06.05.15

ALLIED PROPERTIES REIT

Q U A R T E R LYR E P O R TM A R C H 3 1 , 2 0 1 5 BUILDING CITIES — ONE BUILDING AT A TIME

QRC WEST, TORONTO, NEARING COMPLETION

Q U A R T E R LY R E P O R T

M A R C H 3 1 , 2 0 1 5

CONTENTS LETTER TO UNITHOLDERS. . . . . . . . . . . 4

MANAGEMENT’S DISCUSSION AND ANALY-SIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AS AT MARCH 31, 2015 . . . . . . . . . . . . . . . . . . . 9

SECTION I—Overview . . . . . . . . . . . . . . . . 10

Summary of Key Financial and

Operating Performance Measures. . . . . . . . . . . 12

Business Overview and Strategy. . . . . . . . . . . . 14

Property Portfolio. . . . . . . . . . . . . . . . . . . . 15

Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 16

Corporate Social Responsibility. . . . . . . . . . . . 16

Business Environment and Outlook. . . . . . . . . . 17

SECTION II—Leasing . . . . . . . . . . . . . . . . 18

Status. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Activity. . . . . . . . . . . . . . . . . . . . . . . . . . 19

Tenant Profile . . . . . . . . . . . . . . . . . . . . . . 20

Lease Maturity. . . . . . . . . . . . . . . . . . . . . . 21

SECTION III—Asset Profile . . . . . . . . . . . . . 23

Rental Properties . . . . . . . . . . . . . . . . . . . . 24

Development Properties . . . . . . . . . . . . . . . . 27

SECTION IV—Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . 30

Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Unsecured Revolving Operating Line . . . . . . . . . 33

Unitholders’ Equity . . . . . . . . . . . . . . . . . . . 33

Distributions to Unitholders . . . . . . . . . . . . . . 35

Commitments . . . . . . . . . . . . . . . . . . . . . . 35

SECTION V—Discussion of Operations. . . . . . . 36

Net Operating Income. . . . . . . . . . . . . . . . . . 36

Same-Asset NOI. . . . . . . . . . . . . . . . . . . . . 38

Interest Expense. . . . . . . . . . . . . . . . . . . . . 38

General and Administrative Expenses. . . . . . . . . 38

Net Income and Comprehensive Income . . . . . . . 39

Other Financial Performance Measures. . . . . . . . 39

SECTION VI—Quarterly History . . . . . . . . . . 42

SECTION VII—Accounting . . . . . . . . . . . . . 44

SECTION VIII—Disclosure Controls And Internal Controls. . . . . . . . . . . . . . . . . . . . . 45

SECTION IX—Risks And Uncertainties. . . . . . . 46

Financing and Interest Rate Risk . . . . . . . . . . . 46

Tenant Credit Risk. . . . . . . . . . . . . . . . . . . . 46

Lease Roll-Over Risk . . . . . . . . . . . . . . . . . . 46

Environmental Risk . . . . . . . . . . . . . . . . . . . 47

Development Risk. . . . . . . . . . . . . . . . . . . . 47

Taxation Risk. . . . . . . . . . . . . . . . . . . . . . . 47

Joint Venture Risk. . . . . . . . . . . . . . . . . . . . 47

SECTION X—Property Table. . . . . . . . . . . . . 48

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31 , 2015 . . . . . 55

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LETTER TO UNITHOLDERS

Dear Fellow Unitholder:

To my way of thinking, success in real estate is not so much a function of scale as it is of operating coherence and value creation. Although we’ve acquired and developed a lot of real estate since our IPO, we’ve never seen ourselves as “asset gatherers” or “aggregators”. Rather, we’ve seen ourselves as being in the business of providing urban office space to creative enterprises on a profitable basis for the benefit of our unitholders. Operating coherence allows us to serve our customers better. Value creation allows us to serve our unitholders better. Interestingly, the two are very much intertwined and mutually reinforcing.

Success is also a function of social responsibility. As the impact of our business has widened, we’ve made every effort to think about what we do in the context of city building. Canadian cities are transforming rapidly and profoundly, and we’re singularly well suited to contribute to the transformation by virtue of (i) the properties we own and (ii) the creative enterprises we serve. The more successfully we contribute to city building, the better we’ll serve our customers and the more profitable our business will be for our unitholders.

As we continue to build our business, two factors are becoming more pronounced. The first is the expansion of our opportunity set, and the second is the strengthening of our platform. Again, the two are intertwined and mutually reinforcing.

EXPANDING OPPORTUNITY SET

As I understand it, opportunity set is the range of opportunity that can be exploited within applicable limitations. For a real estate business, there are two principal internal limitations—operating capability and financing capability. The former is what you know how to do. The latter is what you can afford. As either expands, so too should your opportunity set.

Real estate operating capability relates, in large part, to function, asset-type and geography. When we started in 2003, our operating capability was limited to the ownership of stabilized Class I office properties in Downtown Toronto. In

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2005, it expanded to the ownership and management of stabilized Class I office properties in Downtown Toronto and Downtown Montreal. Today, we function as a developer, owner and manager of urban office properties in major cities across Canada. Our operating capability has expanded significantly over the years, with a corresponding expansion of our opportunity set.

At our 2011 AGM, I mentioned that “the need for collaboration with those who have complimentary expertise has increased as our business has grown.” Since then, we’ve established joint-venture relationships with best-in-class real estate organizations like RioCan (retail development), Westbank (residential and office development), Diamond (urban land development) and Perimeter (commercial development on the perimeter of the GTA). These relationships have effectively expanded our operating capability.

Real estate financing capability is based on access to capital and cost of capital. When we started, we had limited access to expensive equity financing and conventional first mortgage financing. In time, our access to capital improved immensely and our cost of capital declined precipitously. Very recently, our ability to access unsecured debt financing was established with an investment-grade credit rating. Our financing capability has also expanded significantly over the years, with a corresponding expansion of our opportunity set.

The Adelaide & Duncan JV illustrates my point perfectly. Located on the southeast corner of Duncan and Adelaide Streets in Toronto’s vibrant Downtown West submarket, 19 Duncan is comprised of a high-quality Class I building and a significant amount of surplus land. It was offered for sale late last year. We saw real value in the Class I building, but we knew that significant value would be attributed to the unused residential density on the surplus land. On our own, we had limited ability to exploit the opportunity inherent in the unused residential density. With Westbank as a joint-venture partner, however, 19 Duncan became a decidedly better opportunity for us. As a result, the Adelaide & Duncan JV between Allied and Westbank was formed. Our expanding financing capability was also helpful in making 19 Duncan part of our opportunity set, as we provided acquisition financing to Westbank on terms that were mutually beneficial. Three years ago, 19 Duncan wouldn’t have been within our opportunity set. Late last year, it clearly was.

STRENGTHENING PLATFORM

A real estate platform is all about the people who collectively represent the operating capability of the business. Expanding our platform is a necessary precondition to expanding our opportunity set successfully. We’ve been doing this for some time now, and we’ll continue to do so going forward.

You’ll recall that we bolstered and realigned our leadership team comprehensively in 2010-2011. We bolstered it again in 2013 through a combination of internal promotion and external recruitment. Late last year and early this year, we bolstered and realigned our leadership team yet again, with the result that it’s now deeper, stronger, better iterated and better composed than ever before. We achieved the most recent transformation with an encouraging combination of internal promotion and external recruitment.

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Tom Burns is an exceptional Chief Operating Officer at a time when the importance of a strong COO has become more evident to everyone in the Canadian REIT universe. With steadfast support from Doug Riches (VP, Mission Critical Facilities), David Pitfield, (VP, Operations) and Tim Low (VP, Leasing), Tom has ensured that our leasing and operating capabilities have kept pace with our expanding opportunity set. He’ll continue to do so while participating fully in the strategic guidance of our business. Cecilia Williams has in a very short period of time proven herself to be an outstanding Chief Financial Officer. She has strong support from Luqman Ahmad (VP, Finance & Accounting), Karen Leeder (Corporate Controller) and Sakshi Bonomo (Controller, Property Accounting). This support will enable her to participate ever more fully in the strategic guidance of our business going forward.

Hugh Clark (VP, Development) has taken primary responsibility for our value-creation activity in recent years, as has Tyrone Bowers (VP, Acquisitions) for our acquisition activity and Sarah Jane O’Shea (VP, Asset Management) for our asset management activity. Like Cecilia, Hugh, Tyrone and Sarah Jane are young leaders with the ability to make a progressively larger contribution to our business for years and years to come.

Jennifer Irwin (VP, Human Resources and Communications) and John Chung (VP, Technology) discharge vital corporate functions. As our platform has expanded, managing human resources intelligently and utilizing technology effectively has taken on ever greater importance, and Jennifer and John have been up to the challenge.

Not only does a strengthening platform propel operating capability, it provides a better foundation for succession planning. Although our current leadership team is stable and fully committed to Allied, a strong platform must be able to adapt to, and take advantage of, unexpected change. If necessary going forward, ours will do so, just as it did in the past six months.

2015 BEGINS

We’ve had a strong start to the year. Our financial and operating performance measures in the first quarter were solid. FFO and AFFO per unit for the quarter were $0.51 and $0.46, in-line with the comparable quarter last year, bringing our FFO and AFFO pay-out ratios to 71% and 79%

Our opportunity set thus far in 2015 has consisted of value-creation opportunities in Toronto’s Downtown West submarket, ones that we can prudently afford because of our strong balance sheet. We acquired 180 John Street, a small and compact redevelopment opportunity similar in many respects to 460 King Street West, which we acquired last year and will have redeveloped by the end of this year. We’ll redevelop 180 John over the next 24 to 36 months and generate a respectable holding return in the interim.

We also announced the acquisition of 511-539 King West, an exceptional complex of heritage properties and surplus land with 63,511 square feet of area and 301 feet of frontage on King West. Our 469-499 King West runs east from the foot of Brant and includes frontage of 321 feet. (With the property, we’ll own 622 feet of uninterrupted frontage on the south side of King West between 469 and 539.) For this and other reasons, the property is extremely strategic to us and

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Michael Emory president.and.chief.executive.officer

represents an extraordinary value-creation opportunity. We’ll operate it as a rental property in the near-term and explore our options for longer-term intensification. It’s highly probable that we’ll pursue this value-creation opportunity with a joint-venture partner having complimentary expertise.

Leasing thus far in 2015 has been exceptionally strong. QRC West in Toronto is on the verge of full lease-up, while 250 Front West is moving steadily in that direction. Our Montreal properties on du Parc and de Gaspe are also moving steadily toward full lease-up, as are The Pilkington Building and Vintage I & II in Calgary. Unless we acquire new upgrade properties over the remainder of the year, we expect our occupancy to progress towards our stabilized level of 95% by year-end.

OUTLOOK

My confidence in Allied’s outlook continues. We remain well positioned to deliver above-average growth in FFO and AFFO per unit, with “above average” being defined as high single-digit to low double-digit growth year over year. This will be propelled by portfolio-wide rental growth, accretion from our ongoing acquisition activity and increased NOI as a result of our ongoing development activity.

Our commitment to the balance sheet remains unwavering because of the defensive and offensive benefits that flow from conservative financial management. Our capability in this regard has been enhanced by an investment-grade credit rating that will enable us to access the unsecured debenture market and expand our pool of unencumbered properties. This comes at an opportune time, as a number of large-scale development projects that we might otherwise have financed with conventional first-mortgage financing are approaching substantial completion.

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,

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AS AT MARCH 31, 2015

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SECTION I —Overview

This Management’s Discussion and Analysis (“MD&A”) of results of operations and financial condition relates to the quarter ended March 31, 2015. 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 May 6, 2015 and should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto for the quarter ended March 31, 2015, as well as with the audited consolidated financial statements and notes thereto the year ended December 31, 2014. This MD&A is based on financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”). 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.

Readers are cautioned that certain terms used in the MD&A such as Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”), Net Operating Income (“NOI”), “Gross Book Value”, Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), “Payout Ratio”, “Interest Coverage”, “Net Debt to Adjusted EBITDA” and any related per Unit amounts used by management 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 or cash flow from operating activities calculated in accordance with IFRS. These terms are defined in the MD&A and reconciled to the condensed consolidated financial statements of Allied for the three months ended March 31, 2015. Such 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. See “Other Measure of Performance”, “Net Operating Income”, “Debt” and “Financial Covenants”.

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EBITDA is a non-IFRS measure that is comprised of earnings less income taxes, interest expense, amortization expense and depreciation expense. It is a metric that can be used to help determine Allied’s ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders.

Adjusted EBITDA, as defined by Allied, is a non-IFRS measure that is comprised of net earnings less income taxes, interest expense, amortization expense and depreciation expense, as well as gains and losses on disposal of investment properties and the IFRS value changes associated with investment properties and financial instruments. It is a metric that can be used to help determine Allied’s ability to service its debt, finance capital expenditures and provide for distributions to its Unitholders. Additionally, Adjusted EBITDA removes the non-cash impact of the IFRS value changes and gains and losses on investment property dispositions.

The ratio of Net Debt to Adjusted EBITDA is included and calculated each period to provide information on the level of Allied’s debt versus Allied’s ability to service that debt. Adjusted EBITDA is used as part of this calculation as the IFRS value changes and gains and losses on investment property dispositions do not impact cash flow, which is a critical part of the measure.

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”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, “continue” or similar expressions suggesting future outcomes or events. In particular, certain statements in Section I—Overview, under the heading “Outlook”, Section III – Asset Profile, under the headings “Development Assets” constitute forward looking information. This MD&A includes, but is not limited to, forward-looking statements regarding: closing dates of proposed acquisitions; completion of construction and lease-up in connection with upgrade projects and Properties Under Development (“PUD”); growth of our AFFO and FFO per unit; continued demand for space in our target markets; increase in net rental income per square feet of GLA; ability to extend lease terms; the creation of future value; estimated GLA, NOI and growth from upgrade projects and PUDs; estimated costs of upgrade projects and PUDs; future economic occupancy; return on investments, including return on investment in upgrade projects and PUDs; estimated rental revenue and anticipated rental rates; lease of our intensification projects; anticipated available square feet of leasable area; receipt of municipal approval for value-creation projects, including intensifications; 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 “Risks and Uncertainties” section, which could cause actual results, operations or performance to differ materially from the forward-looking statements in this Annual Report. Those risks and uncertainties include risks associated with property

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ownership, property development, geographic focus, asset-class focus, competition for real property investments, financing and interest rates, government regulations, environmental matters, construction liability and taxation. Material assumptions that were made in formulating the forward-looking statements in this Annual Report 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 to 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—Outlook and Section III—Asset Profile is qualified in its entirety by this forward-looking disclaimer. These statements are made as of May 6, 2015, 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.

SUMMARY OF KEY FINANCIAL AND OPERATING PERFORMANCE MEASURES

The following table summarizes the key financial and operating performance measures for the first quarter and the comparable quarter in 2014.

Portfolio

Number of Properties 142 136

Total rental GLA 9,501 9,139

Leased rental GLA 8,681 8,319

Leased area 91.4% 91.0%

Occupied area 88.3% 88.7%

Average in place net rent per square foot (period-end) 20.51 19.82

Market rent per square foot (period-end) 22.38 20.74

Investment properties 3,759,462 3,381,968

Total assets 3,995,657 3,580,592

Total debt 1,339,493 1,264,399

Total debt as a % of investment properties 35.6% 37.4%

Annualized Adjusted EBITDA 208,808 193,156

Net debt 1,330,591 1,261,644

Net debt as a multiple of annualized Adjusted EBITDA 6.4x 6.5x

MARCH 31, 2014

MARCH 31, 2015

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Adjusted EBITDA 52,202 48,289

Interest expense 13,184 13,072

Interest expense as a multiple of Adjusted EBITDA 4.0x 3.7x

Rental revenue from investment properties 89,567 82,547

NOI 52,912 48,753

Same-asset NOI 45,263 47,248

Net Income excluding IFRS value adjustments 34,324 31,327

Net Income (3,629) 15,415

FFO 39,418 35,010

AFFO 35,293 31,864

Distributions 27,981 24,281

Rental revenue from investment properties per unit 1.17 1.19

NOI per unit 0.69 0.71

Same-asset NOI per unit 0.59 0.68

Net income excluding IFRS value adjustments per unit 0.45 0.45

Net income per unit (0.05) 0.22

Distributions per unit 1.46 1.41

FFO per unit 0.51 0.51

AFFO per unit 0.46 0.46

Financial Ratios

Total indebtedness ratio < 40% 33.6% 35.4%

Secured indebtedness ratio < 45% 31.6% 35.3%

Debt service coverage ratio >1.50x 2.3x 2.3x

Unencumbered property asset ratio >1.40x 14.3x n/a

Interest-coverage ratio - including interest capitalized >3.0x 3.1x 3.0x

Interest-coverage ratio - excluding interest capitalized 4.0x 3.7x

MARCH 31, 2014

MARCH 31, 2015

ALLIED’S CURRENT TARGETS

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BUSINESS OVERVIEW AND STRATEGY

Allied is an unincorporated closed-end real estate investment trust created pursuant to the Declaration of Trust dated October 25, 2002, as amended and restated on February 6, 2003, May 14, 2008, May 11, 2010, May 15, 2012 and May 14, 2013 (“Declaration”). Allied is governed by the laws of Ontario. Allied’s units are publicly traded on the Toronto Stock Exchange under the symbol AP.UN. Additional information on Allied, including Allied’s annual information form, is available on SEDAR at www.sedar.com.

Allied is a leading owner, manager and developer of urban office environments that enrich experience and enhance profitability for business tenants operating in Canada’s major cities. Allied’s objectives are to provide stable and growing cash distributions to unitholders and to maximize unitholder value through effective management and accretive portfolio growth.

Allied specializes in an office format created through the adaptive re-use of light industrial structures in urban areas that has come to be known as Class I, the “I” stemming from the original industrial nature of the structures. This format typically features high ceilings, abundant natural light, exposed structural frames, interior brick and hardwood floors. When restored and retrofitted to the standards of Allied’s portfolio, Class I buildings can satisfy the needs of the most demanding office and retail tenants. When operated in the coordinated manner of Allied’s portfolio, these buildings become a vital part of the urban fabric and contribute meaningfully to a sense of community.

The Class I value proposition includes (i) proximity to central business districts in areas well served by public transportation, (ii) distinctive internal and external environments that assist tenants in attracting, retaining and motivating employees and (iii) significantly lower overall occupancy costs than those that prevail in the central business districts. The value proposition has proven appeal to a diverse base of business tenants, including the full range of service and professional firms, telecommunications and information technology providers, media and film groups and storefront retailers.

In addition to accommodating their employees in urban office space, many of Allied’s tenants utilize sophisticated and extensive telecommunication and computer equipment. This is often a mission-critical need for our tenants. In an effort to serve this related need, Allied established extensive capability in downtown Toronto through the acquisition of 151 Front Street West, the leading telecommunication interconnection point in Canada. Allied has since expanded its capability and is intent on continuing to do so with a view to serving its tenants’ space requirements more fully.

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PROPERTY PORTFOLIO

Allied completed its Initial Public Offering (“IPO”) on February 20, 2003, at which time it had assets of $120 million, a market capitalization of $62 million and a local, urban-office portfolio of 820,000 square feet. Allied now has assets of $4 billion, a market capitalization of over $3 billion and a national urban-office platform of over 10 million square feet of GLA in ten cities across Canada. The illustration below depicts the geographic diversity of our rental properties.

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ACQUISITIONS

To date in 2015, Allied has acquired two properties for $31,815, a summary of which is in the table below:

CORPORATE SOCIAL RESPONSIBILITY

Allied is committed to sustainability as it relates to the physical environment within which it operates. Most of Allied’s buildings were created through the adaptive re-use of structures built over a century ago. They are recycled buildings, and the recycling has had considerably less impact on the environment than new construction of equivalent GLA would have had. To the extent Allied undertakes new construction through development or intensification, it is committed to obtaining LEED certification. LEED certification is a program administered by the Canada Green Building Council for certifying the design, construction and operation of high-performance green buildings.

The ongoing operation of our buildings also affects the physical environment. Allied is committed to obtaining BOMA BESt certification for as many of its existing buildings as possible. Certification is based on an independent assessment of key areas of environmental performance and management. Level 1 certification involves independent verification that all BOMA BESt practices have been adopted. Level 2 through to Level 4 involve progressively better assessments of environmental performance and management. Allied has one property with Level 2 certification and eight properties with Level 3 certification, with plans to put additional buildings forward for certification on an annual basis.

Allied is also attentive to the impact of its business on the human environment. Allied’s investment and development activities can have a displacing impact on members of the artistic community. As building inventory in an area is improved, the cost of occupancy can become prohibitive. Allied believes that its buildings and tenants are best served if artists remain viable members of the surrounding communities. Accordingly, Allied has made it a practice to allocate an appropriate portion of its rentable area to artistic uses on an affordable basis as part of its Make Room for the Arts program, the most recent example of this being the lease of over 200,000 square feet of GLA to Pied Carré at 5445-5455 de Gaspé in Montréal for a 30-year term. What Allied foregoes in short-term rent, it more than makes up in overall occupancy and net rent levels at other properties in the surrounding communities. Allied sees this as an important part of its corporate social responsibility.

19 Duncan, Toronto (1) February 20, 2015 $23,525 30,956 - 30,956 36

180 John, Toronto April 15, 2015 8,290 30,033 6,140 36,173 2

Total $31,815 60,989 6,140 67,129 38

(1) Equal two-way co-ownership with Westbank, total estimated GLA is 61,911.

ACQUIREDPURCHASE

PRICEOFFICE

GLARETAIL

GLAPROPERTY TOTAL GLA

PARKING SPACES

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BUSINESS ENVIRONMENT AND OUTLOOK

Allied operates in 10 urban markets in Canada – Toronto, Montréal, Ottawa, Winnipeg, Québec City, Kitchener, Calgary, Edmonton, Vancouver and Victoria. The office inventory statistics are summarized in the table below.

Allied remains well positioned to deliver high single-digit to low double-digit growth in FFO and AFFO per unit year-over-year. Allied expects this growth to be propelled by portfolio-wide rental growth and accretion from its ongoing acquisition activity. Ongoing development activity will also begin to contribute to NOI this year. Specifically, 250 Front West, QRC West, and 460 King West will start generating NOI in the latter half of 2015. Breithaupt Block, Phase II, and 485 King West are scheduled to begin contributing to NOI in 2016, and Telus Sky in late 2017.

Allied expects to dispose of non-core assets in Québec City, Winnipeg, Edmonton and Victoria over the course of 2015 and 2016. Allied’s ultimate goal is to recycle capital into development opportunities, thereby improving its return on equity over time.

Allied’s commitment to the balance sheet remains unwavering because of the defensive and offensive benefits that flow from conservative financial management. Allied’s capability in this regard has been enhanced by an investment-grade credit rating that enables it to access the unsecured debenture market and expand its pool of unencumbered properties. This comes at an opportune time, as a number of large-scale value-creation projects that Allied might otherwise have financed with conventional first-mortgage financing are approaching substantial completion.

Toronto 71,365,403 16,100,000 3,919,822 95.7% 24.3%

Montréal 13,252,214 15,000,000 2,730,853 85.1% 18.2%

Ottawa 16,050,498 1,700,000 217,583 92.7% 12.8%

Winnipeg 10,254,027 1,800,000 348,087 83.0% 19.3%

Québec City 18,889,931 1,500,000 219,465 80.9% 14.6%

Kitchener 2,404,874 1,000,000 480,130 97.9% 48.0%

Calgary 40,716,494 1,000,000 976,527 91.3% 97.7%

Edmonton 15,663,771 1,000,000 282,280 97.2% 28.2%

Victoria 4,897,834 2,400,000 41,578 100.0% 1.7%

Vancouver 24,687,619 4,000,000 284,236 91.9% 7.1%

Total 218,182,665 45,500,000 9,500,561 91.4% 20.9%

TOTAL OFFICE INVENTORY

ALLIED’S ESTIMATED SHARE OF

TARGET MARKET

ESTIMATED TARGET MARKET

INVENTORY

ALLIED CURRENT

GLA

PERIOD END ALLIED

LEASED RATE

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SECTION II —Leasing

Allied strives to maintain high levels of occupancy and leased area. At March 31, 2015, Allied’s rental portfolio was 91.4% leased.

STATUS

Leasing status for the rental portfolio as at March 31, 2015, is summarized in the following table:

9,500,561 8,388,763 88.3% 292,534 3.1% 8,681,297 91.4%

OCCUPIEDTOTAL GLA % OCCUPIED % COMMITTED COMMITTED LEASED % LEASED

Of 9,500,561 square feet of total GLA in Allied’s rental portfolio, 8,388,763 square feet were occupied by tenants on March 31, 2015. Another 292,534 square feet were subject to contractual lease commitments with tenants whose leases commence subsequent to March 31, 2015, bringing the leased area to 8,681,297 square feet, which represents 91.4% of Allied’s total GLA.

95.6% of the space subject to contractual lease commitments at the end of the quarter are scheduled to commence in 2015, with the balance commencing in 2016, as summarized in the following table:

Lease commitments 59,822 154,174 65,534 13,004 292,534

% of lease commitments 20.5% 52.7% 22.4% 4.4% 100.0%

Q2 15 Q3 15 Q4 15 2016 TOTAL

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Leasing status during the first quarter is summarized in the following table:

Occupied GLA 8,388,763 8,109,019

% Occupied GLA 88.3% 88.7%

Q1 2015 Q1 2014

Allied monitors the level of sub-lease space in its portfolio and is unaware of any space being offered for sub-lease in its Ottawa, Québec City and Edmonton portfolios. Allied is aware of 155,408 square feet of space being offered for sub-lease in its Toronto portfolio, 52,512 square feet of space in its Montréal portfolio, 17,584 square feet of space in its Kitchener portfolio, 49,450 square feet in its Calgary portfolio, 4,223 square feet in its Winnipeg portfolio, 3,876 square feet in its Victoria portfolio and 7,170 square feet in its Vancouver portfolio. This level of sub-lease space is consistent with past experience and does not represent an operating or leasing challenge to Allied.

ACTIVITY

Allied places a high value on tenant retention, as the cost of retention is typically lower than the cost of securing new tenancies. If retention is neither possible nor desirable, Allied strives for high-quality replacement tenants.

Leasing activity in connection with the rental portfolio as at March 31, 2015, is summarized in the following table:

At the beginning of 2015, 793,366 square feet of GLA was vacant. By the end of the quarter, Allied leased 60,853 square feet of this GLA, leaving 732,513 square feet unleased.

Leases for 191,489 square feet of GLA matured in the first quarter. By the end of the first quarter, Allied renewed or replaced leases for 163,183 square feet of this GLA, leaving 28,306 square feet unleased. Of the 716,213 square feet of GLA maturing in the remainder of the year, Allied renewed or replaced leases for 227,952 square feet by quarter-end.

Vacancy on January 1, 2015 793,366 60,853 7.7% 732,513

Arranged Vacancy in Q1 58,446 - - 58,446

Maturities in Q1 191,489 163,183 85.2% 28,306

Maturities in remainder of 2015 716,213 227,952 31.8% -

Total 1,759,514 451,988 25.7% 819,265

LEASABLE SF

LEASED SF BY

MARCH 31

% LEASED BY

MARCH 31SF UNLEASED ON MARCH 31

20

During the quarter, 43.1% of the GLA covered by leases maturing in 2015 was renewed or replaced. With respect to those renewals and replacements (391,135 square feet of GLA in total), Allied achieved rental rates (i) above in-place rental rates for 59.2% of the GLA, (ii) equal to in-place rental rates for 25.8% of the GLA and (iii) below in-place rates for 15.0% of the GLA. Overall, this has resulted in no change in the net rental income per square foot from maturing leases.

TENANT PROFILE

The following sets out Allied’s tenant-mix on the basis of percentage of rental revenue for the quarter ended March 31, 2015:

The following sets out the percentage of rental revenue from top 10 tenants by rental revenue for the quarter ended March 31, 2015:

Telecommunications and information technology 29.4%

Business service and professional 27.5%

Retail (head office and storefront) 13.8%

Media and entertainment 12.2%

Other 5.6%

Financial services 5.1%

Government 4.5%

Educational and institutional 1.9%

100.0%

% OF RENTAL REVENUE MARCH 31, 2015CATEGORY

WEIGHTED AVERAGE REMAINING LEASE TERM

CREDIT RATING DBRS/S&P/MOODY’S

% OF RENTAL REVENUE

MARCH 31, 2015

National Capital Commission (a Canadian Crown Corporation) 3.4% 4.8 Not rated

Equinix 3.1% 10.1 -/BB/Ba3

Desjardins 2.9% 3.8 AA/A+/Aa2

Ubisoft 2.5% 7.2 Not rated

Cologix 2.2% 11.3 Not rated

Allstream 1.4% 4.0 * BBB/BBB/-

Bell Canada 1.4% 5.3 AL/BBB+/Baa1

SAP Canada 1.3% 6.4 * -/A/A2

Peer 1 1.2% 3.5 * BBH/BB+/-

IBM Canada 1.2% 6.2 * -/AA-/Aa3

*Credit rating for parent company

TENANT

21

LEASE MATURITY

91.4% of the GLA in Allied’s portfolio was leased at March 31, 2015 (excluding upgrade properties). The weighted average term to maturity of Allied’s leases at that time was five years. The following sets out, as of today’s date, the total GLA of the leases that mature up to 2024 and thereafter, assuming tenants do not exercise renewal options, the percentage of total GLA represented by the maturing leases, the weighted average in-place net rental rate on the maturing leases and the weighted average market net rental rate on the space covered by the maturing leases. The square footage maturing by December 31, 2015, does not include month-to-month leases for 139,581 square feet of GLA that are routinely renewed at the end of each month by the tenants. The weighted average market net rental rate is based on Management’s current estimates and is supported in part by independent appraisals of certain of the relevant properties. There can be no assurance that Management’s current estimates are accurate or that they will not change with the passage of time.

Month to month 139,581 1.5% $16.79 $19.08

December 31, 2015 649,407 6.8% 17.90 20.45

December 31, 2016 799,918 8.4% 18.67 19.30

December 31, 2017 1,263,724 13.3% 19.62 21.40

December 31, 2018 1,140,870 12.0% 20.29 21.80

December 31, 2019 955,221 10.1% 25.10 26.80

December 31, 2020 835,059 8.8% 19.35 20.44

December 31, 2021 678,889 7.2% 21.65 23.28

December 31, 2022 557,072 5.9% 20.56 22.18

December 31, 2023 752,720 7.9% 17.43 20.30

December 31, 2024 325,113 3.4% 20.59 24.78

Thereafter 583,722 6.1% 25.92 28.78

Leased area 8,681,296 91.4% $20.51 $22.38

Vacancy 819,265 8.6%

Total 9,500,561 100.0%

SQUARE FEET

% OF TOTAL GLA

WEIGHTED AVERAGE

RENTAL RATE

WEIGHTED AVERAGE

MARKET RATE

RENTAL PROPERTIESYEAR ENDED

22

23

SECTION III —Asset Profile

As at March 31, 2015, Allied’s portfolio consisted of 142 investment properties (123 rental properties, 11 development properties and 8 parking lots) comprising over 10 million square feet of space, with an IFRS value of $3,759,462.

Balance beginning of the period $3,490,057 $236,700 $3,726,757 $ 3,163,688 $137,062 $3,300,750

Additions:

Acquisitions - 24,573 24,573 208,709 26,231 234,940

Transfers from PUD - - - 11,796 (11,796) -

Transfers to PUD (178,642) 178,642 - (8,403) 8,403 -

Capital expenditures 9,363 27,236 36,599 82,727 71,661 154,388

Disposals - - - (6,294) (7,080) (13,374)

Interest in freehold lease and land leases - 1,567 1,567 18,611 - 18,611

IFRS value gain (loss) (15,714) (14,320) (30,034) 19,223 12,219 31,442

Balance end of the period $3,305,064 $454,398 $3,759,462 $3,490,057 $236,700 $3,726,757

RENTAL PROPERTIES

RENTAL PROPERTIESTOTAL

MARCH 31, 2015 DECEMBER 31, 2014

TOTAL

PROPERTIES UNDER

DEVELOPMENT

PROPERTIES UNDER

DEVELOPMENT

24

The IFRS value of rental properties is determined using the discounted cash flow method, 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. The IFRS value of properties under development is measured using both a comparable sales method and a discounted cash flow method, net of costs to complete, as of the balance sheet date.

Management verifies all major inputs to the valuations and reviews the results with the independent appraiser. Management also analyses the changes in IFRS values at the end of each reporting period during the quarterly valuation discussions with the independent appraiser.

In valuing our portfolio as at March 31, 2015, the appraiser used a range of capitalization rates ranging from 4.0% to 8.3%, the high-point being the capitalization rate associated with our property at 6300 Avenue du Parc. The portfolio weighted average cap rate was 6.2%.

RENTAL PROPERTIES

Allied’s rental portfolio was built by consolidating the ownership in major Canadian cities of urban office properties with three distinct attributes—proximity to the core, distinctive internal and external environments and lower occupancy costs than conventional office towers. Scale within each city proved to be very important as Allied grew. It enabled Allied to provide its tenants with greater expansion flexibility, more parking and better telecom and IT capacity than its direct competitors. Scale across the country also proved to be important. It enabled Allied to serve national and global tenants better, to expand its growth opportunities and to achieve meaningful geographic diversification.

MARCH 31, 2015 DECEMBER 31, 2014

Central Region 4.75% - 7.50% 6.3% 4.75% - 7.50% 6.3%

Eastern Region 5.75% - 8.25% 6.2% 5.75% - 8.25% 6.2%

Western Region 4.75% - 7.50% 6.0% 4.75% - 7.50% 6.0%

Total (excl. PUD) 4.75% - 8.25% 6.2% 4.75% - 8.25% 6.2%

PUD 4.00% - 7.75% 6.7% 5.50% - 7.75% 6.7%

Total portfolio 4.00% - 8.25% 6.2% 4.75% - 8.25% 6.3%

RANGE % RANGE %WEIGHTED AVERAGE %

WEIGHTED AVERAGE %

25

The IFRS value for each rental property is the value assigned to it for the purposes of Allied’s condensed consolidated financial statements for the period ended March 31, 2015. The capitalization rate for each rental property is the rate used in determining the IFRS value assigned to it for the purposes of our condensed consolidated financial statements for the period ended March 31, 2015. Last Quarter Annualized (“LQA”) NOI from top 10 rental properties represented approximately 40.5% of our total NOI in the period ended March 31, 2015.

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 and Vancouver. These opportunities are becoming more compelling as the urban areas of Canada’s major cities intensify. Because Allied has captured the unutilized land value at a low cost, it can achieve attractive risk-adjusted returns on intensification.

Allied has initiated the intensification approval process for eight rental properties in Toronto, four of which Allied owns in their entirety and the remaining four co-owned with partners. These properties are identified in the following table.

151 Front West, Toronto 335,250 26,588 7.93% Allstream, Bell, Cologix, Equinix

Cité Multimédia, Montréal 304,220 18,088 5.95% Desjardins, Morgan Stanley, Resolute

The Chambers, Ottawa 119,420 9,072 7.60% National Capital Commission

555 Richmond West, Toronto 104,250 6,048 5.80% Sentinelle Medical

Vintage I & II, Calgary 105,440 5,380 5.10% Royal & Sun Alliance

Boardwalk Revillion, Edmonton 79,620 5,176 6.50% Edmonton Public School Board

The Tannery, Kitchener 70,600 4,176 5.92% Desire 2 Learn, Google

500-522 King Street, Toronto 68,950 3,860 5.60% eBay

QRC East, Toronto 71,250 3,812 5.35% Key Media, Publicis

5505 Saint-Laurent, Montréal 44,070 3,560 8.08% Ubisoft

Total 1,303,070 85,760 6.58%

IFRS VALUE CAP RATELQA NOIPRINCIPAL

TENANTS BY NOI

TOP-10 RENTAL PROPERTIES

Allied’s rental portfolio comprises of 123 rental properties consisting of 9.5 million square feet of GLA. The top 10 rental properties, measured by NOI, are identified in the following table:

26

Estimated GLA is the estimated total amount of gross leasable area in the intensification property based on applicable standards of area measurement and the expected or actual outcome of re-zoning.

The following table sets out the IFRS value and NOI of the rental properties identified in the preceding table, as at March 31, 2015, as well as the current funding obligations in relation to design for zoning approval costs associated with those properties.

Union Centre Rezoning completed Office, limited retail 1,129,000 2020-2025

QRC West, Phase II Rezoning completed Office, retail 74,000 2019

King & Peter Rezoning completed Office, limited retail 790,000 2020-2025

King & Spadina Rezoning completed Office, limited retail 300,000 2020-2025

College & Manning (1) Rezoning completed Office, limited retail, residential 62,500 2020

King & Portland (2) In rezoning Office, retail, residential 200,000 2019

57 Spadina (3) Rezoning completed Office, limited retail, residential 150,000 2015

The Well (4) In rezoning Office, retail, residential 1,240,000 2022-2025

Total 3,945,500

(1) Equal two-way co-ownership with RioCan, total estimated GLA is 125,000 square feet(2) Equal two-way co-ownership with RioCan, total estimated GLA is 400,000 square feet(3) Equal two-way co-ownership with Diamond, total estimated GLA is 300,000 square feet(4) 40/40/20 co-ownership with RioCan and Diamond, total estimated GLA is 3,100,000 square feet

APPROVAL STATUS USEESTIMATED

GLAESTIMATED

COMPLETION

Union Centre 82,000 572 2,500 2,490 10

QRC West, Phase II 28,330 1,292 750 750 -

King & Peter 33,480 1,408 700 700 -

King & Spadina 20,630 1,148 1,150 1,140 10

College & Manning (1) 11,845 656 500 500 -

King & Portland (1) 23,140 684 500 490 10

57 Spadina (1) 6,730 1,704 475 475 -

The Well (1) 70,800 1,112 4,681 3,608 1,073

Total 276,955 8,576 11,256 10,153 1,103

(1) These properties are co-ownerships, reflected in the table at Allied’s ownership percentage of assets and liabilities

(In thousands) IFRS VALUE TO BE FUNDEDLQA NOI

ESTIMATED DESIGN-

APPROVAL COST FUNDED

27

These properties are currently generating NOI and will continue to do so until Allied initiates construction. All properties other than Union Centre and The Well are valued in relation to their current NOI or their current potential NOI. Union Centre is valued in relation to the approved density on the site, and The Well is valued in relation to the anticipated density on the site. With respect to the ultimate intensification of these properties, a significant amount of pre-leasing will be required before construction commences. The design-approval costs have been, and will continue to be, funded with cash-on-hand.

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 pace of urban intensification is accelerating. Residential structures are moving inexorably upward, office structures are moving well beyond traditional boundaries and retailers are accepting new and different spatial configurations, all in an effort to exploit opportunity while accommodating the physical constraints of the inner-city. It has even reached a point where the migration to the suburbs that started in the 1950s is reversing itself. What was identified a few years back as an incipient trend has become a reasonably widespread reverse migration, with office tenants returning to the inner city to capture the ever more concentrated talent pools.

It is expected that development activity will become a more important component of Allied’s growth as projects are completed. The expectation is largely contingent upon completing the development projects in the manner contemplated. The most important factor affecting completion will be successful lease-up of space in the development portfolio. The material assumption made in formulating the statement is that the office leasing market in the relevant markets remains stable. Pursuant to Allied’s Declaration, the cost of Properties Under Development cannot exceed 15% of Gross Book Value. (At the end of the March 31, 2015, the cost of Allied’s Properties Under Development was 7.5% of Gross Book Value.) This self-imposed limitation is intended to align the magnitude of Allied’s development activity with the overall size of the business.

Properties Under Development consist of properties purchased with the intention of being developed before being operated and properties transferred from the rental portfolio once activities changing the condition or state of the property, such as the de-leasing process, commence.

Allied currently has the following eleven Properties Under Development.

28

The following table sets out the IFRS value of Allied’s Properties Under Development, as at March 31, 2015, as well as management’s estimates with respect to the financial outcome on completion.

ESTIMATED GLA (SF) GLA LEASED %USE

5445 de Gaspé Office 502,713 63.0%

QRC West, Phase I Office, limited retail 350,000 95.0%

460 King West Office, retail 20,000 100.0%

250 Front West Telecom and IT 178,000 86.0%

485 King West Office, retail 13,200 0.0%

The Breithaupt Block, Phase II (1) Office 45,000 100.0%

TELUS Sky (1) Office, residential 223,000 21.0%

Duncan & Adelaide (1) Office, residential 200,000 0.0%

College & Palmerston (1) Office, retail 53,000 0.0%

138 Portage East Office 36,334 0.0%

8-10 Bastion Office 32,485 18.0%

Total 1,653,732

(1) These properties are co-ownerships, reflected in the table at Allied’s ownership percentage of assets and liabilities

5445 de Gaspé Q2 2015 43,960 1,555 3,800 60,800 6.2% 10,300

QRC West, Phase I Q2 2015 144,261 545 11,000 115,000 9.6% 6,100

460 King West Q3 2015 17,135 39 850 18,500 4.6% 500

250 Front West Q4 2015 182,907 12,760 20,000 90,000 22.2% 59,300

485 King West Q1 2016 8,000 - 500 10,600 4.7% 2,100

The Breithaupt Block, Phase II (1) Q4 2016 7,191 - 1,170 15,180 7.7% 8,300

TELUS Sky (1) Q3 2017 12,960 - 10,000 133,000 7.5% 117,400

Duncan & Adelaide (1) Q4 2018 22,650 488 TBD TBD - TBD

College & Palmerston (1) Q4 2018 3,850 - 475 9,800 4.8% 5,800

138 Portage East TBD 2,978 940 TBD TBD - TBD

8-10 Bastion TBD 8,506 68 TBD TBD - TBD

Total 454,398 16,395 47,795 452,880 10.6% 209,800

(1) These properties are co-ownerships, reflected in the table at Allied’s ownership percentage of assets and liabilities

TRANSFER TO RENTAL PORTFOLIO

ESTIMATED ANNUAL

NOILQA NOIESTIMATED

ROIIFRS VALUE

ESTIMATED TOTAL COST

ESTIMATED COST TO

COMPLETE(In thousands except for ROI)

29

The IFRS value of Properties Under Development is measured using both a comparable sales method and a discounted cash flow method, net of costs to complete, as of the balance sheet date. 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 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.

Practical completion is when the property is capable of operating in the manner intended by Management. Generally this occurs upon completion of construction and receipt of all necessary occupancy and other material permits. Estimated annual NOI is Management’s estimate of the amount of annual NOI the Properties Under Development will generate on reaching 90% economic occupancy. The most important factor affecting estimated annual NOI will be successful lease-up of vacant space in the development properties at current levels of net rent per square foot. The material assumption made in formulating the statement is that the office leasing market in the relevant markets remains stable. Estimated total cost includes acquisition cost, estimated total construction and financing costs. 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 ROI is the estimated annual NOI as a percentage of the estimated total cost. Estimated completion cost is the difference between the estimated total cost and the costs incurred to date.

30

SECTION IV —Liquidity and Capital Resources

Allied’s liquidity and capital resources are used to fund capital investments including development activity, leasing costs, financing expenses 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, secured short-term debt financing and most recently an unsecured operating line. 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. We will achieve this by accessing the unsecured debenture market and grow our pool of unencumbered assets, which totals $1.1 billion as at March 31, 2015.

DEBT

Total debt and net debt are non-IFRS financial measures and do not have any standard meaning prescribed by IFRS. As computed by Allied, total debt and net debt may differ from similar computations reported by other Canadian real estate investment trusts and, accordingly, may not be comparable to similar computations reported by such organizations. Management considers total debt and net debt to be useful measures for evaluating debt levels and interest coverage. The following illustrates the calculation of total debt and net debt as at March 31, 2015 and December 31, 2014.

31

MORTGAGES PAYABLE

Mortgages payable as at March 31, 2015, consisted of mortgage debt of $1,248,679. The following sets out the maturity schedule of Allied’s mortgage debt and the weighted average interest rate on the maturing mortgages.

Mortgages payable $1,248,679 $1,274,857

Construction loans payable 13,814 54,210

Unsecured revolving operating facility 77,000 -

Secured operating facility - 24,336

Total debt $1,339,493 $1,353,403

Less cash and cash equivalents 8,902 5,260

Net debt $1,330,591 $1,348,143

MARCH 31, 2015 DECEMBER 31, 2014

2015 27,931 46,942 74,873 6.0% 5.3%

2016 35,883 66,511 102,394 8.2% 5.1%

2017 33,845 127,314 161,159 12.8% 3.9%

2018 32,889 56,900 89,789 7.2% 5.4%

2019 30,019 142,360 172,379 13.7% 6.0%

2020 23,991 4,456 28,447 2.3% 5.2%

2021 23,069 104,344 127,413 10.1% 4.2%

2022 19,210 73,683 92,893 7.4% 4.2%

2023 16,008 220,957 236,965 18.9% 4.7%

2024 3,011 165,326 168,337 13.4% 4.3%

245,856 1,008,793 1,254,649 100.0% 4.7%

Net premium on assumed mortgages 704

Financing costs (6,674)

1,248,679

PERIODIC PRINCIPAL PAYMENTS

BALANCE DUE AT

MATURITYTOTAL

PRINCIPAL % TOTAL

PRINCIPAL

WA INTEREST

RATE

32

$74.9

$102.4

$161.2

$89.8

$172.4

$28.4

$127.4

$92.9

$237.0

$168.3

5.3%

5.1%

3.9%

5.4%

6.0%

5.2%

4.2%

4.2%

4.7%

4.3%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

$0

$50

$100

$150

$200

$250

$300

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

MIL

LIO

NS

TOTAL PRINCIPAL DUE AT MATURITY

WA INTEREST RATE

6.0% 8.2% 12.8% 7.2% 13.7% 2.3% 10.1% 7.4% 18.9% 13.4%

PERCENTAGE OF TOTAL PRINCIPAL

Interest rates on mortgage debt are between 2.0% and 6.9%, resulting in a weighted average interest rate of 4.7% (December 31, 2014 - 4.8%). The weighted average term of the mortgage debt is 6.1 years (December 31, 2014 - 6.2 years). Each individual mortgage loan is secured by a mortgage registered on title of a rental property and by security agreements covering assignment of rents and personal property with respect to such property.

CONSTRUCTION LOANS PAYABLE

Allied has provided its guarantee (limited to 50%) to a Canadian chartered bank to support a $45,700 construction lending facility to assist with the financing of construction costs associated with a property under development in which Allied has a 50% joint arrangement interest. The loan matures on December 31, 2015, and bears interest at bank prime plus 80 basis points or bankers’ acceptance rate plus 180 basis points. The balance outstanding under the facility as at March 31, 2015, was $27,628, of which $13,814 was Allied’s loan obligation. The balance outstanding under the facility as at December 31, 2014, was $24,220, of which $12,110 was Allied’s loan obligation.

In May 2013, Allied secured a construction facility from a group of Canadian chartered banks (the “Lenders”) to fund project construction costs for the development at 134 Peter Street, Toronto, Ontario. In February 2015, Allied repaid the construction facility. At December 31, 2014 there was $42,100 outstanding on the construction facility.

33

UNSECURED REVOLVING OPERATING LINE

During the quarter, Allied obtained an unsecured revolving operating facility (“Unsecured Facility”) of $200,000. The Unsecured Facility had a balance of $77,000 outstanding at March 31, 2015. The Unsecured Facility bears interest at bank prime plus 70 basis points or bankers’ acceptance plus 170 basis points and matures on January 18, 2018. The Unsecured Facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $300,000. The Unsecured Facility replaced the $100,000 secured operating facility which had a balance of $24,336 outstanding at December 31, 2014.

The Unsecured Facility contains 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 covenants as they relate to the Unsecured Facility are as follows:

Debt maintenance ratio < 60% 33.6%

Secured indebtedness ratio < 45% 31.6%

Debt service coverage ratio > 1.50x 2.3x

Equity maintenance $1,250,000 plus 75% of future equity issuances $2,389,024

Unencumbered property assets ratio > 1.40x 14.30x

Maximum distribution payout ratio Max 100% of FFO on 8 consecutive quarters basis 68%

REQUIREMENT ACTUALCOVENANT

As of March 31, 2015, Allied was in compliance with the terms and covenants of the Unsecured Facility.

In addition to the Unsecured Facility, Allied monitors a number of other financial ratios such as net debt to EBITDA, total debt as a percentage of investment properties and interest expense as a multiple of EBITDA. These ratios are presented in Section I—Overview.

UNITHOLDERS’ EQUITY

Allied’s change in unit equity for the period is summarized in the table below:

Units beginning of the period 75,068,912 1,623,448

Units issued pursuant to offering on February 2, 2015 2,213,750 86,336

Units issued under the Distribution Reinvestment Plan 194,299 7,201

Units issued under the Unit Option Plan 103,725 2,498

Units end of period 77,580,686 1,719,483

UNITS VALUE

34

The table below represents weighted average units outstanding:

Allied adopted a Unit Option Plan at the time of its IPO. In May of 2004, Allied adopted a long-term incentive plan (“LTIP”) whereby its trustees and officers (“Participants”) may from time to time, at the discretion of the trustees and subject to regulatory approval, subscribe for units at a market price established in accordance with the provisions of the LTIP. The price for the units is payable as to 5% upon issuance and as to the balance (“LTIP Loan”) over 10 years with interest on the LTIP Loan at an annual rate established in accordance with the provisions of the LTIP. The units issued pursuant to the LTIP are registered in the name of a Custodian on behalf of the Participants who are the beneficial owners. The units are pledged to Allied as security for payment of the LTIP Loan, and all distributions paid on the units are forwarded by the Custodian to Allied and applied first on account of interest on the LTIP Loan and then to reduce the outstanding balance of the LTIP Loan. In May of 2010, Allied amended the Unit Option Plan and the LTIP to limit the number of units authorized for issuance under the Unit Option Plan, the LTIP or any other equity compensation plan to 8.1% of the issued and outstanding units from time to time. At March 31, 2015, and the date hereof, Allied had options to purchase 938,736 units outstanding, of which 556,420 had vested, and 17,000 units issued under the LTIP. At December 31, 2014, Allied had options to purchase 778,889 units outstanding, of which 353,371 had vested, and 17,000 units issued under the LTIP.

In April 2014, Allied adopted a new Unit Option Plan. The new plan has substantially the same terms as the previous plan, referred to above, with the exception that the maximum number of units issuable under the new plan and all other equity compensation plans of the REIT is 2,800,545, representing approximately 4.0% of the issued and outstanding units.

In March of 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 Trustees. The Restricted Units are purchased in the open market. Employees who are granted Restricted Units have the right to vote and to receive distributions from the date of the grant. The Restricted Units vest (in the sense that such Units are not subject to forfeiture) as to one-third on each of the three anniversaries following the date of the grant. 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. The Restricted Unit Plan contains provisions providing for the forfeiture within specified time periods of unvested Restricted Units in the event the employee’s employment is terminated. At March 31, 2015, Allied had 220,709 Restricted Units outstanding (December 31, 2014 – 178,755).

Weighted average - basic 76,598,961 68,708,914

Unit option plan 202,500 370,266

Long-term incentive plan 17,000 37,000

Weighted average - diluted 76,818,461 69,116,180

MARCH 31, 2015 MARCH 31, 2014

35

DISTRIBUTIONS TO UNITHOLDERS

Allied is focused on increasing distributions to its unitholders on a regular and prudent basis. During the first 12 months of operations, Allied made regular monthly distributions of $1.10 per unit on an annualized basis. Allied’s distribution increases since then are set out in the table below:

Annualized increase per unit $0.04 $0.04 $0.04 $0.04 $0.06 $0.04 $0.05 $0.05

% increase 3.6% 3.5% 3.4% 3.3% 4.8% 3.0% 3.7% 3.5%

Annualized distribution per unit $1.14 $1.18 $1.22 $1.26 $1.32 $1.36 $1.41 $1.46

MARCH 2004

MARCH 2005

MARCH 2006

MARCH 2007

MARCH 2008

DECEMBER 2012

DECEMBER 2013

DECEMBER 2014

Building renovations and maintenance capital expenditures 16,171

Revenue-enhancing capital 22,844

Expenses 2,392

Conditional and unconditional acquisitions 8,040

Total 49,447

MARCH 31, 2015(In thousands)

COMMITMENTS

At March 31, 2015, Allied had future commitments as set out below:

36

SECTION V —Discussion of Operations

The following sets out summary information and financial results for the quarter ended March 31, 2015, and the comparable quarter ended March 31, 2014.

NET OPERATING INCOME

NOI is a non-IFRS financial measure and should not be considered as an alternative to net income or net income and comprehensive income, cash flow from operating activities or any other measure prescribed under IFRS. NOI does not have any standardized meaning prescribed by IFRS. As computed by Allied, NOI may differ from similar computations reported by other Canadian real estate investment trusts and, accordingly, may not be comparable to similar computations reported by such organizations. Management considers NOI to be a useful measure of performance for rental properties.

Over the past twelve months Allied’s real estate portfolio has grown through acquisitions and development activities which have positively contributed to the operating results for the quarter ended March 31, 2015, as compared to the same period in the prior year.

NOI increased by $4,159 or 8.5% in the first quarter of 2015 compared to the same period in the prior year. The increase is primarily attributable to the lease up of additional space, rent increases on renewals and acquisitions.

Revenue from rental properties 89,567 82,547

Rental property operating cost 38,588 34,793

Net rental income 50,979 47,754

Amortization of tenant improvements 3,044 2,268

Step-rent adjustments (1,111) (1,269)

NOI 52,912 48,753

Q1 2015 Q1 2014

37

Allied operates in 10 urban markets in Canada—Québec City, Montréal, Ottawa, Toronto, Kitchener, Winnipeg, Calgary, Edmonton, Vancouver and Victoria. For the purposes of analysing NOI, Allied groups Québec City with Montréal and Ottawa as Eastern Canada, Toronto with Kitchener as Central Canada and Winnipeg with Calgary, Edmonton, Vancouver and Victoria as Western Canada.

The following sets out the NOI by region from the rental and development properties for the quarter and comparable quarter:

The 8.5% increase in NOI was the result of a 21.9% increase in Central Canada offset by NOI decrease resulting from turnover vacancy in Eastern and Western Canada.

NOI by space type for the quarter and comparable quarter is set out in the following table:

The increase in NOI by space type was consistent compared to prior year with office space accounting for approximately 66.0% of Allied’s NOI.

Eastern Canada 11,682 22.1% 12,708 26.1% (1,026) (8.1%)

Central Canada 31,655 59.8% 25,969 53.2% 5,686 21.9%

Western Canada 9,575 18.1% 10,076 20.7% (501) (5.0%)

NOI 52,912 100.0% 48,753 100.0% 4,159 8.5%

Q1 2015 % OF NOI % OF NOIQ1 2014 CHANGE % CHANGE

Office Space 34,644 65.5% 33,995 69.7% 649 1.9%

Equipment (IT and Telecom) Space 10,056 19.0% 6,962 14.3% 3,094 44.4%

Retail Space 5,723 10.8% 5,540 11.4% 183 3.3%

Parking Space 2,489 4.7% 2,256 4.6% 233 10.3%

NOI 52,912 100.0% 48,753 100.0% 4,159 8.5%

$ % %$ $ %

Q1 2015 Q1 2014 CHANGE

38

SAME-ASSET NOI

Allied strives to maintain or increase same-asset NOI over time. Same-asset refers to those properties that Allied owned and operated for the entire period in question and for the same period in the prior year. Ignoring the step-rent revenue, same-asset NOI decreased by $1,985 or 4.2%. The decrease was primarily due to turnover vacancy in Eastern and Western Canada. Same-asset NOI by region is set out in the table below:

INTEREST EXPENSE

Interest expense, including interest capitalized to Properties Under Development, during the three months ended March 31, 2015, totalled $13,184. The increase in interest expense of $112 for the quarter, over the comparable quarter in 2014 was primarily due to an increase in mortgages payable resulting from refinancing and acquisitions, offset by refinancing of existing mortgages and raising additional debt at lower rates.

Eastern Canada 10,932 24.2% 12,151 25.7% (1,219) (10.0%)

Central Canada 25,559 56.4% 25,521 54.0% 38 0.1%

Western Canada 8,772 19.4% 9,576 20.3% (804) (8.4%)

NOI 45,263 100.0% 47,248 100.0% (1,985) (4.2%)

$ % %$ $ %

Q1 2015 Q1 2014 CHANGE

GENERAL AND ADMINISTRATIVE EXPENSES

For the quarter ended March 31, 2015, general and administrative costs totalled $1,821. The increase of $88 compared to the same period in the prior year due to an increase in professional fees and office and general expenses, partially offset by a decrease in salaries and benefits.

Interest on debt $15,450 $14,869

Interest on finance lease - land leases 814 795

Amortization, premium on assumed mortgages 49 (9)

Amortization, deferred financing 340 311

$16,653 $15,966

Less: interest expense capitalized into investment properties (3,469) (2,894)

Interest expense $13,184 $13,072

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

39

NET INCOME AND COMPREHENSIVE INCOME

Net income and comprehensive income for the quarter was ($3,629), as compared to $15,415 in the comparable quarter. Excluding the effect of IFRS value adjustments on investment properties and derivative instruments, net income was $34,324 compared to $31,327 in the same period in the prior year. An increase of $2,997 is primarily due to the increase in NOI from the lease up of additional space, rent increases on renewals and acquisitions.

OTHER FINANCIAL PERFORMANCE MEASURES

FUNDS FROM OPERATIONS (FFO)

FFO is a non-IFRS financial measure used by most Canadian real estate investment trusts and should not be considered as an alternative to net income or comprehensive income, cash flow from operating activities or any other measure prescribed under IFRS. While FFO does not have any standardized meaning prescribed by IFRS, the Real Property Association of Canada (“REALpac”) established a standardized definition of FFO in its White Paper on Funds From Operations dated November 30, 2004 and subsequently revised April 2014. Essentially, the REALpac definition is net income with adjustments for non-cash and extraordinary items. Management believes that this definition is followed by most Canadian real estate investment trusts and that it is a useful measure of cash available for distributions.

FFO for the three months ended March 31, 2015, totalled $39,418 or $0.51 per unit. In comparison to the same period in 2014, FFO increased by $4,408, primarily due to an increase in NOI of $4,159 and interest income of $171.

To ensure Allied retains sufficient cash to meet capital improvement and leasing objectives, Allied strives to maintain an appropriate FFO pay-out ratio, the ratio of actual distributions to FFO in a given period. In the first quarter, our FFO pay-out ratio was 71.0%.

Salaries and benefits 1,541 1,741

Professional and directors fees 465 394

Office and general expenses 333 230

2,339 2,365

Capitalized to development and acquisitions (518) (632)

Total 1,821 1,733

Q1 2015 Q1 2014

40

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

AFFO is a non-IFRS financial measure used by most Canadian real estate investment trusts and should not be considered as an alternative to net income or comprehensive income, cash flow from operating activities or any other measure prescribed under IFRS. AFFO does not have any standardized meaning prescribed by IFRS. As computed by us, AFFO may differ from similar computations reported by other Canadian real estate investment trusts and, accordingly, may not be comparable to similar computations reported by such organizations. Management considers AFFO to be a useful measure of cash available for distributions. The principal advantage of AFFO is that it starts from the standardized definition of FFO and takes account of maintenance capital expenditures and regular leasing expenditures while ignoring the impact of non-cash revenue. Because maintenance capital expenditures and regular leasing expenditures are not incurred evenly throughout a fiscal year, there can be volatility in AFFO on a quarterly basis.

AFFO for the three months ended March 31, 2015 totaled $35,293 or $0.46 per unit. In comparison to the same period in 2014, AFFO increased by $3,429. Excluding the effect of step-rent adjustments, the change in AFFO is primarily due to an increase in NOI of $4,159 and interest income of $171, offset by higher leasing costs of $1,179.

AFFO per unit did not change from the same period in the prior year of $0.46 which was due to units issued since Q1 2014, resulting in dilution on a per unit basis.

To ensure Allied retains sufficient cash to meet capital improvement and leasing objectives, Allied strives to maintain an appropriate AFFO pay-out ratio, the ratio of actual distributions to AFFO in a given period. In the first quarter, our AFFO pay-out ratio was 79.3%.

RECONCILIATION OF FFO AND AFFO

Net income and comprehensive income (3,629) 15,415 (19,044)

Loss resulting from change in fair value in investment properties 30,092 11,939 18,153

Loss resulting from derivative instruments 7,861 3,973 3,888

Incremental leasing costs 460 - 460

Amortization of leasing costs and tenant improvements 4,634 3,683 951

FFO 39,418 35,010 4,408

Step-rent adjustments (1,111) (1,269) 158

Incremental leasing costs (460) - (460)

Regular leasing expenditures (2,517) (1,798) (719)

Maintenance capital expenditures (37) (79) 42

AFFO 35,293 31,864 3,429

Q1 2015 Q1 2014 CHANGE

41

Per Unit - basic

FFO 0.51 0.51 -

AFFO 0.47 0.47 -

Per Unit - diluted

FFO 0.51 0.51 -

AFFO 0.46 0.46 -

Payout Ratio

FFO 71.0% 69.4% 1.6%

AFFO 79.3% 76.2% 3.1%

Q1 2015 Q1 2014 CHANGE

CAPITAL EXPENDITURES

Our portfolio requires ongoing maintenance capital expenditures and leasing expenditures. Leasing expenditures include the cost of in-suite or base-building improvements made in connection with the leasing of vacant space or the renewal or replacement of tenants occupying space covered by maturing leases, as well as improvement allowances and commissions paid in connection with the leasing of vacant space and the renewal or replacement of tenants occupying space covered by maturing leases.

Allied strives to maintain its properties in top physical condition. The first quarter is historically a one of the lowest capital expenditures due to poor weather conditions. In the quarter, Allied incurred (i) $37 in regular maintenance capital expenditures and (ii) $2,517 in leasing expenditures, $10.02 per leased square foot, on the high end of the historical range of $7 to $10, in connection with new leases or lease-renewals for 251,091 square feet of GLA that commenced in the quarter.

Leasing expenditures 2,517 1,798

Leasing expenditures per leased square foot 10.02 4.82

Maintenance capital expenditures 37 79

Maintenance capital expenditures per portfolio square foot - 0.01

MARCH 31, 2015 MARCH 31, 2014

42

SECTION VI —Quarterly History

The following sets out summary information and financial results for the eight most recently completed fiscal quarters.

43

Factors that cause variation from quarter to quarter include but are not limited to our occupancy, cost of capital, same-asset NOI, acquisition activity, leasing expenditures and maintenance capital expenditures.

Rental revenue from investment properties 89,567 88,685 85,836 80,638 82,547 81,353 76,954 73,420

Property operating cost (38,588) (36,996) (34,608) (32,527) (34,793) (34,757) (31,528) (30,067)

Net rental income 50,979 51,689 51,228 48,111 47,754 46,596 45,426 43,353

Net income and comprehensive income (3,629) 82,437 35,272 18,654 15,415 72,242 54,752 85,368

Weighted average units (diluted) 76,818 75,051 71,371 69,670 69,116 68,830 68,590 68,449

Distributions 27,981 26,716 25,093 24,498 24,281 23,557 23,196 23,130

FFO 39,418 40,274 38,229 35,273 35,010 34,796 34,441 32,860

FFO per unit (diluted) $0.51 $0.54 $0.54 $0.51 $0.51 $0.51 $0.50 $0.48

FFO pay-out ratio 71.0% 66.3% 65.6% 69.5% 69.4% 67.7% 67.3% 70.4%

AFFO 35,293 34,286 34,161 29,886 31,864 29,506 29,872 28,809

AFFO per unit (diluted) $0.46 $0.46 $0.48 $0.43 $0.46 $0.43 $0.44 $0.43

AFFO pay-out ratio 79.3% 77.9% 73.5% 82.0% 76.2% 79.8% 77.7% 80.3%

Investment properties 3,759,462 3,726,757 3,625,043 3,456,310 3,381,968 3,300,750 3,213,451 3,121,467

Total debt 1,339,493 1,359,461 1,332,052 1,353,948 1,264,399 1,216,966 1,197,354 1,093,854

Total debt as a % of investment properties 35.6% 36.5% 36.7% 39.2% 37.4% 36.9% 37.3% 35.0%

Total rental GLA 9,501 9,501 9,527 9,201 9,139 8,928 8,764 8,615

Leased rental GLA 8,681 8,742 8,726 8,358 8,319 8,209 8,128 7,922

% leased 91.4% 92.0% 91.6% 90.8% 91.0% 91.9% 92.7% 92.0%

Q1 2015

Q4 2014

Q3 2014

Q2 2014

Q1 2014

Q4 2013

Q3 2013

Q2 2013

44

SECTION VII —Accounting

SIGNIFICANT ACCOUNTING ESTIMATES

In preparing Allied’s condensed consolidated financial statements and accompanying notes, it is necessary for management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the period. The significant items requiring estimates are discussed in Allied’s condensed consolidated financial statements for the three months ended March 31, 2015 and the notes contained therein.

ACCOUNTING POLICIES

Accounting policies are discussed in Allied’s audited consolidated financial statements for the year ended December 31, 2014 and the notes contained therein. Accounting policies changes adopted during the first quarter of 2015 are discussed in the unaudited condensed consolidated financial statements for the three months ended March 31, 2015 and the notes contained therein.

45

SECTION VIII —Discloure Controls and Internal Controls

Management maintains appropriate information systems, procedures and controls to ensure that information that is publicly disclosed is complete, reliable and timely. The Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of the REIT, along with the assistance of senior management, have designed disclosure controls and procedures to provide reasonable assurance that material information relating to the REIT is made known to the CEO and CFO, and have designed internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS.

No changes were made in Allied’s design of internal controls over financial reporting during the period ended March 31, 2015, which have materially affected, or are reasonably likely to materially affect, our 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.

46

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 10 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.

FINANCING AND INTEREST RATE RISK

Allied is subject to risk associated with debt financing. The availability of debt to re-finance existing and maturing loans and the cost of servicing such debt will influence our 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.

Interest rates on mortgage debt are between 2.0% and 6.9% with a weighted average interest rate of 4.7%. The weighted average term of our mortgage debt is 6.1 years.

TENANT CREDIT RISK

Allied is subject to credit risk arising from the possibility that tenants may not be able to fulfill their lease obligations. Allied strives to mitigate this risk by maintaining a diversified tenant-mix and limiting exposure to any single tenant.

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 tenants 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.

47

In evaluating our lease roll-over risk, it is informative to determine our sensitivity to a decline in occupancy. For every full-year decline of 100 basis points in occupancy at our average rental rate per square foot, our annual AFFO would decline by approximately $3,591 (approximately five cents per unit). The decline in AFFO per unit would be more pronounced if the decline in occupancy involved space leased above our average rental rate per square foot and less pronounced if the decline in occupancy involved space leased below our average rental rate per square foot.

ENVIRONMENTAL RISK

As an owner of real estate, Allied is subject to various federal, provincial and municipal laws relating to environmental matters. Such laws provide that Allied could be liable for the costs of removal of certain hazardous substances and remediation of certain hazardous locations. The failure to remove or remediate such substances or locations, if any, could adversely affect Allied’s ability to sell such real estate or to borrow using such real estate as collateral and could potentially also result in claims against Allied. Allied is not aware of any material non-compliance with environmental laws at any of the properties in its portfolio. Allied is also not aware of any pending or threatened investigations or actions by environmental regulatory authorities in connection with any of the properties in its portfolio or any pending or threatened claims relating to environmental conditions at the properties in its portfolio.

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 tenants to take occupancy and pay rent in accordance with lease arrangements. In connection with all Properties Under Development, Allied incurs development costs prior to (and in anticipation of) achieving a stabilized level of rental revenue. In the case of the development of ancillary or surplus land, these risks are managed in most cases by not commencing construction until a satisfactory level of pre-leasing is achieved. Overall, these risks are managed through Allied’s Declaration, which states that the cost of development cannot exceed 15% of Gross Book Value.

TAXATION RISK

On June 22, 2007, rules changing the manner in which trusts are taxed were proclaimed into force. Trusts that meet the REIT exemption are not subject to these 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. While there can be no assurance in this regard, due to uncertainty surrounding the interpretation of the relevant provisions of the REIT exemption, Allied expects that it will qualify for the REIT exemption.

JOINT VENTURE RISK

Allied has entered into various joint ventures and partnerships with different entities. If these joint ventures 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.

48

SECTION X —Property Table

32 Atlantic 50,434 - 50,434 - - 50,434 100.0%

47 Jefferson 6,884 - 6,884 - - 6,884 100.0%

905 King W 104,018 7,738 111,756 33,096 - 78,660 70.4%

College & Manning JV (1) 28,250 4,270 32,520 5,457 - 27,063 83.2%

The Castle 134,781 34,323 169,104 3,480 - 165,624 97.9%

King West 324,367 46,331 370,698 3.9% 42,033 - 328,665 88.7%

141 Bathurst 10,281 - 10,281 - - 10,281 100.0%

159-161 Bathurst 4,000 - 4,000 - - 4,000 100.0%

183 Bathurst 27,358 5,600 32,958 2,382 - 30,576 92.8%

241 Spadina 25,112 6,586 31,698 - - 31,698 100.0%

379 Adelaide W 36,249 2,700 38,949 - - 38,949 100.0%

383 Adelaide W 7,790 - 7,790 - - 7,790 100.0%

420 Wellington W 33,813 3,137 36,950 - - 36,950 100.0%

425 Adelaide W 76,196 4,104 80,300 1,789 - 78,511 97.8%

425-439 King W 84,513 12,071 96,584 - - 96,584 100.0%

441-443 King W 8,320 3,065 11,385 - - 11,385 100.0%

445-455 King W 30,102 22,335 52,437 - - 52,437 100.0%

468 King W 65,027 - 65,027 - - 65,027 100.0%

469 King W 68,255 10,500 78,755 - - 78,755 100.0%

478 King W (2) - 3,276 3,276 - - 3,276 100.0%

489 King W 21,421 4,850 26,271 - - 26,271 100.0%

495 King W 10,876 - 10,876 - - 10,876 100.0%

499 King W - 8,400 8,400 - - 8,400 100.0%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

MARCH 31, 2015 PROPERTIES

49

500-522 King W 83,980 43,336 127,316 - - 127,316 100.0%

544 King W 17,006 - 17,006 - - 17,006 100.0%

555 Richmond W 256,318 39,966 296,284 6,140 6,768 283,376 95.6%

57 Spadina (3) 8,084 8,566 16,650 - - 16,650 100.0%

579 Richmond W 28,866 - 28,866 - - 28,866 100.0%

589-591 Richmond W - 2,000 2,000 - - 2,000 100.0%

662 King W 30,773 2,126 32,899 - - 32,899 100.0%

80-82 Spadina 56,973 16,009 72,982 - - 72,982 100.0%

96 Spadina 82,158 9,861 92,019 2,099 - 89,920 97.7%

The Well JV (4) 98,611 2,573 101,184 - - 101,184 100.0%

King & Portland JV (1) 27,361 15,274 42,635 1,913 250 40,472 94.9%

King West Central 1,199,443 226,335 1,425,778 15.0% 14,323 7,018 1,404,437 98.5%

116 Simcoe 15,443 - 15,443 - - 15,443 100.0%

151 Front 266,354 6,000 272,354 4,018 - 268,336 98.5%

179 John 68,968 - 68,968 - - 68,968 100.0%

185 Spadina 55,814 - 55,814 - - 55,814 100.0%

200 Adelaide W 28,024 - 28,024 - - 28,024 100.0%

208-210 Adelaide W 12,422 - 12,422 - - 12,422 100.0%

217-225 Richmond W 32,598 23,699 56,297 3,220 - 53,077 94.3%

257 Adelaide W 46,350 - 46,350 - - 46,350 100.0%

312 Adelaide W 65,554 5,665 71,219 - - 71,219 100.0%

331-333 Adelaide W 20,503 3,210 23,713 - - 23,713 100.0%

358-360 Adelaide W 53,430 - 53,430 - - 53,430 100.0%

375-381 Queen W 23,891 10,648 34,539 - - 34,539 100.0%

388 King W 28,954 15,012 43,966 - - 43,966 100.0%

82 Peter 39,422 8,287 47,709 16,096 - 31,613 66.3%

99 Spadina 39,531 11,392 50,923 - - 50,923 100.0%

Union Center 11,952 29,239 41,191 - - 41,191 100.0%

Entertainment District 809,210 113,152 922,362 9.7% 23,334 - 899,028 97.5%

193 Yonge 34,349 16,318 50,667 - - 50,667 100.0%

Downtown 34,349 16,318 50,667 0.5% - - 50,667 100.0%

106 Front E 24,844 10,195 35,039 2,268 - 32,771 93.5%

35-39 Front E 31,952 17,850 49,802 8,040 - 41,762 83.9%

36-40 Wellington E 16,662 9,550 26,212 - - 26,212 100.0%

41-45 Front E 24,894 19,965 44,859 20,958 - 23,901 53.3%

45-55 Colborne 28,362 14,934 43,296 1,458 - 41,838 96.6%

49 Front E 9,320 10,441 19,761 - - 19,761 100.0%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

MARCH 31, 2015 PROPERTIES

50

50 Wellington E 21,866 11,049 32,915 - - 32,915 100.0%

60 Adelaide E 106,054 4,695 110,749 23,507 - 87,242 78.8%

184 Front E 80,583 6,489 87,072 5,904 - 81,168 93.2%

St. Lawrence Market 344,537 105,168 449,705 4.7% 62,135 - 387,570 86.2%

145 Berkeley 9,686 1,325 11,011 - - 11,011 100.0%

204-214 King E 125,903 2,699 128,602 - - 128,602 100.0%

230 Richmond E 73,767 - 73,767 - - 73,767 100.0%

252-264 Adelaide E 47,676 - 47,676 723 - 46,953 98.5%

489 Queen E 29,889 2,737 32,626 - - 32,626 100.0%

70 Richmond 35,118 - 35,118 - - 35,118 100.0%

Dominion Square 71,199 38,050 109,249 12,585 - 96,664 88.5%

QRC East 183,811 35,349 219,160 - - 219,160 100.0%

QRC South 43,403 - 43,403 7,937 - 35,466 81.7%

Queen Richmond 620,452 80,160 700,612 7.4% 21,245 - 679,367 97.0%

Total Toronto 3,332,358 587,464 3,919,822 41.3% 163,070 7,018 3,749,734 95.7%

3575 Saint-Laurent 167,377 18,400 185,777 14,216 - 171,561 92.3%

400 Atlantic 88,628 292 88,920 20,238 - 68,682 77.2%

425 Viger W 205,201 820 206,021 - - 206,021 100.0%

4446 Saint-Laurent 73,280 7,418 80,698 4,642 3,725 72,331 89.6%

451-481 Saint-Catherine 22,480 8,475 30,955 6,382 1,691 22,882 73.9%

5455 Gaspé 510,152 750 510,902 198,502 - 312,400 61.1%

5505 Saint-Laurent 252,452 2,524 254,976 - - 254,976 100.0%

6300 Parc 181,411 6,313 187,724 75,800 4,504 107,420 57.2%

645 Wellington 132,711 4,083 136,794 - - 136,794 100.0%

85 Saint-Paul 79,778 - 79,778 - - 79,778 100.0%

Cité Multimedia 954,283 14,025 968,308 71,905 4,557 891,846 92.1%

Total Montréal 2,667,753 63,100 2,730,853 28.7% 391,685 14,477 2,324,691 85.1%

115 Bannatyne 39,957 - 39,957 - - 39,957 100.0%

123 Bannatyne 20,536 - 20,536 1,748 - 18,788 91.5%

250 McDermot 42,093 12,482 54,575 18,373 6,077 30,125 55.2%

54-70 Arthur 114,648 8,788 123,436 33,130 - 90,306 73.2%

1500 Notre Dame 109,583 - 109,583 - - 109,583 100.0%

Total Winnipeg 326,817 21,270 348,087 3.7% 53,251 6,077 288,759 83.0%

390 Charest 66,751 6,348 73,099 - - 73,099 100.0%

410 Charest 3,229 21,508 24,737 - 1,408 23,329 94.3%

420 Charest 41,432 17,217 58,649 23,252 1,666 33,731 57.5%

605 Saint-Joseph 26,145 7,729 33,874 2,000 1,789 30,085 88.8%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

MARCH 31, 2015 PROPERTIES

51

622 Saint-Joseph 2,711 3,300 6,011 1,936 - 4,075 67.8%

633 Saint-Joseph 16,247 6,848 23,095 6,073 3,848 13,174 57.0%

Total Québec City 156,515 62,950 219,465 2.3% 33,261 8,711 177,493 80.9%

72 Victoria 88,563 - 88,563 10,124 - 78,439 88.6%

Breithaupt Phase I (5) 65,500 - 65,500 - - 65,500 100.0%

The Tannery 251,311 74,756 326,067 - - 326,067 100.0%

Total Kitchener 405,374 74,756 480,130 5.1% 10,124 - 470,006 97.9%

100-6th SW 34,242 - 34,242 - - 34,242 100.0%

119-6th SW 63,063 - 63,063 - - 63,063 100.0%

1207-1215 13th SE 31,601 - 31,601 - - 31,601 100.0%

1240-20th SE 46,124 - 46,124 - - 46,124 100.0%

129-8th SW 2,339 5,034 7,373 - 5,034 2,339 31.7%

209-8th SW 26,474 5,022 31,496 - - 31,496 100.0%

237-8th SE 65,638 10,035 75,673 11,808 8,788 55,077 72.8%

322-326 11th SW 197,595 15,606 213,201 35,238 2,778 175,185 82.2%

402-11th SE 39,414 - 39,414 - - 39,414 100.0%

438-11th SE 52,501 - 52,501 4,414 - 48,087 91.6%

601-611 10th SW 46,913 2,592 49,505 8,164 - 41,341 83.5%

603-605 11th SW 22,035 29,207 51,242 - - 51,242 100.0%

604-1st SW 66,340 21,048 87,388 229 - 87,159 99.7%

613-11th SW - 3,163 3,163 - - 3,163 100.0%

617-11th SW 2,886 6,071 8,957 - - 8,957 100.0%

625-11th SW 32,386 1,409 33,795 6,387 - 27,408 81.1%

805-1st SW 8,775 18,635 27,410 - 1,831 25,579 93.3%

808-1st SW 17,325 30,244 47,569 - - 47,569 100.0%

809-10th SW 35,869 - 35,869 - - 35,869 100.0%

Demcor Building 36,941 - 36,941 - - 36,941 100.0%

Total Calgary 828,461 148,066 976,527 10.3% 66,240 18,431 891,856 91.3%

128 West Pender 75,023 1,700 76,723 14,022 - 62,701 81.7%

840 Cambie 91,520 - 91,520 - - 91,520 100.0%

948-950 Homer 23,114 23,290 46,404 - - 46,404 100.0%

1040 Hamilton 35,957 8,765 44,722 1,988 1,791 40,943 91.6%

1286 Homer 15,752 9,115 24,867 5,179 - 19,688 79.2%

Total Vancouver 241,366 42,870 284,236 3.0% 21,189 1,791 261,256 91.9%

535 Yates 12,718 6,312 19,030 - - 19,030 100.0%

754 Fort 13,339 9,209 22,548 - - 22,548 100.0%

Total Victoria 26,057 15,521 41,578 0.4% - - 41,578 100.0%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

MARCH 31, 2015 PROPERTIES

52

10190-104 NW 11,514 5,767 17,281 5,862 - 11,419 66.1%

Boardwalk & Revillon Building 219,557 45,442 264,999 2,167 - 262,832 99.2%

Total Edmonton 231,071 51,209 282,280 3.0% 8,029 - 274,251 97.2%

The Chambers 201,012 16,571 217,583 6,519 9,391 201,673 92.7%

Total Ottawa 201,012 16,571 217,583 2.3% 6,519 9,391 201,673 92.7%

Total 8,416,784 1,083,777 9,500,561 753,368 65,896 8,681,297 91.4%

(1) RioCan/Allied Joint Venture Properties(2) Lifetime/Allied Joint Venture Property(3) Diamond Corp/Allied Joint Venture Property(4) RioCan/Diamond Corp/Allied Joint Venture Property(5) Perimeter/Allied Joint Venture

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

MARCH 31, 2015 PROPERTIES

19 Duncan JV, Toronto (1) 30,930 - 30,930

250 Front W, Toronto 167,978 - 167,978

460 King W, Toronto 11,700 4,550 16,250

485 King W, Toronto 8,814 4,407 13,221

College & Palmerston JV, Toronto (2) - 3,793 3,793

QRC West Phase I, Toronto (3) 60,074 36,818 96,892

5445 Gaspé, Montréal 497,271 647 497,918

138 Portage. Winnipeg 36,399 - 36,399

The Breithaupt Block Phase II, Kitchener (4) 45,000 - 45,000

TELUS Sky, Calgary (5) 7,091 4,892 11,983

8-10 Bastion, Victoria 22,399 10,086 32,485

Total PUD 887,656 65,193 952,849

(1) Westbank/Allied Joint Venture(2) RioCan/Allied Joint Venture(3) Under Contruction(4) Perimeter/Allied Joint Venture(5) Telus/Westbank/Allied Joint Venture

PROPERTIES UNDER DEVELOPMENTOFFICE

GLARETAIL

GLATOTAL

GLA

53

301 Markham, Toronto 47

388 Richmond, Toronto 117

78 Spadina, Toronto 24

7-9 Morrison, Toronto 25

650 King, Toronto 71

560 King, Toronto 171

478 King JV, Toronto (1) 65

King Brant, Toronto 203

Total PARKING 723

ANCILLARY PARKING FACILITIES NUMBER OF SPACES

54

55

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED MARCH 31, 2015

56

Gordon Cunningham trustee

Michael R. Emory trustee

ALLIED PROPERTIES REIT CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Assets

Non-current assets

Investment properties 3 $3,759,462 $3,726,757

Loans and notes receivable 4 23,038 2,127

Other assets 5 133,241 130,533

3,915,741 3,859,417

Current assets

Cash and cash equivalents 16 8,902 5,260

Loans and notes receivable 4 5,951 6,138

Accounts receivable, prepaid expenses and deposits 6 65,063 61,904

79,916 73,302

Total assets $3,995,657 $3,932,719

Liabilities

Non-current liabilities

Debt 7 $1,144,253 $1,215,780

Freehold lease and land lease obligations 8 128,863 128,758

1,273,116 1,344,538

Current liabilities

Debt 7 195,240 137,623

Freehold lease and land lease obligations 8 7,381 6,886

Accounts payable and other liabilities 9 130,896 113,641

333,517 258,150

Total liabilities 1,606,633 1,602,688

Unitholders’ equity 11 2,389,024 2,330,031

Total liabilities and unitholders’ equity $3,995,657 $3,932,719

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTES MARCH 31, 2015 DECEMBER 31, 2014(in thousands of Canadian dollars)

57

ALLIED PROPERTIES REIT CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

Net rental income

Rental revenue from investment properties 15 $89,567 $82,547

Property operating costs 15 (38,588) (34,793)

Net rental income 50,979 47,754

Other income and expenses

Interest expense 7 (13,184) (13,072)

General and administrative expenses (1,821) (1,733)

Amortization of leasing costs and other assets (1,821) (1,622)

Interest income 171 -

Fair value loss on investment properties 3 (30,092) (11,939)

Fair value loss on derivative instruments (7,861) (3,973)

Net income and comprehensive income for the period (3,629) 15,415

Income per unit 14

Basic $(0.05) $0.22

Diluted $(0.05) $0.22

Weighted average number of units 14

Basic 76,598,961 68,708,914

Diluted 76,818,461 69,116,180

The accompanying notes are an integral part of these condensed consolidated financial statements.

NOTES(in thousands of Canadian dollars, except unit and per unit amounts)

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

58

ALLIED PROPERTIES REIT CONDENSED CONSOLIDATED STATEMENTS OF UNITHOLDERS’ EQUITY (UNAUDITED)

TRUST UNITS

CONTRIBUTED SURPLUS

RETAINED EARNINGS TOTALNOTES(in thousands of Canadian dollars)

Balance at January 1, 2014 13 $1,545,387 $517,524 $5,803 $2,068,714

Comprehensive income - 15,415 - 15,415

Public offering (31) - - (31)

Distributions 13 - (24,281) - (24,281)

Distribution reinvestment plan 13 7,329 - - 7,329

Unit option plan – options exercised 14 11,561 - (470) 11,091

Contributed surplus – unit option plan 14 - - 196 196

Restricted unit plan 15 (1,566) - 285 (1,281)

Long-term incentive plan 15 11 - - 11

Balance at March 31, 2014 $1,562,691 $508,658 $5,814 $2,077,163

Balance at January 1, 2015 13 $1,754,576 $568,714 $6,741 $2,330,031

Comprehensive income - (3,629) - (3,629)

Public offering 82,471 - - 82,471

Distributions 13 - (27,981) - (27,981)

Distribution reinvestment plan 13 7,201 - - 7,201

Unit option plan – options exercised 14 2,709 - (211) 2,498

Contributed surplus – unit option plan 14 - - 139 139

Restricted unit plan 15 (1,904) - 194 (1,710)

Long-term incentive plan 15 4 - - 4

Balance at March 31, 2015 $1,845,057 $537,104 $6,863 $2,389,024

The accompanying notes are an integral part of these condensed consolidated financial statements.

59

ALLIED PROPERTIES REIT CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Operating activities

Net income/(loss) for the period $(3,629) $15,415

Change in fair value on investment properties 3 27,691 20,799

Change in fair value on interest in freehold lease and land leases 2,401 (8,860)

Change in fair value on derivative instruments 7,861 3,973

Amortization of equipment 5 207 183

Amortization of customer relationships 24 24

Amortization of leasing costs 5 1,590 1,415

Amortization of tenant improvements 5 3,044 2,268

Amortization of straight-line rent (1,111) (1,269)

Amortization, premium on assumed mortgages 7 (d) 49 (9)

Compensation expense 15 333 481

Change in other non-cash financing items 674 646

Change in other non-cash operating items (15,127) (10,399)

Cash provided by operating activities 24,007 24,667

Financing Activities

Financing costs (340) (311)

Proceeds from new mortgages payable - 108,500

Repayment of mortgages payable 7 (26,267) (61,068)

Financing - freehold lease and land leases - (53)

Distributions paid to Unitholders (20,475) (16,858)

Proceeds of public offerings (net of issue costs) 11 82,471 (31)

Proceeds from exercise of unit options 12 2,498 11,091

Proceeds from units issued under the LTIP 13 4 11

Restricted unit plan (1,904) (1,566)

Net increase in bank indebtedness and construction loans 12,268 5,817

Cash provided by financing activities 48,255 45,532

NOTES(in thousands of Canadian dollars)

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

60

Investing activities

Capital expenditures, rental properties and other assets (net of assumed mortgages) (33,590) (75,362)

Capital expenditures, properties under development (28,803) (11,897)

Tenant leasing costs (1,521) (2,171)

Tenant improvements (4,706) (9,778)

Cash used in investing activities (68,620) (99,208)

Increase/(decrease) in cash and cash equivalents 3,642 (29,009)

Cash and cash equivalents, beginning of period 5,260 31,764

Cash and cash equivalents, end of period $8,902 $2,755

Supplemental cash flow information (Note 16)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALLIED PROPERTIES REIT CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - continued

NOTES

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014(in thousands of Canadian dollars)

61

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE PERIOD ENDED MARCH 31, 2015 AND 2014 (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER UNIT AND UNIT AMOUNTS) (UNAUDITED)

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 14, 2013. Allied is governed by the laws of the Province of Ontario and began operations on February 19, 2003. The units of the Trust are traded on the Toronto Stock Exchange. Allied is the ultimate parent of its group of companies.

Allied is a leading owner, manager and developer of urban office environments that enrich experience and enhance profitability for business tenants operating in Canada’s major cities. Allied’s objectives are to provide stable and growing cash distributions to Unitholders and to maximize Unitholder value through effective management and accretive portfolio growth.

Allied is domiciled in Ontario, Canada. The address of Allied’s registered office and its principal place of business is 520 King Street West, Suite 300, Toronto, Ontario, M5V 1L7.

2 .. summary.of.significant.accounting.policies

(a) Basis of presentation

These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting using the accounting policies based on currently effective standards.

The condensed consolidated financial statements for the three months ended March 31, 2015, were approved and authorized for issue by the Board of Trustees on May 6, 2015.

(b) Critical accounting estimates and judgements

The preparation of these condensed consolidated financial statements requires Allied to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates, which, by their nature, are uncertain. The impact of such estimates is pervasive throughout the condensed 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, useful lives of assets used to calculate amortization and allowances for doubtful accounts.

62

(c) Accounting policies

The condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements, including the notes thereof, for the year ended December 31, 2014, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The same accounting policies and methods of computation are followed in the condensed consolidated financial statements as compared with the most recent annual financial statements, except as described below.

Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by Allied

At the date of authorization of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by Allied.

Allied anticipates that all of the relevant pronouncements will be adopted in the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to Allied’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on Allied’s financial statements.

. IFRS 9 – FINANCIAL INSTRUMENTS

The International Accounting Standards Board (“IASB”) aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard IFRS 9 as issued applies to the classification and measurement of financial assets and liabilities as defined in IAS 39. On July 24, 2014, the IASB issued a new version of IFRS 9 referred to as IFRS 9 (2014). In November 2009, the IASB issued the first version of IFRS 9 Financial Instruments (IFRS 9 (2009)) and subsequently issued various amendments in October 2010, (IFRS 9 Financial Instruments (2010)) and November 2013 (IFRS 9 Financial Instruments (2013)). IFRS 9 (2014) includes finalized guidance on the classification and measurement of financial assets, hedge accounting requirements and amendments to the impairment model by introducing a new expected credit loss model for calculating impairment. The mandatory effective date for IFRS 9 (2014) is for annual periods beginning on or after January 1, 2018. IFRS 9 (2014) is to be applied retrospectively and early adoption of the standard is permitted. Allied is assessing the impact of the new standard to its financial statements.

IFRS 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS

In May 2014, the IASB issued IFRS 15: Revenue from Contracts with Customers. The new standard provides a framework that replaces existing revenue recognition guidance relating to recognition, measurement and disclosure of revenue from contracts with customers, excluding contracts within the scope of the standard on leases, insurance contracts and financial instruments. The mandatory effective date for IFRS 15 is for annual periods beginning on or after January 1, 2017. IFRS 15 is to be applied retrospectively, or as of the application date by adjusting retained earnings at that date and disclosing the effect of adoption on each line of profit or loss. Early adoption of the standard is permitted. Allied is assessing the impact of the new standard on the financial statements of Allied.

63

(d) Comparative figures

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted in the current year.

3 .. investment.properties

Changes to the carrying amounts of investment properties are summarized as follows:

Rental Properties Total Total

Properties Under Development

Properties Under Development

Rental Properties

Balance beginning of the period $3,490,057 $236,700 $3,726,757 $3,163,688 $137,062 $3,300,750

Additions:

Acquisitions - 24,573 24,573 208,709 26,231 234,940

Transfer from PUD - - - 11,796 (11,796) -

Transfer to PUD (178,642) 178,642 - (8,403) 8,403 -

Capital expenditures 9,363 27,236 36,599 82,727 71,661 154,388

Disposals - - - (6,294) (7,080) (13,374)

Interest in freehold lease and land leases - 1,567 1,567 18,611 - 18,611

IFRS value gain (loss) (15,714) (14,320) (30,034) 19,223 12,219 31,442

Balance end of the period $3,305,064 $454,398 $3,759,462 $3,490,057 $236,700 $3,726,757

Included in the amounts noted above is $182,907 ($180,209 as at December 31, 2014) which represents Allied’s interest in a 49 year, 173,500 square feet, freehold lease as at March 31, 2015.

MARCH 31, 2015 DECEMBER 31, 2014

Total fair market value $3,890,085 $3,854,664

Less Straight-line rents (24,328) (23,206) Tenant improvement allowances (73,828) (72,166) Leasing commissions (32,467) (32,535)

Adjusted fair market value $3,759,462 $3,726,757

MARCH 31, 2015 DECEMBER 31, 2014

Reconciliation between the valuation obtained and the adjusted valuation for the carrying amounts of investment properties is as follows:

64

VALUATION METHODOLOGY

The fair value of investment properties is determined using the discounted cash flow method, 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. The fair value of properties under development is measured using both a comparable sales method and a discounted cash flow method, net of costs to complete, as of the valuation date.

Management verifies all major inputs to the valuations, analyses the change in fair values at the end of each reporting period and reviews the results with the independent appraiser every quarter.

SIGNIFICANT UNOBSERVABLE INPUTS

There are significant unobservable inputs used such as capitalization rates, in determining the fair value of each investment property, thus all investment properties are classified as Level 3 assets. Fair values are most sensitive to changes in capitalization rates and stabilized or forecasted Net Operating Income (“NOI”). Generally, an increase in NOI will result in an increase in the fair value of investment properties and an increase in capitalization rate will result in a decrease in the fair value of investment properties. The capitalization rate magnifies the effect of a change in NOI, with a lower capitalization rate resulting in a greater impact of a change in NOI than a higher capitalization rate. The analysis below shows the maximum impact on fair values of possible changes in capitalization rates, assuming no changes in NOI:

As at March 31, 2015 the average weighted capitalization rate was 6.2% (December 31, 2014 - 6.2%).

Increase (decrease) in fair value

Income properties $284,275 $136,245 (126,360) (206,340)

Properties under development (1) 42,920 20,610 (19,100) (36,860)

(1) Excludes properties under development valued using land comparisons

-0.50%CHANGE IN CAPITALIZATION RATE OF -0.25% +0.25% +0.50%

65

4 .. loans.and.notes.receivable

Loans and notes receivable are as follows:

(a) In February 2015, Allied entered into an agreement with Westbank and completed an acquisition of an undivided 50% interest in 19 Duncan and advanced $40,770 to the partnership between Allied and Westbank. The loan is secured by a first charge on the property and assignment of rents and leases. Interest on the loan is payable monthly at 6.0%. During the quarter, an additional $1,574 was funded to the initial loan. The loan is repayable when the partnership obtains external development financing.

(b).In March 2013, Allied defeased a mortgage associated with a property located at 134 Peter Street. Pursuant to the defeasance, Allied purchased $5,752 of government bonds and pledged them as security for the loan in return for the lender releasing the mortgage on 134 Peter Street. Neither the financial asset nor the loan qualified for de-recognition, and as a result, both remain in the condensed consolidated balance sheets. Therefore included in notes receivable is the amount receivable on government bonds of $4,928 (December 31, 2014 - $5,119), relating to the purchase of the bonds as replacement security for the mortgage. The government bonds are classified as a held to maturity financial asset. The government bonds have various maturities to August 1, 2015 and are measured at amortized cost. The weighted average interest rate on the government bonds is 1.5%.

Also included in notes receivable is an annuity loan receivable of $2,889 (December 31, 2014.-.$3,146),.bearing interest of 1.8 % and maturing on December 1, 2017.

Loans receivable (a) $21,172 $-

Notes receivable (b) 7,817 8,265

$28,989 $8,265

Current $5,951 $6,138

Non-current 23,038 2,127

$28,989 $8,265

MARCH 31, 2015 DECEMBER 31, 2014

66

6 .. accounts.receivable.and.prepaid.expenses

The movement in the allowance for doubtful accounts is reconciled as follows:

5 .. other.assets

Other non-current assets consist of the following:

Tenant improvement allowances (1) $73,828 $72,166

Leasing commissions (2) 32,467 32,535

Straight-line rents 24,328 23,206

Equipment and other assets (3) 2,618 2,626

$133,241 $130,533

(1) During the three months ended March 31, 2015, Allied recorded amortization of tenant improvements of $3,044 (March 31, 2014- $2,268), which was netted against rental revenue.(2) During the three months ended March 31, 2015, Allied recorded amortization of leasing commissions of $1,590 (March 31, 2014- $1,415).(3) During the three months ended March 31, 2015, Allied recorded amortization of equipment and other assets of $231 (March 31, 2014 - $207).

MARCH 31, 2015 DECEMBER 31, 2014

Tenant trade receivables - net of allowance for doubtful accounts $19,657 $17,542

Other tenant receivables 12,878 15,049

Miscellaneous receivables 12,958 10,885

Prepaid expenses and deposits 19,570 18,428

$65,063 $61,904

MARCH 31, 2015 DECEMBER 31, 2014

Allowance for doubtful accounts, beginning of period $3,265 $1,850

Additional provision recorded during the period 685 358

Reversal of previous provisions (330) (19)

Receivables written off during the period (634) (51)

Allowance for doubtful accounts, end of period $2,986 $2,138

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

67

An allowance for doubtful accounts is maintained for estimated losses resulting from the inability of tenants to meet obligations under lease agreements. Allied actively reviews receivables and determines the potentially uncollectible accounts on a per-tenant basis. An accounts receivable is written down to its estimated realizable value when Allied has reason to believe that the tenant will not be able to fulfill its obligations under the lease agreement.

Prepaid expenses primarily relates to property operating expenses and deposits relating to acquisitions.

7 .. debt

Debt consists of the following items:

(a) Mortgages payable

Mortgages payable have a weighted average stated interest rate of 4.7% at March 31, 2015 (December 31, 2014 - 4.8%). The mortgages are secured by 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:

Mortgages payable (a) $1,248,679 $1,274,857

Construction loans payable (b) 13,814 54,210

Unsecured revolving operating facility (c) 77,000 -

Secured operating facility - 24,336

$1,339,493 $1,353,403

Current $195,240 $137,623

Non-current 1,144,253 1,215,780

$1,339,493 $1,353,403

MARCH 31, 2015 DECEMBER 31, 2014

68

(b) Construction loans payable

Allied has provided its guarantee (limited to 50%) to a Canadian chartered bank to support a $45,740 construction lending facility to assist with the financing of construction costs associated with a property under development in which Allied has a 50% joint arrangement interest. The loan matures on December 31, 2015 and bears interest at bank prime plus 80 basis points or bankers’ acceptance rate plus 180 basis points. The balance outstanding under the facility as at March 31, 2015 was $27,628, of which $13,814 is Allied’s proportionate share of the loan. The balance outstanding under the facility as at December 31, 2014 was $24,220, of which $12,110 is Allied’s proportionate share of the loan.

In May 2013, Allied secured a construction facility from a group of Canadian chartered banks (the “Lenders”) to fund project construction costs for the development at 134 Peter Street, Toronto, Ontario. In February 2015, Allied repaid the construction facility. At December 31, 2014 there was $42,100 outstanding on the construction facility.

(c) Unsecured revolving operating facility

During the quarter, Allied obtained an unsecured revolving operating facility (“Unsecured Facility”) of $200,000. The Unsecured Facility had a balance of $77,000 outstanding at March 31, 2015. The Unsecured Facility bears interest at bank prime plus 70 basis points or bankers’ acceptance plus 170 basis points and matures on January 18, 2018. The Unsecured Facility also contains $100,000 accordion feature that allows Allied to increase it to $300,000. The Unsecured Facility replaced the $100,000 secured operating facility which had a balance of $24,336 outstanding at December 31, 2014.

Remainder of 2015 $27,931 $46,942 $74,873

2016 35,883 66,511 102,394

2017 33,845 127,314 161,159

2018 32,889 56,900 89,789

2019 30,019 142,360 172,379

2020 23,991 4,456 28,447

2021 23,069 104,344 127,413

2022 19,210 73,683 92,893

2023 16,008 220,957 236,965

2024 3,011 165,326 168,337

$245,856 $1,008,793 $1,254,649

Net premium on assumed mortgages 704

Financing costs (6,674)

$ 1,248,679

BALANCE DUE AT MATURITY

PRINCIPAL REPAYMENTSAS AT MARCH 31, 2015 TOTAL

69

(d) Interest expense

Interest expense consists of the following:

Borrowing costs have been capitalized at a rate of 4.7% per annum (March 31, 2014 – 4.8%). A description of Allied’s risk management objectives and policies for financial instruments is provided in Note 21.

8 .. freehold.lease.and.land.lease.obligations.

Allied’s future minimum finance lease payments as a lessee are as follows:

Interest on debt $15,450 $14,869

Interest on finance lease - land leases 814 795

Amortization, premium on assumed mortgage 49 (9)

Amortization, deferred financing 340 311

$16,653 $15,966

Less: interest expense capitalized into investment properties (3,469) (2,894)

Interest expense $13,184 $13,072

THREE MONTHS ENDED MARCH 31, 2015

THREE MONTHS ENDED MARCH 31, 2014

Future minimum lease payments $5,529 $33,751 $496,056 $535,336

Less: Amounts representing interest 276 6,786 392,030 399,092

Present value of lease payments $5,253 $26,965 $104,026 $136,244

Current $7,381 $6,886

Non-current 128,863 128,758

$136,244 $135,644

REMAINING 2015

JANUARY 1, 2016 THROUGH

DECEMBER 31, 2019 THEREAFTER

MARCH 31 2015

TOTAL

DECEMBER 31 2014

70

During the three months ended March 31, 2015, minimum lease payments of $1,780 were paid by Allied (March 31, 2014 - $542). No sublease payments or contingent rent payments were made or received. No sublease income is expected as all assets held under lease agreements are used exclusively by Allied.

Some of Allied’s finance lease agreements contain contingent rent clauses. Contingent rental payments are recognized in the condensed consolidated statements of income and comprehensive income as required when contingent criteria are met. None of the finance lease agreements contain renewal or purchase options or escalation clauses or any restrictions concerning distributions, additional debt and further leasing.

9 ..accounts.payable.and.other.liabilities

Accounts payable and other liabilities consists of the following:

10 ..fair.values.of.financial.instruments

The fair value of financial instruments is the amount for which an asset could be exchanged or liability settled between knowledgeable, willing parties in an arm`s length transaction based on the current market for assets and liabilities with the same risks, principal and remaining maturity.

The carrying value of Allied’s financial assets, which include cash and cash equivalents and accounts receivable, as well as financial liabilities, which include accounts payable and other liabilities, approximate their fair values due to their short-term nature. The fair value of loans and notes receivable, mortgages payable, construction loans payable and secured and Unsecured Facility are estimated based on discounted future cash flows using discounted rates that reflect current market conditions for instruments with similar terms and risks.

The fair value of Allied’s financial instruments are summarized in the following table:

MARCH 31, 2015 DECEMBER 31, 2014

Accounts payable and other liabilities $78,680 $ 66,207

Prepaid rents and tenant deposits 22,079 25,353

Accrued interest payable 4,108 4,219

Distributions payable to unitholders 9,434 9,128

Mortgage interest swap liability 16,595 8,734

$130,896 $113,641

71

FAIR VALUE HIERARCHY

Allied uses various methods in estimating the fair values of assets and liabilities that are measured at fair value on a recurring or non-recurring basis in the statement of financial position 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.

The following summarizes the significant methods and assumptions used in estimating fair value of Allied’s financial assets and liabilities measured at fair value:

INTEREST RATE DERIVATIVE CONTRACTS

The fair value of Allied’s interest rate derivative contracts which represents a net liability as at March 31, 2015 is $16,595 as compared to a net liability as at December 31, 2014 of $8,734. The fair value of the derivative contracts is determined using interest rates observable in the market (Level 2).

11 ..unitholders'.equity

The number of units issued and outstanding are as follows:

Financial assets

Loans and notes Receivable $- 28,989 $28,989 $8,265

Financial liabilities

Mortgages payable $- 1,326,074 $1,326,074 $1,276,288

Construction loans Payable $- 13,818 $13,818 $54,009

Secured operating facility $- - $- $24,336

Unsecured Facility $- 77,000 $77,000 $-

Interest rate derivatives $16,595 - $16,595 $8,734

FAIR VALUE THROUGH

PROFIT & LOSS

LOANS RECEIVABLES /

OTHER LIABILITIES

2015

TOTAL TOTAL

2014

72

Allied does not hold any of its own trust units, nor does Allied reserve any trust units for issue under options and contracts.

12 ..unit.option.and.restricted.unit.plans

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 the trustees and certain employees of Allied. The Unit Option Plan complies with the requirements of the Toronto Stock Exchange. 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 options may have a maximum term of ten years from the date of grant. All options are settled in units.

On March 4, 2014, 266,174 options were granted to trustees, officers and employees with an exercise price of $33.29 and expiring on March 4, 2019. 75,538 options vested on March 4, 2015. 62,357 and 62,365 options will vest on March 4, 2016 and March 4, 2017, respectively. 13,182 options have been exercised. 65,914 options have been forfeited.

On May 6, 2014, 8,474 options were granted to an officer with an exercise price of $34.59 and expiring on May 6, 2019. 2,824, 2,825 and 2,825 options will vest on May 6, 2015, May 6, 2016 and May 6, 2017, respectively.

On March 3, 2015, 302,706 options were granted to officers with an exercise price of $40.60 and expiring on March 3, 2020. 100,902, 100,902 and 100,902 options will vest on March 3, 2016, March 3, 2017 and March 3, 2018, respectively.

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.

Units outstanding, January 1, 2014 68,542,410

Units issued under the Distribution Reinvestment Plan 231,005

Units issued under Unit Option Plan 573,005

Units outstanding, March 31, 2014 69,346,420

Units issued pursuant to offering on September 3, 2014 4,887,500

Units issued under the Distribution Reinvestment Plan 621,156

Units issued under Unit Option Plan 213,836

Units outstanding, December 31, 2014 75,068,912

Units issued pursuant to offering on February 2, 2015 2,213,750

Units issued under the Distribution Reinvestment Plan 194,299

Units issued under Unit Option Plan 103,725

Units outstanding, March 31 , 2015 77,580,686

UNITS

73

Weighted average unit price during the period was $39.41 (March 31, 2014 - $33.23).

Allied utilizes the Black-Scholes Model for the valuation of unit options with no performance criteria and the Binomial option pricing model for valuation of unit options with performance criteria. The Binomial option pricing model incorporates the factors specific to the share incentive plan such as market conditions by means of actuarial modeling.

Assumptions utilized in the calculation using the Black-Scholes Model for option valuation are as follows:

The underlying expected volatility was determined by reference to historical data of Allied’s units over 5 years.

Unit options granted 302,706 266,174

Unit option holding period (years) 5 5

Volatility rate 17.8% 20.5%

Distribution yield 3.6% 4.2%

Risk free interest rate 0.7% 1.6%

Value of options granted $1,062 $942

MARCH 31, 2015 MARCH 31, 2014

For the units outstanding at the end of the period $21.91-40.60 3.28 $19.39-34.25 3.23

The range of exercise prices

The range of exercise prices

Weighted average remaining contractual

life (years)

Weighted average remaining contractual

life (years)

MARCH 31, 2015 MARCH 31, 2014

Balance at the beginning of the period 778,889 $28.54 1,350,941 $23.30

Granted during the period 302,706 40.60 266,174 33.29

Forfeited during the period (39,134) 33.60 - -

Exercised during the period (103,725) 24.08 (573,005) 19.36

Balance at the end of the period 938,736 $32.71 1,044,110 $28.01

Units exercisable at the end of the period 452,695 $27.07 567,207 $24.19

Number of units Number of unitsWeighted average

exercise priceWeighted average

exercise price

MARCH 31, 2015 MARCH 31, 2014

74

For the Unit Option Plan, $139 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss for March 31, 2015 and credited to Unitholders’ equity (March 31, 2014 - $196).

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 remain subject to forfeiture until the participant has held his or her position with Allied for a specific period of time. Full vesting of Restricted Units will not occur until the participant has remained employed by Allied for three years from the date of grant. Units required under the Restricted Unit Plan are acquired in the secondary market through a custodian and then distributed to the individual participant accounts. During the three months ended March 31, 2015, 47,695 units of Allied were granted for the Restricted Unit Plan and are included in the units outstanding (March 31, 2014 - 45,742). At March 31, 2015, 220,709 units of Allied were outstanding for the Restricted Unit Plan and 5,741 units were forfeited during the three months ended March 31, 2015. At December 31, 2014, 178,755 units of Allied were outstanding for the Restricted Unit Plan and 7,678 units were forfeited.

For the Restricted Unit Plan, in total, $194 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit for March 31, 2015 and credited to Unitholders’ equity (March 31, 2014 - $285).

13 ..long-term.incentive.plan

Officers and trustees of Allied have been granted the right to participate in a long-term incentive plan (“LTIP”), whereby the participants subscribed for units for a purchase price equal to the weighted average trading price of the units for five trading days preceding the date of the grant. The purchase price was payable as to 5% upon issuance and as to the balance (“installment loan receivable”) over a term not exceeding 10 years. The installment loan receivable bears interest at rates of 3% or 5% per annum on any outstanding balance and is a direct, personal obligation of the participant. The units issued under the LTIP are held by a custodian for the benefit of the participants until the installment loan receivable has been paid in full. The values of these units held by the Custodian as at March 31, 2015 and December 31, 2014 were $685 and $636, respectively. Cash distributions paid in respect of the units issued under the LTIP are applied first to the interest and then to reduce the balance of the installment loan receivable.

The fair value of the LTIP is the estimated present value of the imputed interest benefit over an estimated expected term of ten years, which is recorded as compensation cost. The LTIP installment loans receivable are recognized as deductions from units issued. Distributions received under the LTIP are charged to Unitholders’ equity while interest received under the LTIP is credited to distributions.

75

14 ..weighted.average.number.of.units

The weighted average number of units for the purposes of diluted income per unit is the weighted average number of ordinary units used in the calculation of basic income per unit as follows:

Number of units issued 412,293 - 412,293

Units issued $6,282 $- $6,282

Compensation cost 474 - 474

6,756 - 6,756

LTIP installment loans receivable (5,968) - (5,968)

Interest on installment loans receivable (1,078) (2) (1,076)

Distributions applied against installment loans receivable 3,598 6 3,592

Repayment of installment loans 3,283 - 3,283

(165) 4 (169)

$6,591 $4 $6,587

THREE MONTHS ENDED

MARCH 31, 2015

CUMULATIVE AS AT

MARCH 31, 2015UNITS ISSUED UNDER THE LTIP

CUMULATIVE AS AT

DECEMBER 31, 2014

Number of units issued 412,293 - 412,293

Units issued $6,282 $ - $6,282

Compensation cost 474 - 474

6,756 - 6,756

LTIP installment loans receivable (5,968) - (5,968)

Interest on installment loans receivable (1,076) (7) (1,069)

Distributions applied against installment loans receivable 3,592 30 3,562

Repayment of installment loans 3,283 - 3,283

(169) 23 (192)

$6,587 $23 $6,564

YEAR ENDED DECEMBER 31, 2014

CUMULATIVE AS AT

DECEMBER 31, 2014UNITS ISSUED UNDER THE LTIP

CUMULATIVE AS AT

DECEMBER 31, 2013

76

16 ...supplemental.cash.flow.cash.flow:

Cash and cash equivalents include the following components:

15 ..rental.revenue.from.investment.properties

The following amounts were recognized in income:

Future minimum rental income as a lessor is as follows:

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

Basic 76,598,961 68,708,914

Unit option plan 202,500 370,266

Long-term incentive plan 17,000 37,000

Fully diluted 76,818,461 69,116,180

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

Rental revenue from investment properties $84,779 $81,372

Rental revenue from properties under development 4,788 1,175

89,567 82,547

Direct operating expenses from rental properties (37,850) (34,114)

Direct operating expenses from properties under development (738) (679)

$(38,588) $(34,793)

THEREAFTER TOTAL

Future minimum rental income $254,476 $1,150,353 $667,493 $2,072,322

REMAINING 2015

JANUARY 1, 2016 THROUGH

DECEMBER 31, 2019

Cash at bank and in hand $8,751 $5,113

Short-term deposits 151 147

Total cash and cash equivalents $8,902 $5,260

MARCH 31, 2015

DECEMBER 31, 2014

77

The following summarizes supplemental cash flow information and non-cash transactions:

17 ..co-owned.properties

Co-owned properties are accounted for as joint operations. The following table summarizes Allied’s interest in the assets, liabilities, revenues and expenses for the joint operations in which it participates.

Supplemental

Interest paid on debt $15,535 $14,879

Interest received $171 $-

Non-cash transactions

Units issued under DRIP $7,201 $7,329

Freehold lease and land leases $600 $1,512

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

Total assets $192,276 $168,084

Total liabilities $68,608 $65,115

MARCH 31, 2015

DECEMBER 31, 2014

2015 2014

Breithaupt Block Kitchener, ON Rental/Development 50% 50%

King & Portland Toronto, ON Rental 50% 50%

College and Manning Toronto, ON Rental/Development 50% 50%

478 King Toronto, ON Rental 50% 50%

The Well Toronto, ON Rental 40% 40%

57 Spadina Toronto, ON Rental 50% 50%

19 Duncan Toronto, ON Development 50% 50%

TELUS Sky Calgary, AB Development 33 1/3% 33 1/3%

LOCATIONCO-OWNED PROPERTIES PROPERTY TYPE

OWNERSHIP

78

18 ..segmented.information

To measure performance based on income from property operations, management divides operations into three geographical locations consisting of Eastern Canada (Montréal, Québec City and Ottawa), Central Canada (Toronto and Kitchener) and Western Canada (Winnipeg, Calgary, Edmonton, Vancouver and Victoria). Management reviews assets and liabilities on a total corporate basis and therefore assets and liabilities are not included in the segmented information below.

Allied does not allocate interest expense to segments as debt is viewed by management to be used for the purpose of acquisitions, development and improvements of the properties. Similarly, general administration expenses, interest income and fair value of financial instruments are not allocated to segments. These are disclosed below as Other.

Revenue $2,652 $1,938

Expenses (1,715) (1,534)

Income before fair value adjustments 937 404

Fair value gain (loss) on investment properties (5,973) (2,605)

Net income $(5,036) $(2,201)

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

79

SEGMENTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

CENTRAL CANADA

SEGMENT TOTAL

WESTERN CANADA OTHER TOTAL

EASTERN CANADA

THREE MONTHS ENDED MARCH 31, 2015

Net rental income

Rental revenue from investment properties $21,961 $51,139 $16,467 $89,567 $- $89,567

Property operating costs (10,992) (20,493) (7,103) (38,588) - (38,588)

Net rental income 10,969 30,646 9,364 50,979 - 50,979

Other income and expenses

Interest expense - - - - (13,184) (13,184)

General and administrative expenses - - - - (1,821) (1,821)

Amortization of leasing costs and other assets (669) (672) (249) (1,590) (231) (1,821)

Interest income - - - - 171 171

Fair value gain (loss) on investment properties (3,429) (2,886) (23,777) (30,092) - (30,092)

Fair Value gain (loss) on derivative instruments - - - - (7,861) (7,861)

Net income and comprehensive income for the period $6,871 $27,088 $(14,662) $19,297 $(22,926) $(3,629)

80

19 ..income.taxes

Allied is taxed as a ``Mutual Fund Trust`` for income tax purposes. Allied, pursuant to its Declaration of Trust, distributes or designates substantially all of its taxable income to Unitholders and does not deduct such distributions or designations for income tax purposes. Accordingly, no provision for income taxes has been made. Income tax obligations relating to distributions of Allied are the obligations of the Unitholders.

20 ..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; and key management and their close family members.

Allied engages in third-party property management business, including the provision of services for properties in which certain trustees of Allied have an ownership interest. For the three months ended March 31, 2015 real estate service revenue earned from these properties was $53 and $56 for the three months ended March 31, 2014.

SEGMENTED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)

CENTRAL CANADA

SEGMENT TOTAL

WESTERN CANADA OTHER TOTAL

EASTERN CANADA

THREE MONTHS ENDED MARCH 31, 2014

Net rental income

Rental revenue from investment properties $22,175 $44,450 $15,922 $82,547 $- $82,547

Property operating costs (10,427) (18,422) (5,944) (34,793) - (34,793)

Net rental income 11,748 26,028 9,978 47,754 - 47,754

Other income and expenses

Interest expense - - - - (13,072) (13,072)

General and administrative expenses - - - - (1,733) (1,733)

Amortization of leasing costs and other assets (588) (726) (120) (1,434) (188) (1,622)

Interest income - - - - - -

Fair value gain (loss) on investment properties (8,355) (4,513) 929 (11,939) - (11,939)

Fair Value gain (loss) on derivative instruments - - - - (3,973) (3,973)

Net income and comprehensive income for the period $2,805 $20,789 $10,787 $34,381 $(18,966) $15,415

81

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:

21 ..risk.management

(a) Financial risk

Allied defines capital as the aggregate of Unitholders’ equity, mortgages payable, construction loans payable, unsecured facility and freehold lease and land lease obligations. 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 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 total 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 March 31, 2015 and December 31, 2014, debts having variable interest rates and debts having maturities of less than one year aggregated to 4.0% and 2.5% of gross book value, respectively.

(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. Substantively all of Allied’s mortgages payable at March 31, 2015 are at fixed interest rates and are not exposed to changes in interest rates, during the term of the debt. Unsecured debt as at March 31, 2015 amounts to $77,000, 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. Unsecured facility is at floating rate interest rates and is exposed to changes in interest rates. As fixed rate debt matures and as Allied utilizes additional floating rate debt under the revolving credit facility, Allied will be further exposed to changes in interest rates. In addition, there is a risk that interest rates will fluctuate from the date

Salary, bonus and other short-term employee benefits $ 779 $ 1,033

Share-based payments 329 160

$ 1,108 $ 1,193

THREE MONTHS ENDED

MARCH 31, 2015

THREE MONTHS ENDED

MARCH 31, 2014

82

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.

(c) Credit risk

Credit risk from tenant receivables arises from the possibility that tenants 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 tenant base, ensuring no individual tenant contributes a significant portion of Allied’s revenues and conducting credit reviews of new tenants. Management reviews tenant receivables on a regular basis and reduces carrying amounts through the use of allowance for doubtful accounts and the amount of any loss is recognized in the condensed consolidated statements of income and comprehensive income within rental property operating cost. As at March 31, 2015 and March 31, 2014, allowances for doubtful accounts were $2,986 and $2,138, respectively.

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. Some of the unimpaired trade receivables are past due as at the reporting date. An aging of trade receivables, including trade receivables past due but not impaired can be shown as follows:

Unsecured facility 77,000 770 (770)

Mortgages and loans payable maturing within one year 118,239 1,182 (1,182)

INCOMECARRYING AMOUNT INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2015 -1.0% +1.0%

Less than 30 days $3,635 $80

30 to 60 days 1,090 1,121

More than 60 days 14,932 16,341

Total $19,657 $17,542

MARCH 31, 2015 DECEMBER 31, 2014

83

(d) Liquidity risk

Liquidity risk arises from the possibility of not having sufficient capital available to to fund ongoing operations and refinance or meet obligations as they come due. Mitigation of liquidity risk is discussed above. A significant portion of Allied’s assets have been pledged as security under the related mortgages and other security agreements. Interest rates on the mortgages payable are between 2.0% and 6.9% for March 31, 2015 and December 31, 2014.

Allied has entered into interest rate derivative contracts to limit its exposure to fluctuations in the interest rates on approximately $252,972 of its variable rate mortgages payable as at March 31, 2015 (December 31, 2014 - $254,673). Gains or losses arising from the change in fair values of the interest rate derivative contracts are recognized in the condensed consolidated statements of income and comprehensive income. During the year ended March 31, 2015, Allied recognized, as part of change in fair value adjustment on derivative instruments, a net loss of $7,861 (March 31, 2014 - net loss of $3,973).

22 ..commitments.and.contingencies

Allied has entered into commitments for acquisitions, building renovations with respect to leasing activities and for repairs and operating costs. The commitments as at March 31, 2015 and December 31, 2014 were $41,407 and $16,184, respectively.

Allied is subject to legal and other claims in the normal course of business. Management and Allied’s 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 claims would not have a significant effect on Allied’s consolidated financial statements.

Allied, through a financial intermediary, has issued letters of credit in the amount of $1,382 representing deposits on several of the conditional purchase agreements noted above and other financing requirements (December 31, 2014 - $798).

23 ..subsequent.events

On April 15, 2015, Allied completed the previously announced acquisition of 180 John Street in Toronto for a purchase price of $8,250.

On April 30, 2015, Allied announced the acquisition of 511-539 King Street West, in Toronto for an approximate purchase price of $100 million. The acquisition is expected to close on June 30, 2015.

DELTA FRAME AT QRC WEST, TORONTO, RECEIVING FINAL PAINT APPLICATION

520 KING STREET WEST, SUITE 300 TORONTO, ONTARIO M5V 1L7 T 416.977.9002 F 416.977.9053 alliedreit.com