CIBC Capital Markets maintained its neutral rating on the units of Allied Properties Real Estate Investment Trust (AP-UN.TO) and increased its target price to $11.00 from $10.50.
The bank said the company's units have "significantly outperformed" the market in recent weeks. Its $11.00 price target is based on 10.6x 2027 FFO/u estimate, implying a 1% premium to its revised net asset value estimate.
"We believe management and board changes have begun to alter AP's leasing approach, which we expect will help it deliver on its three-year outlook," said analyst Tal Woolley. "We think units can continue to run here due to some possible speculative factors, but we expect the operational recovery to be a multi-year process, consistent with what AP laid out following Q4 results and the $560MM equity offering."
CIBC believes the market is "either expecting a quicker fundamental turnaround or there may be some speculative factors at play".
"Sufficiently chastened by the Q3/25 reporting experience (units ran up, then dropped -17%), we advise caution in aggressively chasing AP units here, as we do not expect to see a clear turn in operating performance until late 2026," added Woolley. "This is consistent with AP's 3-year outlook. AP: the financial recovery will take time."
The bank also noted that in the management circular, the board made significant downward discretionary adjustments to executive incentive compensation. It also believes the reconfigured C-suite will see "more success" with a more flexible leasing strategy.
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Price: $11.27, Change: $+0.59, Percent Change: +5.52%