plans to sell similar properties — primarily in Montreal, Calgary, Edmonton and Vancouver — for at least $300 million that will go toward debt repayment this year.

“We’ve made progress on our development and upgrade activity as well,” Williams said. “Transfers from the development to the rental portfolio in 2025 are expected to total 340,000 square feet of completed urban workspace and 218 rental residential units.”

Allied is focused on completing all development and upgrade projects currently underway by the end of 2026, Williams added.

Debt and liquidity

Dealing with debt was a priority in 2024 and Allied reduced the amount drawn on its $800-million unsecured revolving operating facility to zero. The REIT also reduced short-term, variable rate debt to $153 million, representing 3.5 per cent of its total debt.

Allied ended 2024 with $863 million of liquidity and 83 per cent of its investment properties are unencumbered. Its total indebtedness ratio, however, rose to 41.7 per cent from 34.7 per cent in 2023.

“While the timing of the 2024 acquisitions resulted in short-term downward pressure on our debt metrics, they will contribute positively to our earnings as they stabilize,” said senior vice-president and chief financial officer Nanthini Mahalingam.

“I want to reiterate my confidence that our portfolio will continue to hold up well in this economic environment,” Williams said to end the presentation portion of the call.

“Yes, we’re aware of the headwinds, but we see more upside and are optimistic because of the strength of our operating platform.”

$450-million green bond offering

In a separate announcement Monday, Allied unveiled a $450-million green bond offering. The unsecured Series K debentures will bear interest at a rate of 4.808 per cent. Proceeds are to be used to pay off a construction loan on 19 Duncan (approximately $250 million) and Allied’s series C senior unsecured debentures due April 21 ($200 million).

The 19 Duncan property is comprised of 149,230 square feet of office space, 3,570 square feet of retail space, 464 rental residential units plus related facilities and parking. The office component is fully leased to Thomson Reuters and residential lease-up is under way.

The property is seeking LEED Gold certification.

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The MSCI/Real Property Association of Canada (REALPAC) Canadian Property Index performed better in 2024 than it had a year earlier, but total returns remained well below historical norms.

The index had a total return on standing assets, excluding developments, of 3.21 per cent in 2024. The income return was 4.91 per cent while capital growth was -1.63 per cent.

These numbers are below the annualized standing investment return average of 8.5 per cent since tracking began in 1985, and the six per cent return averaged over the past 10 years. However, they’re an improvement on 2023 when the total return on standing investments was -0.05 per cent, the income return was 4.72 per cent and capital growth was -4.57 per cent.

Canada was in the middle of the pack among 21 reporting countries through three quarters and looks like it will stay there for the full year. Just three other countries have reported year-end results and Canada’s standing investment return was below the United Kingdom but above the United States and Ireland.

“Canada does hold its value in turbulent market conditions but, when things are more normal or things are recovering, Canada doesn’t necessarily shoot the lights out in terms of performance,” MSCI vice-president of real estate client coverage Peter Koitsopoulos said during a Feb. 4 presentation to discuss the results at Toronto’s Vantage Venues.

“We’re not necessarily the worst and not necessarily the best. We are a nice, stable performing country.”

Retail the top asset class

The total return on standing assets was highest in retail for the second straight year, but its 6.5 per cent return more than doubled last year’s 3.2 per cent. Retail was followed by residential (3.7 per cent), industrial (3.4 per cent) and office (0.0 per cent).

Community/neighbourhood retail centres had a return of 8.4 per cent — owing to a lack of supply, lower vacancy rates and better income growth — while the return for super regional shopping centres was 6.1 per cent.

The return for major metro office buildings was -0.2 per cent in downtowns and -0.5 per cent in the suburbs. Koitsopoulos attributed the difference to higher writedowns for properties in the suburbs.

Office had the highest vacancy rate at 14.9 per cent, followed by retail at 6.2 per cent, residential at 5.1 per cent and industrial at five per cent. Although the industrial rate is well above the sub-two per cent averages from earlier this decade, it’s in line with the longer-term historical average.

Office had the highest investment allocation based on capital value at 26.5 per cent, followed by retail at 24.6 per cent, industrial at 23.7 per cent, residential at 19 per cent and other smaller asset classes combining for 5.5 per cent.

Office and retail have had steady allocation declines over the past 10 years while residential has steadily grown. Industrial was on a consistent upward trajectory before spiking earlier in this decade. It has more recently experienced a small drop.

Halifax was the top city again

The city with the highest total return on standing assets was Halifax at 10.49 per cent, repeating its title from last year when it had a return of 6.9 per cent.

Halifax was followed by Calgary (6.54 per cent), Victoria (6.17 per cent), Vancouver (4.17 per cent), Winnipeg (3.97 per cent), Ottawa/Hull (3.21 per cent), Edmonton (2.95 per cent), Toronto and Regina (both 1.92 per cent), and Montreal (1.89 per cent).

Montreal (-0.8 per cent) and Toronto (2.1 per cent) had the lowest returns of any major city when it comes to industrial properties.

“Not too long ago those two markets were having year-over-year returns of 30 to 40 per cent for industrial, which is quite remarkable for real estate,” Koitsopoulos observed.

Those large returns spurred a lot of industrial development, new supply which is still being absorbed. This is creating a balanced market in those two cities — something which they haven’t had in several years.

CRE transaction volume dropped in 2024

Commercial real estate transaction volume dropped by 21 per cent last year compared to 2023, but the $31 billion in sales was only 10 per cent lower than the annual average for the five years before the COVID-19 pandemic.

“Most of the money moving in so far is from private investors,” said MSCI Real Assets chief economist Jim Costello. “They don’t have the fiduciary challenges of the big managers.”

The absence of institutional investors is somewhat hampering liquidity, but they’re expected to come back to the market as returns start turning positive.

Challenges remain, however, with a potential tariff war between the United States and Canada now creating a major new concern.

“Uncertainty harms investment because, if you’re not sure what the rules of the game are, you can’t underwrite all the risks you have when you’re putting money to work,” Costello said.

Composition of the property index

The MSCI/REALPAC Canadian Property Index measures unlevered total returns of directly held property investments.

The index includes buying, selling, development and redevelopment activity data provided by major pension funds, insurance companies and large real estate owners in Canada.

The 2024 index encompassed 54 portfolios with 2,255 assets totalling 489.3 million square feet and a gross capital value of $165.4 billion.

MSCI and REALPAC

MSCI provides decision-support tools and services for the global investment community. It has more than 50 years of expertise in research, data and technology to assist in investment decisions.

REALPAC was founded in 1970 and is the national leadership association for Canada’s real property sector.

Its 135-plus members include publicly traded real estate companies, real estate investment trusts, pension funds, private companies, fund managers, asset managers, developers, government real estate agencies, lenders, banks, life insurance companies, investment dealers, brokerages, consultants, data providers, large general contractors and international members.

REALPAC members have $1 trillion in assets under management and represent office, retail, industrial, apartment, hotel and seniors residential properties across Canada.

Source Renx.ca. Click here for the full story.

Walmart Canada has announced a $6.5-billion investment in Canada over the next five years, which it says includes “dozens of new stores across the country”, and the openings for several previously announced new facilities.

Walmart also announced it is selling its fleet services business to Canada Cartage, one of the country’s largest trucking and logistics firms.

The announcement Thursday morning mentions five new Supercentre openings in Alberta and Ontario by 2027.

This is to include major new stores in the Alberta cities of Calgary, Edmonton and Fort McMurray, though these plans were previously disclosed late in 2024.

Walmart also notes two Supercentres already approaching completion in the Toronto area are to open by the end of this year. The Port Credit Walmart Supercentre in Mississauga is to open this summer, while the Oakville Walmart in the town just west of Toronto is to open in “late 2025.”

Walmart’s “ambitious growth” plan

Finally, Walmart says its new Vaughan distribution centre, which will be its most advanced facility in the country, is scheduled to open this spring. Vaughan is a fast-growing city located in northern section of the Greater Toronto Area.

The release does not contain any further specific information about how the new spending would be allocated, nor where any new stores might be located.

“Walmart Canada is on an ambitious growth journey to serve even more Canadians – better and differently than ever before. This $6.5 billion investment is the largest we’ve made in Canada towards expanding our footprint since we first arrived here 30 years ago,” Gui Loureiro, regional CEO, Walmart Canada, Chile, Mexico and Central America, said in the announcement.

He is taking over the role of current Walmart Canada president and CEO Gonzalo Gebara.

Canada Cartage buys fleet services

Walmart’s fleet services division is based in Mississauga, and provides services for the company’s over 400 stores and other facilities across Canada. It was in the news in November in B.C., where 95 drivers based in the Metro Vancouver city of Surrey were granted interim certification by the Canada Industrial Relations Board to unionize under Unifor.

The 110-year-old Canada Cartage is also based in Mississauga, and operates a fleet of over 4,000 tractors and trailers. It employs over 3,500 people and operates logistics facilities in every major Canadian urban area, according to the company’s website.

“Canada Cartage has deep expertise in providing dedicated fleet services and has been serving Canadian businesses for more than 110 years,” Matt Kelly, Walmart Canada’s vice-president of supply chain, said in the announcement.

“Through Canada Cartage we can serve customers even better and more flexibly and provide fleet employees with exciting growth opportunities at one of Canada’s largest and most trusted supply chain service providers.”

Financial details of the transaction are not disclosed.

Walmart’s previous five-year plan

Walmart’s announcement comes as the international retail giant closes off a $3.5-billion investment in Canada, announced in 2020. This series of expansions and renovations included:

• modernizing more than 180 stores – including transforming the Mississauga-Square One Supercentre into its flagship location;
• four new store locations: in Victoria, B.C (Hillside) and Montreal, Que., (Marché Central), and relocated stores in Edmonton, Alta., (Kingsway) and Vaughan; and
• more than $800 million invested to open the Cornwall Distribution Centre, Surrey Distribution Centre, Rocky View County Fulfilment Centre (Calgary), Moncton Distribution Centre and the Vaughan Distribution Centre (still to open).

“Across the country we’re making strategic investments in our online and in-store offerings to be more relevant to more customers than ever before. From newcomers and urbanites to higher-income Canadians, more customers are choosing Walmart for their shopping needs,” Joe Schrauder, chief operations officer, Walmart Canada, said in the announcement.

About Walmart Canada

Walmart Canada is an omnichannel retailer of more than 400 stores nationwide serving 1.5 million customers each day. Its online store Walmart.ca is visited by more than 1.5 million customers daily. With more than 100,000 associates, Walmart Canada is one of Canada’s largest employers and is ranked one of the country’s top-10 most influential brands.

Source Renx.ca. Click here for the full story.

There’s been a relatively steady decline in the number of Canadian proptech startups since a peak of 57 in 2020, but Canada remains a global hub for real estate innovation according to Proptech Collective’s just-released Proptech in Canada report.

Toronto-based Proptech Collective is a non-profit founded in 2019 with a vision to drive innovation across the Canadian real estate and construction industries through events, educational content and community initiatives.

“Proptech experienced challenges because it was selling to the real estate industry, which has had its own struggles over the last few years regarding interest rates and other factors,” Alate Partners vice-president and report lead Stephanie Wood told RENX.

“But ultimately, I think we’re emerging stronger because the quality of companies that we’re seeing is just so much more impressive.”

Proptech startups are becoming increasingly focused on building sustainable businesses, shifting from a “growth at all costs” mentality earlier in the decade, according to Wood.

“There have been a lot of lessons learned in the proptech space over the last decade so I think people are looking at those lessons and thinking about what business models actually make sense. I think the industry is entering another phase of maturity compared to the last 10 years or so.

“It’s gone through a bit of a reset and now it’s graduating into its next phase, which is going to be marked by founders that are building stronger businesses that have good unit economics and that are more sustainable and that have scale.”

Growing role for artificial intelligence

Artificial intelligence (AI) holds great potential for transforming construction as well as residential and commercial real estate, but many solutions remain exploratory as industry leaders focus on establishing data governance standards and enhancing data structures and systems architecture.

“AI is unlocking possibilities and things that weren’t really possible before,” Wood explained. “AI inherently can process way more information and way more data.”

AI can help optimize the way buildings are designed while streamlining construction scheduling and creating more efficient and sustainable construction practices. It’s also hoped that it can speed up the zoning and permitting processes to eliminate bottlenecks in receiving development approvals.

AI should also be able to play a role in improving energy efficiency data summarization and decision-making for commercial real estate owners and their portfolios.

Other proptech trends

More scalable approaches are revolutionizing construction, addressing labour shortages and expediting building processes. By assembling components off-site in controlled environments, construction timelines are reduced, costs are more predictable and quality control is more efficient.

“Modular construction is really growing and there’s more appetite for it and more curiosity than I’ve previously seen on the developer side, especially as the construction labour force is shrinking in Canada,” Wood said.

While many institutional real estate firms have been investing in data centre strategies for years, this growth is only predicted to accelerate due to AI and increasing data consumption. These assets require substantial energy, which has highlighted the need for stronger grid infrastructure and more sustainable energy.

Proptech should be able to strengthen these systems, which will be critical in meeting future energy demands, optimizing building performance and advancing climate goals.

There’s been a growing focus on platforms that consolidate services like financing, insurance and transaction management in order to reduce friction and simplify the buying and selling experience.

There are two proptech sectors that have failed to gain the traction which was expected a few years ago:

• blockchain, where a decentralized database records transactions in blocks that are linked together;
• and the metaverse, where users are represented by avatars in virtual worlds and interact to purchase goods and services.

Challenges with fundraising

Canadian proptech startups faced a tough funding year in 2024, raising about $300 million across smaller rounds, though vacation rental software company Hostaway raised approximately $525 million to push the total over $800 million.

Wood said fundraising was down across the entire technology ecosystem and not just within proptech.

“It’s a really interesting and exciting time for the industry, even though it’s gone through this period that has been more challenging on the fundraising side,” Wood said.

“People were investing a ton of money in these businesses that ended up looking more like real estate businesses and had a different return profile and different margins than a tech company. Now people are being a little bit smarter by aligning the sources of capital with the uses of capital.”

Real estate companies have become more discerning since the early days of proptech, when they were interested in trying out a wide variety of different technologies. They now need to see returns on their investments.

Mergers and acquisitions are picking up

Consolidation and partnerships have accelerated as the industry has matured and 2025 is shaping up to be a landmark year for mergers and acquisitions.

While the proptech space has been flooded with tools that have driven innovation and solved specific problems, they’ve also added complexity and forced customers to rely on multiple platforms. The industry now demands simplicity and efficiency, which is driving the push for consolidation.

More than 15 global proptech merger and acquisition deals have already been announced this year.

“It’s been very active in the first few weeks of the year and I think that this year will continue to have a lot of M and A activity,” Wood predicted.

She noted some companies may also be “looking to find a soft landing after a few tough years.”

Source Renx.ca. Click here for the full story.

Dream Industrial REIT (DIR-UN-T) has acquired a prime 32-acre parcel of development land in one of the most coveted locations in the Greater Toronto Area – a site that currently serves as a parking lot for the 2.95-million-square-foot Stellantis auto manufacturing facility in suburban Brampton.

The parcel of land on the sprawling Stellantis property at 2000 Williams Parkway, at the corner of Torbram and North Park roads just north of Toronto itself, was placed on the market in 2024. It underwent a competitive bidding process before Dream emerged as the buyer.

Dream acquired the site for $80 million as part of its Dream Summit JV, the trust revealed in its Q4 2024 financial report. Dream Industrial is partnered with Singapore’s sovereign investment fund GIC in that venture.

“This sale exemplifies the growing demand for well-positioned industrial land and the importance of aligning real estate decisions with long-term business strategies,” Jeff Flemington, a principal with Avison Young, which brokered the transaction for Stellantis, said.

Although additional details were not immediately available, Dream Industrial intends to use the property for future industrial development, a source told RENX. Dream confirmed in its financial report the property is shovel-ready for up to 680,000 square feet of new buildings.

Both Avison Young and Dream Industrial declined to provide further comment for this article.

Significant infill development potential

An announcement Tuesday from Avison Young called the transaction a “complex divestment project” which involved a number of stakeholders including Stellantis and Dream, the City of Brampton and numerous other parties.

“Avison Young was proud to facilitate this outcome for Stellantis, bringing together key experts to ensure a seamless process,” Sanjiv Chadha, also a principal at Avison Young, said in the announcement.

The property offers an opportunity for a significant infill development in an area already zoned for industrial and commercial types of uses, with a skilled workforce, and a sizable existing industrial and manufacturing base.

It is also near Hwy. 427 and the Airport Road north-south corridor, which offers access to a major nearby intermodal rail terminal.

The land became available due to a retooling of the Brampton Stellantis plant as the firm transitions some operations to produce electric vehicles and other new models. Stellantis announced a $3.6-billion plan to retool the Brampton and Windsor facilities in 2022.

The retooling at Brampton began last year and continues into this year. When the facility reopens Stellantis will manufacture the Jeep Compass there, according to the company website.

The GTA West industrial market

Brampton is part of the GTA West subsector, and contains 105 million square feet of the GTA West’s 422 million square feet of industrial inventory. The availability rate in the GTA West has risen recently to 5.7 per cent – a nine-year high according to Avison Young’s Q3 2024 data – as the industrial market has normalized following several years of intense demand and growth.

Asking net rental rates dropped slightly to $18.12 in the quarter. That’s down 3.4 per cent year-over-year, but rents had risen 104 per cent in the previous three years.

About 5.1 million square feet of new space, comprising 18 buildings, was under construction in the GTA West.

About Dream Industrial

Dream Industrial REIT owns interests in, manages and operates a portfolio of 338 industrial assets (545 buildings) totalling approximately 71.9 million square feet of gross leasable area in key markets across Canada, Europe, and the U.S. as at Sept. 30, 2024.

The trust is a part of the Toronto-based Dream group of companies, which has a portfolio of assets under management valued at approximately $26 billion.

EDITOR’S NOTE: This article was updated after being published to include the transaction price, the involvement of the Dream Summit JV, and the plans for 680,000 square feet of future development.

Source Renx.ca. Click here for the full story.

Dream Office REIT (D-UN-T) has confirmed it has an agreement to sell its 438 University Ave., office tower in the heart of downtown Toronto for $105.6 million as office transaction activity in the city seems to be on the upswing.

The transaction is at least the sixth significant office property to trade in the past few months, after an extended period of relative inactivity in the sector due to uncertainty about the economy and future work trends.

The 20-storey class-A 438 University tower is directly connected to the St. Patrick station on the Toronto subway system. It contains 322,835 square feet of space and was 93 per cent occupied when brokers TD Cornerstone Commercial Realty and CBRE listed the building for sale early in 2024.

To facilitate the transaction, Dream said in its announcement late Friday the trust secured agreements to relocate approximately 17,000 square feet of tenants from the building to vacant space in Dream’s other downtown Toronto properties.

Dream did not identify the buyer, but in a published report, Greenstreet called it a government agency. The largest tenant at 438 University Ave. is Infrastructure Ontario, which is leasing 59 per cent of the space.

The transaction does remain subject to customary closing conditions, and is scheduled to close by the end of Q1.