Allied Properties Real Estate Investment Trust
Annual Report 2021

Plain-text annual report

Annual Report December 31, 2021 Urban environments for creativity and connectivity 02.01.22 Annual Report December 31, 2021 Contents LETTER TO UNITHOLDERS . . . . . . . . . . . . . . . 5 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AS AT DECEMBER 31, 2021 . . . . . . . . . . . . . . . . . . . . . 8 SECTION I—Overview . . . . . . . . . . . . . . . . . . . . 9 Q4 2021 Operating and Financial Highlights . . . . . 10 Summary of Key Operating and Financial Performance Measures . . . . . . . . . . . . . . . . . . . . . . Summary of Rental Properties . . . . . . . . . . . . . . . . Business Overview and Strategy . . . . . . . . . . . . . . 12 14 15 Business Environment and Outlook . . . . . . . . . . . . 20 Non-IFRS Measures . . . . . . . . . . . . . . . . . . . . . . . . . 20 Forward-Looking Statements . . . . . . . . . . . . . . . . . 25 SECTION II—Operations . . . . . . . . . . . . . . . . . . . . 27 Net Income and Comprehensive Income . . . . . . . . 28 Net Operating Income . . . . . . . . . . . . . . . . . . . . . . . 30 Same Asset NOI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 General and Administrative Expenses . . . . . . . . . . 36 Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Other Financial Performance Measures . . . . . . . . . 37 SECTION III—Leasing . . . . . . . . . . . . . . . . . . . . . . . 43 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 User Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Lease Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION IV—Historical Performance . . . . . . . . . 51 Environmental and Climate Change Risk . . . . . . . . 92 Development Risk . . . . . . . . . . . . . . . . . . . . . . . . . . 93 SECTION V—Asset Profile . . . . . . . . . . . . . . . . . . . 53 Taxation Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Rental Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Joint Arrangement Risk . . . . . . . . . . . . . . . . . . . . . . 94 Development Properties . . . . . . . . . . . . . . . . . . . . . 65 Cybersecurity Risk . . . . . . . . . . . . . . . . . . . . . . . . . 94 Residential Inventory . . . . . . . . . . . . . . . . . . . . . . . 69 Real Estate Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Development Completions . . . . . . . . . . . . . . . . . . . 69 Loans Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION X—Property Table . . . . . . . . . . . . . . . . . 95 SECTION VI—Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . 73 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Credit Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . 80 Unitholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . 81 Distributions to Unitholders . . . . . . . . . . . . . . . . . . 84 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 . . . . . . . . . . . . 103 Management’s Statement of Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . . 104 Independent Auditor’s Report . . . . . . . . . . . . . . . 105 Consolidated Balance Sheets . . . . . . . . . . . . . . . . 109 Consolidated Statements of Income Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 and Comprehensive Income . . . . . . . . . . . . . . . . . 110 Consolidated Statements of Unitholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . 111 Consolidated Statements of Cash Flows . . . . . . . . 112 Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 114 SECTION VII—Accounting Estimates and Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 SECTION VIII—Disclosure Controls and Internal Controls . . . . . . . . . . . . . . . . . . . . . . . 87 SECTION IX—Risks and Uncertainties . . . . . . . . . 89 COVID-19 Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 Financing and Interest Rate Risk . . . . . . . . . . . . . . 91 Credit Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Lease Roll-Over Risk . . . . . . . . . . . . . . . . . . . . . . . . 92 4 ALLIED 2021 ANNUAL REPORTLetter to Unitholders Dear Fellow Unitholder: 2021 was a strong year operationally and financially for Allied . FFO per unit came in at $2 .405 and AFFO per unit at $2 .091, in both cases at record levels and at the high end of the range contemplated in our internal forecast . NAV per unit was $50 .30 at year-end, up 3 .6% from year-end 2020 . Leasing activity exceeded our expectations for the year, with the result that our average in-place net rent per occupied square foot rose in all four quarters, finishing at $24 .64 in the fourth quarter compared to $23 .88 in the comparable quarter last year . As the global pandemic appears to be coming to an end, I’m reminded of the thesis I articulated in early April of last year . It advanced the proposition that the global pandemic would benefit the commercial real estate industry by accelerating three established secular trends — (i) urban intensification, (ii) humanistic operation and (iii) stress-tested leadership . As I pointed out then, I can’t prove the thesis . Only human behaviour over time will do that… or not . What I can say at this point in time is that human behaviour, as Allied experienced it over the course of 2021, supports the thesis . I intend to update the thesis in early April of this year and perhaps periodically thereafter . We continue to have deep confidence in our strategy of operating distinctive urban workspace and UDCs in Canada’s major cities . We expect our operating and development environment to be generally favourable in 2022 . Our internal forecast for 2022 calls for low-to-mid-single-digit percentage growth in each of same-asset NOI, FFO per unit and AFFO per unit . While we do not forecast NAV per unit growth, we do expect to propel further growth in 2022 . 5 ALLIED 2021 ANNUAL REPORTIf you have any questions or comments, please don’t hesitate to call me at (416) 977-0643 or e-mail me at * * * memory@alliedreit.com . Yours truly, Michael Emory PRESIDENT AND CHIEF EXECUTIVE OFFICER 6 ALLIED 2021 ANNUAL REPORT7 ALLIED 2021 ANNUAL REPORTManagement’s Discussion and Analysis of Results of Operations and Financial Condition as at December 31, 2021 8 ALLIED 2021 ANNUAL REPORTSection I —Overview Allied is an unincorporated closed-end real estate investment trust created pursuant to the Declaration of Trust (“Declaration of Trust”) dated October 25, 2002, as amended and restated from time to time, most recently on May 10, 2021 . Allied is governed by the laws of Ontario . Allied’s units (“Units”) are publicly traded on the Toronto Stock Exchange under the symbol “AP .UN” . Additional information on Allied, including its annual information form, is available on SEDAR at www .sedar .com . This Management’s Discussion and Analysis (“MD&A”) of results of operations and financial condition relates to the year ended December 31, 2021 . Unless the context indicates otherwise, all references to “Allied”, “we”, “us” and “our” in this MD&A refer to Allied Properties Real Estate Investment Trust . The Board of Trustees of Allied, upon the recommendation of its Audit Committee, approved the contents of this MD&A . This MD&A has been prepared with an effective date of February 1, 2022, and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2021 . Historical results and percentage relationships contained in this MD&A, including trends that might appear, should not be taken as indicative of future results, operations or performance . Unless otherwise indicated, all amounts in this MD&A are in thousands of Canadian dollars . This section includes certain terms that do not have a standardized meaning prescribed under International Financial Reporting Standards (“IFRS”) and includes certain forward-looking statements within the meaning of applicable securities law . Refer to Non-IFRS Measures and Forward-Looking Statements on pages 20 and 25, respectively . 9 ALLIED 2021 ANNUAL REPORTQ4 2021 Operating and Financial Highlights Above all, Allied is an operator . For Allied, neither acquisition activity nor development activity is an end in itself . Rather, both are a means of providing knowledge-based organizations with distinctive urban workspace and UDC space effectively and profitably . 10 ALLIED 2021 ANNUAL REPORTQ4 Operating Results LEASED AREA 90.4% OCCUPIED AREA 89.9% AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT $24.64 3.2% Q4 Financial Results RENT GROWTH ON MATURING SPACE WEIGHTED AVERAGE REMAINING LEASE TERM IN YEARS Rental portfolio 9.4% Rental portfolio 5.6 SAME ASSET NOI - RENTAL PORTFOLIO (1) 1.5% $84.9M FFO PER UNIT (1)(2) AFFO PER UNIT (1)(2) $0.600 1.9% $0.518 2.0% Q4 Capital Allocation Q4 Funding ESG Results 2021 GRESB SCORE FOR STANDING INVESTMENTS 80/100 Up from 64/100 in 2020 $95.2M $90.2M Allocated to acquisitions Allocated to development $21.0M Gross proceeds from the at-the-market equity program $240.7M Of liquidity (1)(3) Q4 Balance Sheet NET DEBT AS A MULTIPLE OF ANNUALIZED ADJUSTED EBITDA (1) TOTAL INDEBTEDNESS RATIO (1) INTEREST COVERAGE RATIO (1)(4) UNENCUMBERED INVESTMENT PROPERTIES (1) 9.4x 33.5% 3.4x $9.1B 93.9% of investment properties on a proportionate basis (1) (1) This is a non-IFRS measure, refer to page 20. (2) Excluding condominium related items and financing prepayment costs on a diluted basis. (3) Liquidity is the sum of cash and cash equivalents on a proportionate basis and the undrawn portion of Allied’s unsecured revolving operating facility as at December 31, 2021. (4) Including interest capitalized and excluding financing prepayment costs. 11 ALLIED 2021 ANNUAL REPORT SUMMARY OF KEY OPERATING AND FINANCIAL PERFORMANCE MEASURES The following table summarizes the key operating and financial performance measures for the periods listed below: ($000’s except per-square foot, per-Unit and financial ratios) DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2019 THREE MONTHS ENDED YEAR ENDED YEAR ENDED Leased area Occupied area Average in-place net rent per occupied square foot Renewal and replacement rate for leases maturing in the period Increase in net rent on maturing leases 90.4% 89.9% 92 .5% 92 .1% 94 .8% 94 .4% 24.64 23 .88 22 .88 57.0% 10.1% 78 .3% 17 .2% 84 .9% 18 .7% Investment properties (1)(4) 9,527,105 8,687,375 7,469,265 Unencumbered investment properties (2) 9,064,010 6,463,680 5,464,860 10,384,691 9,400,768 8,309,693 11.2% 50.30 9 .0% 48 .54 9 .4% 46 .55 3,453,284 2,725,462 2,155,181 33.5% 29 .2% 365,050 349,023 9.4x 7 .7x 26 .1% 310,291 6 .3x 146,722 159,921 64,444 90,843 84,915 85,869 75,691 76,520 0.600 70.9% 66,076 0.518 82.1% 145,173 83,842 62,240 90,498 83,624 85,104 74,742 3.4x 3 .4x 3 .3x 568,886 560,327 443,151 500,729 261,854 238,135 365,050 349,023 496,109 629,223 190,860 310,291 314,125 308,354 285,020 325,734 313,554 253,376 284,732 289,120 251,083 74,969 306,559 285,784 259,316 0 .589 70 .0% 64,623 0 .508 81 .2% 2.405 70.6% 2 .295 71 .9% 2 .300 69 .5% 266,517 248,003 219,846 2.091 81.2% 1 .991 82 .8% 1 .950 82 .0% Total assets (1)(4) Cost of PUD as % of GBV (2) NAV per Unit (6) Debt (1) Total indebtedness ratio (2) Adjusted EBITDA (2) Net debt as a multiple of Adjusted EBITDA (2) Interest-coverage ratio - including interest capitalized and excluding financing prepayment costs (2)(3) Rental revenue (1)(4) Net income (1) Net income excluding fair value adjustments and financing prepayment costs (2)(3)(5) Adjusted EBITDA (2) Same Asset NOI - rental portfolio (2) Same Asset NOI - total portfolio (2) FFO (2) All amounts below are excluding condominium related items and financing prepayment costs (2)(3): FFO FFO per Unit (diluted) FFO payout-ratio AFFO AFFO per Unit (diluted) AFFO payout-ratio 12 ALLIED 2021 ANNUAL REPORT(1) This measure is presented on an IFRS basis. (2) This is a non-IFRS measure, refer to page 20. (3) For the three months and year ended December 31, 2021, Allied incurred $721 and $52,610, respectively (December 31, 2020 - $nil and $nil, respectively, for the year ended December 31, 2019 - $6,018) of financing prepayment costs in connection with the favourable refinancing of unsecured debentures and first mortgages. (4) Prior to Q4 2021, the comparative figures for investment properties, total assets and rental revenue were reported in this section on a proportionate share basis. The comparative figures for all prior periods have been revised to an IFRS basis. (5) Prior to Q4 2021, the comparative figures for net income excluding fair value adjustments and financing prepayment costs were calculated on a proportionate share basis. The comparative figures for all prior periods have been revised to be calculated on an IFRS basis. (6) Net asset value per Unit (“NAV per Unit”) is calculated as follows: total Unitholders’ equity as at the corresponding period ended, (per the consolidated balance sheets) divided by the actual number of Units outstanding at period end. 13 ALLIED 2021 ANNUAL REPORTSUMMARY OF RENTAL PROPERTIES 195 Rental Properties valued at $8.4B (3) (Not including 11 Properties Under Development valued at $1 .2B) (3) TOTAL RENTAL PORTFOLIO GLA 14.2M SF VANCOUVER WESTERN REGION 717K SF ALLIED OCCUPANCY 91 .0% MARKET OCCUPANCY (1) 92 .8% PROPERTIES EMPLOYEES 13 15 CALGARY WESTERN REGION 1.3M SF ALLIED OCCUPANCY 86 .3% MARKET OCCUPANCY (1) 66 .8% PROPERTIES EMPLOYEES 30 40 KITCHENER CENTRAL REGION 562K SF TORONTO CENTRAL REGION 4.8M SF MONTRÉAL EASTERN REGION 6.7M SF ALLIED OCCUPANCY 87 .1% MARKET OCCUPANCY (1) 86 .3% ALLIED OCCUPANCY 96 .9% MARKET OCCUPANCY (1)(2) 72 .9% 510K SF INCLUDING URBAN DATA CENTRES PROPERTIES 31 90 PROPERTIES EMPLOYEES 5 4 ALLIED OCCUPANCY 94 .1% MARKET OCCUPANCY (1) 90 . 3% PROPERTIES UDC PROPERTIES ANCILLARY PARKING FACILITIES EMPLOYEES 105 3 9 202 EMPLOYEES OTTAWA EASTERN REGION 231K SF ALLIED OCCUPANCY 99 .0% MARKET OCCUPANCY (1) 90 .1% PROPERTIES EMPLOYEES 2 4 (1) Source: cbre.ca, CBRE Canada Office Figures Q4 2021 Report. (2) Kitchener market occupancy is based on the city of Waterloo market occupancy. (3) The rental properties and properties under development values are on a proportionate basis. 14 ALLIED 2021 ANNUAL REPORTBUSINESS OVERVIEW AND STRATEGY Allied is a leading owner operator of (i) distinctive urban workspace in Canada’s major cities and (ii) network-dense urban data centres in Toronto that form Canada’s hub for global connectivity . Allied’s business is providing knowledge-based organizations with distinctive urban environments for creativity and connectivity .  DISTINCTIVE URBAN WORKSPACE Allied was known initially for its leading role in the emergence of Class I workspace in Toronto, a format created through the adaptive re-use of light industrial structures in the Downtown East and Downtown West submarkets . This format typically features high ceilings, abundant natural light, exposed structural frames, interior brick and hardwood floors . When restored and retrofitted to high standards, Class I workspace can satisfy the needs of the most demanding office and retail users . When operated in a coordinated manner, this workspace becomes a vital part of the urban fabric and contributes meaningfully to a sense of community .  Allied went public in 2003 for the express purpose of consolidating Class I workspace that was centrally located, distinctive and cost-effective . The consolidation that ensued was continuous, enabling Allied to evolve into a leading owner operator of distinctive urban workspace in Canada’s major cities .  URBAN DATA CENTRE (“UDC”) SPACE In addition to providing urban workspace, Allied provides network-dense UDC space in Downtown Toronto . Allied established this capability in 2009 through the acquisition of 151 Front W, the largest internet exchange point in Canada and the third largest in North America . Allied has since expanded this capability by retrofitting a portion of 905 King W and a portion of 250 Front W . Just as Allied’s workspace does, this space provides knowledge-based businesses with distinctive urban environments for creativity and connectivity . Allied’s deep expertise in adaptively re-using urban structures has contributed meaningfully to its success in operating network-dense data centre space in Downtown Toronto .  WORKSPACE INNOVATION Allied’s experience informed its approach to workspace innovation . Office users today value light, air and an open-plan . Abundant natural light and fresh air contribute enormously to human wellness and productivity . An open-plan improves collaboration and creativity . When people can move around and freely connect with one another, communication is improved, along with mutual understanding, and sparks of ingenuity occur .  Technology has contributed to workspace innovation . Light harvesting has made great strides, as has fresh air delivery . Raised-floor systems have made aesthetic and practical contributions in recent years . Aesthetically, they declutter the workspace and obviate the need for drop-ceilings . Practically, they improve air circulation by pressurizing the underfloor area and de-pressurizing the actual work environment . All this can be delivered to workspace users in an environmentally sustainable manner .  15 ALLIED 2021 ANNUAL REPORTWorkspace amenities have made an equivalent contribution to workspace innovation . While achievable to an extent within a single building, amenity-richness is best achieved within a surrounding urban neighbourhood . This in turn places a premium on clustering buildings within an amenity-rich urban neighbourhood . Clustering also allows Allied to accommodate needs for expansion and contraction within the neighbourhood . Allied’s experience with Class I workspace also increased its sensitivity to design . When people migrated to the suburbs in the 1950s, the sensitivity to design in the inner-cities seemed to diminish, if not disappear altogether . Heritage properties were destroyed to make way for non-descript, inward-looking buildings, and synthetic materials seemed to cover everything everywhere . Fortunately, design now matters, and design now pays . The workspace Allied created at QRC West in Toronto is an excellent example . Allied’s architects came up with a creative and beautiful way to build a new office tower above two fully-restored heritage buildings . Although the design entailed additional cost, the ultimate economic and social return on the investment was exceptional . The design paid off in every conceivable way .   Finally, Allied’s experience with Class I workspace put it at the forefront of creating workspace for the knowledge-based economy . This led Allied to place ever-greater emphasis on the ongoing relationship between the user and provider of workspace . Put differently, it led Allied to understand the need for a partnership-like relationship between itself and workspace users . FOCUS AND DEFINITION From the outset, Allied adhered to a clear investment and operating focus . It focused initially on the Class I format and continues to do so on a large scale in major urban centres in Canada . More recently, Allied expanded its focus to include hybrid structures like QRC West and King Portland Centre in Toronto and 425 Viger in Montréal, where heritage buildings were integrated with new structures in a way that resonated meaningfully with the knowledge-based organizations Allied serves . Allied will continue to do so on a large scale in major urban centres in Canada .  As Allied’s business grew and evolved, it was defined not by the specific workspace format Allied owns, operates and develops, but rather by the workspace users Allied serves . If a particular format enables Allied to serve knowledge-based organizations better and more profitably, Allied will invest in it . The Well in Toronto is a good example . The workspace component will be a high-rise tower for the most part with no heritage element at all . However, because of its architecture, performance attributes and location within a vibrant and amenity-rich neighbourhood, it has attracted outstanding knowledge-based organizations .   Allied’s acquisition of 1001 Boulevard Robert-Bourassa in Montréal (formerly named 700 de la Gauchetière) in July of 2019 is another good example . Through a user-led transformation, a small portion of the workspace at this property was improved in a manner consistent with the distinctive urban workspace environments that Allied develops, owns and operates . In fact, this workspace is strikingly similar to workspace occupied by Ubisoft, Framestore and Sun Life Financial at Allied’s de Gaspé properties in Montréal . Allied intends to complete on a vertical plane the kind of building transformation it has completed so often on a more horizontal plane . In doing so, Allied expects to augment its ability to serve knowledge- based organizations, as well as adding meaningful value to 1001 Boulevard Robert-Bourassa over a three- to five-year timeframe .  16 ALLIED 2021 ANNUAL REPORTWhen Allied’s business is defined by the workspace users it serves, the actual format becomes less important and the specific building attributes and neighbourhood amenities take on paramount importance . Accordingly, if a conventional office tower can be transformed to provide the specific attributes and amenities favoured by knowledge-based organizations, it falls squarely within Allied’s investment and operating focus . This expands Allied’s opportunity-set materially .   VISION AND MISSION Allied’s vision statement is as follows: To make a continuous contribution to cities and culture that elevates and inspires the humanity in all of us . In isolation, this could be seen as somewhat extravagant and nebulous, but it is fully grounded and informed by Allied’s mission statement, which is as follows: To provide knowledge- based organizations with distinctive urban workspace in a manner that is sustainable and conducive to human wellness, creativity, connectivity and diversity . Like all such statements, Allied’s vision and mission statements need elaboration .  From inception, Allied’s approach to workspace was both humanistic and technical . Allied sees workspace from the vantage point of people who use it rather than people who invest in it . Allied sees workspace as optimal light and air, a flexible and open floorplan and a collaborative rather than feudal relationship between owner and user . Allied sees workspace as a product of aesthetic and technical design . Finally, Allied sees workspace as part of a large, amenity-rich, urban ecosystem rather than as an instance of the monumental isolation that characterizes so many conventional office towers .  Real estate is no longer a passive investment or a static tolling business . It is a profoundly human business that needs to keep pace with demographic and technological change, as well as the ongoing change in human attitudes and values . It needs to be run with future generations in mind . This means we have to run commercial real estate to save the global environment, not destroy it . It means we have to foster human wellness, not undermine it . It means we have to promote diversity, not impose uniformity . It means we have to facilitate creativity, not encourage conformity . Finally, it means we have to build and operate as city builders .  City builders see commercial real estate as an integral part of a much larger ecosystem of infrastructure, buildings and people . The ecosystem, of course, is the city . We can only build cities well if they endure, if they stand the test of time . This means cities have to be sustainable and conducive to human wellness, creativity, connectivity and diversity . Put differently, it means they have to elevate and inspire the humanity in all of us .  City building requires commitment, innovation and imagination, something Allied strives for on an ongoing basis . In an era of remarkable and continuous urban intensification, city building is essential to sustained profitability in real estate . Sporadic profitability is achievable without reference to the principles of city building . Merchant development of commoditized structures in a boom market illustrates this perfectly . Sustained profitability, on the other hand, requires adherence to the principles of city building . It follows that Allied’s vision and mission statements are the aspirational context within which Allied pursues sustained profitability for the benefit of its unitholders .  17 ALLIED 2021 ANNUAL REPORTENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) Allied made a commitment to submit formally to independent scrutiny of its ESG performance by 2020 . The most important single step was to obtain a GRESB (formerly Global Real Estate Sustainability Benchmark) Assessment and to provide an annual ESG Report . Allied’s 2020 GRESB score was 64 and recognized as a “strong first-year showing” . In addition to strengths, the assessment identified clear opportunities for improvement in Allied’s ESG practices and disclosure . Allied’s 2021 GRESB score was 80, representing material progress in multiple areas over the initial assessment . Allied also aligned its Second Annual ESG Report with (i) the Global Reporting Initiative (GRI) and (ii) the Sustainability Accounting Standards Board (SASB) Real Estate Standard . Allied’s Third Annual ESG Report, scheduled for release in mid-2022, will also outline Allied’s progress in adopting the Task Force on Climate-related Financial Disclosures (TCFD) recommendations . CONTEXT Environmental, social and governance sensitivities are an integral part of Allied . They flow from its evolution as an organization focused on the provision of distinctive urban workspace and network-dense UDC space in Canada’s major cities . Long before going public, Allied focused on the adaptive re-use of older structures built over a century ago for light-industrial purposes . The goal at the time was not to minimize the impact on the environment . Rather, it was to meet what was rightly perceived to be a growing need on the part of users of workspace for environments that would assist them in attracting, motivating and retaining knowledge workers . Nevertheless, by re-cycling buildings rather than re-building them, Allied minimized the impact on the environment . This evolved into greater sensitivity as to the environmental impact of its activity . Again, long before its initial public offering (IPO), Allied concentrated its properties in specific urban areas . The goal at the time was not to make a social contribution . Rather, it was to meet what was rightly perceived to be the need on the part of users of workspace to grow in amenity-rich, mixed-use urban communities . Nevertheless, by aggregating buildings in this way, Allied became sensitized to the impact on the surrounding communities in which it operates . Allied began to see its buildings as part of a larger urban ecosystem and to acknowledge its responsibility to the surrounding community as a whole . Finally, the launch of Allied’s IPO in 2003 increased its sensitivity to governance . The sensitivities at the time were predominantly financial and operational, but as Allied evolved and attracted unitholders globally, the sensitivity to a broader conception of governance increased . Allied’s Board and Management began to see governance as something that could strengthen the business significantly . 18 ALLIED 2021 ANNUAL REPORTGOVERNANCE Allied’s Board and Management are committed to making the inherent approach to ESG more manifest, deliberate and measurable . They have always believed that submitting to informed scrutiny will make Allied a better business, and formally submitting to ESG scrutiny is no exception in this regard . The Trustees are responsible for the oversight of the ESG Strategy and initiatives developed by Management . The Board’s Governance, Compensation and Nomination Committee oversees and monitors Allied’s ESG performance and reviews Allied’s ESG Report, ESG Policy and other governance policies and practices annually . Allied has established an ESG Committee to assist Management and the Board in defining, designing, implementing, expanding and evaluating Allied’s ESG Strategy and initiatives . The ESG Committee reports and makes recommendations to Management and the Board at least annually . Reviews governance practices regularly and is responsible for overseeing Allied’s ESG Strategy and governance philosophy. BOARD OF TRUSTEES BOARD GOVERNANCE, COMPENSATION & NOMINATION COMMITTEE Develops and monitors Allied’s overall approach to matters of governance. Oversees and monitors ESG performance. Reviews Allied’s ESG Report, ESG Policy and other governance policies and practices and makes comprehensive recommendations to the Board annually. EXECUTIVE ESG COMMITTEE Assists Management and the Board in defining, designing, implementing, expanding and evaluating Allied’s ESG Strategy. Meets at least quarterly to review all matters related to ESG initiatives, performance and reporting. ESG HIGHLIGHTS ALLIED MUSIC CENTRE On December 8, 2020, Massey Hall announced that Allied made a landmark contribution to the Massey Hall Revitalization . This transformative support expands the project’s original scope and introduces Canada’s premiere multi-purpose performance facility, Allied Music Centre, home of historic Massey Hall . This partnership with Massey Hall will enable Allied to contribute meaningfully to its communities over an extended period of time . It will also enrich the experience of the many creative organizations and people who use Allied’s urban workspace across the country . Construction is underway and planned for completion in mid-2022 . 19 ALLIED 2021 ANNUAL REPORTISSUED $1 .1 BILLION OF GREEN BONDS On February 3, 2021, Allied announced its Green Financing Framework (the “Framework”) under which Allied or any of its subsidiaries may issue green bonds, green loans, or other financial instruments to finance and/or re-finance eligible green projects, as defined in the Framework . In February 2021, Allied issued its first green bond for $600 million and in August 2021, Allied issued its second green bond for $500 million . In December 2021, Allied published its Green Bond Report on the full allocation of the net proceeds of its February 2021 green bond issuance . Sustainalytics, a leading third party ESG research ratings and data firm, verified the allocation of the net proceeds were in compliance with the Framework . ESTABLISHED ESG GOALS & TARGETS Over the course of 2021, Allied completed its first formal ESG Strategy, which set goals and 2024 targets for its ESG priorities . On December 1, 2021, the Board adopted an ESG policy based on the goals established in the ESG Strategy . A detailed description of the goals and 2024 targets are included in Allied’s 2020 ESG Report . BUSINESS ENVIRONMENT AND OUTLOOK Allied’s internal forecast for 2022 calls for low-to-mid-single-digit percentage growth in each of same-asset NOI, FFO per unit and AFFO per unit . While Allied does not forecast NAV per unit growth, it does expect to propel further growth in 2022 . Allied also expects to allocate a large amount of capital in 2022 with the same strategic coherence and discipline it demonstrated in prior years . Allied continues to have deep confidence in, and commitment to, its strategy of consolidating and intensifying distinctive urban workspace and network-dense UDCs in Canada’s major cities . Allied firmly believes that its strategy is underpinned by the most important secular trends in Canadian and global real estate . Allied also firmly believes that it has the properties, the financial strength, the people and the platform necessary to execute its strategy for the ongoing benefit of its unitholders and other constituents . The foregoing sections contain non-IFRS measures and forward-looking statements . Refer to Non-IFRS Measures and Forward Looking Statements below . NON-IFRS MEASURES Readers are cautioned that certain terms used in the MD&A listed below, including any related per Unit amounts, used by Management of Allied to measure, compare and explain the operating results and financial performance of Allied do not have any standardized meaning prescribed under IFRS and, therefore, should not be construed as alternatives to net income, cash flow from operating activities, or any other measure prescribed under IFRS . These terms are defined in the following table and reconciliations to the most comparable IFRS measure are referenced, as applicable . The following terms do not have a standardized meaning prescribed by IFRS and may not be comparable to similarly titled measures presented by other publicly traded entities . 20 ALLIED 2021 ANNUAL REPORTNON-IFRS MEASURE DEFINITION Allied’s proportionate share or proportionate basis Funds from Operations (“FFO”) and FFO excluding condominium costs and financing prepayment costs Adjusted Funds from Operations (“AFFO”) and AFFO excluding condominium related items and financing prepayment costs All references to “proportionate share” or “proportionate basis” refer to a non-IFRS financial measure representing Allied’s proportionate share of equity accounted investments. Allied applies the equity method of accounting to its joint venture, TELUS Sky, as prescribed under IFRS. Management presents the proportionate share of its interests in joint arrangements that are accounted for using the equity method as it is viewed as relevant in demonstrating Allied’s performance and is the basis of many of Allied’s key performance measures. FFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its February 2019 White Paper (“White Paper”). FFO is defined as net income and comprehensive income less certain adjustments, on a proportionate basis, including fair value changes in investment properties and derivative instruments, incremental leasing costs and amortization of improvement allowances. FFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. Management believes FFO is a key measure of operating performance. FFO excluding condominium related items and financing prepayment costs starts with FFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs and financing prepayment costs. FFO excluding condominium related items and financing prepayment costs is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. Management believes this is a useful measure as these condominium and financing prepayment items are not indicative of recurring operating performance. AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in its White Paper. AFFO is defined as FFO less amortization of straight-line rents, regular leasing expenditures, regular and recoverable maintenance capital expenditures, and incremental leasing costs (related to regular leasing expenditures). AFFO is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. Management considers AFFO to be a useful measure of recurring economic earnings and relevant in understanding Allied’s ability to service its debt, fund capital expenditures and provide distributions to Unitholders. AFFO excluding condominium related items and financing prepayment costs starts with AFFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs and financing prepayment costs. AFFO excluding condominium related items and financing prepayment costs is reconciled to net income and comprehensive income, which is the most directly comparable IFRS measure. Management believes this is a useful measure as these condominium and financing prepayment items are not indicative of recurring economic earnings. RECONCILIATION Section II - Operations, Section V - Asset Profile, Section VI - Liquidity and Capital Resources Section II - Operations - Other Financial Performance Measures Section II - Operations - Other Financial Performance Measures 21 ALLIED 2021 ANNUAL REPORT NON-IFRS MEASURE DEFINITION Net income excluding fair value adjustments and financing prepayment costs is a non-IFRS financial measure that starts with net income and removes the effects of fair value gains or losses on investment properties and investment properties held for sale, or derivative instruments and financing prepayment costs on an IFRS basis. Management considers this to be a useful measure of operating performance, as fair value adjustments can fluctuate widely with the market and financing prepayment costs are non- recurring in nature. NRI is a non-IFRS financial measure defined as rental revenue less property operating costs on a proportionate basis. It excludes condominium revenue and condominium cost of sales. The most comparable IFRS figure is operating income. Management considers NRI to be a useful measure of the operating performance of its rental properties portfolio. NOI is a non-IFRS financial measure defined as NRI excluding the impact of non-cash items such as amortization of improvement allowances and the amortization of straight-line rents on a proportionate basis. The most directly comparable IFRS measure to NOI is Operating Income. Management believes this is a useful measure as it demonstrates the cash generating operating performance of its income producing properties. Same asset NOI is a non-IFRS measure defined as NOI for the properties that Allied owned and operated for the entire duration of both the current and comparative period. The most directly comparable IFRS measure to same asset NOI is Operating Income. Management believes this is a useful measure as NOI growth can be assessed on its portfolio excluding the impact of acquisition and disposition activities. Allied uses same asset NOI to evaluate the performance of its properties. Normalized LQA NOI is a non-IFRS measure defined as the normalized NOI of an individual property or portfolio for the most recently completed quarter multiplied by four. In the calculation of this metric, non-recurring items are excluded from LQA NOI. The most directly comparable IFRS measure to normalized LQA NOI is Operating Income. Management considers normalized LQA NOI relevant in analyzing the operations of its rental properties on a property-by-property or portfolio basis. Gross Book Value is a non-IFRS measure defined as the total assets of Allied on a proportionate basis. The most directly comparable IFRS measure to GBV is total assets. Management believes GBV is a useful measure to assess the growth in Allied’s total portfolio of rental and development properties. Unencumbered investment properties is a non-IFRS measure defined as the value of investment properties which are free and clear of any encumbrances. This is calculated on a proportionate share basis. Management believes unencumbered investment properties is a useful measure to assess the borrowing capacity of Allied. Net income excluding fair value adjustments and financing prepayment costs Net Rental Income (“NRI”) Net Operating Income (“NOI”) Same Asset NOI Normalized Last Quarter Annualized (“LQA”) NOI Gross Book Value (“GBV”) Unencumbered investment properties 22 RECONCILIATION Section II - Operations Section II - Operations - Net Operating Income Section II - Operations - Net Operating Income Section II - Operations - Same Asset NOI N/A Section V - Asset Profile N/A ALLIED 2021 ANNUAL REPORTNON-IFRS MEASURE DEFINITION Cost of Properties Under Development (“PUD”) as a percentage of GBV Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and Annualized Adjusted EBITDA Net debt Net debt as a multiple of Annualized Adjusted EBITDA Cost of PUD as a percentage of GBV is a non-IFRS measure defined as the book value of Allied’s properties under development, on a proportionate basis, divided by the GBV at period-end. Management believes this is a useful metric in assessing development risk. Allied has a limit of 15% as outlined in its Declaration of Trust. Adjusted EBITDA is a non-IFRS measure calculated on a proportionate basis comprised of earnings before interest expense, income taxes, depreciation and amortization expense (including amortization of improvement allowances), gains and losses on disposal of investment properties and the fair value changes associated with investment properties and investment properties held for sale, and financial instruments. Annualized Adjusted EBITDA is a non-IFRS measure calculated as the Adjusted EBITDA for the current year-to-date period annualized. The most directly comparable IFRS measure to Adjusted EBITDA and Annualized Adjusted EBITDA is net income and comprehensive income. Management believes Adjusted EBITDA and Annualized Adjusted EBITDA are useful metrics to determine Allied’s ability to service its debt, finance capital expenditures and provide distributions to its Unitholders. Net debt is a non-IFRS measure, calculated on a proportionate basis, as debt less cash and cash equivalents. The most directly comparable IFRS measure to net debt is debt. Management considers net debt a useful measure for evaluating debt levels and interest coverage. Net debt as a multiple of Annualized Adjusted EBITDA is a non- IFRS measure of Allied’s financial leverage and is defined as net debt divided by Annualized Adjusted EBITDA. This measure indicates the number of years required for Allied’s Annualized Adjusted EBITDA to repay all outstanding debts, taking into consideration the cash on hand to decrease debt. Management considers this metric a useful measure for evaluating Allied’s ability to service its debt. FFO and AFFO Payout-Ratios and FFO and AFFO Payout-Ratios excluding condominium related items and financing prepayment costs FFO and AFFO payout-ratios and FFO and AFFO payout-ratios excluding condominium related items and financing prepayment costs are non-IFRS measures. These payout ratios are calculated by dividing the actual Unitholder distributions by FFO, AFFO and FFO and AFFO excluding condominium related items and financing prepayment costs in a given period. Management considers these metrics a useful way to evaluate Allied’s distribution paying capacity. RECONCILIATION Section V - Asset Profile Section II - Operations - Other Financial Performance Measures Section VI - Liquidity and Capital Resources - Debt N/A N/A 23 ALLIED 2021 ANNUAL REPORT NON-IFRS MEASURE DEFINITION Interest Coverage Ratio and Interest Coverage Ratio - including interest capitalized and excluding financing prepayment costs Total Indebtedness Ratio Interest coverage ratio and interest coverage ratio including interest capitalized and excluding financing prepayment costs are non-IFRS measures calculated on a trailing twelve-month basis and are defined as Adjusted EBITDA divided by interest expense with interest capitalized included and financing prepayment costs excluded. Management considers these metrics useful as they indicate Allied’s ability to meet its interest cost obligations on a trailing twelve-month basis. Total indebtedness ratio is a non-IFRS measure of Allied’s financial leverage, which is calculated on a proportionate basis by taking debt plus outstanding letters of credit divided by total assets. Management considers this metric useful as it indicates Allied’s ability to meet its debt obligations. RECONCILIATION N/A Section V - Asset Profile 24 ALLIED 2021 ANNUAL REPORT FORWARD-LOOKING STATEMENTS Certain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws, including, among other things, statements concerning Allied’s objectives and strategies to achieve those objectives, statements with respect to Management’s beliefs, plans, estimates and intentions and statements concerning anticipated future events, circumstances, expectations, results, operations or performance that are not historical facts . Forward-looking statements can be identified generally by the use of forward-looking terminology, such as “indicators”, “outlook”, “forecast”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, “continue” or similar expressions suggesting future outcomes or events . In particular, certain statements in the Letter to Unitholders, Section I—Overview, under the headings “Business Overview and Strategy”, “Focus and Definition”, “Vision and Mission”, “Environmental, Social and Governance” and “Business Environment and Outlook”, Section III - Leasing under the headings “Status” and “Lease Maturity”, Section V - Asset Profile, under the headings “Rental Properties”, and “Development Properties”, Section VI - Liquidity and Capital Resources and Section IX - Risks and Uncertainties, constitute forward-looking information . This MD&A includes, but is not limited to, forward-looking statements regarding: increases to Allied’s annual EBITDA due to development activities; expected capital expenditure and allocation over 2022; completion of construction and lease-up in connection with Properties Under Development (“PUDs”); growth of our same asset NOI, FFO per Unit excluding condominium related items and financing prepayment costs and AFFO per Unit excluding condominium related items and financing prepayment costs; continued demand for space in our target markets; the expected effect of the global pandemic and consequent economic disruption; Allied’s internal forecast; the creation of future value; estimated gross leasable area (“GLA”), NOI and growth from PUDs; estimated costs of PUDs; future economic occupancy; return on investments, including yield on cost of PUDs; estimated rental NOI and anticipated rental rates; lease up of our intensification projects; anticipated available square feet of leasable area; targets for LEED certification; our ability to generate ancillary revenue; our ability to achieve risk-adjusted returns on intensification; our expectations regarding the timing of development of potential incremental density; receipt of municipal approval for value-creation projects, including intensifications; Management’s expectations regarding future distributions; and completion of future financings and availability of capital . Such forward- looking statements reflect Management’s current beliefs and are based on information currently available to Management . 25 ALLIED 2021 ANNUAL REPORTThe forward-looking statements in this MD&A are not guarantees of future results, operations or performance and are based on estimates and assumptions that are subject to risks and uncertainties, including those described in Section IX - Risks and Uncertainties, which could cause actual results, operations or performance to differ materially from the forward-looking statements in this MD&A . Those risks and uncertainties include risks associated with property ownership, property development, geographic focus, asset-class focus, competition for real property investments, financing and interest rates, government regulations, environmental matters, construction liability, taxation, cybersecurity, and COVID-19 . Material assumptions that were made in formulating the forward-looking statements in this MD&A include the following: that our current target markets remain stable, with no material increase in supply of directly-competitive office space; that acquisition capitalization rates remain reasonably constant; that the trend toward intensification within our target markets continues; and that the equity and debt markets continue to provide us with access to capital at a reasonable cost to fund our future growth and potentially refinance our mortgage debt as it matures . Although the forward-looking statements contained in this MD&A are based on what Management believes are reasonable assumptions, there can be no assurance that actual results, operations or performance will be consistent with these statements . All forward-looking statements in this MD&A are qualified in their entirety by this forward-looking disclaimer . Without limiting the generality of the foregoing, the discussion in the Letter to Unitholders, Section I - Overview, Section V - Asset Profile and Section VI - Liquidity and Capital Resources are qualified in their entirety by this forward-looking disclaimer . These statements are made as of February 1, 2022, and, except as required by applicable law, Allied undertakes no obligation to update publicly or revise any such statements to reflect new information or the occurrence of future events or circumstances . 26 ALLIED 2021 ANNUAL REPORTSection II —Operations The following sets out summary information and financial results for the three months and year ended December 31, 2021, and the comparable period in 2020 . 27 ALLIED 2021 ANNUAL REPORTNET INCOME AND COMPREHENSIVE INCOME The following table reconciles the consolidated statements of income and comprehensive income on an IFRS basis to a proportionate basis, which is a non-IFRS measure, for the three months and years ended December 31, 2021, and December 31, 2020 . Refer to Non-IFRS measures on page 20 . There is an additional table to reconcile net income and comprehensive income to net income excluding fair value adjustments and financing prepayment costs, a non-IFRS measure, for the three months and years ended December 31, 2021, and December 31, 2020 . Refer to Non-IFRS measures on page 20 . THREE MONTHS ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS IFRS BASIS Rental revenue $146,722 $1,411 Property operating costs (63,917) (1,096) Net rental income Operating income 82,805 $82,805 315 $315 $148,133 (65,013) 83,120 $83,120 $145,173 (62,421) 82,752 $82,752 Interest expense (17,438) (16) (17,454) (17,774) (7,464) (108) (273) 7,036 — — — — (7,464) (5,211) (108) (273) 7,036 (227) (341) 5,018 INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS $777 (639) 138 $138 — — (44) — — $145,950 (63,060) 82,890 $82,890 (17,774) (5,211) (271) (341) 5,018 96,204 (1,134) 95,070 16,880 (2,071) 14,809 (6) (835) $159,921 — 835 $— (6) — 4,722 — (1,977) 1,977 4,722 — $159,921 $83,842 $— $83,842 Net income and comprehensive income Less: Fair value gain on investment properties and investment properties held for sale Less: Fair value (loss) gain on derivative instruments Add: Financing prepayment costs THREE MONTHS ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $159,921 96,204 (6) 721 $83,842 16,880 4,722 — Net income excluding fair value adjustments and financing prepayment costs $64,444 $62,240 28 General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value gain (loss) on investment properties and investment properties held for sale Fair value (loss) gain on derivative instruments Net loss from joint venture Net income and comprehensive income ALLIED 2021 ANNUAL REPORTGeneral and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value gain (loss) on investment properties and investment properties held for sale Fair value gain (loss) on derivative instruments Net (loss) income from joint venture Net income and comprehensive income On an IFRS basis, net income and comprehensive income for the three months ended December 31, 2021, increased by $76,079 over the comparable period in 2020, primarily due to fair value adjustments and an increase in interest income, partially offset by an increase in general and administrative expenses . DECEMBER 31, 2021 DECEMBER 31, 2020 YEAR ENDED INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS Rental revenue $568,886 $4,907 $573,793 $560,327 $2,464 Property operating costs (239,495) (3,274) (242,769) (241,490) (1,219) $562,791 (242,709) Net rental income 329,391 1,633 331,024 318,837 1,245 320,082 Condominium revenue — — — 178 — 178 Operating income $329,391 $1,633 $331,024 $319,015 $1,245 $320,260 Interest expense (120,145) (206) (120,351) (72,603) (25,834) — (25,834) (22,215) (573) (14) (1,167) 28,023 — — (587) (1,167) 28,023 (1,230) (133) (1,467) 19,819 — — — — (72,603) (22,215) (1,363) (1,467) 19,819 217,557 (1,864) 215,693 280,590 (4,296) 276,294 16,350 (451) $443,151 — 451 $— 16,350 (17,996) — (17,996) — (3,184) 3,184 — $443,151 $500,729 $— $500,729 YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 Net income and comprehensive income $443,151 $500,729 Less: Fair value gain on investment properties and investment properties held for sale Less: Fair value gain (loss) on derivative instruments Add: Financing prepayment costs 217,557 16,350 52,610 280,590 (17,996) — Net income excluding fair value adjustments and financing prepayment costs $261,854 $238,135 29 ALLIED 2021 ANNUAL REPORTOn an IFRS basis, net income and comprehensive income for the year ended December 31, 2021, decreased by $57,578 over the comparable period in 2020 primarily due to fair value adjustments, financing prepayment costs, and an increase in general and administrative expenses, partially offset by an increase in operating income, an increase in interest income and a decrease in interest expense . NET OPERATING INCOME (“NOI”) Allied operates in seven urban markets — Montréal, Ottawa, Toronto, Kitchener, Calgary, Edmonton and Vancouver . For the purpose of analyzing NOI, Allied groups the cities by geographic location . Allied’s real estate portfolio has grown through acquisitions and development activities that have positively contributed to the operating results for the year ended December 31, 2021, as compared to the same period in the prior year . The following table reconciles operating income to net operating income, a non-IFRS measure . Refer to non-IFRS measures on page 20 . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 Operating income, IFRS basis Add: investment in joint venture Operating income, proportionate basis Condominium revenue Net rental income $82,805 315 83,120 — $82,752 138 82,890 — $329,391 1,633 331,024 — $319,015 $1,245 320,260 (178) $83,120 $82,890 $331,024 $320,082 Amortization of improvement allowances (1) Amortization of straight-line rents (1) 8,259 (1,141) 8,072 (1,596) 32,424 (4,729) 32,522 (10,132) Includes Allied’s proportionate share of the equity accounted investment of the following amounts for the three months and year ended December 31, 2021: amortization improvement allowances of $130 and $119, respectively, (December 31, 2020 - $113 and $329, respectively), and amortization of straight-line rents of $(239) and $(1,047), respectively (December 31, 2020 - $(393) and $(2,276), respectively). $90,238 $89,366 $358,719 $342,472 NOI (1) 30 ALLIED 2021 ANNUAL REPORTThe following tables set out the NOI by segment and space type from the rental and development properties for the three months and year ended December 31, 2021, and the comparable period in 2020 . SEGMENT Urban Workspace THREE MONTHS ENDED CHANGE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % Montréal & Ottawa $30,401 33.7% $27,936 31 .2% Toronto & Kitchener Calgary, Edmonton & Vancouver Urban Workspace - Total Urban Data Centres 34,853 9,647 $74,901 $15,337 38.6 10.7 83.0% 17.0% 36,967 10,071 $74,974 $14,392 41 .4 11 .3 83 .9% 16 .1% NOI $90,238 100.0% $89,366 100 .0% $2,465 (2,114) (424) $(73) $945 $872 8 .8% (5 .7) (4 .2) (0 .1)% 6 .6% 1 .0% THREE MONTHS ENDED CHANGE TYPE OF SPACE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % Urban Workspace - Office $63,534 70.4% $65,228 73 .0% $(1,694) (2 .6)% Urban Data Centres Urban Workspace - Retail Urban Workspace - Parking 15,337 7,592 3,775 17.0 8.4 4.2 14,392 6,826 2,920 16 .1 7 .6 3 .3 945 766 855 6 .6 11 .2 29 .3 NOI $90,238 100.0% $89,366 100 .0% $872 1 .0% The increase in NOI for the three months ended December 31, 2021, was primarily the result of commencement of economic occupancy at 425 Viger, occupancy and rent growth in the UDC portfolio, contributions from acquisitions in Montréal, Toronto, Vancouver, and Calgary, and an increase in variable parking revenue . This is partially offset by the Quebec government subsidy related to the Canada Emergency Commercial Rent Assistance (“CECRA”) program in the comparable quarter and occupancy turnover mainly in the urban workspace portfolio . 31 ALLIED 2021 ANNUAL REPORT SEGMENT Urban Workspace YEAR ENDED CHANGE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % Montréal & Ottawa $115,970 32.3% $106,711 31 .2% $9,259 8 .7% Toronto & Kitchener 142,360 Calgary, Edmonton & Vancouver 39,762 39.7 11.1 141,405 38,451 Urban Workspace - Total $298,092 83.1% $286,567 Urban Data Centres $60,627 16.9% $55,905 41 .3 11 .2 83 .7% 16 .3% 955 1,311 $11,525 $4,722 NOI $358,719 100.0% $342,472 100 .0% $16,247 0 .7 3 .4 4 .0% 8 .4% 4 .7% YEAR ENDED CHANGE TYPE OF SPACE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % Urban Workspace - Office $254,516 70.9% $248,564 72 .6% $5,952 2 .4% Urban Data Centres Urban Workspace - Retail Urban Workspace - Parking 60,627 30,758 12,818 16.9 8.6 3.6 55,905 24,953 13,050 16 .3 7 .3 3 .8 4,722 5,805 (232) 8 .4 23 .3 (1 .8) NOI $358,719 100.0% $342,472 100 .0% $16,247 4 .7% The increase in NOI for the year ended December 31, 2021, was primarily the result of commencement of economic occupancy at 425 Viger, occupancy and rent growth in the UDC portfolio, contributions from acquisitions in Vancouver, Toronto, Calgary, and Montréal and rent abatements provided under the CECRA program in the comparable period . This was partially offset by a decrease in variable parking revenue and turnover vacancy in the urban workspace portfolio . SAME ASSET NOI Same asset NOI, a non-IFRS measure in the table below, refers to those investment properties that were owned by Allied from October 1, 2020, to December 31, 2021 . Same asset NOI of the development portfolio for the three months ended December 31, 2021, consists of Breithaupt Phase III, Adelaide & Duncan, College & Manning, KING Toronto, The Well, QRC West Phase II, King & Brant, 400 Atlantic and Boardwalk-Revillon Building . Same asset NOI of the assets held for sale for the three months ended December 31, 2021, consists of three investment properties that Allied classified as assets held for sale on September 30, 2021 and intends to sell to third parties within the next nine months . Refer to non-IFRS measures on page 20 . 32 ALLIED 2021 ANNUAL REPORTTHREE MONTHS ENDED CHANGE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % Urban Workspace Montréal & Ottawa Toronto & Kitchener Calgary & Vancouver Urban Workspace Urban Data Centres $29,401 $27,493 31,521 8,656 32,660 9,079 $69,578 $69,232 15,337 14,392 Rental Portfolio - Same Asset NOI $84,915 $83,624 Urban Workspace Development Portfolio - Same Asset NOI Assets Held for Sale - Same Asset NOI 574 $574 $380 988 $988 $492 Total Portfolio - Same Asset NOI $85,869 $85,104 Acquisitions Lease terminations Development fees and corporate items NOI Amortization of improvement allowances Amortization of straight-line rents 1,441 268 2,660 4 542 3,716 $90,238 $89,366 (8,259) 1,141 (8,072) 1,596 Operating income, proportionate basis $83,120 $82,890 Less: investment in joint venture 315 138 Operating income, IFRS basis $82,805 $82,752 $1,908 (1,139) (423) $346 945 $1,291 (414) $(414) $(112) $765 1,437 (274) (1,056) $872 (187) (455) $230 177 $53 6 .9% (3 .5) (4 .7) 0 .5% 6 .6% 1 .5% (41 .9) (41 .9)% (22 .8)% 0 .9% 1 .0% 0 .3% 128 .3% 0 .1% Same asset NOI of the total portfolio increased by 0 .9% for the three months ended December 31, 2021 . Same asset NOI of the rental portfolio increased by 1 .5% as a result of rent commencement at 425 Viger, occupancy and rent growth in the UDC portfolio, and an increase in variable parking revenue . This is partially offset by the Quebec government subsidy related to the CECRA program in the comparable quarter and turnover vacancy in the urban workspace portfolio . Same asset NOI of the UDC portfolio increased by 6 .6% as a result of occupancy, rent and ancillary revenue growth . Same asset NOI of the development portfolio decreased due to lower occupancy during upgrade activities at Boardwalk-Revillon Building and 400 Atlantic . Same asset NOI in the table below refers to those investment properties that were owned by Allied from January 1, 2020, to December 31, 2021 . Same asset NOI of the development portfolio for the year ended December 31, 2021, consists of 425 Viger, Breithaupt Phase III, College & Manning, Adelaide & Duncan, KING Toronto, TELUS Sky, The Well, QRC West Phase II, King & Brant, 400 Atlantic and Boardwalk- Revillon Building . Same asset NOI of the assets held for sale for the year ended December 31, 2021, consists of three investment properties that Allied classified as assets held for sale on September 30, 2021 and intends to sell to third parties within the next nine months . 33 ALLIED 2021 ANNUAL REPORTYEAR ENDED CHANGE DECEMBER 31, 2021 DECEMBER 31, 2020 $ % $96,382 $94,028 $2,354 Urban Workspace Montréal & Ottawa Toronto & Kitchener Calgary & Vancouver Urban Workspace Urban Data Centres Rental Portfolio - Same Asset NOI Urban Workspace Development Portfolio - Same Asset NOI Assets Held for Sale - Same Asset NOI 127,715 29,401 253,498 60,627 $314,125 10,074 $10,074 $1,535 127,623 30,937 252,588 55,766 $308,354 3,325 $3,325 $1,875 Total Portfolio - Same Asset NOI $325,734 $313,554 Acquisitions Lease terminations Development fees and corporate items NOI Amortization of improvement allowances Amortization of straight-line rents Condominium profits 20,146 1,281 11,558 $358,719 (32,424) 4,729 — 16,735 1,163 11,020 (32,522) 10,132 178 Operating income, proportionate basis $331,024 $320,260 Less: investment in joint venture 1,633 1,245 92 (1,536) 910 4,861 $5,771 6,749 $6,749 $(340) $12,180 3,411 118 538 98 (5,403) (178) $10,764 388 Operating income, IFRS basis $329,391 $319,015 $10,376 2 .5% 0 .1 (5 .0) 0 .4% 8 .7% 1 .9% 203 .0% 203 .0% (18 .1)% 3 .9% 3 .4% 31 .2% 3 .3% $342,472 $16,247 4 .7% Same asset NOI of the total portfolio increased by 3 .9% for the year ended December 31, 2021 . Same asset NOI of the rental portfolio increased by 1 .9% as a result of occupancy and rent growth in the UDC portfolio and rent abatements provided under the CECRA program in the comparable period . This was partially offset by a decrease in variable parking revenue and turnover vacancy in the urban workspace portfolio . Same asset NOI of the UDC portfolio increased by 8 .7% as a result of occupancy, rent and ancillary revenue growth . Same asset NOI of the development portfolio increased due to rent commencement at 425 Viger and TELUS Sky . 34 ALLIED 2021 ANNUAL REPORTINTEREST EXPENSE Interest expense for the three months and years ended December 31, 2021, and 2020, are as follows: Interest on debt: Mortgages payable Construction loans payable Unsecured Facilities Unsecured Debentures Unsecured term loan Interest on lease liabilities Amortization, premium on debt Amortization, net financing costs THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 $1,002 1,390 1,409 18,666 2,202 2,361 (117) 590 $7,670 378 423 13,669 2,206 2,219 (469) 518 $16,722 2,983 2,836 64,940 8,739 9,184 (531) 2,394 $31,141 1,351 2,152 49,455 10,353 8,926 (1,846) 2,081 Less: Interest capitalized to qualifying investment properties and residential inventory (10,786) (8,840) (39,732) (31,010) $27,503 $26,614 $107,267 $103,613 Interest expense excluding financing prepayment costs Financing prepayment costs Interest expense, IFRS basis $16,717 721 $17,438 $17,774 — $17,774 $67,535 52,610 $72,603 — $120,145 $72,603 For the three months ended December 31, 2021, interest expense on an IFRS basis decreased by $336 over the comparable period primarily due to higher capitalized interest and a lower balance of mortgages payable, partially offset by a higher balance of unsecured debentures . For the year ended December 31, 2021, interest expense on an IFRS basis increased by $47,542 over the comparable period primarily due to financing prepayment costs and a higher balance of unsecured debentures, partially offset by a lower balance of mortgages payable and higher capitalized interest . For the three months and year ended December 31, 2021, capitalized interest increased over the comparable period with the continuation of development and upgrade activities across the portfolio . In accordance with IAS 23 - Borrowing Costs, interest may be capitalized on properties in connection with activity required to get the assets ready for their intended use (refer to note 2 (g) in Allied’s audited consolidated financial statements for the year ended December 31, 2021, for further details) . This would include upgrade work as well as work completed in relation to a future development, such as obtaining zoning approval, completing site approval plans, engineering and architectural drawings . On completion of upgrade and development activity, the ability to capitalize interest expense ends, partially offsetting the positive impact of lease commencement . 35 ALLIED 2021 ANNUAL REPORTGENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the three months and years ended December 31, 2021, and 2020, are as follows: Salaries and benefits Professional and trustees fees Office and general expenses Capitalized to qualifying investment properties Total general and administrative expenses, IFRS basis THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 $6,317 1,184 1,938 $9,439 (1,975) $7,464 $4,358 $21,683 $18,080 861 1,289 $6,508 (1,297) $5,211 4,481 5,816 $31,980 (6,146) $25,834 4,319 4,628 $27,027 (4,812) $22,215 For the three months ended December 31, 2021, general and administrative expenses increased by $2,253 over the comparative quarter mainly due to higher compensation expense recognized for the year . For the year ended December 31, 2021, general and administrative expenses increased by $3,619 from the comparable period, primarily due to higher compensation expense and severance expense incurred in the current year . INTEREST INCOME Interest income for the three months and years ended December 31, 2021, and 2020, are as follows: THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 Interest on loans receivable $6,358 $4,794 $24,065 $17,932 Guarantee fees Interest on cash and cash equivalents and other 593 85 111 113 3,294 664 459 1,428 Interest income, IFRS basis $7,036 $5,018 $28,023 $19,819 For the three months ended December 31, 2021, interest income increased by $2,018 over the comparable period primarily due to a higher balance of loans receivable and an increase in guarantee fees . For the year ended December 31, 2021, interest income increased by $8,204 from the comparable period, primarily due to a higher balance of loans receivable and an increase in guarantee fees (including a retroactive amount totaling $1,567), partially offset by a lower balance of cash and cash equivalents . 36 ALLIED 2021 ANNUAL REPORTOTHER FINANCIAL PERFORMANCE MEASURES FUNDS FROM OPERATIONS (“FFO”) AND FFO EXCLUDING CONDOMINIUM RELATED ITEMS AND FINANCING PREPAYMENT COSTS Allied’s calculation of FFO, a non-IFRS measure, is in compliance with REALPAC’s standardized definition in the White Paper . FFO excluding condominium related items and financing prepayment costs, a non-IFRS measure, starts with the standardized definition of FFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs and financing prepayment costs . Refer to non- IFRS measures on page 20 . Allied initiated condominium pre-sales at KING Toronto, a 50/50 joint venture with Westbank, in the fourth quarter of 2018 . For the three months and year ended December 31, 2021, Allied incurred $108 and $573, respectively, (at its share) of condominium marketing costs in connection with the pre-sales activity . (Marketing costs associated with merchant development are expensed when incurred .) Allied and Westbank have initiated construction of KING Toronto . For the three months ended December 31, 2021, FFO per Unit excluding condominium related items and financing prepayment costs totaled $0 .600 . This is an increase of $0 .011 or 1 .9% over the comparable period in the prior year . The increase was primarily due to an increase in NOI and an increase in interest income, partially offset by higher general and administrative expenses . For the year ended December 31, 2021, FFO per Unit excluding condominium related items and financing prepayment costs totaled $2 .405 . This is an increase of $0 .110 or 4 .8% over the comparable period in the prior year . The increase was primarily due to an increase in NOI, an increase in interest income which included a retroactive amount totaling $1,567 for guarantee fees, and a decrease in interest expense, partially offset by an increase in general and administrative expenses . To ensure sufficient cash is retained to meet capital improvement and leasing objectives, Allied strives to maintain an appropriate FFO pay-out ratio excluding condominium related items and financing prepayment costs . Refer to non-IFRS measures on page 20 . For the three months and year ended December 31, 2021, the FFO pay-out ratio excluding condominium related items and financing prepayment costs was 70 .9% and 70 .6%, respectively . ADJUSTED FUNDS FROM OPERATIONS (“AFFO”) EXCLUDING CONDOMINIUM RELATED ITEMS AND FINANCING PREPAYMENT COSTS Allied’s calculation of AFFO, a non-IFRS measure, is in compliance with REALPAC’s standardized definition in the White Paper . AFFO excluding condominium related items and financing prepayment costs, a non-IFRS measure, starts with the standardized definition of AFFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs and financing prepayment costs . Refer to non- IFRS measures on page 20 . 37 ALLIED 2021 ANNUAL REPORTFor the three months ended December 31, 2021, AFFO per Unit excluding condominium related items and financing prepayment costs totaled $0 .518 . This represents an increase of $0 .010 or 2 .0% over the comparable period in the prior year . The increase was primarily due to the changes in FFO excluding condominium related items and financing prepayment costs discussed above and lower regular leasing expenditures, partially offset by higher recoverable maintenance capital expenditures . For the year ended December 31, 2021, AFFO per Unit excluding condominium related items and financing prepayment costs totaled $2 .091 . This represents an increase of $0 .100 or 5 .0% over the comparable period in the prior year . The increase was primarily due to the changes in FFO excluding condominium related items and financing prepayment costs discussed above and lower amortization of straight-line rents, partially offset by higher regular leasing expenditures and recoverable maintenance capital expenditures . To ensure sufficient cash is retained to meet capital improvement and leasing objectives, Allied strives to maintain an appropriate AFFO pay-out ratio excluding condominium related items and financing prepayment costs, which is the ratio of actual distributions to AFFO excluding condominium related items and financing prepayment costs in a given period . For the three months and year ended December 31, 2021, the AFFO pay-out ratio excluding condominium related items and financing prepayment costs was 82 .1% and 81 .2%, respectively . RECONCILIATION OF FFO AND AFFO The following table reconciles Allied’s net income to FFO, FFO excluding condominium related items and financing prepayment costs and AFFO excluding condominium related items and financing prepayment costs, which are on a non-IFRS basis, for the three months and years ended December 31, 2021, and December 31, 2020 . Refer to non-IFRS measures on page 20 . Net income and comprehensive income $159,921 $83,842 $76,079 THREE MONTHS ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 CHANGE Adjustment to fair value of investment properties and investment properties held for sale Adjustment to fair value of derivative instruments Incremental leasing costs Amortization of improvement allowances Adjustments relating to joint venture: Adjustment to fair value on investment properties Amortization of improvement allowances Interest expense (1) FFO Condominium revenue Condominium marketing costs Financing prepayment costs 38 (96,204) 6 2,249 8,129 1,134 130 326 (16,880) (4,722) 1,745 7,959 2,071 113 614 $75,691 $74,742 — 108 721 — 227 — (79,324) 4,728 504 170 (937) 17 (288) $949 — (119) 721 ALLIED 2021 ANNUAL REPORTTHREE MONTHS ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 CHANGE FFO excluding condominium related items and financing prepayment costs $76,520 $74,969 $1,551 Amortization of straight-line rents Regular leasing expenditures (2) Regular maintenance capital expenditures Incremental leasing costs (related to regular leasing expenditures) Recoverable maintenance capital expenditures Adjustment relating to joint venture: Amortization of straight-line rents (902) (3,253) (1,566) (1,574) (2,910) (1,203) (3,849) (1,939) (1,221) (1,741) 301 596 373 (353) (1,169) (239) (393) 154 AFFO excluding condominium related items and financing prepayment costs $66,076 $64,623 $1,453 Weighted average number of Units Basic Diluted Per Unit - basic FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs Per Unit - diluted FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs Pay-out Ratio FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs 127,441,142 127,256,661 127,611,273 127,298,000 184,481 313,273 $0.594 $0 .587 $0 .007 $0.600 $0 .589 $0 .011 $0.518 $0 .508 $0 .010 $0.593 $0 .587 $0 .006 $0.600 $0 .589 $0 .011 $0.518 $0 .508 $0 .010 71.6% 70.9% 82.1% 70 .2% 70 .0% 81 .2% 1 .4% 0 .9% 0 .9% (1) This amount represents interest expense on Allied’s joint venture investment in TELUS Sky and is not capitalized under IFRS, but is allowed as an adjustment under REALPAC’s definition of FFO.   (2) Refer to Capital Expenditures on page 41 for a description of regular leasing expenditures. 39 ALLIED 2021 ANNUAL REPORTNet income and comprehensive income $443,151 $500,729 $(57,578) YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 CHANGE Adjustment to fair value of investment properties and investment properties held for sale Adjustment to fair value of derivative instruments Incremental leasing costs Amortization of improvement allowances Adjustments relating to joint venture: Adjustment to fair value on investment properties Amortization of improvement allowances Interest expense (1) FFO Condominium revenue Condominium marketing costs Financing prepayment costs (217,557) (280,590) (16,350) 8,038 32,305 1,864 119 1,806 17,996 7,069 32,193 4,296 329 2,710 63,033 (34,346) 969 112 (2,432) (210) (904) $253,376 $284,732 $(31,356) — 573 52,610 (178) 1,230 — 178 (657) 52,610 $20,775 4,174 (6,161) 1,581 (676) (2,408) FFO excluding condominium related items and financing prepayment costs $306,559 $285,784 Amortization of straight-line rents Regular leasing expenditures (2) Regular maintenance capital expenditures Incremental leasing costs (related to regular leasing expenditures) Recoverable maintenance capital expenditures Adjustment relating to joint venture: (3,682) (17,177) (4,327) (5,626) (8,183) (7,856) (11,016) (5,908) (4,950) (5,775) Amortization of straight-line rents (1,047) (2,276) 1,229 AFFO excluding condominium related items and financing prepayment costs $266,517 $248,003 $18,514 Weighted average number of Units Basic Diluted Per Unit - basic FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs Per Unit - diluted FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs 40 127,305,384 124,427,715 127,455,829 124,536,634 2,877,669 2,919,195 $1.990 $2 .288 $(0 .298) $2.408 $2 .297 $2.094 $1 .993 $0 .111 $0 .101 $1.988 $2 .286 $(0 .298) $2.405 $2 .295 $2.091 $1 .991 $0 .110 $0 .100 ALLIED 2021 ANNUAL REPORTPay-out Ratio FFO FFO excluding condominium related items and financing prepayment costs AFFO excluding condominium related items and financing prepayment costs YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 CHANGE 85.5% 70.6% 72 .1% 71 .9% 81.2% 82 .8% 13 .4% (1 .3)% (1 .6)% (1) This amount represents interest expense on Allied’s joint venture investment in TELUS Sky and is not capitalized under IFRS, but is allowed as an adjustment under REALPAC’s definition of FFO.   (2) Refer to Capital Expenditures on page 41 for a description of regular leasing expenditures. CAPITAL EXPENDITURES Our portfolio requires ongoing maintenance capital expenditures and leasing expenditures . Leasing expenditures include the cost of in-suite or base-building improvements made in connection with the leasing of vacant space or the renewal or replacement of users occupying space covered by maturing leases, as well as improvement allowances and commissions paid in connection with the leasing of vacant space and the renewal or replacement of users occupying space covered by maturing leases . For the three months ended December 31, 2021, Allied incurred (i) $3,253 in regular leasing expenditures or $9 .35 per occupied square foot, (ii) $1,566 in regular maintenance capital expenditures and (iii) $2,910 of recoverable maintenance capital expenditures . For the year ended December 31, 2021, Allied incurred (i) $17,177 in regular leasing expenditures or $10 .55 per occupied square foot, (ii) $4,327 in regular maintenance capital expenditures and (iii) $8,183 of recoverable maintenance capital expenditures . For the three months and year ended December 31, 2021, Allied invested $128,973 and $417,967, respectively, of revenue enhancing capital into the rental and development portfolio to enhance its income-producing capability and in ongoing development activity . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 Regular leasing expenditures Regular maintenance capital expenditures Recoverable maintenance capital expenditures $3,253 $1,566 $2,910 $3,849 $1,939 $1,741 $17,177 $4,327 $8,183 $11,016 $5,908 $5,775 Revenue-enhancing capital and development costs $128,973 $108,570 $417,967 $348,737 41 ALLIED 2021 ANNUAL REPORTEARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (“EBITDA”) The following table reconciles Allied’s net income and comprehensive income to Adjusted EBITDA, a non- IFRS measure, for the three months and years ended December 31, 2021, and December 31, 2020 . Refer to non-IFRS measures on page 20 . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 Net income and comprehensive income for the period $159,921 $83,842 $443,151 $500,729 Interest expense Amortization of other assets Amortization of improvement allowances Fair value gain on investment properties and investment properties held for sale Fair value loss (gain) on derivative instruments 17,454 273 8,259 (95,070) 6 17,774 341 8,072 120,351 1,167 32,424 72,603 1,467 32,522 (14,809) (4,722) (215,693) (276,294) (16,350) 17,996 Adjusted EBITDA $90,843 $90,498 $365,050 $349,023 42 ALLIED 2021 ANNUAL REPORTSection III —Leasing Allied strives to maintain high levels of occupancy and leased area . At December 31, 2021, Allied’s rental portfolio was 90 .4% leased . 43 ALLIED 2021 ANNUAL REPORTSTATUS Leasing status for the rental portfolio as at December 31, 2021, is summarized below: Leased area (occupied & committed) - beginning of year Vacancy committed for future leases Occupancy - beginning of year Previously committed vacant space now occupied New leases and expansions on vacant space New vacancies during the period Surrender/early termination agreements Suite additions, remeasurements and removals Occupancy (pre-2021 acquisitions, dispositions and transfers) Occupancy related to acquired properties Occupancy related to transfers to PUD Occupancy - end of year Vacancy committed for future leases Leased area (occupied & committed) - end of year (1) Excludes properties under development and residential GLA. GLA 12,946,538 (59,159) 12,887,379 53,609 301,001 (510,627) (98,784) (31,049) 12,601,529 317,544 (128,452) 12,790,621 70,606 12,861,227 YEAR ENDED AS A % OF TOTAL GLA (1) 92.5% 92.1% 90.1% 89.9% 90.4% Of the 14,234,491 square feet total GLA in Allied’s rental portfolio, 12,790,621 square feet were occupied by users on December 31, 2021 . Another 70,606 square feet were subject to contractual lease commitments with users whose leases commence subsequent to December 31, 2021, bringing the leased area to 12,861,227 square feet, which represents 90 .4% of Allied’s total rental portfolio GLA . The table below outlines the rental portfolio’s leased area as at December 31, 2021, for the stabilized properties and the transitional properties . Transitional properties consists of six properties (810 Saint Antoine, El Pro Lofts, RCA Building, 342 Water, 375 Water and the retail portion of 1001 Boulevard Robert- Bourassa) where we have suppressed occupancy to facilitate longer term upgrade plans . DECEMBER 31, 2021 LEASED AREA (SF) LEASED AREA (%) 12,335,316 525,911 12,861,227 91 .6% 68 .4% 90.4% Stabilized rental portfolio Transitional rental portfolio Total rental portfolio 44 ALLIED 2021 ANNUAL REPORTThe table below outlines the timing of the contractual lease commitments by commencement of occupancy: FIXTURING COMMENCEMENT (OCCUPANCY) Lease commitments - GLA % of lease commitments Q1 2022 Q2 2022 Q3 2022 Q3 2023 TOTAL 18,329 26 .0% 39,657 56 .1% 7,070 10 .0% 5,550 7 .9% 70,606 100% In most instances, occupancy commences with a fixturing period prior to rent commencement . During the fixturing period, straight-line rent revenue is recognized, and no recoverable costs are paid by the user . Thereafter, recoverable costs are paid by the user and recognized as rental revenue . In cases where interest and realty taxes were being capitalized prior to occupancy (in accordance with IFRS), capitalization ends on occupancy . During occupancy, rental revenue is recognized and interest and realty taxes are expensed . In some instances, particularly in ground up developments, there may be fixturing periods outside of the term of the lease while base building work is being completed . In this case, capitalization is taking place so revenue is not recognized . The table below outlines the timing of the contractual lease commitments by commencement of rent payment: RENT COMMENCEMENT (ECONOMIC OCCUPANCY) Lease commitments - GLA % of lease commitments Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q4 2023 TOTAL 8,043 22,556 10,286 7,070 15,567 11 .4% 31 .9% 14 .6% 10 .0% 22 .0% 1,534 2 .2% 5,550 70,606 7 .9% 100 .0% Allied monitors the level of sub-lease space being marketed in its rental portfolio . Below is a summary of sub-lease space being marketed by city: DECEMBER 31, 2021 SEPTEMBER 30, 2021 JUNE 30, 2021 MARCH 31, 2021 Toronto Kitchener Montréal Calgary Vancouver Total square feet % of Total GLA 229,434 — 169,429 21,610 7,654 428,127 3.0% 264,944 — 176,260 46,403 28,906 516,513 3 .7% 344,914 — 203,850 32,005 46,161 626,930 4 .5% 383,038 35,421 239,059 37,781 37,745 733,044 5 .3% The decline in the three months and year ended December 31, 2021, is primarily due to tenants withdrawing space from the sub-lease market in favor of reoccupying . 45 ALLIED 2021 ANNUAL REPORTACTIVITY Allied places a high value on user retention, as the cost of retention is typically lower than the cost of securing new users . When retention is neither possible nor desirable, Allied strives for high-quality replacement users . Leasing activity in connection with the rental portfolio as at December 31, 2021, is summarized in the following table: Unleased area on January 1, 2021, including re-measurement Maturities during the year ended December 31, 2021 (2) Maturities in future years Total LEASABLE SF (1) LEASED SF BY DECEMBER 31 % LEASED BY DECEMBER 31 UNLEASED SF AT DECEMBER 31 1,225,682 405,574 1,547,125 2,772,807 882,136 1,287,710 920,382 2,208,092 33 .1% 57 .0% 820,108 664,989 1,485,097 (1) Excludes the impact of properties acquired in the current period and properties under development. (2) Some maturities occurred at December 31, 2021, and are included in Allied’s leased area as at December 31, 2021. On January 1, 2021, 1,225,682 square feet of GLA was unleased . By the year ended December 31, 2021, Allied had leased 405,574 square feet of this GLA, leaving 820,108 square feet to be leased (net of vacancy transferred to PUD, if any) . Leases for 1,547,125 square feet of GLA matured in the year ended December 31, 2021, at the end of which Allied renewed or replaced leases totaling 882,136 square feet of GLA, leaving 664,989 square feet to be leased . In addition, during the year ended December 31, 2021, Allied leased 920,382 of square feet scheduled to mature after 2021 . The tables below summarize the rental rates achieved for leases that were either renewed or replaced in the three months and year ended December 31, 2021 . THREE MONTHS ENDED DECEMBER 31, 2021 YEAR ENDED DECEMBER 31, 2021 EXPIRING RATE RENEWAL AND REPLACEMENT RATE SPREAD SQUARE FEET EXPIRING RATE RENEWAL AND REPLACEMENT RATE SPREAD SQUARE FEET LEASING SPREAD Ending to Starting Base Rent Total Portfolio $16 .02 Excluding Calgary $16 .20 Average to Average Base Rent Total Portfolio $15 .37 Excluding Calgary $15 .61 $17 .52 $17 .90 $18 .19 $18 .63 9 .4% 794,826 $18 .47 $20 .34 10 .1% 1,802,518 10 .5% 742,680 $18 .72 $20 .97 12 .0% 1,672,462 18 .3% 794,826 $17 .31 $20 .88 20 .6% 1,802,518 19 .3% 742,680 $17 .57 $21 .54 22 .6% 1,672,462 46 ALLIED 2021 ANNUAL REPORTLEASE RENEWALS/ REPLACEMENTS FOR THE YEAR ENDED DECEMBER 31, 2021 ABOVE IN-PLACE RENTS AT IN-PLACE RENTS BELOW IN-PLACE RENTS % of total leased SF Maturing leases - weighted average rent Renewals and replacements - weighted average rent 52 .6% $18 .95 $24 .03 29 .0% $20 .74 $20 .74 18 .4% $13 .52 $9 .15 Leasing activity resulted in an increase of 9 .4% and 10 .1% in the net rent per square foot from maturing leases for the three months and year ended December 31, 2021, respectively . Excluding transactions in Calgary, the rental rates achieved on maturing leases resulted in an increase of 10 .5% and 12 .0% in net rent per square foot for both the three months and year ended December 31, 2021, respectively . The following tables outline leasing activity during the year ended December 31, 2021 . FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 FOR THE YEAR ENDED DECEMBER 31, 2021 NEW LEASES RENEWALS AND REPLACEMENTS TOTAL 253 NEW LEASES RENEWALS AND REPLACEMENTS TOTAL 1,010 87,729 794,826 882,555 405,574 1,802,518 2,208,092 26 5 .9 115 11 .3 141 10 .8 116 5 .4 279 7 .5 395 7 .1 Tours Net leased square feet Number of transactions Lease term (in years) Net effective rent (per square foot per year) (1) Net annualized rent $24 .06 $19 .50 $19 .82 $24 .25 $21 .89 $22 .36 Tenant improvements Leasing commissions Landlord’s work (1 .40) (2 .32) (2 .26) (1 .75) (2 .09) (2 .03) (1 .61) (0 .90) (0 .91) (0 .75) (0 .96) (0 .76) (0 .90) (0 .78) (0 .90) (0 .46) (0 .90) (0 .52) Total leasing costs $(3 .91) $(3 .98) $(3 .98) $(3 .43) $(3 .45) $(3 .45) Net effective rent $20.15 $15.52 $15.84 $20.82 $18.44 $18.91 (1) Calculated based on a weighted average of leased square feet. 47 ALLIED 2021 ANNUAL REPORTUSER PROFILE The following sets out Allied’s user-mix on the basis of percentage of rental revenue for the year ended December 31, 2021: CATEGORY Business services and professional Telecommunications and information technology Media and entertainment Retail Financial services Government Parking and other Life sciences Educational and institutional % OF RENTAL REVENUE DECEMBER 31, 2021 33 .3% 31 .6% 12 .2% 8 .7% 4 .7% 4 .5% 2 .6% 1 .4% 1 .0% 100 .0% The following sets out information on the top-10 users by rental revenue for the year ended December 31, % OF RENTAL REVENUE DECEMBER 31, 2021 WEIGHTED AVERAGE REMAINING LEASE TERM (YEARS) % OF TOTAL GLA CREDIT RATING DBRS/S&P/ MOODY’S 4 .4% 2 .5% 2 .3% 2 .2% 2 .0% 1 .4% 1 .4% 1 .4% 1 .2% 1 .1% 19 .9% 1 .4 10 .5 16 .0 3 .3 7 .8 19 .1 7 .9 13 .9 15 .4 7 .0 9 .6 0 .7% 3 .8% 0 .5% 0 .4% 2 .4% 1 .3% 1 .6% 0 .2% 0 .6% 0 .6% 12 .1% -/AAA/Aaa* Not Rated -/B/B3 -/BBB/Baa3 -/AA+/Aa2* Not Rated AH/BBB+/A1 BBB/BBB+/Baa2 BBBH/BBB+/Baa1 Not Rated 2021: USER Cloud Service Provider Ubisoft Cologix Equinix Google Canada Corporation National Capital Commission (“NCC”), a Canadian Crown Corporation Morgan Stanley Bell Canada TELUS Communications Inc . Shopify Inc . * Credit rating for parent company 48 ALLIED 2021 ANNUAL REPORTLEASE MATURITY As at December 31, 2021, 90 .4% of the GLA in Allied’s rental portfolio was leased and its weighted average term to maturity was 5 .6 years . The estimated weighted average market net rental rate is based on Management’s estimates of today’s market rental rates and is supported in part by independent appraisals of certain relevant properties . There can be no assurance that Management’s current estimates are accurate or that they will not change with the passage of time . The following contains information on the urban workspace and UDC leases that mature up to 2026 and the corresponding estimated weighted average market rental rate as at December 31, 2021 . Where the renewal rate on maturity is contractually predetermined, it is reflected below as the market rental rate . SQUARE FEET % OF TOTAL GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 1,588,458 1,439,165 863,510 1,280,120 1,204,725 11 .2% 10 .1% 6 .1% 9 .0% 8 .5% 25 .45 25 .03 31 .13 27 .27 23 .24 27 .61 26 .45 31 .68 28 .93 24 .63 % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE TOTAL RENTAL PORTFOLIO December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 25.0% 20.0% $27.61 $25.45 11.2% $26.45 $25.03 10.1% 15.0% 10.0% 5.0% 0.0% $31.68 $31.13 6.1% $28.93 $27.27 $24.63 $23.24 9.0% 8.5% $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 49 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 1,588,458 1,439,165 863,510 1,280,120 1,204,725 SQUARE FEET ALLIED 2021 ANNUAL REPORTThe following tables contain information on lease maturities by segment: MONTRÉAL & OTTAWA December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 598,945 444,803 260,629 280,448 520,196 8 .7% 6 .4% 3 .8% 4 .1% 7 .5% 17 .88 16 .72 17 .92 18 .20 18 .32 18 .19 17 .58 17 .57 17 .97 18 .67 TORONTO & KITCHENER SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 615,376 658,657 350,441 673,155 503,801 12 .8% 13 .7% 7 .3% 14 .0% 10 .5% 22 .88 25 .67 32 .57 26 .04 26 .37 27 .06 30 .70 33 .62 30 .28 29 .13 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 279,450 311,337 197,980 236,728 177,764 14 .0% 15 .6% 9 .9% 11 .8% 8 .9% 19 .68 26 .88 28 .43 21 .13 26 .54 21 .82 21 .52 27 .46 16 .75 27 .12 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 94,687 24,368 54,460 89,789 2,964 18 .6% 4 .8% 10 .7% 17 .6% 0 .6% 107 .05 136 .02 94 .86 81 .01 158 .75 107 .94 136 .41 102 .15 85 .17 158 .75 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 CALGARY & VANCOUVER December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 URBAN DATA CENTRES December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 50 ALLIED 2021 ANNUAL REPORTSection IV —Historical Performance The following sets out summary information and financial results for the eight most recently completed fiscal quarters . 51 ALLIED 2021 ANNUAL REPORTQ4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Rental revenue (1) $146,722 $142,654 $138,675 $140,835 $145,173 $139,673 $136,504 $138,977 Condominium revenue (1) — — — — — 65 113 — Property operating costs (1) Condominium cost of sales (1) $(63,917) $(59,112) $(56,748) $(59,718) $(62,421) $(60,647) $(59,204) $(59,218) — — — — — — — — Operating income (1) $82,805 $83,542 $81,927 $81,117 $82,752 $79,091 $77,413 $79,759 Net income and comprehensive income (1) Weighted average Units (diluted) $159,921 $107,185 $98,523 $77,522 $83,842 $69,013 $92,961 $254,913 127,611,273 127,447,002 127,443,551 127,329,378 127,298,000 124,390,540 123,207,219 123,255,260 Distributions (1) $54,225 $54,101 $54,094 $54,101 $52,493 $51,354 $50,784 $50,746 FFO (2) $75,691 $41,690 $76,580 $59,415 $74,742 $70,276 $68,624 $71,089 FFO per Unit (diluted) (2) $0 .593 $0 .327 $0 .601 $0 .467 $0 .587 $0 .565 $0 .557 $0 .577 FFO pay-out ratio (2) 71 .6% 129 .8% 70 .6% 91 .1% 70 .2% 73 .1% 74 .0% 71 .4% All amounts below are excluding condominium related items and financing prepayment costs (3) FFO (2) FFO per Unit (diluted) (2) $76,520 $79,537 $76,705 $73,797 $74,969 $70,486 $68,652 $71,676 $0 .600 $0 .624 $0 .602 $0 .580 $0 .589 $0 .567 $0 .557 $0 .582 FFO payout-ratio (2) 70 .9% 68 .0% 70 .5% 73 .3% 70 .0% 72 .9% 74 .0% 70 .8% AFFO (2) AFFO per Unit (diluted) (2) $66,076 $66,132 $67,980 $66,329 $64,623 $59,796 $61,216 $62,367 $0 .518 $0 .519 $0 .533 $0 .521 $0 .508 $0 .481 $0 .497 $0 .506 AFFO payout-ratio (2) 82 .1% 81 .8% 79 .6% 81 .6% 81 .2% 85 .9% 83 .0% 81 .4% NAV per Unit (2) $50 .30 $49 .50 $49 .07 $48 .72 $48 .54 $48 .29 $48 .52 $48 .17 Net debt as a multiple of annualized adjusted EBITDA (2) Total indebtedness ratio (2) 9 .4x 8 .9x 8 .1x 7 .9x 7 .4x 7 .2x 7 .6x 6 .8x 33 .5% 32 .9% 31 .0% 31 .1% 29 .2% 28 .8% 29 .3% 27 .2% Total rental GLA 14,234 14,106 13,936 13,886 13,991 13,930 14,097 13,632 Leased rental GLA 12,861 12,781 12,772 12,755 12,947 12,990 13,343 12,929 Leased area % 90 .4% 90 .6% 91 .6% 91 .9% 92 .5% 93 .3% 94 .7% 94 .8% (1) This measure is presented on an IFRS basis. (2) This is a non-IFRS measure, refer to page 20. (3) In the first, third and fourth quarters of 2021, Allied incurred $14,161, $37,728 and $721, respectively, of financing prepayment costs in connection with the favourable refinancing of unsecured debentures and first mortgages. Factors that cause variation from quarter to quarter include, but are not limited to, occupancy, cost of capital, same asset NOI, acquisition activity, leasing expenditures and maintenance capital expenditures . 52 ALLIED 2021 ANNUAL REPORTSection V —Asset Profile The following table reconciles the consolidated balance sheet on an IFRS basis to a proportionate basis, a non-IFRS measure, as at December 31, 2021, and December 31, 2020 . Refer to non-IFRS measures on page 20 . 53 ALLIED 2021 ANNUAL REPORTDECEMBER 31, 2021 DECEMBER 31, 2020 IFRS BASIS INVESTMENT IN JOINT VENTURE PROPOR- TIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPOR- TIONATE BASIS Assets Non-current assets Investment properties $9,527,105 $124,960 $9,652,065 $8,687,375 $122,310 $8,809,685 Residential inventory 170,980 — 170,980 140,038 — 140,038 124,790 (124,790) — 117,112 (117,112) — 223,456 28,185 — 1,370 223,456 322,543 29,555 23,643 — 533 322,543 24,176 10,074,516 1,540 10,076,056 9,290,711 5,731 9,296,442 22,548 2,170 24,718 45,512 3,286 48,798 144,306 — 144,306 93 — 93 57,061 86,260 709 — 57,770 64,452 86,260 — 310,175 2,879 313,054 110,057 602 — 3,888 $9,619 65,054 — 113,945 $9,410,387 Total assets $10,384,691 $4,419 $10,389,110 $9,400,768 $3,417,138 $— $3,417,138 $2,698,794 $— $2,698,794 44,635 157,550 3,619,323 36,146 303,450 339,596 — — — — 44,635 157,550 63,045 157,068 3,619,323 2,918,907 36,146 26,668 4,419 4,419 4,419 307,869 344,015 278,161 304,829 3,963,338 3,223,736 — — — — 9,619 9,619 9,619 63,045 157,068 2,918,907 26,668 287,780 314,448 3,233,355 Total liabilities 3,958,919 Unitholders’ equity 6,425,772 — 6,425,772 6,177,032 — 6,177,032 Total liabilities and Unitholders’ equity 54 $10,384,691 $4,419 $10,389,110 $9,400,768 $9,619 $9,410,387 Investment in joint venture and loan receivable Loans and notes receivable Other assets Current assets Cash and cash equivalents Loans and notes receivable Accounts receivable, prepaid expenses and deposits Investment properties held for sale Liabilities Non-current liabilities Debt Other liabilities Lease liabilities Current liabilities Debt Accounts payable and other liabilities ALLIED 2021 ANNUAL REPORTAs at December 31, 2021, Allied’s portfolio consisted of 209 investment properties (195 rental properties, 11 development properties and three investment properties held for sale), with a fair value of $9,652,065, including one equity accounted investment in a joint venture . Changes to the carrying amounts of investment properties on a proportionate basis, a non-IFRS measure, are summarized in the following table . Refer to non-IFRS measures on page 20 . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2021 RENTAL PROPERTIES PROPERTIES UNDER DEVELOP- MENT TOTAL RENTAL PROPERTIES PROPERTIES UNDER DEVELOP- MENT TOTAL Balance, beginning of period $8,172,266 $1,163,460 $9,335,726 $7,913,165 $896,520 $8,809,685 Additions: Acquisitions Improvement allowances (1) Leasing commissions (1) 95,222 9,051 8,450 — 430 183 95,222 315,973 28,648 344,621 9,481 8,633 23,615 15,313 2,119 1,829 25,734 17,142 Capital expenditures (1) 43,257 90,192 133,449 126,071 304,406 430,477 Dispositions Transfers to PUD — — Transfers to other assets (2,456) (16,153) (16,153) — (71,592) (71,592) — — — — — (47,040) 47,040 (2,456) (6,838) — 211 (86,260) 1,098 — — — — (6,838) (86,260) 1,098 — 211 (6,999) (119) (7,118) (27,195) (500) (27,695) 94,233 837 95,070 185,333 30,360 215,693 Balance, end of period $8,413,235 $1,238,830 $9,652,065 $8,413,235 $1,238,830 $9,652,065 (1) Includes Allied’s proportionate share of the equity accounted investment of the following amounts for the three months and year ended December 31, 2021: improvement allowances of $nil and $1,056; leasing commissions of $29 and $301; capital expenditures of $896 and $2,229; amortization of straight-line rent and improvement allowances of $109 and $928; and fair value loss on investment properties of $1,134 and $1,864, respectively. For the three months ended December 31, 2021, Allied capitalized $10,790 of borrowing costs to its capital expenditures on a proportionate basis, $8,248 of which related to development activity and $1,089 to upgrade activity in the rental portfolio (primarily 250 Front W, RCA Building and 1001 Boulevard Robert- Bourassa) . Allied capitalized $1,453 of borrowing costs to qualifying residential inventory . 55 Transfers to investment properties held for sale Finance leases Amortization of straight-line rent and improvement allowances (1) Fair value gain on investment properties and investment properties held for sale (1) ALLIED 2021 ANNUAL REPORTFor the year ended December 31, 2021, Allied capitalized $39,919 of borrowing costs to its capital expenditures on a proportionate basis, $30,692 of which related to development activity and $4,468 to upgrade activity in the rental portfolio (primarily 250 Front W, RCA Building and 375 Water) . Allied capitalized $4,759 of borrowing costs to qualifying residential inventory . As at December 31, 2021, Allied had three properties classified as investment properties held for sale . Allied intends to sell these properties to third parties within the next nine months . Investment properties held for sale $86,260 $— DECEMBER 31, 2021 DECEMBER 31, 2020 The appraised fair value of investment properties and investment properties held for sale is most commonly determined using the following methodologies:  Discounted cash flow method (“DCF method”) - Under this approach, discount rates are applied to the projected annual operating cash flows, generally over a ten-year period, including a terminal value of the properties based on a capitalization rate applied to the estimated net operating income (“NOI”), a non-IFRS measure, in the terminal year . This method is primarily used to value the rental portfolio . Comparable sales method - This approach compares a subject property’s characteristics with those of comparable properties which have recently sold . The process uses one of several techniques to adjust the price of the comparable transactions according to the presence, absence, or degree of characteristics which influence value . These characteristics include the cost of construction incurred at a property under development . This method is primarily used to value the development portfolio, ancillary parking facilities and investment properties held for sale . Allied’s entire portfolio is revalued by the external appraiser each quarter . Management verifies all major inputs to the valuations, analyzes the change in fair values at the end of each reporting period and reviews the results with the independent appraiser every quarter . There were no material changes to the valuation techniques during the period . For properties with a leasehold interest with a term less than 40 years, the resulting valuation methodology is based upon a full-term discounted cash flow model . 56 ALLIED 2021 ANNUAL REPORTIn valuing the investment properties as at December 31, 2021, the independent appraiser compares the value derived using the DCF method to the value that would have been calculated by applying a capitalization rate to NOI . This is done to assess the reasonability of the value obtained under the DCF method . The resulting portfolio weighted average capitalization rate was 4 .69%, detailed in the table below: OVERALL CAPITALIZATION RATE DECEMBER 31, 2021 DECEMBER 31, 2020 RANGE % WEIGHTED AVERAGE % FAIR VALUE $ (1) RANGE % WEIGHTED AVERAGE % FAIR VALUE $ (1) Montréal & Ottawa Toronto & Kitchener Calgary & Vancouver Urban Data Centres Rental Properties Properties Under Development Total Investment Properties 4.50% - 6.75% 5.03% $2,546,217 4 .75% - 6 .75% 5 .08% $2,419,295 3.75% - 5.75% 4.39% 3,605,222 3 .75% - 5 .75% 4 .47% 3,428,395 3.50% - 7.00% 4.52% 1,128,774 3 .50% - 7 .00% 4 .76% 1,040,835 5.00% - 5.75% 5.30% 1,133,022 5 .00% - 5 .75% 5 .32% 1,024,640 3.50% - 7.00% 4.74% $8,413,235 3 .50% - 7 .00% 4 .80% $7,913,165 4.00% - 7.00% 4.24% 1,238,830 5 .25% - 7 .00% 5 .95% 896,520 3.50% - 7.00% 4.69% $9,652,065 3 .50% - 7 .00% 4 .82% $8,809,685 (1) Presented on a proportionate basis, which is a non-IFRS measure. Refer to non-IFRS measures on page 20. RENTAL PROPERTIES Allied’s rental portfolio was built by consolidating the ownership of urban office properties and network- dense urban data centres . Scale within each city of focus proved to be important as Allied grew . It enabled Allied to provide users with greater expansion flexibility, more parking and better human and digital connectivity than its direct competitors . Scale across the country also proved to be important . It enabled Allied to serve national and global users better, to expand its growth opportunities and to achieve meaningful geographic diversification . URBAN WORKSPACE Allied has evolved into a leading owner operator of urban workspace in Canada’s major cities . It currently owns 195 rental properties in six Canadian cities and three investment properties held for sale . Listed below are Allied’s top-10 urban workspace rental properties measured by Normalized Last Quarter Annualized (“LQA”) NOI, a non-IFRS measure . Refer to non-IFRS measures on page 20 . These properties represent 30 .1% of the total LQA NOI for the three months ended December 31, 2021 . 57 ALLIED 2021 ANNUAL REPORTPROPERTY NAME NORMALIZED LQA NOI APPRAISED FAIR VALUE CAP RATE PRINCIPAL USERS 1001 Boulevard Robert-Bourassa, Montréal (1) $17,039 $373,750 5 .25% Cité Multimédia, Montréal 16,300 408,410 4 .75% Le Nordelec, Montréal QRC West, Toronto 15,066 13,178 302,820 5 .00% 318,660 4 .00% 747 Rue du Square Victoria, Montréal 10,255 283,360 4 .75% AON Canada Inc, Autorité Régionale de Transport Métropolitain, Hydro-Québec, National Bank of Canada Acceo Solutions, Morgan Stanley, Technicolor Gsoft, Unity Technologies, Yellow Pages Media eOne, Sapient Canada Dassault Systèmes Canada, Otera Capital Inc ., Secretariat of the Convention on Biological Diversity, Société Québecoise des Infrastructures 5455 de Gaspé Avenue, Montréal 555 Richmond Street West, Toronto King Portland Centre, Toronto 5445 de Gaspé Avenue, Montréal 9,340 7,744 6,743 6,473 147,840 5 .00% Attraction Media, Framestore, Ubisoft 189,530 4 .50% Centre Francophone de Toronto, Synaptive 183,010 3 .81% 107,820 5 .25% Indigo, Shopify Sun Life, Ubisoft Incognito Software Inc ., Cloud Service Provider, Quarterdeck Brewing Co 375 Water Street, Vancouver 6,453 227,820 Total $108,591 $2,543,020 3 .75% 4 .62% (1) 700 De La Gauchetière was renamed to 1001 Boulevard Robert-Bourassa in Q2 2021. NETWORK-DENSE URBAN DATA CENTRES Allied operates three network-dense UDCs in downtown Toronto: 151 Front W (“151”), 250 Front W (“250”) and 905 King W (“905”) . Listed below are Allied’s UDCs measured by Normalized LQA NOI, a non-IFRS measure . Refer to non-IFRS measures on page 20 . UDCs represent 17 .0% of the total LQA NOI for the three months ended December 31, 2021 . PROPERTY NAME NORMALIZED LQA NOI APPRAISED FAIR VALUE CAP RATE PRINCIPAL USERS 151 Front W, Toronto $40,822 $678,800 5 .00% Bell, Cologix, Equinix, Digital Realty 250 Front W, Toronto 905 King W, Toronto 15,978 4,673 348,710 105,510 5 .75 5 .75 AWS, Cloud Service Provider Beanfield, Cloud Service Provider, Cologix Total $61,473 $1,133,020 5 .30% Allied has two basic sources of rental revenue from 151, 250 and 905 . The largest source, regular rental revenue, derives from leasing and sub-leasing space to ultimate users . A smaller but material source, ancillary rental revenue, derives from conduit fees, rack fees and interconnection fees charged on a recurring monthly basis for cross-connects that enable different types of users to interconnect with low- latency and redundancy, reducing network costs and improving network security and performance . Regular rental revenue represents 88 .6% of Normalized LQA NOI from UDCs for the three months ended December 31, 2021 . Ancillary rental revenue represents 11 .4% of Normalized LQA NOI from UDCs . Ancillary rental revenue is comprised of revenue from the rental of conduit space, rack space and cross-connects . 58 ALLIED 2021 ANNUAL REPORTRegular rental revenue Ancillary rental revenue Total Normalized LQA NOI NORMALIZED LQA NOI % OF NORMALIZED LQA NOI $54,447 7,026 $61,473 88 .6% 11 .4% 100 .0% Allied acquired 151 in 2009 and both 250 and 905 are connected to it via a multi-layered, diverse infrastructure of high-density fibre that Allied owns . 151 is the largest internet exchange point (IXP) in Canada and the third largest in North America . It houses Toronto Internet Exchange (TorIX), a not-for-profit organization that enables internet networks to connect and exchange traffic . With over 290 peers connecting, TorIX has experienced a steady and dramatic increase in traffic since 2009, with traffic in the fourth quarter of 2021 exceeding 1,500 gigabits per second . The following sets out Allied’s increase in UDC NOI in relation to the growth in traffic through TorIX . Our Urban Data Centres are a critical component of Canada's communications infrastructure UDC NOI Excluding Ancillary Revenue UDC NOI from Ancillary Revenue Year-Over-Year Traffic Trending (Gbps) ) s n o i l l i m ( I O N 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 25.0 29.8 1.7 28.1 28.1 1.6 26.5 49.1 2.2 46.9 42.8 2.2 40.6 37.5 1.7 35.8 38.2 1.7 36.5 61.5 7.0 54.5 55.9 5.9 50.0 53.4 4.4 49.0 1,500 1,250 1,000 750 500 250 0 ) s p b G ( c i f f a r T 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1) 2021 151 is a carrier-neutral facility . With a critical mass of carrier networks, TorIX and numerous other networks, 151 is Canada’s hub for global connectivity and is the gateway to Canada for all major North American cities and numerous major international cities . 59 ALLIED 2021 ANNUAL REPORT As a critical component of Canada’s communications infrastructure, 151 is a network-dense urban data centre, distinct from conventional suburban data centres . The latter are analogous to interchanges on small highways . While valuable, they are relatively easy to replicate . 151 is analogous to a massive interchange on an intersecting series of super-highways . It is exceptionally valuable and very difficult to replicate . Allied leases 173,000 square feet of GLA at 250 pursuant to a long-term lease that expires on June 2, 2062 . As a result of substantial capital improvements completed by Allied, including high-density fibre connections to 151, 250 has become an important interconnected cloud-hosting facility in Canada, providing retail, wholesale and managed services . Allied acquired 905 in 2003 . As a result of substantial capital improvements completed by Allied, including connecting it to 151 with high-density fibre, 59,056 square feet of GLA at the property has become an important urban data centre . Allied expects that cross-connects at 250 and 905 will give rise to recurring ancillary rental revenue . Cross-connects utilize the existing infrastructure at 250 and 905 without occupying any of the unleased GLA or requiring additional capital expenditure by Allied . URBAN DATA CENTRE USER PROFILE The following sets out Allied’s user-mix for UDCs, on the basis of percentage of rental revenue for the year ended December 31, 2021: CATEGORY Network Cloud Enterprise % OF RENTAL REVENUE DECEMBER 31, 2021 69 .3% 29 .8% 0 .9% 100 .0% 60 ALLIED 2021 ANNUAL REPORTACQUISITIONS During the year ended December 31, 2021, Allied acquired the following properties and air rights from third parties: PROPERTY ACQUISITION DATE ACQUISITION COST (1) OFFICE GLA RETAIL GLA TOTAL GLA 432 Wellington, Toronto (2) January 28, 2021 $17,806 608-1st SW, Calgary February 8, 2021 478 King W, Toronto (3) 65 Front E, Toronto 64 Spadina, Toronto 12 Brant, Toronto April 22, 2021 April 29, 2021 May 19, 2021 June 18, 2021 422-424 Wellington W, Toronto (4) August 4, 2021 143 Bathurst, Toronto August 23, 2021 700 Saint Antoine E, Montréal (5) August 30, 2021 810 Saint Antoine E, Montréal (6) August 30, 2021 731-10th SW, Calgary (7) October 19, 2021 6,464 10,963 20,064 14,617 16,180 28,648 2,945 80,449 51,263 7,975 — — — 14,899 — — — — 107,320 43,500 8,997 34,100 4,351 5,922 5,297 11,936 — — 15,323 — — 10,404 802-838 11th SW, Glenbow Assembly, Calgary (7) October 19, 2021 12,787 17,020 Sherwin Block, Calgary (7) October 19, 2021 207 West Hastings, Vancouver November 12, 2021 7,299 67,161 9,160 59,659 17,695 4,088 12,646 344,621 251,558 130,759 8,997 34,100 4,351 20,821 5,297 11,936 — — 122,643 43,500 10,404 34,715 13,248 72,305 382,317 Union Centre Air Rights, Toronto December 15, 2021 14,814 N/A N/A N/A Total $359,435 $251,558 $130,759 $382,317 (1) Purchase price plus transaction costs. (2) This property has a parking lot component containing 10 spaces. (3) Allied acquired the remaining 50% interest in 478 King W on April 22, 2021. (4) This property has a parking lot component containing 20 spaces. (5) This property has a parking lot component containing 21 spaces. (6) This property has a parking lot component containing 132 spaces. (7) Allied acquired the remaining 50% interest in 731-10th SW, 802-838 11th SW, and Sherwin Block on October 19, 2021. 61 ALLIED 2021 ANNUAL REPORTDISPOSITIONS During the year ended December 31, 2021, Allied and its partners closed on the dispositions of the following phases of The Well air rights and associated underground parking and transfer floor slab developments: PHASE OF THE WELL AIR RIGHTS Second phase Third phase Fourth phase CLOSING DATE April 7, 2021 June 11, 2021 December 20, 2021 CASH CONSIDERATION (AT ALLIED’S SHARE) $31,152 24,287 16,153 $71,592 The total cash consideration received of $71,592 (at Allied’s share) represented the fair value at the time of disposition so there is no gain or loss on disposition . On January 24, 2022, Allied and its partners closed on the fifth and final phase of The Well air rights, the associated underground parking and transfer floor slab developments for net cash consideration of $14,841 (at Allied’s share), which represented the fair value at the time of disposition so there is no gain or loss on disposition . RENTAL PROPERTIES UNDERGOING INTENSIFICATION APPROVAL One way Allied creates value is by intensifying the use of underutilized land . The land beneath the buildings in Toronto is significantly underutilized in relation to the existing zoning potential . This is also true of some of Allied’s buildings in Kitchener, Montréal, Calgary, Edmonton, and Vancouver . These opportunities are becoming more compelling as the urban areas of Canada’s major cities intensify . Since Allied has captured the unutilized land value at a low cost, it can achieve attractive risk-adjusted returns on intensification . Allied began tracking the intensification potential inherent in the Toronto portfolio in the fourth quarter of 2007 (see our MD&A dated March 7, 2008, for the quarter and year ended December 31, 2007) . At the time, the 46 properties in Toronto comprised 2 .4 million square feet of GLA and were situated on 780,000 square feet (17 .8 acres) of underutilized land immediately east and west of the Downtown Core . The 112 properties in Toronto (including properties in the development portfolio) now comprise 4 .3 million square feet of GLA and are situated on 38 .9 acres of underutilized land immediately east and west of the Downtown Core . With achievable rezoning, the underlying land in our Toronto portfolio could permit up to 11 .4 million square feet of GLA, 7 .1 million square feet more than currently is in place . Allied entered the Montréal market in April of 2005 . The 32 properties in Montréal now comprise 6 .7 million square feet of GLA . As they are much larger buildings on average than those comprising the Toronto portfolio, the 45 .2 acres of land on which they sit (immediately south, east and northeast of the Downtown Core) are more fully utilized than the land in the Toronto portfolio . Nevertheless, the underlying land in the Montréal portfolio could permit up to 8 .7 million square feet of GLA, 2 .0 million square feet more than currently is in place . 62 ALLIED 2021 ANNUAL REPORTThere is similar potential inherent in the rest of Allied’s portfolio, which is quantified in the chart below . Across Canada on a portfolio-wide basis, there is 11 .6 million square feet of potential incremental density, of which 2 .0 million square feet is currently in PUD, and the remaining 9 .6 million square feet is potential incremental density . Of the 9 .6 million square feet of potential incremental density, 3 .3 million square feet is reflected in the appraised fair values, mainly at properties where zoning approvals are in place . The remaining 6 .3 million square feet is not reflected in the appraised fair values . Potential Incremental Density (in sq.ft.) - Geographic Breakdown CITY Toronto Kitchener Total Toronto & Kitchener Toronto Urban Data Centres Total Urban Data Centres Montréal Ottawa Total Montréal & Ottawa Calgary Edmonton Vancouver Total Calgary, Edmonton & Vancouver Total CURRENT GLA CURRENT PUD (ESTIMATED ON COMPLETION) POTENTIAL INCREMENTAL DENSITY TOTAL POTENTIAL GLA 4,250,469 562,295 4,812,764 510,000 510,000 6,680,378 231,468 6,911,846 1,283,298 — 716,583 1,999,881 14,234,491 1,353,134 147,000 1,500,134 — — 87,473 — 87,473 88,000 297,851 — 385,851 1,973,458 5,823,758 332,216 6,155,974 — — 1,972,727 — 1,972,727 1,435,762 — 65,030 1,500,792 9,629,493 11,427,361 1,041,511 12,468,872 510,000 510,000 8,740,578 231,468 8,972,046 2,807,060 297,851 781,613 3,886,524 25,837,442 The timing of development for the 9 .6 million square feet of potential incremental density is impossible to predict with precision, however the chart below provides a reasonable estimate of when the potential could begin to be realized . One factor is our self-imposed limitation on development activity . The focus in the short-term and the long-term remains on the Toronto portfolio . 63 ALLIED 2021 ANNUAL REPORTToronto & Kitchener Calgary, Edmonton & Vancouver Montréal & Ottawa Projected Portfolio Development Pipeline ) . t f . q s ( y t i s n e D l a t n e m e r c n I l a i t n e t o P 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 54,000 551,000 3,618,000 87,000 386,000 1,500,000 28,000 122,000 566,000 1,300,000 30,000,000 25,000,000 1,418,000 20,000,000 1,971,000 15,000,000 10,000,000 5,000,000 0 ) . t f . q s ( A L G o i l o f t r o P d e t c e j o r P l a t o T Current PUD Short Term (0-5 Years) Medium Term (5-10 Years) Long Term (10+ Years) Allied has initiated the intensification approval process for five properties in Toronto, two properties in Montréal and one property in Vancouver, all of which are owned in their entirety by Allied . These properties are identified in the following table: PROPERTY NAME NORMALIZED LQA NOI APPRAISED FAIR VALUE REZONING APPROVAL STATUS USE CURRENT GLA ESTIMATED GLA ON COMPLETION ESTIMATED COMPLETION The Castle (1) $5,146 $114,580 In progress Office, limited retail 179,907 460,000 Unscheduled King & Peter (2) Union Centre Bathurst Street Assembly (3) 365 Railway Adelaide & Spadina (4) Le Nordelec - Lot A (5) Le Nordelec - Lot E (6) 2,827 1,863 957 661 336 — — 83,730 Completed Office, limited retail 86,230 790,000 Unscheduled 146,980 Completed Office, limited retail 41,787 1,330,000 Unscheduled 46,450 In progress Office, residential, retail 36,919 318,000 Unscheduled 18,700 In progress Office 31,528 60,000 Unscheduled 24,740 Completed Office, retail 11,015 230,000 Unscheduled 24,300 In progress Office — 230,000 Unscheduled 5,000 Completed Office 7,550 135,000 Unscheduled Total $11,790 $464,480 394,936 3,553,000 (1) The Castle is comprised of 41-53 Fraser, 8 Pardee Avenue and 135 Liberty Street. (2) King & Peter is comprised of 82 Peter and 388 King W. (3) Bathurst Street Assembly is comprised of 141 Bathurst, 579 Richmond, the surface parking lot at 555 Richmond and the associated ancillary residential properties at Bathurst and Richmond. (4) Adelaide & Spadina is comprised of 383 Adelaide W and 387 Adelaide W. (5) Le Nordelec - Lot A is comprised of 1900 Saint Patrick, a component of the 1751 Richardson & 1700 Saint-Patrick property. (6) Le Nordelec - Lot E is comprised of 1301-1303 Montmorency. 64 ALLIED 2021 ANNUAL REPORT Estimated GLA is based on applicable standards of area measurement and the expected or actual outcome of rezoning . These properties are currently generating NOI and will continue to do so until Allied initiates construction . With respect to the ultimate intensification of these properties, a significant amount of pre- leasing will be required on the larger projects before construction commences . The design-approval costs have been, and will continue to be, funded by Allied for its share . DEVELOPMENT PROPERTIES Development is another way to create value and a particularly effective one for Allied, given the strategic positioning of its portfolio in the urban areas of Canada’s major cities . Urban intensification is the single most important trend in relation to Allied’s business . Not only does it anchor Allied’s investment and operating focus, it provides the context within which Allied creates value for its Unitholders . It is expected that development activity will become a more important component of Allied’s growth as projects are completed . The expectation is largely contingent upon completing the development projects in the manner contemplated . The most important factor affecting completion will be successful lease-up of space in the development portfolio . The material assumption is that the office leasing market in the relevant markets remains stable . Pursuant to Allied’s Declaration of Trust, the cost of Properties Under Development cannot exceed 15% of GBV . At December 31, 2021, the cost of Allied’s Properties Under Development was 11 .2% of GBV (December 31, 2020 - 9 .0%) . This self-imposed limitation is intended to align the magnitude of Allied’s development activity with the overall size of the business . Properties Under Development consist of properties purchased with the intention of being developed before being operated and properties transferred from the rental portfolio once activities changing the condition or state of the property, such as the de-leasing process, commence . 65 ALLIED 2021 ANNUAL REPORTAllied has the following 11 Properties Under Development: PROPERTY NAME The Lougheed (604-1st SW), Calgary (1) USE Office, retail College & Manning, 547-549 College, Toronto (2) Retail, residential 400 Atlantic, Montréal The Well, Toronto (2)(3) Breithaupt Phase III, Kitchener (2) Adelaide & Duncan, Toronto (2)(4) Boardwalk-Revillon Building, Edmonton (5) QRC West Phase II, Toronto (6) 422-424 Wellington W, Toronto KING Toronto, Toronto (2)(7) King & Brant, Toronto (8) Total Office, retail Office, retail Office Office, retail, residential Office, retail Office, retail Retail Office, retail Office, retail, residential ESTIMATED GLA ON COMPLETION (SF) % OF OFFICE DEVELOPMENT PRE-LEASED 88,000 27,000 87,473 763,000 147,000 230,000 297,851 93,134 10,000 100,000 130,000 1,973,458 —% N/A 35 90 100 100 51 100 N/A — — 68% (1) While initially working toward repositioning this property for a different use, Allied is now working toward restoring and retrofitting the property to the highest possible standards for workspace in the creative economy. (2) These properties are co-owned, reflected in the table above at Allied’s ownership interest. (3) Each of Allied and RioCan own an undivided 50% interest in The Well. The GLA components (in square feet) at Allied’s 50% share will be as follows: approximately 586,000 of office, 177,000 of retail and the residential air rights. The residential air rights and associated underground parking and transfer floor slab developments (“The Well Air Rights”) were sold by the co-ownership as previously announced, with the first phase closed in Q4 2020, the second and third phases closed in Q2 2021, the fourth phase closed in Q4 2021 and the last phase closed in January 2022. (4) The GLA components (in square feet) at our 50% share are as follows: 144,000 of residential, 77,000 of office and 9,000 of retail. (5) The GLA components (in square feet) are as follows: 233,559 of office and 64,292 of retail. (6) The GLA components (in square feet) are as follows: 77,434 of office and 15,700 of retail. (7) Allied entered into a joint arrangement with Westbank to develop KING Toronto. As part of the arrangement, Allied sold a 50% undivided interest to Westbank. KING Toronto is comprised of the following properties: 489 King W, 495 King W, 499 King W, 511-529 King W, 533 King W, 539 King W. The GLA components (in square feet) at our 50% share will be as follows: 60,000 of retail and 40,000 of office. (8) Allied has received permission to intensify 544 King W and 7-9 Morrison. The approval permits approximately 120,000 square feet of office space and 10,000 square feet of retail space. Allied is exploring the opportunity to increase the permitted leasable area. 66 ALLIED 2021 ANNUAL REPORTThe following table sets out the fair value of Allied’s Properties Under Development as at December 31, 2021, as well as Management’s estimates with respect to the financial outcome on completion: PROPERTY NAME TRANSFER TO RENTAL PORTFOLIO APPRAISED VALUE ESTIMATED ANNUAL NOI ESTIMATED TOTAL COST ESTIMATED YIELD ON COST ESTIMATED COST TO COMPLETE The Lougheed (604-1st SW), Calgary Q1 2022 $16,580 TBD TBD TBD TBD College & Manning, 547-549 College, Toronto (1) Q1 2022 28,380 975 - 1,125 32,075 3 .0% - 3 .5% 400 Atlantic, Montréal Q2 2022 8,080 TBD TBD TBD 2,000 TBD The Well, Toronto (1)(3) Q2 2022 769,040 37,500 - 43,250 768,000 4 .9% - 5 .6% 143,300 Breithaupt Phase III, Kitchener (1)(2) Q2 2022 68,860 5,375 - 5,500 78,652 6 .8% - 7 .0% 25,300 Adelaide & Duncan, Toronto (1)(4) Q3 2022 136,260 9,625 - 11,125 194,500 4 .9% - 5 .7% 67,200 Boardwalk-Revillon Building, Edmonton Q3 2022 63,630 TBD TBD TBD TBD QRC West Phase II, Toronto Q2 2023 48,990 4,500 - 4,600 83,849 5 .4% - 5 .5% 47,100 422-424 Wellington W, Toronto TBD 27,500 TBD TBD TBD TBD KING Toronto, Toronto (1)(5) Q1 2024 50,660 5,000 - 6,000 88,143 5 .7% - 7 .2% 31,600 King & Brant, Toronto Total TBD 20,850 TBD TBD TBD TBD $1,238,830 (1) These properties are co-owned, reflected in the table above at Allied’s ownership percentage of assets and liabilities. (2) Breithaupt Phase III is comprised of 43 Wellington, 53 & 55 Wellington, 305 Joseph and 2-4 Stewart. (3) The estimated costs are net of the estimated gross proceeds from the sale of the The Well Air Rights of $100,885 (at Allied’s share), excluding closing costs. (4) The project is anticipated to be completed in two phases. The commercial phase is scheduled for completion in Q3 2022 and the residential phase is scheduled for completion in Q4 2023. (5) Allied entered into a joint arrangement with Westbank to develop KING Toronto. As part of the arrangement, Allied sold a 50% undivided interest to Westbank. KING Toronto is comprised of the following properties: 489 King W, 495 King W, 499 King W, 511-529 King W, 533 King W, 539 King W. The appraised value relates to the commercial component. The estimated total cost is net of the estimated gross proceeds from the sale of the residential inventory of $290,000 - $295,000. The initial cost of Properties Under Development includes the acquisition cost of the property, direct development costs, realty taxes and borrowing costs directly attributable to the development . Borrowing costs and realty taxes associated with direct expenditures on Properties Under Development are capitalized . The amount of capitalized borrowing costs is determined first by reference to borrowings specific to the project, where relevant, and otherwise by applying a weighted average cost of borrowings to eligible expenditures after adjusting for borrowings associated with other specific developments . Transfer to the rental portfolio occurs when the property is capable of operating in the manner intended by Management . Generally this occurs upon completion of construction and receipt of all necessary occupancy and other material permits . Estimated annual NOI is based on 100% economic occupancy . The most important factor affecting estimated annual NOI will be successful lease-up of vacant space in the development properties at current levels of net rent per square foot . The material assumption is that the office leasing market in the relevant markets remains stable . Estimated total cost includes acquisition cost, estimated total construction, financing costs and realty taxes . The material assumption made in formulating the estimated total cost is that construction and financing costs remain stable for the remainder of the development period . Estimated yield on cost is the estimated annual NOI as a percentage of the estimated total cost . Estimated cost to complete is the difference between the estimated total cost and the costs incurred to date . 67 ALLIED 2021 ANNUAL REPORTThe Well Development Update: The Well is a large-scale development project that will be completed in early 2022 . The office is 90% pre-leased and rent commencement is anticipated to begin in the third quarter of 2022 . The current stacking plan for The Well is set out below: WORKSPACE LEASED SQUARE FOOTAGE - 90% RENT COMMENCEMENT LEGEND 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Media & Entertainment Floor 2: 26,013 sf Q2 2023 Service Provider Konrad Group Spaces/IWG Shopify Torstar Intuit Quadrangle Dyson Financeit Floors 2-4: 89,908 sf Floors 3-6: 127,158 sf Q3 2023 Q1 2023 Floors 3-9: 343,268 sf Q4 2022 Floors 10-11: 59,963 sf Q1 2023 Floors 16-19: 113,687 sf Q3 2022 Floors 20-21: 47,526 sf Q4 2022 Floor 22: 24,579 sf Q4 2022 Floors 23-24: 49,158 sf Q3 2022 Index Exchange Floors 25-30: 108,814 Q2 2023 Middlefield Digital Media Service Provider Floor 31: 11,799 sf Floor 32: 11,799 sf Q3 2023 Q4 2022 Woodbourne Canada Floor 33: 11,799 sf Q4 2022 Matthews, Dinsdale & Clark LLP Floors 34-35: 23,598 sf Q1 2023 BUILDING F 460 FRONT ST W BUILDING E 486 FRONT ST W BUILDING D 2 3 4 1 68 AVAILABLE OFFICE SPACE 122,219 SF * LEASED OFFICE SPACE 1,049,069 SF * BUILDINGS D, E AND F REPRESENT RESIDENTIAL DENSITY IN WHICH ALLIED HAS NO INTEREST *SQUARE FEET AT 100% OWNERSHIP (OF WHICH ALLIED’S SHARE IS 50%) 8 SPADINA AVE OFFICE TOWER BUILDING G 14 13 12 11 10 9 8 7 6 5 36 Mech Mech 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 UG LG LL ALLIED 2021 ANNUAL REPORT RESIDENTIAL INVENTORY Residential inventory is as follows: KING Toronto $170,980 $140,038 DECEMBER 31, 2021 DECEMBER 31, 2020 The changes in the aggregate carrying value of Allied’s residential inventory is as follows: Balance, beginning of year Development expenditures Balance, end of year DECEMBER 31, 2021 DECEMBER 31, 2020 $140,038 30,942 $170,980 $114,910 25,128 $140,038 Residential inventory consists of assets that are developed by Allied for sale in the ordinary course of business . Allied may transfer an investment property to residential inventory based on a change in use, as evidenced by the commencement of development activities with the intention to sell . Alternatively, a transfer from residential inventory to investment property would be evidenced by the commencement of leasing activity . On November 30, 2018, Allied entered into a joint arrangement with Westbank to develop KING Toronto . KING Toronto is a mixed-use property comprised of office, retail and residential uses . As part of the arrangement Allied sold a 50% undivided interest to Westbank . The residential component will be developed and sold as condominium units, totaling 440 units . As at December 31, 2021, 362 units or 82% have been pre-sold, subject to customary closing conditions . Management expects the condominium sales to close in 2024 . DEVELOPMENT COMPLETIONS PROPERTY COMPLETION INVESTMENT LQA NOI UNLEVERED YIELD ON COST FAIR VALUE VALUE CREATION VALUE CREATION AS % OF COST QRC West, Toronto 2015 $130,000 $13,178 10 .1% $318,660 $188,660 145 .1% The Breithaupt Block, Kitchener 180 John, Toronto 189 Joseph, Kitchener 2016 2017 2017 $25,020 $2,527 10 .1% $49,870 $24,850 99 .3% $27,500 $11,360 $1,572 $707 5 .7% 6 .2% $31,580 $13,740 $4,080 $2,380 14 .8% 21 .0% In 2004, Allied expanded into Montréal with the purchase of 425 Viger . At the time, the property comprised of 200,000 square feet of GLA and was fully leased . In 2007, Allied purchased the adjacent parking lot with the intention of intensifying the combined property once the main user’s lease expired . Allied began the intensification activity in Q1 2018, and completed the project in Q2 2020 . The property now consists of 316,320 square feet of GLA . 69 ALLIED 2021 ANNUAL REPORT425 VIGER Land Costs Hard & Soft Costs INVESTMENT $30,076 66,353 Capitalized Interest & Operating Costs 7,839 LQA NOI UNLEVERED YIELD ON COST FAIR VALUE VALUE CREATION VALUE CREATION AS % OF COST Total Development Costs $104,268 $8,015 7.7% $169,260 $64,992 62.3% In 2012, Allied entered into an equal two-way joint arrangement with RioCan to develop King Portland Centre . Allied and RioCan each acquired an undivided 50% interest in 642 King W and 620 King W and subsequently put them into development, completing 642 King W in early 2018 and 620 King W in early 2019 . They are comprised of 299,126 square feet of GLA (Allied’s share 149,563 square feet) and are 100% leased . (602-606 King W are excluded from the figures below as they were never under development .) The property is LEED Platinum certified for core and shell . KING PORTLAND CENTRE Land Costs Hard & Soft Costs Capitalized Interest & Operating Costs INVESTMENT $21,478 64,437 5,033 Condominium Profits (14,270) LQA NOI UNLEVERED YIELD ON COST FAIR VALUE VALUE CREATION VALUE CREATION AS % OF COST Total Development Costs $76,678 $6,017 7.8% $158,140 $81,462 106.2% The fair values are provided by Allied’s external appraiser, which are calculated based on the discounted cash flow method . LOANS RECEIVABLE As at December 31, 2021, total loans receivable outstanding is $367,579 (December 31, 2020 - $320,526) . In February 2015, Allied entered into a joint arrangement with Westbank and completed the acquisition of an undivided 50% interest in Adelaide & Duncan . As part of the arrangement, Allied advanced $21,173 to Westbank for its purchase of a 50% undivided interest in the property . The facility is secured by a charge on the property (subordinated to the construction lender) and assignment of rents and leases . Interest accrues and is payable monthly at a rate of 7 .75% per annum . The loan is repayable when the joint arrangement obtains external permanent financing . As at December 31, 2021, the loan receivable outstanding is $21,173 (December 31, 2020 - $21,173) . 70 ALLIED 2021 ANNUAL REPORTOn August 1, 2017, Allied entered into an arrangement with Westbank to provide a credit facility of up to $100,000, plus interest, for the land acquisition and the pre-development costs of 400 West Georgia in Vancouver . The facility is secured by Westbank’s covenant and a charge on the property (subordinated to the construction lender) . On February 11, 2019, the facility was increased to $160,000 . Interest accrues to the credit facility monthly at a rate of 6 .75% per annum . The credit facility matures on August 31, 2022, and has a one-year extension option to August 31, 2023 . On placement of permanent financing, Allied intends to acquire a 50% undivided interest in 400 West Georgia based on total development costs . As at December 31, 2021, the loan receivable outstanding is $144,271 (December 31, 2020 - $120,825) . On November 30, 2018, Allied entered into a joint arrangement with Westbank to develop KING Toronto . As part of the arrangement, Allied advanced $67,030 to Westbank for its purchase of a 50% undivided interest in the property . The facility will initially be secured by a first mortgage on the property . On placement of construction financing, the mortgage will be secured by a charge on the property (subordinated to the construction lender) . Interest accrues at a rate of 7 .00% per annum and is payable on loan repayment . The loan is repayable at the earlier of November 30, 2023, or the closing of the condominium units . As at December 31, 2021, the loan receivable outstanding is $90,586 (December 31, 2020 - $84,566) . On March 18, 2019, Allied made an amendment to the joint arrangement with Perimeter to develop Breithaupt Phase III and a loan receivable arrangement to provide 50% of the pre-development costs . The facility is secured by a charge on the property (subordinated to the construction lender) . Interest accrues at a rate of 7 .00% per annum and is payable on loan repayment . The loan is repayable in instalments upon completion of development and rent commencement, which is anticipated to begin in the third quarter of 2022 . As at December 31, 2021, the loan receivable outstanding is $10,256 (December 31, 2020 - $10,637) due to repayments made earlier than anticipated . On July 31, 2019, Allied entered into an arrangement with Westbank to provide a credit facility of up to $185,000, plus interest, for the land acquisition and the pre-development costs of 720 Beatty Street in Vancouver . The funding will initially be secured by a first mortgage on the property for a fixed term . On placement of construction financing, the mortgage will be secured by a charge on the property (subordinated to the construction lender) . Interest accrues to the credit facility monthly at a rate of 7 .00% per annum . The credit facility matures on December 9, 2025 . On placement of permanent financing, Allied intends to acquire a 50% undivided interest in 720 Beatty based on an agreed upon formula . As at December 31, 2021, the loan receivable outstanding is $101,293 (December 31, 2020 - $83,325) . 71 ALLIED 2021 ANNUAL REPORTThe table below summarizes the loans receivable as at December 31, 2021, and December 31, 2020 . Adelaide & Duncan 400 West Georgia KING Toronto Breithaupt Phase III 720 Beatty Total loans receivable DECEMBER 31, 2021 DECEMBER 31, 2020 $21,173 144,271 90,586 10,256 101,293 $21,173 120,825 84,566 10,637 83,325 $367,579 $320,526 72 ALLIED 2021 ANNUAL REPORTSection VI —Liquidity and Capital Resources Allied’s liquidity and capital resources are used to fund capital investments including development activity, leasing costs, interest expense and distributions to Unitholders . The primary source of liquidity is net operating income generated from rental properties, which is dependent on rental and occupancy rates, the structure of lease agreements, leasing costs, and the rate and amount of capital investment and development activity, among other variables . Allied has financed its operations through the use of equity, mortgage debt secured by rental properties, construction loans, unsecured operating lines, senior unsecured debentures and unsecured term loans . Conservative financial management has been consistently applied through the use of long term, fixed rate, debt financing . Allied’s objective is to maximize financial flexibility while continuing to strengthen the balance sheet . Management intends to achieve this by continuing to access the equity market, unsecured debenture market, unsecured loans and growing the pool of unencumbered investment properties, which totals $9,064,010, representing 93 .9% of investment properties, on a proportionate basis, as at December 31, 2021 . Refer to non-IFRS measures on page 20 . In November 2021, Allied established an at-the-market equity program (the “ATM Program”) which allows it to issue and sell up to $300,000 of Units to the public, from time to time, at its discretion . The ATM Program is designed to provide Allied with additional financing flexibility which may be used in conjunction with other existing funding sources . Allied intends to use the net proceeds from the ATM Program for development, repayment of indebtedness and general trust purposes . 73 ALLIED 2021 ANNUAL REPORTDEBT The following illustrates the calculation of debt (net of transaction costs) on an IFRS basis and net debt, a non- IFRS measure, as at December 31, 2021, and December 31, 2020 . Refer to non-IFRS measures on page 20 . Mortgages payable Construction loans payable Unsecured revolving operating facilities Senior unsecured debentures Unsecured term loan Debt, IFRS basis Less cash and cash equivalents (1) Net debt DECEMBER 31, 2021 DECEMBER 31, 2020 $118,057 132,696 365,000 2,587,989 249,542 $716,813 57,104 60,000 1,642,119 249,426 $3,453,284 $2,725,462 24,718 $3,428,566 48,798 $2,676,664 (1) This is on a proportionate basis and includes cash and cash equivalents attributable to TELUS Sky totaling $2,170 as at December 31, 2021 (December 31, 2020 - $3,286). The table below summarizes the scheduled principal maturity for Allied’s mortgages payable, Unsecured Debentures and unsecured term loan: W/A INTEREST RATE OF MATURING MORTGAGES MORTGAGES PAYABLE SENIOR UNSECURED DEBENTURES W/A INTEREST RATE UNSECURED TERM LOAN W/A INTEREST RATE TOTAL CONSOLIDATED W/A INTEREST RATE OF MATURING DEBT $5,105 4 .24% $— —% $— —% $5,105 4 .24% 15,299 4 .30 49,196 3 .47 — — — — 6,423 — 200,000 3 .64 21,834 3 .59 600,000 487 — 14,750 4 .04 300,000 300,000 1 .73 3 .11 3 .13 300,000 3 .39 400,000 3 .12 — 5,000 — — — — — — — — — — — — — — — — — — — — — — 15,299 4 .30 49,196 206,423 621,834 300,487 314,750 300,000 405,000 250,000 500,000 3 .47 3 .64 1 .79 3 .11 3 .17 3 .39 3 .12 3 .50 3 .10 — — 250,000 3 .50 500,000 3 .10 — — $118,094 3 .39% $2,600,000 2 .86% $250,000 3 .50% $2,968,094 2 .94% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 74 ALLIED 2021 ANNUAL REPORT Allied’s consolidated weighted average interest rate of maturing debt decreased by 66 basis points to 2 .94% as at December 31, 2021, from 3 .60% as at December 31, 2020 . The reduction was primarily due to a $600,000 inaugural green bond issued on February 12, 2021, bearing interest at 1 .726%, and a subsequent $500,000 green bond issued on August 6, 2021, bearing interest at 3 .095%, which were used to prepay $633,053 of first mortgages with a weighted average interest rate of 4 .42% . The weighted average term of Allied’s debt (excluding construction loans and Unsecured Facilities) is 6 .7 years . The chart below summarizes the maturities of principal in regards to debt obligations as at December 31, 2021: $700,000 $600,000 $500,000 4.24% 4.30% $400,000 $300,000 $200,000 $100,000 MORTGAGES UNSECURED TERM LOAN UNSECURED DEBENTURES CONSOLIDATED W/A INTEREST RATE $600.0 3.64% 3.47% 3.39% 3.50% 3.11% 3.17% $400.0 3.12% 6.00% 5.00% $500.0 4.00% 3.10% 3.00% $300.0 $300.0 $300.0 1.79% $200.0 $250.0 2.00% 1.00% $0 $5.1 2022 $49.2 $15.3 2023 2024 $6.4 2025 $21.8 2026 $0.5 2027 $14.8 2028 2029 $5.0 2030 2031 2032 0.00% 75 ALLIED 2021 ANNUAL REPORTMORTGAGES PAYABLE As at December 31, 2021, mortgages payable, net of financing costs, total $118,057 and have a weighted average stated interest rate of 3 .39% (December 31, 2020 - 4 .31%) . The weighted average term of the mortgage debt is 4 .0 years (December 31, 2020 - 2 .9 years) . The mortgages are secured by a first registered charge over specific investment properties and first general assignments of leases, insurance and registered chattel mortgages . The following table contains information on the remaining contractual mortgage maturities: 2022 2023 2024 2025 2026 2027 2028 2030 Mortgages, principal Net premium on assumed mortgages Net financing costs PRINCIPAL REPAYMENTS BALANCE DUE AT MATURITY DECEMBER 31, 2021 DECEMBER 31, 2020 $3,307 3,069 2,528 6,423 1,391 487 293 5,000 $22,498 $1,798 12,230 46,668 — 20,443 — 14,457 — $5,105 15,299 49,196 6,423 21,834 487 14,750 5,000 $95,596 $118,094 $715,043 1,066 (1,103) 3,555 (1,785) $118,057 $716,813 CONSTRUCTION LOANS PAYABLE As at December 31, 2021, and December 31, 2020, Allied’s obligations under the construction loans are as follows: JOINT ARRANGEMENT OWNERSHIP DATE OF MATURITY DECEMBER 31, 2021 DECEMBER 31, 2020 Adelaide & Duncan Breithaupt Phase III KING Toronto 50% 50% 50% August 11, 2023 $62,048 December 2, 2022 December 17, 2024 31,041 39,607 $132,696 $44,051 7,406 5,647 $57,104 On January 31, 2019, the Adelaide & Duncan joint arrangement obtained a $270,000 construction lending facility from a syndicate of Canadian banks, in which Allied’s 50% share is $135,000 . The loan matures on August 11, 2023, and bears interest at bank prime plus 35 basis points or bankers’ acceptance rate plus 135 basis points . Allied is providing a joint and several guarantee, limited to $135,000, to support the construction facility and is earning a related guarantee fee . On August 23, 2019, the Adelaide & Duncan joint arrangement entered into a swap agreement to fix 75% of the construction costs up to $209,572 at 2 .86% . 76 ALLIED 2021 ANNUAL REPORTOn February 21, 2020, Allied and Perimeter obtained a $138,000 construction loan for the Breithaupt Phase III joint arrangement from a syndicate of Canadian banks, in which Allied’s 50% share is $69,000 . The loan matures on December 2, 2022, and bears interest at bank prime or bankers’ acceptance rate plus 120 basis points . Allied is providing a joint and several guarantee, limited to $69,000, to support the facility and is earning a related guarantee fee .   On December 17, 2020, Allied and Westbank obtained a $465,000 green construction loan for the KING Toronto joint arrangement from a syndicate of Canadian banks, in which Allied’s 50% share is $232,500 . The loan matures on December 17, 2024, and bears interest at bank prime plus 45 basis points or bankers’ acceptance rate plus 145 basis points . Allied is providing a joint and several guarantee, limited to $232,500, to support the facility and is earning a related guarantee fee . UNSECURED REVOLVING OPERATING FACILITIES As at December 31, 2021, and December 31, 2020, Allied’s obligations under the unsecured revolving operating facilities (the “Unsecured Facilities”) are as follows:   DECEMBER 31, 2021 MATURITY DATE INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE Unsecured facility limit $600,000 (1) January 30, 2025 Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) 0 .24% $600,000 $(365,000) $(19,025) $215,975 (1) This unsecured facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $700,000. (2) The interest rates on drawings for this facility are subject to certain conditions being met. In the event that these conditions are not met, this unsecured facility will bear interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points. MATURITY DATE INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE DECEMBER 31, 2020 Unsecured facility limit $400,000 (1) January 30, 2023 Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) Unsecured facility limit $100,000 April 20, 2021 Prime + 0 .45% or Bankers’ acceptance + 1 .45% 0 .24% $400,000 $(60,000) $(22,420) $317,580 0 .29% 100,000 — — 100,000 $500,000 $(60,000) $(22,420) $417,580 (1) This unsecured facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $500,000. (2) The interest rates on drawings for this facility are subject to certain conditions being met. In the event that these conditions are not met, this Unsecured Facility will bear interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points. On April 21, 2020, Allied entered into a $100,000 bilateral unsecured line of credit which matured on April 20, 2021, bearing interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points .  77 ALLIED 2021 ANNUAL REPORTOn January 29, 2021, Allied amended the unsecured facilities to merge the two existing facilities into one facility with a limit of $500,000 plus a $100,000 accordion feature and to extend the maturity to January 30, 2024 . On December 31, 2021, Allied amended the unsecured facility to increase the facility limit to $600,000 plus a $100,000 accordion feature and to extend the maturity to January 30, 2025 . SENIOR UNSECURED DEBENTURES As at December 31, 2021, and December 31, 2020, Allied’s obligations under the senior unsecured debentures are as follows:   SERIES Series B Series C Series D Series E Series F Series G Series H Series I INTEREST RATE DATE OF MATURITY INTEREST PAYMENT DATE DECEMBER 31, 2021 DECEMBER 31, 2020 3 .934% November 14, 2022 May 14 and November 14 $— $150,000 3 .636% 3 .394% 3 .113% 3 .117% 3 .131% 1 .726% 3 .095% April 21, 2025 April 21 and October 21 August 15, 2029 February 15 and August 15 April 8, 2027 April 8 and October 8 February 21, 2030 February 21 and August 21 May 15, 2028 May 15 and November 15 February 12, 2026 February 12 and August 12 February 6, 2032 February 6 and August 6 200,000 300,000 300,000 400,000 300,000 600,000 500,000 200,000 300,000 300,000 400,000 300,000 — — Unsecured Debentures, principal Net financing costs $2,600,000 $1,650,000 (12,011) (7,881) $2,587,989 $1,642,119 The Series B, C, D, E, F, G, H and I Senior Unsecured Debentures are collectively referred to as the “Unsecured Debentures” .  On February 12, 2021, Allied issued $600,000 of 1 .726% Series H Unsecured Debentures (the “Series H Debentures”) due February 12, 2026, with semi-annual interest payments due on February 12 and August 12 each year commencing on August 12, 2021 . Debt financing costs of $3,100 were incurred and recorded against the principal owing . The Series H Debentures were Allied’s inaugural green bond issuance . Proceeds from the Series H Debentures were used to redeem in full the $150,000 aggregate principal amount of 3 .934% Series B Debentures due November 14, 2022, with a financing prepayment cost of $8,003, prepay $139,213 on a first mortgage with a financing prepayment cost of $6,158, repay $75,000 drawn on Allied’s unsecured facility and for general working capital purposes . On August 6, 2021, Allied issued $500,000 of 3 .095% Series I Unsecured Debentures (the “Series I Debentures”) due February 6, 2032, with semi-annual interest payments due on February 6 and August 6 each year commencing on February 6, 2022 . Debt financing costs of $3,000 were incurred and recorded against the principal owing . 78 ALLIED 2021 ANNUAL REPORTProceeds from the Series I Debentures were used to prepay $493,840 aggregate principal amount of first mortgages and for general working capital purposes . The mortgages had a financing prepayment cost of $38,449 . The respective financing costs recognized are amortized using the effective interest method and recorded to interest expense . UNSECURED TERM LOAN As at December 31, 2021, and December 31, 2020, Allied’s obligation under the unsecured term loan is as follows:  INTEREST RATE DATE OF MATURITY FREQUENCY OF INTEREST PAYMENT DECEMBER 31, 2021 DECEMBER 31, 2020 Unsecured term loan 3 .496% January 14, 2031 Monthly $250,000 $250,000 Net financing costs (458) (574) $249,542 $249,426 The respective financing costs are amortized using the effective interest method and recorded to interest expense . CREDIT RATINGS Allied’s credit ratings as at December 31, 2021, are summarized below: DEBT RATING AGENCY LONG-TERM CREDIT RATING TREND/OUTLOOK Issuer Rating & Unsecured Debentures DBRS Limited Issuer Rating & Unsecured Debentures Moody’s Investors Service Inc . BBB Baa2 Stable Stable DBRS Limited (“DBRS”) and Moody’s Investors Service Inc . (“Moody’s”) provide issuer ratings and credit ratings of debt securities for commercial issuers that indicate the risk associated with a borrower’s capabilities to fulfill its obligations . The minimum DBRS investment grade rating is “BBB (low),” with the highest rating being “AAA .” The minimum Moody’s investment grade rating is “Baa3,” with the highest rating being “Aaa” . With these ratings, Allied’s ability to access the debt capital markets on favourable financial terms will be enhanced . Allied expects the ratings to be particularly helpful as Allied fortifies the balance sheet with a view to bringing added financial flexibility and discipline to the urban development program .  The above-mentioned ratings assigned to Allied and the Unsecured Debentures are not recommendations to buy, sell or hold any securities of Allied . Allied has paid customary rating fees to DBRS and Moody’s in connection with the above-mentioned ratings . There can be no assurance that any rating will remain in effect for any given period of time or that a rating will not be lowered, withdrawn or revised by the rating agency if in its judgment circumstances so warrant . 79 ALLIED 2021 ANNUAL REPORTFINANCIAL COVENANTS The Unsecured Facilities, unsecured term loan and Unsecured Debentures contain numerous financial covenants . Failure to comply with the covenants could result in a default, which, if not waived or cured, could result in adverse financial consequences . The related covenants are as follows: UNSECURED FACILITIES AND UNSECURED TERM LOAN The following outlines the covenants as defined in the agreements governing the Unsecured Facilities and unsecured term loan . The covenants are calculated on a proportionate basis, as required in these agreements . Refer to non-IFRS measures on page 20 . THRESHOLD DECEMBER 31, 2021 DECEMBER 31, 2020 COVENANT Indebtedness ratio Secured indebtedness ratio Below 60% Below 45% 33.5% 2.5% 2.1x 29 .2% 8 .2% 2 .7x Debt service coverage ratio (1) Consolidated adjusted EBITDA to be more than 1 .5 times debt service payments Equity maintenance At least $1,250,000 plus 75% of future equity issuances ($2,812,770) 6,425,772 6,177,032 Unencumbered property assets value ratio Unencumbered property assets to be more than 1 .4 times total unsecured debt Distribution payout ratio Maintain distributions below 100% of FFO 2.8x 71.2% 3 .3x 70 .8% (1) The debt service coverage ratio as at December 31, 2021, includes financing prepayment costs of $52,610 (December 31, 2020 - $nil). Excluding these financing prepayment costs, the debt service coverage ratio as at December 31, 2021, would be 2.9x. SENIOR UNSECURED DEBENTURES The following outlines the requirements of covenants specified in the trust indenture with respect to the Unsecured Debentures . The covenants are calculated on a proportionate basis, which is in line with the trust indenture . Refer to non-IFRS measures on page 20 . COVENANT Pro forma interest coverage ratio THRESHOLD Maintain a 12-month rolling consolidated pro forma EBITDA of at least 1 .65 times pro forma interest expense Pro forma asset coverage test Maintain net consolidated debt below 65% of net aggregate assets on a pro forma basis DECEMBER 31, 2021 DECEMBER 31, 2020 3.5x 33.5% 3 .2x 29 .1% 6,177,032 Equity maintenance Maintain Unitholders’ equity above $300,000 6,425,772 Pro forma unencumbered net aggregate adjusted asset ratio Maintain pro forma unencumbered net aggregate adjusted assets above 1 .4 times consolidated unsecured indebtedness 3.0x 3 .6x As at December 31, 2021, Allied was in compliance with the terms and covenants of the agreements governing the Unsecured Facilities, the unsecured term loan and the Unsecured Debentures . 80 ALLIED 2021 ANNUAL REPORTA number of other financial ratios are also monitored by Allied, such as net debt as a multiple of annualized adjusted EBITDA and interest coverage ratio - including interest capitalized and excluding financing prepayment costs . These ratios are presented in Section I—Overview . UNITHOLDERS’ EQUITY The following represents the number of Units issued and outstanding, and the related carrying value of Unitholders’ equity, for the years ended December 31, 2021 and December 31, 2020 . DECEMBER 31, 2021 DECEMBER 31, 2020 UNITS AMOUNT UNITS AMOUNT Units, beginning of year 127,259,218 $3,884,661 122,838,799 $3,725,472 Restricted Unit Plan (net of forfeitures) Unit Option Plan - options exercised Unit issuance (net of costs) — 1,533 477,100 (2,141) 56 20,079 — 277,311 4,143,108 (2,695) 9,805 152,079 Units, end of year 127,737,851 $3,902,655 127,259,218 $3,884,661 During the three months and year ended December 31, 2021, Allied issued 477,100 Units under the ATM Program at a weighted average price of $44 .07 per Unit for gross proceeds of $21,028, and incurred commissions of $315, for net proceeds of $20,713 . Issuance costs on the ATM Program were $634 for the year ended December 31, 2021 . The commissions and issuance costs were applied against the gross proceeds and charged against Unitholders’ equity . Subsequent to December 31, 2021, Allied issued 211,800 Units under the ATM Program at a weighted average price of $44 .02 per Unit for gross proceeds of $9,324, and incurred commissions of $140, for net proceeds of $9,184 . As at February 1, 2022, 127,949,651 Trust Units and 1,726,381 options to purchase Units were issued and outstanding . Allied does not hold any of its own Units, nor does Allied reserve any Units for issue under options and contracts . The table below represents weighted average Units outstanding for: Basic Unit Option Plan Fully diluted THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 127,441,142 127,256,661 127,305,384 124,427,715 170,131 41,339 150,445 108,919 127,611,273 127,298,000 127,455,829 124,536,634 81 ALLIED 2021 ANNUAL REPORTNORMAL COURSE ISSUER BID On February 22, 2021, Allied received approval from the Toronto Stock Exchange (“TSX”) for the renewal of its normal course issuer bid (“NCIB”), which entitles Allied to purchase up to 12,531,845 of its outstanding Units, representing approximately 10% of its public float as at February 11, 2021 . The NCIB commenced February 24, 2021, and will expire on February 23, 2022, or such earlier date as Allied completes its purchases pursuant to the NCIB . All purchases under the NCIB will be made on the open market through the facilities of the TSX or alternate trading systems in Canada at market prices prevailing at the time of purchase . Any Units that are repurchased will either be cancelled or delivered to participants under Allied’s Restricted Unit Plan or to employees pursuant to Allied’s employee programs . During the year ended December 31, 2021, Allied purchased 58,923 Units for $2,169 at a weighted average price of $36 .80 per Unit under its NCIB program, of which 58,260 Units were purchased for delivery to participants under Allied’s Restricted Unit Plan and 663 Units were purchased for certain employee rewards outside of Allied’s Restricted Unit Plan . COMPENSATION PLANS Allied adopted a unit option plan (the “Unit Option Plan”) providing for the issuance, from time to time, at the discretion of the trustees, of options to purchase Units for cash . Participation in the Unit Option Plan is restricted to certain employees of Allied . The Unit Option Plan complies with the requirements of the TSX . The exercise price of any option granted will not be less than the closing market price of the Units on the day preceding the date of grant . The term of the options may not exceed ten years . Options granted prior to February 22, 2017 vest evenly over three years; options granted subsequently vest evenly over four years from the date of grant . All options are settled in Units . Effective December 2021, no further options will be granted under the Unit Option Plan . At December 31, 2021, Allied had granted options to purchase up to 1,726,381 Units outstanding, of which 842,672 had vested . At December 31, 2020, Allied had options to purchase 1,288,229 Units outstanding, of which 548,396 had vested . For the year ended December 31, 2021, Allied recorded a share-based payment expense of $1,740 (December 31, 2020 - $1,988) in general and administrative expense in the consolidated statements of income and comprehensive income related to the Unit Option Plan . 82 ALLIED 2021 ANNUAL REPORTIn March 2010, Allied adopted a restricted unit plan (the “Restricted Unit Plan”), whereby restricted Units (“Restricted Units”) are granted to certain key employees and trustees, at the discretion of the Board of Trustees . The Restricted Units are purchased in the open market . Employees and trustees who are granted Restricted Units have the right to vote and to receive distributions from the date of the grant . Generally, the Restricted Units granted to employees vest as to one-third on each of the three anniversaries following the date of the grant . Restricted Units granted to non-management trustees are fully vested . Whether vested or not, without the specific authority of the Governance and Compensation Committee, the Restricted Units may not be sold, mortgaged or otherwise disposed of for a period of six years following the date of the grant, except that in the case of a non-management trustee, the release date will be automatically accelerated to the date such person ceases to hold office as a trustee of Allied . The Restricted Unit Plan contains provisions providing for the vesting or forfeiture of unvested Restricted Units within specified time periods in the event the employee’s employment is terminated, and authorizes the Chief Executive Officer, in his or her discretion, to accelerate the release date and vesting of Restricted Units in certain circumstances where an employee’s employment is terminated . At December 31, 2021, Allied had 296,810 Restricted Units outstanding (December 31, 2020 – 288,135) . For the year ended December 31, 2021, Allied recorded a share-based payment expense of $2,376 (December 31, 2020 - $2,804) in general and administrative expense in the consolidated statements of income and comprehensive income related to the Restricted Unit Plan . In December 2021, Allied adopted a cash settled restricted and performance trust unit plan (the “RTU/PTU Plan”) whereby performance trust units and/or restricted trust units (together, “Plan Units”) are granted to certain employees at the discretion of the Board . Plan Units are subject to such vesting, settlement, performance criteria and adjustment factors as are established by the Board at the time of the grant and accumulate distribution equivalents in the form of additional Plan Units . The RTU/PTU Plan contains provisions providing for the vesting or forfeiture of unvested Plan Units within specified time periods in the event the employee’s employment is terminated, and authorizes the Chief Executive Officer, in their discretion, to amend the vesting and settlement of Plan Units in certain circumstances where an employee’s employment is terminated . At December 31, 2021, there were no Plan Units granted or outstanding . 83 ALLIED 2021 ANNUAL REPORTDISTRIBUTIONS TO UNITHOLDERS Allied is focused on increasing distributions to its Unitholders on a regular and prudent basis . During the first 12 months of operations, Allied made regular monthly distributions of $1 .10 per unit on an annualized basis . The distribution increases since then are set out in the table below: MARCH, 2004 MARCH, 2005 MARCH, 2006 MARCH, 2007 MARCH, 2008 DECEMBER, 2012 DECEMBER, 2013 Annualized increase per Unit % increase Annualized distribution per Unit $0 .04 3 .6% $1 .14 $0 .04 3 .5% $1 .18 $0 .04 3 .4% $1 .22 $0 .04 3 .3% $1 .26 $0 .06 4 .8% $1 .32 $0 .04 3 .0% $1 .36 $0 .05 3 .7% $1 .41 DECEMBER, 2014 DECEMBER, 2015 DECEMBER, 2016 DECEMBER, 2017 DECEMBER, 2018 JANUARY, 2020 JANUARY, 2021 JANUARY, 2022 Annualized increase per Unit $0 .05 $0 .04 $0 .03 $0 .03 $0 .04 $0 .05 $0 .05 $0 .05 % increase Annualized distribution per Unit 3 .5% $1 .46 2 .7% $1 .50 2 .0% $1 .53 2 .0% $1 .56 2 .6% $1 .60 3 .1% $1 .65 3 .0% $1 .70 2 .9% $1 .75 SOURCES OF DISTRIBUTIONS For the three months and year ended December 31, 2021, Allied declared $54,225 and $216,521 in distributions, respectively (December 31, 2020 - $52,493 and $205,377, respectively) . Distributions declared Net income Cash flows provided by operating activities AFFO excluding condominium related items and financing prepayment costs (1) AFFO excluding condominium related items and financing prepayment costs payout ratio (1) THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2021 DECEMBER 31, 2020 $54,225 $159,921 $87,509 $52,493 $83,842 $65,754 $216,521 $443,151 $241,114 $205,377 $500,729 $356,257 $66,076 $64,623 $266,517 $248,003 82.1% 81 .2% 81.2% 82 .8% Excess of net income over distributions declared $105,696 $31,349 $226,630 $295,352 Excess of cash flows provided by operating activities over distributions declared Excess of cash provided by AFFO excluding condominium related items and financing prepayment costs over distributions declared (1) This is a non-IFRS measure, refer to page 20. $33,284 $13,261 $24,593 $150,880 $11,851 $12,130 $49,996 $42,626 84 ALLIED 2021 ANNUAL REPORTIn determining the amount of distributions to be made to Unitholders, Allied’s Board of Trustees consider many factors, including provisions in its Declaration of Trust, macro-economic and industry specific environments, the overall financial condition of Allied, future capital requirements, debt covenants, and taxable income . In accordance with Allied’s distribution policy, Management and the Board of Trustees regularly review Allied’s rate of distributions to ensure an appropriate level of cash and non-cash distributions . Management anticipates that distributions declared will, in the foreseeable future, continue to vary from net income as net income includes fair value adjustments and other non-cash items . While cash flows from operating activities are generally sufficient to cover distribution requirements, timing of expenses and seasonal fluctuations in non-cash working capital may result in a shortfall . These seasonal or short-term fluctuations will be funded, if necessary, by the Unsecured Facilities . As such, the cash distributions are not an economic return of capital, but a distribution of sustainable cash flow from operations . Based on current facts and assumptions, Management does not anticipate cash distributions will be reduced or suspended in the foreseeable future . The rate of distribution as at December 31, 2021, amounts to $1 .70 per Unit per annum (December 31, 2020 - $1 .65 per Unit per annum) . COMMITMENTS At December 31, 2021, Allied had future commitments as set out below, excluding the amount held within equity accounted investments: Capital expenditures and committed acquisitions $473,779 $335,344 DECEMBER 31, 2021 DECEMBER 31, 2020 As at December 31, 2021, commitments of $354 (December 31, 2020 - $551) were held within equity accounted investments .  The above does not include Allied’s lease liability commitments, which are disclosed in note 12 of the consolidated financial statements for the year ended December 31, 2021 . 85 ALLIED 2021 ANNUAL REPORTSection VII —Accounting Estimates and Assumptions CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of the consolidated financial statements requires management to make judgments and estimates in applying Allied’s accounting policies that affect the reported amounts and disclosures made in the consolidated financial statements and accompanying notes . Critical accounting estimates and assumptions are discussed in Allied’s audited consolidated financial statements for the year ended December 31, 2021, and the notes contained therein . SIGNIFICANT ACCOUNTING POLICIES Accounting policies and any respective changes are discussed in Allied’s audited consolidated financial statements for the year ended December 31, 2021, and the notes contained therein . 86 ALLIED 2021 ANNUAL REPORTSection VIII —Disclosure Controls and Internal Controls Management maintains appropriate information systems, procedures and controls to provide reasonable assurance that information that is publicly disclosed is complete, reliable and timely . The Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”) evaluated, or caused to be evaluated under their direct supervision, the design and operating effectiveness of disclosure controls and procedures (as defined in National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) at December 31, 2021, and based on that evaluation, have concluded that such disclosure controls and procedures were appropriately designed and were operating effectively . Management is responsible for establishing adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS . The CEO and CFO evaluated, or caused to be evaluated under their direct supervision, the effectiveness of Allied’s internal controls over financial reporting (as defined in National Instrument 52-109, Certification of Disclosure in Issuers’ Annual and Interim Filings) at December 31, 2021, using the COSO Internal Control - Integrated Framework (2013), published by the Committee of Sponsoring Organizations of the Treadway Commission . Based on that assessment, the CEO and the CFO determined that internal controls over financial reporting were appropriately designed and were operating effectively . No changes were made in the design of internal controls over financial reporting during the period ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, Allied’s internal controls over financial reporting . 87 ALLIED 2021 ANNUAL REPORTIt should be noted that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met . Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance of control issues, including whether instances of fraud, if any, have been detected . These inherent limitations include, among other items: (i) that Management’s assumptions and judgments could ultimately prove to be incorrect under varying conditions and circumstances; (ii) the impact of any undetected errors; and (iii) that controls may be circumvented by the unauthorized acts of individuals, by collusion of two or more people, or by Management override . 88 ALLIED 2021 ANNUAL REPORTSection IX —Risks and Uncertainties There are certain risk factors inherent in the investment and ownership of real estate . Real estate investments are capital intensive, and success from real estate investments depends upon maintaining occupancy levels and rental income flows to generate acceptable returns . These success factors are dependent on general economic conditions and local real estate markets, demand for leased premises and competition from other available properties . Allied’s portfolio is focused on a particular asset class in seven metropolitan real estate markets in Canada . This focus enables Management to capitalize on certain economies of scale and competitive advantages that would not otherwise be available . 89 ALLIED 2021 ANNUAL REPORTCOVID-19 RISK The ongoing COVID-19 pandemic, and government restrictive measures intended to contain or manage its impact, could adversely affect Allied’s business, financial condition and results of operations . Various measures have been introduced by Canadian federal and provincial governments and other authorities to mitigate the transmission of COVID-19 and its variants, including social distancing recommendations, closure of non-essential businesses, occupancy limits in enclosed spaces, quarantines, and travel bans, some of which remain in effect . The nature and extent of these measures may change depending on the efficacy of vaccination programs, the emergence of new variants of the COVID-19 virus, and any resurgence of COVID-19 positive cases . As a result of the continuously evolving circumstances surrounding COVID-19, uncertainty remains with respect to Allied’s revised internal forecast, the most significant being the fact that it cannot predict how consumers will respond as the restriction measures continue or change in Canada . In addition, Allied cannot predict the extent and severity of the economic disruption flowing from the global pandemic . The global pandemic could have adverse consequences on Allied including, but not limited to, business continuity interruptions, disruptions and costs of development activities, unfavorable market conditions, and threats to the health and safety of employees . Allied’s users may also face business challenges as a result of the pandemic that may adversely affect their business and their ability to pay rent as required under the leases . Allied has afforded rent deferrals to certain users . There can be no assurance that deferred rents will be collected in accordance with deferral arrangements or at all . Any inability to collect rents in a timely manner or at all could adversely affect Allied’s business and financial results . Allied is a party to various joint arrangements and partnerships with different entities . If these joint arrangements or partnerships do not perform as expected or default on financial obligations due in whole or in part to factors related to COVID-19, Allied has an associated risk . Allied has mitigated these risks by negotiating contractual rights upon default, by entering into agreements with financially stable partners and by working with partners who have a successful record of completing development projects . Certain of the materials and products used in the development of Allied’s Properties Under Development are sourced from third-party suppliers and manufacturers in China and elsewhere . The COVID-19 pandemic has resulted in the extended shutdown of certain businesses across the world which may in turn result in disruptions or delays to the supply of such materials and products including disruptions from the temporary closure of third-party supplier and manufacturer facilities and interruptions in product supply . Any disruption of Allied’s suppliers and their contract manufacturers may have an impact on the planned development of Allied’s Properties Under Development and related timelines . The duration of business disruptions and related financial impact of COVID-19 cannot be reasonably estimated at this time nor can Allied predict how consumers and users will respond while restrictive measures continue or during the transition to a fully reopened economy . In response to the pandemic, Allied has developed and implemented a plan to monitor and mitigate risks posed to its employees, users and business . Allied’s plan is guided by local public health authorities and governments in each of its markets . Allied continues to closely monitor business operations and may take further actions that respond to directives of governments and public health authorities or that are in the best interests of employees, users, suppliers or other stakeholders, as necessary . 90 ALLIED 2021 ANNUAL REPORTHowever, no such plan can eliminate the risks associated with events of this magnitude, and much of the impacts will be the result of matters beyond Allied’s control . There can be no assurance that the measures undertaken to date will eliminate the risk of disruption to Allied’s business operations and development activity, and there can be no assurance that Allied’s users will be able to maintain their business operations and continue to be able to pay rent in full, on a timely basis or at all . Such events could materially adversely affect Allied’s operations, reputation and financial condition, including the fair value of Allied’s properties . The global pandemic has caused an economic slowdown and increased volatility in financial markets, which has negatively impacted the market price for the equity securities of Allied . Governments and central banks have responded with monetary and fiscal interventions intended to stabilize economic conditions . However, it is not currently known how these interventions will impact debt and equity markets or the economy generally . Although the impact of COVID-19, and its duration, on the global economy remains uncertain, disruptions caused by COVID-19 may materially adversely affect Allied’s users, the debt and equity markets and Allied’s operations and financial performance . It could also potentially affect Allied’s current credit ratings, total return and distributions . Even after the COVID-19 pandemic has subsided, Allied may experience material adverse impacts to its business as a result of the global economy as well as lingering effects on Allied’s employees, suppliers, third-party service providers and/or users . FINANCING AND INTEREST RATE RISK Allied is subject to risk associated with debt financing . The availability of debt to re-finance existing and maturing loans and the cost of servicing such debt will influence Allied’s success . In order to minimize risk associated with debt financing, Allied strives to re-finance maturing loans with long-term fixed-rate debt and to stagger the maturities over time . For Allied’s current debt-maturity schedule, refer to page 74 . Interest rates on debt are between 1 .73% and 4 .30% with a weighted average interest rate of 2 .94% . The weighted average term of our debt (excluding construction loans and Unsecured Facilities) is 6 .7 years . Refer to note 11(b) and (c) of the consolidated financial statements for further details . Allied is additionally subject to risk associated with equity financing . The ability to access the equity capital markets at appropriate points in time and at an acceptable cost will influence Allied’s success . In order to minimize the risk associated with equity financing, Allied engages in extensive investor relations activity with retail and institutional investors globally and strives to fix the cost of equity in conjunction with a clear use of proceeds . 91 ALLIED 2021 ANNUAL REPORTCREDIT RISK Allied is subject to credit risk arising from the possibility that users may not be able to fulfill their lease obligations . Allied strives to mitigate this risk by maintaining a diversified user-mix and limiting exposure to any single user . Allied’s exposure to top-10 users is 19 .9% of gross revenue and the credit quality of our top- 10 users continues to improve . As Allied has invested in mortgages to facilitate acquisitions, further credit risks arise in the event that borrowers default on the repayment of their mortgages to Allied . Allied’s mortgage investments will typically be subordinate to prior ranking mortgage or charges . Not all of Allied’s financing activities will translate into acquisitions . As at December 31, 2021, Allied had $367,579 in loans receivable, the majority of which is loaned to affiliates of a single private company . In the event of a large commercial real estate market correction, the fair market value of an underlying property may be unable to support the mortgage investment . Allied mitigates this risk by obtaining corporate guarantees and/or registered mortgage charges . LEASE ROLL-OVER RISK Allied is subject to lease roll-over risk . Lease roll-over risk arises from the possibility that Allied may experience difficulty renewing or replacing users occupying space covered by leases that mature . Allied strives to stagger its lease maturity schedule so that it is not faced with a disproportionately large level of lease maturities in a given year . For Allied’s current lease maturity schedule, refer to page 49 . In evaluating lease roll-over risk, it is informative to determine Allied’s sensitivity to a decline in occupancy . For every full-year decline of 100 basis points in occupancy at its average rental rate per square foot, Allied’s annual AFFO excluding condominium related items and financing prepayment costs would decline by approximately $5,737 (approximately $0 .045 per Unit) . The decline in AFFO excluding condominium related items and financing prepayment costs per Unit would be more pronounced if the decline in occupancy involved space leased above the average rental rate per square foot and less pronounced if the decline in occupancy involved space leased below the average rental rate per square foot . ENVIRONMENTAL AND CLIMATE CHANGE RISK As an owner of real estate, Allied is subject to various federal, provincial and municipal laws relating to environmental matters . Such laws provide that Allied could be liable for the costs of removal of certain hazardous substances and remediation of certain hazardous locations . The failure to remove or remediate such substances or locations, if any, could adversely affect Allied’s ability to sell such real estate or to borrow using such real estate as collateral and could potentially also result in claims against Allied . Allied is not aware of any material non-compliance with environmental laws at any of the properties . Allied is also not aware of any pending or threatened investigations or actions by environmental regulatory authorities in connection with any of the properties or any pending or threatened claims relating to environmental conditions at the properties . 92 ALLIED 2021 ANNUAL REPORTAllied will make the necessary capital and operating expenditures to ensure compliance with environmental laws and regulations . Although there can be no assurances, Allied does not believe that costs relating to environmental matters will have a material adverse effect on Allied’s business, financial condition or results of operation . However, environmental laws and regulations may change and Allied may become subject to more stringent environmental laws and regulations in the future . Compliance with more stringent environmental laws and regulations could have an adverse effect on Allied’s business, financial condition or results of operation . It is Allied’s operating policy to obtain a Phase I environmental assessment conducted by an independent and experienced environmental consultant prior to acquiring a property . Phase I environmental assessments have been performed in respect of all properties . Natural disasters and severe weather such as floods, blizzards and rising temperatures may result in damage to the properties . The extent of Allied’s casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area . Allied is also exposed to risks associated with inclement winter weather, including increased need for maintenance and repair of its buildings . In addition, climate change, to the extent it causes changes in weather patterns, could have effects on Allied’s business by increasing the cost of property insurance, and/or energy at the properties . As a result, the consequences of natural disasters, severe weather and climate change could increase Allied’s costs and reduce Allied’s cash flow . DEVELOPMENT RISK As an owner of Properties Under Development, Allied is subject to development risks, such as construction delays, cost over-runs and the failure of users to take occupancy and pay rent in accordance with lease arrangements . In connection with all Properties Under Development, Allied incurs development costs prior to (and in anticipation of ) achieving a stabilized level of rental revenue . In the case of the development of ancillary or surplus land, these risks are managed in most cases by not commencing construction until a satisfactory level of pre-leasing is achieved . Overall, these risks are managed through Allied’s Declaration, which states that the cost of development cannot exceed 15% of GBV . TAXATION RISK On June 22, 2007, specified investment flow through trusts or partnerships (“SIFT”) rules were introduced and changed the manner in which certain trusts are taxed . Certain distributions from a SIFT would not be deductible in computing the SIFT’s taxable income and therefore the distributions would be subject to trust entity level tax, at the general tax rate applicable to Canadian corporations . Trusts that meet the REIT exemption are not subject to SIFT rules . The determination as to whether Allied qualifies for the REIT exemption in a particular taxation year can only be made with certainty at the end of that taxation year . Asset tests need to be met at all times in the taxation year and revenue tests need to be met for the taxation year . While there is uncertainty surrounding the interpretation of the relevant provisions of the REIT exemption and application of SIFT rules, Allied expects that it will qualify for the REIT exemption . In the event that the SIFT rules apply to Allied, the impact to Unitholders will depend on the status of the holder and, in part, on the amount of income distributed which would not be deductible by Allied in computing its income in a particular year and what portions of Allied’s distributions constitute “non-portfolio earnings”, other income and return of capital . 93 ALLIED 2021 ANNUAL REPORTJOINT ARRANGEMENT RISK Allied has entered into various joint arrangements and partnerships with different entities . If these joint arrangements or partnerships do not perform as expected or default on financial obligations, Allied has an associated risk . Allied reduces this risk by seeking to negotiate contractual rights upon default, by entering into agreements with financially stable partners and by working with partners who have a successful record of completing development projects . CYBERSECURITY RISK The efficient operation of Allied’s business is dependent on computer hardware and software systems . Information systems are vulnerable to cybersecurity incidents . A cybersecurity incident is considered to be any material adverse event that threatens the confidentiality, integrity or availability of Allied’s information resources . A cybersecurity incident is an intentional attack or an unintentional event including, but not limited to, malicious software, attempts to gain unauthorized access to data or information systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data . Allied’s primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to its reputation, damage to its business relationships with users, the disclosure of confidential information including personally identifiable information, potential liability to third parties, loss of revenue, additional regulatory scrutiny and fines, as well as litigation and other costs and expenses . Allied undertakes regular internal and external assessments of its information security posture, including annual third-party penetration testing and ongoing third-party assessment of Allied’s information technology footprint . Allied has adopted ISO 27001:2013 as a guiding framework for its portfolio and has obtained ISO 27001 certification and a SOC 2 Type 2 audit report for its UDC portfolio . For information stored with or processed by third parties, Allied undertakes due diligence prior to working with them and uses contractual means to ensure compliance to standards set by Allied . Allied’s employees complete information security training every four months and an external Information Technology General Controls audit is completed annually . Additionally, Allied monitors and assesses risks surrounding collection, usage, storage, protection, and retention/ destruction practices of personal data . Allied also maintains information security risk insurance coverage . Since inception, Allied has not experienced an unauthorized intrusion or infiltration of its systems that has resulted in a data breach . These measures, as well as Allied’s increased awareness of a risk of a cyber incident, do not guarantee that its financial results will not be negatively impacted by such an incident . REAL ESTATE RISK Allied is subject to the conventional risks associated with the ownership of real estate . Allied strives to mitigate these risks by remaining fully informed on best practices, trends and legislative and demographic changes in the commercial real estate markets within which we operate . Allied additionally strives to mitigate these risks by focusing intently on execution . 94 ALLIED 2021 ANNUAL REPORTSection X —Property Table DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace 28 Atlantic 32 Atlantic 47 Jefferson 64 Jefferson 905 King W College & Manning - 559-563 College (1) College & Palmerston - 491 College (1) 10,065 50,434 6,884 78,820 — — — — 51,262 1,400 24,627 2,634 8,863 3,717 The Castle - 135 Liberty The Castle - 41 Fraser 55,152 14,857 — — The Castle - 47 Fraser 7,468 3,480 The Castle - 49 Fraser The Castle - 53 Fraser 17,472 78,797 — — The Castle - 8 Pardee — 2,681 King West 404,701 13,912 12 Brant 141 Bathurst 183 Bathurst 241 Spadina 379 Adelaide W 383 Adelaide W — 11,936 10,101 24,136 24,833 38,560 4,515 — 5,643 6,046 3,045 — — — — — — — — — — — — — — — — — — — — — 10,065 50,434 6,884 78,820 52,662 27,261 12,580 55,152 14,857 10,948 17,472 78,797 2,681 — — — — — — — — — — 10,065 100 .0% 50,434 100 .0% 6,884 100 .0% 78,820 100 .0% 52,662 100 .0% 27,261 100 .0% 12,580 100 .0% 55,152 100 .0% 14,857 100 .0% 10,948 100 .0% 6,870 10,602 60 .9% — — 78,797 100 .0% 2,681 100 .0% 418,613 2.9% 6,870 411,743 98.4% 11,936 10,101 29,779 30,879 41,605 4,515 — 11,936 100 .0% 1,718 8,383 83 .0% 13,924 15,855 53 .2% — 30,879 100 .0% 23,676 17,929 2,382 2,133 43 .1% 47 .2% 95 ALLIED 2021 ANNUAL REPORTUrban Workspace DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA 387 Adelaide W 420 Wellington W 425 Adelaide W 6,500 31,221 72,404 — 3,163 2,858 425-439 King W 66,486 23,497 432 Wellington Street W — 8,997 441-443 King W 6,377 2,904 445-455 King W 31,523 16,342 460 King W 461 King W 468 King W 469 King W 478 King W (2) 485 King W 500 King W 522 King W 10,144 4,285 38,689 35,833 63,121 — 61,618 12,273 — 8,701 12,339 — 44,130 21,598 28,850 21,863 552-560 King W 6,784 17,395 555 Richmond W 296,038 1,850 579 Richmond W 26,818 — 64 Spadina 662 King W 668 King W — 5,297 33,731 — — 6,934 80-82 Spadina 60,048 16,009 96 Spadina 78,913 8,240 King Portland Centre - 602-606 King W (1) King Portland Centre - 620 King W (1) King Portland Centre - 642 King W (1) 19,208 6,364 127,658 9,170 7,370 5,365 King West Central 1,232,115 265,608 116 Simcoe 117 & 119 John 125 John 179 John 180 John 185 Spadina 200 Adelaide W 208-210 Adelaide W 96 15,461 — 2,171 70,923 45,631 55,213 26,614 11,477 — 7,562 798 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Total Vacant & Unleased Total Leased Leased % — — 6,500 100 .0% 34,384 100 .0% 6,723 68,539 91 .1% — — — — — — — — — — — — — 89,983 100 .0% 8,997 100 .0% 9,281 100 .0% 47,865 100 .0% 14,429 100 .0% 74,522 100 .0% 63,121 100 .0% 73,891 100 .0% 8,701 100 .0% 12,339 100 .0% 65,728 100 .0% 50,713 100 .0% 24,179 100 .0% 6,500 34,384 75,262 89,983 8,997 9,281 47,865 14,429 74,522 63,121 73,891 8,701 12,339 65,728 50,713 24,179 297,888 35,661 262,227 88 .0% 26,818 5,297 33,731 6,934 76,057 87,153 25,572 136,828 12,735 3,459 23,359 87 .1% — 5,297 100 .0% 2,703 31,028 92 .0% — — 6,934 100 .0% 76,057 100 .0% 4,122 83,031 95 .3% — — — 25,572 100 .0% 136,828 100 .0% 12,735 100 .0% 1,497,723 10.5% 94,368 1,403,355 93.7% 15,461 7,562 2,969 70,923 45,631 55,213 26,614 11,477 3,973 11,488 74 .3% — — — — — 1,441 1,854 7,562 100 .0% 2,969 100 .0% 70,923 100 .0% 45,631 100 .0% 55,213 100 .0% 25,173 94 .6% 9,623 83 .9% ALLIED 2021 ANNUAL REPORTUrban Workspace DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA 217-225 Richmond W 31,122 21,670 257 Adelaide W 312 Adelaide W 331-333 Adelaide W 358-360 Adelaide W 388 King W 82 Peter 99 Spadina QRC West - 134 Peter, Phase I QRC West - 364 Richmond W, Phase I Union Centre 42,763 62,420 19,048 50,786 — 5,584 3,725 — 20,275 19,040 40,069 6,846 51,058 — 298,782 8,213 38,279 41,787 — — Entertainment District 923,879 73,438 193 Yonge Downtown 106 Front E 184 Front E 34,349 16,898 34,349 16,898 24,123 10,554 84,116 4,829 35-39 Front E 34,653 13,822 36-40 Wellington E 15,494 9,993 41-45 Front E 20,958 14,239 45-55 Colborne 30,622 13,288 47 Front E 49 Front E 9,068 4,337 9,482 10,435 50 Wellington E 22,112 12,454 54 Esplanade 56 Esplanade 60 Adelaide E 65 Front E 70 Esplanade — 9,038 59,270 22,137 106,193 4,608 14,899 19,590 5,922 6,109 St. Lawrence Market 450,580 141,765 135-137 George 139 George 2,399 1,545 — — 204-214 King E 115,087 13,837 230 Richmond E 73,542 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Total Vacant & Unleased Total Leased Leased % 8,737 44,055 83 .5% — 42,763 100 .0% 25,834 42,170 62 .0% — 22,773 100 .0% 8,575 42,211 13,741 25,574 83 .1% 65 .1% — — — — 46,915 100 .0% 51,058 100 .0% 306,995 100 .0% 38,279 100 .0% 4,952 36,835 88 .2% 52,792 42,763 68,004 22,773 50,786 39,315 46,915 51,058 306,995 38,279 41,787 997,317 7.0% 69,107 928,210 93.1% 51,247 51,247 0.4% — — 51,247 100 .0% 51,247 100.0% 34,677 88,945 48,475 25,487 35,197 43,910 13,405 19,917 34,566 9,038 81,407 110,801 20,821 25,699 3,397 31,280 90 .2% — — 88,945 100 .0% 48,475 100 .0% 4,055 21,432 84 .1% — 35,197 100 .0% 8,716 35,194 80 .2% — 13,405 100 .0% 1,813 18,104 90 .9% — — 34,566 100 .0% 9,038 100 .0% 10,108 71,299 87 .6% — 110,801 100 .0% 3,865 16,956 81 .4% — 25,699 100 .0% 592,345 4.2% 31,954 560,391 94.6% 2,399 1,545 128,924 73,542 — 2,399 100 .0% 1,545 — —% — — 128,924 100 .0% 73,542 100 .0% 97 ALLIED 2021 ANNUAL REPORTUrban Workspace DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA 252-264 Adelaide E 44,537 2,582 489 Queen E 70 Richmond E Dominion Square - 468 Queen N Dominion Square - 468 Queen S Dominion Square - 478-496 Queen 31,737 34,469 — — 30,383 3,523 34,313 9,091 6,552 33,526 QRC East - 111 Queen E 190,697 20,733 QRC South - 100 Lombard 44,671 — Queen Richmond 609,932 83,292 — — — — — — — — — 47,119 31,737 34,469 33,906 43,404 40,078 211,430 44,671 Total Vacant & Unleased Total Leased Leased % 13,550 33,569 71 .2% 2,159 29,578 93 .2% — — — — 34,469 100 .0% 33,906 100 .0% 43,404 100 .0% 40,078 100 .0% 3,032 208,398 98 .6% 7,077 37,594 84 .2% 693,224 4.9% 27,363 665,861 96.1% Toronto 3,655,556 594,913 — 4,250,469 29.9% 229,662 4,020,807 94.6% 189-195 Joseph 25 Breithaupt (3) 51 Breithaupt (3) 72 Victoria The Tannery - 151 Charles W 26,462 46,845 66,355 90,010 — — — — 306,813 25,810 Kitchener 536,485 25,810 — — — — — — 26,462 46,845 66,355 90,010 — — — 26,462 100 .0% 46,845 100 .0% 66,355 100 .0% 2,056 87,954 97 .7% 332,623 15,271 317,352 95 .4% 562,295 4.0% 17,327 544,968 96.9% Toronto & Kitchener 4,192,041 620,723 — 4,812,764 33.9% 246,989 4,565,775 94.9% The Chambers - 40 Elgin 195,994 5,500 The Chambers - 46 Elgin 28,218 Ottawa 224,212 1,756 7,256 1001 Boulevard Robert- Bourassa (4) 957,397 32,371 3510 Saint-Laurent 85,646 15,022 3530-3540 Saint-Laurent 47,348 4,008 3575 Saint-Laurent 165,502 19,276 425 Viger 311,646 4,674 4396-4410 Saint-Laurent 41,799 14,147 4446 Saint-Laurent 72,805 7,251 451-481 Saint- Catherine W 480 Saint-Laurent 20,879 53,406 9,983 6,293 — — — — — — — — — — — — 201,494 29,974 — 201,494 100 .0% 2,430 27,544 91 .9% 231,468 1.6% 2,430 229,038 99.0% 989,768 100,668 51,356 184,778 316,320 55,946 80,056 30,862 59,699 115,952 873,816 88 .3% — 100,668 100 .0% 4,780 46,576 90 .7% 15,490 169,288 91 .6% 16,097 300,223 94 .9% 5,008 50,938 91 .0% 14,229 65,827 82 .2% 2,350 2,649 28,512 92 .4% 57,050 95 .6% 98 ALLIED 2021 ANNUAL REPORTUrban Workspace DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA 5445 de Gaspé 483,685 896 5455 de Gaspé 467,061 22,562 5505 Saint-Laurent 6300 Parc 645 Wellington 243,788 184,510 129,017 2,221 3,736 8,115 700 Saint Antoine 107,320 15,323 740 Saint-Maurice 67,692 — 747 Square-Victoria 530,950 37,752 8 Place du Commerce 48,231 11,633 810 Saint Antoine 85 Saint-Paul W Cité Multimédia - 111 Boulevard Robert- Bourassa (5) Cité Multimédia - 50 Queen Cité Multimédia - 700 Wellington Cité Multimédia - 75 Queen Cité Multimédia - 80 Queen Cité Multimédia - 87 Prince El Pro Lofts - 644 Courcelle Le Nordelec - 1301-1303 Montmorency Le Nordelec - 1655 Richardson Le Nordelec - 1751 Richardson & 1700 Saint-Patrick RCA Building - 1001 Lenoir 43,500 79,483 — — 358,913 12,571 27,072 135,232 — — 253,311 2,513 65,044 4,203 100,116 1,040 145,170 8,933 7,550 32,893 — — 785,836 42,003 305,231 35,819 — — — — — — — — — — — — — — — — — — — — — — 484,581 489,623 246,009 188,246 137,132 122,643 67,692 568,702 59,864 43,500 79,483 371,484 27,072 135,232 255,824 69,247 101,156 154,103 7,550 32,893 827,839 341,050 Total Vacant & Unleased Total Leased Leased % 5,152 479,429 98 .9% — — 489,623 100 .0% 246,009 100 .0% 22,947 165,299 87 .8% 6,811 130,321 95 .0% 5,281 117,362 95 .7% 14,029 53,663 79 .3% 89,736 478,966 84 .2% 22,807 37,057 61 .9% 43,500 — —% 24,078 55,405 69 .7% 189,471 182,013 49 .0% 1,077 25,995 96 .0% 20,912 114,320 84 .5% 3,157 252,667 98 .8% 8,331 60,916 88 .0% 1,040 100,116 99 .0% 46,274 107,829 70 .0% — — 7,550 100 .0% 32,893 100 .0% 60,372 767,467 92 .7% 118,762 222,288 65 .2% Montréal 6,358,033 322,345 — 6,680,378 46.9% 860,292 5,820,086 87.1% Montréal & Ottawa 6,582,245 329,601 — 6,911,846 48.5% 862,722 6,049,124 87.5% 613 11th SW 617 11th SW Alberta Block - 805 1st SW Alberta Hotel - 808 1st SW — 3,230 4,288 6,306 9,094 22,540 28,036 20,424 — — — — 4,288 9,536 31,634 48,460 — 4,288 100 .0% 3,824 5,712 59 .9% 4,408 27,226 86 .1% 2,326 46,134 95 .2% 99 ALLIED 2021 ANNUAL REPORTDECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace Atrium on Eleventh - 625 11th SE Biscuit Block - 438 11th SE Burns Building - 237 8th SE Cooper Block - 809 10th SW Customs House - 134 11th SE Demcor Condo - 221 10th SE Demcor Tower - 239 10th SE Five Roses Building - 731-739 10th SW (6) Glenbow - 802 11th SW (6) 34,705 1,373 51,298 — 66,862 7,423 35,256 76,866 14,253 25,228 — — — — — — 20,808 7,319 7,838 Glenbow - 822 11th SW (6) 9,697 Glenbow Annex - 816 11th SW (6) Glenbow Cornerblock - 838 11th SW (6) Glenbow Ellison - 812 11th SW (6) Kipling Square - 601 10th SW — 9,021 10,998 11,212 13,344 48,502 — — Leeson Lineham Building - 209 8th SW 27,821 5,420 LocalMotive - 1240 20th SE 57,536 Odd Fellows - 100 6th SW 33,474 Pilkington Building - 402 11th SE 40,253 — — — Roberts Block - 603-605 11th SW Sherwin Block - 738 11th SW (6) Telephone Building - 119 6th SW TELUS Sky - 685 Centre SW (7) Theatre Grand - 608 1st Street SW Vintage Towers - 322-326 11th SW Woodstone Building - 1207-1215 13th SE 23,645 27,499 18,319 8,176 63,063 — 144,290 3,711 — 34,100 190,219 20,418 32,428 — Young Block - 129 8th SW 4,841 2,164 — — — — — — — — — — — — — — — — — — — — — — — — — — 36,078 51,298 74,285 35,256 76,866 14,253 25,228 20,808 7,319 17,535 9,021 22,210 13,344 48,502 33,241 57,536 33,474 40,253 51,144 26,495 63,063 148,001 34,100 210,637 32,428 7,005 21,538 14,540 40 .3% — 51,298 100 .0% 2,741 71,544 96 .3% 5,278 29,978 85 .0% 5,652 71,214 92 .7% 7,218 7,035 49 .4% — 25,228 100 .0% 2,495 18,313 88 .0% — 7,319 100 .0% 8,946 8,589 49 .0% — 9,021 100 .0% 1,146 21,064 94 .8% — 13,344 100 .0% 13,709 34,793 71 .7% — — — 33,241 100 .0% 57,536 100 .0% 33,474 100 .0% 5,898 34,355 85 .4% 12,082 39,062 76 .4% 10,372 16,123 60 .9% — 63,063 100 .0% 43,620 104,381 70 .5% — 34,100 100 .0% 17,169 193,468 91 .9% 1,223 4,841 31,205 96 .2% 2,164 30 .9% Calgary 1,063,258 220,040 — 1,283,298 9.0% 174,486 1,108,812 86.4% 100 ALLIED 2021 ANNUAL REPORTUrban Workspace DECEMBER 31, 2021 PROPERTIES Office GLA Retail GLA Urban Data Centres GLA Total GLA % Total GLA 1040 Hamilton 1050 Homer 1220 Homer 1286 Homer 151-155 West Hastings 2233 Columbia 342 Water 365 Railway 375 Water 840 Cambie 36,276 38,302 21,708 25,637 38,512 21,591 18,434 31,528 9,162 4,797 — — — 6,852 3,206 — 148,889 27,149 89,377 — 948-950 Homer 23,245 21,758 Dominion Building - 207 West Hastings Sun Tower - 128 West Pender 59,659 12,646 76,162 1,693 Vancouver 629,320 87,263 — — — — — — — — — — — — — — 45,438 43,099 21,708 25,637 38,512 28,443 21,640 31,528 176,038 89,377 45,003 72,305 77,855 Total Vacant & Unleased Total Leased Leased % 11,856 33,582 73 .9% 1,028 42,071 97 .6% — — — — 21,708 100 .0% 25,637 100 .0% 38,512 100 .0% 28,443 100 .0% 10,780 10,860 50 .2% — 31,528 100 .0% 15,417 160,621 91 .2% — — 89,377 100 .0% 45,003 100 .0% 4,461 67,844 93 .8% 21,073 56,782 72 .9% 716,583 5.0% 64,615 651,968 91.0% Calgary & Vancouver 1,692,578 307,303 — 1,999,881 14.0% 239,101 1,760,780 88.0% Total Office and Retail 12,466,864 1,257,627 — 13,724,491 96.4% 1,348,812 12,375,679 90.2% 151 Front W 250 Front W 905 King W Urban Data Centres — — — — — — — — 277,944 277,944 — 277,944 100 .0% 173,000 173,000 24,452 148,548 85 .9% 59,056 59,056 — 59,056 100 .0% 510,000 510,000 3.6% 24,452 485,548 95.2% Total Rental Portfolio 12,466,864 1,257,627 510,000 14,234,491 100% 1,373,264 12,861,227 90.4% Note that the table above does not include ancillary residential properties, which total 14 and are included in the property count. (1) RioCan/Allied Joint Arrangement (2) On April 22, 2021, Allied acquired the remaining 50% interest in 478 King W. (3) Perimeter/Allied Joint Arrangement (4) 700 De La Gauchetière was renamed to 1001 Boulevard Robert-Bourassa in Q2 2021. (5) 111 Duke was renamed to 111 Boulevard Robert-Bourassa in Q3 2021. (6) On October 19, 2021, Allied acquired the remaining 50% interest in these properties. (7) Westbank/Allied/TELUS Joint Arrangement 101 ALLIED 2021 ANNUAL REPORTRENTAL RESIDENTIAL UNITS PROPERTY TELUS Sky OCCUPANCY AT DECEMBER 31, 2021 WEIGHTED AVERAGE OCCUPANCY FOR THE YEAR ENDED DECEMBER 31, 2021 51 .9% 29 .0% PROPERTIES UNDER DEVELOPMENT ESTIMATED GLA ON COMPLETION (SF) The Lougheed (604-1st SW), Calgary (1) College & Manning, 547-549 College, Toronto (2) 400 Atlantic, Montréal The Well, Toronto (2)(3) Breithaupt Phase III, Kitchener (2) Adelaide & Duncan, Toronto (2)(4) Boardwalk-Revillon Building, Edmonton (5) QRC West Phase II, Toronto (6) 422-424 Wellington W, Toronto KING Toronto, Toronto (2)(7) King & Brant, Toronto (8) Total Development Portfolio 88,000 27,000 87,473 763,000 147,000 230,000 297,851 93,134 10,000 100,000 130,000 1,973,458 (1) While initially working toward repositioning this property for a different use, Allied is now working toward restoring and retrofitting the property to the highest possible standards for workspace in the creative economy. (2) These properties are co-owned, reflected in the table above at Allied’s ownership interest. (3) Each of Allied and RioCan own an undivided 50% interest in The Well. The GLA components (in square feet) at Allied’s 50% share will be as follows: approximately 586,000 of office, 177,000 of retail and the residential air rights. The Well Air Rights were sold by the co-ownership as previously announced, with the first phase closed in Q4 2020, the second and third phases closed in Q2 2021, the fourth phase closed in Q4 2021 and the last phase closed in January 2022. (4) The GLA components (in square feet) at our 50% share are as follows: 144,000 of residential, 77,000 of office and 9,000 of retail. (5) The GLA components (in square feet) are as follows: 233,559 of office and 64,292 of retail. (6) The GLA components (in square feet) are as follows: 77,434 of office and 15,700 of retail. (7) Allied entered into a joint arrangement with Westbank to develop KING Toronto. As part of the arrangement, Allied sold a 50% undivided interest to Westbank. KING Toronto is comprised of the following properties: 489 King W, 495 King W, 499 King W, 511-529 King W, 533 King W, 539 King W. The GLA components (in square feet) at our 50% share will be as follows: 60,000 of retail and 40,000 of office. (8) Allied has received permission to intensify 544 King W and 7-9 Morrison. The approval permits approximately 120,000 square feet of office space and 10,000 square feet of retail space. Allied is exploring the opportunity to increase the permitted leasable area. ANCILLARY PARKING FACILITIES NUMBER OF SPACES 15 Brant, Toronto 78 Spadina, Toronto 105 George, Toronto 301 Markham, Toronto 388 Richmond, Toronto 464 King, Toronto 478 King, Toronto 560 King, Toronto 650 King, Toronto Total Parking 102 208 39 15 47 121 12 131 171 71 815 ALLIED 2021 ANNUAL REPORTConsolidated Financial Statements For the Years Ended December 31, 2021 and 2020 103 ALLIED 2021 ANNUAL REPORTManagement’s Statement of Responsibility for Financial Reporting The accompanying consolidated financial statements, management’s discussion and analysis of results of operations and financial condition and the annual report are the responsibility of the Management of Allied Properties Real Estate Investment Trust (“Allied”) . The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and where appropriate, include amounts which are based on judgments, estimates and assumptions of Management . Management has developed and maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition, and liabilities are recognized . The Board of Trustees (the “Board”) is responsible for ensuring that Management fulfills its responsibility for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements . The Board carries out this responsibility principally through its Audit Committee (the “Committee”), which is comprised entirely of independent trustees . The Committee reviews the consolidated financial statements with both Management and the independent auditors . The Committee reports its findings to the Board, which approves the consolidated financial statements before they are submitted to the Unitholders of Allied . Deloitte LLP (the “Auditors”), the independent auditors of Allied, have audited the consolidated financial statements of Allied in accordance with Canadian generally accepted auditing standards to enable them to express to the Unitholders their opinion on the consolidated financial statements . The Auditors have direct and full access to, and meet periodically with the Committee, both with and without Management present . Michael R . Emory Cecilia C . Williams, CPA, CA President and Chief Executive Officer Executive Vice President and Chief Financial Officer 104 ALLIED 2021 ANNUAL REPORTIndependent Auditor’s Report TO THE UNITHOLDERS AND THE BOARD OF TRUSTEES OF ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST OPINION We have audited the consolidated financial statements of Allied Properties Real Estate Investment Trust (the “Trust”), which comprise the consolidated balance sheets as at December 31, 2021 and 2020, and the consolidated statements of income and comprehensive income, unitholders’ equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”) . In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Trust as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”) . BASIS FOR OPINION We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”) . Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report . We are independent of the Trust in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements . We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion . KEY AUDIT MATTER A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021 . This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter . 105 ALLIED 2021 ANNUAL REPORTFAIR VALUE OF INVESTMENT PROPERTIES — REFER TO NOTES 2(D), 3 AND 5 OF THE FINANCIAL STATEMENTS KEY AUDIT MATTER DESCRIPTION Investment properties are accounted for using the fair value model . The Trust predominantly uses the discounted cash flow (“DCF”) method to estimate fair value and uses the comparable sales method primarily for properties under development . The critical assumptions relating to the Trust’s estimates of fair values of investment properties include discount rates, terminal capitalization rates, and anticipated cash flow assumptions relating to occupancy and rental rates . While there are several assumptions that are required to determine the fair value of all investment properties using the DCF method, the critical assumptions with the highest degree of subjectivity and impact on fair values are the anticipated rental rates, discount rates, and terminal capitalization rates . Auditing these critical assumptions required a high degree of auditor judgment as the estimations made by management contain significant measurement uncertainty . This resulted in an increased extent of audit effort, including the need to involve fair value specialists . HOW THE KEY AUDIT MATTER WAS ADDRESSED IN THE AUDIT Our audit procedures related to the anticipated rental rates, discount rates and terminal capitalization rates used to determine the fair value of the investment properties included the following, among others: — Evaluated the effectiveness of controls over determining investment properties’ fair value, including those over the determination of the anticipated rental rates, discount rates and terminal capitalization rates . — Evaluated the reasonableness of management’s forecast of anticipated rental rates by comparing management’s forecasts with historical results, internal communications to management and the Board of Trustees, and contractual information, where applicable . — With the assistance of fair value specialists, evaluated the reasonableness of management’s forecast of anticipated rental rates, discount rates and terminal capitalization rates by considering recent market transactions and industry surveys . OTHER INFORMATION Management is responsible for the other information . The other information comprises: — Management’s Discussion and Analysis of Results of Operations and Financial Condition — The information, other than the financial statements and our auditor’s report thereon, in the Annual Report . Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon . In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated . 106 ALLIED 2021 ANNUAL REPORTWe obtained Management’s Discussion and Analysis of Results of Operations and Financial Condition and the Annual Report prior to the date of this auditor’s report . If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report . We have nothing to report in this regard . RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error . In preparing the financial statements, management is responsible for assessing the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Trust or to cease operations, or has no realistic alternative but to do so . Those charged with governance are responsible for overseeing the Trust’s financial reporting process . AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion . Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it exists . Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements . As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit . We also: — Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion . The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control . — Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control . — Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management . 107 ALLIED 2021 ANNUAL REPORT— Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust’s ability to continue as a going concern . If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion . Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report . However, future events or conditions may cause the Trust to cease to continue as a going concern . — Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation . — Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Trust to express an opinion on the financial statements . We are responsible for the direction, supervision and performance of the group audit . We remain solely responsible for our audit opinion . We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit . We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards . From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters . We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication . The engagement partner on the audit resulting in this independent auditor’s report is Antonio Ciciretto . /s/ Deloitte LLP CHARTERED PROFESSIONAL ACCOUNTANTS LICENSED PUBLIC ACCOUNTANTS TORONTO, ONTARIO FEBRUARY 1, 2022 108 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2021 AND DECEMBER 31, 2020 (in thousands of Canadian dollars) NOTES DECEMBER 31, 2021 DECEMBER 31, 2020 Assets Non-current assets Investment properties Residential inventory Investment in joint venture and loan receivable Loans and notes receivable Other assets Current assets Cash and cash equivalents Loans and notes receivable Accounts receivable, prepaid expenses and deposits Investment properties held for sale Total assets Liabilities Non-current liabilities Debt Other liabilities Lease liabilities Current liabilities Debt Accounts payable and other liabilities Total liabilities Unitholders’ equity 5 6 7 8 9 20 8 10 5 11 13 12 11 13 $9,527,105 $8,687,375 170,980 124,790 223,456 28,185 140,038 117,112 322,543 23,643 10,074,516 9,290,711 22,548 144,306 57,061 86,260 310,175 45,512 93 64,452 — 110,057 $10,384,691 $9,400,768 $3,417,138 $2,698,794 44,635 157,550 63,045 157,068 3,619,323 2,918,907 36,146 303,450 339,596 3,958,919 6,425,772 26,668 278,161 304,829 3,223,736 6,177,032 Total liabilities and Unitholders’ equity $10,384,691 $9,400,768 Commitments and Contingencies (note 26) The accompanying notes are an integral part of these consolidated financial statements. Gordon Cunningham Trustee Michael R . Emory Trustee 109 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (in thousands of Canadian dollars, except Unit and per Unit amounts) NOTES DECEMBER 31, 2021 DECEMBER 31, 2020 YEAR ENDED Rental revenue Condominium revenue Total revenue Property operating costs Operating income Interest expense General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value gain on investment properties and investment properties held for sale Fair value gain (loss) on derivative instruments Net loss from joint venture 18, 22 $568,886 18 22 11 (f) 19 9 5 14, 25 (d) 7 — 568,886 (239,495) 329,391 (120,145) (25,834) (573) (1,167) 28,023 217,557 16,350 (451) $560,327 178 560,505 (241,490) 319,015 (72,603) (22,215) (1,230) (1,467) 19,819 280,590 (17,996) (3,184) Net income and comprehensive income $443,151 $500,729 Income per Unit Basic Diluted Weighted average number of Units 17 Basic Diluted The accompanying notes are an integral part of these consolidated financial statements. $3.48 $3.48 $4 .02 $4 .02 127,305,384 127,455,829 124,427,715 124,536,634 110 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF UNITHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (in thousands of Canadian dollars) Balance at January 1, 2020 Net income and comprehensive income Unit issuance (net of costs) Distributions NOTES TRUST UNITS RETAINED EARNINGS CONTRIBUTED SURPLUS TOTAL $3,725,472 $1,969,974 $22,253 $5,717,699 15 15 — 500,729 152,079 — — (205,377) — — — — 1,988 2,804 500,729 152,079 (205,377) 9,805 1,988 109 Unit Option Plan – options exercised 15, 16 (a) 9,805 Contributed surplus – Unit Option Plan 16 (a) Restricted Unit Plan (net of forfeitures) 15, 16 (b) — (2,695) — — — Balance at December 31, 2020 $3,884,661 $2,265,326 $27,045 $6,177,032 (in thousands of Canadian dollars) NOTES TRUST UNITS RETAINED EARNINGS CONTRIBUTED SURPLUS TOTAL Balance at January 1, 2021 15 $3,884,661 $2,265,326 $27,045 $6,177,032 Net income and comprehensive income — 443,151 Unit issuance (net of costs) 15 20,079 — Distributions Unit Option Plan – options exercised Contributed surplus – Unit Option Plan 15, 16 (a) 16 (a) — 56 — Restricted Unit Plan (net of forfeitures) 15, 16 (b) (2,141) (216,521) — — — — — — — 1,740 2,376 443,151 20,079 (216,521) 56 1,740 235 Balance at December 31, 2021 $3,902,655 $2,491,956 $31,161 $6,425,772 The accompanying notes are an integral part of these consolidated financial statements. 111 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (in thousands of Canadian dollars) NOTES DECEMBER 31, 2021 DECEMBER 31, 2020 YEAR ENDED $443,151 $500,729 (280,590) 17,996 80 72,603 (66,511) (19,819) 13,560 3,184 1,467 32,193 (7,856) (1,846) 113 2,081 4,792 (25,128) 109,209 356,257 Operating activities Net income for the year Fair value gain on investment properties and investment properties held for sale Fair value (gain) loss on derivative instruments 5 (Payments) proceeds on settlement of derivative instruments Interest expense (excluding capitalized interest) 11 (f) (217,557) (16,350) (3,781) 120,145 Interest paid (excluding capitalized interest) 5, 6, 12, 20 (113,108) Interest income Interest received Net loss from joint venture Amortization of other assets Amortization of improvement allowances Amortization of straight-line rents Amortization of premium on debt Amortization of lease liabilities Amortization of net financing costs Unit compensation expense Additions to residential inventory 7 9 5 5 11 (f) 5, 12 11 (f) 16 6 Change in other non-cash operating items 8, 10, 13, 20 Cash provided by operating activities (28,023) 18,688 451 1,167 32,305 (3,682) (3,488) (428) 3,604 4,116 (30,942) 34,846 241,114 112 ALLIED 2021 ANNUAL REPORT(in thousands of Canadian dollars) NOTES DECEMBER 31, 2021 DECEMBER 31, 2020 YEAR ENDED Financing activities Repayment of mortgages payable Proceeds from senior unsecured debentures (net of financing costs) Redemption of senior unsecured debentures Repayment of unsecured term loan Principal payments of lease liabilities Distributions paid to Unitholders Proceeds of Unit issuance (net of issuance costs) Proceeds from exercise of Unit options Restricted Unit Plan (net of forfeitures) Proceeds from notes receivable Proceeds from Unsecured Revolving Operating Facilities Repayments of Unsecured Revolving Operating Facilities Proceeds from construction loan Financing costs Proceeds from loans receivable Loans receivable issued to third-parties Cash provided by financing activities Investing activities 11 (a) 11 (d) 11 (d) 11 (e) 12 15 15, 16 (a) 15, 16 (b) 8 (b) 11 (c) 11 (c) 11 (b) 8 (a) 7, 8 (a), 20 (648,699) 1,093,900 (150,000) — (189) (215,918) 20,079 56 (2,141) 1,927 460,000 (155,000) 75,592 (836) 382 (47,435) 431,718 Acquisition of investment properties 4 (288,887) Deposits on acquisitions (268) Additions to investment properties (including capitalized interest) 5, 11 (f) (428,248) Net proceeds on disposition of properties under development Net (contributions to) distributions from equity accounted investments Additions to equipment and other assets Leasing commissions Improvement allowances 4 7 9 5 5 71,592 (8,129) (337) (16,841) (24,678) (25,783) 695,700 — (200,000) (30) (204,217) 152,079 9,805 (2,695) 253 560,000 (500,000) 33,894 (306) 252 (77,927) 441,025 (567,971) (3,550) (346,766) 24,911 (15,448) (781) (11,274) (39,805) Cash used in investing activities (695,796) (960,684) Decrease in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year (22,964) 45,512 $22,548 (163,402) 208,914 $45,512 Note 20 contains supplemental cash flow information. The accompanying notes are an integral part of these consolidated financial statements. 113 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (in thousands of Canadian dollars, except per Unit and Unit amounts) 1 . NATURE OF OPERATIONS Allied Properties Real Estate Investment Trust (“Allied”) is a Canadian unincorporated closed-end real estate investment trust created pursuant to the Declaration of Trust dated October 25, 2002, most recently amended May 10, 2021 . Allied is governed by the laws of the Province of Ontario and began operations on February 19, 2003 . The Units of Allied are traded on the Toronto Stock Exchange (“TSX”) and are traded under the symbol “AP .UN” . Allied is domiciled in Ontario, Canada . The address of Allied’s registered office and its principal place of business is 134 Peter Street, Suite 1700, Toronto, Ontario, M5V 2H2 . 2 . SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance The consolidated financial statements of Allied for the years ended December 31, 2021 and 2020, are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) . The policies set out below were consistently applied to all the years presented unless otherwise noted . The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting judgments, estimates and assumptions that affect the amounts reported . Allied’s basis for applying judgments, estimates and assumptions to its accounting policies are described in note 2 and 3 below . The consolidated financial statements for the years ended December 31, 2021 and 2020, were approved and authorized for issue by the Board of Trustees (the “Board”) on February 1, 2022 . (b) Basis of presentation The consolidated financial statements have been prepared on a historical cost basis except for the following items that were measured at fair value: — — investment properties as described in note 2 (d) and note 5; and interest rate swaps as described in note 2 (i) . The consolidated financial statements are presented in Canadian dollars, which is Allied’s functional currency, and all amounts are rounded to the nearest thousand, unless otherwise indicated . 114 ALLIED 2021 ANNUAL REPORTThe preparation of these consolidated financial statements requires Allied to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period . Actual outcomes could differ from these estimates . These consolidated financial statements include estimates, which, by their nature, are uncertain . The impact of such estimates is pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences . Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods . Significant estimates and assumptions include the fair values assigned to investment properties, interest rate derivative contracts, and allowances for expected credit losses . (c) Basis of consolidation The consolidated financial statements comprise the financial statements of Allied and its subsidiaries . Subsidiaries are all entities over which Allied has control, where control is defined as the power to direct the relevant activities of an entity so as to obtain benefit from its activities . Control exists when a parent company is exposed to, or has rights to, variable returns from the subsidiaries and has the ability to affect those returns through its power . Subsidiaries are consolidated from the date control is transferred to Allied, and are de-consolidated from the date control ceases . Intercompany transactions between subsidiaries are eliminated on consolidation . Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by Allied . All subsidiaries have a reporting date of December 31 . (d) Investment properties At the time of acquisition of a property, Allied applies judgment when determining if the acquisition is an asset acquisition or a business combination . Allied classifies its acquisitions as asset acquisitions when it acquires a property or a portfolio of properties and it has not acquired an operating platform . Investment properties include rental properties and properties under development that are owned by Allied, or leased by Allied as a lessee, to earn rental revenue and/or for capital appreciation . Investment properties are accounted for using the fair value model . Rental income and operating expenses from investment properties are reported within ‘total revenue’ and ‘total operating expenses’ respectively . Where Allied has concluded an acquisition of an asset, Allied uses the asset purchase model whereby the initial cost of an investment property is comprised of its purchase price and any directly attributable expenditures . Directly attributable expenditures include transaction costs such as due diligence costs, appraisal fees, environmental fees, legal fees, land transfer taxes, and brokerage fees . 115 ALLIED 2021 ANNUAL REPORTInvestment properties are externally appraised quarterly and are reported in the consolidated balance sheets at their fair values . Fair value is based on valuations prepared by a nationally recognized and qualified independent professional appraiser with sufficient experience with respect to both the geographic location and the nature of the investment property and supported by market evidence . Any gain or loss resulting from a change in the fair value of an investment property is immediately recognized in the Consolidated Statements of Income and Comprehensive Income . The fair value of each investment property is based upon, among other things, rental income from current leases and assumptions about rental income from future leases reflecting market conditions at the balance sheet date, less future estimated non-recoverable capital cash outflows in respect of such properties . The independent professional appraiser engaged by Allied predominantly uses the discounted cash flow method to determine fair value, whereby the income and expenses are projected over the anticipated term of the investment and combined with a terminal value, all of which is discounted using an appropriate discount rate . Properties under development are measured using both a comparable sales method and a discounted cash flow method, net of costs to complete, as of the balance sheet date . For further details on methods used, refer to note 5 . Valuations of investment properties are most sensitive to changes in discount rates and capitalization rates . Allied has applied judgment based on the extent that costs are incurred to enhance the service potential of the property in determining whether certain costs are additions to the carrying amount of investment properties or will be expensed . Allied has applied judgment when reporting its properties under development . The cost of properties under development includes the acquisition cost of the property, direct development costs, realty taxes and borrowing costs attributable to the development . See 2 (g) below for further information regarding Allied’s accounting for borrowing costs . (e) Joint arrangements Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor . Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control . Joint Operation A joint operation is a joint arrangement whereby the parties that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement . A joint operation usually results from direct interests in the assets and liabilities of an investee . None of the parties involved have unilateral control of a joint operation . Allied accounts for its joint arrangements as joint operations wherein it records its share of the assets, liabilities, revenue and expenses of the joint operations . 116 ALLIED 2021 ANNUAL REPORTJoint Venture A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets relating to the arrangement, and usually results from the establishment of a separate legal entity . Allied accounts for its joint ventures using the equity method . The share of results of earnings (loss) of the joint venture is reflected in the consolidated statement of income and comprehensive income . Under the equity method, an investment in a joint venture is recognized initially in the consolidated balance sheet at cost and adjusted thereafter to recognize Allied’s share of the profit or loss and other comprehensive income of the joint venture in accordance with Allied’s accounting policies . When Allied’s share of losses of a joint venture exceeds Allied’s interest in that joint venture (which includes any long-term interests that, in substance, form part of Allied’s net investment in the joint venture), Allied continues recognizing its share of further losses to the extent that Allied has incurred legal or constructive obligations or made payments on behalf of the joint venture . When Allied transacts with a joint venture, profits and losses resulting from the transactions with the joint venture are recognized in Allied’s consolidated financial statements only to the extent of interests in the joint venture that are not related to Allied . (f) Revenue recognition Allied has retained substantially all of the risks and benefits of ownership of its investment properties and as such accounts for its leases with tenants as operating leases . Revenue includes rents from tenants under leases, property tax and operating cost recoveries, percentage participation rents, lease cancellation fees, parking income and other income . Rents from tenants may include free rent periods and rental increases over the term of the lease and are recognized in revenue on a straight-line basis over the term of the lease . Typically, in ground up developments, when there are fixturing periods outside of the term of the lease, revenue is not recognized during these fixturing periods . The difference between revenue recognized and the cash received is included in investment properties as straight-line rents receivable . Lease incentives provided to tenants (referred to as tenant improvements) are deferred and amortized on a straight-line basis against revenue over the term of the lease . Recoveries from tenants are recognized as revenue in the period in which the applicable costs are incurred . Percentage participation rents are recognized after the minimum sales level has been achieved with each lease, where applicable . Lease cancellation fees are recognized as revenue once an agreement is completed with the tenant to terminate the lease and the collectability is reasonably assured . Other income is recognized upon provision of goods or services when collectability is reasonably assured . Contracts with customers for residential condominium units generally include one distinct performance obligation . Revenue is measured at the transaction price agreed under the contract, and is recognized at the point in time in which control over the property has been transferred . Customer deposits received are held in trust and restricted for use . 117 ALLIED 2021 ANNUAL REPORT(g) Borrowing costs Borrowing costs directly attributable to acquiring or constructing a qualifying investment property are capitalized . Capitalization commences when the activities necessary to prepare an asset for development or redevelopment begin, and ceases once the asset is substantially complete, or is suspended if the development of the asset is suspended . The amount of borrowing costs capitalized is determined first by reference to borrowings specific to the project, where relevant, and otherwise by applying a weighted average cost of borrowings to eligible expenditures after adjusting for borrowings associated with other specific developments . Where borrowings are associated with specific developments, the amount capitalized is the gross costs incurred on those borrowings . The capitalization of borrowing costs is suspended if there are prolonged periods when development activity is interrupted . (h) Other assets Computer and office equipment and owner occupied property are included in other assets and are stated at cost less accumulated amortization and accumulated impairment losses . Cost includes expenditures that are directly attributable to the acquisition of the asset . For the assets that are amortized, Allied records amortization expense on a straight-line basis over the assets’ estimated useful life which is generally three to seven years . The assets’ residual values and useful lives are reviewed annually or if expectations differ from previous estimates, and adjusted if appropriate . When events and circumstances indicate an asset may be impaired, the carrying amount is written down immediately to its recoverable amount (defined as the higher of an asset’s fair value less costs to sell and its value in use) . (i) Financial instruments Cash and cash equivalents include cash on hand, balances with banks and short-term deposits with original maturities of three months or less . Mortgages payable consists of the legal liabilities owing pursuant to loans secured by mortgages and premiums and discounts recognized on loans assumed on acquisition of properties, netted against the transaction costs, and the effective interest method of amortization is applied to the premiums, discounts and transaction costs . The following table describes Allied’s classification and measurement of its financial assets and liabilities: ASSET/LIABILITY Loans and notes receivable Cash and cash equivalents Accounts receivable Debt Accounts payable and other liabilities Interest rate swaps 118 CLASSIFICATION/MEASUREMENT Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Fair value ALLIED 2021 ANNUAL REPORTAllied designated its accounts receivable, loans and notes receivable, and cash and cash equivalents as loans and receivables; its debt and accounts payable and other liabilities as other financial liabilities . All derivatives, including embedded derivatives, are classified at fair value through profit or loss and are recorded on the consolidated balance sheet at fair value . At the end of each reporting period, Allied will reassess categorization between levels in the hierarchy to determine whether transfers have occurred . The reassessment is based on the lowest level input that is significant to the fair value measurement in its entirety . Financial Assets Financial assets are classified as loans and receivables or fair value through profit or loss . Financial assets are initially measured at fair value . Transaction costs that are directly attributable to the acquisition or issuance of financial assets or liabilities, with the exception of those classified as at fair value through profit or loss, are accounted for as part of the respective asset or liability’s carrying value at inception and amortized over the expected life of the financial instrument using the effective interest method . Transaction costs directly attributable to the acquisition or issuance of financial assets or liabilities classified as at fair value through profit or loss are recognized immediately in net income . Impairment of Financial Assets Allied assesses, on a continual basis, whether a financial asset that is measured at amortized cost is impaired under an expected credit loss (“ECL”) model . For user trade receivables within the scope of IFRS 16, Allied applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized under the initial recognition of its receivables . To measure the expected credit losses for its accounts receivable, Allied established a provision matrix, that applies loss factors to contractual payments by aging categories, and incorporates forward-looking factors that are specific to the tenant, historical credit loss experience, and the economic environment, where applicable . For loans and notes receivable, Allied applies an ECL approach as required under IFRS 9, which reflects the present value of all cash shortfalls related to default events either (i) over the following twelve months or (ii) over the expected life of a financial instrument depending on the credit deterioration from inception . The ECL reflects an unbiased, probability-weighted outcome which considers multiple scenarios based on reasonable and supportable forecasts . Allied assesses whether there has been a significant increase in credit risk since initial recognition of a financial instrument and its ECL measurement at each reporting date . Increases or decreases in the ECL are recognized as impairment gains or losses within interest (expense) income in net income and comprehensive income (loss) . Allied’s financial assets measured at amortized cost are presented net of the ECL in the consolidated balance sheets . 119 ALLIED 2021 ANNUAL REPORTFinancial Liabilities Financial liabilities are classified and measured as disclosed in the table above . Financial liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognized in profit or loss . Allied measures its debt, finance lease obligations, and accounts payable and other liabilities, at amortized cost using the effective interest method . All interest-related charges are reported in the Consolidated Statements of Income and Comprehensive Income and are included within ‘Interest expense’, except for those interest-related charges capitalized to qualifying properties under development or rental properties . From time to time, Allied uses derivative financial instruments to manage risks from fluctuations in interest rates . All derivative instruments, including embedded derivatives that must be separately accounted for, are valued at their respective fair values unless they are effective cash flow hedging instruments . On the date a derivative contract is entered into, Allied assesses whether or not to designate the derivative as either a hedge of the fair value of a recognized asset or liability (a “fair-value hedge”) or a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability or a forecasted transaction (a “cash-flow hedge”) . Allied does not hold any fair-value or cash-flow hedges . Allied has entered into interest rate derivative contracts to limit its exposure to fluctuations in the interest rates on variable rate mortgages and unsecured term loans . Gains or losses arising from the change in fair values of the interest rate derivative contracts are recognized in the Consolidated Statements of Income and Comprehensive Income . (j) Unitholders’ equity Trust Units represents the initial value of Units that have been issued . Any transaction costs associated with the issuing of Units are deducted from Unit proceeds . Unitholders’ equity includes all current and prior period retained income . Distributions payable to Unitholders are included in ‘Distributions payable to Unitholders’ when the distributions have been approved and declared prior to the reporting date, but have yet to be paid . (k) Short-term employee benefits Allied does not provide pension plan benefits . Short-term employee benefits are expensed as a period expense . (l) Unit-based compensation plans Equity-settled unit-based payments to employees and trustees are measured at the fair value of the equity instruments at the grant date . 120 ALLIED 2021 ANNUAL REPORTThe fair value determined at the grant date of the equity-settled unit-based payments is expensed on a straight-line basis over the period during which the employee becomes unconditionally entitled to equity instruments, based on Allied’s estimate of equity instruments that will eventually vest . At the end of each reporting period, Allied revises its estimate of the number of equity instruments that are expected to vest . Allied utilizes the Black-Scholes Model for the valuation of unit options with no performance criteria, see note 16 for assumptions used . Unit options granted under the Unit Option Plan and Restricted Units granted under the Restricted Unit Plan are subject to vesting conditions and disposition restrictions, in order to provide a long term compensation incentive . The Unit Options and Restricted Units are subject to forfeiture until the participant has held his or her position with Allied for a specified period of time . Full vesting of Restricted Units and Unit Options may not occur until the participant has remained employed by Allied for three and four years, respectively from the date of grant . Upon forfeiture of Unit Options and Restricted Units by an employee or trustee of Allied, the expense related to any unvested, forfeited Unit Options and Restricted Units recognized up to and including the date of the forfeiture is reversed . (m) Provisions Provisions are recognized when there is a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated . Provisions are not recognized for future operating losses . Allied does not have any provisions as of the date of this report . (n) Per Unit calculations Basic net income per unit is calculated by dividing net income by the weighted average number of Units outstanding for the period (refer to note 17 for further details) . Diluted net income per unit is calculated using the denominator of the basic calculation described above adjusted to include the potentially dilutive effect of the outstanding unit purchase options . The denominator is increased by the total number of additional Units that would have been issued by Allied assuming exercise of all unit purchase options with exercise prices below the average market price for the year (refer to note 16 for further details) . (o) Residential inventories Residential inventory are assets that are developed by Allied for sale in the ordinary course of business and is recorded at the lower of cost and estimated net realizable value . Impairment is reviewed at each reporting date, with any losses recognized in net income when the carrying value of the inventory exceeds its net realizable value . The net realizable value is defined as the entity-specific future selling price, including any development plans, in the ordinary course of business less estimated costs of completion and selling costs . The cost of residential inventory includes any costs that are directly attributable to bring the projects to a state of active development, which includes borrowing costs . Borrowing costs are accounted under IAS 23 similarly to Allied’s policies for capitalization to qualifying assets . 121 ALLIED 2021 ANNUAL REPORT(p) Leases Allied recognizes a right-of-use (“ROU”) asset and a lease obligation at the lease commencement date, in accordance with IFRS 16, Leases . Allied accounts for its ROU assets that do not meet the definition of investment property as fixed assets . The ROU asset is initially measured at cost and, subsequently, at cost less any accumulated depreciation and impairment and adjusted for certain remeasurements of the lease obligation . When a ROU asset meets the definition of investment property, it is initially measured at cost and subsequently measured at fair value (note 2(d)) . Land held as part of the operating leases (“ground leases”) which meets the definition of investment property is classified as ROU assets within investment properties . Management office leases and leases for equipment components embedded as part of service contracts which do not meet the definitions of investment property are recognized as ROU assets within other real estate assets . Refer below to the various lease types identified and their respective financial statement classification . TYPE OF LEASE Ground lease Management office Other ROU ASSET CLASSIFICATION ROU LIABILITY CLASSIFICATION Investment properties Other assets Other assets Lease liability Lease liability Lease liability The lease liability is initially measured at the present value of the lease payments at the commencement date, discounted by using the interest rate implicit in the lease, or, if that rate cannot be readily determined, at Allied’s incremental borrowing rate . Generally, Allied uses its incremental borrowing rate as the discount rate . The lease obligation is subsequently measured by increasing the carrying amount to reflect interest on the lease liability and by reducing the carrying amount to reflect the lease payments made . Lease liability is remeasured when there is a change in the future lease payments arising from a change in an index or rate, a change in estimate of the amount expected to be payable under the residual value guarantee or, as appropriate, change in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised . Allied has applied judgment to determine the lease term for some lease contracts in which it is a lessee that include renewal or termination options . The assessment of whether Allied is reasonably certain to exercise such options impacts the lease term which in turn, affects the amount of lease obligations and right-of-use assets recognized . Allied also applies judgment in determining the discount rate used to present value the lease obligations . (q) IAS 20, government grants Allied recognizes government assistance, in the form of grants or forgivable loans, when there is reasonable assurance that Allied will be able to comply with the conditions attached to the assistance and that the assistance will be received . Government assistance that compensates Allied for expenses incurred is recognized in the consolidated statements of income and comprehensive income, as a reduction of the related expense, in the periods in which the expenses are recognized . Refer to note 10 for the specific impact of this program on Allied . 122 ALLIED 2021 ANNUAL REPORT(r) Investment properties held for sale Investment properties are classified as held for sale when their carrying amount is to be recovered primarily through a sale transaction rather than from continuing use . An investment property held for sale is available for sale in its present condition and the sale is considered highly probable within one year . Investment properties held for sale are measured at fair value . (s) Comparative figures Certain comparative figures in the note disclosure for general and administrative expenses (note 19) have been reclassified to present share-based payment expenses related to the Trustees of Allied in professional and trustee fees, which were previously presented in salaries and benefits . Also, certain comparative figures in the note disclosure for fair value measurements of loans and notes receivable and loan receivable from joint venture (note 14) have been revised to reflect the immaterial correction of the calculation of fair value, primarily due to the revision of the interest component of the calculation . As a result, the fair value of loans and notes receivable has decreased to $322,881 from $355,819 and the fair value of loans receivable from joint venture has decreased to $113,287 from $117,725, both of which were previously reported as at December 31, 2020 . There was no change to the fair value of loans and notes receivable and the fair value of loans receivable from joint venture as at January 1, 2020 . This revision does not impact the carrying value of loans and notes receivable and loan receivable from joint venture balances as at December 31, 2020 . 3 . CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of the consolidated financial statements requires management to make judgments and estimates in applying Allied’s accounting policies that affect the reported amounts and disclosures made in the consolidated financial statements and accompanying notes . Within the context of these consolidated financial statements, a judgment is a decision made by management in respect of the application of an accounting policy, a recognized or unrecognized financial statement amount and/or note disclosure, following an analysis of relevant information that may include estimates and assumptions . Estimates and assumptions are used mainly in determining the measurement of balances recognized or disclosed in the consolidated financial statements and are based on a set of underlying data that may include management’s historical experience, knowledge of current events and conditions and other factors that are believed to be reasonable under the circumstances . Management continually evaluates the estimates and judgments it uses . The following are the accounting policies subject to judgments and key sources of estimation uncertainty that Allied believes could have the most significant impact on the amounts recognized in the consolidated financial statements . Allied’s significant accounting policies are disclosed in note 2 . 123 ALLIED 2021 ANNUAL REPORTInvestment Properties Judgments Made in Relation to Accounting Policies Applied - Judgment is applied in determining whether certain costs are additions to the carrying value of investment properties and investment properties held for sale, identifying the point at which substantial completion of a development property occurs, and identifying the directly attributable borrowing costs to be included in the carrying value of the development property . Allied also applies judgment in determining whether the properties it acquires are considered to be asset acquisitions or business combinations . Allied has determined through the appropriate analysis that all the properties it has acquired to date to be asset acquisitions . Key Sources of Estimation - The fair value of investment properties and investment properties held for sale is dependent on available comparable transactions, future cash flows over the holding period and discount rates and capitalization rates applicable to those assets . For further details, see note 5 . The review of anticipated cash flows involves assumptions relating to occupancy, rental rates and residual value . In addition to reviewing anticipated cash flows, management assesses changes in the business climate and other factors which may affect the ultimate value of the property . These assumptions may not ultimately be achieved . Joint Arrangements Judgments Made in Relation to Accounting Policies Applied - Judgment is applied in determining whether Allied has joint control and whether the arrangements are joint operations or joint ventures . In making this assessment management applies judgment to determine Allied’s rights and obligations in the arrangement based on factors such as the structure, legal form and contractual terms of the arrangement . Income Taxes Judgments Made in Relation to Accounting Policies Applied - Allied qualifies as a mutual fund trust (“MFT”) and a REIT as defined in the Income Tax Act (Canada) . Allied is not liable to pay entity level Canadian income taxes provided that its taxable income is fully distributed to Unitholders each year and if it meets the prescribed rules under the Income Tax Act (Canada) to be a REIT and MFT . This results in no current or deferred income tax being recognized in the financial statements . Allied applies judgment in determining whether it will continue to qualify as a REIT and in assessing its interpretation and application to its assets and revenue . While there are uncertainties in interpretation and application of these rules, Allied believes it meets the REIT and MFT rules . Allied expects to continue to qualify as a REIT under the Income Tax Act (Canada), however, should it no longer qualify, it would be subject to entity level tax and would be required to recognize current and deferred income taxes . 124 ALLIED 2021 ANNUAL REPORTImpact of COVID-19 In response to the global COVID-19 pandemic, various measures have been introduced by Canadian federal and provincial governments and other authorities to mitigate the transmission of COVID-19 and its variants, including social distancing recommendations, closure of non-essential businesses, occupancy limits in enclosed spaces, quarantines, and travel bans, some of which remain in effect . The nature and extent of these measures may change depending on the efficacy of vaccination programs, the emergence of new variants of the COVID-19 virus, and any resurgence of COVID-19 positive cases . As a result of the continuously evolving circumstances surrounding COVID-19, uncertainty remains with respect to Allied’s revised internal forecast, the most significant being the fact that it cannot predict how consumers will respond as the restriction measures continue or change in Canada . In addition, Allied cannot predict the extent and severity of the economic disruption flowing from the global pandemic . In the preparation of these consolidated financial statements, Allied has incorporated the potential impact of COVID-19 into its estimates and assumptions that affect the carrying amounts of its assets and liabilities and the reported amount of its results using the best available information as at December 31, 2021 . Actual results could differ from those estimates . The estimates and assumptions that Allied considers critical and/or could be impacted by COVID-19 include those underlying the valuation of investment properties and investment properties held for sale, including discount rates and terminal capitalization rates, operating assumptions, the carrying amount of its investment in a joint venture, the estimate of any expected credit losses on its accounts receivable and loans and notes receivable and determining the values of financial instruments . The following estimates and assumptions have been significantly impacted by the COVID-19 pandemic: Valuation of Investment Properties Given the evolving circumstances surrounding COVID-19, it is difficult to predict with certainty the extent and severity of the COVID-19 pandemic and the impact it will have on the operations of Allied’s users . The impact of the COVID-19 pandemic is highly dependent on future developments, which include among other things, emerging information concerning COVID-19 and the actions required to contain or manage its impact . In determining the fair value of investment properties, Allied considered the impact on its user base related to the COVID-19 pandemic as well as the overall market performance . In line with the valuation process outlined in notes 2(d), 3 and 5, Allied has considered the effects of COVID-19 on assumptions such as rent growth, vacancy loss assumptions, credit loss assumptions, as well as valuation metrics . Allied has adjusted cash flow assumptions for its estimate of near term disruptions to cash flows to reflect collections, vacancy and assumptions on new leasing . Allied undertook a process to assess the appropriateness of the discount and terminal capitalization rates considering changes to risk free rates, changes to credit spreads as well as changes to property-level cash flows and any risk premium inherent in such cash flow changes . These considerations are reflected in the fair value adjustments of investment properties . 125 ALLIED 2021 ANNUAL REPORTUser Trade Receivables In assessing the adequacy of the allowance for expected credit loss on user trade receivables, Allied has considered the likelihood of collection of current receivables given the impact on user operations as a result of COVID-19 . Allied continues to work with users facing financial challenges as a result of the pandemic, including for the period of the programs existence by participating in the Canada Emergency Rent Subsidy (“CERS”) program and providing rental abatement or deferrals to certain challenged users . Rental abatements provided for past amounts due are treated as expected credit loss allowance . Loans and Notes Receivable As a result of uncertainty arising from COVID-19, Allied considered whether there is an increase in credit risk for the loans and notes receivable in accordance with the requirements of IFRS 9, Financial Instruments . Allied considered various factors in assessing the credit risks, including but not limited to, borrower payment patterns and loan status, the status of project leasing and/or condominium sales, the development status of each project, the corresponding value of the loan collateral and the financial health and status of the respective debtors . Allied’s assessment of expected credit losses for user trade receivables and loans and notes receivable is inherently subjective due to the forward-looking nature of the assessments . As a result, the value of the expected credit loss is subject to a degree of uncertainty and is made on the basis of assumptions which may not prove to be accurate with the unprecedented uncertainty caused by COVID-19 . 126 ALLIED 2021 ANNUAL REPORT4 . ACQUISITIONS AND DISPOSITIONS Acquisitions During the year ended December 31, 2021, Allied acquired the following properties and air rights from ACQUISITION DATE PROPERTY TYPE INVESTMENT PROPERTY INTEREST ACQUIRED third parties: PROPERTY 432 Wellington, Toronto 608 1st SW, Calgary 478 King W, Toronto (1) 65 Front E, Toronto 64 Spadina, Toronto 12 Brant, Toronto January 28, 2021 February 8, 2021 April 22, 2021 Retail Retail Retail April 29, 2021 Office, Retail May 19, 2021 June 18, 2021 Retail Retail 422-424 Wellington W, Toronto August 4, 2021 Development 143 Bathurst, Toronto August 23, 2021 Residential 700 Saint Antoine E, Montréal August 30, 2021 Office, Retail 810 Saint Antoine E, Montréal August 30, 2021 731-10th SW, Calgary (2) October 19, 2021 Office Retail 802-838 11th SW, Glenbow Assembly, Calgary (2) October 19, 2021 Office, Retail Sherwin Block, Calgary (2) October 19, 2021 Office, Retail 207 West Hastings, Vancouver November 12, 2021 Office, Retail Union Centre Air Rights, Toronto December 15, 2021 N/A $17,806 6,464 10,963 20,064 14,617 16,180 28,648 2,945 80,449 51,263 7,975 12,787 7,299 67,161 344,621 14,814 $359,435 100% 100% 50% 100% 100% 100% 100% 100% 100% 100% 50% 50% 50% 100% 100% (1) Allied acquired the remaining 50% interest in 478 King W on April 22, 2021. (2) Allied acquired the remaining 50% interest in 731-10th SW, 802-838 11th SW, and Sherwin Block on October 19, 2021. The total purchase price, including acquisition costs, for the above-noted properties during the year ended December 31, 2021, of $344,621 is comprised of net cash consideration of $288,887, a mortgage assumption of $51,750, a deferred mortgage premium of $1,000 and the assumption of other liabilities of $2,984 . In addition, on December 15, 2021, Allied completed the acquisition of the air rights associated with Union Centre for a total purchase price including acquisition costs of $14,814, which was settled in cash and recognized as a capital expenditures addition to investment properties . 127 ALLIED 2021 ANNUAL REPORTDuring the year ended December 31, 2020, Allied completed the following property acquisitions from third parties: PROPERTY ACQUISITION DATE PROPERTY TYPE INVESTMENT PROPERTY INTEREST ACQUIRED 3530-3540 Saint-Laurent, Montréal January 14, 2020 Office, Retail $13,421 4396-4410 Saint-Laurent, Montréal January 15, 2020 Office, Retail 54 The Esplanade, Toronto January 16, 2020 Retail 747 Square-Victoria, Montréal January 28, 2020 Office, Retail 375 Water, Vancouver 125 John, Toronto April 20, 2020 Office, Retail November 16, 2020 Office, Retail 117-119 John, Toronto December 24, 2020 Retail Ancillary residential properties, Toronto (1) — Residential (1) Allied acquired four ancillary residential properties during the year ended December 31, 2020. 18,530 26,079 284,541 225,404 4,196 8,341 6,648 $587,160 100% 100% 100% 100% 100% 100% 100% 100% The total purchase price, including acquisition costs, for the above noted properties during the year ended December 31, 2020, of $587,160 is comprised of net cash consideration of $567,971, the assumption of other liabilities of $9,189 and a mortgage assumption of $10,000 . Dispositions During the year ended December 31, 2021, Allied and its partners closed on the dispositions of the following phases of The Well air rights and associated underground parking and transfer floor slab developments: PHASE OF THE WELL AIR RIGHTS Second phase Third phase Fourth phase CLOSING DATE April 7, 2021 June 11, 2021 December 20, 2021 CASH CONSIDERATION (AT ALLIED’S SHARE) $31,152 24,287 16,153 $71,592 The total cash consideration received of $71,592 (at Allied’s share) represented the fair value at the time of disposition so there is no gain or loss on disposition . On December 23, 2020, Allied and its partners closed on the disposition of the first phase of The Well air rights and associated underground parking and transfer floor slab development for cash consideration of $24,911 (at Allied’s share) which represented the fair value at the time of disposition and accordingly, there was no gain or loss on disposition . 128 ALLIED 2021 ANNUAL REPORTDispositions Transfers from PUD Transfers to PUD Transfers to other assets Transfers to investment properties held for sale Lease liabilities Amortization of straight- line rent and improvement allowances Fair value gain (loss) on investment properties and investment properties held for sale 5 . INVESTMENT PROPERTIES Changes to the carrying amounts of investment properties are summarized as follows: DECEMBER 31, 2021 DECEMBER 31, 2020 RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT (“PUD”) TOTAL RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT (“PUD”) TOTAL Balance, beginning of year $7,790,855 $896,520 $8,687,375 $6,754,215 $715,050 $7,469,265 Additions: Acquisitions Improvement allowances Leasing commissions 315,973 22,559 15,012 28,648 344,621 587,160 — 587,160 2,119 1,829 24,678 16,841 32,541 8,066 7,264 3,208 Capital expenditures 123,842 304,406 428,248 80,922 265,844 — — (47,040) (6,838) (86,260) 1,098 (71,592) (71,592) — (24,911) — 47,040 — — — — — 130,100 (130,100) (77,828) 77,828 (6,838) (86,260) — — 1,098 1,763 — — — 39,805 11,274 346,766 (24,911) — — — — 1,763 (28,123) (500) (28,623) (25,244) 907 (24,337) 187,197 30,360 217,557 299,160 (18,570) 280,590 Balance, end of year $8,288,275 $1,238,830 $9,527,105 $7,790,855 $896,520 $8,687,375 For the year ended December 31, 2021, Allied capitalized $34,973 (December 31, 2020 - $26,647) of borrowing costs to qualifying investment properties . Included in the rental properties amounts noted above are right-of-use assets with a fair value of $528,400 (December 31, 2020 - $525,940) representing the fair value of Allied’s interest in five investment properties with corresponding lease liabilities . The leases’ maturities range from 22 .8 years to 80 .5 years . As at December 31, 2021, Allied had three properties classified as investment properties held for sale . Investment properties held for sale $86,260 $— DECEMBER 31, 2021 DECEMBER 31, 2020 129 ALLIED 2021 ANNUAL REPORTValuation Methodology The appraised fair value of investment properties and investment properties held for sale is most commonly determined using the following methodologies:  (a) Discounted cash flow method - Under this approach, discount rates are applied to the projected annual operating cash flows, generally over a ten-year period, including a terminal value of the properties based on a capitalization rate applied to the estimated net operating income (“NOI”), a non-IFRS measure, in the terminal year . This method is primarily used to value the rental portfolio .   (b) Comparable sales method - This approach compares a subject property’s characteristics with those of comparable properties which have recently sold . The process uses one of several techniques to adjust the price of the comparable transactions according to the presence, absence, or degree of characteristics which influence value . These characteristics include the cost of construction incurred at a property under development . This method is primarily used to value the development portfolio, ancillary parking facilities and investment properties held for sale .   In accordance with its policy, Allied measures and records its investment properties and investment properties held for sale using valuations under the supervision of Management with the support of an independent external appraiser . Allied’s entire portfolio is revalued by the external appraiser each quarter . Management verifies all major inputs to the valuations, analyzes the change in fair values at the end of each reporting period and reviews the results with the independent appraiser every quarter . There were no material changes to the valuation techniques during the period . For properties with a leasehold interest with a term less than 40 years, the resulting valuation methodology is based upon a full-term discounted cash flow model . Significant Inputs There are significant unobservable inputs used, such as capitalization rates, in determining the fair value of each investment property and investment property held for sale . Accordingly, all investment properties and investment properties held for sale are measured in accordance with the fair value measurement hierarchy levels and the inputs comprise Level 3 unobservable inputs, reflecting Management’s best estimate of what market participants would use in pricing the asset at the measurement date . Fair values are most sensitive to changes in capitalization rates and stabilized or forecasted NOI . Generally, an increase in NOI will result in an increase in the fair value and an increase in capitalization rates will result in a decrease in the fair value . Below are the rates used in the modeling process for valuations of investment properties . WEIGHTED AVERAGE DECEMBER 31, 2021 DECEMBER 31, 2020 5.98% 5.03% 4.68% 10 6 .35% 5 .18% 4 .82% 10 Discount rate Terminal capitalization rate Overall capitalization rate Discount horizon (years) 130 ALLIED 2021 ANNUAL REPORTThe analysis below shows the maximum impact on fair values of possible changes in capitalization rates, assuming no changes in NOI: CHANGE IN CAPITALIZATION RATE OF -0.50% -0.25% +0.25% +0.50% Increase (decrease) in fair value Investment Properties $1,139,606 $537,647 $(483,119) $(919,605) 6 . RESIDENTIAL INVENTORY Residential inventory is as follows: KING Toronto $170,980 $140,038 DECEMBER 31, 2021 DECEMBER 31, 2020 The changes in the aggregate carrying value of Allied’s residential inventory is as follows:   Balance, beginning of year Development expenditures Balance, end of year DECEMBER 31, 2021 DECEMBER 31, 2020 $140,038 30,942 $170,980 $114,910 25,128 $140,038 Residential inventory consists of assets that are developed by Allied for sale in the ordinary course of business . Allied may transfer an investment property to residential inventory based on a change in use, as evidenced by the commencement of development activities with the intention to sell . Alternatively, a transfer from residential inventory to investment property would be evidenced by the commencement of leasing activity .   On November 30, 2018, Allied entered into a joint arrangement with Westbank to develop KING Toronto . KING Toronto is a mixed-use property comprised of office, retail and residential uses . As part of the arrangement Allied sold a 50% undivided interest to Westbank . The residential component will be developed and sold as condominium units, totaling 440 units .   For the year ended December 31, 2021, Allied capitalized $4,759 (December 31, 2020 - $4,363) of borrowing costs to qualifying residential inventory . 131 ALLIED 2021 ANNUAL REPORT7 . INVESTMENT IN JOINT VENTURE AND LOAN RECEIVABLE Investment in joint venture and the associated loan receivable is comprised of the following: Investment in joint venture Loan receivable from joint venture DECEMBER 31, 2021 DECEMBER 31, 2020 $11,503 113,287 $124,790 $3,825 113,287 $117,112 On July 2, 2013, Allied entered into a partnership agreement whereby Allied holds a one-third voting and economic interest in 7th Avenue Sky Partnership (“TELUS Sky”) . TELUS Sky was created with the specific purpose of acquiring the entire beneficial interest in the properties located at 100-114 7th Avenue SW, Calgary and participating in its construction, development and management . On October 31, 2019, Allied advanced a construction loan in the amount of $96,142 to TELUS Sky, with the loan having a maximum limit of $114,000 . The loan matures on July 15, 2023, and bears interest at bank prime plus 45 basis points or bankers’ acceptance rate plus 145 basis points . As at December 31, 2021, the loan receivable outstanding is $113,287 (December 31, 2020 - $113,287) . Allied is providing a joint and several guarantee in the amount of $114,000 to support the TELUS Sky facility . Allied accounts for its interests in joint ventures using the equity method . The financial information below represents TELUS Sky at 100% and at Allied’s one-third interest . Current assets (including cash and cash equivalents) Non-current assets Current liabilities Non-current liabilities Net assets of TELUS Sky at 100% Net assets of TELUS Sky at Allied’s share Revenue Expenses Interest expense General and administrative expense Fair value loss Net loss and total comprehensive income of TELUS Sky at 100% Net loss and total comprehensive income at Allied’s share 132 DECEMBER 31, 2021 DECEMBER 31, 2020 $8,637 378,990 (13,257) (339,861) $34,509 $11,503 $11,664 368,529 (28,857) (339,861) $11,475 $3,825 YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $14,721 (9,822) (619) (42) (5,591) $(1,353) $(451) $7,392 (3,657) — (399) (12,888) $(9,552) $(3,184) ALLIED 2021 ANNUAL REPORTInvestment in joint venture, beginning of year Net loss Contributions Distributions Investment in joint venture, end of year 8 . LOANS AND NOTES RECEIVABLE Loans and notes receivable are as follows: Loans receivable (a) Notes and other receivables (b) Current Non-current DECEMBER 31, 2021 DECEMBER 31, 2020 $3,825 (451) 10,490 (2,361) $11,503 $(8,439) (3,184) 17,914 (2,466) $3,825 DECEMBER 31, 2021 DECEMBER 31, 2020 $367,579 183 $367,762 $144,306 223,456 $367,762 $320,526 2,110 $322,636 $93 322,543 $322,636 (a) In February 2015, Allied entered into a joint arrangement with Westbank and completed the acquisition of an undivided 50% interest in Adelaide & Duncan . As part of the arrangement, Allied advanced $21,173 to Westbank for its purchase of a 50% undivided interest in the property . The facility is secured by a charge on the property (subordinated to the construction lender) and assignment of rents and leases . Interest accrues and is payable monthly at a rate of 7 .75% per annum . The loan is repayable when the joint arrangement obtains external permanent financing . As at December 31, 2021, the loan receivable outstanding is $21,173 (December 31, 2020 - $21,173) . On August 1, 2017, Allied entered into an arrangement with Westbank to provide a credit facility of up to $100,000, plus interest, for the land acquisition and the pre-development costs of 400 West Georgia in Vancouver . The facility is secured by Westbank’s covenant and a charge on the property (subordinated to the construction lender) . On February 11, 2019, the facility was increased to $160,000 . Interest accrues to the credit facility monthly at a rate of 6 .75% per annum . The credit facility matures on August 31, 2022, and has a one-year extension option to August 31, 2023 . As at December 31, 2021, the loan receivable outstanding is $144,271 (December 31, 2020 - $120,825) . On November 30, 2018, Allied entered into a joint arrangement with Westbank to develop KING Toronto . As part of the arrangement, Allied advanced $67,030 to Westbank for its purchase of a 50% undivided interest in the property . The facility will initially be secured by a first mortgage on the property . On placement of construction financing, the mortgage will be secured by a charge on the property (subordinated to the construction lender) . Interest accrues at a rate of 7 .00% per annum and is payable on loan repayment . The loan is repayable at the earlier of November 30, 2023, or the closing of the condominium units . As at December 31, 2021, the loan receivable outstanding is $90,586 (December 31, 2020 - $84,566) . 133 ALLIED 2021 ANNUAL REPORT On March 18, 2019, Allied made an amendment to the joint arrangement with Perimeter to develop Breithaupt Phase III and a loan receivable arrangement to provide 50% of the pre-development costs . The facility is secured by a charge on the property (subordinated to the construction lender) . Interest accrues at a rate of 7 .00% per annum and is payable on loan repayment . The loan is repayable in instalments upon completion of development and rent commencement, which is anticipated to begin in the third quarter of 2022 . As at December 31, 2021, the loan receivable outstanding is $10,256 (December 31, 2020 - $10,637) due to repayments made earlier than anticipated . On July 31, 2019, Allied entered into an arrangement with Westbank to provide a credit facility of up to $185,000, plus interest, for the land acquisition and the pre-development costs of 720 Beatty Street in Vancouver . The funding will initially be secured by a first mortgage on the property for a fixed term . On placement of construction financing, the mortgage will be secured by a charge on the property (subordinated to the construction lender) . Interest accrues to the credit facility monthly at a rate of 7 .00% per annum . The credit facility matures on December 9, 2025 . As at December 31, 2021, the loan receivable outstanding is $101,293 (December 31, 2020 - $83,325) .   Allied has assessed the expected credit losses on an individual loan basis . Allied assesses the risk of expected credit losses, including considering the status of corporate guarantees and/or registered mortgage charges and assignment of leases, outcome of credit checks on borrowers, results of monitoring the financial and operating performance of borrowers, results of the status of development projects and status of scheduled principal and interest payments . The expected credit losses estimated by Management considering the factors described above is $nil and $nil as at December 31, 2021, and December 31, 2020, respectively . (b) As at December 31, 2021, and December 31, 2020, the balance of notes and other receivables is made up of individually insignificant notes receivable . 9 . OTHER ASSETS Other assets consist of the following: Equipment and other assets (1) Property, plant and equipment (2) Interest rate swap derivative assets DECEMBER 31, 2021 DECEMBER 31, 2020 $3,565 24,620 — $28,185 $4,395 17,782 1,466 $23,643 (1) During the year ended December 31, 2021, Allied recorded amortization of equipment and other assets of $1,167 (December 31, 2020 - $1,467). (2) Property, plant and equipment relates to owner-occupied property. 134 ALLIED 2021 ANNUAL REPORT 10 . ACCOUNTS RECEIVABLE, PREPAID EXPENSES AND DEPOSITS User trade receivables - net of allowance (a) Other user receivables (b) Miscellaneous receivables (c) Prepaid expenses and deposits (d) (a) User trade receivables DECEMBER 31, 2021 DECEMBER 31, 2020 $16,659 2,092 13,124 25,186 $57,061 $16,854 2,991 15,709 28,898 $64,452 User trade receivables include minimum rent, additional rent recoveries, parking, ancillary revenue and applicable sales taxes . An allowance is maintained for expected credit losses resulting from the inability of users to meet obligations under lease agreements . Allied actively reviews receivables on a continuous basis and determines the potentially uncollectible accounts on a per-user basis giving consideration to their credit risk, payment history and future expectations of likely default events, and records an impairment based on expected credit losses as required . The change in the allowance for expected credit loss is reconciled as follows: Allowance for expected credit loss, beginning of year Additional provision recorded during the period Reversal of previous provisions Receivables written off during the period Allowance for expected credit loss, end of year YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $6,649 3,024 (407) (89) $9,177 $3,899 9,112 (1,172) (5,190) $6,649 During the year ended December 31, 2020, Allied provided rent abatements for 75% of gross rent to qualifying tenants participating in the Canada Emergency Commercial Rent Assistance (“CECRA”) program . As a result, the qualifying tenants’ outstanding receivable was reduced and recorded as a charge to expected credit loss . Concurrently, Allied recognized the benefit of the government’s forgivable loan covering 50% of gross rent as a reduction of expected credit loss . As at December 31, 2020, Allied recorded rent abatements of $5,040 (net of government assistance of $11,600 and a $760 subsidy received from the Québec government) for tenants qualifying under the CECRA program . The net charge to expected credit loss totaled $6,790 related to the CECRA program . As at December 31, 2020, all amounts related to the CECRA forgivable loan were received from the government . 135 ALLIED 2021 ANNUAL REPORT(b) Other user receivables Other user receivables pertain to unbilled operating costs such as common area maintenance and property tax recoveries and chargebacks . (c) Miscellaneous receivables Miscellaneous receivables consist primarily of HST receivables from the government and management fees and interest income due from external parties . As at December 31, 2021, there are no credit risk indicators that the debtors will not meet their payment obligations . (d) Prepaid expenses and deposits Prepaid expenses and deposits primarily relate to deposits for naming rights, taxes, and insurance . 11 . DEBT Debt consists of the following items, net of financing costs: Mortgages payable (a) Construction loans payable (b) Unsecured revolving operating facilities (c) Senior unsecured debentures (d) Unsecured term loan (e) Current Non-current DECEMBER 31, 2021 DECEMBER 31, 2020 $118,057 132,696 365,000 2,587,989 249,542 $716,813 57,104 60,000 1,642,119 249,426 $3,453,284 $2,725,462 $36,146 3,417,138 $3,453,284 $26,668 2,698,794 $2,725,462 136 ALLIED 2021 ANNUAL REPORT(a) Mortgages payable Mortgages payable have a weighted average stated interest rate of 3 .39% as at December 31, 2021 (December 31, 2020 - 4 .31%) . The mortgages are secured by a first registered charge over specific investment properties and first general assignments of leases, insurance and registered chattel mortgages . PRINCIPAL REPAYMENTS BALANCE DUE AT MATURITY DECEMBER 31, 2021 DECEMBER 31, 2020 2022 2023 2024 2025 2026 2027 2028 2030 Mortgages, principal Net premium on assumed mortgages Net financing costs (b) Construction loans payable $3,307 3,069 2,528 6,423 1,391 487 293 5,000 $22,498 $1,798 12,230 46,668 — 20,443 — 14,457 — $5,105 15,299 49,196 6,423 21,834 487 14,750 5,000 $95,596 $118,094 1,066 (1,103) $715,043 3,555 (1,785) $118,057 $716,813 As at December 31, 2021, and December 31, 2020, Allied’s obligations under the construction loans are as follows:   JOINT ARRANGEMENT OWNERSHIP DATE OF MATURITY DECEMBER 31, 2021 DECEMBER 31, 2020 Adelaide & Duncan Breithaupt Phase III KING Toronto 50% 50% 50% August 11, 2023 $62,048 December 2, 2022 December 17, 2024 31,041 39,607 $132,696 $44,051 7,406 5,647 $57,104 On January 31, 2019, the Adelaide & Duncan joint arrangement obtained a $270,000 construction lending facility from a syndicate of Canadian banks, in which Allied’s 50% share is $135,000 . The loan matures on August 11, 2023, and bears interest at bank prime plus 35 basis points or bankers’ acceptance rate plus 135 basis points . Allied is providing a joint and several guarantee, limited to $135,000, to support the construction facility and is earning a related guarantee fee . On August 23, 2019, the Adelaide & Duncan joint arrangement entered into a swap agreement to fix 75% of the construction costs up to $209,572 at 2 .86% .  137 ALLIED 2021 ANNUAL REPORTOn February 21, 2020, Allied and Perimeter obtained a $138,000 construction loan for the Breithaupt Phase III joint arrangement from a syndicate of Canadian banks, in which Allied’s 50% share is $69,000 . The loan matures on December 2, 2022, and bears interest at bank prime or bankers’ acceptance rate plus 120 basis points . Allied is providing a joint and several guarantee, limited to $69,000, to support the facility and is earning a related guarantee fee . On December 17, 2020, Allied and Westbank obtained a $465,000 green construction loan for the KING Toronto joint arrangement from a syndicate of Canadian banks, in which Allied’s 50% share is $232,500 . The loan matures on December 17, 2024, and bears interest at bank prime plus 45 basis points or bankers’ acceptance rate plus 145 basis points . Allied is providing a joint and several guarantee, limited to $232,500, to support the facility and is earning a related guarantee fee . (c) Unsecured revolving operating facilities As at December 31, 2021, and December 31, 2020, Allied’s obligations under the unsecured revolving operating facilities (the “Unsecured Facilities”) are as follows:   DECEMBER 31, 2021 MATURITY DATE INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE Unsecured facility limit $600,000 (1) January 30, 2025 Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) 0.24% $600,000 $(365,000) $(19,025) $215,975 (1) This unsecured facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $700,000. (2) The interest rates on drawings for this facility are subject to certain conditions being met. In the event that these conditions are not met, this unsecured facility will bear interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points. MATURITY DATE INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE DECEMBER 31, 2020 Unsecured facility limit $400,000 (1) Unsecured facility limit $100,000 January 30, 2023 Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) April 20, 2021 Prime + 0 .45% or Bankers’ acceptance + 1 .45% 0 .24% $400,000 $(60,000) $(22,420) $317,580 0 .29% 100,000 — — 100,000 $500,000 $(60,000) $(22,420) $417,580 (1) This unsecured facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $500,000. (2) The interest rates on drawings for this facility are subject to certain conditions being met. In the event that these conditions are not met, this unsecured facility will bear interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points. 138 ALLIED 2021 ANNUAL REPORTOn April 21, 2020, Allied entered into a $100,000 bilateral unsecured line of credit which matured on April 20, 2021, bearing interest at bank prime plus 45 basis points or bankers’ acceptance plus 145 basis points with a standby fee of 29 basis points .  On January 29, 2021, Allied amended the unsecured facilities to merge the two existing facilities into one facility with a limit of $500,000 plus a $100,000 accordion feature and to extend the maturity to January 30, 2024 . On December 31, 2021, Allied amended the unsecured facility to increase the facility limit to $600,000 plus a $100,000 accordion feature and to extend the maturity to January 30, 2025 . (d) Senior unsecured debentures As at December 31, 2021, and December 31, 2020, Allied’s obligations under the senior unsecured debentures are as follows:   INTEREST RATE DATE OF MATURITY INTEREST PAYMENT DATE DECEMBER 31, 2021 DECEMBER 31, 2020 3 .934% November 14, 2022 May 14 and November 14 $— $150,000 SERIES Series B Series C 3 .636% April 21, 2025 April 21 and October 21 Series D 3 .394% August 15, 2029 February 15 and August 15 Series E Series F 3 .113% April 8, 2027 April 8 and October 8 3 .117% February 21, 2030 February 21 and August 21 Series G 3 .131% May 15, 2028 May 15 and November 15 Series H Series I 1 .726% February 12, 2026 February 12 and August 12 3 .095% February 6, 2032 February 6 and August 6 Unsecured Debentures, principal Net financing costs 200,000 300,000 300,000 400,000 300,000 600,000 500,000 200,000 300,000 300,000 400,000 300,000 — — $2,600,000 $1,650,000 (12,011) (7,881) $2,587,989 $1,642,119 The Series B, C, D, E, F, G, H and I Senior Unsecured Debentures are collectively referred to as the “Unsecured Debentures” .  On February 21, 2020, Allied issued $400,000 of 3 .117% Series F Senior Unsecured Debentures (the “Series F Debentures”) due February 21, 2030, with semi-annual interest payments due on February 21 and August 21 each year commencing on August 21, 2020 . Debt financing costs of $2,350 were incurred and recorded against the principal owing .   Proceeds from the Series F Debentures were used to prepay $200,000 aggregate principal amount of the Unsecured Term Facility defined in note 11(e) maturing March 16, 2021, repay amounts drawn on the unsecured facility in the amount of $110,000, to fund Allied’s development and value-add initiatives and for general working capital purposes .  139 ALLIED 2021 ANNUAL REPORTOn May 15, 2020, Allied issued $300,000 of 3 .131% Series G Senior Unsecured Debentures (the “Series G Debentures”) due May 15, 2028, with semi-annual interest payments due on May 15 and November 15 each year commencing on November 15, 2020 . Debt financing costs of $1,950 were incurred and recorded against the principal owing . Proceeds from the Series G Debentures were used to repay amounts drawn on the unsecured facility in the amount of $240,000 and for general working capital purposes . On February 12, 2021, Allied issued $600,000 of 1 .726% Series H Unsecured Debentures (the “Series H Debentures”) due February 12, 2026, with semi-annual interest payments due on February 12 and August 12 each year commencing on August 12, 2021 . Debt financing costs of $3,100 were incurred and recorded against the principal owing . Proceeds from the Series H Debentures were used to redeem in full the $150,000 aggregate principal amount of 3 .934% Series B Debentures due November 14, 2022, with a financing prepayment cost of $8,003, prepay $139,213 on a first mortgage with a financing prepayment cost of $6,158, repay $75,000 drawn on Allied’s unsecured facility and for general working capital purposes . On August 6, 2021, Allied issued $500,000 of 3 .095% Series I Unsecured Debentures (the “Series I Debentures”) due February 6, 2032, with semi-annual interest payments due on February 6 and August 6 each year commencing on February 6, 2022 . Debt financing costs of $3,000 were incurred and recorded against the principal owing . Proceeds from the Series I Debentures were used to prepay $493,840 aggregate principal amount of first mortgages and for general working capital purposes . The mortgages had a financing prepayment cost of $38,449 . The respective financing costs recognized are amortized using the effective interest method and recorded to interest expense (note 11 (f )) .   (e) Unsecured term loan As at December 31, 2021, and December 31, 2020, Allied’s obligation under the unsecured term loan is as follows:  INTEREST RATE DATE OF MATURITY FREQUENCY OF INTEREST PAYMENT DECEMBER 31, 2021 DECEMBER 31, 2020 Unsecured term loan 3 .496% January 14, 2031 Monthly $250,000 $250,000 Net financing costs (458) (574) $249,542 $249,426 On February 10, 2020, Allied repaid $100,000 of the principal amount of Tranche 1 of an unsecured term facility (the “Unsecured Term Facility”) due March 16, 2021 . On March 4, 2020, Allied repaid $100,000 of the principal amount of Tranche 2, representing the remaining balance of the Unsecured Term Facility due March 16, 2021 .  On August 11, 2020, Allied amended the unsecured term loan at a fixed interest rate of 3 .496% (previously 3 .992%), and extended the maturity date to January 14, 2031 (previously January 14, 2026) . 140 ALLIED 2021 ANNUAL REPORTThe respective financing costs are amortized using the effective interest method and recorded to interest expense (note 11 (f )) . (f ) Interest expense Interest expense consists of the following: YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 Interest on debt: Mortgages payable Construction loans payable Unsecured Facilities Unsecured Debentures Unsecured term loan Interest on lease liabilities Amortization, premium on debt Amortization, net financing costs Less: Interest capitalized to qualifying investment properties and residential inventory Interest expense excluding financing prepayment costs Financing prepayment costs (1) Interest expense $16,722 2,983 2,836 64,940 8,739 9,184 (531) 2,394 $107,267 (39,732) $67,535 52,610 $120,145 $31,141 1,351 2,152 49,455 10,353 8,926 (1,846) 2,081 $103,613 (31,010) $72,603 — $72,603 (1) For the year ended December 31, 2021, financing prepayment costs include $54,357 of prepayment penalties, $1,210 of accelerated amortization of net financing costs, partially offset by $2,957 accelerated amortization of premium on debt. Borrowing costs have been capitalized to qualifying investment properties and residential inventory at a weighted average rate of 2 .80% per annum (December 31, 2020 – 3 .57%) . (g) Schedule of principal repayments The table below summarizes the scheduled principal maturity for Allied’s mortgages payable, construction loans payable, Unsecured Facilities, Unsecured Debentures and unsecured term loan . Mortgages payable, principal repayments Mortgages payable, balance due at maturity 2022 2023 2024 2025 2026 THEREAFTER TOTAL $3,307 $3,069 $2,528 $6,423 $1,391 $5,780 $22,498 1,798 12,230 46,668 Construction loans payable 31,041 62,048 39,607 Unsecured facility Unsecured Debentures Unsecured term loan — — — — — — — — — — — 365,000 20,443 14,457 95,596 — — — — 132,696 365,000 200,000 600,000 1,800,000 2,600,000 — — 250,000 250,000 Total $36,146 $77,347 $88,803 $571,423 $621,834 $2,070,237 $3,465,790 141 ALLIED 2021 ANNUAL REPORTA description of Allied’s risk management objectives and policies for financial instruments is provided in note 25 . 12 . LEASE LIABILITIES Allied’s future minimum lease liability payments as a lessee are as follows: 2022 (1) 2023-2026 (1) THEREAFTER DECEMBER 31, 2021 DECEMBER 31, 2020 Future minimum lease payments $9,749 $41,790 $432,213 $483,752 $493,501 Interest accrued (paid) on lease obligations Less: amounts representing interest payments 516 (707) — (191) 560 (10,265) (41,083) (274,663) (326,011) (336,993) Present value of lease payments $— $— $157,550 $157,550 $157,068 (1) The future minimum lease payments prior to 2025 are less than the effective interest on the lease liabilities. Some of Allied’s lease agreements contain contingent rent clauses . Contingent rental payments are recognized in the consolidated statements of income and comprehensive income as required when contingent criteria are met . The lease agreements contain renewal options, purchase options, escalation clauses, additional debt and further leasing clauses . For the year ended December 31, 2021, minimum lease payments of $9,699 (December 31, 2020 - $8,712) were paid by Allied . 13 . ACCOUNTS PAYABLE AND OTHER LIABILITIES Accounts payable and other liabilities consists of the following: Trade payables and other liabilities $180,363 $169,434 DECEMBER 31, 2021 DECEMBER 31, 2020 Prepaid user rents Accrued interest payable Distributions payable to Unitholders Residential deposits (1) Interest rate swap derivative liabilities Current Non-current (2) 81,488 23,498 18,101 39,693 4,942 $348,085 $303,450 44,635 $348,085 75,090 16,139 17,498 36,506 26,539 $341,206 $278,161 63,045 $341,206 (1) Residential deposits relate to the sale of residential condominium units at KING Toronto. (2) Non-current liabilities as at December 31, 2021, are composed of residential deposits totaling $39,693 and interest rate swap derivative liabilities totaling $4,942 (December 31, 2020 - $36,506 and $26,539, respectively). 142 ALLIED 2021 ANNUAL REPORT14 . FAIR VALUE MEASUREMENTS The classification, measurement basis and related fair value disclosures of the financial assets and liabilities are summarized in the following table: DECEMBER 31, 2021 DECEMBER 31, 2020 CLASSIFICATION/ MEASUREMENT CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE Financial Assets: Loans and notes receivable (notes 2(s), 8) Amortized cost 367,762 367,762 322,636 322,881 Loan receivable from joint venture (notes 2(s), 7) Amortized cost 113,287 113,287 113,287 113,287 Cash and cash equivalents (note 20) Amortized cost 22,548 22,548 Accounts receivable (note 10) Amortized cost 31,875 31,875 Interest rate swap derivative assets FVTPL — — 45,512 35,554 1,466 45,512 35,554 1,466 Financial Liabilities: Debt (note 11) Mortgages Amortized cost 118,057 121,169 716,813 755,780 Construction loans payable Amortized cost 132,696 132,696 57,104 57,104 Unsecured Facilities Amortized cost 365,000 365,000 60,000 60,000 Unsecured Debentures Amortized cost 2,587,989 2,608,549 1,642,119 1,754,526 Unsecured term loan Amortized cost 249,542 255,366 249,426 277,963 Interest rate swap liabilities (note 13) FVTPL 4,942 4,942 26,539 26,539 Accounts payable and other liabilities (note 13) Amortized cost 343,143 343,143 314,667 314,667 Allied uses various methods in estimating the fair value of assets and liabilities that are measured on a recurring or non-recurring basis in the consolidated balance sheet after initial recognition . The fair value hierarchy reflects the significance of inputs used in determining the fair values . — Level 1 – quoted prices in active markets for identical assets and liabilities; — Level 2 – inputs other than quoted prices in active markets or valuation techniques where significant inputs are based on observable market data; and — Level 3 – valuation technique for which significant inputs are not based on observable market data . 143 ALLIED 2021 ANNUAL REPORTThe following table presents the hierarchy of the significance of inputs in determining the fair value of assets and liabilities for measurement or disclosure based on Allied’s accounting policy for such instrument: DECEMBER 31, 2021 DECEMBER 31, 2020 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 Financial Assets: Loans and notes receivable (notes 2(s), 8) Loan receivable from joint venture (notes 2(s), 7) — — Cash and cash equivalents (note 20) 22,548 Accounts receivable (note 10) Interest rate swap derivative assets Financial Liabilities: Debt (note 11) Mortgages Construction loans payable Unsecured Facilities Unsecured Debentures Unsecured term loan Interest rate swap liabilities Accounts payable and other liabilities (note 13) — — — — — — — — — 367,762 113,287 — 31,875 — 121,169 132,696 365,000 2,608,549 255,366 4,942 343,143 — — — — — — — — — — — — — — 45,512 — — — — — — — — — 322,881 113,287 — 35,554 1,466 755,780 57,104 60,000 1,754,526 277,963 26,539 314,667 — — — — — — — — — — — — There were no transfers between levels of the fair value hierarchy in either period . The following summarizes the significant methods and assumptions used in estimating the fair value of Allied’s financial assets and liabilities measured at fair value: Interest Rate Swap Derivative Contracts The fair value of Allied’s interest rate derivative contracts, which represent a net liability as at December 31, 2021, is $4,942 (December 31, 2020 - $25,073) . The fair value of the derivative contracts is determined using forward interest rates observable in the market (Level 2) . Interest rate swap derivative asset (note 9) Interest rate swap derivative liabilities (note 13) DECEMBER 31, 2021 DECEMBER 31, 2020 $— (4,942) $(4,942) $1,466 (26,539) $(25,073) Debt and loans and notes receivable The fair value of debt and loans and notes receivable are determined by discounting the cash flows of these financial instruments using period end market rates for instruments of similar terms and credit risks that are observable in the market (Level 2) . Total 144 ALLIED 2021 ANNUAL REPORT15 . UNITHOLDERS’ EQUITY The following represents the number of Units issued and outstanding, and the related carrying value of Unitholders’ equity, for the years ended December 31, 2021 and December 31, 2020 . DECEMBER 31, 2021 DECEMBER 31, 2020 UNITS AMOUNT UNITS AMOUNT Units, beginning of year 127,259,218 $3,884,661 122,838,799 $3,725,472 Restricted Unit Plan (net of forfeitures) (note 16(b)) Unit Option Plan - options exercised (note 16(a)) — 1,533 (2,141) 56 — 277,311 Unit issuance (net of costs) 477,100 20,079 4,143,108 (2,695) 9,805 152,079 Units, end of year 127,737,851 $3,902,655 127,259,218 $3,884,661 During the three months and year ended December 31, 2021, Allied issued 477,100 Units under the at- the-market program (“ATM Program”) at a weighted average price of $44 .07 per Unit for gross proceeds of $21,028, and incurred commissions of $315, for net proceeds of $20,713 . Issuance costs on the ATM Program were $634 for the year ended December 31, 2021 . The commissions and issuance costs were applied against the gross proceeds and charged against Unitholders’ equity . The ATM Program is described in note 25(a) . On September 4, 2020, Allied raised gross proceeds of $153,295 through a private placement issuance of 4,143,108 Units at a price of $37 .00 per Unit . Costs relating to the issuance totaled $1,216 and were applied against the gross proceeds of the issuance and charged against Unitholders’ equity . Allied does not hold any of its own Units, nor does Allied reserve any Units for issue under options and contracts . Distributions On January 17, 2022, Allied declared a distribution for the month of January 2022 of $0 .1458 per Unit, representing $1 .75 per Unit on an annualized basis to Unitholders of record as at January 31, 2022 . Normal Course Issuer Bid On February 22, 2021, Allied received approval from the Toronto Stock Exchange (“TSX”) for the renewal of its normal course issuer bid (“NCIB”), which entitles Allied to purchase up to 12,531,845 of its outstanding Units, representing approximately 10% of its public float as at February 11, 2021 . The NCIB commenced February 24, 2021, and will expire on February 23, 2022, or such earlier date as Allied completes its purchases pursuant to the NCIB . All purchases under the NCIB will be made on the open market through the facilities of the TSX or alternate trading systems in Canada at market prices prevailing at the time of purchase . Any Units that are repurchased will either be cancelled or delivered to participants under Allied’s Restricted Unit Plan or to employees pursuant to Allied’s employee programs .   145 ALLIED 2021 ANNUAL REPORTDuring the year ended December 31, 2021, Allied purchased 58,923 Units for $2,169 at a weighted average price of $36 .80 per Unit under its NCIB program, of which 58,260 Units were purchased for delivery to participants under Allied’s Restricted Unit Plan and 663 Units were purchased for certain employee rewards outside of Allied’s Restricted Unit Plan . 16 . COMPENSATION PLANS (a) Unit Option Plan Allied adopted a Unit Option Plan providing for the issuance, from time to time, at the discretion of the trustees, of options to purchase Units for cash . Participation in the Unit Option Plan is restricted to certain employees of Allied . The Unit Option Plan complies with the requirements of the TSX . The exercise price of any option granted will not be less than the closing market price of the Units on the day preceding the date of grant . Options granted prior to February 22, 2017, vest evenly over three years and options granted subsequently vest evenly over four years from the date of grant . All options are settled in Units . Effective December 2021, no further options will be granted under the Unit Option Plan . SUMMARY OF UNIT OPTION GRANTS: Date granted Expiry date Unit options granted Exercise price Exercised - life to date Forfeited - life to date Net outstanding Vested March 1, 2016 March 1, 2026 540,480 $31 .56 (344,499) (19,132) 176,849 176,849 February 22, 2017 February 22, 2027 279,654 $35 .34 (23,576) February 14, 2018 February 14, 2028 198,807 $40 .30 (14,685) — — 256,078 256,078 184,122 134,999 February 13, 2019 February 13, 2029 323,497 $47 .53 (2,717) (3,219) February 5, 2020 February 5, 2030 352,230 $54 .59 — (1,159) 317,561 351,071 February 3, 2021 February 3, 2031 442,233 $36 .55 (1,533) — 440,700 167,007 99,849 7,890 2,136,901 (387,010) (23,510) 1,726,381 842,672 YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 The range of exercise prices Weighted average remaining contractual life (years) The range of exercise prices Weighted average remaining contractual life (years) For the Units outstanding at the end of the period $31.56-54.59 7.13 $31 .56-54 .59 7 .45 146 ALLIED 2021 ANNUAL REPORTDECEMBER 31, 2021 DECEMBER 31, 2020 YEAR ENDED Number of Units Weighted average exercise price Balance, beginning of year 1,288,229 Granted Forfeited during the year Exercised Balance, end of year Units exercisable at the end of the year 442,233 (2,548) (1,533) 1,726,381 $43.81 36.55 50.92 36.55 $41.95 842,672 $40.05 548,396 Number of Units 1,213,310 352,230 — (277,311) 1,288,229 Weighted average exercise price $38 .75 54 .59 — 35 .35 $43 .81 $37 .25 Allied accounts for its Unit Option Plan using the fair value method, under which compensation expense is measured at the date options are granted and recognized over the vesting period . Allied utilizes the Black-Scholes Model for the valuation of Unit options with no performance criteria . Assumptions utilized in the Black-Scholes Model for option valuation are as follows: Unit options granted Unit option holding period (years) Volatility rate Distribution yield Risk-free interest rate Value of options granted YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 442,233 10 21.38% 4.65% 0.84% $1,441 352,230 10 17 .04% 3 .00% 1 .36% $2,187 The underlying expected volatility was determined by reference to historical data of Allied’s Units over 10 years . For the year ended December 31, 2021, Allied recorded a share-based payment expense of $1,740 (December 31, 2020 - $1,988) in general and administrative expense in the consolidated statements of income and comprehensive income . 147 ALLIED 2021 ANNUAL REPORT(b) Restricted Unit Plan Certain employees and the Trustees of Allied may be granted Restricted Units pursuant to the terms of the Restricted Unit Plan, which are subject to vesting conditions and disposition restrictions, in order to provide a long-term compensation incentive . The Restricted Units will not vest and remain subject to forfeiture until the participant has held his or her position with Allied for a specific period of time . Generally, one third of the Restricted Units vest on each of the first, second and third anniversaries from the date of grant for employees . Restricted Units granted to non-management trustees are fully vested on the grant date . Units required under the Restricted Unit Plan are acquired in the secondary market through a custodian and then distributed to the individual participant accounts . The following is a summary of the activity of Allied’s Restricted Unit Plan: Restricted Units, beginning of year Granted Expired Forfeited Restricted Units, end of year YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 288,135 58,260 (49,585) — 296,810 287,023 48,148 (45,640) (1,396) 288,135 For the year ended December 31, 2021, Allied recorded a share-based payment expense of $2,376 (December 31, 2020 - $2,804) in general and administrative expense in the consolidated statements of income and comprehensive income . (c) Restricted Trust Unit and Performance Trust Unit Plans In December 2021, Allied adopted a cash settled restricted and performance trust unit plan (the “RTU/ PTU Plan”) whereby performance trust units and/or restricted trust units (together, “Plan Units”) are granted to certain employees at the discretion of the Board . Plan Units are subject to such vesting, settlement, performance criteria and adjustment factors as are established by the Board at the time of the grant and accumulate distribution equivalents in the form of additional Plan Units . The RTU/PTU Plan contains provisions providing for the vesting or forfeiture of unvested Plan Units within specified time periods in the event the employee’s employment is terminated, and authorizes the Chief Executive Officer, in their discretion, to amend the vesting and settlement of Plan Units in certain circumstances where an employee’s employment is terminated . At December 31, 2021, there were no Plan Units granted or outstanding . 148 ALLIED 2021 ANNUAL REPORT17 . WEIGHTED AVERAGE NUMBER OF UNITS The weighted average number of Units for the purpose of calculating basic and diluted income per unit is as follows: Basic Unit Option Plan Fully diluted 18 . TOTAL REVENUE Total revenue includes the following: Rental revenue (1) Tax and insurance recoveries Miscellaneous revenue (2) Operating cost recoveries Total rental revenue Condominium revenue Total revenue YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 127,305,384 150,445 127,455,829 124,427,715 108,919 124,536,634 YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $267,577 99,058 26,221 176,030 $568,886 — $568,886 $263,184 98,649 23,801 174,693 $560,327 178 $560,505 Includes straight-line rent, amortization of tenant improvements and parking revenue earned at properties. (1) (2) Includes lease terminations, third-party managed parking, variable percentage rent and other miscellaneous items. Future minimum rental income is as follows: Future minimum rental income $302,492 $285,037 $263,846 $236,482 $207,146 $1,012,818 $2,307,821 2022 2023 2024 2025 2026 THEREAFTER TOTAL 149 ALLIED 2021 ANNUAL REPORT19 . GENERAL AND ADMINISTRATIVE EXPENSES YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 Salaries and benefits Professional and trustee fees Office and general expenses Capitalized to qualifying investment properties Total general and administrative expenses $21,683 4,481 5,816 $31,980 (6,146) $25,834 20 . SUPPLEMENTAL CASH FLOW INFORMATION Cash and cash equivalents include the following components: $18,080 4,319 4,628 $27,027 (4,812) $22,215 Cash Short-term deposits Total cash and cash equivalents DECEMBER 31, 2021 DECEMBER 31, 2020 $22,548 — $22,548 $45,012 500 $45,512 The following summarizes supplemental cash flow information in operating activities: YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 Supplemental Interest paid on debt (including capitalized interest and financing prepayment costs (note 11)) $152,840 $97,521 The following summarizes supplemental cash flow information in investing activities: Supplemental Mortgages assumed (note 4) YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $51,750 $10,000 150 ALLIED 2021 ANNUAL REPORTThe following summarizes the change in non-cash operating items: YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 Net change in accounts receivable, prepaid expenses and deposits Add back: Prepaid expenses and deposits Add back: Deposits on acquisitions Net change in loans and notes receivable Less: Proceeds from notes receivable Less: Proceeds from loans receivable Add back: Loan receivable issued to third-party Add back: Non-cash interest income Net change in accounts payable and other liabilities Less: Non-cash interest expense Less: Distributions payable to Unitholders Add back (less): Interest rate swap liabilities Less: Accrued amounts from acquired properties (net of assumed mortgage premiums) Change in non-cash operating items 21 . JOINT OPERATIONS $7,391 — 268 (45,126) (1,927) (382) 47,435 9,335 6,879 (7,037) (603) 21,597 (2,984) $34,846 $65,492 13,202 3,550 (84,322) (253) — 77,927 6,259 59,614 (6,092) (1,160) (15,819) (9,189) $109,209 Allied has investments in properties under joint arrangements which are accounted for as joint operations . The following tables summarize Allied’s ownership interests in joint operations and its share of the rights to the assets, its share of the obligations with respect to liabilities, and its share of revenues and expenses for the joint operations in which it participates . Allied’s joint arrangements are governed by agreements with the respective co-owners . Included within the agreements are standard exit and transfer provisions that include, but are not limited to, buy/sell and/or right of first offers or refusals that provide for unwinding the arrangement . Allied is liable for its proportionate share of the obligations of the arrangement . In the event that there is default on payment by the co-owner, credit risk is typically mitigated with an option to remedy any non-performance by the defaulting co-owner, as well as recourse against the asset, whereby claims would be against both the underlying real estate investments and the co-owner in default . 151 ALLIED 2021 ANNUAL REPORTPROPERTIES LOCATION CURRENT STATUS 478 King W (1) 642 King W 731-10th SW (3) 802-838 11th SW, Glenbow Assembly (3) Toronto, ON Toronto, ON Calgary, AB Calgary, AB Rental Property Rental Property Rental Property Rental Property Adelaide & Duncan Toronto, ON Property Under Development Breithaupt Block Kitchener, ON College & Manning Toronto, ON Rental Property and Property Under Development Rental Property and Property Under Development College & Palmerston Toronto, ON Rental Property KING Toronto Toronto, ON Property Under Development King Portland Centre Toronto, ON Sherwin Block (3) Calgary, AB Rental Property Rental Property The Well (2) Toronto, ON Property Under Development OWNERSHIP DECEMBER 31, 2021 DECEMBER 31, 2020 100% 50% 100% 100% 50% 50% 50% 50% 50% 50% 100% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% (1) Allied acquired the remaining 50% interest in 478 King W on April 22, 2021. (2) Allied owns an undivided 40% interest in the residential component and an undivided 50% interest in the commercial component of The Well. The residential component is comprised of parking and transfer floor slab developments along with air rights, which were sold by the co-ownership in 2016, with the first, second, third and fourth phases closed on December 23, 2020, April 7, 2021, June 11, 2021, and December 20, 2021, respectively, and the last phase is expected to close by the end of the first quarter of 2022 when certain specified conditions are met. The commercial component is comprised of the office and retail components of the property under development. (3) Allied acquired the remaining 50% interest in 731-10th SW, 802-838 11th SW, and Sherwin Block on October 19, 2021. Total assets Total liabilities Revenue Expenses Income before fair value adjustment on investment properties Fair value gain on investment properties Net income DECEMBER 31, 2021 DECEMBER 31, 2020 $1,502,233 $444,135 $1,258,241 $340,930 YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $16,072 (8,199) 7,873 82,050 $89,923 $18,267 (10,088) 8,179 18,066 $26,245 152 ALLIED 2021 ANNUAL REPORT22 . SEGMENTED INFORMATION IFRS 8, Operating Segments, requires reportable segments to be determined based on internal reports that are regularly reviewed by the chief operating decision maker (“CODM”) for the purpose of allocating resources to the segment and assessing its performance . Allied has determined that its CODM is the President and Chief Executive Officer . Allied’s operating segments are managed by use of properties and geographical locations . Urban Data Centres are comprised of properties operating similar to data centres and colocation facilities . The urban office properties are managed by geographic location consisting of three areas . The CODM measures and evaluates the performance of Allied’s operating segments based on net rental income and condominium profits . Condominium profits during the year ended December 31, 2021, were $nil (December 31, 2020 - $178) . Management reviews assets and liabilities on a total basis and therefore assets and liabilities are not included in the segmented information below . All revenue is generated in Canada and net assets are located in Canada . Allied does not allocate interest expense to segments as debt is viewed by Management to be used for the purpose of acquisitions, development and improvement of all the properties . Similarly, general and administrative expenses, interest income, fair value of investment properties and investment properties held for sale and fair value of derivative instruments are not allocated to operating segments . The following summary tables present a reconciliation of operating income to net income for the years ended December 31, 2021 and 2020 . 153 ALLIED 2021 ANNUAL REPORTSEGMENTED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2021 MONTRÉAL & OTTAWA TORONTO & KITCHENER CALGARY, EDMONTON & VANCOUVER (1) URBAN DATA CENTRES CONDO- MINIUMS JOINT VENTURE (TELUS SKY) (2) TOTAL Rental revenue $201,222 $209,095 $67,389 $96,087 Property operating costs (99,074) (79,318) (29,674) (34,703) Net rental income $102,148 $129,777 $37,715 $61,384 Condominium revenue — — — — Operating income $102,148 $129,777 $37,715 $61,384 $— — $— — $— $(4,907) $568,886 3,274 (239,495) $(1,633) — $— — $(1,633) $329,391 Interest expense General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value gain on investment properties and investment properties held for sale Fair value gain on derivative instruments Net loss from joint venture Net income and comprehensive income (120,145) (25,834) (573) (1,167) 28,023 217,557 16,350 (451) $443,151 (1) (2) Includes Allied’s proportionate share of revenue and expenses of its investment in TELUS Sky. This is an adjustment to remove the impact of the TELUS Sky joint venture from the Calgary, Edmonton & Vancouver results, to arrive at the equity method of accounting. 154 ALLIED 2021 ANNUAL REPORTSEGMENTED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME YEAR ENDED DECEMBER 31, 2020 MONTRÉAL & OTTAWA TORONTO & KITCHENER CALGARY, EDMONTON & VANCOUVER (1) URBAN DATA CENTRES CONDO- MINIUMS JOINT VENTURE (TELUS SKY) (2) TOTAL Rental revenue $198,049 $210,798 $63,853 $90,091 Property operating costs (98,556) (82,369) (27,689) (34,095) Net rental income $99,493 $128,429 $36,164 $55,996 Condominium revenue — — — — $— — $— 178 $(2,464) $560,327 1,219 (241,490) $(1,245) — $— 178 Operating income $99,493 $128,429 $36,164 $55,996 $178 $(1,245) $319,015 Interest expense General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value gain on investment properties Fair value loss on derivative instruments Net loss from joint venture Net income and comprehensive income Includes Allied’s proportionate share of revenue and expenses of its investment in TELUS Sky. (1) (2) This is an adjustment to remove the impact of the TELUS Sky joint venture from the Calgary, Edmonton & Vancouver results, to arrive at the equity method of accounting. (72,603) (22,215) (1,230) (1,467) 19,819 280,590 (17,996) (3,184) $500,729 155 ALLIED 2021 ANNUAL REPORT23 . INCOME TAXES Allied qualifies as a REIT and MFT for income tax purposes . Pursuant to its Declaration of Trust, it also distributes or designates substantially all of its taxable income to Unitholders and deducts such distributions or designations for income tax purposes . Accordingly, there is no entity level tax and no provision for current and deferred income taxes in the financial statements . Income tax obligations relating to distributions of Allied are the obligations of the Unitholders . 24 . RELATED PARTY TRANSACTIONS Allied’s related parties include its subsidiaries, nominee corporations, Allied Properties Management Trust, Allied Properties Management Limited Partnership, Allied Properties Management GP Limited, the TELUS Sky joint venture, key management, Board of Trustees and their close family members . Allied engages in third-party property management business, including the provision of services for properties in which a trustee of Allied has an ownership interest . For the year ended December 31, 2021, real estate service revenue earned from these properties was $413 (December 31, 2020 - $368) . As at December 31, 2021, the loan to the TELUS Sky joint venture has a balance outstanding of $113,287 (December 31, 2020 - $113,287) (see note 7) . The transactions are in the normal course of operations and were measured at the amount set out in agreement between the respective property owners . Related party transactions were made on terms equivalent to those that prevail in arm’s length transactions . Transactions with key management personnel are summarized in the table below: Salary, bonus and other short-term employee benefits Unit-based compensation Total YEAR ENDED DECEMBER 31, 2021 DECEMBER 31, 2020 $4,906 3,177 $8,083 $3,816 3,849 $7,665 156 ALLIED 2021 ANNUAL REPORT25 . RISK MANAGEMENT (a) Capital management Allied defines capital as the aggregate of Unitholders’ equity, mortgages payable, construction loans payable, Unsecured Facilities, Unsecured Debentures, unsecured term loan and lease liabilities . Allied manages its capital to comply with investment and debt restrictions pursuant to the Declaration of Trust, to comply with debt covenants, to ensure sufficient operating funds are available to fund business strategies, to fund leasing and capital expenditures, to fund acquisitions and development activities of properties, and to provide stable and growing cash distributions to Unitholders . Various debt, equity and earnings distributions ratios are used to monitor capital adequacy requirements . For debt management, debt to gross book value and fair value, debt average term to maturity, and variable debt as a percentage of debt are the primary ratios used in capital management . The Declaration of Trust requires Allied to maintain debt to gross book value, as defined by the Declaration of Trust, of less than 60% (65% including convertible debentures, if any) and the variable rate debt and debt having maturities of less than one year to not exceed 15% of gross book value . As at December 31, 2021, the debt to gross book value ratio was 33 .5% (December 31, 2020 - 29 .2%) and debts having variable interest rates or maturities of less than one year aggregated to 4 .2% of gross book value (December 31, 2020 - 0 .9%) . On June 2, 2021, Allied filed a short form base shelf prospectus allowing for the issuance, from time to time, of Units and debt securities, or any combination thereof having an aggregate offering price of up to $3,000,000 . This document is valid for a 25-month period . The short form base shelf prospectus filed on June 2, 2021 was amended on November 11, 2021 (the “Shelf Prospectus”), and was filed in each of the provinces and territories of Canada . On November 12, 2021, Allied filed a prospectus supplement to its Shelf Prospectus, allowing Allied to offer and issue Units under the ATM Program up to $300,000 . Distributions of Units under the ATM Program, if any, will be made pursuant to the terms of an equity distribution agreement (the “Distribution Agreement”) dated November 12, 2021, entered into among Allied, Goldman Sachs Canada Inc ., National Bank Financial Inc . and Scotia Capital Inc . The volume and timing of any distributions of Units under the ATM Program will be determined in Allied’s sole discretion . The ATM Program will be effective until July 2, 2023, unless earlier terminated in accordance with the terms of the Distribution Agreement . As Units distributed under the ATM Program will be issued and sold at the prevailing market price at the time of the sale, prices may vary among purchasers during the period of the ATM Program . Allied has certain key financial covenants in its Unsecured Debentures, Unsecured Facilities and unsecured term loan . The key financial covenants include debt service ratios and leverage ratios, as defined in the respective agreements . These ratios are evaluated by Allied on an ongoing basis to ensure compliance with the agreements . Allied was in compliance with each of the key financial covenants under these agreements as at December 31, 2021 . 157 ALLIED 2021 ANNUAL REPORT(b) Market risk Market risk is the risk that the fair value or future cash flow of financial instruments will fluctuate because of changes in market prices . Allied is exposed to interest rate risk on its borrowings . All of Allied’s mortgages payable as at December 31, 2021 are at fixed interest rates and are not exposed to changes in interest rates during the term of the debt . However, there is interest rate risk associated with Allied’s fixed interest rate term debt due to the expected requirement to refinance such debts upon maturity . As fixed rate debt matures and as Allied utilizes additional floating rate debt under the Unsecured Facilities, Allied will be further exposed to changes in interest rates . As at December 31, 2021, the Unsecured Facilities, which are at floating interest rates and are exposed to changes in interest rates, had a balance outstanding of $365,000 (December 31, 2020 - $60,000) . Also, Allied has construction loans payable, of which $70,648 are subject to floating interest rates and are exposed to changes in interest rates (December 31, 2020 - $13,053) . In addition, there is a risk that interest rates will fluctuate from the date Allied commits to a debt to the date the interest rate is set with the lender . As part of its risk management program, Allied endeavours to maintain an appropriate mix of fixed rate and floating rate debt, to stagger the maturities of its debt and to minimize the time between committing to a debt and the date the interest rate is set with the lender . The following table illustrates the annualized sensitivity of income and equity to a reasonably possible change in interest rates of +/- 1 .0% . These changes are considered to be reasonably possible based on observation of current market conditions . The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates . All other variables are held constant . AS AT DECEMBER 31, 2021 CARRYING AMOUNT INCOME IMPACT INCOME IMPACT -1.0% +1.0% Unsecured facility Construction loans payable Mortgages payable due within one year $365,000 $70,648 $5,105 $3,650 $706 $51 $(3,650) $(706) $(51) 158 ALLIED 2021 ANNUAL REPORT(c) Credit risk As Allied has provided loans and advances to facilitate property development, further credit risks arise in the event that borrowers default on the repayment of their amounts owing to Allied . Allied’s loans and advances will be subordinate to prior ranking mortgages or charges . As at December 31, 2021, Allied had $367,579 outstanding in loans receivable (December 31, 2020 - $320,526) and $113,287 outstanding in joint venture loan receivable (December 31, 2020 - $113,287) . In the event of a large commercial real estate market correction, the fair market value of an underlying property may be unable to support the loan value . Allied mitigates this risk by obtaining corporate guarantees and/or registered mortgage charges and assignment of leases, performing credit checks on potential borrowers, monitoring the financial and operating performance of borrowers, monitoring the status of development projects and ensuring interest payments are made on time . The expected credit losses estimated by Management, giving consideration to the factors above, as at December 31, 2021, are $nil (December 31, 2020 - $nil) (note 8) . Credit risk from user receivables arises from the possibility that users may experience financial difficulty and be unable to fulfill their lease commitments, resulting in Allied incurring a financial loss . Allied manages credit risk to mitigate exposure to financial loss by staggering lease maturities, diversifying revenue sources over a large user base, ensuring no individual user contributes a significant portion of Allied’s revenues and conducting credit reviews of new users . The expected credit losses estimated by Management at December 31, 2021, are $9,177 (December 31, 2020 - $6,649) (note 10 (a)) . Allied considers that all the financial assets that are not impaired or past due for each of the reporting dates under review are of good quality . The carrying amount of accounts receivable best represents Allied’s maximum exposure to credit risk . None of Allied’s financial assets are secured by collateral or other credit enhancements . An aging of trade receivables, including trade receivables past due but not impaired can be shown as follows: Less than 30 days 30 to 60 days More than 60 days Total DECEMBER 31, 2021 DECEMBER 31, 2020 $4,204 2,190 10,265 $16,659 $3,632 2,591 10,631 $16,854 As at December 31, 2021, accounts receivable includes $1,533 which is expected to be collected pursuant to the CERS and other government subsidies . As at December 31, 2020, accounts receivable includes $2,000, which was collected pursuant to the CERS . 159 ALLIED 2021 ANNUAL REPORT(d) Liquidity risk Liquidity risk arises from the possibility of not having sufficient capital available to fund ongoing operations or the ability to refinance or meet obligations as they come due . Mitigation of liquidity risk is also managed through credit risk as discussed above . A portion of Allied’s assets have been pledged as security under the related mortgages and other security agreements . Interest rates on the mortgages payable are between 2 .77% and 4 .30% for December 31, 2021 (December 31, 2020 - 3 .59% and 4 .80%) . Allied entered into interest rate derivative contracts to limit its exposure to fluctuations in interest rates on $250,000 of its variable rate unsecured term loan and $62,048 of its construction loans (December 31, 2020 - $250,000 and $37,881, respectively) . As at December 31, 2021, Allied repaid all of its variable rate mortgages payable (December 31, 2020 - $81,682) and exited its associated interest rate derivative contracts on these mortgages payable with a cash settlement of $3,781 . Gains or losses arising from the change in fair values of the interest rate derivative contracts are recognized in the consolidated statements of income and comprehensive income . For the year ended December 31, 2021, Allied recognized as part of the change in fair value adjustment on derivative instruments a fair value gain of $16,350 (December 31, 2020 - a fair value loss of $17,996) . Liquidity and capital availability risks are mitigated by maintaining appropriate levels of liquidity, diversifying Allied’s sources of funding, maintaining a well-staggered debt maturity profile and actively monitoring market conditions . (e) Maturity analysis The undiscounted future principal and interest payments on Allied’s debt instruments are as follows: 2022 2023 2024 2025 2026 THEREAFTER TOTAL Mortgages payable $8,970 $18,589 $51,753 $7,842 $23,199 $21,179 $131,532 Construction loans payable 33,394 63,553 40,328 — Unsecured facility 9,673 9,673 9,673 365,806 — — — — 137,275 394,825 Unsecured Debentures 74,485 74,485 74,485 270,849 662,035 1,978,057 3,134,396 Unsecured term loan 8,740 8,740 8,740 8,740 8,740 285,295 328,995 Total $135,262 $175,040 $184,979 $653,237 $693,974 $2,284,531 $4,127,023 160 ALLIED 2021 ANNUAL REPORT26 . COMMITMENTS AND CONTINGENCIES Allied has entered into commitments for acquisitions, development activity and building renovations from leasing activity . The commitments as at December 31, 2021 were $473,779 (December 31, 2020 - $335,344) . Commitments as at December 31, 2021 of $354 (December 31, 2020 - $551) were held within equity accounted investments . Allied is subject to legal and other claims in the normal course of business . Management and legal counsel evaluate all claims . In the opinion of Management these claims are generally covered by Allied’s insurance policies and any liability from such remaining claims are not probable to occur and would not have a material effect on the consolidated financial statements . Allied, through a financial intermediary, has issued letters of credit in the amount of $28,256 as at December 31, 2021 (December 31, 2020 - $24,578) . 27 . SUBSEQUENT EVENTS Subsequent to December 31, 2021, Allied issued 211,800 Units under the ATM Program at a weighted average price of $44 .02 per Unit for gross proceeds of $9,324, and incurred commissions of $140, for net proceeds of $9,184 . On January 24, 2022, Allied and its partners closed on the fifth and final phase of The Well air rights, the associated underground parking and transfer floor slab developments for net cash consideration of $14,841 (at Allied’s share), which represented the fair value at the time of disposition so there is no gain or loss on disposition . 161 ALLIED 2021 ANNUAL REPORTALLIED PROPERTIES REIT 134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 alliedreit.com 

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