Allied Properties Real Estate Investment Trust
Annual Report 2022

Plain-text annual report

Annual Report December 31, 2022 Urban environments for creativity and connectivity 01. 31.23 Annual Report December 31, 2022 Contents LETTER TO UNITHOLDERS . . . . . . . . . . . . . . . 5 MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AS AT DECEMBER 31, 2022 . . . . . . . . . . . . . . . . . . . . 8 SECTION I—Overview . . . . . . . . . . . . . . . . . . . . 9 Q4 2022 Operating and Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 10 Summary of Key Operating and Financial Performance Measures . . . . . . . . . . . . . . 12 Summary of Rental Properties . . . . . . . . . . . . . . . . 14 Business Overview and Strategy . . . . . . . . . . . . . . 15 Environmental, Social and Governance (“ESG”) . . 18 Business Environment and Outlook . . . . . . . . . . . .20 Non-IFRS Measures . . . . . . . . . . . . . . . . . . . . . . . . . 21 Forward-Looking Statements . . . . . . . . . . . . . . . . . 25 SECTION II—Operations . . . . . . . . . . . . . . . . . 27 Net Income and Comprehensive Income . . . . . . . . 28 Net Operating Income . . . . . . . . . . . . . . . . . . . . . . . 32 Same Asset NOI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 General and Administrative Expenses . . . . . . . . . . 38 Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Other Financial Performance Measures . . . . . . . . .40 SECTION III—Leasing . . . . . . . . . . . . . . . . . . . 48 SECTION IX—Risks and Uncertainties . . . . . . . 93 Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Operating Risks and Risk Management . . . . . . . . .94 Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Financial Risks and Risk Management . . . . . . . . . .96 User Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Other Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 Lease Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION IV—Historical Performance . . . . . . . . 56 SECTION V—Asset Profile . . . . . . . . . . . . . . . . 59 Rental Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Development Properties . . . . . . . . . . . . . . . . . . . . . 70 SECTION X—Property Table . . . . . . . . . . . . . 104 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED  DECEMBER 31, 2022 AND 2021 . . . . . . . . . . 113 Management’s Statement of Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . . 114 Residential Inventory . . . . . . . . . . . . . . . . . . . . . . . . 72 Independent Auditor’s Report . . . . . . . . . . . . . . . 115 Development Completions . . . . . . . . . . . . . . . . . . . 73 Consolidated Balance Sheets . . . . . . . . . . . . . . . . 119 Consolidated Statements of Income and Comprehensive Income . . . . . . . . . . . . . . . . . 120 Consolidated Statements of Equity . . . . . . . . . . . 121 Consolidated Statements of Cash Flows . . . . . . . 122 Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . 124 Loans Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 SECTION VI—Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . 75 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Credit Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 83 Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 SECTION VII—Accounting Estimates and Assumptions . . . . . . . . . . . . . . . . . . . . . . . 91 SECTION VIII—Disclosure Controls and Internal Controls . . . . . . . . . . . . . . . . . . . 92 4 ALLIED 2022 ANNUAL REPORTLetter to Unitholders Dear Fellow Unitholder: Allied’s operating performance in 2022 was strong . Our AFFO per unit was up 4% from the prior year, underpinning our 11th consecutive annual distribution increase and providing a take-off point for our 2023 outlook of low-to-mid-single-digit growth in same asset NOI, FFO per unit and AFFO per unit . Our total return to unitholders, on the other hand, was negative, though equivalent to, or better than, other leading office issuers in North America . We weathered an extended storm in 2022, one that began as pronounced concern about the future of office space and morphed into deep fear of recession . The storm is not over, but it will pass, as all storms do . RESILIENCE Allied has proven from inception to be resilient, and we have every reason to be confident that this will continue . In the past three years, • we deepened, strengthened and integrated the numerous and diverse members of the Allied Team across the country, • we continued the renewal and diversification of our Board of Trustees, • we implemented a long-standing succession plan for senior leaders, • we made significant and measurable strides in improving our ESG practices and • we took decisive steps toward reaffirming our mission and maintaining our commitment to the balance sheet . These elements of resilience signal our strategic and tactical direction going forward and establish a solid foundation for our future . 5 ALLIED 2022 ANNUAL REPORTSALE OF UDC PORTFOLIO Our UDC portfolio is comprised of freehold interests in 151 Front Street West and 905 King Street West and a leasehold interest in 250 Front Street West . The portfolio is unencumbered and does not include 20 York Street, the site for Union Centre . We acquired 151 Front in 2009 and have driven significant earnings and value growth since then, both organically and through the addition of 905 King and 250 Front . Since 2013, we have achieved a 9 .6% compound annual growth rate in NOI from the portfolio and a 10% compound annual growth rate in the IFRS value of the portfolio . Having propelled the portfolio materially closer to the point of earnings and value optimization, we have recently concluded that selling it now is in Allied’s best interest, operationally and financially . Our principal motivation is two-fold . First, we want to reaffirm our mission and pursue it over the next few years with low- cost capital . Second, we want to supercharge our balance sheet and reduce our dependence on the capital markets going forward . Our UDC portfolio was connected to our mission from the beginning, but it is not core to our mission in the way urban workspace is . As a stabilized asset in a currently favoured sector, the portfolio represents a promising and timely monetization opportunity, one that could enable us to grow our business going forward in the most flexible and prudent manner . We plan to use a significant portion of the sale proceeds to retire debt and the balance to fund current development activity . We may elect to use a portion of the sale proceeds to buy back units under our NCIB . We do not expect to use any of the proceeds to fund acquisitions, nor do we expect to engage in material acquisition activity in 2023 . The comprehensive sale process started earlier this month . We will not be able to comment further on the process until it is complete, but we will advise you once the outcome is known . 6 ALLIED 2022 ANNUAL REPORT* * * Allied has been evolving rapidly and successfully for nearly 20 years . In 2023 and beyond, this will continue while reaffirming our vision and mission as an operator of distinctive urban workspace in Canada’s major cities . 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 7 ALLIED 2022 ANNUAL REPORTManagement’s Discussion and Analysis of Results of Operations and Financial Condition as at December 31, 2022 8 ALLIED 2022 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 3, 2022 . 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, 2022 . 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 January 31, 2023, and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2022 . 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 21 and 25, respectively . 9 ALLIED 2022 ANNUAL REPORTQ4 2022 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 2022 ANNUAL REPORTQ4 Operating Results LEASED AREA (1) 90.8% OCCUPIED AREA (1) 89.6% Q4 Financial Results SAME ASSET NOI - RENTAL PORTFOLIO AND ASSETS HELD FOR SALE (2) 0.2% from Q4 2021 AVERAGE IN-PLACE NET RENT PER OCCUPIED SQUARE FOOT (1) $23.10 2021: $21.98 2020: $21.35 5.1% from Q4 2021 RENT GROWTH ON RENEWING SPACE (1) Total rental portfolio WEIGHTED AVERAGE REMAINING LEASE TERM IN YEARS (1) 6.1% Excluding Calgary 8.6% Rental portfolio 5.5 FFO PER UNIT (2)(3) $0.618 3.0% AFFO PER UNIT (2)(3) $0.548 5.8% from Q4 2021 from Q4 2021 Year-to-Date Capital Allocation $971.5M $263.5M Allocated to acquisitions Allocated to development End of Q4 (4) Liquidity $166.7M Q4 Balance Sheet NET DEBT AS A MULTIPLE OF ANNUALIZED ADJUSTED EBITDA (2) TOTAL INDEBTEDNESS RATIO (2) INTEREST COVERAGE RATIO (2)(5) 9.8x 35.6% 2.8x UNENCUMBERED INVESTMENT PROPERTIES (2) $8.3B 85.2% of investment properties on a proportionate basis (2) ESG Results (6) 2022 GRESB SCORE FOR STANDING INVESTMENTS 86/100 Up from 80/100 in 2021 2021 ENERGY USE INTENSITY (EUI) 15.4% 2021 GREENHOUSE GAS INTENSITY (GHGI) 12.4% 2021 WATER USE INTENSITY (WUI) 2021 WASTE DIVERSION 43.3% 1% from our 2019 baseline from our 2019 baseline from our 2019 baseline in average waste diversion from our 2019 baseline (1) The operating results exclude the assets held for sale. (2) This is a non-IFRS measure, refer to page 21. These non-IFRS measures (except for unencumbered investment properties) include the results of the continuing operations and the discontinued operations. Unencumbered investment properties exclude the assets held for sale. (3) Excluding condominium related items, financing prepayment costs, and the mark-to-market adjustment on unit-based compensation on a diluted basis. (4) 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, 2022. Including interest capitalized and excluding financing prepayment costs. (5) (6) For more information, refer to Allied’s 2021 Environmental, Social and Governance Report published on June 27, 2022, available on www.alliedreit.com. 11 ALLIED 2022 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, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2020 THREE MONTHS ENDED YEAR ENDED YEAR ENDED Leased area (1) Occupied area (1) 90.8% 89.6% 90 .4% 89 .9% 90.8% 89.6% 90 .4% 89 .9% 92 .5% 92 .1% Average in-place net rent per occupied square foot (1) Average in-place net rent per occupied square foot - excluding UDC in all periods Leased rate for leases maturing in the period (1) Increase in net rent on renewing leases - total rental portfolio (1) Increase in net rent on renewing leases - excluding Calgary (1) 23.10 24 .64 23.10 24 .64 23 .88 23.10 21 .98 23.10 21 .98 21 .35 45.6% 30 .9% 57.9% 57 .0% 78 .3% 6.1% 8.6% 5 .0% 6 .0% 5.6% 7.8% 7 .9% 9 .8% 14 .5% 16 .6% Investment properties (1)(2)(5) 9,669,005 9,527,105 9,669,005 9,527,105 8,687,375 Unencumbered investment properties (1)(3) 8,345,530 9,064,010 8,345,530 9,064,010 6,463,680 Total assets (2)(5) 11,906,350 10,384,691 11,906,350 10,384,691 9,400,768 Cost of PUD as % of GBV (3) NAV per unit (7) Debt (2) Total indebtedness ratio (3) Annualized Adjusted EBITDA (3) Net debt as a multiple of Annualized Adjusted EBITDA (3) Interest-coverage ratio - including interest capitalized and excluding financing prepayment costs (3)(4) 12.6% 50.96 11 .2% 50 .30 12.6% 50.96 11 .2% 50 .30 9 .0% 48 .54 4,211,185 3,453,284 4,211,185 3,453,284 2,725,462 35.6% 426,520 33 .5% 363,372 35.6% 403,119 33 .5% 29 .2% 365,050 349,023 9.8x 9 .4x 10.4x 9 .4x 7 .7x 2.8x 3 .4x 3.0x 3 .4x 3 .4x Rental revenue (2)(5)(8) 135,924 Net income and comprehensive income (2) 41,392 122,534 159,921 519,468 375,363 472,799 443,151 470,236 500,729 Net income attributable to Unitholders (2) Net income attributable to Unitholders per unit (basic and diluted) (2) Net income from continuing operations (2)(8) Net income from continuing operations attributable to Unitholders (2)(8) 39,223 159,921 368,855 443,151 500,729 0.28 1 .25 2.69 3 .48 4 .02 20,178 113,518 174,669 331,381 404,570 18,009 113,518 168,161 331,381 404,570 12 ALLIED 2022 ANNUAL REPORT ($000’s except per-square foot, per-unit and financial ratios) DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2020 THREE MONTHS ENDED YEAR ENDED YEAR ENDED Net income from continuing operations attributable to Unitholders per unit (basic and diluted) (2)(8) Net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment (3)(4)(6)(8) Adjusted EBITDA (3) Same Asset NOI - rental portfolio (3)(8) Same Asset NOI - rental portfolio and assets held for sale (3) Same Asset NOI - total portfolio (3) FFO (3) FFO per unit (diluted) (3) FFO pay-out ratio (3) All amounts below are excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation (3)(4): FFO FFO per unit (diluted) FFO payout-ratio AFFO AFFO per unit (diluted) AFFO payout-ratio 0.13 0 .89 1.23 2 .60 3 .25 60,814 106,630 67,326 84,146 88,186 86,755 0.621 70.5% 86,325 0.618 70.8% 76,553 0.548 79.9% 50,672 90,843 68,499 83,979 86,669 75,691 0 .593 71 .6% 76,520 0 .600 70 .9% 66,076 0 .518 82 .1% 225,118 403,119 268,443 333,774 342,496 334,477 2.443 71.6% 206,419 365,050 270,441 332,450 341,964 253,376 1 .988 85 .5% 169,384 349,023 N/A N/A 313,554 284,732 2 .286 72 .1% 333,392 306,559 285,784 2.435 71.8% 297,579 2.174 80.4% 2 .405 70 .6% 2 .295 71 .9% 266,517 248,003 2 .091 81 .2% 1 .991 82 .8% (1) This metric excludes the assets held for sale based on the assets held for sale classification at the end of each period. (2) This measure is presented on an IFRS basis. (3) This is a non-IFRS measure, refer to page 21. These non-IFRS measures include the results of the continuing operations and the discontinued operations (except for unencumbered investment properties, net income from continuing operations excluding fair value adjustments, financing prepayments costs and impairment, and same asset NOI - rental portfolio, which only include continuing operations). (4) For the three months and year ended December 31, 2022, Allied incurred $(564) and $(564), respectively, (December 31, 2021 - $721 and $52,610, respectively, and for the year ended December 31, 2020 - $nil and $nil, respectively) of financing prepayment costs in connection with the favourable refinancing of unsecured debentures and first mortgages. (5) 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. (6) Prior to Q4 2021, the comparative figures for net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment were calculated on a proportionate share basis. The comparative figures for all prior periods have been revised to be calculated on an IFRS basis. (7) Net asset value per unit (“NAV per unit”) is calculated as follows: total equity as at the corresponding period ended, (per the consolidated balance sheets) divided by the actual number of Units and class B limited partnership units of Allied Properties Exchangeable Limited Partnership (“Exchangeable LP Units”) outstanding at period end. (8) For the three months and years ended December 31, 2022 and December 31, 2021, this metric includes only the results of the continuing operations. 13 ALLIED 2022 ANNUAL REPORT SUMMARY OF RENTAL PROPERTIES 199 Rental Properties valued at $8.2B (3) (Not including Assets Held for Sale valued at $1 .4B and Properties Under Development valued at $1 .5B) (3) TOTAL RENTAL PORTFOLIO GLA 14.3M SF VANCOUVER 1.0M SF ALLIED OCCUPANCY 93 .2% MARKET OCCUPANCY (1) 90 .2% PROPERTIES EMPLOYEES 14 19 KITCHENER TORONTO 562K SF 5.0M SF MONTRÉAL 6.3M SF ALLIED OCCUPANCY 89 .2% MARKET OCCUPANCY (1) 84 .0% ALLIED OCCUPANCY 94 .4% ALLIED OCCUPANCY 89 .1% PROPERTIES MARKET OCCUPANCY (1)(2) 77 .2% MARKET OCCUPANCY (1) 86 .4% EMPLOYEES 31 95 CALGARY PROPERTIES 1.3M SF EMPLOYEES 5 4 PROPERTIES ANCILLARY PARKING FACILITIES EMPLOYEES 107 10 232 ALLIED OCCUPANCY 87 .2% MARKET OCCUPANCY (1) 67 .4% PROPERTIES EMPLOYEES 30 32 (1) Source: cbre.ca, CBRE Canada Office Figures Q4 2022 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 OTTAWA 231K SF ALLIED OCCUPANCY 99 .0% MARKET OCCUPANCY (1) 87 .8% PROPERTIES EMPLOYEES 2 4 ALLIED 2022 ANNUAL REPORTBUSINESS OVERVIEW AND STRATEGY Allied is a leading operator of distinctive urban workspace in Canada’s major cities and network-dense urban data centres in Toronto . 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 .  On January 16, 2023, Allied announced the completion of the initial phase of its exploration of the sale of its UDC portfolio, which consists of freehold interests in 151 Front W and 905 King W and a leasehold interest in 250 Front Street W (the “Portfolio”) . The Portfolio is unencumbered and does not include 20 York Street, the site for Union Centre . The sale of the Portfolio will enable Allied to reaffirm its mission to serve knowledge-based organizations and to propel continued growth with low-cost capital over the next few years . The Portfolio was connected to Allied’s mission from the beginning, but it is not core to Allied’s mission in the way urban workspace is . If successful in selling the Portfolio, Allied expects to use a significant portion of the sale proceeds to retire debt and the balance to fund its current development activity . As a result of the recent implementation of a comprehensive sales process, the UDC segment is classified as a discontinued operation and asset held for sale for the three months and year ended December 31, 2022 . It is classified as assets held for sale on the consolidated balance sheets as at December 31, 2022, and the comparative period is not revised . It is classified as a discontinued operation on the consolidated statements of income and comprehensive income for the three months and years ended December 31, 2022, and December 31, 2021 . 15 ALLIED 2022 ANNUAL REPORT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 .  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 is a high-rise tower for the most part with no 16 ALLIED 2022 ANNUAL REPORT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 . 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 people . 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 2022 ANNUAL REPORTENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) 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 . ESG OVERSIGHT & REPORTING Allied’s Board and Management are committed to making its 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 ESG 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 established an Executive ESG Committee to assist Management and the Board in defining, designing, implementing, expanding and evaluating Allied’s ESG Strategy and ESG initiatives . The Committee reports and makes recommendations to Management and the Board at least once annually . On the recommendation of the Governance, Compensation and Nomination Committee, in 2021, the Board established four ESG Accountability Corporate Targets, the achievement of which the Governance, Compensation and Nomination Committee and the Board analyzed as part of its assessment of incentive bonus awards for the executive officers . In June 2022, Allied published its third Annual ESG Report in accordance with the Global Reporting Initiative (GRI) 2021 Universal Standards, the Sustainability Accounting Standards Board (SASB) Real Estate Standard and for the first time, the United Nations Sustainable Development Goals (UN SDGs) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations . 18 ALLIED 2022 ANNUAL REPORTESG HIGHLIGHTS Outperformed 2024 Targets In 2021, Allied exceeded its 2024 reduction targets for Energy Use Intensity (EUI), Greenhouse Gas Intensity (GHGI) and Water Use Intensity (WUI) . Reduced Energy Use by 15.4% & GHG Emissions by 12.4% In 2021, Allied reduced its energy use and greenhouse gas emissions by 15 .4% and 12 .4%, respectively, compared to the 2019 baseline, surpassing its 2024 reduction targets . Reduced Water Use by 43.3% In 2021, Allied reduced its water use from 67 L/ft2 in 2019 to 38 L/ft2 . This represents a 43 .3% reduction compared to the 2019 baseline and exceeds its 2024 target . Improved our GRESB Score by Six Points Issued $1.1 Billion of Green Bonds Initiated Allied’s Net Zero Carbon Plan In its 2022 GRESB assessment, Allied scored 86/100 for its standing investments, a six-point improvement from 2021 and scored 82/100 for its development portfolio, a seven-point improvement from 2021 . Recognized as a Canadian “Best Employer” Since 2020, Allied engaged Kincentric to conduct an annual third-party employee engagement survey . In 2020 and 2021, Allied was recognized by Kincentric as a “Best Employer” . In 2021, Allied announced its Green Financing Framework . In February 2021, Allied issued its first green bond for $600 million and in August 2021, it issued its second green bond for $500 million . In December 2021 and June 2022, Allied published Green Bond Reports on the full allocation of the respective net proceeds for its February 2021 and August 2021 green bond issuances . Outperformed Peers in User Experience Assessment Ratings In November 2022, Allied completed its third annual third-party User Experience Assessment Survey . Results demonstrated year over year improvements . 2022 scores exceeded the benchmark of the Kingsley Index in key areas . In early 2022, Allied committed to developing a Net Zero Carbon (NZC) Plan which will identify a clear pathway for Allied to reach net zero in alignment with the Science Based Targets Initiative’s (SBTi) Corporate Net-Zero Standard v1 .0 . Piloted HOME Initiative In 2021, in partnership with WoodGreen Community Services, a local social service agency, Allied provided two families with housing and social supports . 19 ALLIED 2022 ANNUAL REPORTBUSINESS ENVIRONMENT AND OUTLOOK Allied’s internal forecast for 2023 calls for low-to-mid-single-digit percentage growth in each of same asset NOI, FFO per unit and AFFO per unit . Allied does not forecast NAV per unit growth in any given time period . Allied continues to have deep confidence in, and commitment to, its strategy of consolidating and intensifying distinctive urban workspace 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 . Where it is not explicitly stated, the measures include the results of both continuing and discontinued operations . Management believes these combined results provide a more meaningful measure of financial performance for the periods presented . Refer to Non-IFRS Measures and Forward Looking Statements below . 20 ALLIED 2022 ANNUAL REPORT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 . NON-IFRS MEASURE DEFINITION RECONCILIATION Allied’s proportionate share or proportionate basis 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. Section II - Operations, Section V - Asset Profile, Section VI - Liquidity and Capital Resources Section II - Operations - Other Financial Performance Measures Funds from Operations (“FFO”) and FFO excluding condominium costs, financing prepayment costs and the mark-to- market adjustment on unit-based compensation 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 January 2022 White Paper (“White Paper”). FFO is defined as net income and comprehensive income from continuing operations less certain adjustments, on a proportionate basis, including fair value changes in investment properties, investment properties held for sale and derivative instruments, impairment, incremental leasing costs, net income and comprehensive income from discontinued operations, amortization of improvement allowances and amortization of property, plant and equipment which relates to owner-occupied property. FFO is reconciled to net income and comprehensive income from continuing operations, which is the most directly comparable IFRS measure. Management believes FFO is a key measure of operating performance. FFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation starts with FFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs, financing prepayment costs and the mark-to-market adjustment on unit-based compensation. FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation is reconciled to net income and comprehensive income from continuing operations, 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, and the mark-to-market adjustments of unit-based compensation can fluctuate widely with the market. 21 ALLIED 2022 ANNUAL REPORT NON-IFRS MEASURE DEFINITION Adjusted Funds from Operations (“AFFO”) and AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts based on a standardized definition established by REALPAC in the 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 from continuing operations, 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. RECONCILIATION Section II - Operations - Other Financial Performance Measures AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation starts with AFFO and removes the effects of condominium revenue, condominium cost of sales, condominium marketing costs, financing prepayment costs and the mark-to-market adjustment on unit-based compensation. AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation is reconciled to net income and comprehensive income from continuing operations, 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, and the mark-to-market adjustments of unit-based compensation can fluctuate widely with the market. Net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment is a non-IFRS financial measure that starts with net income from continuing operations and removes the effects of fair value gains or losses on investment properties and investment properties held for sale, or derivative instruments, the mark-to-market adjustment on unit-based compensation, financing prepayment costs and impairment 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 and impairment are non-recurring in nature. Section II - Operations Net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment Net Rental Income (“NRI”) NRI is a non-IFRS financial measure defined as rental revenue from continuing operations less property operating costs from continuing operations on a proportionate basis. It excludes condominium revenue and condominium cost of sales. The most directly comparable IFRS measure is operating income. Management considers NRI to be a useful measure of the operating performance of its rental properties portfolio. Section II - Operations - Net Operating Income Net Operating Income (“NOI”) from continuing operations NOI from discontinued operations 22 NOI from continuing operations 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 from continuing operations on a proportionate basis. The most directly comparable IFRS measure to NOI from continuing operations is Operating Income. Management believes this is a useful measure as it demonstrates the cash generating operating performance of its income producing properties. NOI from discontinued operations is a non-IFRS financial measure defined as rental revenue from discontinued operations less property operating costs from discontinued operations on a proportionate basis, excluding the impact of non-cash items such as amortization of improvement allowances and the amortization of straight-line rents from discontinued operations on a proportionate basis. The most directly comparable IFRS measure to NOI from discontinued operations is Operating Income. Management believes this is a useful measure as it demonstrates the performance of its discontinued segment. Section II - Operations - Net Operating Income Section II - Operations - Net Operating Income ALLIED 2022 ANNUAL REPORT NON-IFRS MEASURE DEFINITION Total NOI is a non-IFRS financial measure defined as the sum of NOI from continuing operations and NOI from discontinued operations. The most directly comparable IFRS measure to Total NOI is Operating Income. Management believes this is a useful measure as it demonstrates the cash generating operating performance of all its properties. RECONCILIATION Section II - Operations - Net Operating Income Total NOI Same Asset NOI 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 on a proportionate basis. 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. Section II - Operations - Same Asset NOI Normalized Last Quarter Annualized (“LQA”) NOI Normalized LQA NOI is a non-IFRS measure defined as the normalized NOI from continuing operations for an individual property or portfolio for the most recently completed quarter multiplied by four on a proportionate basis. 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. N/A Gross Book Value (“GBV”) GBV 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. Section V - Asset Profile Unencumbered investment properties Unencumbered investment properties is a non-IFRS measure defined as the value of investment properties, excluding investment properties held for sale, 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. N/A Cost of Properties Under Development (“PUD”) as a percentage of GBV 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. Section V - Asset Profile Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and Annualized Adjusted EBITDA 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), impairment, gains and losses on disposal of investment properties and the fair value gains or losses associated with investment properties and investment properties held for sale, financial instruments, and unit-based compensation. Section II - Operations - Other Financial Performance Measures Annualized Adjusted EBITDA is a non-IFRS measure calculated as the Adjusted EBITDA for the current 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. 23 ALLIED 2022 ANNUAL REPORT NON-IFRS MEASURE DEFINITION RECONCILIATION Net debt 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. Section VI - Liquidity and Capital Resources - Debt Net debt as a multiple of Annualized Adjusted EBITDA FFO and AFFO Payout-Ratios and FFO and AFFO Payout-Ratios excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation Interest Coverage Ratio and Interest Coverage Ratio - including interest capitalized and excluding financing prepayment costs Total Indebtedness Ratio 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, financing prepayment costs and the mark-to- market adjustment on unit-based compensation are non-IFRS measures. These payout ratios are calculated by dividing the actual distributions declared by FFO, AFFO and FFO and AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation in a given period. Management considers these metrics a useful way to evaluate Allied’s distribution paying capacity. Interest coverage ratio and interest coverage ratio including interest capitalized and excluding financing prepayment costs are non-IFRS measures calculated on a trailing three-month basis and twelve-month basis for the three months ended and the year ended, respectively. These ratios 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. N/A N/A N/A 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. Section V - Asset Profile 24 ALLIED 2022 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 NOI due to development activities; expected annualized adjusted EBITDA on the properties acquired from Choice Properties; the proposed sale of the Portfolio and the expected use of proceeds if such sale is completed; 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation and AFFO per unit excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation; 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; the development of a Net Zero Carbon (NZC) Plan and the identification of a clear pathway for Allied to reach net zero; 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 . 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 . 25 ALLIED 2022 ANNUAL REPORT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, Unit price changes, 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 January 31, 2023, 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 2022 ANNUAL REPORTSection II —Operations The following sets out summary information and financial results for three months and year ended December 31, 2022, and the comparable period in 2021 . 27 ALLIED 2022 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, 2022, and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . There is an additional table to reconcile net income and comprehensive income from continuing operations to net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment, a non-IFRS measure, for the three months and years ended December 31, 2022, and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . THREE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS Continuing operations Rental revenue $135,924 $1,855 $137,779 $122,534 $1,411 $123,945 Property operating costs (58,639) (745) (59,384) (55,056) (1,096) (56,152) Net rental income 77,285 Operating income $77,285 1,110 $1,110 78,395 $78,395 67,478 $67,478 315 $315 67,793 $67,793 Interest expense (20,722) — — — — 6 (20,722) (15,883) (16) (15,899) (5,794) (7,464) (189) (385) 9,435 (108) (273) 7,036 — — — — (7,464) (108) (273) 7,036 (5,794) (189) (385) 9,429 (42,988) 1,733 693 — 1,809 (1,809) — (835) 1,733 (6) — 835 (6) — (42,295) 63,573 (1,134) 62,439 $20,178 $— $20,178 $113,518 $— $113,518 General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value (loss) gain on investment properties and investment properties held for sale Fair value gain (loss) on derivative instruments Net income (loss) from joint venture Net income and comprehensive income from continuing operations (1) 28 ALLIED 2022 ANNUAL REPORTTHREE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS Discontinued operations (UDC segment) Rental revenue $23,810 Property operating costs (7,251) Net rental income $16,559 Interest expense (1,778) Fair value gain on investment properties held for sale Net income and comprehensive income from discontinued operations Net income and comprehensive income 6,433 21,214 $41,392 $— — $— — — — $— $23,810 $24,188 (7,251) (8,861) $16,559 $15,327 (1,778) (1,555) 6,433 32,631 21,214 46,403 $41,392 $159,921 $— — $— — — — $— $24,188 (8,861) $15,327 (1,555) 32,631 46,403 $159,921 (1) Includes two investment properties held for sale as at December 31, 2022, and three investment properties held for sale as at December 31, 2021. Net income and comprehensive income from continuing operations Fair value loss (gain) on investment properties and investment properties held for sale Fair value (gain) loss on derivative instruments Mark-to-market adjustment on unit-based compensation Financing prepayment costs Net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment (1) THREE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $20,178 42,988 (1,733) (55) (564) $60,814 $113,518 (63,573) 6 — 721 $50,672 (1) This excludes the Urban Data Centre segment which was classified as a discontinued operation in Q4 2022. The prior period comparative figures have been revised accordingly. On an IFRS basis, net income and comprehensive income from continuing operations for the three months ended December 31, 2022, decreased by $93,340 from the comparable period in 2021, primarily due to fair value adjustments, partially offset by an increase in operating income . On an IFRS basis, net income and comprehensive income from discontinued operations for the three months ended December 31, 2022, decreased by $25,189 from the comparable period in 2021, primarily due to fair value adjustments . For the three months ended December 31, 2022, the fair value loss on investment properties and investment properties held for sale of continuing and discontinued operations on an IFRS basis is $36,555 (December 31, 2021 - fair value gain on investment properties and investment properties held for sale of $96,204) . 29 ALLIED 2022 ANNUAL REPORTGeneral and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value (loss) gain on investment properties and investment properties held for sale Fair value gain on derivative instruments Impairment of residential inventory Net loss from joint venture Net income and comprehensive income from continuing operations (1) YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS Continuing operations Rental revenue $519,468 $6,771 $526,239 $472,799 Property operating costs (224,260) (3,843) (228,103) (204,792) Net rental income 295,208 2,928 298,136 268,007 Operating income $295,208 $2,928 $298,136 $268,007 $4,907 (3,274) 1,633 $1,633 $477,706 (208,066) 269,640 $269,640 Interest expense (72,802) (22,593) (602) (1,325) 32,080 — — — — 12 (72,802) (114,196) (206) (114,402) (22,593) (25,834) (602) (573) (1,325) 32,092 (1,167) 28,023 — (14) — — (25,834) (587) (1,167) 28,023 (73,750) (6,101) (79,851) 161,222 (1,864) 159,358 37,343 (15,729) — — 37,343 16,350 (15,729) — — — (3,161) 3,161 — (451) 451 16,350 — — $174,669 $— $174,669 $331,381 $— $331,381 Discontinued operations (UDC segment) Rental revenue $ 96,669 Property operating costs (32,375) Net rental income $64,294 Interest expense (6,532) Fair value gain on investment properties held for sale Net income and comprehensive income from discontinued operations Net income and comprehensive income 142,932 $200,694 $375,363 $— — $— — — $— $— $ 96,669 $ 96,087 (32,375) (34,703) $64,294 $61,384 (6,532) (5,949) 142,932 56,335 $200,694 $111,770 $375,363 $443,151 $— — $ — — — $— $— $ 96,087 (34,703) $61,384 (5,949) 56,335 $111,770 $443,151 (1) Includes two investment properties held for sale as at December 31, 2022, and three investment properties held for sale as at December 31, 2021. 30 ALLIED 2022 ANNUAL REPORTYEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 Net income and comprehensive income from continuing operations $174,669 Fair value loss (gain) on investment properties and investment properties held for sale Fair value gain on derivative instruments Mark-to-market adjustment on unit based compensation Financing prepayment costs Impairment of residential inventory Net income from continuing operations excluding fair value adjustments, financing prepayment costs and impairment (1) 73,750 (37,343) (1,123) (564) 15,729 $225,118 $331,381 (161,222) (16,350) — 52,610 — $206,419 (1) This excludes the Urban Data Centre segment which was classified as a discontinued operation in Q4 2022. The prior period comparative figures have been revised accordingly. On an IFRS basis, net income and comprehensive income from continuing operations for the year ended December 31, 2022, decreased by $156,712 from the comparable period in 2021 primarily due to fair value adjustments, partially offset by an increase in operating income and a decrease in interest expense . On an IFRS basis, net income and comprehensive income from discontinued operations for the year ended December 31, 2022, increased by $88,924 from the comparable period in 2021, primarily due to fair value adjustments . For the year ended December 31, 2022, the fair value gain on investment properties and investment properties held for sale of continuing and discontinued operations on an IFRS basis is $69,182 (December 31, 2021 - $217,557) . 31 ALLIED 2022 ANNUAL REPORT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 three months and year ended December 31, 2022, as compared to the same period in the prior year . As the Urban Data Centre segment has been classified as held for sale as at December 31, 2022, its results of operations have been presented separately as discontinued operations . The following table reconciles operating income to net operating income, a non-IFRS measure . Refer to Non-IFRS measures on page 21 . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 Operating income, IFRS basis Add: investment in joint venture Operating income, proportionate basis Amortization of improvement allowances (1)(2) Amortization of straight-line rents (1)(2) NOI from continuing operations NOI from discontinued operations Total NOI $77,285 1,110 $78,395 8,147 (2,533) $84,009 $16,392 $100,401 $67,478 $295,208 $268,007 315 $67,793 8,124 (1,016) $74,901 $15,337 $90,238 2,928 1,633 $298,136 $269,640 32,379 (6,739) $323,776 $64,134 $387,910 31,894 (3,442) $298,092 $60,627 $358,719 (1) Includes Allied’s proportionate share of the equity accounted investment of the following amounts for the three months and year ended December 31, 2022: amortization improvement allowances of $164 and $613, respectively (December 31, 2021 - $130 and $119, respectively), and amortization of straight-line rents of $(25) and $(609), respectively (December 31, 2021 - $(239) and $(1,047), respectively). (2) Excludes the Urban Data Centre segment which was classified as a discontinued operation in Q4 2022. The prior period comparative figures have been revised accordingly. For the three months and year ended December 31, 2022, the Urban Data Centre segment’s amortization of improvement allowances was $132 and $536, respectively (December 31, 2021 - $135 and $530, respectively). For the three months and year ended December 31, 2022, the Urban Data Centre segment’s amortization of straight-line rents was $(299) and $(695), respectively (December 31, 2021 - $(125) and $(1,287), respectively). 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, 2022, and the comparable period in 2021 . SEGMENT Urban Workspace THREE MONTHS ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % Montréal & Ottawa $29,220 29.1% $30,401 33 .7% $(1,181) (3 .9)% Toronto & Kitchener Calgary & Edmonton Vancouver 40,676 5,579 8,534 NOI from continuing operations $84,009 NOI from discontinued operations $16,392 40.5 5.6 8.5 83.7% 16.3% 34,853 4,784 4,863 $74,901 $15,337 38 .6 5 .3 5 .4 83 .0% 17 .0% 5,823 795 3,671 $9,108 $1,055 Total NOI 32 $100,401 100.0% $90,238 100 .0% $10,163 16 .7 16 .6 75 .5 12 .2% 6 .9% 11 .3% ALLIED 2022 ANNUAL REPORTTYPE OF SPACE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % THREE MONTHS ENDED CHANGE Urban Workspace - Office $69,914 69.7% $63,534 70 .4% $6,380 10 .0% Urban Workspace - Retail Urban Workspace - Parking 9,074 5,021 NOI from continuing operations $84,009 NOI from discontinued operations $16,392 9.0 5.0 83.7% 16.3% 7,592 3,775 $74,901 $15,337 8 .4 4 .2 83 .0% 17 .0% 1,482 1,246 $9,108 $1,055 Total NOI $100,401 100.0% $90,238 100 .0% $10,163 19 .5 33 .0 12 .2% 6 .9% 11 .3% The increase in NOI from continuing operations for the three months ended December 31, 2022, was due to acquisitions, increased variable parking revenue, and rent commencement at The Well, partially offset by known non-renewals at Cité Multimédia and de-leasing to facilitate upgrade activities at 1001 Boulevard Robert-Bourassa in Montréal . The increase in NOI from discontinued operations for the three months ended December 31, 2022, was due to rent, occupancy and ancillary revenue growth in the UDC portfolio . SEGMENT Urban Workspace YEAR ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % Montréal & Ottawa $116,059 29.9% $115,970 32 .3% Toronto & Kitchener 154,644 39.9 142,360 Calgary & Edmonton Vancouver 21,823 31,250 5.6 8.1 19,829 19,933 NOI from continuing operations $323,776 83.5% $298,092 NOI from discontinued operations $64,134 16.5% $60,627 39 .7 5 .5 5 .6 83 .1% 16 .9% $89 12,284 1,994 11,317 $25,684 $3,507 Total NOI $387,910 100.0% $358,719 100 .0% $29,191 YEAR ENDED CHANGE TYPE OF SPACE DECEMBER 31, 2022 DECEMBER 31, 2021 $ Urban Workspace - Office $269,974 69.6% $254,516 70 .9% $15,458 Urban Workspace - Retail Urban Workspace - Parking 36,374 17,428 9.4 4.5 30,758 12,818 NOI from continuing operations $323,776 83.5% $298,092 NOI from discontinued operations $64,134 16.5% $60,627 8 .6 3 .6 83 .1% 16 .9% 5,616 4,610 $25,684 $3,507 Total NOI $387,910 100.0% $358,719 100 .0% $29,191 0 .1% 8 .6 10 .1 56 .8 8 .6% 5 .8% 8 .1% % 6 .1% 18 .3 36 .0 8 .6% 5 .8% 8 .1% 33 ALLIED 2022 ANNUAL REPORTThe increase in NOI from continuing operations for the year ended December 31, 2022, was due to acquisitions, increased variable parking revenue and rent commencement at The Well, partially offset by known non-renewals at Cité Multimédia in Montréal and 185 Spadina in Toronto and de-leasing to facilitate upgrade activities at 1001 Boulevard Robert-Bourassa in Montréal . The increase in NOI from discontinued operations for the year ended December 31, 2022, was due to rent and occupancy growth in the UDC 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, 2021, to December 31, 2022 . Same asset NOI of the development portfolio for the three months ended December 31, 2022, consists of Breithaupt Phase III, Adelaide & Duncan, 185 Spadina, College & Manning, KING Toronto, QRC West Phase II, King & Brant, 400 Atlantic, Boardwalk- Revillon Building, 342 Water Street, 3575 Saint-Laurent and portions of The Well, 1001 Boulevard Robert- Bourassa and RCA Building - 1001 Lenoir Street . Same asset NOI of the assets held for sale for the three months ended December 31, 2022, consists of five investment properties . THREE MONTHS ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % Urban Workspace Montréal & Ottawa Toronto & Kitchener Calgary Vancouver Rental Portfolio - Same Asset NOI Assets Held for Sale - Same Asset NOI Rental Portfolio and Assets Held for Sale - Same Asset NOI Urban Workspace $26,552 30,745 4,929 5,100 $67,326 16,820 $84,146 4,040 Development Portfolio - Same Asset NOI $4,040 Total Portfolio - Same Asset NOI Acquisitions Dispositions Lease terminations $88,186 9,415 (5) 741 Development fees and corporate items 2,064 Total NOI $100,401 $28,363 31,407 4,199 4,530 $68,499 15,480 $83,979 2,690 $2,690 $86,669 247 393 268 2,661 $90,238 $(1,811) (662) 730 570 $(1,173) 1,340 $167 1,350 $1,350 $1,517 9,168 (398) 473 $(597) $10,163 (6 .4)% (2 .1) 17 .4 12 .6 (1 .7)% 8 .7 0 .2% 50 .2 50 .2% 1 .8% 11 .3% Same asset NOI of the total portfolio increased by $1,517 or 1 .8% for the three months ended December 31, 2022 . Same asset NOI of the rental portfolio and assets held for sale increased by $167 or 0 .2% as a result of increased variable parking revenue, rent growth and economic occupancy in Vancouver, Calgary, and rent, occupancy and ancillary revenue growth in the UDC portfolio . This was offset by known non-renewals at Cité Multimédia in Montréal . 34 ALLIED 2022 ANNUAL REPORTSame asset NOI of the development portfolio increased by $1,350 or 50 .2%, primarily due to rent commencement at The Well . This was partially offset by de-leasing to facilitate upgrade activities at 1001 Boulevard Robert-Bourassa in Montréal . Same asset NOI, a non-IFRS measure in the table below, refers to those investment properties that were owned by Allied from January 1, 2021, to December 31, 2022 . Same asset NOI of the development portfolio for the year ended December 31, 2022, consists of Breithaupt Phase III, Adelaide & Duncan, 185 Spadina, College & Manning, KING Toronto, QRC West Phase II, King & Brant, 400 Atlantic, Boardwalk- Revillon Building, 342 Water Street, 3575 Saint-Laurent and portions of The Well, 1001 Boulevard Robert- Bourassa and RCA Building - 1001 Lenoir Street . Same asset NOI of the assets held for sale for the year ended December 31, 2022, consists of five investment properties . YEAR ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % Urban Workspace Montréal & Ottawa Toronto & Kitchener Calgary Vancouver $104,940 124,339 18,571 20,593 Rental Portfolio - Same Asset NOI $268,443 Assets Held for Sale - Same Asset NOI 65,331 $108,765 125,549 16,753 19,374 $270,441 62,009 Rental Portfolio and Assets Held for Sale - Same Asset NOI $333,774 $332,450 Urban Workspace Development Portfolio - Same Asset NOI Total Portfolio - Same Asset NOI Acquisitions Dispositions Lease terminations Development fees and corporate items 8,722 $8,722 $342,496 33,420 1,319 1,094 9,581 9,514 $9,514 $341,964 2,366 1,548 1,281 11,560 Total NOI $387,910 $358,719 $(3,825) (1,210) 1,818 1,219 $(1,998) 3,322 $1,324 (792) $(792) $532 31,054 (229) (187) (1,979) $29,191 (3 .5)% (1 .0) 10 .9 6 .3 (0 .7)% 5 .4 0 .4% (8 .3) (8 .3)% 0 .2% 8 .1% Same asset NOI of the total portfolio increased by $532 or 0 .2% for the year ended December 31, 2022 . Same asset NOI of the rental portfolio and assets held for sale increased by $1,324 or 0 .4% as a result of increased variable parking revenue, rent growth and economic occupancy in Vancouver and Calgary, and rent and occupancy growth in the UDC portfolio . This was offset by known non-renewals at Cité Multimédia in Montréal . Same asset NOI of the development portfolio decreased by $792 or 8 .3% primarily due to de-leasing to facilitate upgrade activities at 1001 Boulevard Robert-Bourassa in Montréal and 185 Spadina in Toronto . This was partially offset by rent commencement at The Well . 35 ALLIED 2022 ANNUAL REPORTINTEREST EXPENSE Interest expense for the three months and years ended December 31, 2022, and 2021, are as follows: THREE MONTHS ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % Interest on debt: Mortgages payable Construction loans payable Promissory note payable Unsecured Facility Unsecured Debentures Unsecured Term Loans Interest on lease liabilities (1) Amortization, net discount (premium) on debt Amortization, net financing costs Interest capitalized to qualifying investment properties and residential inventory Interest expense excluding financing prepayment costs Financing prepayment costs Interest expense, IFRS basis $1,133 2,236 504 5,060 18,675 7,031 803 879 641 $1,002 1,390 — 1,409 18,666 2,202 806 (117) 590 $131 846 504 3,651 9 4,829 (3) 996 51 $36,962 $25,948 $11,014 (15,676) (10,786) (4,890) $21,286 (564) $20,722 $15,162 721 $15,883 $6,124 (1,285) $4,839 13 .1% 60 .9 100 .0 259 .1 — 219 .3 (0 .4) 851 .3 8 .6 42 .4% 45 .3 40 .4% (178 .2) 30 .5% (1) Excludes interest on a lease liability held for sale of $1,778 (December 31, 2021 - $1,555). For the three months ended December 31, 2022, interest expense on an IFRS basis increased by $4,839 or 30 .5% over the comparable period primarily due to a higher balance of Unsecured Term Loans, higher draws on the Unsecured Facility, partially offset by higher capitalized interest and lower financing prepayment costs . 36 ALLIED 2022 ANNUAL REPORTInterest on debt: Mortgages payable Construction loans payable Promissory note payable Unsecured Facility Unsecured Debentures Unsecured Term Loans Interest on lease liabilities (1) Amortization, net discount (premium) on debt Amortization, net financing costs Interest capitalized to qualifying investment properties and residential inventory Interest expense excluding financing prepayment costs Financing prepayment costs Interest expense, IFRS basis YEAR ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ % $4,635 6,487 1,512 11,125 74,705 20,592 3,224 2,401 2,495 $16,722 2,983 — 2,836 64,940 8,739 3,235 (531) 2,394 $(12,087) (72 .3)% 3,504 1,512 8,289 9,765 11,853 (11) 2,932 101 117 .5 100 .0 292 .3 15 .0 135 .6 (0 .3) 552 .2 4 .2 25 .5% $127,176 $101,318 $25,858 (53,810) (39,732) (14,078) 35 .4 $73,366 (564) $72,802 $61,586 52,610 $114,196 $11,780 (53,174) $(41,394) 19 .1% (101 .1) (36 .2)% (1) Excludes interest on a lease liability held for sale of $6,532 (December 31, 2021 - $5,949). For the year ended December 31, 2022, interest expense on an IFRS basis decreased by $41,394 or 36 .2% primarily due to a financing prepayment cost in the comparative period, a lower balance of mortgages payable and higher capitalized interest, partially offset by a higher balance of Unsecured Term Loans, higher Unsecured Debentures’ interest expense, and higher draws on the Unsecured Facility . For the three months and year ended December 31, 2022, 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, 2022, 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, and 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 . 37 ALLIED 2022 ANNUAL REPORTGENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses for the three months and years ended December 31, 2022 and 2021, are as follows: THREE MONTHS ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 Salaries and benefits Professional and trustees fees Office and general expenses Capitalized to qualifying investment properties Total general and administrative expenses, IFRS basis $6,403 1,343 1,448 $9,194 (3,400) $5,794 $6,317 1,184 1,938 $9,439 (1,975) $7,464 $ $86 159 (490) $(245) (1,425) % 1 .4% 13 .4 (25 .3) (2 .6)% (72 .2) $(1,670) (22 .4)% For the three months ended December 31, 2022, general and administrative expenses decreased by $1,670 or 22 .4% from the comparable period primarily due to increased capitalization of general and administrative expenses as there was a higher volume of development and upgrade projects underway . Salaries and benefits Professional and trustees fees Office and general expenses Capitalized to qualifying investment properties Total general and administrative expenses, IFRS basis YEAR ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $21,119 6,051 5,549 $32,719 $21,683 4,481 5,816 $31,980 $ $(564) 1,570 (267) $739 (10,126) (6,146) (3,980) % (2 .6)% 35 .0 (4 .6) 2 .3% 64 .8 $22,593 $25,834 $(3,241) (12 .5)% For the year ended December 31, 2022, general and administrative expenses decreased by $3,241 or 12 .5% from the comparable period primarily due to the mark-to-market adjustment on the unit-based compensation incurred in the current period, severance expense incurred in the comparable period and increased capitalization of general and administrative expenses as there was a higher volume of development and upgrade projects underway, partially offset by higher consulting and trustee fees . 38 ALLIED 2022 ANNUAL REPORTINTEREST INCOME Interest income for the three months and years ended December 31, 2022 and 2021, are as follows: THREE MONTHS ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 $ Interest on loans receivable $8,482 $6,358 $2,124 Guarantee fees Interest on cash and cash equivalents and other 794 153 593 85 201 68 Interest income, IFRS basis $9,429 $7,036 $2,393 % 33 .4% 33 .9 80 .0 34 .0% For the three months ended December 31, 2022, interest income increased by $2,393 or 34 .0% over the comparative period primarily due to a higher balance of loans receivable . YEAR ENDED CHANGE DECEMBER 31, 2022 DECEMBER 31, 2021 Interest on loans receivable Guarantee fees Interest on cash and cash equivalents and other Interest income, IFRS basis $28,765 2,820 495 $32,080 $24,065 3,294 664 $28,023 $ $4,700 (474) (169) $4,057 % 19 .5% (14 .4) (25 .5) 14 .5% For the year ended December 31, 2022, interest income increased by $4,057 or 14 .5% from the comparable period primarily due to a higher balance of loans receivable, partially offset by a retroactive guarantee fee in the comparative period . 39 ALLIED 2022 ANNUAL REPORTOTHER FINANCIAL PERFORMANCE MEASURES FUNDS FROM OPERATIONS (“FFO”) AND FFO EXCLUDING CONDOMINIUM RELATED ITEMS, FINANCING PREPAYMENT COSTS AND THE MARK-TO-MARKET ADJUSTMENT ON UNIT-BASED COMPENSATION 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, financing prepayment costs and the mark-to- market adjustment on unit-based compensation, 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation . Refer to Non-IFRS Measures on page 21 . 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, 2022, Allied incurred (at its share) $189 and $602, respectively, 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, 2022, FFO per unit excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation totaled $0 .618 . This is an increase of $0 .018 or 3 .0% over the comparable period in the prior year . The increase was primarily due to an increase in total NOI, partially offset by higher interest expense . For the year ended December 31, 2022, FFO per unit excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation totaled $2 .435 . This is an increase of $0 .030 or 1 .2% over the comparable period in the prior year . The increase was primarily due to an increase in total NOI, partially offset by an increase in interest expense . 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation . Refer to Non-IFRS Measures on page 21 . For the three months and year ended December 31, 2022, the FFO pay-out ratio excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation was 70 .8% and 71 .8%, respectively . ADJUSTED FUNDS FROM OPERATIONS (“AFFO”) EXCLUDING CONDOMINIUM RELATED ITEMS, FINANCING PREPAYMENT COSTS AND THE MARK-TO-MARKET ADJUSTMENT ON UNIT-BASED COMPENSATION 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation, 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, financing prepayment costs and the mark-to-market adjustment on unit- based compensation . Refer to Non-IFRS Measures on page 21 . 40 ALLIED 2022 ANNUAL REPORTFor the three months ended December 31, 2022, AFFO per unit excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation totaled $0 .548 . This represents an increase of $0 .030 or 5 .8% over the comparable period in the prior year . The increase was primarily due to the changes in FFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation discussed above and lower regular and recoverable maintenance capital expenditures, partially offset by higher amortization of straight-line rents . For the year ended December 31, 2022, AFFO per unit excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation totaled $2 .174 . This represents an increase of $0 .083 or 4 .0% over the comparable period in the prior year . The increase was primarily due to the changes in FFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation discussed above and lower regular leasing expenditures and lower regular and recoverable maintenance capital expenditures, partially offset by higher amortization of straight-line rents . 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation, which is the ratio of actual distributions to AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation in a given period . For the three months and year ended December 31, 2022, the AFFO pay-out ratio excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation was 79 .9% and 80 .4%, respectively . RECONCILIATION OF FFO AND AFFO The following table reconciles Allied’s net income and comprehensive income from continuing operations to FFO, FFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation and AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation, which are on a non-IFRS basis, for the three months and years ended December 31, 2022 and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . 41 ALLIED 2022 ANNUAL REPORTTHREE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 CHANGE $20,178 $113,518 $(93,340) 46,403 (25,189) Net income and comprehensive income from continuing operations Net income and comprehensive income from discontinued operations 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 Amortization of property, plant and equipment (1) Adjustments relating to joint venture: Adjustment to fair value on investment properties Amortization of improvement allowances Interest expense (2) FFO Condominium marketing costs Financing prepayment costs Mark-to-market adjustment on unit-based compensation FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Amortization of straight-line rents Regular leasing expenditures (3) Regular maintenance capital expenditures Incremental leasing costs (related to regular leasing expenditures) Recoverable maintenance capital expenditures Adjustment relating to joint venture: 21,214 36,555 (1,733) 2,479 8,115 99 (693) 164 377 $86,755 189 (564) (55) $86,325 (2,807) (2,855) (354) (1,736) (1,995) (96,204) 6 2,249 8,129 — 1,134 130 326 $75,691 108 721 — $76,520 (902) (3,253) (1,566) (1,574) (2,910) 132,759 (1,739) 230 (14) 99 (1,827) 34 51 $11,064 81 (1,285) (55) $9,805 (1,905) 398 1,212 (162) 915 214 Amortization of straight-line rents (25) (239) AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Weighted average number of units (4) Basic Diluted Per unit - basic FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation 42 $76,553 $66,076 $10,477 139,765,128 139,765,128 127,441,142 127,611,273 12,323,986 12,153,855 $0.621 $0.618 $0 .594 $0 .027 $0 .600 $0 .018 $0.548 $0 .518 $0 .030 ALLIED 2022 ANNUAL REPORTTHREE MONTHS ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 CHANGE Per unit - diluted FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Pay-out Ratio FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation $0.621 $0.618 $0 .593 $0 .028 $0 .600 $0 .018 $0.548 $0 .518 $0 .030 70.5% 70.8% 79.9% 71 .6% (1 .1%) 70 .9% (0 .1%) 82 .1% (2 .2%) (1) Property, plant and equipment relates to owner-occupied property. (2) 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.  (3) Refer to Capital Expenditures on page 46 for a description of regular leasing expenditures. (4) The weighted average number of units includes Units and Exchangeable LP Units. The Exchangeable LP Units are classified as equity in the audited consolidated financial statements as non-controlling interests. 43 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 DECEMBER 31, 2021 CHANGE YEAR ENDED $174,669 $331,381 $(156,712) 200,694 (69,182) (37,343) 15,729 9,281 32,302 224 6,101 613 1,389 $334,477 602 (564) (1,123) $333,392 (6,825) (13,956) (1,979) (6,497) (5,947) (609) 111,770 88,924 (217,557) (16,350) — 8,038 32,305 — 1,864 119 1,806 $253,376 573 52,610 — $306,559 (3,682) (17,177) (4,327) (5,626) (8,183) (1,047) 148,375 (20,993) 15,729 1,243 (3) 224 4,237 494 (417) $81,101 29 (53,174) (1,123) $26,833 (3,143) 3,221 2,348 (871) 2,236 438 $297,579 $266,517 $31,062 136,880,675 136,904,082 127,305,384 127,455,829 9,575,291 9,448,253 Net income and comprehensive income from continuing operations Net income and comprehensive income from discontinued operations Adjustment to fair value of investment properties and investment properties held for sale Adjustment to fair value of derivative instruments Impairment of residential inventory Incremental leasing costs Amortization of improvement allowances Amortization of property, plant and equipment (1) Adjustments relating to joint venture: Adjustment to fair value on investment properties Amortization of improvement allowances Interest expense (2) FFO Condominium marketing costs Financing prepayment costs Mark-to-market adjustment on unit-based compensation FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Amortization of straight-line rents Regular leasing expenditures (3) 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 AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Weighted average number of units (4) Basic Diluted 44 ALLIED 2022 ANNUAL REPORTPer unit - basic FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Per unit - diluted FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation Pay-out Ratio FFO FFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation AFFO excluding condominium related items, financing prepayment costs and the mark-to- market adjustment on unit-based compensation DECEMBER 31, 2022 DECEMBER 31, 2021 CHANGE YEAR ENDED $2.444 $1 .990 $0 .454 $2.436 $2 .408 $0 .028 $2.174 $2 .094 $0 .080 $2.443 $1 .988 $0 .455 $2.435 $2 .405 $0 .030 $2.174 $2 .091 $0 .083 71.6% 71.8% 85 .5% (13 .9%) 70 .6% 1 .2% 80.4% 81 .2% (0 .8%) (1) Property, plant and equipment relates to owner-occupied property. (2) 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. (3) Refer to Capital Expenditures on page 46 for a description of regular leasing expenditures. (4) The weighted average number of units includes Units and Exchangeable LP Units. The Exchangeable LP Units are classified as equity in the audited consolidated financial statements as non-controlling interests. 45 ALLIED 2022 ANNUAL REPORTCAPITAL EXPENDITURES Our portfolio requires ongoing maintenance capital expenditures and leasing expenditures . Regular maintenance capital expenditures are costs incurred to maintain and sustain the existing property infrastructure, including structural repairs . Recoverable maintenance capital expenditures are typically not structural in nature, but allow the building to operate more efficiently, such as investing in building automation systems and HVAC systems . These improvements provide a direct benefit to users and can be recovered over the useful life of the asset according to the lease . Both regular maintenance capital expenditures and recoverable maintenance capital expenditures are deducted in the calculation of AFFO . Regular leasing expenditures are leasing costs incurred to maintain the existing revenues of a property and are deducted in the calculation of AFFO . These costs are considered operational, and typically include improvement allowances, landlord’s work and leasing commissions required to replace or renew users at existing rates or market rates . For the three months ended December 31, 2022, Allied incurred (i) $2,855 in regular leasing expenditures or $10 .44 per square foot, (ii) $354 in regular maintenance capital expenditures and (iii) $1,995 of recoverable maintenance capital expenditures . For the year ended December 31, 2022, Allied incurred (i) $13,956 in regular leasing expenditures or $11 .98 per square foot, (ii) $1,979 in regular maintenance capital expenditures and (iii) $5,947 of recoverable maintenance capital expenditures . Revenue-enhancing capital is invested to improve the revenue generating ability of the properties . This includes investments to change the use of space, increase gross leasable area, or materially improve the aesthetics or efficiency of a property . Development costs are investments to generate new revenue streams and/or to increase the productivity of a property . These consist of pre-development costs, carrying costs, direct construction costs, leasing costs, improvement allowances, borrowing costs, and direct costs of internal staff directly attributable to the projects under development . For the three months and year ended December 31, 2022, Allied invested $93,398 and $391,210, respectively, of revenue enhancing capital into its portfolio to enhance its income-producing capability and in ongoing development activity . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 Regular maintenance capital expenditures Recoverable maintenance capital expenditures Regular leasing expenditures $354 $1,995 $2,855 $1,566 $2,910 $3,253 Revenue-enhancing capital and development costs $93,398 $128,973 $1,979 $5,947 $13,956 $391,210 $4,327 $8,183 $17,177 $417,967 46 ALLIED 2022 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, 2022 and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 $41,392 22,500 385 8,279 — $159,921 $375,363 $443,151 17,454 273 8,259 — 79,334 1,325 32,915 15,729 120,351 1,167 32,424 — 35,862 (95,070) (63,081) (215,693) Net income and comprehensive income for the period Interest expense (1) Amortization of other assets Amortization of improvement allowances Impairment of residential inventory Fair value loss (gain) on investment properties and investment properties held for sale (2) Fair value (gain) loss on derivative instruments Mark-to-market adjustment on unit-based compensation Adjusted EBITDA (3) $106,630 $90,843 (1,733) (55) 6 — (37,343) (16,350) (1,123) $403,119 — $365,050 (1) Includes Allied’s proportionate share of the equity accounted investment’s interest expense of $nil and $nil for the three months and year ended December 31, 2022, respectively (December 31, 2021 - $16 and $206, respectively). (2) Includes Allied’s proportionate share of the equity accounted investment’s fair value gain on investment properties of $693 and fair value loss of $6,101 for the three months and year ended December 31, 2022, respectively (December 31, 2021 - fair value loss on investment properties of $1,134 and $1,864, respectively). (3) Includes the Urban Data Centre segment which was classified as a discontinued operation in Q4 2022. 47 ALLIED 2022 ANNUAL REPORT Section III —Leasing Allied strives to maintain high levels of occupancy and leased area . At December 31, 2022, Allied’s rental portfolio (which excludes assets held for sale including UDC) was 90 .8% leased . 48 ALLIED 2022 ANNUAL REPORTSTATUS Leasing status for the rental portfolio as at December 31, 2022, is summarized below: YEAR ENDED GLA AS A % OF TOTAL GLA (1) Leased area (occupied & committed) on January 1, 2022 Vacancy committed for future leases Occupancy - beginning of period 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 12,861,227 (70,606) 12,790,621 21,321 402,631 (480,202) (204,061) 1,954 90.4% 89.9% Occupancy (pre-2022 acquisitions, dispositions and transfers) 12,532,264 88.0% Occupancy related to acquired properties Occupancy related to transfers to/from PUD and investment properties held for sale Occupancy - end of period Vacancy committed for future leases Leased area (occupied & committed) on December 31, 2022 1,129,422 (829,619) 12,832,067 166,163 12,998,230 (1) Excludes properties under development, investment properties held for sale and residential GLA. 89.6% 90.8% Of the 14,317,179 square feet total GLA in Allied’s rental portfolio, 12,832,067 square feet were occupied on December 31, 2022 . Another 166,163 square feet were subject to contractual lease commitments with users whose leases commence subsequent to December 31, 2022, bringing the leased area to 12,998,230 square feet, which represents 90 .8% of Allied’s total rental portfolio GLA . The table below outlines the rental portfolio’s leased area as at December 31, 2022, for the stabilized properties and the transitional properties . Transitional properties consist of three properties (810 Saint Antoine, El Pro Lofts - 644 Courcelle and 375 Water) where we have suppressed occupancy to facilitate longer term upgrade plans . Stabilized rental portfolio Transitional rental portfolio Total rental portfolio DECEMBER 31, 2022 LEASED AREA (SF) LEASED AREA (%) 12,727,429 270,801 12,998,230 91 .3% 72 .2% 90.8% 49 ALLIED 2022 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 2023 Q2 2023 Q3 2023 Q4 2023 THEREAFTER TOTAL 126,233 75 .9% 34,159 20 .6% — —% — —% 5,771 3 .5% 166,163 100 .0% 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 2023 Q2 2023 Q3 2023 Q4 2023 THEREAFTER TOTAL 18,063 39,421 43,662 23,255 10 .9% 23 .8% 26 .3% 14 .0% 41,762 25 .0% 166,163 100 .0% Allied monitors the level of sub-lease space being marketed in its rental portfolio, below is a summary: DECEMBER 31, 2022 SEPTEMBER 30, 2022 JUNE 30, 2022 MARCH 31, 2022 Toronto Montréal Calgary Vancouver Total square feet % of Total GLA 271,100 158,157 32,361 7,411 469,029 3.3% 242,962 81,072 27,203 5,499 356,736 2 .4% 249,239 81,072 15,006 16,035 361,352 2 .4% 225,815 126,618 18,823 10,536 381,792 2 .5% This level of marketed sub-lease space is consistent with past experience and does not represent an operating or leasing challenge . 50 ALLIED 2022 ANNUAL REPORTACTIVITY Allied places a high value on user retention and when retention is neither possible nor desirable, Allied strives to introduce high-quality new users to its portfolio . Leasing activity in connection with the rental portfolio for the year ended December 31, 2022, is summarized in the following table: LEASABLE SF LEASED SF BY DECEMBER 31 % LEASED BY DECEMBER 31 UNLEASED SF AT DECEMBER 31 Unleased area on January 1, 2022, including re-measurement (1) Maturities during the year ended December 31, 2022 (2)(3) Total (4) Unleased area related to properties acquired in 2022 Maturities during the year ended December 31, 2022, related to properties acquired in 2022 (3) Maturities in future years 1,341,007 625,964 1,484,983 2,825,990 818,332 1,444,296 46 .7% 55 .1% 715,043 666,651 1,381,694 99,538 23,327 23 .4% 76,211 173,919 142,322 343,285 81 .8% 31,597 Total (4) 3,099,447 1,953,230 (1) The unleased area on January 1, 2022, including re-measurement, consists of Allied’s rental properties owned as at December 31, 2022. (2) Some maturities occurred at December 31, 2022, and are included in Allied’s leased area. (3) Of the total portfolio, which includes properties acquired in 2022, 57.9% of the maturing space was leased for the year ended December 31, 2022. (4) The information above is net of transfers to/from PUD and investment properties held for sale. The tables below summarize the rental rates achieved for leases that were renewed in the rental portfolio for the three months and year ended December 31, 2022 . THREE MONTHS ENDED DECEMBER 31, 2022 YEAR ENDED DECEMBER 31, 2022 EXPIRING RATE RENEWAL RATE SPREAD SQUARE FEET EXPIRING RATE RENEWAL RATE SPREAD SQUARE FEET LEASING SPREAD ON RENEWALS Ending to Starting Base Rent Total Portfolio Excluding Calgary $21 .57 $22 .07 $22 .89 $23 .97 6 .1% 8 .6% 278,058 242,637 $21 .44 $22 .96 $22 .64 $24 .75 5 .6% 934,188 7 .8% 804,338 Average to Average Base Rent Total Portfolio Excluding Calgary $20 .19 $20 .90 $23 .34 $24 .34 15 .6% 16 .5% 278,058 242,637 $20 .57 $22 .13 $23 .29 $25 .43 13 .2% 934,188 14 .9% 804,338 51 ALLIED 2022 ANNUAL REPORTLEASE RENEWAL RATE % of total leased SF Maturing leases - weighted average rent Renewing leases - weighted average rent YEAR ENDED DECEMBER 31, 2022 ABOVE IN-PLACE RENTS AT IN-PLACE RENTS BELOW IN-PLACE RENTS 49 .2% $24 .80 $28 .14 42 .6% $18 .38 $18 .38 8 .2% $17 .17 $11 .78 Leasing activity resulted in an increase of 6 .1% and 5 .6% in the net rent per square foot from maturing leases upon renewal for the three months and year ended December 31, 2022, respectively . Excluding transactions in Calgary, the rental rates achieved on maturing leases resulted in an increase of 8 .6% and 7 .8% in net rent per square foot for the three months and year ended December 31, 2022, respectively . The following table outlines leasing activity in the rental portfolio for the three months and year ended December 31, 2022 . Net effective rent (per square foot per year) (1) Net annualized rent $19 .84 $23 .34 Tours Net leased square feet Number of transactions Lease term (in years) Tenant improvements Leasing commissions Landlord’s work Total leasing costs Net effective rent THREE MONTHS ENDED DECEMBER 31, 2022 YEAR ENDED DECEMBER 31, 2022 NEW NEW LEASES RENEWALS TOTAL LEASES RENEWALS TOTAL 241,966 278,058 520,024 1,019,042 934,188 1,953,230 226 994 56 3 .4 58 2 .6 (3 .15) (0 .80) (1 .71) (1 .64) (0 .48) (0 .15) 114 3 .0 $21 .71 (2 .34) (0 .63) (0 .87) 244 5 .5 216 3 .5 460 4 .6 $19 .95 $23 .27 $21 .53 (2 .87) (1 .14) (1 .61) (1 .91) (0 .59) (0 .14) (2 .41) (0 .88) (0 .91) $(5 .66) $(2 .27) $(3 .84) $(5 .62) $(2 .64) $(4 .20) $14.18 $21.07 $17.87 $14.33 $20.63 $17.33 (1) Calculated based on a weighted average of leased square feet. 52 ALLIED 2022 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, 2022: CATEGORY Business services and professional Telecommunications and information technology Media and entertainment Retail Financial services Government Life sciences Parking and other Educational and institutional % OF RENTAL REVENUE (1) DECEMBER 31, 2022 40 .4% 15 .9% 13 .8% 9 .8% 6 .8% 6 .2% 2 .8% 2 .7% 1 .6% 100.0% (1) The rental revenue is on a proportionate basis, which is a non-IFRS measure. Refer to Non-IFRS Measures on page 21. The following sets out information on the top-10 users by rental revenue for the year ended December 31, 2022: USER Ubisoft Divertissements Inc . Google Canada Corporation Société Québecoise des Infrastructures Morgan Stanley Services Canada Corp National Capital Commission National Bank of Canada Technicolor Canada Inc . Entertainment One Shopify Inc Hydro-Québec % OF RENTAL REVENUE (1) DECEMBER 31, 2022 WEIGHTED AVERAGE REMAINING LEASE TERM (YEARS) % OF TOTAL RENTAL GLA CREDIT RATING DBRS/S&P/ MOODY’S 3 .1% 2 .3% 2 .0% 1 .8% 1 .7% 1 .4% 1 .3% 1 .2% 1 .1% 0 .9% 16.8% 9 .5 6 .8 5 .0 6 .9 11 .7 4 .2 2 .4 5 .5 9 .7 7 .2 7.2 3 .8% 2 .3% 2 .0% 1 .6% 1 .4% 1 .4% 1 .2% 0 .7% 1 .1% 0 .9% 16.4% Not Rated *-/AA+/Aa2 Not Rated AH/A-/A1 Not Rated AA/A/Aa3 *-/CCC+/Caa1 *-/BBB/Baa2 Not Rated AAL/AA-/Aa2 * Credit rating for parent company (1) The rental revenue is on a proportionate basis, which is a non-IFRS measure. Refer to Non-IFRS Measures on page 21. 53 ALLIED 2022 ANNUAL REPORTLEASE MATURITY As at December 31, 2022, 90 .8% of the GLA in Allied’s rental portfolio (which excludes assets held for sale including UDC) was leased and its weighted average term to maturity was 5 .5 years . The estimated weighted average market net rental rate is based on Management’s estimates of today’s market rental rates and is supported by independent appraisals of certain 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 leases that mature through 2027 and the corresponding estimated weighted average market rental rate as at December 31, 2022 . Where the renewal rate on maturity is contractually predetermined, it is reflected below as the market rental rate . TOTAL RENTAL PORTFOLIO SQUARE FEET % OF TOTAL GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE December 31, 2023 1,553,867 10 .9% December 31, 2024 December 31, 2025 December 31, 2026 1,014,987 1,385,951 1,365,610 7 .1% 9 .7% 9 .5% December 31, 2027 1,866,627 13 .0% 23 .90 25 .50 23 .59 24 .01 21 .06 % OF TOTAL GLA W/A RENTAL RATE ESTIMATED W/A MARKET RATE $24 .62 $23 .90 10 .9% $25 .90 $25 .50 7 .1% $24 .41 $23 .59 $25 .65 $24 .01 9 .7% 9 .5% 24 .62 25 .90 24 .41 25 .65 23 .81 $30 .00 $23 .81 $25 .00 $21 .06 $20 .00 13 .0% $15 .00 $10 .00 $5 .00 $0 .00 December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 1,553,867 1,014,987 1,385,951 1,365,610 1,866,627 SQUARE FEET 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 54 ALLIED 2022 ANNUAL REPORTThe following tables contain information on lease maturities by segment: MONTRÉAL & OTTAWA December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 TORONTO & KITCHENER December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 CALGARY December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 VANCOUVER December 31, 2023 December 31, 2024 December 31, 2025 December 31, 2026 December 31, 2027 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 450,862 372,043 325,067 528,042 892,703 6 .9% 5 .7% 5 .0% 8 .1% 13 .7% 17 .86 16 .99 17 .76 17 .75 15 .51 18 .01 17 .24 18 .29 18 .54 19 .18 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 640,682 389,041 771,574 516,659 776,268 11 .6% 7 .0% 14 .0% 9 .3% 14 .0% 25 .06 32 .81 26 .40 27 .08 26 .65 28 .79 33 .92 29 .31 30 .22 28 .98 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 199,066 112,898 228,571 116,279 91,641 15 .5% 8 .8% 17 .8% 9 .1% 7 .1% 19 .99 18 .49 18 .35 16 .03 13 .26 11 .03 13 .62 12 .62 13 .94 11 .94 SQUARE FEET % OF SEGMENT GLA WEIGHTED AVERAGE IN-PLACE RENTAL RATE ESTIMATED WEIGHTED AVERAGE MARKET RENTAL RATE 263,257 141,005 60,739 204,630 106,016 26 .1% 14 .0% 6 .0% 20 .3% 10 .5% 34 .39 33 .40 38 .88 36 .96 33 .56 36 .08 36 .49 39 .30 39 .11 35 .13 55 ALLIED 2022 ANNUAL REPORTSection IV —Historical Performance The following sets out summary information and financial results for the eight most recently completed fiscal quarters . 56 ALLIED 2022 ANNUAL REPORTQ4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Rental revenue (1)(2) $135,924 $131,823 $130,780 $120,942 $122,534 $118,090 $114,872 $117,304 Property operating costs (1)(2) $(58,639) $(56,401) $(55,686) $(53,535) $(55,056) $(50,000) $(48,427) $(51,309) Operating income (1)(2) $77,285 $75,422 $75,094 $67,407 $67,478 $68,090 $66,445 $65,995 Net income and comprehensive income (1) $41,392 $46,743 $100,038 $187,190 $159,921 $107,185 $98,523 $77,522 per unit (basic and diluted) (1) $0.30 $0 .33 $0 .72 $1 .46 $1 .25 $0 .84 $0 .77 $0 .61 Net income attributable to Unitholders (1) $39,223 $44,573 $97,869 $187,190 $159,921 $107,185 $98,523 $77,522 per unit (basic and diluted) (1) $0.28 $0 .32 $0 .70 $1 .46 $1 .25 $0 .84 $0 .77 $0 .61 Net income from continuing operations (1)(2) $20,178 $101 $85,516 $68,874 $113,518 $98,318 $63,848 $55,697 per unit (basic and diluted) (1)(2) $0.14 $— $0 .61 $0 .54 $0 .89 $0 .77 $0 .50 $0 .44 Net income from continuing operations attributable to Unitholders (1)(2) $18,009 $(2,068) $83,347 $68,874 $113,518 $98,318 $63,848 $55,697 per unit (basic and diluted) (1)(2) $0.13 $(0 .01) $0 .60 $0 .54 $0 .89 $0 .77 $0 .50 $0 .44 Weighted average units (diluted) (3) 139,765,128 139,765,373 139,860,134 128,279,982 127,611,273 127,447,002 127,443,551 127,329,378 Distributions (1)(4) $61,134 $61,131 $61,132 $55,966 $54,225 $54,101 $54,094 $54,101 FFO (5) $86,755 $85,332 $85,050 $77,340 $75,691 $41,690 $76,580 $59,415 FFO per unit (diluted) (5) FFO pay-out ratio (5) $0.621 70.5% $0 .611 $0 .608 $0 .603 $0 .593 $0 .327 $0 .601 $0 .467 71 .6% 71 .9% 72 .4% 71 .6% 129 .8% 70 .6% 91 .1% All amounts below are excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation (6) FFO (5) $86,325 $84,747 $84,747 $77,573 $76,520 $79,537 $76,705 $73,797 FFO per unit (diluted) (5) $0.618 $0 .606 $0 .606 $0 .605 $0 .600 $0 .624 $0 .602 $0 .580 FFO payout-ratio (5) 70.8% 72 .1% 72 .1% 72 .1% 70 .9% 68 .0% 70 .5% 73 .3% AFFO (5) $76,553 $73,508 $75,947 $71,571 $66,076 $66,132 $67,980 $66,329 AFFO per unit (diluted) (5) $0.548 $0 .526 $0 .543 $0 .558 $0 .518 $0 .519 $0 .533 $0 .521 AFFO payout-ratio (5) 79.9% 83 .2% 80 .5% 78 .2% 82 .1% 81 .8% 79 .6% 81 .6% 57 ALLIED 2022 ANNUAL REPORTQ4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 NAV per unit (7) $50.96 $51 .10 $51 .20 $50 .92 $50 .30 $49 .50 $49 .07 $48 .72 Net debt as a multiple of annualized adjusted EBITDA (5)(8) 9.8x 9 .6x 9 .6x 10 .2x 9 .4x 8 .6x 8 .0x 7 .9x Total indebtedness ratio (5) 35.6% 34 .3% 33 .9% 33 .3% 33 .5% 32 .9% 31 .0% 31 .1% Total rental GLA 14,317 14,968 14,812 15,417 14,234 14,106 13,936 13,886 Leased rental GLA Leased area % 12,998 90.8% 13,582 13,468 13,775 12,861 12,781 12,772 12,755 90 .7% 90 .9% 89 .3% 90 .4% 90 .6% 91 .6% 91 .9% (1) This measure is presented on an IFRS basis. (2) Excludes the results of the Urban Data Centres segment which was classified as a discontinued operation in Q4 2022. The prior period comparative figures have been revised accordingly. (3) Starting Q1 2022, this includes the weighted average number of Units and Exchangeable LP Units. (4) Starting Q2 2022, this includes distributions on Units and Exchangeable LP Units. (5) This is a non-IFRS measure, refer to page 21. These non-IFRS measures include the results of the continuing operations and the discontinued operations. (6) In the fourth quarter of 2022, Allied incurred $(564) of financing prepayment costs in connection with the favourable refinancing of a mortgage. In addition, 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. (7) Net asset value per unit (“NAV per unit”) is calculated as follows: total equity as at the corresponding period ended, (per the consolidated balance sheets) divided by the actual number of Units and Exchangeable LP Units outstanding at period end. (8) Net debt as a multiple of annualized adjusted EBITDA for Q1 2022 including the expected annualized EBITDA from the six properties acquired from Choice Properties on March 31, 2022, is 9.4x. Allied’s quarterly results are impacted by occupancy, the economic productivity of the portfolio, acquisitions, the magnitude and timing of development expenditures and project completions, and changes in the fair values of investment properties and investment properties held for sale . 58 ALLIED 2022 ANNUAL REPORTSection V —Asset Profile The following table reconciles the consolidated balance sheets on an IFRS basis to a proportionate basis, a non-IFRS measure, as at December 31, 2022, and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . 59 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 DECEMBER 31, 2021 INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS Assets Non-current assets Investment properties $9,669,005 $120,630 $9,789,635 $9,527,105 $124,960 $9,652,065 Residential inventory 187,272 — 187,272 170,980 — 170,980 Investment in joint venture and loan receivable 7,089 (7,089) — 124,790 (124,790) Loans and notes receivable 174,019 — Other assets 56,221 1,372 174,019 57,593 223,456 28,185 10,093,606 114,913 10,208,519 10,074,516 — 1,370 1,540 — 223,456 29,555 10,076,056 Current assets Cash and cash equivalents 20,990 1,273 22,263 22,548 2,170 24,718 Loan receivable from joint venture 113,287 (113,287) — — Loans and notes receivable 258,093 — 258,093 144,306 Accounts receivable, prepaid expenses and deposits 65,544 Investment properties held for sale 1,354,830 613 — 66,157 57,061 1,354,830 86,260 — — 709 — 1,812,744 (111,401) 1,701,343 310,175 2,879 — 144,306 57,770 86,260 313,054 Total assets $11,906,350 $3,512 $11,909,862 $10,384,691 $4,419 $10,389,110 Liabilities Non-current liabilities Debt $3,864,256 $— $3,864,256 $3,417,138 $— $3,417,138 Lease liabilities Other liabilities 50,851 43,438 3,958,545 Current liabilities Debt 346,929 — — — — Accounts payable and other liabilities 370,823 3,512 Lease liability held for sale 107,215 — 824,967 3,512 50,851 43,438 157,550 44,635 3,958,545 3,619,323 346,929 36,146 — — — — 157,550 44,635 3,619,323 36,146 374,335 107,215 828,479 303,450 4,419 307,869 — — — 339,596 4,419 344,015 Total liabilities $4,783,512 $3,512 $4,787,024 $3,958,919 $4,419 $3,963,338 60 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 DECEMBER 31, 2021 IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS IFRS BASIS INVESTMENT IN JOINT VENTURE PROPORTIONATE BASIS Equity Unitholders’ equity $6,581,166 Non-controlling interests 541,672 Total equity $7,122,838 $— — $— $6,581,166 $6,425,772 541,672 — $7,122,838 $6,425,772 $— — $— $6,425,772 — $6,425,772 Total liabilities and equity $11,906,350 $3,512 $11,909,862 $10,384,691 $4,419 $10,389,110 As at December 31, 2022, Allied’s portfolio of 217 investment properties consists of 199 rental properties (three of which are partially under development), 13 development properties, and five investment properties held for sale . Allied’s portfolio of investment properties has a fair value of $11,144,465, including one equity accounted investment in a joint venture . Changes to the carrying amounts of investment properties and investment properties held for sale on a proportionate basis, a non-IFRS measure, are summarized in the following table . Refer to Non-IFRS Measures on page 21 . 61 ALLIED 2022 ANNUAL REPORTTHREE MONTHS ENDED DECEMBER 31, 2022 YEAR ENDED DECEMBER 31, 2022 RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT TOTAL RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT TOTAL Balance, beginning of period $9,474,149 $1,455,480 $10,929,629 $8,499,495 $1,238,830 $9,738,325 Additions: Acquisitions — 126,198 126,198 805,757 165,747 971,504 872 1,634 25,271 4,014 61,006 15,019 1,728 5,889 62,734 20,908 59,655 95,747 135,592 263,544 399,136 — — — 4,915 — (74,945) (15,254) (90,199) 376,730 (376,730) (293,542) 293,542 3,900 561 — — — — 3,900 561 Improvement allowances (1) 24,399 Leasing commissions (1) Capital expenditures (1) Dispositions 2,380 36,092 — Transfers from PUD 179,560 (179,560) Transfers to PUD (74,300) 74,300 — 4,915 — — — Transfers from other assets Finance leases Amortization of straight- line rent and improvement allowances (1) Fair value (loss) gain on investment properties and investment properties held for sale (1) (5,973) 526 (5,447) (26,874) 1,389 (25,485) (26,197) (9,665) (35,862) 112,326 (49,245) 63,081 Balance, end of period $9,615,025 $1,529,440 $11,144,465 $9,615,025 $1,529,440 $11,144,465 Investment properties $8,260,195 $1,529,440 $9,789,635 $8,260,195 $1,529,440 $9,789,635 Investment properties held for sale 1,354,830 — 1,354,830 1,354,830 — 1,354,830 $9,615,025 $1,529,440 $11,144,465 $9,615,025 $1,529,440 $11,144,465 (1) Includes Allied’s proportionate share of the equity accounted investment of the following amounts for the three months and year ended December 31, 2022: improvement allowances of $400 and $512, respectively; leasing commissions of $— and $305, respectively; capital expenditures of $426 and $962, respectively; amortization of straight-line rent and improvement allowances of $(139) and $(8), respectively; and a fair value gain (loss) on investment properties of $693 and $(6,101), respectively. As at December 31, 2022, Allied had five properties classified as investment properties held for sale totaling $1,354,830, four located in Toronto and one located in Montréal . There were three investment properties held for sale as at December 31, 2021, totaling $86,260, two located in Toronto and one located in Montréal . The increase of $1,268,570 in the year ended December 31, 2022, is due to the addition of five investment properties and the disposition of three investment properties held for sale . For the three months ended December 31, 2022, Allied recognized a fair value loss on investment properties and investment properties held for sale of $35,862 on a proportionate basis . This was primarily due to macroeconomic conditions . 62 ALLIED 2022 ANNUAL REPORTFor the year ended December 31, 2022, Allied recognized a fair value gain on investment properties and investment properties held for sale of $63,081 on a proportionate basis . This was primarily due to an increase in value from compressing capitalization rates in the UDC portfolio and from additional density value recognized, moderated by macroeconomic conditions . For the three months ended December 31, 2022, Allied capitalized $15,676 of borrowing costs to its capital expenditures on a proportionate basis, $12,235 of which related to development activity and $1,592 to upgrade activity in the rental portfolio . Allied capitalized $1,849 of borrowing costs to qualifying residential inventory . For the year ended December 31, 2022, Allied capitalized $53,810 of borrowing costs to its capital expenditures on a proportionate basis, $43,066 of which related to development activity and $4,540 to upgrade activity in the rental portfolio . Allied capitalized $6,204 of borrowing costs to qualifying residential inventory . 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, and, in some cases, investment properties held for sale .   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 and ancillary parking facilities and, in some cases, investment properties held for sale .   Direct capitalization method - Under this approach, capitalization rates are applied to the estimated stabilized NOI of the properties . Estimated stabilized NOI is based on projected rental revenue and property operating costs, and external evidence such as current market rents for similar properties, and is further adjusted for estimated vacancy loss and capital reserves . Currently, this method is used only to value residential use . Allied’s portfolio is valued by an 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 . In valuing the investment properties as at December 31, 2022, 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 .62%, detailed in the table below: 63 ALLIED 2022 ANNUAL REPORTOVERALL CAPITALIZATION RATE DECEMBER 31, 2022 DECEMBER 31, 2021 RANGE % WEIGHTED AVERAGE % FAIR VALUE $ (1) RANGE % WEIGHTED AVERAGE % FAIR VALUE $ (1) Montréal & Ottawa 4.50% - 7.00% 4.98% $2,490,473 4 .50% - 6 .75% 5 .03% $2,546,217 Toronto & Kitchener 4.00% - 5.75% 4.39% 4,396,581 3 .75% - 5 .75% 4 .39% 3,569,080 Calgary Vancouver 5.75% - 7.50% 6.58% 286,467 5 .00% - 7 .00% 4.00% - 4.25% 4.03% 967,050 3 .50% - 4 .00% 5 .93% 3 .76% 358,989 711,180 Urban Workspace 4.00% - 7.50% 4.62% $8,140,571 3 .50% - 7 .00% 4 .64% $7,185,466 Urban Data Centres (2) —% —% — 5 .00% - 5 .75% 5 .30% 1,133,022 Rental Properties 4.00% - 7.50% 4.62% $8,140,571 3 .50% - 7 .00% 4 .74% $8,318,488 Residential Properties 3.75% - 5.00% 4.61% 119,624 5 .00% - 5 .00% 5 .00% 94,747 Properties Under Development 4.00% - 7.25% 4.66% 1,529,440 4 .00% - 7 .00% 4 .24% 1,238,830 Investment Properties 3.75% - 7.50% 4.62% $9,789,635 3 .50% - 7 .00% 4 .69% $9,652,065 Investment Properties Held for Sale 4.50% - 5.25% 4.80% $1,354,830 —% —% $86,260 $11,144,465 $9,738,325 (1) Presented on a proportionate basis, which is a non-IFRS measure. Refer to Non-IFRS Measures on page 21. (2) For the year ended December 31, 2022, the Urban Data Centres were classified as investment properties held for sale. 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 owns 199 rental properties in six Canadian cities (three of these rental properties are partially under development) and five investment properties held for sale as at December 31, 2022 . 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 21 . These properties represent 31 .3% of the total LQA NOI as at December 31, 2022 . 64 ALLIED 2022 ANNUAL REPORTPROPERTY NAME NORMALIZED LQA NOI APPRAISED FAIR VALUE CAP RATE Le Nordelec, Montréal $15,657 $313,380 5 .00% Cité Multimédia, Montréal 14,202 416,010 4 .75% 1001 Boulevard Robert-Bourassa, Montréal (1) QRC West, Toronto 14,125 13,547 355,810 341,430 5 .50% 4 .00% 747 Rue du Square Victoria, Montréal 10,861 284,400 4 .75% 5455 de Gaspé Avenue, Montréal King Portland Centre, Toronto 9,174 6,993 162,490 184,030 5 .00% 4 .00% 375 Water Street, Vancouver 6,861 215,610 4 .00% 555 Richmond Street West, Toronto 175 Bloor Street E, Toronto 6,845 6,598 188,710 185,090 Total $104,863 $2,646,960 4 .50% 4 .25% 4.64% PRINCIPAL USERS Gsoft, Unity Technologies, Yellow Pages Media Acceo Solutions, Morgan Stanley, Technicolor Autorité Régionale de Transport Métropolitain, Hydro-Québec, National Bank of Canada, Société Québecoise des Infrastructures eOne, Sapient Canada Dassault Systèmes Canada, Otera Capital Inc ., Secretariat of the Convention on Biological Diversity, Société Québecoise des Infrastructures Attraction Media, Framestore, Ubisoft Indigo, Shopify Global Technology Provider, Quarterdeck Brewing Co, Zoic Studios BC Inc . Centre Francophone de Toronto, Synaptive Medical Klick Health, Leo Burnett Company, Norr (1) A portion of the property is under development. The appraised fair value includes the portion in the rental portfolio and the portion under development. URBAN DATA CENTRES As at December 31, 2022, the Urban Data Centre segment has been classified as discontinued operations and is comprised of three investment properties held for sale totaling $1,305,990 and a related lease liability held for sale totaling $107,215 . The three investment properties are 151 Front Street W, 905 King Street W and 250 Front Street W and the lease liability is at 250 Front Street W . The following table summarizes the results from discontinued operations: Rental Revenue Property operating costs Operating income Interest expense Fair value gain on investment properties held for sale Net income from discontinued operations YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $96,669 (32,375) 64,294 (6,532) 142,932 $200,694 $96,087 (34,703) 61,384 (5,949) 56,335 $111,770 65 ALLIED 2022 ANNUAL REPORTACQUISITIONS During the year ended December 31, 2022, Allied acquired the following properties from third parties: PROPERTY ACQUISITION DATE ACQUISITION COST (1) OFFICE GLA RETAIL GLA TOTAL GLA PARKING STALLS 108 East 5th Avenue, Vancouver (2)(3) February 23, 2022 $39,549 N/A 1010 Sherbrooke W, Montréal March 31, 2022 116,248 326,754 110 Yonge, Toronto (3) 525 University, Toronto March 31, 2022 March 31, 2022 55,757 137,967 78,100 192,771 175 Bloor E, Toronto (3) March 31, 2022 166,547 295,739 N/A 1,600 2,376 9,392 9,177 N/A 328,354 80,476 202,163 304,916 1508 West Broadway, Vancouver (4) March 31, 2022 166,408 82,961 64,183 147,144 1185 West Georgia, Vancouver March 31, 2022 131,671 160,364 540 King W, Toronto 121 John, Toronto April 8, 2022 July 6, 2022 26,615 4,544 — 2,444 700 Saint-Hubert, Montréal (2) October 31, 2022 126,198 143,314 4,869 5,935 798 800 165,233 5,935 3,242 144,114 N/A 276 72 178 264 265 157 10 2 146 Total $971,504 1,282,447 99,130 1,381,577 1,370 Includes transaction costs and the assumption of liabilities. (1) (2) This property is a property under development. (3) Allied owns a 50% interest in these properties. The GLA is at Allied’s ownership. The parking spaces are at 100% ownership. (4) Allied acquired a leasehold interest in 1508 West Broadway. DISPOSITIONS 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 accordingly there was no gain or loss recorded . In addition, during the year ended December 31, 2022, Allied received cash of $413 (at Allied’s share) for the release of a holdback related to the disposition of the first phase of The Well air rights . On June 30, 2022, Allied closed on the disposition of two investment properties held for sale, which were 662 King Street West and 668 King Street West, both in Toronto, for net proceeds of $38,954 and $9,991, respectively . The total net cash consideration of $48,945 represented the fair value at the time of disposition, so there was no gain or loss recorded on closing . The disposition costs incurred were fully recoverable from the purchaser . On August 16, 2022, Allied closed on the disposition of one investment property held for sale, 100 Lombard Street in Toronto, at a selling price of $26,000, which represented the fair value at the time of disposition, so there was no gain or loss recorded on closing . In addition, Allied incurred net working capital adjustments of $487 and selling costs of $21, resulting in total net cash consideration of $25,492 . 66 ALLIED 2022 ANNUAL REPORT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 115 properties in Toronto (including properties in the development portfolio) now comprise 5 .0 million square feet of GLA and are situated on 40 .1 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 12 .0 million square feet of GLA, 7 .0 million square feet more than currently is in place . Allied entered the Montréal market in April of 2005 . The 34 properties in Montréal now comprise 6 .3 million square feet of GLA . As they are much larger buildings on average than those comprising the Toronto portfolio, the 46 .1 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 9 .4 million square feet of GLA, 3 .1 million square feet more than currently is in place . 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 12 .9 million square feet of potential incremental density, of which 2 .5 million square feet is currently in PUD, and the remaining 10 .4 million square feet is potential incremental density . Of the 10 .4 million square feet of potential incremental density, 5 .2 million square feet is reflected in the appraised fair values, mainly at properties where zoning approvals are in place . The remaining 5 .2 million square feet is not reflected in the appraised fair values . 67 ALLIED 2022 ANNUAL REPORTPOTENTIAL INCREMENTAL DENSITY (IN SQ .FT .) - GEOGRAPHIC BREAKDOWN CITY Toronto (1) Kitchener Montréal Ottawa Calgary Edmonton Vancouver Total CURRENT GLA CURRENT PUD (ESTIMATED ON COMPLETION) POTENTIAL INCREMENTAL DENSITY TOTAL POTENTIAL GLA 4,965,084 562,303 6,266,588 231,434 1,283,002 — 1,008,768 14,317,179 959,966 147,000 923,686 — 88,000 297,851 123,640 6,065,093 332,218 2,163,456 — 1,436,198 — 371,046 11,990,143 1,041,521 9,353,730 231,434 2,807,200 297,851 1,503,454 2,540,143 10,368,011 27,225,333 (1) The GLA estimated on completion for properties under development in Toronto excludes 291,381 square feet of GLA at The Well, which has been transferred to the rental portfolio. The timing of development for the 10 .4 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 . Toronto & Kitchener Calgary & Edmonton Montréal & Ottawa Vancouver Projected Portfolio Development Pipeline 6,000,000 5,000,000 4,000,000 3,000,000 124,000 2,000,000 924,000 1,000,000 386,000 1,107,000 0 Current PUD 122,000 28,000 529,000 Short Term (0-5 Years) ) . 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 68 43,000 551,000 3,816,000 300,000 1,491,000 1,436,000 30,000,000 25,000,000 20,000,000 15,000,000 2,052,000 10,000,000 5,000,000 0 Medium Term (5-10 Years) Long Term (10+ Years) ) . t f . q s ( A L G o i l o f t r o P d e t c e o r P j l a t o T ALLIED 2022 ANNUAL REPORT Allied has initiated the intensification approval process for seven properties in Toronto, three 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 APPRAISED FAIR VALUE REZONING APPROVAL STATUS USE CURRENT GLA ESTIMATED GLA ON COMPLETION ESTIMATED COMPLETION The Castle (1) King & Peter (2) $102,840 In progress Office, limited retail 179,907 440,000 Unscheduled 121,360 Completed Office, limited retail 86,230 790,000 Unscheduled King & Spadina (3) 88,860 In progress Office, limited retail 77,550 430,000 Unscheduled King & Brant (4) Union Centre 45,850 Completed Office, residential, retail 16,340 240,000 Unscheduled 199,500 Completed Office, limited retail 41,787 1,330,000 Unscheduled Bathurst Street Assembly (5) 49,380 In progress Office, residential, retail 36,919 318,000 Unscheduled Adelaide & Spadina (6) 34,500 Completed Office, retail 11,015 230,000 Unscheduled Le Nordelec - Lot A (7) 23,600 In progress Office — 230,000 Unscheduled Le Nordelec - Lot B (8) 52,080 In progress Office 32,893 744,000 Unscheduled Le Nordelec - Lot E (9) 10,800 Completed Office 7,550 135,000 Unscheduled 365 Railway Total 17,440 In progress Office 31,528 60,000 Unscheduled $746,210 521,719 4,947,000 (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) King & Spadina is comprised of 460 King W, 468 King W, the surface parking lot at 464 King W, and the surface parking lot at 78 Spadina. (4) King & Brant is comprised of 540 King W, 544 King W and the surface parking lot at 7-9 Morrison. (5) 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. (6) Adelaide & Spadina is comprised of 383 Adelaide W and 387 Adelaide W. (7) Le Nordelec - Lot A is comprised of 1900 Saint Patrick, a component of the 1751 Richardson & 1700 Saint-Patrick property. (8) Le Nordelec - Lot B is compromised of 1655 Richardson and the adjacent surface parking lot. (9) Le Nordelec - Lot E is comprised of 1301-1303 Montmorency. 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 . Allied intends to align all new developments and redevelopments with its Net Zero Carbon Plan . 69 ALLIED 2022 ANNUAL REPORT  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 . The completion of projects currently under development is an important component of Allied’s growth . 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, 2022, the cost of Allied’s Properties Under Development was 12 .6% of GBV (December 31, 2021 - 11 .2%) . 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 or redeveloped 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 . Allied has the following 13 Properties Under Development and three rental properties partially under development . Seven of the projects are ground-up developments and nine are redevelopments . GROUND-UP DEVELOPMENTS Ground-up development involves construction of significant amounts of new leasable area . PROPERTY NAME USE ESTIMATED GLA ON COMPLETION (SF) % OF OFFICE DEVELOPMENT PRE-LEASED The Well, Toronto (1)(2)(6) Breithaupt Phase III, Kitchener (1) Office, retail Office Adelaide & Duncan, Toronto (1)(3) Office, retail, residential QRC West Phase II, Toronto (4) KING Toronto, Toronto (1)(5) 108 East 5th Avenue, Vancouver (1) 700 Saint Hubert, Montréal Total Office, retail Office, retail Office Office, retail 763,000 147,000 230,000 93,134 100,000 102,000 144,114 1,579,248 98% 100 100 100 — 54 24 82% (1) These properties are co-owned, reflected in the table above at Allied’s ownership interest. (2) 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 584,000 of office, 160,000 of retail, 19,000 of storage 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. (3) 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. (4) The GLA components (in square feet) are as follows: 77,434 of office and 15,700 of retail. (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 GLA components (in square feet) at our 50% share will be as follows: 60,000 of retail and 40,000 of office. (6) A portion of The Well has been transferred to the rental portfolio. The percentage of office development pre-leased and the estimated GLA on completion includes the portion in the rental portfolio. 70 ALLIED 2022 ANNUAL REPORTREDEVELOPMENTS Redevelopment involves transformation of existing leasable area to enhance revenue-producing capability . PROPERTY NAME The Lougheed (604-1st SW), Calgary 400 Atlantic, Montréal Boardwalk-Revillon Building, Edmonton (1) 185 Spadina, Toronto 342 Water, Vancouver (2) 1001 Boulevard Robert-Bourassa, Montréal (3)(4) RCA Building, Montréal (4) 422-424 Wellington W, Toronto 3575 Saint Laurent, Montréal (5) Total USE GLA (SF) Office, retail Office, retail Office, retail Office Office, retail Office, retail Office Retail Office, retail 88,000 87,473 297,851 55,213 21,640 335,652 171,668 10,000 184,779 1,252,276 (1) The GLA components (in square feet) are as follows: 233,559 of office and 64,292 of retail. (2) The GLA components (in square feet) are as follows: 15,385 of office and 6,255 of retail. (3) The GLA components (in square feet) are as follows: 303,281 of office and 32,371 of retail. (4) A portion of the property is under development. The GLA represents the portion under development. (5) The GLA components (in square feet) are as follows: 165,502 of office and 19,277 of retail. The following table sets out the fair value of Allied’s Properties Under Development as at December 31, 2022, as well as Management’s estimates with respect to the financial outcome on completion . Estimated NOI from development completion is based on stabilized occupancy and, in the first year, its impact is moderated by the discontinuation of capitalized costs . PROPERTY NAME The Well, Toronto (1)(2) Adelaide & Duncan, Toronto (1)(3) TRANSFER TO RENTAL PORTFOLIO Q3 2022 - Q4 2023 Q2 2023 - Q4 2024 APPRAISED VALUE ESTIMATED ANNUAL NOI ESTIMATED TOTAL COST ESTIMATED YIELD ON COST ESTIMATED COST TO COMPLETE $909,480 $37,500 - 43,250 $793,000 4 .7% - 5 .5% $78,000 177,260 9,625 - 11,125 206,200 4 .7% - 5 .4% 45,700 Breithaupt Phase III, Kitchener (1)(4) Q3 2023 QRC West, Phase II, Toronto Q2 2024 81,590 70,560 5,375 - 5,500 78,652 6 .8% - 7 .0% 8,700 4,550 - 4,650 91,574 5 .0% - 5 .1% 32,400 KING Toronto, Toronto (1)(5) Q2 2025 67,800 5,000 - 6,000 93,791 5 .3% - 6 .8% 22,400 108 East 5th Avenue, Vancouver (1) Q1 2025 49,290 4,350 - 4,600 106,384 4 .1% - 4 .3% 58,000 700 Saint Hubert Q2 2023 126,990 4,000 - 5,000 130,457 3 .1% - 3 .8% 10,500 Redevelopments (6) Total Q1 2023 - Q4 2024 231,220+ 13,865 - 16,540+ 346,992+ 3 .9% - 4 .7% 54,600+ $1,714,190+ (7) $84,265 - 96,665+ (1) These properties are co-owned, reflected in the table above at Allied’s ownership percentage of assets and liabilities. (2) The estimated costs are net of the actual gross proceeds from the sale of the The Well Air Rights of $111,758 (at Allied’s share). The transfer of The Well to the rental portfolio is occurring in phases. (3) The project is anticipated to be completed in two phases. The commercial phase is scheduled for completion in Q2 2023 and the residential phase is scheduled for completion in Q4 2024. (4) Breithaupt Phase III is comprised of 43 Wellington, 53 & 55 Wellington, 305 Joseph, 20 Breithaupt and 2-4 Stewart. (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. (6) Redevelopments consist of nine projects, seven which include properties in their entirety and two which include a portion of the property. (7) The Properties Under Development as at December 31, 2022 of $1,529,440 excludes the portion of The Well that has been transferred to the rental portfolio. 71 ALLIED 2022 ANNUAL REPORT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 permits . In some instances, particularly in ground-up developments like The Well and Breithaupt Phase III, base building work is underway during the fixturing period . In this case, transfer to the rental portfolio occurs when the base building work is complete . Estimated annual NOI is based on 100% economic occupancy . The most important factor affecting estimated annual NOI is the 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 . RESIDENTIAL INVENTORY Residential inventory is as follows: KING Toronto $187,272 $170,980 DECEMBER 31, 2022 DECEMBER 31, 2021 The changes in the aggregate carrying value of Allied’s residential inventory is as follows:  Balance, beginning of year Development expenditures Impairment Balance, end of year DECEMBER 31, 2022 DECEMBER 31, 2021 $170,980 32,021 (15,729) $187,272 $140,038 30,942 — $170,980 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 .   72 ALLIED 2022 ANNUAL REPORT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, 2022, 384 units or 87% have been pre-sold, subject to customary closing conditions . Management expects the condominium sales to close in 2024 . During the year ended December 31, 2022, Allied recorded an impairment of $15,729 on KING Toronto . Residential inventory carrying value is calculated as the estimated gross proceeds less estimated costs to complete . The impairment in the period reflects higher estimated costs to complete . DEVELOPMENT COMPLETIONS PROPERTY COMPLETION INVESTMENT LQA NOI (1) UNLEVERED YIELD ON COST FAIR VALUE VALUE CREATION VALUE CREATION AS % OF COST QRC West, Toronto 2015 $130,000 $13,547 10 .4% $341,430 $211,430 162 .6% The Breithaupt Block, Kitchener 180 John, Toronto 189 Joseph, Kitchener King Portland Centre, Toronto (2) 425 Viger, Montréal 2016 2017 2017 2019 2020 $25,020 $27,500 $11,360 $76,678 $104,268 $2,523 $1,540 $770 $6,278 $8,221 5 .6% 6 .8% 8 .2% 7 .9% 10 .1% $46,980 $21,960 $34,220 $13,290 $6,720 $1,930 87 .8% 24 .4% 17 .0% $154,310 $77,632 101 .2% $172,680 $68,412 65 .6% (1) This is a non-IFRS measure. Refer to Non-IFRS Measures on page 21. (2) Includes 642 King W completed in early 2018 and 620 King W completed in early 2019. 602-606 King W are excluded as they were not under development. LOANS RECEIVABLE As at December 31, 2022, total loans receivable outstanding is $432,032 (December 31, 2021 - $367,579) . 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, 2022, the loan receivable outstanding is $21,173 (December 31, 2021 - $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, and on August 18, 2022, the facility was further increased to $175,000 . On May 18, 2022, Westbank exercised its option to extend the maturity date from August 31, 2022, to August 31, 2023 . On January 12, 2023, the maturity date of 73 ALLIED 2022 ANNUAL REPORTthe facility was further extended from August 31, 2023 to February 29, 2024 . Interest accrues to the credit facility monthly at a rate of 6 .75% per annum up to August 31, 2022 . Thereafter, interest accrues to the credit facility monthly at the greater of 6 .75% per annum and the prime rate plus 3 .00% per annum . 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, 2022, the loan receivable outstanding is $161,032 (December 31, 2021 - $144,271) . 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 is secured by a charge on the property (subordinated to the construction lender) . Interest accrues to the credit facility at a rate of 7 .00% per annum . The loan is repayable at the earlier of November 30, 2023, or the closing of the condominium units . As at December 31, 2022, the loan receivable outstanding is $97,037 (December 31, 2021 - $90,586) . 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 installments upon completion of development and rent commencement, which is anticipated to begin in the second quarter of 2023 . As at December 31, 2022, the loan receivable outstanding is $9,913 (December 31, 2021 - $10,256) 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 150 West Georgia (previously known as 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 150 West Georgia based on an agreed upon formula . As at December 31, 2022, the loan receivable outstanding is $142,877 (December 31, 2021 - $101,293) . The table below summarizes the loans receivable as at December 31, 2022, and December 31, 2021 . DECEMBER 31, 2022 DECEMBER 31, 2021 $21,173 161,032 97,037 9,913 142,877 $432,032 $21,173 144,271 90,586 10,256 101,293 $367,579 Adelaide & Duncan 400 West Georgia KING Toronto Breithaupt Phase III 150 West Georgia (1) Total loans receivable (1) Previously known as 720 Beatty Street. 74 ALLIED 2022 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, a promissory note payable, an unsecured operating facility, 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 $8,345,530, representing 85 .2% of investment properties, on a proportionate basis, as at December 31, 2022 . Refer to Non-IFRS Measures on page 21 . 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 . 75 ALLIED 2022 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, 2022, and December 31, 2021 . Refer to Non-IFRS Measures on page 21 . Mortgages payable Construction loans payable Promissory note payable Unsecured revolving operating facility Senior unsecured debentures Unsecured term loans Debt, IFRS basis Less: cash and cash equivalents (1) Net debt DECEMBER 31, 2022 DECEMBER 31, 2021 $112,822 223,725 195,673 440,000 2,589,939 649,026 $4,211,185 22,263 $4,188,922 $118,057 132,696 — 365,000 2,587,989 249,542 $3,453,284 24,718 $3,428,566 (1) This is on a proportionate basis and includes cash and cash equivalents attributable to TELUS Sky totaling $1,273 as at December 31, 2022 (December 31, 2021 - $2,170). The table below summarizes the scheduled principal maturity and weighted average contractual interest rates for Allied’s mortgages payable, promissory note payable, unsecured debentures and unsecured term loans . As at December 31, 2022, 86 .3% of Allied’s debt had a fixed rate . INTEREST RATE OF MATURING MORTGAGES MORTGAGES PAYABLE PROMISSORY NOTE PAYABLE INTEREST RATE SENIOR UNSECURED DEBENTURES INTEREST RATE UNSECURED TERM LOANS INTEREST RATE TOTAL CONSOLIDATED INTEREST RATE OF MATURING DEBT $15,299 4 .30% $200,000 2 .00% 49,197 6,423 21,834 487 14,750 — 5,000 — — 3 .47 — 3 .59 — 4 .04 — — — — — — — — — — — — — — — — — — — — — — $— — —% — $— — 200,000 3 .64 400,000 600,000 1 .73 250,000 300,000 300,000 3 .11 3 .13 300,000 3 .39 400,000 3 .12 — — 500,000 3 .10 — — — — — — —% $215,299 2 .13% — 49,197 4 .87 3 .50 — — — — — — 606,423 871,834 300,487 314,750 300,000 405,000 — 500,000 3 .47 4 .46 2 .28 3 .11 3 .17 3 .39 3 .12 — 3 .10 $112,990 3.37% $200,000 2.00% $2,600,000 2.86% $650,000 4.34% $3,562,990 3.10% 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 76 ALLIED 2022 ANNUAL REPORT The weighted average term of Allied’s debt (excluding construction loans and the Unsecured Facility) is 4 .8 years . The chart below summarizes the maturities of principal in regards to debt obligations as at December 31, 2022: MORTGAGES UNSECURED TERM LOANS UNSECURED DEBENTURES PROMISSORY NOTE CONSOLIDATED W/A CONTRACTUAL INTEREST RATE $1,000,000 $900,000 $800,000 $700,000 $600 .0 4.46% $600,000 3.47% $200 .0 $500,000 3.11% 3.17% 3.12% 3.39% $400,000 2.13% $400 .0 2.28% $400 .0 $300 .0 $300 .0 $300 .0 $250 .0 $300,000 $200,000 $200 .0 $100,000 $0 $15 .3 2023 $49 .2 2024 6 .00% 5 .00% 4 .00% 3.10% $500 .0 3 .00% 2 .00% 1 .00% $6 .4 2025 $21 .8 2026 $0 .5 2027 $14 .8 2028 2029 $5 .0 2030 2031 2032 0 .00% The table below summarizes the weighted average effective interest rate as at December 31, 2022: MORTGAGES PAYABLE PROMISSORY NOTE PAYABLE SENIOR UNSECURED DEBENTURES UNSECURED TERM LOANS TOTAL Weighted Average Effective Interest Rate as at December 31, 2022 2 .92% 3 .81% 2 .86% 4 .34% 3 .47% 77 ALLIED 2022 ANNUAL REPORTMORTGAGES PAYABLE As at December 31, 2022, mortgages payable, net of financing costs, total $112,822 and have a weighted average contractual interest rate of 3 .37% (December 31, 2021 - 3 .39%) . The weighted average term of the mortgage debt is 3 .0 years (December 31, 2021 - 4 .0 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: 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, 2022 DECEMBER 31, 2021 $3,069 2,528 6,423 1,391 487 293 5,000 $19,191 $12,230 46,669 — 20,443 — 14,457 — $15,299 49,197 6,423 21,834 487 14,750 5,000 $93,799 $112,990 $118,094 584 (752) 1,066 (1,103) $112,822 $118,057 CONSTRUCTION LOANS PAYABLE As at December 31, 2022, and December 31, 2021, Allied’s obligations under the construction loans are as follows: JOINT ARRANGEMENT OWNERSHIP DATE OF MATURITY DECEMBER 31, 2022 DECEMBER 31, 2021 Adelaide & Duncan Breithaupt Phase III KING Toronto 108 East 5th Avenue 50% 50% 50% 50% August 11, 2023 $85,485 $62,048 June 2, 2023 December 17, 2024 December 6, 2025 50,472 71,762 16,006 31,041 39,607 — $223,725 $132,696 78 ALLIED 2022 ANNUAL REPORT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 with a standby fee of 25 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $135,000 of the guarantee . 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% . 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 . On December 1, 2022, Allied and Perimeter exercised their option to extend the loan maturity to June 2, 2023, which bears interest at bank prime or bankers’ acceptance rate plus 120 basis points with a standby fee of 20 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $69,000 of the guarantee . 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 with a standby fee of 25 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $232,500 of the guarantee . On December 5, 2022, the 108 East 5th Avenue joint arrangement obtained a $150,000 construction lending facility from a syndicate of Canadian banks, in which Allied’s 50% share is $75,000 . The loan matures on December 6, 2025, and bears interest at prime plus 35 basis points or bankers’ acceptance rate plus 135 basis points with a standby fee of 27 basis points and a letter of credit fee rate of 100 basis points . These interest rates and the standby fee (other than the letter of credit fee) are subject to variability based on the achievement of two distinct sustainability performance targets . For each sustainability performance target achieved, the interest rate and standby fee would decrease by 0 .025% per annum and 0 .005% per annum, respectively . In addition, if certain sustainability minimums are not achieved, the interest rate and standby fee would increase by 0 .025% per annum and 0 .005% per annum, respectively . Depending on the applicable sustainability performance target or sustainability minimum, the settlement of these interest rate variations and the standby fee occurs either annually or at the earlier of December 6, 2025, and the date the construction lending facility is fully repaid . Allied has provided a joint and several guarantee of the entire facility and is earning a related guarantee fee on $75,000 of the guarantee . On January 13, 2023, the 108 East 5th Avenue joint arrangement entered into a swap agreement to fix 75% of the construction costs up to $110,175 at 4 .90% . 79 ALLIED 2022 ANNUAL REPORTPROMISSORY NOTE PAYABLE On March 31, 2022, Allied acquired a portfolio of six properties from Choice Properties, which was partially settled with the issuance of a $200,000 promissory note . The promissory note is secured by a first registered charge on five of the six properties acquired . Allied’s obligations under the promissory note are as follows: Promissory note payable Net discount on promissory note payable CONTRACTUAL INTEREST RATE DATE OF MATURITY FREQUENCY OF INTEREST PAYMENT DECEMBER31, 2022 DECEMBER 31, 2021 1 .00% for 2022, 2 .00% for 2023 December 31, 2023 Quarterly $200,000 (4,327) $195,673 $— — $— UNSECURED REVOLVING OPERATING FACILITY As at December 31, 2022, and December 31, 2021, Allied’s obligation under the unsecured revolving operating facility (the “Unsecured Facility”) is as follows: MATURITY DATE CONTRACTUAL INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE DECEMBER 31, 2022 Unsecured Facility limit $600,000 (1) January 30, 2025 Prime + 0.20% or Bankers’ acceptance + 1.20% (2) 0.24% $600,000 $(440,000) $(15,563) $144,437 (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 CONTRACTUAL INTEREST RATES ON DRAWINGS STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE DECEMBER 31, 2021 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. 80 ALLIED 2022 ANNUAL REPORTSENIOR UNSECURED DEBENTURES As at December 31, 2022, and December 31, 2021, Allied’s obligations under the senior unsecured debentures are as follows: SERIES Series C Series D Series E Series F Series G Series H Series I Unsecured Debentures, principal Net financing costs CONTRACTUAL INTEREST RATE DATE OF MATURITY INTEREST PAYMENT DATE DECEMBER 31, 2022 DECEMBER 31, 2021 April 21, 2025 April 21 and October 21 $200,000 $200,000 3 .636% 3 .394% 3 .113% 3 .117% 3 .131% 1 .726% 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 3 .095% February 6, 2032 February 6 and August 6 300,000 300,000 400,000 300,000 600,000 500,000 300,000 300,000 400,000 300,000 600,000 500,000 $2,600,000 $2,600,000 (10,061) (12,011) $2,589,939 $2,587,989 The Series C, D, E, F, G, H and I Senior Unsecured Debentures are collectively referred to as the “Unsecured Debentures” .  The respective financing costs recognized are amortized using the effective interest method and recorded to interest expense . UNSECURED TERM LOANS As at December 31, 2022, and December 31, 2021, Allied’s obligations under the unsecured term loans are as follows:  CONTRACTUAL INTEREST RATE DATE OF MATURITY FREQUENCY OF INTEREST PAYMENT DECEMBER 31, 2022 DECEMBER 31, 2021 Unsecured term loan 3 .496% January 14, 2026 (1) Monthly $250,000 $250,000 Unsecured term loan 4 .865% October 22, 2025 Monthly 400,000 — Unsecured Term Loans, principal Net financing costs $650,000 $250,000 (974) (458) $649,026 $249,542 (1) The unsecured term loan is due on January 14, 2024, with two one-year extensions to January 14, 2026. The swap agreement to fix the rate at 3.496% covers the term including both extensions. 81 ALLIED 2022 ANNUAL REPORTThe two unsecured term loans are collectively referred to as “Unsecured Term Loans” . The respective financing costs are amortized using the effective interest method and recorded to interest expense . On April 22, 2022, Allied entered into an unsecured term loan with a financial institution for $400,000 at a rate of prime plus 10 basis points or bankers’ acceptance plus 110 basis points, due on October 22, 2025 . The proceeds from the loan were used to repay the Unsecured Facility . Debt financing costs of $700 were incurred and recorded against the principal owing . On June 24, 2022, Allied entered into a swap agreement to fix the rate at 4 .86% . On December 21, 2022, Allied amended the swap agreement for the settlement period, which increased the rate from 4 .86% to 4 .865% . CREDIT RATINGS Allied’s credit ratings as at December 31, 2022, 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 . 82 ALLIED 2022 ANNUAL REPORTFINANCIAL COVENANTS The Unsecured Facility, Unsecured Term Loans 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 FACILITY AND UNSECURED TERM LOANS The following outlines the covenants as defined in the agreements governing the Unsecured Facility and Unsecured Term Loans . The covenants are calculated on a proportionate basis, as required in these agreements . Refer to Non-IFRS Measures on page 21 . THRESHOLD DECEMBER 31, 2022 DECEMBER 31, 2021 COVENANT (1) Indebtedness ratio Secured indebtedness ratio Debt service coverage ratio (2) Equity maintenance Consolidated adjusted EBITDA to be more than 1 .5 times debt service payments At least $1,250,000 plus 75% of future equity issuances ($2,819,658) 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 Below 60% Below 45% 35.6% 4.5% 3.0x 33 .5% 2 .5% 2 .1x 6,581,166 6,425,772 2.6x 71.2% 2 .8x 71 .2% Includes results from continuing operations, discontinued operations and assets and liabilities classified as held for sale. (1) (2) The debt service coverage ratio as at December 31, 2022, includes financing prepayment costs of $(564) for the twelve months ended December 31, 2022 (December 31, 2021 - $52,610). Excluding these financing prepayment costs, the debt service coverage ratio as at December 31, 2022, would be 2.9x (December 31, 2021 - 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 21 . COVENANT THRESHOLD Pro forma interest coverage ratio Pro forma asset coverage test Maintain a 12-month rolling consolidated pro forma EBITDA of at least 1 .65 times pro forma interest expense Maintain net consolidated indebtedness below 65% of net aggregate assets on a pro forma basis DECEMBER 31, 2022 DECEMBER 31, 2021 2.8x 3 .5x 35.5% 33 .5% Equity maintenance (1) Maintain Unitholders’ equity above $300,000 6,581,166 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 2.8x 3 .0x (1) Includes results from continuing operations, discontinued operations and assets and liabilities classified as held for sale. 83 ALLIED 2022 ANNUAL REPORTAs at December 31, 2022, Allied was in compliance with the terms and covenants of the agreements governing the Unsecured Facility, the Unsecured Term Loans and the Unsecured Debentures . 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 . EQUITY The equity of Allied is comprised of Units issued by Allied and Exchangeable LP Units issued by Allied Properties Exchangeable Limited Partnership (“the Partnership”): UNITS (AUTHORIZED - UNLIMITED) Each Unit represents a single vote at any meeting of holders of Units and Special Voting Units (as defined below) and entitles the holders of Units and Special Voting Units to receive a pro rata share of all distributions, in accordance with the conditions provided for in the Declaration of Trust . EXCHANGEABLE LP UNITS (AUTHORIZED - UNLIMITED) Exchangeable LP Units issued by the Partnership are economically equivalent to Units, receive distributions equal to the distributions paid on the Units and are exchangeable, on a one-for-one basis, at the holder’s option, for Units . All Exchangeable LP Units are held, directly or indirectly, by Choice Properties . The 11,809,145 Exchangeable LP Units issued on March 31, 2022, in connection with the acquisition of six properties from Choice Properties contain lock-up and standstill restrictions . The lock-up will expire based on the following schedule: LOCK-UP EXPIRATION DATE NUMBER OF EXCHANGEABLE LP UNITS ELIGIBLE FOR RELEASE June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 2,952,286 2,952,286 2,952,286 2,952,287 11,809,145 Each Exchangeable LP Unit is accompanied by one special voting unit of Allied (“Special Voting Unit”) which provides the holder thereof with the right to one vote at all meetings of holders of Units and Special Voting Units . The Declaration of Trust was amended on March 4, 2022, to provide for the creation and issuance of the Special Voting Units . 84 ALLIED 2022 ANNUAL REPORTThe following represents the number of Units and Exchangeable LP Units issued and outstanding, and the related carrying value of equity, for the years ended December 31, 2022 and December 31, 2021 . NUMBER ISSUED AND OUTSTANDING AMOUNT UNITS EXCHANGEABLE LP UNITS TOTAL EQUITY UNITS EXCHANGEABLE LP UNITS TOTAL EQUITY Balance - January 1, 2021 127,259,218 Restricted Unit Plan (net of forfeitures) Unit Option Plan - options exercised Unit issuance (net of costs) Balance - December 31, 2021 Restricted Unit Plan (net of forfeitures) Unit Option Plan - options exercised Unit issuance (net of costs) Balance - December 31, 2022 — 1,533 477,100 127,737,851 — 6,332 — — — — — — — 127,259,218 $3,884,661 $— $3,884,661 — (2,141) 1,533 56 477,100 20,079 — — — (2,141) 56 20,079 127,737,851 $3,902,655 $— $3,902,655 — (2,661) 6,332 200 — — (2,661) 200 211,800 11,809,145 12,020,945 9,184 550,660 559,844 127,955,983 11,809,145 139,765,128 $3,909,378 $550,660 $4,460,038 During the year ended December 31, 2022, the acquisition of six office assets from Choice Properties was satisfied in part by the issuance of 11,809,145 Exchangeable LP Units . The Exchangeable LP Units were recognized as non-controlling interests in the consolidated statements of equity . In January 2022, Allied issued 211,800 Units under the ATM Program in settlement of trades executed at the end of December 2021 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 . During the 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 .  85 ALLIED 2022 ANNUAL REPORTAllied does not hold any of its own Units, nor does Allied reserve any Units for issue under options and contracts . As at January 31, 2023, 127,955,983 Units and 1,717,043 options to purchase Units were issued and outstanding . The weighted average number of Units and Exchangeable LP Units for the purpose of calculating basic and diluted income per unit is as follows: THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 Units 127,955,983 127,441,142 127,951,020 127,305,384 Exchangeable LP Units (1) 11,809,145 — 8,929,655 — Total units - basic Unit Option Plan 139,765,128 127,441,142 136,880,675 127,305,384 — 170,131 23,407 150,445 Total units - fully diluted 139,765,128 127,611,273 136,904,082 127,455,829 (1) Issued on March 31, 2022. NORMAL COURSE ISSUER BID On February 22, 2022, 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 12,602,594 of its outstanding Units, representing approximately 10% of its public float as at February 10, 2022 . The NCIB commenced February 24, 2022, and will expire on February 23, 2023, 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, 2022, Allied purchased 61,725 Units for $2,664 at a weighted average price of $43 .16 per Unit under its NCIB program, of which 61,148 Units were purchased for delivery to participants under Allied’s Restricted Unit Plan and 577 Units were purchased for certain employee rewards outside of Allied’s Restricted Unit Plan . 86 ALLIED 2022 ANNUAL REPORT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, 2022, Allied had granted options to purchase up to 1,717,043 Units outstanding, of which 1,151,274 had vested . At December 31, 2021, Allied had granted options to purchase 1,726,381 Units outstanding, of which 842,672 had vested . For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $876 (December 31, 2021 - $1,740) in general and administrative expense in the consolidated statements of income and comprehensive income related to the Unit Option Plan . 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, 2022, Allied had 322,411 Restricted Units outstanding (December 31, 2021 – 296,810) . For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $2,807 (December 31, 2021 - $2,376) in general and administrative expense in the consolidated statements of income and comprehensive income related to the Restricted Unit Plan . 87 ALLIED 2022 ANNUAL REPORTIn December 2021, Allied adopted a cash settled performance and restricted trust unit plan (the “PTU/RTU 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 PTU/RTU 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 . The following is a summary of the activity of Allied’s PTU/RTU Plan: Plan Units, beginning of period Granted Cancelled/Forfeited Distributions equivalents Plan Units, end of period YEAR ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 — 172,500 (1,035) 7,728 179,193 — — — — — For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $738 (December 31, 2021 - $nil), including the mark-to-market adjustment, in general and administrative expense in the consolidated statements of income and comprehensive income . DISTRIBUTIONS 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 DECEMBER, 2014 Annualized increase per Unit $0 .04 $0 .04 $0 .04 $0 .04 $0 .06 $0 .04 $0 .05 $0 .05 % increase Annualized distribution per Unit 3 .6% $1 .14 3 .5% $1 .18 3 .4% $1 .22 3 .3% $1 .26 4 .8% $1 .32 3 .0% $1 .36 3 .7% $1 .41 3 .5% $1 .46 DECEMBER, 2015 DECEMBER, 2016 DECEMBER, 2017 DECEMBER, 2018 JANUARY, 2020 JANUARY, 2021 JANUARY, 2022 JANUARY, 2023 Annualized increase per Unit $0 .04 $0 .03 $0 .03 $0 .04 $0 .05 $0 .05 $0 .05 $0 .05 % increase Annualized distribution per Unit 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 2 .9% $1 .80 88 ALLIED 2022 ANNUAL REPORTOn each date that a distribution is declared by Allied on the Units, a distribution in an equal amount per unit is declared by the Partnership on the Exchangeable LP Units . A holder of Exchangeable LP Units may elect to defer receipt of all or a portion of distributions declared by the Partnership until the first business day following the end of the fiscal year . If the holder elects to defer, the Partnership will loan the holder an amount equal to the deferred distribution without interest, and the loan will be due and payable on the first business day following the end of the fiscal year during which the loan was advanced . The distributions declared by the Partnership on the Exchangeable LP Units from April 1, 2022, to December 31, 2022, was $15,496, for which Choice Properties elected to receive a loan in lieu of all of the distributions . Of the $15,496 loan in lieu of distributions, a note receivable of $13,774 was issued to Choice Properties for the cash advances made during the nine months ended December 31, 2022, with the remaining $1,722 advanced to Choice Properties as a note receivable on January 16, 2023 . Since there is a legally enforceable right and an intention by Allied and Choice Properties to settle the note receivable from Choice Properties and the distributions payable to Choice Properties on a net basis, these financial instruments are offset on the balance sheet . On January 3, 2023, $13,774 of the note receivable due from Choice Properties was settled on a net basis against the distribution payable to Choice Properties . SOURCES OF DISTRIBUTIONS For the three months and year ended December 31, 2022, Allied declared $61,134 and $239,363 in distributions, respectively (December 31, 2021 - $54,225 and $216,521, respectively), including distributions to holders of the Exchangeable LP Units of $5,165 and $15,496, respectively (December 31, 2021 - $nil and $nil, respectively) . THREE MONTHS ENDED YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 Distributions declared Net income and comprehensive income $61,134 $41,392 $54,225 $239,363 $216,521 $159,921 $375,363 $443,151 Cash flows provided by operating activities $94,509 $87,509 $321,193 $241,114 AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation (1) AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation payout ratio (1) $76,553 $66,076 $297,579 $266,517 79.9% 82 .1% 80.4% 81 .2% (Deficit) excess of net income over distributions declared $(19,742) $105,696 $136,000 $226,630 Excess of cash flows provided by operating activities over distributions declared Excess of cash provided by AFFO excluding condominium related items, financing prepayment costs and the mark-to-market adjustment on unit-based compensation over distributions declared (1) This is a non-IFRS measure, refer to page 21. $33,375 $33,284 $81,830 $24,593 $15,419 $11,851 $58,216 $49,996 89 ALLIED 2022 ANNUAL REPORTIn determining the amount of distributions to be made, Allied’s Board of Trustees consider many factors, including provisions in its Declaration of Trust, macroeconomic 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 Facility . 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, 2022, amounts to $1 .75 per unit per annum (December 31, 2021 - $1 .70 per Unit per annum) . COMMITMENTS At December 31, 2022, Allied had future commitments as set out below, excluding the amount held within equity accounted investments: DECEMBER 31, 2022 DECEMBER 31, 2021 Capital expenditures and committed acquisitions $247,819 $473,779 As at December 31, 2022, commitments of $510 (December 31, 2021 - $354) were held within equity accounted investments .  As at December 31, 2022, there are no committed acquisitions (December 31, 2021 - $126,198 for the acquisition of 700 Saint-Hubert, which closed on October 31, 2022) . The above does not include Allied’s lease liability commitments, which are disclosed in note 13 of the consolidated financial statements for the year ended December 31, 2022 . 90 ALLIED 2022 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, 2022, 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, 2022, and the notes contained therein . 91 ALLIED 2022 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, 2022, 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, 2022, 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, 2022, that have materially affected, or are reasonably likely to materially affect, Allied’s internal controls over financial reporting . 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 . 92 ALLIED 2022 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 . The following discussion of risks is not exhaustive but is designed to highlight the key risks that may affect Allied’s business, operations and financial condition or future performance . 93 ALLIED 2022 ANNUAL REPORTOPERATING RISKS AND RISK MANAGEMENT REAL ESTATE RISK Allied is subject to the conventional risks associated with the ownership of real estate . Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges must be made by Allied throughout the period of its ownership of the properties regardless of whether the property is producing sufficient income to cover such expenses . In order to provide desirable rentable space over the long term, Allied must maintain or, in some cases, improve each property’s condition to meet market demand . Maintaining and improving a rental property can entail significant costs that Allied may not be able to pass on to users . Real property investments tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation to demand for and the perceived desirability of such investments . Such illiquidity may tend to limit Allied’s ability to vary its portfolio promptly in response to changing economic or investment conditions . If Allied were to dispose of real property investments, the proceeds to Allied might be significantly less than the aggregate carrying value of its properties . 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 . 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 54 . 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, financing prepayment costs and the mark-to-market adjustment on unit-based compensation would decline by approximately $6,229 (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 . USER TERMINATIONS AND FINANCIAL STABILITY Allied’s distributable income would be adversely affected if a significant number of users were to become unable to meet their obligations under their leases or if a significant amount of available space in its properties were not able to be leased on economically favourable lease terms . Upon the expiry of any lease, there can be no assurance that the lease will be renewed or the user replaced . The terms of any subsequent lease may be less favourable to Allied than the existing lease . In the event of default by a user, 94 ALLIED 2022 ANNUAL REPORTdelays or limitations in enforcing rights as lessor may be experienced and substantial costs in protecting Allied’s investment may be incurred . Furthermore, at any time, a user of any of Allied’s properties may seek the protection of bankruptcy, insolvency or similar laws that could result in the rejection and termination of such user’s lease and thereby cause a reduction in the cash flow available to Allied . The ability to rent unleased space in the properties in which Allied will have an interest will be affected by many factors . Costs may be incurred in making improvements or repairs to property required by a new user . The failure to rent unleased space on a timely basis or at all would likely have an adverse effect on Allied’s financial condition . 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 of Trust, which states that the cost of development cannot exceed 15% of GBV . JOINT ARRANGEMENTS AND PARTNERSHIPS 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 . Allied may own less than a controlling interest, may not be in a position to exercise sole decision-making authority regarding the properties owned through joint arrangements and may not fully manage those properties . Investments in joint arrangements may, under certain circumstances, involve risks not present when a third party is not involved, including: (i) counter-party risk; (ii) the possibility that joint arrangement partners may have business interests or goals that are inconsistent with Allied’s business interests or goals; and (iii) the need to obtain the joint arrangement partner’s consent with respect to certain major decisions relating to these assets, such as decisions relating to the sale of the assets, timing and amount of distributions of cash from such properties to Allied and its joint arrangement partners, and capital expenditures . In addition, the sale or transfer of interests in certain of the joint arrangements and partnerships may be subject to rights of first refusal and certain of the joint arrangement agreements may provide for buy-sell, put or similar arrangements . COMPETITION The real estate business is competitive . Numerous other developers, managers and owners of office properties compete with Allied in seeking users . Some of the properties of Allied’s competitors are better located or less levered than Allied’s properties and any property in which Allied subsequently acquires an interest . Some of Allied’s competitors are better capitalized and stronger financially and hence better able 95 ALLIED 2022 ANNUAL REPORTto withstand an economic downturn . The existence of competing developers and owners and competition for Allied’s users could have an adverse effect on Allied’s ability to lease space in its properties and on the rents charged or concessions granted, and could adversely affect Allied’s revenues and its ability to meet its debt obligations . An increase in the availability of investment funds and an increase in interest in immovable property investments may tend to increase competition for immovable property investments, thereby increasing purchase prices and reducing the yield on them . Competition for acquisitions of real properties is intense, and some competitors may have the ability or inclination to acquire properties at a higher price or on terms less favourable than those that Allied is prepared to accept . UNEXPECTED COSTS OR LIABILITIES RELATED TO ACQUISITIONS A risk associated with acquisitions is that there may be an undisclosed or unknown liability relating to the acquired property, and Allied may not be indemnified for some or all of these liabilities . Following an acquisition, Allied may discover that it has acquired undisclosed liabilities, which may be material . The due diligence procedures performed by Management are designed to address this risk . Allied performs what it believes to be an appropriate level of investigation in connection with its acquisition of properties and seeks through contract to ensure that risks lie with the appropriate party . RELIANCE ON KEY PERSONNEL The management of Allied depends on the services of certain key personnel . The loss of the services of any key personnel could have an adverse effect on Allied . CONDOMINIUM MARKET Some of Allied’s current development projects could be impacted by changes in condominium markets . These include changes in general and local economic and industry conditions, such as employment levels, availability of financing for homebuyers, interest rates, consumer confidence, levels of new and existing homes for sale, demographic trends and housing demand . FINANCIAL RISKS AND RISK MANAGEMENT FINANCING AND INTEREST RATE RISK Allied is subject to risk associated with debt financing . Allied’s financing may include indebtedness with interest rates based on variable lending rates that will result in fluctuations in Allied’s cost of borrowing . 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 77 . Interest rates on debt for mortgages payable, promissory note payable, unsecured debentures and unsecured term loans are between 1 .00% and 4 .87% with a weighted average contractual interest rate of 3 .10% . The weighted average term of our debt (excluding construction loans and the Unsecured Facility) is 4 .8 years . Refer to note 12(b) and (d) of the consolidated financial statements for further details . 96 ALLIED 2022 ANNUAL REPORT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 . ACCESS TO CAPITAL The real estate industry is highly capital intensive . Allied will require access to capital to maintain its properties, to complete development and intensification projects, as well as to fund its growth strategy and significant capital expenditures from time to time . There is no assurance that capital will be available when needed or on favourable terms . Allied’s access to capital and cost of capital will be subject to a number of factors, including general market conditions; the market’s perception of Allied’s growth potential; Allied’s current and expected future earnings; Allied’s cash flow and cash distributions; and the market price of Allied’s Units . If Allied is unable to obtain sources of capital, it may not be able to acquire or develop assets, or pursue the development or intensification of properties when strategic opportunities arise . AVAILABILITY OF CASH FLOW AND DISTRIBUTIONS There can be no assurance that Allied will maintain or increase its distribution levels in the future . Distributions are made at the discretion of the Trustees based on many factors, including provisions of the Declaration of Trust, macroeconomic and industry specific environments, the overall financial condition of Allied, future capital requirements, debt covenants, and taxable income . Distributable income may exceed actual cash available to Allied from time to time because of items such as principal repayments of debt, user inducements, leasing commissions and capital expenditures, if any . Allied may be required to use part of its debt capacity or reduce distributions in order to accommodate such items . The market value of the Units may be negatively impacted if Allied is unable to maintain its distribution levels in the future . MORTGAGE PAYMENTS Approximately 76 .1% of the principal amount of the Mortgages have terms of five years or less . Variations in interest rates and principal repayments required under the Mortgages and Allied’s operating and acquisition credit facilities, on renewal or otherwise, could result in significant changes in the amount required to be applied to debt service and, as a result, reduce the amount of cash available for distribution to Unitholders . Certain covenants in the Mortgages and credit facilities may also limit payments by Allied to its Unitholders . If Allied becomes unable to pay its debt service charges or otherwise commits an event of default, the rights of its lenders will rank senior to any rights of Unitholders . 97 ALLIED 2022 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 16 .8% of rental revenue and the credit quality of our top- 10 users continues to improve . As Allied has invested in mortgages to third parties 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, 2022, Allied had $432,032 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 . UNIT PRICE RISK Unit price risk arises from the unit-based compensation liabilities which are recorded at fair value at each quarter-end date . Allied’s unit-based compensation liabilities negatively impact operating income when the Unit price rises and positively impact operating income when the Unit price declines . POTENTIAL VOLATILITY OF UNIT PRICES Allied is an unincorporated trust and its Units are listed on the TSX . A publicly-traded real estate investment trust will not necessarily trade at values determined solely by reference to the underlying value of its real estate assets . The prices at which the Units will trade cannot be predicted and could be subject to significant fluctuations in response to variations in quarterly operating results, distributions, and other factors beyond the control of Allied such as changes or uncertainty regarding global economic conditions, including but not limited to those caused by the occurrence of a natural disaster, a public health emergency or other force majeure event . The annual yield on the Units as compared to the annual yield on other financial instruments may also influence the price of the Units in the public trading markets . In addition, securities markets may experience significant price and volume fluctuations from time to time that are unrelated or disproportionate to the operating performance of particular issuers . These broad fluctuations may adversely affect the market price of the Units . DILUTION Allied may, in its sole discretion, issue additional Units, or securities convertible or exchangeable into Units, from time to time, and the voting power and/or economic interest of Unitholders may be diluted thereby . Allied cannot predict the size or nature of future sales or issuances of securities, or the effect, if any, that such future sales and issuances will have on the market price of the Units . 98 ALLIED 2022 ANNUAL REPORTOTHER RISKS COVID-19 RISK As a result of the continuously evolving circumstances surrounding the COVID-19 pandemic, uncertainty remains with respect to Allied’s revised internal forecast, the most significant being the fact that it cannot predict how consumers, users and governments will respond during the transition to a fully reopened economy . In addition, Allied cannot predict the extent and severity of the economic disruption and related financial impact 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 . 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 . 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 . 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 . 99 ALLIED 2022 ANNUAL REPORT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 . GENERAL ECONOMIC CONDITIONS Allied may be affected by changes in general economic conditions (such as inflation and the availability and cost of credit), local real estate markets (such as an oversupply of space or a reduction in demand for real estate in the area), government regulations, competition from other available premises, including new developments, and various other factors . Property valuations may be impacted by inflation and interest rate risk . The global economy may face increasing uncertainty due to acts of nature, including the COVID-19 global pandemic, trade protectionism, disputes and political events around the world, which could potentially impact Canadian trade and the Canadian economy at large . This could have an impact on the markets in which Allied operates and in turn could have an adverse effect on Allied . GENERAL UNINSURED LOSSES Allied carries comprehensive general liability, fire, flood, extended coverage and rental loss insurance with policy specifications, limits and deductibles customarily carried for similar properties . There are, however, certain types of risks, generally of a catastrophic nature, such as wars or environmental contamination, which are either uninsurable or not insurable on an economically viable basis . Allied will have insurance for earthquake risks, subject to certain policy limits, deductibles and self-insurance arrangements, and will continue to carry such insurance if it is economical to do so . Should an uninsured or underinsured loss occur, Allied could lose its investment in, and anticipated profits and cash flows from, one or more of its properties, but Allied would continue to be obliged to repay any recourse mortgage indebtedness on such properties . 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 . Allied will make the necessary capital and operating expenditures to ensure compliance with environmental laws and regulations . Such laws provide that Allied could be liable for the costs of removal of certain hazardous substances, remediation of certain hazardous locations or other environmental impacts . The failure to remove or remediate such substances, locations or environmental impacts, 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 . 100 ALLIED 2022 ANNUAL REPORTClimate change could pose significant environmental, social and business risks . If environmental laws and regulations change, Allied could be 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 . Allied is committed to evaluating potential impacts to its business on an ongoing basis and to making investments to mitigate potential identified impacts . Physical risks from climate change that may result in damage to Allied’s properties may include natural disasters and severe weather, such as floods, blizzards and rising temperatures . 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, the physical impacts from climate change, including changing weather patterns, could have effects on Allied’s business by increasing the cost of property insurance, and/or energy at its 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 . Allied is evaluating all of its assets to understand how the physical risks from climate change could impact the portfolio and is taking a proactive and precautionary approach to mitigate potential impacts . 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 . TAXATION RISK Allied is a mutual fund trust as defined in the Tax Act . The Tax Act contains restrictions relating to the activities and the investments permitted by a mutual fund trust and, if Allied failed to adhere to these restrictions, adverse tax consequences would arise . 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 . 101 ALLIED 2022 ANNUAL REPORT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 . CHANGES IN LEGISLATION AND INVESTMENT ELIGIBILITY There can be no assurance that income tax laws (or the judicial interpretation thereof or the administrative and/or assessing practices of the Canada Revenue Agency) and/or the treatment of mutual fund trusts will not be changed in a manner which adversely affects Unitholders . Allied will endeavour to ensure that the Units continue to be qualified investments for registered retirement savings plans, deferred profit sharing plans, registered retirement income funds, registered education savings plans, registered disability savings plans and tax-free savings accounts . Units will cease to be qualified investments for registered retirement savings plans, deferred profit sharing plans, registered retirement income funds, registered education savings plans, registered disability savings plans and tax-free savings accounts if the Units were no longer listed on a stock exchange that, for the purposes of the Tax Act, is a designated stock exchange (which includes the TSX) and Allied no longer qualified as a mutual fund trust or as a registered investment . The Tax Act imposes penalties for the acquisition or holding of non-qualified investments . 102 ALLIED 2022 ANNUAL REPORTABSENCE OF SHAREHOLDER RIGHTS Unitholders do not have all of the statutory rights normally associated with ownership of shares of a company . On May 12, 2016, Allied amended the Declaration of Trust to include certain rights, remedies and procedures in favour of Unitholders consistent, to the extent possible, with those available to shareholders of a corporation pursuant to the Canada Business Corporations Act, as further described in Allied’s Management Information Circular dated April 11, 2016 . The rights granted in the Declaration of Trust are granted as contractual rights afforded to Unitholders (rather than as statutory rights) . Similar to other existing rights contained in Allied’s Declaration of Trust (i .e ., the take-over bid provisions and conflict of interest provisions), making these rights and remedies and certain procedures available by contract is structurally different from the manner in which the equivalent rights and remedies or procedures (including the procedure for enforcing such remedies) are made available to shareholders of a corporation, who benefit from those rights and remedies or procedures by the corporate statute that governs the corporation, such as the Canada Business Corporations Act . As such, there is no certainty how these rights, remedies or procedures may be treated by the courts in the non-corporate context or that a Unitholder will be able to enforce the rights and remedies in the manner contemplated by the amendments . Furthermore, how the courts will treat these rights, remedies and procedures will be in the discretion of the court, and the courts may choose to not accept jurisdiction to consider any claim contemplated in the provisions . The Units are not “deposits” within the meaning of the Canada Deposit Insurance Corporation Act and are not insured under the provisions of that Act or any other legislation . Furthermore, Allied is not a trust company and, accordingly, it is not registered under any trust and loan company legislation as it does not carry on or intend to carry on the business of a trust company . UNITHOLDER LIABILITY On December 16, 2004, the Province of Ontario proclaimed the Trust Beneficiaries Liability Act (Ontario) in force . This legislation provides that beneficiaries of Ontario based income trusts are not liable, as beneficiaries, for any act, default, obligation or liability of the income trust . Unitholders of Allied will have the benefit of this legislation with respect to liabilities arising on or after December 16, 2004 . This legislation has not been subject to interpretation by courts in the Province of Ontario or elsewhere . 103 ALLIED 2022 ANNUAL REPORTSection X —Property Table 104 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace 28 Atlantic 32 Atlantic 47 Jefferson 64 Jefferson College & Manning - 547-549 College College & Manning - 559-563 College (1) College & Palmerston - 491 College (1) The Castle - 135 Liberty The Castle - 41 Fraser The Castle - 47 Fraser The Castle - 49 Fraser The Castle - 53 Fraser 10,065 50,434 6,884 78,820 — — — — 10,065 50,434 6,884 78,820 — 2,708 2,708 24,627 2,634 27,261 8,863 55,357 14,857 7,468 17,472 78,797 3,717 — — 3,480 — — 12,580 55,357 14,857 10,948 17,472 78,797 2,681 The Castle - 8 Pardee — 2,681 The Well - 8 Spadina (1)(6) 246,702 285 246,987 The Well - 452 Front W (1)(6) The Well - 468 Front W (1)(6) 42,871 1,523 — — 42,871 1,523 — — — — — — — 10,065 100 .0% 50,434 100 .0% 6,884 100 .0% 78,820 100 .0% 2,708 100 .0% 27,261 100 .0% 12,580 100 .0% 29,409 25,948 46 .9% — — 14,857 100 .0% 10,948 100 .0% 10,363 7,109 40 .7% — — — — — 78,797 100 .0% 2,681 100 .0% 246,987 100 .0% 42,871 100 .0% 1,523 100 .0% King West 644,740 15,505 660,245 4.6% 39,772 620,473 94.0% 12 Brant 141 Bathurst 183 Bathurst 241 Spadina 379 Adelaide W 383 Adelaide W 387 Adelaide W 420 Wellington W 425 Adelaide W 425-439 King W 432 Wellington W 441-443 King W 445-455 King W 460 King W 461 King W 468 King W 469 King W 478 King W 485 King W — 11,936 10,101 24,136 24,833 38,560 4,515 6,500 31,339 70,846 — 5,643 6,046 3,045 — — 3,163 3,809 11,936 10,101 29,779 30,879 41,605 4,515 6,500 34,502 74,655 — — 11,936 100 .0% 10,101 100 .0% 10,268 19,511 65 .5% — 30,879 100 .0% 26,432 15,173 36 .5% 2,133 2,382 52 .8% — — 6,500 100 .0% 34,502 100 .0% 1,247 73,408 98 .3% 66,486 23,497 89,983 10,545 79,438 88 .3% — 6,377 8,997 2,904 31,523 16,304 10,144 38,717 63,121 61,618 — 12,339 4,285 35,833 — 12,273 8,701 — 8,997 9,281 47,827 14,429 74,550 63,121 73,891 8,701 12,339 — — — — 17,071 63,121 — — — 8,997 100 .0% 9,281 100 .0% 47,827 100 .0% 14,429 100 .0% 57,479 77 .1% — —% 73,891 100 .0% 8,701 100 .0% 12,339 100 .0% 105 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace 500 King W 522 King W 540 King W 544 King W 44,130 21,598 28,850 21,863 — 5,935 16,340 — 552-560 King W 6,784 17,395 65,728 50,713 5,935 16,340 24,179 — 65,728 100 .0% 14,449 36,264 71 .5% — — — 5,935 100 .0% 16,340 100 .0% 24,179 100 .0% 555 Richmond W 296,009 1,850 297,859 29,468 268,391 90 .1% 579 Richmond W 26,818 — 26,818 8,961 17,857 66 .6% 64 Spadina 80-82 Spadina 96 Spadina King Portland Centre - 602-606 King W (1) King Portland Centre - 620 King W (1) King Portland Centre - 642 King W (1) — 5,297 60,048 16,009 77,223 8,240 5,297 76,057 85,463 19,208 6,364 25,572 127,658 9,170 136,828 — — 5,297 100 .0% 76,057 100 .0% 11,562 73,901 86 .5% — — 25,572 100 .0% 136,828 100 .0% 7,370 5,365 12,735 363 12,372 97 .1% King West Central 1,211,593 265,522 1,477,115 10.3% 195,620 1,281,495 86.8% 116 Simcoe 117 & 119 John 121 John 125 John 179 John 180 John 200 Adelaide W 208-210 Adelaide W 217 Richmond W 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 15,461 — 15,461 3,973 11,488 74 .3% — 7,562 2,444 2,171 70,898 45,631 26,614 11,477 31,707 42,763 62,420 19,048 50,786 798 798 — — — — 21,670 — 5,584 3,725 — 20,275 19,040 40,069 6,846 51,058 — 7,562 3,242 2,969 70,898 45,631 26,614 11,477 53,377 42,763 68,004 22,773 50,786 39,315 46,915 51,058 — 1,528 — — — — 3,681 3,405 7,562 100 .0% 1,714 52 .9% 2,969 100 .0% 70,898 100 .0% 45,631 100 .0% 26,614 100 .0% 7,796 67 .9% 49,972 93 .6% — 42,763 100 .0% 23,093 44,911 66 .0% — 22,773 100 .0% 12,228 18,227 — — 38,558 75 .9% 21,088 53 .6% 46,915 100 .0% 51,058 100 .0% 298,782 8,213 306,995 9,080 297,915 97 .0% 38,279 41,787 — — 38,279 41,787 6,864 4,952 31,415 36,835 82 .1% 88 .1% Entertainment District 871,670 74,236 945,906 6.6% 87,031 858,875 90.8% 106 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace 110 Yonge (2) 175 Bloor E (3) 193 Yonge 78,100 295,739 2,376 9,177 80,476 304,916 13,247 67,229 83 .5% 60,666 244,250 80 .1% 34,349 16,898 51,247 — 51,247 100 .0% 525 University 192,771 9,392 202,163 1,772 200,391 99 .1% Downtown 600,959 37,843 638,802 4.5% 75,685 563,117 88.2% 10,554 34,672 6,756 27,916 80 .5% 4,829 88,945 16,290 72,655 81 .7% 13,822 48,640 — 48,640 100 .0% 106 Front E 184 Front E 35-39 Front E 36-40 Wellington E 24,118 84,116 34,818 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 9,482 4,337 10,435 25,487 35,197 43,910 13,405 19,917 50 Wellington E 22,112 12,454 34,566 54 Esplanade 56 Esplanade 60 Adelaide E 65 Front E 70 Esplanade — 9,038 59,270 22,137 106,193 14,339 19,590 4,608 5,922 6,109 9,038 81,407 110,801 20,261 25,699 4,055 21,432 84 .1% 13,967 21,230 60 .3% 3,591 2,900 5,849 — — 40,319 10,505 14,068 91 .8% 78 .4% 70 .6% 34,566 100 .0% 9,038 100 .0% 17,530 63,877 78 .5% 8,383 102,418 92 .4% — — 20,261 100 .0% 25,699 100 .0% St. Lawrence Market 450,180 141,765 591,945 4.1% 79,321 512,624 86.6% 135-137 George 133 George 139-141 George 204-214 King E 230 Richmond E 252-264 Adelaide E 489 Queen E 70 Richmond E Dominion Square - 468 Queen N Dominion Square - 468 Queen S Dominion Square - 478-496 Queen 2,399 1,617 2,190 — — — 2,399 1,617 2,190 115,087 13,837 128,924 73,542 44,537 31,737 34,469 — 73,542 2,582 — — 47,119 31,737 34,469 30,383 3,523 33,906 — — 2,399 100 .0% 1,617 100 .0% 2,190 — —% — — 128,924 100 .0% 73,542 100 .0% 13,550 33,569 71 .2% — — — 31,737 100 .0% 34,469 100 .0% 33,906 100 .0% 34,313 9,091 43,404 1,358 42,046 96 .9% 6,552 33,526 40,078 — 40,078 100 .0% QRC East - 111 Queen E 190,953 20,733 211,686 6,165 205,521 97 .1% Queen Richmond 567,779 83,292 651,071 4.5% 23,263 627,808 96.4% Toronto 4,346,921 618,163 4,965,084 34.7% 500,692 4,464,392 89.9% 107 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace 195 Joseph 25 Breithaupt (4) 51 Breithaupt (4) 72 Victoria 26,462 46,845 66,355 90,010 — — — — 26,462 46,845 66,355 90,010 — — — 26,462 100 .0% 46,845 100 .0% 66,355 100 .0% 4,386 85,624 95 .1% 91 .8% The Tannery - 151 Charles W 306,821 25,810 332,631 27,281 305,350 Kitchener 536,493 25,810 562,303 3.9% 31,667 530,636 94.4% Toronto & Kitchener 4,883,414 643,973 5,527,387 38.6% 532,359 4,995,028 90.4% The Chambers - 40 Elgin 195,994 5,466 201,460 — 201,460 100 .0% The Chambers - 46 Elgin Ottawa 28,218 224,212 1,756 7,222 29,974 2,430 27,544 91 .9% 231,434 1.6% 2,430 229,004 99.0% 1001 Boulevard Robert-Bourassa (6) 653,962 — 653,962 7,005 646,957 98 .9% 1010 Sherbrooke W 326,754 1,600 328,354 23,900 304,454 92 .7% 3510 Saint-Laurent 85,646 15,022 100,668 — 100,668 100 .0% 3530-3540 Saint-Laurent 425 Viger 4396-4410 Saint-Laurent 4446 Saint-Laurent 451-481 Saint-Catherine W 480 Saint-Laurent 5445 de Gaspé 5455 de Gaspé 5505 Saint-Laurent 6300 Parc 645 Wellington 52,321 307,201 41,374 72,819 21,044 53,407 4,008 9,146 14,147 7,251 9,983 6,293 56,329 316,347 55,521 80,070 31,027 59,700 4,780 51,549 13,555 302,792 91 .5% 95 .7% 838 54,683 98 .5% 14,198 2,350 65,872 82 .3% 28,677 92 .4% 447 59,253 99 .3% 483,685 896 484,581 53,713 430,868 88 .9% 466,698 22,562 489,260 243,788 184,510 129,017 2,221 3,933 8,117 246,009 188,443 137,134 7,917 2,221 481,343 98 .4% 243,788 99 .1% 17,339 171,104 90 .8% 5,506 5,281 131,628 96 .0% 118,932 95 .7% 700 Saint Antoine 107,320 16,893 124,213 740 Saint-Maurice 67,674 — 67,674 — 67,674 100 .0% 747 Square-Victoria 531,612 37,752 569,364 51,828 517,536 90 .9% 43,500 79,707 — — 43,500 79,707 29,000 14,500 33 .3% 11,472 68,235 85 .6% 359,039 12,571 371,610 173,350 198,260 53 .4% 27,072 135,232 — — 27,072 135,232 1,255 25,817 95 .4% 20,912 114,320 84 .5% 810 Saint Antoine 85 Saint-Paul W Cité Multimédia - 111 Boulevard Robert-Bourassa Cité Multimédia - 50 Queen Cité Multimédia - 700 Wellington 108 ALLIED 2022 ANNUAL REPORTDECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Urban Workspace Cité Multimédia - 75 Queen 253,311 2,513 255,824 23,613 232,211 90 .8% Cité Multimédia - 80 Queen Cité Multimédia - 87 Prince 69,247 99,089 El Pro Lofts - 644 Courcelle 145,166 Le Nordelec - 1301-1303 Montmorency Le Nordelec - 1655 Richardson Le Nordelec - 1751 Richardson & 1700 Saint-Patrick 7,550 32,893 — 69,247 — 69,247 100 .0% 1,040 8,935 — — 100,129 154,101 7,550 32,893 3,254 96,875 96 .8% 50,977 103,124 66 .9% — — 7,550 100 .0% 32,893 100 .0% 785,995 41,479 827,474 45,861 781,613 94 .5% RCA Building - 1001 Lenoir (6) 147,350 26,243 173,593 — 173,593 100 .0% Montréal 6,013,983 252,605 6,266,588 43.8% 570,572 5,696,016 90.9% Montréal & Ottawa 6,238,195 259,827 6,498,022 45.4% 573,002 5,925,020 91.2% 613 11th SW 617 11th SW Alberta Block - 805 1st SW — 3,230 9,094 4,288 6,306 22,038 4,288 9,536 31,132 — — 4,288 100 .0% 9,536 100 .0% 1,856 29,276 94 .0% Alberta Hotel - 808 1st SW 28,036 20,424 48,460 10,563 37,897 78 .2% Atrium on Eleventh - 625 11th SE Biscuit Block - 438 11th SE Burns Building - 237 8th SE 34,594 1,373 51,298 67,160 — 7,423 Cooper Block - 809 10th SW 35,256 Customs House - 134 11th SE 77,097 Demcor Condo - 221 10th SE 14,253 Demcor Tower - 239 10th SE 25,228 Five Roses Building - 731-739 10th SW Glenbow - 802 11th SW — — Glenbow - 822 11th SW 14,037 Glenbow Annex - 816 11th SW Glenbow Cornerblock - 838 11th SW 10,998 11,212 Glenbow Ellison - 812 11th SW 13,344 Kipling Square - 601 10th SW 48,502 Leeson Lineham Building - 209 8th SW LocalMotive - 1240 20th SE Odd Fellows - 100 6th SW Pilkington Building - 402 11th SE 27,821 57,536 33,474 40,018 — — 5,420 — — — 35,967 51,298 74,583 35,256 77,097 14,253 25,228 4,204 31,763 88 .3% — 51,298 100 .0% 3,332 71,251 95 .5% — — 7,021 2,938 35,256 100 .0% 77,097 100 .0% 7,232 50 .7% 22,290 88 .4% — — — — 20,808 20,808 2,495 18,313 88 .0% 7,319 3,501 7,319 17,538 — 7,319 100 .0% 4,743 12,795 73 .0% — 9,021 9,021 — 9,021 100 .0% 22,210 13,344 48,502 33,241 57,536 33,474 40,018 1,146 — 7,171 — — — — 21,064 94 .8% 13,344 100 .0% 41,331 85 .2% 33,241 100 .0% 57,536 100 .0% 33,474 100 .0% 40,018 100 .0% 109 ALLIED 2022 ANNUAL REPORTUrban Workspace DECEMBER 31, 2022 PROPERTIES Office GLA Retail GLA Total GLA % Total GLA Total Vacant & Unleased Total Leased Leased % Roberts Block - 603-605 11th SW 23,641 27,499 51,140 Sherwin Block - 738 11th SW 18,319 8,176 26,495 15,915 10,372 35,225 68 .9% 16,123 60 .9% Telephone Building - 119 6th SW TELUS Sky - 685 Centre SW (5) Theatre Grand - 608 1st Street SW Vintage Towers - 322-326 11th SW Woodstone Building - 1207-1215 13th SE 63,063 — 63,063 25,183 37,880 60 .1% 144,290 3,711 148,001 32,904 115,097 77 .8% — 34,100 34,100 — 34,100 100 .0% 190,243 20,418 210,661 18,742 191,919 91 .1% 32,428 — 32,428 — 32,428 100 .0% Young Block - 129 8th SW 4,841 2,164 7,005 2,414 4,591 65 .5% Calgary 1,067,801 215,201 1,283,002 9.0% 150,999 1,132,003 88.2% 1040 Hamilton 1050 Homer 36,276 38,302 9,162 4,797 45,438 43,099 1185 West Georgia 160,364 4,869 165,233 1220 Homer 1286 Homer 21,708 25,613 — — 21,708 25,613 11,856 33,582 73 .9% — 44 — — 43,099 100 .0% 165,189 100 .0% 21,708 100 .0% 25,613 100 .0% 1508 West Broadway 82,961 64,183 147,144 4,283 142,861 97 .1% 151-155 West Hastings 2233 Columbia 365 Railway 375 Water 840 Cambie 948-950 Homer Dominion Building - 207 West Hastings 38,512 21,591 31,528 — 38,512 6,852 28,443 — 31,528 — — — 38,512 100 .0% 28,443 100 .0% 31,528 100 .0% 150,276 27,149 177,425 24,247 153,178 86 .3% 89,377 — 89,377 23,245 21,758 45,003 — — 89,377 100 .0% 45,003 100 .0% Sun Tower - 128 West Pender 76,247 1,693 59,659 12,646 72,305 77,940 6,203 15,956 66,102 61,984 91 .4% 79 .5% Vancouver 855,659 153,109 1,008,768 7.0% 62,589 946,179 93.8% Total Rental Portfolio 13,045,069 1,272,110 14,317,179 100.0% 1,318,949 12,998,230 90.8% Note that the table above does not include ancillary residential properties, which total 13, and are included in the property count. The table above also excludes properties under development and investment properties held for sale. (1) RioCan/Allied Joint Arrangement (2) Sutter Hill/Allied Joint Arrangement (3) OPTrust/Allied Joint Arrangement (4) Perimeter/Allied Joint Arrangement (5) Westbank/Allied/TELUS Joint Arrangement (6) A portion of the property is under development. Only the portion of GLA that is in the rental portfolio is included in the property table. 110 ALLIED 2022 ANNUAL REPORTRENTAL RESIDENTIAL UNITS PROPERTY TELUS Sky College & Manning OCCUPANCY AT DECEMBER 31, 2022 WEIGHTED AVERAGE OCCUPANCY FOR THE YEAR ENDED DECEMBER 31, 2022 81 .4% 96 .8% 65 .0% 64 .5% PROPERTIES UNDER DEVELOPMENT ESTIMATED GLA ON COMPLETION (SF) The Well, Toronto (1)(2)(5) The Lougheed (604-1st SW), Calgary 400 Atlantic, Montréal Boardwalk-Revillon Building, Edmonton (3) 185 Spadina, Toronto Breithaupt Phase III, Kitchener (1) 342 Water, Vancouver Adelaide & Duncan, Toronto (1)(4) 1001 Boulevard Robert-Bourassa, Montréal (5) RCA Building, Montréal (5) 422-424 Wellington W, Toronto QRC West Phase II, Toronto (6) KING Toronto, Toronto (1)(7) 108 East 5th Avenue, Vancouver (1) 700 Saint Hubert, Montréal 3575 Saint-Laurent, Montréal Total Development Portfolio 763,000 88,000 87,473 297,851 55,213 147,000 21,640 230,000 335,652 171,668 10,000 93,134 100,000 102,000 144,114 184,779 2,831,524 (1) These properties are co-owned, reflected in the table above at Allied’s ownership interest. (2) 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 584,000 of office, 160,000 of retail, 19,000 of storage 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. (3) The GLA components (in square feet) are as follows: 233,559 of office and 64,292 of retail. (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) A portion of the property is under development. The GLA represents the portion under development, except for The Well, which is a ground-up development and the GLA includes the portion in the rental portfolio. (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. 111 ALLIED 2022 ANNUAL REPORTANCILLARY PARKING FACILITIES NUMBER OF SPACES 208 39 25 15 47 121 12 131 171 71 840 15 Brant, Toronto 78 Spadina, Toronto 7-9 Morrison, Toronto 105 George, Toronto 301 Markham, Toronto 388 Richmond, Toronto 464 King, Toronto 478 King, Toronto 560 King, Toronto 650 King, Toronto Total Parking 112 ALLIED 2022 ANNUAL REPORTConsolidated Financial Statements For the Years Ended December 31, 2022 and 2021 113 ALLIED 2022 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 President and Chief Executive Officer Cecilia C . Williams, CPA, CA Executive Vice President and Chief Financial Officer 114 ALLIED 2022 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, 2022 and 2021, and the consolidated statements of income and comprehensive income, 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, 2022 and 2021, 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, 2022 . 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 . 115 ALLIED 2022 ANNUAL REPORTFAIR VALUE OF INVESTMENT PROPERTIES AND INVESTMENT PROPERTIES HELD FOR SALE— REFER TO NOTES 2(D), 2(S), 3, 5 AND 6 OF THE FINANCIAL STATEMENTS KEY AUDIT MATTER DESCRIPTION Investment properties and investment properties held for sale (collectively, “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 . 116 ALLIED 2022 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 . — 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 . 117 ALLIED 2022 ANNUAL REPORT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 JANUARY 31, 2023 118 ALLIED 2022 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 2022 AND DECEMBER 31, 2021 (in thousands of Canadian dollars) NOTES DECEMBER 31, 2022 DECEMBER 31, 2021 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 Loan receivable from joint venture Loans and notes receivable Accounts receivable, prepaid expenses and deposits Investment properties held for sale Total assets Liabilities Non-current liabilities Debt Lease liabilities Other liabilities Current liabilities Debt Accounts payable and other liabilities Lease liability held for sale Total liabilities Equity Unitholders’ equity Non-controlling interests Total equity Total liabilities and equity 5 7 8 9 10 22 8 9 11 5, 6 12 13 14 12 14 6, 13 16 16 $9,669,005 $9,527,105 187,272 7,089 174,019 56,221 170,980 124,790 223,456 28,185 $10,093,606 $10,074,516 20,990 113,287 258,093 65,544 1,354,830 $1,812,744 22,548 — 144,306 57,061 86,260 $310,175 $11,906,350 $10,384,691 $3,864,256 50,851 43,438 $3,417,138 157,550 44,635 $3,958,545 $3,619,323 346,929 370,823 107,215 $824,967 $4,783,512 $6,581,166 541,672 $7,122,838 $11,906,350 36,146 303,450 — $339,596 $3,958,919 $6,425,772 — $6,425,772 $10,384,691 Commitments and Contingencies (note 28) The accompanying notes are an integral part of these consolidated financial statements. Gordon Cunningham Trustee Michael R . Emory Trustee 119 ALLIED 2022 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (in thousands of Canadian dollars, except unit and per unit amounts) Rental revenue Property operating costs Operating income Interest expense General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value (loss) gain on investment properties and investment properties held for sale Fair value gain on derivative instruments Impairment of residential inventory Net loss from joint venture Net income and comprehensive income from continuing operations Net income and comprehensive income from discontinued operations Net income and comprehensive income Net income and comprehensive income attributable to: Unitholders’ equity Non-controlling interests Net income and comprehensive income per unit Basic and Diluted Weighted average number of units Basic Diluted YEAR ENDED NOTES DECEMBER 31, 2022 DECEMBER 31, 2021 20, 24 24 6, 12 (g) 21 10 5, 6 27 (d) 7 8 6 19 18 $519,468 (224,260) $295,208 (72,802) (22,593) (602) (1,325) 32,080 (73,750) 37,343 (15,729) (3,161) $174,669 $200,694 $375,363 $368,855 6,508 $375,363 $472,799 (204,792) $268,007 (114,196) (25,834) (573) (1,167) 28,023 161,222 16,350 — (451) $331,381 $111,770 $443,151 $443,151 — $443,151 $2.74 $3 .48 136,880,675 136,904,082 127,305,384 127,455,829 The accompanying notes are an integral part of these consolidated financial statements. 120 ALLIED 2022 ANNUAL REPORT ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (in thousands of Canadian dollars) NOTES UNITS RETAINED EARNINGS CONTRIB- UTED SURPLUS UNITHOLD- ERS’ EQUITY EXCHANGE- ABLE LP UNITS RETAINED EARNINGS EXCHANGE- ABLE LP UNITS’ EQUITY TOTAL EQUITY 16 $3,884,661 $2,265,326 $27,045 $6,177,032 $— $— $— $6,177,032 — 443,151 16 20,079 — — (216,521) Unit Option Plan – options exercised 16, 17 (a) — — — — — 443,151 20,079 (216,521) 56 56 — 17 (a) — 1,740 1,740 16, 17 (b) (2,141) — 2,376 235 — — — — — — — — — — — — — — — — — — 443,151 20,079 (216,521) 56 1,740 235 $3,902,655 $2,491,956 $31,161 $6,425,772 $— $— $— $6,425,772 ATTRIBUTABLE TO UNITHOLDERS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS NOTES UNITS RETAINED EARNINGS CONTRIB- UTED SURPLUS UNITHOLD- ERS’ EQUITY EXCHANGE- ABLE LP UNITS RETAINED EARNINGS (DEFICIT) EXCHANGE- ABLE LP UNITS’ EQUITY TOTAL EQUITY 16 $3,902,655 $2,491,956 $31,161 $6,425,772 $— $— $— $6,425,772 — 368,855 16 9,184 — — (223,867) Unit Option Plan – options exercised 16, 17 (a) 200 17 (a) — 16, 17 (b) (2,661) — — — — (223,867) 200 876 876 2,807 146 — — — 368,855 — 6,508 6,508 375,363 9,184 550,660 — 550,660 559,844 — — — — (15,496) (15,496) (239,363) — — — — — — 200 876 146 $3,909,378 $2,636,944 $34,844 $6,581,166 $550,660 $(8,988) $541,672 $7,122,838 The accompanying notes are an integral part of these consolidated financial statements. 121 Balance at January 1, 2021 Net income and comprehensive income Unit issuance (net of costs) Distributions Contributed surplus – Unit Option Plan Restricted Unit Plan (net of forfeitures) Balance at December 31, 2021 Balance at January 1, 2022 Net income and comprehensive income Unit issuance (net of costs) Distributions Contributed surplus – Unit Option Plan Restricted Unit Plan (net of forfeitures) Balance at December 31, 2022 ALLIED 2022 ANNUAL REPORT ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (in thousands of Canadian dollars) NOTES DECEMBER 31, 2022 DECEMBER 31, 2021 YEAR ENDED Operating activities Net income for the year Fair value gain on investment properties and investment properties held for sale Fair value gain on derivative instruments Payments on settlement of derivative instruments Impairment of residential inventory Interest expense (excluding the impact of capitalization) 5 27 (d) 27 (d) 7 12 (g) Interest paid (excluding the impact of capitalization) 5, 7, 13, 22 Interest income Interest received Net loss from joint venture Amortization of other assets Amortization of improvement allowances Amortization of straight-line rents Amortization of discount (premium) on debt Amortization of lease liabilities Amortization of net financing costs Unit-based compensation expense Additions to residential inventory 8 10 5 5 12 (g) 5, 13 12 (g) 17 7 Change in other non-cash operating items 9, 11, 14, 22 Cash provided by operating activities $375,363 $443,151 (69,182) (37,343) — 15,729 79,334 (77,727) (32,080) 21,341 3,161 1,325 32,302 (6,825) 1,837 155 2,495 4,421 (32,021) 38,908 $321,193 (217,557) (16,350) (3,781) — 120,145 (113,108) (28,023) 18,688 451 1,167 32,305 (3,682) (3,488) (428) 3,604 4,116 (30,942) 34,846 $241,114 Financing activities Repayment of mortgages payable Proceeds from senior unsecured debentures (net of financing costs) Redemption of senior unsecured debentures Principal payments of lease liabilities Distributions paid on Units Proceeds of Unit issuance (net of issuance costs) Proceeds from exercise of Unit options Restricted Unit Plan (net of forfeitures) Proceeds from Unsecured Revolving Operating Facility Repayments of Unsecured Revolving Operating Facility 122 12 (a) 12 (e) 12 (e) 13 16 16, 17 (a) 16, 17 (b) 12 (d) 12 (d) (16,932) (648,699) — — (200) (223,312) 9,184 200 (2,661) 545,000 (470,000) 1,093,900 (150,000) (189) (215,918) 20,079 56 (2,141) 460,000 (155,000) ALLIED 2022 ANNUAL REPORT(in thousands of Canadian dollars) NOTES DECEMBER 31, 2022 DECEMBER 31, 2021 YEAR ENDED Proceeds from construction loan Proceeds from unsecured term loan (net of financing costs) 12 (b) 12 (f) Financing costs Cash provided by financing activities Investing activities 91,029 399,300 (10) $331,598 Acquisition of investment properties 4 (190,753) Deposits on acquisitions (928) Additions to investment properties (including capitalized interest) 5, 12 (g) (398,174) Net proceeds on disposition of investment properties held for sale Net proceeds on disposition of properties under development Net distributions from (contributions to) equity accounted investments 4 4 8 74,437 15,254 1,253 Loans receivable issued to third-parties 8, 9 (a), 22 (58,345) Proceeds from loans receivable Proceeds from notes receivable Advances on note receivable from holder of Exchangeable LP Units Additions to equipment and other assets Leasing commissions Improvement allowances 9 (a) 9 (b) 16 10 5 5 343 22 (13,774) (859) (20,603) (62,222) 75,592 — (836) $476,844 (288,887) (268) (428,248) — 71,592 (8,129) (47,435) 382 1,927 — (337) (16,841) (24,678) Cash used in investing activities $(654,349) $(740,922) Decrease in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year (1,558) 22,548 $20,990 (22,964) 45,512 $22,548 Note 22 contains supplemental cash flow information. The accompanying notes are an integral part of these consolidated financial statements. 123 ALLIED 2022 ANNUAL REPORTALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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 3, 2022 . Allied is governed by the laws of the Province of Ontario and began operations on February 19, 2003 . The units of Allied (“Units”) are traded on the Toronto Stock Exchange (“TSX”) and are traded under the symbol “AP .UN” . The subsidiaries of Allied include Allied Properties Management Trust, Allied Properties Management Limited Partnership, Allied Properties Management GP Limited, Allied Properties Exchangeable Limited Partnership (the “Partnership”), and Allied Properties Exchangeable GP Inc . (the “General Partner”) . On March 31, 2022, Allied acquired a portfolio of six properties from Choice Properties Real Estate Investment Trust (“Choice Properties”), which was partially settled with the issuance of 11,809,145 class B exchangeable limited partnership units of the Partnership (“Exchangeable LP Units”) . Allied owns 100% of the shares of the General Partner and 100% of the class A LP Units of the Partnership (the “Class A Units”) . 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 The consolidated financial statements are presented in Canadian dollars . (a) Statement of compliance The consolidated financial statements of Allied for the years ended December 31, 2022 and 2021, 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, 2022 and 2021, were approved and authorized for issue by the Board of Trustees (the “Board”) on January 31, 2023 . (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: 124 ALLIED 2022 ANNUAL REPORT— — — investment properties as described in note 2 (d) and note 5; investment properties held for sale and lease liability held for sale as described in note 2 (s); interest rate swaps as described in note 2 (i); and — unit-based compensation liabilities as described in note 17 (c) . 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 . 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 . 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 and investment properties held for sale, interest rate derivative contracts, unit- based compensation liabilities, 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 . 125 ALLIED 2022 ANNUAL REPORT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 . 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 . 126 ALLIED 2022 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 . 127 ALLIED 2022 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 . This is generally three to seven years for computer and office equipment, and will vary for owner occupied property depending on the property . 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 128 CLASSIFICATION/MEASUREMENT Amortized cost Amortized cost Amortized cost Amortized cost Amortized cost Fair value ALLIED 2022 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 . 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 . 129 ALLIED 2022 ANNUAL REPORT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, unsecured term loans and construction 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 on Units’ when the distributions have been approved and declared prior to the reporting date, but have yet to be paid . (k) Exchangeable limited partnership units The Exchangeable LP Units may, at the request of the holder, be exchanged on a one-for-one basis for Units of Allied . The Exchangeable LP Units are entitled to distributions from the Partnership in an amount equal to distributions declared by Allied on the Units . The Exchangeable LP Units provide the holder the indirect economic benefits and exposures to the underlying performance of Allied and accordingly to the variability of the distributions of Allied, whereas Allied’s unitholders have direct access to the economic benefits and exposures of Allied through direct ownership interest in Allied . Accordingly, the Exchangeable LP Units have been presented within non-controlling interests on the consolidated balance sheets . Net income and other comprehensive income are attributed to unitholders and to non-controlling interests . Net income and other comprehensive income attributable to non- controlling interests is equivalent to the amount allocated to the Partnership for income tax purposes . The basic net income per unit is calculated by dividing net income by the weighted average number of Units and Exchangeable LP Units outstanding for the period (note 18) . Distributions payable to holders of Exchangeable LP Units are included in ‘Distributions Payable on Exchangeable LP Units’ when the distributions have been approved and declared prior to the reporting date, but have yet to be paid . 130 ALLIED 2022 ANNUAL REPORT(l) Short-term employee benefits Allied does not provide pension plan benefits . Short-term employee benefits are expensed as a period expense . (m) 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 . 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 17 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 . (n) Cash-settled unit-based compensation plans Under the Performance and Restricted Trust Unit Plan (the “PTU/RTU Plan”), performance trust units and/or restricted trust units (together, “Plan Units”) are granted which entitle certain key employees to receive the fair value of the Plan Units in cash as a lump sum payment at the end of the applicable vesting period, which is usually three years in length . The PTU/RTU Plan provides for the accumulation of additional Plan Units in the form of distribution equivalents during the vesting period . The Plan Units are recognized as an expense, on a straight-line basis over the period that the employees render service, in general and administrative expenses with a corresponding amount recorded to unit-based compensation liabilities . The unit-based compensation liabilities are measured based on the market value of the underlying units . During the periods in which the unit-based compensation liabilities are outstanding, the liabilities are adjusted for changes in the market value of the underlying units, with such positive or negative adjustments recognized in general and administrative expenses in the period in which they occur . For the performance trust units’ liabilities, performance market conditions are also considered and the performance trust unit liabilities are adjusted accordingly . Upon forfeiture of Plan Units by an employee, the liability representing the cumulative expense recognized to date is reversed with a corresponding reversal of expense . 131 ALLIED 2022 ANNUAL REPORT(o) 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 . (p) 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 18 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 17 for further details) . (q) 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 . (r) 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 . 132 ALLIED 2022 ANNUAL REPORT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 . (s) Assets and liabilities held for sale and discontinued operations Non-current assets and groups of assets and liabilities which comprise disposal groups are presented as assets held for sale on the Consolidated Balance Sheets when the asset or disposal group is available for immediate sale in its present condition and the sale is highly probable . A sale is highly probable when management is committed to a plan to sell the asset, the non-current asset or disposal group is being actively marketed at a sale price that is reasonable in relation to its current fair value, the sale is expected to be completed within one year from the date of classification, and it is unlikely there will be significant changes to the plan or that the plan will be withdrawn . Non-current assets and disposal groups held for sale that are not investment properties are recorded at the lower of carrying amount and fair value less costs to sell on the Consolidated Balance Sheets . Otherwise, the non-current assets and disposal groups held for sale are recorded at fair value . Any gain or loss arising from the change in measurement basis as a result of reclassification is recognized in net income at the time of reclassification . Investment properties that are held for sale are recorded at fair value determined in accordance with IFRS 13, Fair Value Measurement . When a component of an entity has been disposed of and it represents a separate major line of business or geographical area of operations, or is classified as held for sale and is part of a single coordinated plan to dispose of such a line of business or area of operations, the related results of operations and gain or loss on reclassification or disposition are presented separately as discontinued operations on 133 ALLIED 2022 ANNUAL REPORTthe Consolidated Statements of Income and Comprehensive Income . The non-current assets and groups of assets and liabilities which comprise disposal groups classified as held for sale are not revised in the Consolidated Balance Sheets for prior periods to reflect the classification for the latest period presented . However, the revenue, expenses, fair value gain or loss, and any other components making up the net income and comprehensive income of the discontinued operations are revised for the comparative period in the Consolidated Statements of Net Income and Comprehensive Income . (t) Comparative figures Comparative figures in respect of loans and notes receivables previously classified in financing activities in the consolidated statements of cash flows have been revised to be classified in investing activities to conform to the presentation in the current year . Comparative figures in respect of segment information were revised to present the City of Vancouver separately from previous presentation within the Calgary and Edmonton segment . The revision reflects the presentation based on the effect of internal reorganization and corresponding information reported to and reviewed by the chief operating decision maker to allocate resources and assess the performance of the segments . 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 . 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, 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 . 134 ALLIED 2022 ANNUAL REPORT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 . Impact of COVID-19 As a result of the continuously evolving circumstances surrounding the COVID-19 pandemic, uncertainty remains with respect to Allied’s revised internal forecast, the most significant being the fact that it cannot predict how consumers, users and governments will respond during the transition to a fully reopened economy . In addition, Allied cannot predict the extent and severity of the economic disruption and related financial impact 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, 2022 . 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 135 ALLIED 2022 ANNUAL REPORT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 . 4 . ACQUISITIONS AND DISPOSITIONS Acquisitions During the year ended December 31, 2022, Allied acquired the following properties from third parties: PROPERTY ACQUISITION DATE PROPERTY TYPE INVESTMENT PROPERTY INTEREST ACQUIRED 108 East 5th Avenue, Vancouver February 23, 2022 Development 1010 Sherbrooke W, Montréal March 31, 2022 Office, Retail 110 Yonge, Toronto March 31, 2022 Office, Retail 525 University, Toronto March 31, 2022 Office, Retail 175 Bloor E, Toronto March 31, 2022 Office, Retail 1508 West Broadway, Vancouver (1) March 31, 2022 Office, Retail 1185 West Georgia, Vancouver March 31, 2022 Office, Retail 540 King W, Toronto 121 John, Toronto April 8, 2022 Retail July 6, 2022 Office, Retail 700 Saint-Hubert, Montréal October 31, 2022 Office (1) Allied acquired a leasehold interest in 1508 West Broadway. $39,549 116,248 55,757 137,967 166,547 166,408 131,671 26,615 4,544 126,198 $971,504 50% 100% 50% 100% 50% 100% 100% 100% 100% 100% The total purchase price, including acquisition costs, for 108 East 5th Avenue of $39,549 is comprised of net cash consideration of $24,998, a mortgage assumption of $13,625, and a deferred mortgage premium of $926 . Six properties were acquired as a portfolio from Choice Properties for a total cost of $774,598, which includes $31,510 of acquisition costs, which was satisfied by i) a promissory note with a face value of $200,000 net of a deferred discount of $7,572, which matures on December 31, 2023, bearing interest at 1% and 2% per annum in 2022 and 2023, respectively (note 12) and ii) the issuance of 11,809,145 Exchangeable LP Units of $550,660 . In addition, Allied assumed other liabilities of $9,571, which were reimbursed by Choice Properties . The total purchase price, including acquisition costs, for 540 King Street West is comprised of net cash consideration of $26,615 . The total purchase price, including acquisition costs, for 121 John Street is comprised of net cash consideration of $4,541 and assumption of other liabilities of $3 . The total purchase price, including acquisition costs, for 700 Saint-Hubert is comprised of net cash consideration of $112,660 and assumptions of other liabilities of $13,538 . 136 ALLIED 2022 ANNUAL REPORT During the year ended December 31, 2021, Allied completed the following property acquisitions and air rights from third parties: ACQUISITION DATE PROPERTY TYPE INVESTMENT PROPERTY INTEREST ACQUIRED PROPERTY 432 Wellington, Toronto 608 1st, Calgary 478 King W, Toronto (1) 65 Front E, Toronto 64 Spadina, Toronto 12 Brant, Toronto 422-424 Wellington W, Toronto 143 Bathurst, Toronto 700 Saint Antoine E, Montréal 810 Saint Antoine E, Montréal 731-10th SW, Calgary (2) 802-838 11th SW, Glenbow Assembly, Calgary (2) Sherwin Block, Calgary (2) 207 West Hastings, Vancouver 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 August 4, 2021 Development August 23, 2021 Residential August 30, 2021 Office, Retail August 30, 2021 October 19, 2021 Office Retail October 19, 2021 Office, Retail October 19, 2021 Office, Retail November 12, 2021 Office, Retail Union Centre Air Rights, Toronto December 15, 2021 $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 . Dispositions On January 24, 2022, Allied and its partners closed on the fifth and final phase of The Well air rights and 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 accordingly there was no gain or loss recorded . In addition, during the year ended December 31, 2022, Allied received cash of $413 (at Allied’s share) for the release of a holdback related to the disposition of the first phase of The Well air rights . 137 ALLIED 2022 ANNUAL REPORTOn June 30, 2022, Allied closed on the disposition of two investment properties held for sale, which were 662 King Street West and 668 King Street West, both in Toronto, for net proceeds of $38,954 and $9,991, respectively (note 5) . The total net cash consideration of $48,945 represented the fair value at the time of disposition, so there was no gain or loss recorded on closing . The disposition costs incurred were fully recoverable from the purchaser . On August 16, 2022, Allied closed on the disposition of one investment property held for sale, 100 Lombard Street in Toronto, at a selling price of $26,000 (note 5), which represented the fair value at the time of disposition, so there was no gain or loss recorded on closing . In addition, Allied incurred net working capital adjustments of $487 and selling costs of $21, resulting in the total net cash consideration of $25,492 . 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 . 138 ALLIED 2022 ANNUAL REPORT5 . INVESTMENT PROPERTIES AND INVESTMENT PROPERTIES HELD FOR SALE Changes to the carrying amounts of investment properties and investment properties held for sale are summarized as follows: YEAR ENDED DECEMBER 31, 2022 YEAR ENDED DECEMBER 31, 2021 RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT (“PUD”) TOTAL RENTAL PROPERTIES PROPERTIES UNDER DEVELOPMENT (“PUD”) TOTAL Balance, beginning of year $8,374,535 $1,238,830 $9,613,365 $7,790,855 $896,520 $8,687,375 Additions: Acquisitions Improvement allowances Leasing commissions Capital expenditures Dispositions Transfers from PUD Transfers to PUD Transfers from (to) other assets Lease liabilities Amortization of straight-line rent and improvement allowances Fair value gain (loss) on investment properties and investment properties held for sale (1) 805,757 60,494 14,714 134,630 (74,945) 165,747 971,504 315,973 28,648 344,621 1,728 5,889 62,222 22,559 20,603 15,012 2,119 1,829 24,678 16,841 263,544 398,174 123,842 304,406 428,248 (15,254) (90,199) (71,592) (71,592) 376,730 (376,730) (293,542) 293,542 — — (47,040) 47,040 — — — — — 3,900 561 — — 3,900 (6,838) 561 1,098 — — (6,838) 1,098 (26,866) 1,389 (25,477) (28,123) (500) (28,623) 118,427 (49,245) 69,182 187,197 30,360 217,557 Balance, end of year $9,494,395 $1,529,440 $11,023,835 $8,374,535 $1,238,830 $9,613,365 Investment properties $8,139,565 $1,529,440 $9,669,005 $8,288,275 $1,238,830 $9,527,105 Investment properties held for sale 1,354,830 — 1,354,830 86,260 — 86,260 $9,494,395 $1,529,440 $11,023,835 $8,374,535 $1,238,830 $9,613,365 (1) Includes a fair value gain on investment properties held for sale for discontinued operations for the year ended December 31, 2022 of $142,932 (December 31, 2021 - $56,335) which is presented separately in the net income from discontinued operations (note 6). As at December 31, 2022, Allied had five properties classified as investment properties held for sale totaling $1,354,830, four located in Toronto and one located in Montréal . There were three investment properties held for sale as at December 31, 2021, totaling $86,260, two located in Toronto and one located in Montréal . The increase of $1,268,570 in the year ended December 31, 2022, is due to the addition of five properties and disposition of three investment properties held for sale (note 4) . For the year ended December 31, 2022, Allied capitalized $47,606 (December 31, 2021 - $34,973) of borrowing costs to qualifying investment properties . 139 ALLIED 2022 ANNUAL REPORTIncluded in the rental properties amounts noted above are right-of-use assets with a fair value of $564,200 (December 31, 2021 - $528,400) representing the fair value of Allied’s interest in four investment properties and one investment property held for sale with corresponding lease liabilities . The leases’ maturities range from 21 .8 years to 79 .5 years . In addition, Allied has a prepaid land leasehold interest on a property with a fair value of $178,020 and a maturity of 73 .6 years . 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, and, in some cases, investment properties held for sale . (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 and ancillary parking facilities and, in some cases, investment properties held for sale . (c) Direct capitalization method - Under this approach, capitalization rates are applied to the estimated stabilized NOI of the properties . Estimated stabilized NOI is based on projected rental revenue and property operating costs, and external evidence such as current market rents for similar properties, and is further adjusted for estimated vacancy loss and capital reserves . Currently, this method is used only to value residential use . 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 portfolio is valued by an 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 . 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 140 ALLIED 2022 ANNUAL REPORT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 and investment properties held for sale . Discount rate Terminal capitalization rate Overall capitalization rate Discount horizon (years) WEIGHTED AVERAGE DECEMBER 31, 2022 DECEMBER 31, 2021 5.93% 4.99% 4.64% 10 5 .98% 5 .03% 4 .68% 10 The analysis below shows the maximum impact on fair values of possible changes in capitalization rates, assuming no changes in NOI (including investment properties and investment properties held for sale): CHANGE IN CAPITALIZATION RATE OF -0.50% -0.25% +0.25% +0.50% Increase (decrease) in fair value Investment Properties and Investment Properties Held for Sale 6 . DISCONTINUED OPERATIONS $1,331,381 $627,781 $(563,591) $(1,072,357) As at December 31, 2022, the Urban Data Centre segment has been classified as discontinued operations and the disposal group is comprised of three investment properties held for sale totaling $1,305,990 and a related lease liability held for sale totaling $107,215 . The three investment properties are 151 Front Street W, 905 King Street W and 250 Front Street W and the lease liability is at 250 Front Street W . Allied expects to sell these properties to a third-party purchaser within one year . The following table summarizes the results from discontinued operations: Rental revenue Property operating costs Operating income Interest expense Fair value gain on investment properties held for sale Net income from discontinued operations YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $96,669 (32,375) 64,294 (6,532) 142,932 $200,694 $96,087 (34,703) 61,384 (5,949) 56,335 $111,770 141 ALLIED 2022 ANNUAL REPORTYEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $53,521 — (29,318) $24,203 $62,344 — (50,190) $12,154 Cash provided by (used in): Operating activities Financing activities Investing activities 7 . RESIDENTIAL INVENTORY Residential inventory is as follows: KING Toronto $187,272 $170,980 DECEMBER 31, 2022 DECEMBER 31, 2021 The changes in the aggregate carrying value of Allied’s residential inventory is as follows: Balance, beginning of year Development expenditures Impairment Balance, end of year DECEMBER 31, 2022 DECEMBER 31, 2021 $170,980 32,021 (15,729) $187,272 $140,038 30,942 — $170,980 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 . During the year ended December 31, 2022, Allied recorded an impairment of $15,729 on KING Toronto . Residential inventory carrying value is calculated as the estimated gross proceeds less estimated costs to complete . The impairment in the period reflects higher estimated costs to complete . For the year ended December 31, 2022, Allied capitalized $6,204 (December 31, 2021 - $4,759) of borrowing costs to qualifying residential inventory . 142 ALLIED 2022 ANNUAL REPORT8 . 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 Current Non-current DECEMBER 31, 2022 DECEMBER 31, 2021 $7,089 113,287 $120,376 $113,287 7,089 $120,376 $11,503 113,287 $124,790 $— 124,790 $124,790 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, 2022, the loan receivable outstanding is $113,287 (December 31, 2021 - $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 DECEMBER 31, 2022 DECEMBER 31, 2021 $5,658 366,006 (350,397) — $21,267 $7,089 $8,637 378,990 (13,257) (339,861) $34,509 $11,503 143 ALLIED 2022 ANNUAL REPORTRevenue Expenses Interest expense General and administrative expense Interest income Fair value loss Net loss and comprehensive loss of TELUS Sky at 100% Net loss and comprehensive loss of TELUS Sky at Allied’s share Investment in joint venture, beginning of year Net loss Contributions Distributions Investment in joint venture, end of year 9 . LOANS AND NOTES RECEIVABLE Loans and notes receivable are as follows: Loans receivable (a) Notes and other receivables (b) Current Non-current YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $20,313 (11,529) — — 36 (18,303) $(9,483) $(3,161) $14,721 (9,822) (619) (42) — (5,591) $(1,353) $(451) DECEMBER 31, 2022 DECEMBER 31, 2021 $11,503 (3,161) 3,192 (4,445) $7,089 $3,825 (451) 10,490 (2,361) $11,503 DECEMBER 31, 2022 DECEMBER 31, 2021 $432,032 80 $432,112 $258,093 174,019 $432,112 $367,579 183 $367,762 $144,306 223,456 $367,762 144 ALLIED 2022 ANNUAL REPORT(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, 2022, the loan receivable outstanding is $21,173 (December 31, 2021 - $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, and on August 18, 2022, the facility was further increased to $175,000 . On May 18, 2022, Westbank exercised its option to extend the maturity date from August 31, 2022, to August 31, 2023 . On January 12, 2023, the maturity date of the facility was further extended from August 31, 2023 to February 29, 2024 . Interest accrues to the credit facility monthly at a rate of 6 .75% per annum up to August 31, 2022 . Thereafter, interest accrues to the credit facility monthly at the greater of 6 .75% per annum and the prime rate plus 3 .00% per annum . As at December 31, 2022, the loan receivable outstanding is $161,032 (December 31, 2021 - $144,271) . 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 is secured by a charge on the property (subordinated to the construction lender) . Interest accrues to the credit facility at a rate of 7 .00% per annum . The loan is repayable at the earlier of November 30, 2023, or the closing of the condominium units . As at December 31, 2022, the loan receivable outstanding is $97,037 (December 31, 2021 - $90,586) . 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 installments upon completion of development and rent commencement, which is anticipated to begin in the second quarter of 2023 . As at December 31, 2022, the loan receivable outstanding is $9,913 (December 31, 2021 - $10,256) due to repayments made earlier than anticipated . 145 ALLIED 2022 ANNUAL REPORT 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 150 West Georgia (previously known as 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, 2022, the loan receivable outstanding is $142,877 (December 31, 2021 - $101,293) . 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 as at December 31, 2022 (December 31, 2021 - $nil) . (b) As at December 31, 2022, and December 31, 2021, the balance of notes and other receivables is made up of individually insignificant notes receivable . 10 . 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, 2022 DECEMBER 31, 2021 $3,323 20,497 32,401 $56,221 $3,565 24,620 — $28,185 (1) During the year ended December 31, 2022, Allied recorded amortization of equipment and other assets of $1,101 (December 31, 2021 - $1,167). (2) Property, plant and equipment relates to owner-occupied property. During the year ended December 31, 2022, Allied recorded amortization of owner-occupied property of $224 (December 31, 2021 - $nil). 11 . ACCOUNTS RECEIVABLE, PREPAID EXPENSES AND DEPOSITS Accounts receivable, prepaid expenses and deposits consist of the following: User trade receivables - net of allowance (a) Other user receivables (b) Miscellaneous receivables (c) Prepaid expenses and deposits (d) 146 DECEMBER 31, 2022 DECEMBER 31, 2021 $19,864 5,950 22,979 16,751 $65,544 $16,659 2,092 13,124 25,186 $57,061 ALLIED 2022 ANNUAL REPORT (a) User trade receivables 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 year Reversal of previous provisions Receivables written off during the year Allowance for expected credit loss, end of year (b) Other user receivables YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $9,177 3,117 (829) (129) $11,336 $6,649 3,024 (407) (89) $9,177 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, management fees and interest income due from external parties, and chargebacks on construction projects which are managed by Allied for tenants . As at December 31, 2022, 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 prepaid interest, deposits for naming rights, and residential deposits related to KING Toronto . 147 ALLIED 2022 ANNUAL REPORT12 . DEBT Debt consists of the following items, net of financing costs: Mortgages payable (a) Construction loans payable (b) Promissory note payable (c) Unsecured revolving operating facility (d) Senior unsecured debentures (e) Unsecured term loans (f) Current Non-current (a) Mortgages payable DECEMBER 31, 2022 DECEMBER 31, 2021 $112,822 223,725 195,673 440,000 2,589,939 649,026 $4,211,185 $346,929 3,864,256 $4,211,185 $118,057 132,696 — 365,000 2,587,989 249,542 $3,453,284 $36,146 3,417,138 $3,453,284 Mortgages payable have a weighted average contractual interest rate of 3 .37% as at December 31, 2022 (December 31, 2021 - 3 .39%) . The mortgages are secured by a first registered charge over specific investment properties and first general assignments of leases, insurance and registered chattel mortgages . 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, 2022 DECEMBER 31, 2021 $3,069 2,528 6,423 1,391 487 293 5,000 $19,191 $12,230 46,669 — 20,443 — 14,457 — $15,299 49,197 6,423 21,834 487 14,750 5,000 $93,799 $112,990 $118,094 584 (752) 1,066 (1,103) $112,822 $118,057 148 ALLIED 2022 ANNUAL REPORT(b) Construction loans payable As at December 31, 2022, and December 31, 2021, Allied’s obligations under the construction loans are as follows: JOINT ARRANGEMENT OWNERSHIP DATE OF MATURITY DECEMBER 31, 2022 DECEMBER 31, 2021 Adelaide & Duncan Breithaupt Phase III KING Toronto 108 East 5th Avenue 50% 50% 50% 50% August 11, 2023 $85,485 $62,048 June 2, 2023 December 17, 2024 December 6, 2025 50,472 71,762 16,006 31,041 39,607 — $223,725 $132,696 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 with a standby fee of 25 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $135,000 of the guarantee . 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% . 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 . On December 1, 2022, Allied and Perimeter exercised their option to extend the loan maturity to June 2, 2023, which bears interest at bank prime or bankers’ acceptance rate plus 120 basis points with a standby fee of 20 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $69,000 of the guarantee . 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 with a standby fee of 25 basis points and a letter of credit fee of 100 basis points . Allied is providing a joint and several guarantee of the entire facility and is earning a related guarantee fee on $232,500 of the guarantee . On December 5, 2022, the 108 East 5th Avenue joint arrangement obtained a $150,000 construction lending facility from a syndicate of Canadian banks, in which Allied’s 50% share is $75,000 . The loan matures on December 6, 2025, and bears interest at prime plus 35 basis points or bankers’ acceptance rate plus 135 basis points with a standby fee of 27 basis points and a letter of credit fee rate of 100 basis points . These interest rates and the standby fee (other than the letter of credit fee) are subject 149 ALLIED 2022 ANNUAL REPORTto variability based on the achievement of two distinct sustainability performance targets . For each sustainability performance target achieved, the interest rate and standby fee would decrease by 0 .025% per annum and 0 .005% per annum, respectively . In addition, if certain sustainability minimums are not achieved, the interest rate and standby fee would increase by 0 .025% per annum and 0 .005% per annum, respectively . Depending on the applicable sustainability performance target or sustainability minimum, the settlement of these interest rate variations and the standby fee occurs either annually or at the earlier of December 6, 2025, and the date the construction lending facility is fully repaid . Allied has provided a joint and several guarantee of the entire facility and is earning a related guarantee fee on $75,000 of the guarantee . On January 13, 2023, the 108 East 5th Avenue joint arrangement entered into a swap agreement to fix 75% of the construction costs up to $110,175 at 4 .90% . (c) Promissory note payable On March 31, 2022, Allied acquired a portfolio of six properties from Choice Properties which was partially settled with the issuance of a $200,000 promissory note (note 4) . The promissory note is secured by a first registered charge on five of the six acquired properties . CONTRACTUAL INTEREST RATE DATE OF MATURITY 1 .00% for 2022, 2 .00% for 2023 December 31, 2023 FREQUENCY OF INTEREST PAYMENT DECEMBER 31, 2022 DECEMBER 31, 2021 Quarterly $200,000 (4,327) $195,673 $— — $— Promissory note payable Net discount on promissory note payable (d) Unsecured revolving operating facility As at December 31, 2022, and December 31, 2021, Allied’s obligation under the unsecured revolving operating facility (the “Unsecured Facility”) is as follows: CONTRACTUAL INTEREST RATES ON DRAWINGS MATURITY DATE Unsecured Facility limit $600,000 (1) January 30, 2025 Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) DECEMBER 31, 2022 STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE 0.24% $600,000 $(440,000) $(15,563) $144,437 (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. 150 ALLIED 2022 ANNUAL REPORTMATURITY DATE Unsecured Facility limit $600,000 (1) January 30, 2025 CONTRACTUAL INTEREST RATES ON DRAWINGS Prime + 0 .20% or Bankers’ acceptance + 1 .20% (2) DECEMBER 31, 2021 STANDBY FEE FACILITY LIMIT DRAWINGS LETTERS OF CREDIT AMOUNT AVAILABLE 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. Allied had a $100,000 bilateral unsecured line of credit with a maturity date of 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 extended 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 extended the maturity to January 30, 2025 . (e) Senior unsecured debentures As at December 31, 2022, and December 31, 2021, Allied’s obligations under the senior unsecured debentures are as follows: DATE OF MATURITY INTEREST PAYMENT DATE DECEMBER 31, 2022 DECEMBER 31, 2021 April 21, 2025 April 21 and October 21 $200,000 $200,000 CONTRACTUAL INTEREST RATE 3 .636% 3 .394% 3 .113% 3 .117% 3 .131% SERIES Series C Series D Series E Series F Series G Series H Series I Unsecured Debentures, principal Net financing costs 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 1 .726% February 12, 2026 February 12 and August 12 3 .095% February 6, 2032 February 6 and August 6 300,000 300,000 400,000 300,000 600,000 500,000 300,000 300,000 400,000 300,000 600,000 500,000 $2,600,000 $2,600,000 (10,061) (12,011) $2,589,939 $2,587,989 The Series C, D, E, F, G, H and I Senior Unsecured Debentures are collectively referred to as the “Unsecured Debentures” .  151 ALLIED 2022 ANNUAL REPORT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 12 (g)) . (f ) Unsecured term loans As at December 31, 2022, and December 31, 2021, Allied’s obligations under the unsecured term loans are as follows:  Unsecured term loan Unsecured term loan Unsecured term loans, principal Net financing costs CONTRACTUAL INTEREST RATE DATE OF MATURITY FREQUENCY OF INTEREST PAYMENT DECEMBER 31, 2022 DECEMBER 31, 2021 3 .496% January 14, 2026 (1) Monthly $250,000 $250,000 4 .865% October 22, 2025 Monthly 400,000 — $650,000 $250,000 (974) (458) $649,026 $249,542 (1) The unsecured term loan is due on January 14, 2024, with two one-year extensions to January 14, 2026. The swap agreement to fix the rate at 3.496% covers the term including both extensions. The two unsecured term loans are collectively referred to as “Unsecured Term Loans” . The respective financing costs are amortized using the effective interest method and recorded to interest expense (note 12 (g)) . 152 ALLIED 2022 ANNUAL REPORTOn April 22, 2022, Allied entered into an unsecured term loan with a financial institution for $400,000 at a rate of prime plus 10 basis points or bankers’ acceptance plus 110 basis points, due on October 22, 2025 . The proceeds from the loan were used to repay the Unsecured Facility . Debt financing costs of $700 were incurred and recorded against the principal owing . On June 24, 2022, Allied entered into a swap agreement to fix the rate at 4 .86% . On December 21, 2022, Allied amended the swap agreement for the settlement period, which increased the rate from 4 .86% to 4 .865% . (g) Interest expense Interest expense consists of the following: Interest on debt: Mortgages payable Construction loans payable Promissory note payable Unsecured Facility Unsecured Debentures Unsecured Term Loans Interest on lease liabilities (1) Amortization, net discount (premium) on debt Amortization, net financing costs Interest capitalized to qualifying investment properties and residential inventory Interest expense excluding financing prepayment costs Financing prepayment costs (2) Interest expense YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $4,635 6,487 1,512 11,125 74,705 20,592 3,224 2,401 2,495 $127,176 (53,810) $73,366 (564) $72,802 $16,722 2,983 — 2,836 64,940 8,739 3,235 (531) 2,394 $101,318 (39,732) $61,586 52,610 $114,196 (1) Excludes interest on a lease liability held for sale of $6,532 (December 31, 2021 - $5,949) that is presented separately in the net income from discontinued operations (note 6). (2) For the year ended December 31, 2022, financing prepayment costs include $nil of prepayment penalties (December 31, 2021 - $54,357), $nil of accelerated amortization of net financing costs (December 31, 2021 - $1,210), partially offset by $564 of accelerated amortization of premium on debt (December 31, 2021 - $2,957). Borrowing costs have been capitalized to qualifying investment properties and residential inventory at a weighted average effective rate of 3 .11% per annum (December 31, 2021 – 3 .06%) . 153 ALLIED 2022 ANNUAL REPORT(h) Schedule of principal repayments The table below summarizes the scheduled principal maturity for Allied’s mortgages payable, construction loans payable, promissory note payable, Unsecured Facility, Unsecured Debentures and Unsecured Term Loans as at December 31, 2022 . 2023 2024 2025 2026 2027 THEREAFTER TOTAL $3,069 $2,528 $6,423 $1,391 $487 $5,293 $19,191 Mortgages payable, principal repayments Mortgages payable, balance due at maturity Construction loans payable 135,957 71,762 16,006 12,230 46,669 — 20,443 — 440,000 — — — — — — — 14,457 — — — 93,799 223,725 200,000 440,000 200,000 600,000 300,000 1,500,000 2,600,000 400,000 250,000 — — 650,000 Promissory note payable 200,000 Unsecured Facility Unsecured Debentures Unsecured Term Loans — — — — — — — Total $351,256 $120,959 $1,062,429 $871,834 $300,487 $1,519,750 $4,226,715 A description of Allied’s risk management objectives and policies for financial instruments is provided in note 27 . 13 . LEASE LIABILITIES Allied’s future minimum lease liability payments as a lessee are as follows: 2023(1)(2) 2024 - 2027(1)(2) THEREAFTER DECEMBER 31, 2022 DECEMBER 31, 2021 Future minimum lease payments $10,403 $42,168 $425,412 $477,983 $483,752 (54) (938) — (992) (191) Interest accrued (paid) on lease obligations Less: amounts representing interest payments (10,349) (41,230) Present value of lease payments $— $— Current (note 6) Non-current (267,346) $158,066 (318,925) $158,066 $107,215 50,851 $158,066 (326,011) $157,550 $— 157,550 $157,550 (1) The future minimum lease payments prior to 2027 are less than the effective interest on the lease liabilities. (2) Includes future minimum lease payments for the lease liability held for sale. 154 ALLIED 2022 ANNUAL REPORT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, 2022, minimum lease payments of $9,689 (December 31, 2021 - $9,699) were paid by Allied . 14 . ACCOUNTS PAYABLE AND OTHER LIABILITIES Accounts payable and other liabilities consists of the following: Trade payables and other liabilities $245,675 $180,551 DECEMBER 31, 2022 DECEMBER 31, 2021 Prepaid user rents Accrued interest payable on Unsecured Debentures Distributions payable on Units Distributions payable on Exchangeable LP Units (note 16) Residential deposits (1) Interest rate swap derivative liabilities Unit-based compensation liabilities (note 17(c)) Current Non-current (2) 81,489 23,281 18,656 1,722 42,700 — 738 81,488 23,310 18,101 — 39,693 4,942 — $414,261 $348,085 $370,823 43,438 $414,261 $303,450 44,635 $348,085 (1) Residential deposits related to the residential condominium units at KING Toronto. (2) Non-current liabilities as at December 31, 2022, are composed of residential deposits totaling $42,700, unit-based compensation liabilities totaling $738, and interest rate swap derivative liabilities totaling $nil (December 31, 2021 - $39,693, $nil and $4,942, respectively). 155 ALLIED 2022 ANNUAL REPORT15 . 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, 2022 DECEMBER 31, 2021 CLASSIFICATION/ MEASUREMENT CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE Financial Assets: Loan receivable from joint venture (note 8) Amortized cost $113,287 $113,287 $113,287 $113,287 Loans and notes receivable (note 9) Amortized cost 432,112 422,999 367,762 367,762 Interest rate swap derivative assets (note 10) FVTPL Accounts receivable (note 11) Amortized cost 32,401 48,793 32,401 48,793 Cash and cash equivalents (note 22) Amortized cost 20,990 20,990 — 31,875 22,548 — 31,875 22,548 Financial Liabilities: Debt (note 12) Mortgages Amortized cost $112,822 $107,030 $118,057 $121,169 Construction loans payable Amortized cost 223,725 223,725 132,696 132,696 Promissory note payable Amortized cost 195,673 194,145 — — Unsecured Facility Amortized cost 440,000 440,000 365,000 365,000 Unsecured Debentures Amortized cost 2,589,939 2,255,528 2,587,989 2,608,549 Unsecured Term Loans Amortized cost 649,026 628,450 249,542 255,366 Accounts payable and other liabilities (note 14) Interest rate swap liabilities (note 14) Unit-based compensation liabilities (notes 14 and 17(c)) Amortized cost 413,523 413,523 343,143 343,143 FVTPL FVTPL — 738 — 738 4,942 4,942 — — 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 . 156 ALLIED 2022 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 instruments: DECEMBER 31, 2022 DECEMBER 31, 2021 LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3 Financial Assets: Loan receivable from joint venture (note 8) $— $113,287 $— $— $113,287 $— Loans and notes receivable (note 9) Interest rate swap derivative assets (note 10) Accounts receivable (note 11) — — — Cash and cash equivalents (note 22) 20,990 422,999 32,401 48,793 — — — — — — — — 22,548 367,762 — 31,875 — — — — — Financial Liabilities: Debt (note 12) Mortgages Construction loans payable Promissory note payable Unsecured Facility Unsecured Debentures Unsecured Term Loans Accounts payable and other liabilities (note 14) Interest rate swap liabilities (note 14) Unit-based compensation liabilities (notes 14 and 17(c)) $— $107,030 $— $— $121,169 $— — — — — — — — — 223,725 194,145 440,000 2,255,528 628,450 413,523 — 738 — — — — — — — — — — — — — — — — 132,696 — 365,000 2,608,549 255,366 343,143 4,942 — — — — — — — — — There were no transfers between levels of the fair value hierarchy in either period . 157 ALLIED 2022 ANNUAL REPORT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 asset as at December 31, 2022, is $32,401 (December 31, 2021 - net liability of $4,942) . The fair value of the derivative contracts is determined using forward interest rates observable in the market (Level 2) . Interest rate swap derivative assets (note 10) Interest rate swap derivative liabilities (note 14) Total Unit-Based Compensation Liabilities DECEMBER 31, 2022 DECEMBER 31, 2021 $32,401 — $32,401 $— (4,942) $(4,942) The fair value of Allied’s unit-based compensation liabilities is based on the market value of the underlying units . For the performance trust units, the performance market conditions are also taken into consideration . Debt, 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) . 16 . EQUITY The equity of Allied is comprised of Units issued by Allied and Exchangeable LP Units issued by the Partnership: Units (authorized - unlimited) Each Unit represents a single vote at any meeting of holders of Units and Special Voting Units (as defined below) and entitles the holders of Units and Special Voting Units to receive a pro rata share of all distributions, in accordance with the conditions provided for in the Declaration of Trust . Exchangeable LP Units (authorized - unlimited) Exchangeable LP Units issued by the Partnership are economically equivalent to Units, receive distributions equal to the distributions paid on the Units and are exchangeable, at the holder’s option, for Units . All Exchangeable LP Units are held, directly or indirectly, by Choice Properties . 158 ALLIED 2022 ANNUAL REPORTThe 11,809,145 Exchangeable LP Units issued on March 31, 2022, in connection with the acquisition of certain properties (see note 4) contain lock-up and standstill restrictions . The lock-up will expire based on the following schedule: LOCK-UP EXPIRATION DATE NUMBER OF EXCHANGEABLE LP UNITS ELIGIBLE FOR RELEASE June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 2,952,286 2,952,286 2,952,286 2,952,287 11,809,145 Each Exchangeable LP Unit is accompanied by one special voting unit of Allied (“Special Voting Unit”) which provides the holder thereof with the right to one vote at all meetings of holders of Units and Special Voting Units . The following represents the number of Units and Exchangeable LP Units issued and outstanding, and the related carrying value of equity, for the years ended December 31, 2022 and December 31, 2021 . NUMBER ISSUED AND OUTSTANDING AMOUNT UNITS EXCHANGEABLE LP UNITS TOTAL EQUITY UNITS EXCHANGEABLE LP UNITS TOTAL EQUITY Balance at January 1, 2021 127,259,218 Restricted Unit Plan (net of forfeitures) (note 17(b)) Unit Option Plan - options exercised (note 17(a)) Unit issuance (net of costs) — 1,533 477,100 Balance at December 31, 2021 127,737,851 Restricted Unit Plan (net of forfeitures (note 17(b)) Unit Option Plan - options exercised (note 17(a)) — 6,332 — — — — — — — 127,259,218 $3,884,661 $— $3,884,661 — (2,141) 1,533 56 477,100 20,079 — — — (2,141) 56 20,079 127,737,851 $3,902,655 $— $3,902,655 — (2,661) 6,332 200 9,184 — — (2,661) 200 550,660 559,844 Unit issuance (net of costs) 211,800 11,809,145 12,020,945 Balance at December 31, 2022 127,955,983 11,809,145 139,765,128 $3,909,378 $550,660 $4,460,038 159 ALLIED 2022 ANNUAL REPORTDuring the year ended December 31, 2022, the acquisition of six office assets from Choice Properties was satisfied in part by the issuance of 11,809,145 Exchangeable LP Units . In January 2022, Allied issued 211,800 Units under the at-the-market program (“ATM Program”) in settlement of trades executed at the end of December 2021 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 . The ATM Program is described in note 27 (a) . During the 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 . Allied does not hold any of its own Units, nor does Allied reserve any Units for issue under options and contracts . Distributions On January 16, 2023, Allied declared a distribution for the month of January 2023 of $0 .15 per Unit, representing $1 .80 per Unit on an annualized basis to Unitholders of record as at January 31, 2023 . On each date that a distribution is declared by Allied on the Units, a distribution in an equal amount per unit is declared by the Partnership on the Exchangeable LP Units . A holder of Exchangeable LP Units may elect to defer receipt of all or a portion of distributions declared by the Partnership until the first business day following the end of the fiscal year . If the holder elects to defer, the Partnership will loan the holder an amount equal to the deferred distribution without interest, and the loan will be due and payable on the first business day following the end of the fiscal year during which the loan was advanced . The distributions declared by the Partnership on the Exchangeable LP Units from April 1, 2022 to December 31, 2022 was $15,496, for which Choice Properties elected to receive a loan in lieu of all of the distributions . Of the $15,496 loan in lieu of distributions, a note receivable of $13,774 was issued to Choice Properties for the cash advances made during the nine months ended December 31, 2022, with the remaining $1,722 advanced to Choice Properties as a note receivable on January 16, 2023 . Since there is a legally enforceable right and an intention by Allied and Choice Properties to settle the note receivable from Choice Properties and the distributions payable to Choice Properties on a net basis on the first business day following the end of the fiscal year, these financial instruments are offset on the balance sheet . On January 3, 2023, $13,774 of the note receivable due from Choice Properties was settled on a net basis against the distributions payable to Choice Properties . On January 16, 2023, the Partnership declared a distribution for the month of January 2023 of $0 .15 per Exchangeable LP Unit, representing $1 .80 per Exchangeable LP Unit on an annualized basis to holders of the Exchangeable Units as at January 31, 2023, for which Choice Properties elected to receive a loan in lieu of the distribution . 160 ALLIED 2022 ANNUAL REPORTNormal Course Issuer Bid On February 22, 2022, 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 12,602,594 of its outstanding Units, representing approximately 10% of its public float as at February 10, 2022 . The NCIB commenced February 24, 2022, and will expire on February 23, 2023, 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, 2022, Allied purchased 61,725 Units for $2,664 at a weighted average price of $43 .16 per Unit under its NCIB program, of which 61,148 Units were purchased for delivery to participants under Allied’s Restricted Unit Plan and 577 Units were purchased for certain employee rewards outside of Allied’s Restricted Unit Plan . 17 . 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 (350,831) (19,132) 170,517 170,517 February 22, 2017 February 22, 2027 279,654 $35 .34 (23,576) February 14, 2018 February 14, 2028 198,807 $40 .30 (14,685) — — February 13, 2019 February 13, 2029 323,497 $47 .53 (2,717) (4,330) 256,078 256,078 184,122 316,450 184,122 241,451 February 5, 2020 February 5, 2030 352,230 $54 .59 — (1,594) 350,636 183,376 February 3, 2021 February 3, 2031 442,233 $36 .55 (1,533) (1,460) 439,240 115,730 2,136,901 (393,342) (26,516) 1,717,043 1,151,274 161 ALLIED 2022 ANNUAL REPORTYEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 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 year $31.56-54.59 6.13 $31 .56-54 .59 7 .13 DECEMBER 31, 2022 DECEMBER 31, 2021 YEAR ENDED NUMBER OF UNITS WEIGHTED AVERAGE EXERCISE PRICE Balance, beginning of year 1,726,381 Granted Forfeited Exercised Balance, end of year — (3,006) (6,332) 1,717,043 $41.95 — 43.28 31.56 $41.98 NUMBER OF UNITS 1,288,229 442,233 (2,548) (1,533) 1,726,381 WEIGHTED AVERAGE EXERCISE PRICE $43 .81 36 .55 50 .92 36 .55 $41 .95 Units exercisable at the end of the year 1,151,274 $41.32 842,672 $40 .05 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 the valuation of options granted are as follows: YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 — — —% —% —% $— 442,233 10 21 .38% 4 .65% 0 .84% $1,441 Unit options granted Unit option holding period (years) Volatility rate Distribution yield Risk-free interest rate Value of options granted 162 ALLIED 2022 ANNUAL REPORTThe underlying expected volatility was determined by reference to historical data of Allied’s Units over 10 years . For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $876 (December 31, 2021 - $1,740) in general and administrative expense in the consolidated statements of income and comprehensive income . (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 . Restricted Units are released to participants forthwith following the sixth anniversary of the award date or such other date as determined in accordance with the Restricted Unit Plan . The following is a summary of the activity of Allied’s Restricted Unit Plan: Restricted Units, beginning of year Granted Released Forfeited Restricted Units, end of year YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 296,810 61,148 (35,444) (103) 322,411 288,135 58,260 (49,585) — 296,810 For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $2,807 (December 31, 2021 - $2,376) in general and administrative expense in the consolidated statements of income and comprehensive income . During the year ended December 31, 2022, 103 Restricted Units were forfeited for $4 at a weighted average price of $34 .41 per Unit . 163 ALLIED 2022 ANNUAL REPORT(c) Performance and Restricted Trust Unit Plan In December 2021, Allied adopted a cash settled performance and restricted trust unit plan (the “PTU/ RTU 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 PTU/RTU 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 . The following is a summary of the activity of Allied’s PTU/RTU Plan: Plan Units, beginning of year Granted Forfeited Distribution equivalents Plan Units, end of year YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 — 172,500 (1,035) 7,728 179,193 — — — — — For the year ended December 31, 2022, Allied recorded a unit-based compensation expense of $738 (December 31, 2021 - $nil), including the mark-to-market adjustment, in general and administrative expense in the consolidated statements of income and comprehensive income . 18 . WEIGHTED AVERAGE NUMBER OF UNITS The weighted average number of Units and Exchangeable LP Units for the purpose of calculating basic and diluted income per unit is as follows: YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 127,951,020 8,929,655 136,880,675 23,407 136,904,082 127,305,384 — 127,305,384 150,445 127,455,829 Units Exchangeable LP Units (1) Total units - basic Unit Option Plan Total units - fully diluted (1) Issued on March 31, 2022. 164 ALLIED 2022 ANNUAL REPORT19 . NET INCOME PER UNIT Net income per basic and diluted unit is calculated based on net income and comprehensive income divided by the weighted average number of units taking into account the dilution effect of Unit options . YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 Net income and comprehensive income from continuing operations attributable to Unitholders Net income and comprehensive income from discontinued operations attributable to Unitholders Net income and comprehensive income attributable to Unitholders Net income and comprehensive income attributable to non-controlling interests Net income and comprehensive income $168,161 200,694 $368,855 6,508 $375,363 $331,381 111,770 $443,151 — $443,151 Net income and comprehensive income per unit (basic and diluted): DECEMBER 31, 2022 DECEMBER 31, 2021 YEAR ENDED Continuing operations Discontinued operations Attributable to Unitholders Attributable to non-controlling interests Net income and comprehensive income per unit (basic and diluted) $1.23 1.46 $2.69 0.05 $2.74 $2 .60 0 .88 $3 .48 — $3 .48 20 . TOTAL REVENUE Total revenue includes the following: Rental revenue (1) Tax and insurance recoveries Miscellaneous revenue (2) Operating cost recoveries Total rental revenue from continuing operations YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $252,650 99,633 21,937 145,248 $519,468 $226,962 94,030 15,310 136,497 $472,799 Includes straight-line rent, amortization of tenant improvements and parking revenue earned at properties. (1) (2) Includes transient parking, percentage rent, lease terminations and other miscellaneous items. 165 ALLIED 2022 ANNUAL REPORTFuture minimum rental income from continuing operations is as follows: 2023 2024 2025 2026 2027 THEREAFTER TOTAL Future minimum rental income $296,945 $284,262 $258,496 $229,532 $193,992 $800,562 $2,063,789 21 . GENERAL AND ADMINISTRATIVE EXPENSES Salaries and benefits Professional and trustee fees Office and general expenses Capitalized to qualifying investment properties Total general and administrative expenses YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $21,119 6,051 5,549 $32,719 (10,126) $22,593 $21,683 4,481 5,816 $31,980 (6,146) $25,834 22 . SUPPLEMENTAL CASH FLOW INFORMATION The following summarizes supplemental cash flow information in operating activities: YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 Supplemental Interest paid on debt (including capitalized interest and financing prepayment costs (note 12)) $131,537 $152,840 The following summarizes supplemental cash flow information in investing activities: YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $13,625 $51,750 Supplemental Mortgages assumed (note 4) 166 ALLIED 2022 ANNUAL REPORTThe following summarizes the change in non-cash operating items: YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 Net change in accounts receivable, prepaid expenses and deposits Net change in loans and notes receivable Net change in accounts payable and other liabilities Other working capital changes Change in non-cash operating items $(8,483) (64,350) 66,176 45,565 $38,908 $7,391 (45,126) 6,879 65,702 $34,846 23 . JOINT OPERATIONS 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 . PROPERTIES LOCATION CURRENT STATUS DECEMBER 31, 2022 DECEMBER 31, 2021 OWNERSHIP 642 King W Toronto, ON Rental Property Adelaide & Duncan Toronto, ON Property Under Development Breithaupt Block Kitchener, ON College & Manning Toronto, ON College & Palmerston Toronto, ON Rental Property and Property Under Development Rental Property Rental Property KING Toronto Toronto, ON Property Under Development King Portland Centre Toronto, ON Rental Property The Well Toronto, ON Rental Property and Property Under Development 108 East 5th Avenue Vancouver, BC Property Under Development 175 Bloor Street E Toronto, ON 110 Yonge Street Toronto, ON Rental Property Rental Property 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% N/A N/A N/A 167 ALLIED 2022 ANNUAL REPORTTotal assets Total liabilities Revenue Expenses Income before impairment and fair value adjustment on investment properties Impairment of KING Toronto Fair value gain on investment properties Net income 24 . SEGMENTED INFORMATION DECEMBER 31, 2022 DECEMBER 31, 2021 $2,016,405 $570,821 $1,502,233 $444,135 YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 $35,071 (13,669) 21,402 (15,729) 10,416 $16,089 $16,072 (8,199) 7,873 — 82,050 $89,923 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 cities . The urban office properties are managed by geographic location consisting of four groups of cities . The CODM measures and evaluates the performance of Allied’s operating segments based on net rental income and operating income . 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 all assets and liabilities 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, fair value of derivative instruments and impairment of residential inventory are not allocated to operating segments . As at December 31, 2022, the Urban Data Centre segment has been classified as discontinued operations (note 6) and is therefore excluded from the following tables, which present a reconciliation of operating income to net income from continuing operations for the years ended December 31, 2022 and 2021 . 168 ALLIED 2022 ANNUAL REPORTSEGMENTED CONSOLIDATED STATEMENTS OF INCOME FROM CONTINUING OPERATIONS YEAR ENDED DECEMBER 31, 2022 MONTRÉAL & OTTAWA TORONTO & KITCHENER CALGARY & EDMONTON (1) VANCOUVER JOINT VENTURE (TELUS SKY) (2) TOTAL Rental revenue $209,163 $230,638 $39,561 $46,877 $(6,771) $519,468 Property operating costs (106,385) (85,416) (20,417) (15,885) 3,843 (224,260) Net rental income and operating income Interest expense General and administrative expenses Condominium marketing expenses Amortization of other assets Interest income Fair value loss on investment properties and investment properties held for sale Fair value gain on derivative instruments Impairment of residential inventory Net loss from joint venture Net income from continuing operations $102,778 $145,222 $19,144 $30,992 $(2,928) $295,208 (72,802) (22,593) (602) (1,325) 32,080 (73,750) 37,343 (15,729) (3,161) $174,669 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 and Edmonton results, to arrive at the equity method of accounting. 169 ALLIED 2022 ANNUAL REPORTTOTAL $472,799 (204,792) YEAR ENDED DECEMBER 31, 2021 MONTRÉAL & OTTAWA TORONTO & KITCHENER CALGARY & EDMONTON (1) VANCOUVER JOINT VENTURE (TELUS SKY) (2) Rental revenue Property operating costs Net rental income and 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 on derivative instruments Net loss from joint venture Net income from continuing operations $201,222 (99,074) $209,095 (79,318) $37,337 (19,061) $30,052 (10,613) $(4,907) 3,274 $102,148 $129,777 $18,276 $19,439 $(1,633) $268,007 (114,196) (25,834) (573) (1,167) 28,023 161,222 16,350 (451) $331,381 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 and Edmonton results, to arrive at the equity method of accounting. 25 . 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 . 170 ALLIED 2022 ANNUAL REPORT26 . 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, Allied Properties Exchangeable Limited Partnership, Allied Properties Exchangeable GP Inc ., 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, 2022, real estate service revenue earned from these properties was $405 (December 31, 2021 - $413) . As at December 31, 2022, the loan to the TELUS Sky joint venture has a balance outstanding of $113,287 (December 31, 2021 - $113,287) (see note 8) . 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 $4,452 4,328 $8,780 $4,906 3,177 $8,083 YEAR ENDED DECEMBER 31, 2022 DECEMBER 31, 2021 171 ALLIED 2022 ANNUAL REPORT27 . RISK MANAGEMENT (a) Capital management Allied defines capital as the aggregate of equity, mortgages payable, construction loans payable, promissory note payable, Unsecured Facility, Unsecured Debentures, Unsecured Term Loans 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, 2022, the debt to gross book value ratio was 35 .6% (December 31, 2021 - 33 .5%) and debts having variable interest rates or maturities of less than one year aggregated to 7 .4% of gross book value (December 31, 2021 - 4 .2%) . 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 Facility and Unsecured Term Loans . 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, 2022 . 172 ALLIED 2022 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, 2022 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 Facility, Allied will be further exposed to changes in interest rates . As at December 31, 2022, the Unsecured Facility, which is at a floating interest rate and is exposed to changes in interest rates, had a balance outstanding of $440,000 (December 31, 2021 - $365,000) . Also, Allied has construction loans payable, of which $138,240 is subject to floating interest rates and is exposed to changes in interest rates (December 31, 2021 - $70,648) . 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, 2022 CARRYING AMOUNT INCOME IMPACT INCOME IMPACT -1.0% +1.0% Unsecured Facility Construction loans payable (1) Mortgages payable due within one year Promissory note $440,000 $223,725 $15,299 $195,673 $4,400 $2,237 $153 $1,957 $(4,400) $(2,237) $(153) $(1,957) (1) Includes a construction loan of $85,485, which is due within a year and $138,240 construction loans which are subject to floating interest rates, of which $50,472 is due within one year. 173 ALLIED 2022 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, 2022, Allied had $432,032 outstanding in loans receivable (December 31, 2021 - $367,579) and $113,287 outstanding in joint venture loan receivable (December 31, 2021 - $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, 2022, are $nil (December 31, 2021 - $nil) (note 9) . 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, 2022, are $11,336 (December 31, 2021 - $9,177) (note 11 (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 DECEMBER 31, 2022 DECEMBER 31, 2021 $1,677 3,129 15,058 $19,864 $4,204 2,190 10,265 $16,659 as follows: Less than 30 days 30 to 60 days More than 60 days Total 174 ALLIED 2022 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 . Contractual interest rates on the mortgages payable are between 2 .77% and 4 .30% for December 31, 2022 (December 31, 2021 - 2 .77% and 4 .30%) . Allied entered into interest rate derivative contracts to limit its exposure to fluctuations in interest rates on $650,000 of its variable rate unsecured term loan and $85,485 of its construction loans (December 31, 2021 - $250,000 and $62,048, respectively) . As at December 31, 2021, Allied repaid all of its variable rate mortgages payable 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, 2022, Allied recognized as part of the change in fair value adjustment on derivative instruments a fair value gain of $37,343 (December 31, 2021 - $16,350) . 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: 2023 2024 2025 2026 2027 THEREAFTER TOTAL Mortgages payable $18,589 $51,754 $7,842 $23,199 $1,088 $20,091 $122,563 Construction loans payable 146,322 77,106 17,004 Promissory note payable 204,000 Unsecured Facility Unsecured Debentures 29,260 74,485 — 29,260 74,485 — 442,438 — — — — — — — — — 240,432 204,000 500,958 270,849 662,035 352,188 1,625,868 3,059,910 Unsecured Term Loans 28,200 28,200 424,957 250,335 — — 731,692 Total $500,856 $260,805 $1,163,090 $935,569 $353,276 $1,645,959 $4,859,555 (f ) Unit price risk Unit price risk arises from the unit-based compensation liabilities which are recorded at fair value at each quarter-end date . Allied’s unit-based compensation liabilities negatively impact operating income when the Unit price rises and positively impact operating income when the Unit price declines . 175 ALLIED 2022 ANNUAL REPORT28 . COMMITMENTS AND CONTINGENCIES Allied has entered into commitments for acquisitions, development activity and building renovations from leasing activity . The commitments as at December 31, 2022 were $247,819 (December 31, 2021 - $473,779) . Commitments as at December 31, 2022 of $510 (December 31, 2021 - $354) were held within equity accounted investments . As at December 31, 2022, there are no committed acquisitions (December 31, 2021 - $126,198 for the acquisition of 700 Saint-Hubert, which closed on October 31, 2022) . 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 $23,952 as at December 31, 2022 (December 31, 2021 - $28,256) . 176 ALLIED 2022 ANNUAL REPORTCorporate Profile About Us Allied is a leading operator of distinctive urban workspace in Canada’s major cities and network-dense UDC space in Toronto . Allied’s mission is to provide knowledge-based organizations with workspace and UDC space that is sustainable and conducive to human wellness, creativity, connectivity and diversity . Allied’s vision is to make a continuous contribution to cities and culture that elevates and inspires the humanity in all people . 177 ALLIED 2022 ANNUAL REPORTSenior Management Board of Trustees Michael Emory President and Chief Executive Officer Tom Burns Executive Vice President and Chief Operating Officer Cecilia Williams Executive Vice President and Chief Financial Officer Hugh Clark Executive Vice President, Development Doug Riches Executive Vice President, Special Operations Matthew Andrade (1) Gordon Cunningham (2) Kay Brekken (1)(2) Michael Emory Hazel Claxton (2) Toni Rossi (2) Gerald Connor (1) Stephen Sender (1) Lois Cormack (1)(2) Jennifer Tory (2) HEAD OFFICE TRANSFER AGENT & REGISTRAR 134 Peter Street, Suite 1700 Toronto, Ontario M5V 2H2 T . 416 .977 .9002 | F . 416 .306 .8704 STOCK EXCHANGE LISTING AND SYMBOL Toronto Stock Exchange Units - AP .UN AUDITORS Deloitte LLP (1) Audit Committee (2) Governance, Compensation and Nomination Committee TSX Trust Company P .O . Box 700, Postal Station B Montreal, Quebec H3B 3K3 T . 1 .800 .387 .0825 | F . 1 .888 .249 .6189 E-mail: shareholderinquiries@tmx .com Website: www .tsxtrust .com INVESTOR RELATIONS T . 416 .977 .9002 Email: info@alliedreit .com Website: www .alliedreit .com 178 ALLIED 2022 ANNUAL REPORT

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