Office property owner Allied Properties REIT is considering a sale of its data centre portfolio, a deal that would help the commercial landlord pay down debt as it retools for a new era of higher interest rates and hybrid working.
However, the real estate market has been rocked this year by rising interest rates and Allied’s units have been some of the hardest hit, losing 40 per cent of their value since January. Allied was adored by investors pre-pandemic, with its units hitting a record high near $60 each in February, 2020, but fears of weaker office space demand, coupled with higher interest rates, which make mortgages more expensive, has hammered the company’s units.Allied has faced additional headwinds.
Analysts believe Allied is pursuing a sale of its data centre portfolio because the cash earned can be used to pay down debt that has accumulated while financing developments. Selling the properties at a strong valuation could also help to boost Allied’s unit price, because at the moment investors don’t seem to be giving Allied much value for these differentiated assets.
Good! Please flood the market with units. Keep cranking the interest rates. If these guys are hurting it is working.