Quarterly ReportJune 30, 2016

Building cities — one building at a time

08.03.16

Le Nordelec, Montréal

Quarterly Report

June 30, 2016

Contents LETTER TO UNITHOLDERS. . . . . . . . . . . 4

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION AS AT JUNE 30, 2016. . . . . . . . . . . . . . . . . . . . . 8

SECTION I—Overview . . . . . . . . . . . . . . . . 9

Summary of Key Financial and

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

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

Property Management. . . . . . . . . . . . . . . . . . 15

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

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

Dispositions . . . . . . . . . . . . . . . . . . . . . . . 16

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

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

SECTION II—Leasing . . . . . . . . . . . . . . . . 19

Status. . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Activity. . . . . . . . . . . . . . . . . . . . . . . . . . 21

Tenant Profile . . . . . . . . . . . . . . . . . . . . . . 23

Lease Maturity. . . . . . . . . . . . . . . . . . . . . . 24

SECTION III—Asset Profile . . . . . . . . . . . . . 28

Rental Properties . . . . . . . . . . . . . . . . . . . . 29

Development Properties . . . . . . . . . . . . . . . . 31

SECTION IV—Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . 35

Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Credit Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Financial Covenants. . . . . . . . . . . . . . . . . . . 42

Unitholders’ Equity . . . . . . . . . . . . . . . . . . . 47

Distributions to Unitholders . . . . . . . . . . . . . . 49

Commitments . . . . . . . . . . . . . . . . . . . . . . 51

SECTION V—Discussion of Operations. . . . . . . 52

Net Operating Income. . . . . . . . . . . . . . . . . . 53

Same Asset NOI. . . . . . . . . . . . . . . . . . . . . 55

Interest Expense. . . . . . . . . . . . . . . . . . . . . 56

General and Administrative Expenses. . . . . . . . . 57

Net Income and Comprehensive Income . . . . . . . 57

Other Financial Performance Measures. . . . . . . . 58

SECTION VI—Quarterly History . . . . . . . . . . 63

SECTION VII—Significant Accounting Policies. . . 65

SECTION VIII—Disclosure Controls And Internal Controls. . . . . . . . . . . . . . . . . . . . . 66

SECTION IX—Risk And Uncertainties . . . . . . . 67

Financing and Interest Rate Risk . . . . . . . . . . . 67

Tenant Credit Risk. . . . . . . . . . . . . . . . . . . . 67

Lease Roll-Over Risk . . . . . . . . . . . . . . . . . . 67

Environmental Risk . . . . . . . . . . . . . . . . . . . 68

Development Risk. . . . . . . . . . . . . . . . . . . . 68

Taxation Risk. . . . . . . . . . . . . . . . . . . . . . . 68

Joint Arrangement Risk. . . . . . . . . . . . . . . . . 68

SECTION X—Property Table. . . . . . . . . . . . . 69

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015. . . . . . . . . . . . . . 75

Condensed Consolidated Balance Sheets

(Unaudited) . . . . . . . . . . . . . . . . . . . . . . . 76

Condensed Consolidated Statements of Income

and Comprehensive Income (Unaudited) . . . . . . . 77

Condensed Consolidated Statements of

Unitholders’ Equity (Unaudited). . . . . . . . . . . . . 78

Condensed Consolidated Statements of Cash

Flows (Unaudited) . . . . . . . . . . . . . . . . . . . . 79

Notes to the Unaudited Condensed

Consolidated Financial Statements . . . . . . . . . . . . . 81

4

Letter to UnitholdersDear Fellow Unitholder:

Our rental and development portfolios met expectations in the first half. I expect this to continue through the remainder of the year. Our leasing and acquisition activity exceeded expectations. I expect our leasing activity to remain strong through the remainder of the year. I also expect we’ll make additional acquisitions in the second half, though not to the extent we did in the first.

RENTAL AND DEVELOPMENT PORTFOLIOS

Our second-quarter results were slightly below internal forecast due to modestly delayed occupancy and higher than anticipated interest expense due to proactive debt financing. As a result of a slight exceedance in the first quarter, our results for the first half were essentially in-line with internal forecast.

FFO per unit for the second quarter was 54 cents, in line with the comparable quarter last year. FFO per unit for the first half was $1.08, up 3% from the comparable period last year. As expected, we returned to same asset NOI growth (2.2% overall for the first half) with favourable results in Eastern and Central Canada being tempered by unfavourable results in Western Canada. I expect same asset NOI growth to accelerate over the remainder of the year.

NAV per unit at the end of the first half was $33.63, up 5% from the same time last year. The increase was a result of development completions, material value creation at The Well and cap-rate compression in our Toronto portfolio. Given the unrelenting demand for urban real estate in Canada, I expect cap rates in our major target markets to compress further over the remainder of the year.

Excluding Le Nordelec, our occupancy at quarter-end was 90%, up 130 basis points from the same time last year. Our leased area was 92%, up 160 basis points from the same time last year. I expect occupancy and leased area to increase over the remainder of the year.

5

We scheduled three developments for completion this year, two of which are now complete (485 King Street West in Toronto and The Breithaupt Block, Phase II, in Kitchener). The third and largest development, 250 Front West in Toronto, is scheduled for completion by year-end. Demand for internet and cloud infrastructure is on the rise globally. We’ve entered into specific expansion negotiations with an existing tenant that could result in material additional lease-up and will, in all probability, ensure that we achieve the target implicit in our outlook for 2016, which is to reach 65% occupancy by year-end.

We initiated the development of King Portland Centre in Toronto earlier this year. Like QRC West, this will involve the integration of new LEED certified commercial space with a restored heritage structure, a format that I believe has enduring social and commercial appeal in urban centres. We’re actively pre-leasing the office component of Adelaide & Duncan, The Well and Union Centre and expect to initiate at least one of these Toronto projects this year.

Adelaide & Duncan is moving through the approval process. With a manageable pre-leasing threshold of 30,000 to 50,000 square feet for the office component, I expect the JV (Allied and Westbank) will initiate the project in the fourth quarter. The Well moved meaningfully toward initiation with the recently announced sale by the JV (Allied, RioCan and Diamond) of the residential density to Tridel and Woodbourne. In addition to reducing risk and boosting potential return, the sale will enable the JV to initiate construction of the below-grade component of the entire project early next year. Union Centre is under consideration by several prospective tenants. With a large pre-leasing threshold of 500,000 to 600,000 square feet, it’s not yet possible to predict when this project will be initiated.

LEASING AND ACQUISITION ACTIVITY

Our leasing activity to date reflects the depth and breadth of demand for urban office space in our target markets across the country. Excluding Le Nordelec, leased area at the end of the first half was up by 80 basis points from the beginning of the year. Our Montréal portfolio was up by 410 basis points. Our Toronto portfolio was flat, in large part due to two non-renewals in the second quarter that we expect to re-lease promptly at net rental rates above prior in-place rates. Perhaps most encouragingly, our Calgary portfolio was up by 40 basis points.

Storefront retail space in Toronto is very much in demand. We leased a key corner at King & Spadina to The Toronto Travel Centre and SoulCycle earlier this year. Not only are these retailers ideal for the neighbourhood and our portfolio, the net rents achieved reflect significant retail strengthening along King West. Although storefront retail space in downtown Calgary is understandably weaker, we leased 7,403 square feet at The Burns Building to a local food-service business at respectable levels of net rent in relation to our cost base.

6

Demand from TAMI tenants for office space in Montreal remains strong. 5445-5455 de Gaspé was 80% leased at the end of the first half, in large part as a result of another expansion by Ubisoft and new leases to SunLife Financial and Regus. The rental component of Le Nordelec was 73% leased on acquisition in early June. Since then, we’ve increased the leased area to 77% as a result of three expansions aggregating 24,600 square feet. We’ve entered into another expansion negotiation for 109,000 square feet, which if completed would bring the leased area to 90%.

Demand for office space in downtown Toronto is exceptionally strong. Net-effective rental rates in our Class I portfolio have risen to record levels this year. The lease of 112,000 square feet of space to Shopify in the first half enabled us to initiate the construction of King Portland Centre. We’re now negotiating with two prospective office tenants for King Portland Centre, one requiring 50,000 square feet and the other 70,000 square feet. We’ve also accommodated the expansion of Synaptive Medical by 27,600 square feet at 555 Richmond West, bringing the leased area to 99%.

We completed over $260 million of accretive acquisitions in the first half of the year, materially more than I initially expected. Our balance-sheet metrics remained strong, with our debt ratio at 40% and our interest coverage ratio coming in at 3.0:1. Our pool of unencumbered properties grew to $2 billion, up 40% from the same time last year. Because our commitment to the balance sheet remains unwavering, we intend to bring our debt ratio back down to our target level of 35% in due course.

We remain committed to selling our small number of non-core assets. We’ve sold one of our three properties in Victoria and have the other two under firm contract to sell. We’ve also sold a small, non-core property in each of Toronto (145 Berkeley) and Winnipeg (138 Portage). With these transactions completed, we’ve turned our attention to exiting the Québec City market. In addition to enabling us to redeploy capital profitably, selling our non-core assets will enable us to streamline our operations. Once we’ve exited Québec City, we’ll evaluate the Winnipeg and Edmonton markets in the context of our overall business strategy.

OUTLOOK

My confidence in Allied’s near-term and longer-term outlook continues. We expect a return to solid same asset NOI growth this year, enabling us to deliver FFO, AFFO and NAV per unit growth in the mid-single-digit range. My confidence is predicated on the continued intensification of the urban core of Canada’s major cities and the continued desire on the part of office users to locate in distinctive urban office environments, both of which I consider to be secular trends. My confidence is underpinned by ongoing leasing success and recent acquisition success in our target markets. It’s also underpinned by the depth and strength of the Allied team and the team’s ability to execute our strategy at all levels.

* * *

7

Michael Emory president.and.chief.executive.officer

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,

8

Management’s Discussion and Analysis of Results of Operations and Financial Condition as at June 30, 2016

9

Section I

—Overview

This Management’s Discussion and Analysis (“MD&A”) of results of operations and financial condition relates to the quarter ended June 30, 2016. Unless the context indicates otherwise, all references to “Allied”, “the Trust”, “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 August 3, 2016, and should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto for the quarter ended June 30, 2016 and Allied’s 2015 Annual Report. 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”), Net Asset Value (“NAV”), Gross Book Value (“GBV”), 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 of Allied to measure, compare and explain the operating results and financial performance of Allied do not have any standardized meaning prescribed under IFRS and, therefore, should not be construed as alternatives to net income or cash flow from operating activities calculated in accordance with IFRS. These terms are defined in the MD&A and reconciled to the unaudited condensed consolidated financial statements of Allied for the quarter ended June 30, 2016. 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 Financial Performance Measures”, “Net Operating Income”, “Debt” and “Financial Covenants”.

10

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 fair value changes associated with investment properties and financial instruments (“IFRS value changes”). 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 IFRS value is referred to as the fair value of the investment properties in the unaudited condensed consolidated financial statements.

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.

FORWARD LOOKING STATEMENTS

Certain information included in this MD&A contains forward-looking statements within the meaning of applicable securities laws, including, among other things, statements concerning Allied’s objectives and strategies to achieve those objectives, statements with respect to Management’s beliefs, plans, estimates and intentions and statements concerning anticipated future events, circumstances, expectations, results, operations or performance that are not historical facts. Forward-looking statements can be identified generally by the use of forward-looking terminology, such as “indicators”, “outlook”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans”, “continue” or similar expressions suggesting future outcomes or events. In particular, certain statements in the Letter to Unitholders, Section I—Overview, under the headings “Business Overview and Strategy”, “Corporate Social Responsibility” and ‘Business Environment and Outlook”, Section III—Asset Profile, under the headings “Rental Properties”, “Development Properties” and Section IV—Liquidity and Capital Resources, 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 Properties Under Development (“PUDs”); 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 gross leasable area (“GLA”); ability to extend lease terms; the creation of future value; estimated GLA, NOI and growth from PUDs; estimated costs of PUDs; future economic occupancy; return on investments, including yield on cost of PUDs; estimated rental NOI and anticipated rental rates; lease up of our intensification projects; anticipated available square feet of leasable area; management’s plans to put additional buildings forward for certification; our ability to achieve risk-adjusted returns on intensification; 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.

11

The forward-looking statements in this MD&A are not guarantees of future results, operations or performance and are based on estimates and assumptions that are subject to risks and uncertainties, including those described in Section IX - Risks and Uncertainties, which could cause actual results, operations or performance to differ materially from the forward-looking statements in this MD&A. Those risks and uncertainties include risks associated with property ownership, property development, geographic focus, asset-class focus, competition for real property investments, financing and interest rates, government regulations, environmental matters, construction liability and taxation. Material assumptions that were made in formulating the forward-looking statements in this MD&A include the following: that our current target markets remain stable, with no material increase in supply of directly-competitive office space; that acquisition capitalization rates remain reasonably constant; that the trend toward intensification within our target markets continues; and that the equity and debt markets continue to provide us with access to capital at a reasonable cost to fund our future growth and potentially refinance our mortgage debt as it matures. Although the forward-looking statements contained in this MD&A are based on what Management believes are reasonable assumptions, there can be no assurance that actual results, operations or performance will be consistent with these statements.

All forward-looking statements in this MD&A are qualified in their entirety by this forward-looking disclaimer. Without limiting the generality of the foregoing, the discussion in the Letter to Unitholders, Section I— Overview and Section III—Asset Profile are qualified in their entirety by this forward-looking disclaimer. These statements are made as of August 3, 2016, 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.

12

Portfolio

Number of properties 156 146 148

Total rental GLA (000’s of square feet) 11,639 10,451 10,421

Leased rental GLA (000’s of square feet) 10,593 9,461 9,516

Leased area 91.0% 90 .5% 91 .3%

Occupied area 89.1% 89 .0% 90 .6%

Average in place net rent per occupied square foot (period-end) 19.97 20 .34 19 .85

Estimated market rent per occupied square foot (period-end) 20.76 21 .38 20 .72

Investment properties 4,599,657 4,008,398 4,197,277

Total assets 4,882,154 4,296,957 4,455,946

Cost of PUD as % of GBV 5.7% 3 .8% 4 .7%

Unencumbered investment properties 1,990,460 1,423,535 1,619,465

Total debt 1,949,110 1,506,858 1,587,503

Net asset value 2,642,969 2,496,050 2,591,731

Annualized Adjusted EBITDA 231,468 223,356 226,830 216,424 219,208

Net debt 1,945,106 1,474,879 1,945,106 1,474,879 1,583,180

Net debt as a multiple of annualized Adjusted EBITDA 8.4x 6 .6x 8.6x 6 .8x 7 .2x

Adjusted EBITDA 57,867 55,839 113,415 108,212 219,208

Interest expense 15,727 14,107 29,622 27,291 52,131

Interest expense as a multiple of Adjusted EBITDA 3.7x 4 .0x 3.8x 4 .0x 4 .2x

Rental revenue from investment properties 94,220 91,023 188,033 180,507 365,401

NOI 56,428 52,994 110,486 105,906 215,452

Same Asset NOI - rental portfolio 49,423 48,442 97,969 95,832 183,002

Same Asset NOI - total portfolio 53,963 52,320 106,665 103,497 199,091

Net income excluding loss on disposal and IFRS value adjustments 35,045 37,130 69,875 71,454 144,671

Net income 69,145 126,942 106,613 123,313 254,367

FFO 42,466 41,959 84,528 81,377 168,610

JUNE 30, 2016

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2015

DECEMBER 31, 2015

YEAR ENDEDTHREE MONTHS ENDED SIX MONTHS ENDED

($000’s except per-square foot, per-unit and other data)

SUMMARY OF KEY FINANCIAL AND OPERATING PERFORMANCE MEASURES

The following table summarizes the key financial and operating performance measures for the three and six months ended June 30, 2016, June 30, 2015 and the year ended December 31, 2015.

13

AFFO 36,247 33,811 70,942 69,564 140,683

Distributions 29,467 28,404 58,900 56,385 113,674

Per unit:

Rental revenue from investment properties 1.20 1 .17 2.39 2 .33 4 .70

NOI 0.72 0 .68 1.41 1 .37 2 .77

Net income excluding loss on disposal and IFRS value adjustments 0.45 0 .48 0.89 0 .92 1 .86

Net income 0.88 1 .63 1.36 1 .59 3 .27

FFO 0.54 0 .54 1.08 1 .05 2 .17

AFFO 0.46 0 .43 0.90 0 .90 1 .81

AFFO payout ratio 81.3% 84 .0% 83.0% 81 .1% 80 .8

Distributions 0.38 0 .37 0.75 0 .73 1 .46

Net asset value 33.63 32 .08 33 .05

Actual units outstanding 78,589,519 77,799,308 78,430,153

Weighted average diluted units outstanding 78,717,035 77,839,513 78,631,138 77,331,276 77,773,683

Financial Ratios ALLIED’S TARGETS

Total indebtedness ratio <40% 40.0% 35 .1% 35 .8%

Secured indebtedness ratio <45% 24.2% 29 .0% 27 .0%

Debt service coverage ratio >1.50x 2.2x 2 .1x 2 .2x

Unencumbered property asset ratio >1.40x 2.6x 5 .4x 4 .1x

Interest-coverage ratio - including interest capitalized >3.0x 3.0x 3 .1x 3 .1x

JUNE 30, 2016

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2015

DECEMBER 31, 2015

YEAR ENDEDTHREE MONTHS ENDED SIX MONTHS ENDED

($000’s except per-square foot, per-unit and other data)

14

BUSINESS OVERVIEW AND STRATEGY

Allied is an unincorporated closed-end real estate investment trust created pursuant to the Declaration of Trust (“Declaration”) dated October 25, 2002, as amended and restated from time to time, most recently May 12, 2016. 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 its 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. This 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 by retrofitting a portion of 905 King Street West and a portion of 250 Front Street West with a view to serving its tenants’ space requirements more fully.

15

PROPERTY MANAGEMENT

Allied’s wholly owned subsidiary, Allied Properties Management Limited Partnership (the “Property Manager”), provides property management and related services on a fee-for-services basis.

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 of GLA. As of June 30, 2016, Allied had assets of $4.9 billion, a market capitalization of $3.0 billion and rental properties with 11.6 million square feet of GLA in ten cities across Canada. The illustration below depicts the geographic diversity of Allied’s rental portfolio.

16

ACQUISITIONS

During the six months ended June 30, 2016, Allied acquired the following properties:

816-838 11th SW, Calgary (2) February 29, 2016 $10,534 10,119 13,617 23,736 59

64 Jefferson, Toronto March 29, 2016 32,396 78,820 — 78,820 120

Le Nordelec Portfolio (Rental and Development), Montréal (3) May 31, 2016 172,986 804,676 59,310 863,986 520

Redbourne Portfolio, Montréal (4) May 31, 2016 56,607 241,210 39,922 281,132 380

Total $272,523 1,134,825 112,849 1,247,674 1,079

(1) Purchase price plus transaction costs.(2) Equal two-way co-ownership with First Capital Realty, with total estimated GLA of 47,472 at 100%.(3) For property count purposes, this acquisition is split into two components: rental and development.(4) For property count purposes, this acquisition is split into four properties: 3510 Saint-Laurent, 480 Saint-Laurent, 740 Saint-Maurice and 8 Place du

Commerce.

ACQUISITION DATE

ACQUISITION COST (1)

OFFICE GLA

RETAIL GLAPROPERTY TOTAL

GLAPARKING SPACES

57 Spadina, Toronto (1) February 17, 2016 $9,615 8,084 8,566 16,650 —

Total $9,615 8,084 8,566 16,650 —

(1) Undivided 50% interest

DISPOSITION DATE

SALE PRICE

OFFICE GLA

RETAIL GLAPROPERTY

TOTAL GLA

PARKING SPACES

DISPOSITIONS

During the six months ended June 30, 2016, Allied disposed of the following:

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.

17

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 thirteen 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.

BUSINESS ENVIRONMENT AND OUTLOOK

As of June 30, 2016, Allied was operating in 10 urban markets in Canada – Toronto, Kitchener, Ottawa, Montréal, Québec City, Winnipeg, Calgary, Edmonton, Vancouver and Victoria. Subsequent to June 30, 2016, with the sale of the two properties in Victoria, British Columbia, and consistent with Allied’s previously disclosed business strategy, Allied will exit that market.

The office inventory statistics are summarized in the table below:

Toronto 87,800,000 16,100,000 4,429,314 96 .0% 27 .5%

Kitchener 2,400,000 1,000,000 534,552 97 .7% 53 .5%

Ottawa 18,700,000 1,700,000 222,016 99 .7% 13 .1%

Montréal 47,100,000 17,500,000 4,267,730 87 .2% 24 .4%

Québec City 19,000,000 1,500,000 223,366 64 .5% 14 .9%

Winnipeg 10,300,000 1,800,000 342,747 82 .5% 19 .0%

Calgary 49,300,000 2,900,000 1,006,920 87 .8% 34 .7%

Edmonton 15,800,000 1,000,000 286,107 94 .3% 28 .6%

Vancouver 33,300,000 4,000,000 284,903 89 .4% 7 .1%

Victoria 4,900,000 2,400,000 41,578 100 .0% 1 .7%

Total 288,600,000 49,900,000 11,639,233 91 .0% 23 .3%

TOTAL OFFICE INVENTORY

ALLIED’S ESTIMATED SHARE OF

TARGET MARKET

ESTIMATED TARGET MARKET

INVENTORY

ALLIED CURRENT

GLA

PERIOD END ALLIED

LEASED RATE

18

Allied expects its operating and development environment to be generally favourable in 2016, and its acquisition environment has proven to be more favourable than initially expected. Allied expects a return to solid same asset NOI growth in 2016, enabling it to deliver FFO, AFFO and NAV per unit growth in the mid-single-digit range.

Allied’s outlook is predicated on the continued intensification of the urban core of Canada’s major cities and the continued desire on the part of office users to locate in distinctive urban office environments. Allied’s outlook is underpinned by ongoing leasing success and recent acquisition success in its target markets. It is also underpinned by the depth and strength of the Allied team and the team’s ability to execute Allied’s strategy at all levels.

19

Section II

—Leasing

20

Allied strives to maintain high levels of occupancy and leased area. At June 30, 2016, Allied’s rental portfolio was 91% leased.

STATUS

Leasing status for the rental portfolio as at June 30, 2016, is summarized in the following table:

Leased Area (Occupied & Committed)

December 31, 2015 $19 .85 $20 .72 9,516,372 91.3%

Vacancy Committed for Future Leases (73,952)

Occupancy - December 31, 2015 (Adjusted) 9,442,420 90.6%

Previous Committed Vacant Space now Occupied $15 .66 $17 .19 164,224

New Leases on Vacant Space $19 .74 $17 .86 70,374

Expansions into Vacant Space $14 .71 $14 .75 21,571

Vacancies $16 .92 $15 .95 (185,710)

Surrender / Early Termination Agreement (132,046)

Office, Residential & Storage Suite Additions 1,986

Remeasurements 13,371

Occupancy (Pre Acquisitions, Dispositions, 9,396,190 90.2% and Transfers)

Occupancy Related to Acquired Properties 936,287

Occupancy Related to Disposed Properties (16,650)

Occupancy Related to Transfers from PUD 58,988

Occupancy Related to Transfers to PUD (6,699)

Occupancy - June 30, 2016 10,368,116 89.1%

Vacancy Committed for Future Leases 224,385

Leased Area (Occupied & Committed), June 30, 2016 $19 .97 $20 .76 10,592,501 91.0%

(1) Excludes properties under development

WEIGHTED AVERAGE RATE

CURRENT RENT (PER SF)

WEIGHTED AVERAGE RATE MARKET RENT

(PER SF) GLAAS A % OF

TOTAL GLA (1)

21

Of 11,639,233 square feet of total GLA in Allied’s rental portfolio, 10,368,116 square feet were occupied by tenants on June 30, 2016. Another 224,385 square feet were subject to contractual lease commitments with tenants whose leases commence subsequent to June 30, 2016, bringing the leased area to 10,592,501 square feet, which represents 91% of Allied’s total GLA.

Allied monitors the level of sub-lease space in its rental portfolio. Below is a summary of sub-lease space currently being marketed by city as at June 30, 2016 and December 31, 2015:

Lease commitments - GLA 196,748 8,929 18,708 224,385

% of lease commitments 88% 4% 8% 100%

Q3 2016 Q4 2016 THEREAFTER TOTAL

Toronto 18,148 113,563

Kitchener 1,116 2,061

Ottawa — —

Montréal 21,284 26,645

Québec City — —

Winnipeg — 4,223

Calgary 15,110 12,937

Edmonton 1,645 1,645

Vancouver — —

Victoria — 3,876

Total square feet 57,303 164,950

% of Total GLA 0.5% 1 .6%

JUNE 30, 2016 DECEMBER 31, 2015

This level of marketed sublease space is consistent with past experience and does not represent an operating or leasing challenge.

ACTIVITY

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

22

Vacancy on January 1, 2016, including re-measurement 939,141 309,718 33 .0% 629,423

Acquired vacancy as at June 30, 2016 224,886 21,003 9 .3% 203,883

Arranged vacancy as at June 30, 2016 99,935 2,609 2 .6% 97,326

Maturities as at June 30, 2016 609,471 493,371 81 .0% 116,100

Maturities in remainder of 2016 338,298 115,356 34 .1% —

Total 2,211,731 942,057 42 .6% 1,046,732

LEASABLE SFLEASED SF BY

JUNE 30% LEASED BY

JUNE 30UNLEASED SF AT

JUNE 30

At the beginning of 2016, 939,141 square feet of GLA was vacant. By the six months ended June 30, 2016, Allied leased 309,718 square feet of this GLA, leaving 629,423 square feet unleased.

Acquired vacancy in the period totaled 224,886 square feet of GLA, of which 21,003 square feet were leased by June 30, 2016. Subsequent to June 30, 2016, an additional three expansions aggregating 24,600 square feet have taken place at Le Nordelec. This has resulted in leased area totaling 76% at Le Nordelec, up from 73% when it was acquired on May 31, 2016.

Leases for 609,471 square feet of GLA matured in the period ended June 30, 2016, at the end of which Allied renewed or replaced leases for 493,371 square feet of this GLA, leaving 116,100 square feet unleased.

For the six months ended June 30, 2016, the table below summarizes the rental rates achieved for the leases that were either renewed or replaced. Overall, this has resulted in an increase of 4.0% in the net rental income per square foot from maturing leases.

Leasing activity in connection with the rental portfolio as at June 30, 2016, is summarized in the following table:

% of Total Leased SF 52 .50% 14 .40% 33 .10%

Renewals - Weighted average rent $16 .85 $18 .27 $22 .57

Replacements - Weighted average rent $20 .50 $18 .27 $19 .06

ABOVE IN-PLACE RENTS

AT IN-PLACE RENTS

BELOW IN-PLACE RENTS

LEASE RENEWALS/REPLACEMENTS

FOR THE SIX MONTHS ENDED, JUNE 30, 2016

23

WEIGHTED AVERAGE REMAINING LEASE

TERM (YEARS)CREDIT RATING

DBRS/S&P/MOODY’S

% OF RENTAL REVENUE

JUNE 30, 2016

Equinix 3 .0% 8 .8 -/BB/Ba3

Ubisoft 2 .4% 7 .5 Not rated

Desjardins 2 .3% 2 .5 AA/A+/Aa2

National Capital Commission (a Canadian Crown Corporation) 2 .1% 19 .1 Not rated

Cologix 2 .0% 10 .8 Not rated

Entertainment One 1 .7% 12 .0 -/B+/Ba3

Morgan Stanley 1 .4% 4 .3 AH/BBB+/A3

Allstream 1 .3% 2 .7 * -/B/B2

Bell Canada 1 .3% 4 .1 AL/BBB+/Baa1

SAP Canada 1 .3% 5 .2 * -/A/A2

18 .8%

*Credit rating for parent company

TENANT

The following sets out the percentage of rental revenue from top 10 tenants by rental revenue for the period ended June 30, 2016:

Business service and professional 29 .9%

Telecommunications and information technology 28 .8%

Media and entertainment 13 .4%

Retail (head office and storefront) 11 .9%

Other 6 .3%

Financial services 4 .7%

Government 3 .1%

Educational and institutional 1 .9%

100 .0%

% OF RENTAL REVENUE JUNE 30, 2016CATEGORY

TENANT PROFILE

The following sets out Allied’s tenant-mix on the basis of percentage of rental revenue for the six months ended June 30, 2016:

24

Month to month 169,918 1 .5% $15 .16 $17 .43

December 31, 2016 498,219 4 .3% 14 .64 18 .13

December 31, 2017 1,102,977 9 .5% 19 .21 19 .91

December 31, 2018 1,198,292 10 .3% 20 .53 21 .65

December 31, 2019 964,617 8 .3% 22 .12 22 .09

December 31, 2020 1,081,682 9 .3% 19 .05 18 .90

December 31, 2021 1,171,211 10 .1% 19 .82 21 .21

December 31, 2022 974,103 8 .4% 20 .24 20 .71

December 31, 2023 931,808 8 .0% 17 .09 17 .59

December 31, 2024 446,379 3 .8% 20 .33 21 .82

December 31, 2025 559,709 4 .8% 28 .01 28 .39

Thereafter 1,493,586 12 .7% 20 .32 20 .90

(1) Included in the table above is GLA that is expected to be transferred to the developmental portfolio in the near term.

SQUARE FEET

% OF TOTAL GLA

WEIGHTED AVERAGE

RENTAL RATE

ESTIMATED WEIGHTED

AVERAGE MARKET RENTAL RATE (1)

TOTAL RENTAL PORTFOLIO

LEASE MATURITY

As at June 30, 2016, 91.0% of the GLA in Allied’s rental portfolio was leased. The weighted average term to maturity of Allied’s leases at that time was 5.8 years. The square footage maturing by December 31, 2016, does not include month-to-month leases for 169,918 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 relevant properties. There can be no assurance that Management’s current estimates are accurate or that they will not change with the passage of time.

The following table contains information on the office and retail leases that mature up to 2025 and thereafter, assuming tenants do not exercise renewal options, and the corresponding estimated weighted average market rental rate:

25

26

Month to month 86,071 1 .7% $20 .65 $23 .03

December 31, 2016 224,350 4 .5% 16 .62 23 .56

December 31, 2017 439,887 8 .9% 21 .59 26 .79

December 31, 2018 649,743 13 .1% 24 .58 28 .63

December 31, 2019 416,372 8 .4% 26 .67 30 .90

December 31, 2020 516,426 10 .4% 22 .32 23 .57

December 31, 2021 378,979 7 .6% 25 .57 29 .78

December 31, 2022 608,110 12 .3% 21 .29 23 .49

December 31, 2023 154,984 3 .1% 22 .40 26 .85

December 31, 2024 220,151 4 .4% 21 .63 26 .06

December 31, 2025 314,030 6 .3% 34 .78 37 .82

Thereafter 764,188 15 .4% 27 .15 27 .68

(1) Included in the table above is GLA that is expected to be transferred to the developmental portfolio in the near term.

SQUARE FEET

% OF REGIONAL GLA

WEIGHTED AVERAGE

RENTAL RATE

ESTIMATED WEIGHTED

AVERAGE MARKET RENTAL RATE (1)CENTRAL CANADA

The following tables contain information on the office and retail lease maturities by region:

Month to month 55,756 1 .2% $8 .44 $12 .01

December 31, 2016 161,427 3 .4% 9 .71 12 .89

December 31, 2017 483,333 10 .3% 15 .84 15 .26

December 31, 2018 283,135 6 .0% 14 .84 14 .55

December 31, 2019 354,065 7 .5% 17 .99 14 .79

December 31, 2020 307,705 6 .5% 16 .18 14 .96

December 31, 2021 598,628 12 .7% 15 .60 15 .62

December 31, 2022 298,347 6 .3% 16 .37 14 .92

December 31, 2023 591,763 12 .6% 13 .16 15 .29

December 31, 2024 105,629 2 .2% 13 .98 15 .45

December 31, 2025 132,687 2 .8% 14 .90 14 .45

Thereafter 713,769 15 .2% 12 .92 13 .69

SQUARE FEET

% OF REGIONAL GLA

WEIGHTED AVERAGE

RENTAL RATE

ESTIMATED WEIGHTED

AVERAGE MARKET RENTAL RATEEASTERN CANADA

27

Month to month 28,091 1 .4% $11 .70 $11 .03

December 31, 2016 112,442 5 .7% 17 .77 14 .83

December 31, 2017 179,757 9 .2% 22 .42 15 .55

December 31, 2018 265,414 13 .5% 16 .71 12 .16

December 31, 2019 194,180 9 .9% 19 .91 16 .50

December 31, 2020 257,551 13 .1% 15 .93 14 .25

December 31, 2021 193,604 9 .9% 21 .64 21 .73

December 31, 2022 67,646 3 .4% 27 .84 21 .34

December 31, 2023 185,061 9 .4% 25 .20 17 .19

December 31, 2024 120,599 6 .1% 23 .53 19 .64

December 31, 2025 112,992 5 .8% 24 .60 18 .53

Thereafter 15,629 0 .8% 23 .78 19 .18

SQUARE FEET

% OF REGIONAL GLA

WEIGHTED AVERAGE

RENTAL RATE

ESTIMATED WEIGHTED

AVERAGE MARKET RENTAL RATEWESTERN CANADA

28

Section III

—Asset Profile

As at June 30, 2016, Allied’s portfolio consisted of 156 investment properties (137 rental properties, nine development properties and ten ancillary parking facilities), with an IFRS value of $4,599,657.

Balance, beginning of period $3,928,168 $363,028 $4,291,196 $3,854,076 $343,201 $4,197,277

Additions:

Acquisitions 195,093 34,500 229,593 238,023 34,500 272,523

Transfers from PUD 22,633 (22,633) — 22,633 (22,633) —

Transfers to PUD — — — (10,992) 10,992 —

Capital expenditures 13,928 15,103 29,031 32,927 47,749 80,676

Dispositions — — — (9,615) — (9,615)

Freehold lease and land leases — 13,426 13,426 — 14,741 14,741

IFRS value gain (loss) 55,409 (18,998) 36,411 88,179 (44,124) 44,055

Balance, end of period $4,215,231 $384,426 $4,599,657 $4,215,231 $384,426 $4,599,657

RENTAL PROPERTIES

RENTAL PROPERTIESTOTAL

JUNE 30, 2016

THREE MONTHS ENDED

JUNE 30, 2016

SIX MONTHS ENDED

TOTAL

PROPERTIES UNDER

DEVELOPMENT

PROPERTIES UNDER

DEVELOPMENT

The IFRS value (or the “fair value”, as referred to in the unaudited condensed consolidated financial statements) for each investment property is the value assigned to it for the purpose of Allied’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016.

29

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 either a comparable sales method or 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 analyzes the changes in IFRS values at the end of each reporting period during the quarterly valuation discussions with the independent appraiser.

The capitalization rate for each rental property is the rate used in determining the IFRS value assigned to it. In valuing our portfolio as at June 30, 2016, the appraiser used capitalization rates ranging from 4.0% to 8.0%, the high-point being the capitalization rate associated with our property at 6300 Avenue du Parc. The portfolio weighted average overall capitalization rate was 6.0%.

JUNE 30, 2016 DECEMBER 31, 2015

Central Region 4.00% - 7.25% 5.8% 4 .00% - 7 .25% 5 .8%

Eastern Region 5.75% - 8.00% 6.2% 5 .75% - 8 .00% 6 .2%

Western Region 4.50% - 7.50% 5.8% 4 .50% - 7 .50% 5 .8%

Rental Properties 4.00% - 8.00% 5.9% 4 .00% - 8 .00% 5 .9%

Properties Under Development 7.00% - 7.75% 7.0% 7 .00% - 7 .75% 7 .3%

Total Investment Properties 4.00% - 8.00% 6.0% 4 .00% - 8 .00% 6 .0%

RANGE % RANGE %WEIGHTED AVERAGE %

WEIGHTED AVERAGE %

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 telecommunication and information technology 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.

30

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. Since Allied has captured the unutilized land value at a low cost, it can achieve attractive risk-adjusted returns on intensification.

TOP-10 RENTAL PROPERTIES

Listed below are Allied’s top 10 rental properties, measured by Last Quarter Annualized (“LQA”) NOI which represents the most recent completed quarter results multiplied by four. These properties represent 42.0% of total NOI for the period ended June 30, 2016.

151 Front West, Toronto $28,148 $390,070 $385,619 7 .25% Allstream, Bell, Cologix, Equinix

Cité Multimédia, Montréal 18,140 319,650 295,057 5 .75% Desjardins, Morgan Stanley, Resolute

QRC West, Toronto 10,484 190,740 166,393 4 .75% Arc Productions, Sapient Canada, eOne

The Chambers, Ottawa 8,143 151,140 144,726 5 .75% National Capital Commission

Vintage I & II, Calgary 5,914 107,710 101,757 6 .00% Royal & Sun Alliance

555 Richmond West, Toronto 5,748 110,040 106,380 5 .75% Sentinelle Medical

The Tannery, Kitchener 5,153 77,030 73,254 6 .50% Desire 2 Learn, Google

5455 de Gaspe, Montreal 4,766 70,830 55,758 7 .50% Ubisoft, Attraction Media

QRC East, Toronto 4,295 87,220 81,962 5 .25% Key Media, Publicis

60 Adelaide East, Toronto 4,026 51,930 48,505 5 .25% Legend 3D Canada, Logiq3, Verizon

Total $94,817 $1,556,360 $1,459,411 6 .09%

LQA NOI CAP RATEAPPRAISED

VALUEIFRS

VALUEPRINCIPAL

TENANTS BY NOIPROPERTY NAME

31

Estimated GLA is based on applicable standards of area measurement and the expected or actual outcome of re-zoning.

These properties are currently generating NOI and will continue to do so until Allied initiates construction. With respect to the ultimate intensification of these properties, a significant amount of pre-leasing will be required on the larger projects before construction commences. The design-approval costs have been, and will continue to be, funded by Allied for its share.

DEVELOPMENT PROPERTIES

Development is another way to create value and a particularly effective one for Allied, given the strategic positioning of its portfolio in the urban areas of Canada’s major cities. Urban intensification is the single most important trend in relation to Allied’s business. Not only does it anchor Allied’s investment and operating focus, it provides the context within which Allied creates value for its unitholders. 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.

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

College & Manning (1) $12,500 $12,209 $612 Completed Office, limited retail, 31,581 56,500 2020 residential

QRC West, Phase II 29,700 29,642 1,184 Completed Office, retail 32,439 90,000 Unscheduled

King & Peter 61,950 61,260 1,400 Completed Office, limited retail 91,620 790,000 Unscheduled

King & Spadina (2) 127,130 126,877 3,382 In progress Office, retail, residential 107,189 650,000 Unscheduled

Union Centre 82,000 80,974 1,273 Completed Office, limited retail 40,571 1,129,000 Unscheduled

The Well (3) 152,104 151,645 1,318 In progress Office, retail, residential 101,183 1,240,000 Unscheduled

Total $465,384 $462,607 $9,169 404,583 3,955,500

(1) Equal two-way co-ownership with RioCan Real Estate Investment Trust (“RioCan”), total estimated GLA is 113,000 square feet.(2) Allied plans to redevelop this project with its current joint-venture partner Westbank. Allied will own an undivided 50% interest of the proposed joint

arrangement. The figures listed in the table above are currently at 100% ownership.(3) 40/40/20 co-ownership with RioCan and Diamond Corp., total estimated GLA is 3,100,000 square feet.

REZONING APPROVAL

STATUSLQA NOI

IFRS VALUE

APPRAISED VALUE USE

CURRENT GLA

ESTIMATED GLA ON

COMPLETIONESTIMATED

COMPLETION

PROPERTY NAME

32

It is expected that development activity will become a more important component of Allied’s growth as projects are completed. The expectation is largely contingent upon completing the development projects in the manner contemplated. The most important factor affecting completion will be successful lease-up of space in the development portfolio. The material assumption is that the office leasing market in the relevant markets remains stable. Pursuant to Allied’s Declaration, the cost of Properties Under Development cannot exceed 15% of GBV. At the end of June 30, 2016, the cost of Allied’s Properties Under Development was 5.7% of GBV ( June 30, 2015 - 3.8%; December 31, 2015 – 4.7%). 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 nine Properties Under Development:

ESTIMATED GLA ON

COMPLETION (SF)

% OF GLA OCCUPIED AT PERIOD END

% OF GLA LEASEDUSE

250 Front West, Toronto Telecommunications and IT 173,800 38% 54%

180 John, Toronto Office 46,000 — 100%

189 Joseph, Kitchener Office 26,040 — 100%

TELUS Sky, Calgary (1) (2) Office, retail, residential 223,000 — 32%

Adelaide & Duncan, Toronto (1) (3) Office, retail, residential 225,500 55% —

College & Palmerston, Toronto (1) Office, retail 12,500 — 30%

King Portland Centre, Toronto (1) (4) Office, retail, residential 211,300 — 44%

Le Nordelec - Development, Montreal Office, retail, residential TBD 16% —

138 Portage East, Winnipeg (5) — — — —

Total 918,140

(1) These properties are co-owned, reflected in the table above at Allied’s ownership.(2) The GLA components (in square feet) at our 33.33% share are as follows: 148,000 of office, 70,000 of residential and 5,000 of retail. 32% of the

office space is leased, representing 21% of the total GLA.(3) The GLA components (in square feet) at our 50% share are as follows: 155,800 of residential, 58,300 of office and 11,400 of retail.(4) The GLA components (in square feet) at our 50% share are as follows: 156,250 of office, 48,550 of residential and 6,500 of retail.(5) This property has been sold subsequent to June 30, 2016.

33

The following table sets out the fair value of Allied’s Properties Under Development, as at June 30, 2016, as well as Management’s estimates with respect to the financial outcome on completion:

250 Front West, Toronto Q4 2016 $261,390 $257,177 $5,369 $26,000 - $28,000 $140,000 18 .0% - 20 .0% $15,000

180 John, Toronto Q1 2017 10,580 9,970 — 1,500 - 1,700 26,500 5 .7% - 6 .4% 16,000

189 Joseph, Kitchener Q2 2017 2,360 1,962 — 670 - 880 12,000 5 .6% - 7 .3% 10,300

TELUS Sky, Calgary (1) Q4 2018 33,233 33,040 — 8,000 - 9,600 133,000 6 .0% - 7 .2% 99,945

Adelaide & Duncan, Toronto (1) Q4 2018 27,260 27,260 92 8,250 - 9,500 149,000 5 .5% - 6 .4% 121,404

College & Palmerston, Toronto (1) Q4 2018 3,995 3,995 — 400 - 500 11,000 3 .6% - 4 .5% 5,540

King Portland Centre, Toronto (2) Q1 2019 14,000 13,302 — 6,750 - 7,900 114,000 5 .9% - 6 .9% 85,948

Le Nordelec - Development, Montreal Unscheduled 34,500 34,500 46 — TBD TBD TBD

138 Portage East, Winnipeg (3) — 3,220 3,220 — — — — —

(1) These properties are co-owned, reflected in the table above at Allied’s ownership percentage of assets and liabilities.(2) The King Portland Centre is a co-owned project and reflected in the table above at Allied’s ownership percentage of assets and liabilities. The estimated

costs to complete are net of $21,000 in land value which was previously acquired.(3) This property has been sold subsequent to June 30, 2016.

TRANSFER TO RENTAL PORTFOLIO

ESTIMATED ANNUAL

NOILQA NOI

IFRS VALUE

APPRAISED VALUE

ESTIMATED TOTAL COST

ESTIMATED COST TO

COMPLETE

ESTIMATED YIELD

ON COST

Due to more extensive build out of the space for tenants in 250 Front West, the previously scheduled occupancy in the second quarter of 2016 will now take place in the fourth quarter of 2016:

At December 31, 2015 29,000 17%

Q1 2016 37,000 21%

Q4 2016 27,000 16%

Total 93,000 54%

% OF TOTAL GLAGLACOMMENCEMENT DATE

The appraised value of Properties Under Development is measured using either a comparable sales method or 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.

34

Transfer to the rental portfolio occurs when the property is capable of operating in the manner intended by Management. Generally this occurs upon completion of construction and receipt of all necessary occupancy and other material permits. Estimated annual NOI is based on 100% economic occupancy. The most important factor affecting estimated annual NOI will be successful lease-up of vacant space in the development properties at current levels of net rent per square foot. The material assumption is that the office leasing market in the relevant markets remains stable. Estimated total cost includes acquisition cost, estimated total construction 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 yield on cost is the estimated annual NOI as a percentage of the estimated total cost. Estimated cost to complete is the difference between the estimated total cost and the costs incurred to date.

35

Section IV

—Liquidity and Capital Resources

Allied’s liquidity and capital resources are used to fund capital investments including development activity, leasing costs, interest expense and distributions to Unitholders. The primary source of liquidity is net operating income generated from rental properties, which is dependent on rental and occupancy rates, the structure of lease agreements, leasing costs, and the rate and amount of capital investment and development activity, among other variables.

Allied has financed its operations through the use of equity, mortgage debt secured by rental properties, construction loans, an unsecured operating line, senior unsecured debentures and unsecured term loans. Conservative financial management has been consistently applied through the use of long term, fixed rate, debt financing. Allied’s objective is to maximize financial flexibility while continuing to strengthen the balance sheet. Management intends to achieve this by continuing to access the unsecured debenture market, unsecured loans and growing the pool of unencumbered assets, which totals $2.0 billion as at June 30, 2016.

36

Mortgages payable $1,144,493 $1,172,468

Construction loans payable 33,181 21,789

Unsecured revolving operating facility 49,085 19,598

Senior unsecured debentures 373,457 224,161

Unsecured term loans 348,894 149,487

Total debt $1,949,110 $1,587,503

Less cash and cash equivalents 4,004 4,323

Net debt $1,945,106 $1,583,180

JUNE 30, 2016 DECEMBER 31, 2015

The table below summarizes the scheduled principal maturity for Allied’s Mortgages payable, Unsecured Debentures (as defined below) and Unsecured Term Loans (as defined below).

Remaining 2016 $42,409 4 .15% $— — $— — $42,409 4 .15%

2017 158,554 3 .93% — — — — 158,554 3 .93%

2018 90,753 5 .41% — — 150,000 2 .65% 240,753 3 .69%

2019 160,630 6 .26% — — — — 160,630 6 .26%

2020 29,987 5 .20% 225,000 3 .75% — — 254,987 3 .92%

2021 129,059 4 .18% — — 200,000 2 .86% 329,059 3 .38%

2022 120,721 4 .18% 150,000 3 .93% — — 270,721 4 .04%

2023 237,378 4 .72% — — — — 237,378 4 .72%

2024 168,764 4 .30% — — — — 168,764 4 .30%

2025 8,960 3 .63% — — — — 8,960 3 .63%

$1,147,215 4 .70% $375,000 3 .82% $350,000 2 .75% $1,872,215 4 .16%

MORTGAGES

W/A INTEREST

RATE

W/A INTEREST

RATE

W/A INTEREST

RATEUNSECURED TERM LOANS TOTAL

SENIOR UNSECURED

DEBENTURES

CONSOLIDATED W/A INTEREST

RATE

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 June 30, 2016 and December 31, 2015:

37

The chart below summarizes the maturities of principal in regards to Allied’s various obligations as at June 30, 2016.

MORTGAGES PAYABLE

Mortgages payable as at June 30, 2016, totaled $1,144,493 and have a weighted average stated interest rate of 4.7% (December 31, 2015 - 4.7%). The weighted average term of the mortgage debt is 5.4 years (December 31, 2015 - 5.7 years). The mortgages are secured by a first registered charge over specific investment properties and first general assignments of leases, insurance and registered chattel mortgages.

38

The following table contains information on the remaining contractual mortgage maturities:

Remaining 2016 $18,293 $24,116 $42,409

2017 34,667 123,887 158,554

2018 33,853 56,900 90,753

2019 31,265 129,365 160,630

2020 25,531 4,456 29,987

2021 24,715 104,344 129,059

2022 20,619 100,102 120,721

2023 16,421 220,957 237,378

2024 3,438 165,326 168,764

2025 172 8,788 8,960

Mortgages, principal $208,974 $938,241 $1,147,215 $1,177,514

Net discount on assumed mortgages 2,634 568

Net financing costs (5,356) (5,614)

$1,144,493 $1,172,468

PRINCIPAL REPAYMENTS

BALANCE DUE AT MATURITY JUNE 30, 2016

DECEMBER 31, 2015

For the six months ended June 30, 2016, Allied repaid seven mortgages totaling $45,822 with a weighted average interest rate of 5.5%.

CONSTRUCTION LOANS PAYABLE

Allied provided a guarantee (limited to $114,000) to a Canadian chartered bank to support a $342,000 construction lending facility to assist with the financing of construction costs associated with the development of TELUS Sky, in which Allied has a 33.33% joint arrangement interest. The loan matures on August 31, 2019, and bears interest at bank prime plus 70 basis points or banker’s acceptance rate plus 195 basis points. Allied’s obligation of the balance outstanding under the facility as at June 30, 2016 was $11,624 (December 31, 2015 - $3,126).

Allied has provided a guarantee (limited to $22,870) to a Canadian chartered bank to support a $45,740 construction lending facility to assist with the financing of construction costs associated with the development of the Breithaupt Block project, in which Allied has a 50% joint arrangement interest. On March 23, 2016, the loan maturity was extended to September 30, 2016 (December 31, 2015 - maturity of March 31, 2016). The loan bears interest at bank prime plus 80 basis points or bankers’ acceptance rate plus 180 basis points. Allied’s obligation of the balance outstanding under the facility as at June 30, 2016, was $21,557 (December 31, 2015 - $18,663).

39

UNSECURED REVOLVING OPERATING FACILITY

On January 28, 2015, Allied obtained an unsecured revolving operating facility (the “Unsecured Facility”) of $200,000. The Unsecured Facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $300,000. On April 26, 2016, the limit under the Unsecured Facility was increased to $250,000 and the maturity date was extended to January 29, 2019 (December 31, 2015 - maturity of January 18, 2018). The Unsecured Facility bears interest at bank prime plus 70 basis points or bankers’ acceptance plus 170 basis points, at Allied’s current credit rating. The Unsecured Facility had a balance of $49,085 outstanding at June 30, 2016 (December 31, 2015 - $19,598).

SENIOR UNSECURED DEBENTURES

On May 12, 2016, Allied issued $150,000 of 3.934% Series B unsecured debentures (the “Series B Debentures”) due November 14, 2022, with semi-annual interest payments due on May 14 and November 14 of each year commencing November 14, 2016. Debt financing costs of $801 were incurred and recorded against the principal owing. Funds from the issuance were used to fund acquisitions, repay amounts drawn on the Unsecured Facility and for general working capital purposes.

On May 13, 2015, Allied issued $150,000 of 3.748% Series A unsecured debentures (the “Series A Debentures”) due May 13, 2020, with semi-annual interest payments due on May 13 and November 13 of each year commencing November 13, 2015. Debt financing costs of $1,001 were incurred and recorded against the principal owing. Furthermore, on August 18, 2015, Allied issued an additional $75,000 of 3.748% Series A Debentures with the same terms and conditions as the May 13, 2015, issuance described above. Allied recognized a premium of $731 on the secondary offering of the Series A Debentures. Debt financing costs of $700 were incurred and recorded against the principal owing.

The Series A Debentures and the Series B Debentures are collectively referred to as the “Unsecured Debentures”.

The respective financing costs and premium recognized are amortized using the effective interest method and recorded to Interest Expense.

TELUS Sky 33 .33% $114,000 August 31, 2019 $11,624 $3,126

Breithaupt Block 50% 22,870 September 30, 2016 21,557 18,663

$33,181 $21,789

OWNERSHIP

ALLIED’S GUARANTEE

LIMITDATE OF

MATURITYJUNE 30,

2016DECEMBER 31,

2015

JOINT ARRANGEMENT

40

UNSECURED TERM LOANS

On March 16, 2016, Allied entered into a $150,000 unsecured credit facility with a Canadian chartered bank for a term of five years and bearing interest at a floating rate of CDOR plus 1.70% per year (the “Unsecured Term Facility”). On May 25, 2016, the credit limit for the Unsecured Term Facility was increased to $200,000. Allied drew on the Unsecured Term Facility in two tranches, on March 16, 2016 for $100,000 at an effective interest rate of 2.83%, and on May 25, 2016 for $100,000 at an effective interest rate of 2.89%. The Unsecured Term Facility provides for the interest rate to be adjusted up or down based on changes in the credit rating of the Unsecured Debentures. In addition, Allied entered into interest rate swap agreements which will have the effect of fixing the floating CDOR interest rate for the term of the Unsecured Term Facility. After giving effect to the interest rate swaps, the current effective rate for the Unsecured Term Facility is 2.86%. Financing costs of $700 were incurred and recorded against the principal owing.

Funds from the Unsecured Term Facility were used to fund acquisitions, repay amounts drawn on the Unsecured Facility and for general working capital purposes. The interest rate swap agreements have a notional amount of $200,000.

On December 14, 2015, Allied entered into a credit agreement with a Canadian chartered bank to obtain a $150,000 unsecured term loan in the form of a revolving bankers’ acceptance at prime plus 170 basis points which matures December 14, 2018 (the “Unsecured Term Loan”). Concurrently, with the closing of the Unsecured Term Loan, Allied entered into an interest rate swap agreement to fix the variable interest rate on the bankers’ acceptance to 0.945%, resulting in a total fixed interest rate of 2.645% for the full term of the Unsecured Term Loan. The interest rate swap agreement has a notional amount of $150,000. Financing costs of $522 were incurred and recorded against the principal owing.

Funds from the Unsecured Term Loan were used to repay amounts drawn on the Unsecured Facility and for general working capital purposes.

The Unsecured Term Loan and Unsecured Term Facility are collectively referred to as the “Unsecured Term Loans”.

The respective financing costs are amortized using the effective interest method and recorded to Interest Expense.

Series A 3 .748% May 13, 2020 May 13 and November 13 $225,000 $225,000

Series B 3 .934% November 14, 2022 May 14 and November 14 150,000 —

375,000 225,000

Net financing costs (1,543) (839)

$373,457 $224,161

INTEREST RATE

DATE OF MATURITY

INTEREST PAYMENT DATE

JUNE 30, 2016

DECEMBER 31, 2015SERIES

41

CREDIT RATING

Allied’s credit rating for the Unsecured Debentures is summarized below:

Unsecured Term Loan 2 .645% December 14, 2018 Monthly $150,000 $150,000

Unsecured Term Facility

Tranche 1 2 .83% March 16, 2021 Quarterly 100,000

Tranche 2 2 .89% March 16, 2021 Quarterly 100,000

350,000 150,000

Net financing costs (1,106) (513)

$348,894 $149,487

INTEREST RATE

DATE OF MATURITY

INTEREST PAYMENT

JUNE 30, 2016

DECEMBER 31, 2015

Long-term ratings assigned by DBRS Limited (“DBRS”) provide an opinion of DBRS on the risk of default; that is, the risk that an issuer will fail to satisfy its financial obligations in accordance with the terms under which an obligation has been issued.

DBRS’ long-term credit ratings scale ranges from “AAA” (typically assigned to obligations of the highest credit quality) to “D” (typically assigned to obligations when the issuer has filed under any applicable bankruptcy, insolvency or winding up statute or there is a failure to pay or satisfy an obligation after the exhaustion of grace periods where DBRS believes the default will subsequently be general in nature and include all obligations). A long-term obligation rated “BBB” by DBRS is the fourth highest-rated obligation after those rated “AAA”, “AA” and “A” and is, in DBRS’ view, of adequate credit quality. The capacity for the payment of financial obligations is considered acceptable. DBRS indicates that “BBB” rated obligations may be vulnerable to future events. All DBRS rating categories other than “AAA” and “D” also contain subcategories “(high)” and “(low)”. The addition of either a “(high)” or “(low)” designation indicates the relative standing within a rating category.

Unsecured Debentures DBRS BBB (low) Stable

TRENDLONG-TERM

CREDIT RATINGRATING AGENCYDEBT

42

DBRS uses “rating trends” for its ratings in, among other areas, the real estate investment trust sector. DBRS’ rating trends provide guidance in respect of DBRS’ opinion regarding the outlook for the rating in question, with rating trends falling into one of three categories: “Positive”, “Stable” or “Negative”. The rating trend indicates the direction in which DBRS considers the rating is headed should present circumstances continue, or in some cases, unless challenges are addressed. In general, DBRS assigns rating trends based primarily on an evaluation of the issuing entity or guarantor itself, but may also include consideration of the outlook for the industry or industries in which the issuing entity operates. A “Positive” or “Negative” trend assigned by DBRS is not an indication that a rating change is imminent, but represents an indication that there is a greater likelihood that the rating could change in the future than would be the case if a “Stable” trend was assigned.

The above-mentioned rating assigned to the Unsecured Debentures is not a recommendation to buy, sell or hold any securities of the Trust and may be subject to revision or withdrawal at any time by DBRS.

The Trust has paid customary rating fees to DBRS in connection with the above-mentioned rating. There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered, withdrawn or revised by the rating agency if in its judgment circumstances so warrant.

FINANCIAL COVENANTS

The Unsecured Facility, Unsecured Term Loans and Unsecured Debentures contain numerous financial covenants. Failure to comply with the covenants could result in a default, which, if not waived or cured, could result in adverse financial consequences. The related covenants are as follows:

UNSECURED FACILITY AND UNSECURED TERM LOANS

The following outlines the requirements of covenants as defined in the agreements governing the Unsecured Facility and Unsecured Term Loans.

1) Indebtedness ratio

Allied is required to maintain its indebtedness ratio below 60%.

Total debt $1,949,110

Letters of credit 1,936

Consolidated indebtedness $1,951,046

Consolidated gross book value $4,882,154

Indebtedness ratio 40.0%

JUNE 30, 2016

43

Consolidated indebtedness $1,951,046

Less:

Unsecured Facility (49,085)

Unsecured Debentures (373,457)

Unsecured Term Loans (348,894)

Consolidated secured indebtedness $1,179,610

Consolidated gross book value $4,882,154

Secured indebtedness ratio 24.2%

JUNE 30, 2016

2) Secured indebtedness ratio

Allied is required to maintain its secured indebtedness ratio below 45%.

3) Debt service coverage ratio

On a twelve month rolling basis, Allied is required to maintain its consolidated adjusted EBITDA at more than 1.5 times of its debt service payments.

Net income and comprehensive income $237,668

Interest expense 54,462

Capitalized interest 21,333

Amortization of leasing costs and other assets 9,207

Amortization of tenant improvements 17,650

IFRS value gain on investment properties (105,584)

Fair value loss on derivative instruments 10,737

Loss on disposal of investment properties 272

Consolidated adjusted EBITDA $245,745

Total principal and interest payments (excluding principal payments on maturity) $112,121

Debt service coverage ratio 2.2x

ROLLING 12 MONTHS JUNE 30, 2016

44

4) Equity maintenance

Allied is required to maintain equity of at least $1,250,000 plus 75% of future equity issuances.

Unitholders’ equity $2,642,969

Initial requirement $1,250,000

75% of future equity issuances 61,761

Total required equity amount $1,311,761

Excess over required amount $1,331,208

JUNE 30, 2016

5) Unencumbered property assets ratio

Allied is required to maintain its balance of unencumbered property assets at more than 1.4 times its total unsecured debt.

Total unencumbered properties $1,990,460

Unsecured Facility $49,085

Unsecured Debentures 373,457

Unsecured Term Loans 348,894

Total unsecured debt $771,436

Unencumbered property assets ratio 2.6x

JUNE 30, 2016

6) Distribution payout ratio

On a twenty four month rolling basis, Allied is required to maintain distributions below 100% of its FFO.

Distributions $224,383

FFO $331,641

Distribution payout ratio 67.7%

ROLLING 24 MONTHS JUNE 30, 2016

45

SENIOR UNSECURED DEBENTURES

The following outlines the requirements of covenants specified in the Trust indenture agreement with respect to the Unsecured Debentures.

1) Pro forma interest coverage ratio

Allied is required to maintain a 12-month rolling consolidated pro forma EBITDA of at least 1.65 times its pro forma interest expense.

Net income and comprehensive income $238,871

Interest expense (net of capitalized interest) 64,100

Amortization of leasing costs and other assets 9,207

Amortization of tenant improvements 17,650

IFRS value (gain) loss on investment properties (105,584)

Fair value loss on derivative instruments 10,737

Loss on disposal of investment properties 272

Consolidated pro forma EBITDA $235,253

Pro forma interest expense (including capitalized interest) $85,433

Pro forma interest coverage ratio 2.8x

PRO FORMA 12 MONTHSJUNE 30, 2016

2) Pro forma asset coverage test

Allied is required to maintain its net consolidated debt below 65% of the net aggregate assets on a pro forma basis.

Total liabilities $2,239,185

Less:

Accounts payable and other liabilities (139,046)

Net consolidated debt $2,100,139

Total assets 4,882,154

Less:

Cumulative capitalized interest (74,136)

Add:

Cumulative amortization of tenant improvements 58,817

Cumulative amortization of leasing costs and other assets 39,168

Net aggregate assets $4,906,003

Asset coverage test 42.8%

PRO FORMA JUNE 30, 2016

46

As of June 30, 2016, Allied was in compliance with the terms and covenants of the agreements governing the Unsecured Facility, the Unsecured Term Loans and the Unsecured Debentures.

A number of other financial ratios are also monitored by Allied, including 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.

3) Equity maintenance covenant

Allied is required to maintain Unitholders’ equity above $300,000.

Unitholders’ equity $2,642,969

Requirement 300,000

Excess over required amount $2,342,969

JUNE 30, 2016

4) Pro forma unencumbered net aggregate adjusted asset ratio

Allied is required to maintain pro forma unencumbered net aggregate adjusted assets above 1.4 times consolidated unsecured indebtedness.

Total assets $4,882,154

Less:

Investment properties with certain encumbrances (2,609,197)

Cumulative capitalized interest (74,136)

Add:

Cumulative amortization of tenant improvements 58,817

Cumulative amortization of leasing costs and other assets 39,168

Total pro forma unencumbered net aggregate adjusted assets $2,296,806

Unsecured Facility 49,085

Unsecured Debentures 373,457

Unsecured Term Loans 348,894

Consolidated unsecured indebtedness $771,436

Pro forma unencumbered net aggregate adjusted asset ratio 3.0x

JUNE 30, 2016

47

JUNE 30, 2016 DECEMBER 31, 2015

Trust Units, beginning of period 78,430,153 $1,873,541 75,068,912 $1,754,576

Units issued under the DRIP 102,377 3,422 1,028,659 35,195

Net cash used to purchase and allocate Units to the Restricted Units Plan (net of forfeitures) — (1,021) — (1,672)

Repayments of Long-term incentive plan installment loan receivable — 72 — 18

Units issued under the unit based compensation arrangement 159,366 3,492 118,832 3,076

Units issued, net of issuance costs — 2,213,750 82,348

Units canceled under NCIB (102,377) (3,603) — —

Trust Units, end of period 78,589,519 $1,875,903 78,430,153 $1,873,541

UNITS UNITSAMOUNT AMOUNT

UNITHOLDERS’ EQUITY

The following represents the number of Units issued and outstanding, and the related carrying value of Unit equity, for the six months ended June 30, 2016 and for the year ended December 31, 2015.

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

The table below represents weighted average units outstanding for:

THREE MONTHS ENDED SIX MONTHS ENDED

Basic 78,566,849 77,674,230 78,526,832 77,139,566

Unit option plan 133,820 148,283 87,623 174,710

LTIP 16,366 17,000 16,683 17,000

Fully diluted 78,717,035 77,839,513 78,631,138 77,331,276

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

48

NORMAL COURSE ISSUER BID

In December 2015, Allied received approval from the Toronto Stock Exchange (“TSX”) for its normal course issuer bid (“NCIB”), which entitles Allied to purchase for cancellation up to 7,685,791 of its outstanding units, representing approximately 10% of its public float at December 15, 2015. The NCIB commenced December 22, 2015, and will terminate December 21, 2016 or such earlier date as the Trust determines or completes its purchase pursuant to the NCIB. All purchases under the NCIB will be made on the open market through the facilities of the TSX or alternate trading systems in Canada at market prices prevailing at the time of purchase. Any units that are repurchased will either be cancelled or delivered to participants under Allied’s Restricted Unit Plan.

On March 9, 2016, the Trust entered into an automatic unit repurchase plan with a broker in order to facilitate repurchase of its Units under the NCIB at times when the Trust would ordinarily not be permitted to purchase its Units due to self-imposed trading blackout periods.

During the six months ended June 30, 2016, Allied purchased 133,371 Units under the NCIB, of which 102,377 Units were purchased for cancellation and 30,994 Units were purchased for delivery to participants under the Trust’s Restricted Unit Plan (December 31, 2015 - nil).

UNIT OPTION AND RESTRICTED UNIT PLANS

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 2014, Allied adopted the Unit Option Plan and amended 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 2,800,545 units, representing 3.6% of the issued and outstanding units as at June 30, 2016 and the date hereof. No further units will be issued, or indebtedness incurred, under the LTIP.

Allied adopted a Unit Option Plan providing for the issuance, from time to time, at the discretion of the trustees, of options to purchase Units for cash. Participation in the Unit Option Plan is restricted to certain employees of Allied. The Unit Option Plan complies with the requirements of the 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 and vest evenly over three years from the date of grant. All options are settled in Units.

49

At June 30, 2016, and the date hereof, Allied had issued options to purchase 1,303,180 units outstanding, of which 502,737 had vested, and 7,845 units issued under the LTIP. At December 31, 2015, Allied had options to purchase 923,629 units outstanding, of which 440,417 had vested, and 17,000 units issued under the LTIP. In May 2015, the Unit Option Plan was amended so that non-employee trustees of the REIT are no longer eligible to be granted options under the Unit Option Plan.

For the Unit Option Plan, $600 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in net income for the six months ended June 30, 2016, and credited to Unitholders’ equity (for the six months ended June 30, 2015 - $367).

In March 2010, Allied adopted a restricted unit plan (the “Restricted Unit Plan”), whereby restricted units (“Restricted Units”) are granted to certain key employees and trustees, at the discretion of the Board of Trustees. The Restricted Units are purchased in the open market. Employees 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 June 30, 2016, Allied had 223,717 Restricted Units outstanding (December 31, 2015 – 220,216).

For the Restricted Unit Plan, a total of $563 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in net income for the six months ended June 30, 2016, and credited to Unitholders’ equity (for the six months ended June 30, 2015 - $621, respectively).

DISTRIBUTIONS TO UNITHOLDERS

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

Annualized increase per unit $0 .04 $0 .04 $0 .04 $0 .04 $0 .06 $0 .04 $0 .05 $0 .05 $0 .04

% increase 3 .6% 3 .5% 3 .4% 3 .3% 4 .8% 3 .0% 3 .7% 3 .5% 2 .7%

Annualized distribution per unit $1 .14 $1 .18 $1 .22 $1 .26 $1 .32 $1 .36 $1 .41 $1 .46 $1 .50

MARCH, 2004

MARCH, 2005

MARCH, 2006

MARCH, 2007

MARCH, 2008

DECEMBER, 2012

DECEMBER, 2013

DECEMBER, 2014

DECEMBER, 2015

50

DISTRIBUTION REINVESTMENT PLAN (“DRIP”)

Allied has instituted a DRIP whereby Canadian Unitholders may elect to have their distributions automatically reinvested in additional units. Effective December 17, 2015, Unitholders who so elect to participate in the DRIP will receive no additional distribution of units for each distribution that was reinvested. No commissions, service charges or brokerage fees are payable by participants in connection with the DRIP.

SOURCES OF DISTRIBUTIONS

For the three and six months ended June 30, 2016, Allied declared $29,467 and $58,900 in distributions (three and six months ended June 30, 2015 - $28,404 and $56,385, respectively), and non-cash distributions of $1,487 and $3,422 were provided under the DRIP (three and six months ended June 30, 2015 - $7,316 and $14,517, respectively).

THREE MONTHS ENDED SIX MONTHS ENDED

Distributions $29,467 $28,404 $58,900 $56,385

Distributions reinvested through the DRIP (1,487) (7,316) (3,422) (14,517)

Net distributions declared $27,980 $21,088 $55,478 $41,868

Net income $69,145 $126,942 $106,613 $123,313

Cash flows provided by operating activities $23,597 $60,808 $64,353 $104,600

AFFO $36,247 $33,811 $70,942 $69,564

Excess of net income over net distributions declared $41,165 $105,854 $51,135 $81,445

Excess (deficiency) of cash flows provided by operating activities over net distributions declared $(4,383) $39,720 $8,875 $62,732

Excess of cash provided by AFFO over net distributions declared $8,267 $12,723 $15,464 $27,696

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

In determining the amount of distributions to be made to Unitholders, Allied’s Board of Trustees consider many factors, including provisions in its Declaration of Trust, macro-economic and industry specific environments, the overall financial condition of the Trust, future capital requirements, debt covenants, and taxable income. In accordance with Allied’s distribution policy, Management and the Board of Trustees regularly review Allied’s rate of distributions to ensure an appropriate level of cash and non-cash distributions. Management anticipates that distributions declared will, in the foreseeable future, continue to vary from net income as net income includes fair value adjustments and other non-cash items. While cash flows from operating activities are generally sufficient to cover distribution requirements, timing of expenses and seasonal fluctuations in non-cash working capital may result in a shortfall. These seasonal or short-term fluctuations shall be funded, if necessary, by the Unsecured Facility. As such, the cash distributions are not an economic return of capital, but a distribution of sustainable cash flow from operations. Based on current facts and assumptions, management does not anticipate cash distributions will be reduced or suspended in the foreseeable future.

51

Building renovations and maintenance capital expenditures $1,467

Revenue-enhancing capital expenditures 82,276

Operating expenses 1,581

Conditional acquisitions 5,600

Total $90,924

JUNE 30, 2016

The current rate of distribution amounts to $1.50 per unit per annum (December 31, 2015 - $1.50 per unit per annum).

COMMITMENTS

At June 30, 2016, Allied had future commitments as set out below:

52

Section V

—Discussion of Operations

The following sets out summary information and financial results for the three and six months June 30, 2016, and the comparable period in 2015.

THREE MONTHS ENDED SIX MONTHS ENDED

Rental revenue from investment properties $94,220 $91,023 $188,033 $180,507

Property operating costs (39,415) (35,941) (80,412) (74,446)

Net rental income 54,805 55,082 107,621 106,061

Interest expense (15,727) (14,107) (29,622) (27,291)

General and administrative expenses (1,950) (2,408) (4,183) (4,229)

Amortization of leasing costs and other assets (2,418) (1,810) (4,608) (3,631)

Interest income 335 373 667 544

Fair value gain on investment properties 36,411 86,001 44,055 55,909

Fair value gain (loss) on derivative instruments (2,311) 3,811 (7,193) (4,050)

Loss on disposal of investment properties — — (124) —

Net income and comprehensive income 69,145 126,942 $106,613 $123,313

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

53

The following sets out the NOI by region and space type from the rental and development properties for the three and six months ended June 30, 2016, and comparable period.

Eastern Canada $13,887 24.6% $11,362 21 .4% $2,525 22 .2%

Central Canada 33,807 59.9% 31,625 59 .7% 2,182 6 .9%

Western Canada 8,734 15.5% 10,007 18 .9% (1,273) (12 .7%)

NOI $56,428 100.0% $52,994 100 .0% $3,434 6 .5%

CHANGE

JUNE 30, 2016 JUNE 30, 2015

THREE MONTHS ENDED

REGION $ %

NET OPERATING INCOME (“NOI”)

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

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.

Over the past year, Allied’s real estate portfolio has grown through acquisitions and development activities which have positively contributed to the operating results for the three and six months ended June 30, 2016, as compared to the same period in the prior year.

THREE MONTHS ENDED SIX MONTHS ENDED

Revenue from investment properties $94,220 $91,023 $188,033 $180,507

Property operating costs (39,415) (35,941) (80,412) (74,446)

Net rental income 54,805 55,082 107,621 106,061

Amortization of tenant improvements 4,677 2,792 9,310 5,836

Amortization of straight-line rents (3,054) (4,880) (6,445) (5,991)

NOI $56,428 $52,994 $110,486 $105,906

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

54

Eastern Canada $26,113 23.6% $23,044 21 .8% $3,069 13 .3%

Central Canada 66,853 60.5% 63,280 59 .7% 3,573 5 .6%

Western Canada 17,520 15.9% 19,582 18 .5% (2,062) (10 .5%)

NOI $110,486 100.0% $105,906 100 .0% $4,580 4 .3%

CHANGE

JUNE 30, 2016 JUNE 30, 2015

SIX MONTHS ENDED

REGION $ %

The increase in NOI for the three months ended June 30, 2016, was the result of acquisitions, rent growth and occupancy gain in Central and Eastern Canada, partially offset by occupancy erosion in Western Canada and a non-recurring connection fee of $3,000 at 250 Front West in Toronto in the three months ended June 30, 2015.

Office $41,310 73.2% $36,704 69 .3% $4,606 12 .5%

Equipment 8,214 14.6% 9,795 18 .5% (1,581) (16 .1%)

Retail 4,183 7.4% 4,120 7 .8% 63 1 .5%

Parking 2,721 4.8% 2,375 4 .4% 346 14 .6%

NOI $56,428 100.0% $52,994 100 .0% $3,434 6 .5%

CHANGE

JUNE 30, 2016 JUNE 30, 2015

THREE MONTHS ENDED

TYPE OF SPACE $ %

Office $80,195 72.6% $71,348 67 .4% $8,847 12 .4%

Equipment 16,150 14.6% 19,851 18 .7% (3,701) (18 .6)%

Retail 8,808 8.0% 9,843 9 .3% (1,035) (10 .5%)

Parking 5,333 4.8% 4,864 4 .6% 469 9 .6%

NOI $110,486 100.0% $105,906 100 .0% $4,580 4 .3%

CHANGE

JUNE 30, 2016 JUNE 30, 2015

SIX MONTHS ENDED

TYPE OF SPACE $ %

The increase in NOI for the six months ended June 30, 2016, was the result of acquisitions, rent growth and occupancy gain in Central and Eastern Canada, partially offset by occupancy erosion in Western Canada and a non-recurring connection fee of $6,000 at 250 Front West in Toronto in the six months ended June 30, 2015.

55

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. The same asset NOI development portfolio for the three and six months ended June 30, 2016, consists of QRC West, 5445 de Gaspé, 460 King, 250 Front, Breithaupt Block (Phase II), Adelaide & Duncan, 485 King, 189 Joseph, 180 John, and King Portland Centre.

The same asset NOI in the table below refers to those investment properties that were owned by the Trust from April 1, 2015 to June 30, 2016.

Same asset NOI of the total portfolio increased by 3.1% for the three months ended June 30, 2016, primarily due to same asset NOI in the rental portfolio being up $981, or 2.0%, as a result of rent growth and occupancy in Central and Eastern Canada partially offset by occupancy erosion in Western Canada. Same asset NOI in the development portfolio was also favorable to the comparative quarter, up $662, or 17.1%, due to occupancy commencement, primarily at QRC West.

THREE MONTHS ENDED CHANGE

Eastern Canada $12,441 $10,800 $1,641 15 .2%

Central Canada 28,386 28,018 368 1 .3%

Western Canada 8,596 9,624 (1,028) (10 .7%)

Same Asset NOI - rental portfolio 49,423 48,442 981 2 .0%

Same Asset NOI - development portfolio 4,540 3,878 662 17 .1%

Same Asset NOI - total portfolio $53,963 $52,320 $1,643 3 .1%

Acquisitions 2,297 60 2,237 3,728 .3%

Dispositions (32) (46) 14 (30 .4%)

Non-recurring items 200 660 (460) (69 .7%)

NOI - cash basis $56,428 $52,994 $3,434 6 .5%

Amortization of tenant improvements (4,677) (2,792) (1,885) 67 .5%

Amortization of straight-line rents 3,054 4,880 (1,826) (37 .4%)

Net rental income - accounting basis $54,805 $55,082 $(277) (0 .5%)

JUNE 30, 2016 $JUNE 30, 2015 %

56

Same asset NOI of the total portfolio increased by 3.1% for the six months ended June 30, 2016, primarily due to same asset NOI in the rental portfolio being up $2,137, or 2.2%, as a result of rent growth and occupancy in Central and Eastern Canada partially offset by occupancy erosion in Western Canada. Same asset NOI in the development portfolio was also favorable to the comparative quarter, up $1,031, or 13.5%, due to occupancy commencement, primarily at QRC West.

INTEREST EXPENSE

For the three and six months ended June 30, 2016, excluding capitalized interest, interest expense increased over the comparable period in 2015 primarily due to higher levels of debt used to fund acquisitions, although these were at more favourable interest rates. Interest may be capitalized on properties in connection with activity required to get the assets ready for their intended use. This would include upgrade work as well as work completed in relation to a future development, such as obtaining zoning approval, completing site approval plans, engineering and architectural drawings. Capitalized interest increased over the comparable period in 2015 due to the increase in development and upgrade activities across the portfolio.

SIX MONTHS ENDED CHANGE

Eastern Canada $24,362 $22,039 $2,323 10 .5%

Central Canada 56,481 54,770 1,711 3 .1%

Western Canada 17,126 19,023 (1,897) (10 .0%)

Same Asset NOI - rental portfolio 97,969 95,832 2,137 2 .2%

Same Asset NOI - development portfolio 8,696 7,665 1,031 13 .5%

Same Asset NOI - total portfolio $106,665 $103,497 $3,168 3 .1%

Acquisitions 3,211 206 3,005 1,458 .7%

Dispositions 128 407 (279) (68 .6%)

Non-recurring items 482 1,796 (1,314) (73 .2%)

NOI - cash basis $110,486 $105,906 $4,580 4 .3%

Amortization of tenant improvements (9,310) (5,836) (3,474) 59 .5%

Amortization of straight-line rents 6,445 5,991 454 7 .6%

Net rental income - accounting basis $107,621 $106,061 $1,560 1 .5%

JUNE 30, 2016 $JUNE 30, 2015 %

The same asset NOI in the table below refers to those investment properties that were owned by the Trust from January 1, 2015, to June 30, 2016.

57

GENERAL AND ADMINISTRATIVE EXPENSES

For the three and six months ended June 30, 2016, general and administrative expenses decreased by $458 and $46, respectively, over the comparable periods in 2015. The decrease for the three months ended June 30, 2016 is due to lower salaries and benefits as well as higher capitalization of general and administrative costs to investment properties. The lower salaries and benefits were due to a one time adjustment for Restricted Units expense of $260. The decrease for the six months ended June 30, 2016, is due to lower office and general expenses and higher capitalization of general and administrative costs to investment properties partially off set by higher salaries and benefits.

THREE MONTHS ENDED SIX MONTHS ENDED

Interest on debt $18,704 $15,870 $35,954 $31,267

Interest on freehold lease and land lease obligations 1,140 818 2,244 1,632

Amortization, premium (discount) on debt 21 56 189 105

Amortization, net financing costs 502 326 958 719

$20,367 $17,070 $39,345 $33,723

Less: interest capitalized to qualifying investment properties (4,640) (2,963) (9,723) (6,432)

Interest expense $15,727 $14,107 $29,622 $27,291

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Salaries and benefits $1,690 $1,888 $3,786 $3,429

Professional and directors fees 718 791 1,302 1,256

Office and general expenses 198 248 397 581

$2,606 $2,927 $5,485 $5,266

Capitalized to investment properties (656) (519) (1,302) (1,037)

Total $1,950 $2,408 $4,183 $4,229

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

NET INCOME AND COMPREHENSIVE INCOME

Net income and comprehensive income for the three and six months ended June 30, 2016, decreased by $57,797 and $16,700, respectively, over the comparable period in 2015. Excluding the effect of IFRS value changes on investment properties, derivative instruments, and loss on sale of investment properties, net income for the three and six months June 30, 2016, was down $2,085 and $1,579, respectively, as compared to the same period in the prior year primarily due to an increase in interest expense and amortization of leasing costs and other assets, partially offset by higher NOI and interest income.

58

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. 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.

For the three months ended June 30, 2016, FFO totaled $42,466 or $0.54 per unit consistent with the same period in the prior year. There was no change in FFO per unit due to an increase in the number of weighted average units outstanding.

For the six months ended June 30, 2016, FFO totaled $84,528 or $1.08 per unit. As compared to the same period in the prior year, FFO increased by $0.03 per unit or 2.9%. The increase in FFO for the six months ended June 30, 2016, was primarily due to the increase in NOI and an increase in interest income, partially offset by higher interest expense and amortization of leasing costs and other assets.

To ensure sufficient cash is retained to meet capital improvement and leasing objectives, Allied strives to maintain an appropriate FFO pay-out ratio, which is the ratio of actual distributions to FFO in a given period. For the three and six months ended June 30, 2016, the FFO pay-out ratio was 69.4% and 69.7%, respectively.

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 Allied, 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 regular maintenance capital expenditures and regular leasing expenditures while ignoring the impact of non-cash revenue. As regular 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.

For the three months ended June 30, 2016, AFFO totaled $36,247 or $0.46 per unit. This represents an increase of $0.03 per unit, or 7.0%, over the comparable period in the prior year. Including the changes in FFO, the increase in AFFO per unit is primarily due to a decrease in amortization of straight line rent and lower regular leasing expenditures.

For the six months ended June 30, 2016, AFFO totaled $70,942 or $0.90 per unit consistent with the same period in the prior year. Including the changes in FFO, there was no change in AFFO per unit due to higher amortization of straight-line rents, regular leasing expenditures and regular maintenance capital expenditures.

59

THREE MONTHS ENDED

Net income and comprehensive income $69,145 $126,942 $(57,797)

IFRS value (gain) on investment properties (36,411) (86,001) 49,590

Fair value (gain) loss from derivative instruments 2,311 (3,811) 6,122

Incremental leasing costs 716 479 237

Amortization of leasing costs and tenant improvements 6,705 4,350 2,355

FFO $42,466 $41,959 $507

Amortization of straight-line rents (3,054) (4,880) 1,826

Regular leasing expenditures (2,763) (3,208) 445

Regular maintenance capital expenditures (402) (60) (342)

AFFO (1) $36,247 $33,811 $2,436

Weighted average number of units

Basic 78,566,849 77,674,230 892,619

Diluted 78,717,035 77,839,513 877,522

Per Unit - basic

FFO 0.54 0 .54 —

AFFO 0.46 0 .44 0 .02

Per Unit - diluted

FFO 0.54 0 .54 —

AFFO 0.46 0 .43 0 .03

Payout Ratio

FFO 69.4% 67 .7% 1 .7%

AFFO 81.3% 84 .0% (2 .7%)

(1) For the three months ended June 30, 2016 and 2015, incremental leasing costs have been excluded for the calculation of AFFO as they are related to development projects and would have otherwise been capitalized to investment properties.

CHANGEJUNE 30, 2016 JUNE 30, 2015

To ensure sufficient cash is retained 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. For the three and six months ended June 30, 2016, the AFFO pay-out ratio was 81.3% and 83.0%, respectively.

RECONCILIATION OF FFO AND AFFO

The following table reconciles Allied’s net income to FFO and AFFO for the three months ended June 30, 2016, and June 30, 2015.

60

SIX MONTHS ENDED

Net income and comprehensive income $106,613 $123,313 $(16,700)

IFRS value (gain) on investment properties (44,055) (55,909) 11,854

Fair value loss from derivative instruments 7,193 4,050 3,143

Loss on disposal of investment properties 124 — 124

Incremental leasing costs 1,484 939 545

Amortization of leasing costs and tenant improvements 13,169 8,984 4,185

FFO $84,528 $81,377 $3,151

Amortization of straight-line rents (6,445) (5,991) (454)

Regular leasing expenditures (6,577) (5,725) (852)

Regular maintenance capital expenditures (564) (97) (467)

AFFO (1) $70,942 $69,564 $1,378

Weighted average number of units

Basic 78,526,832 77,139,566 1,387,266

Diluted 78,631,138 77,331,276 1,299,862

Per Unit - basic

FFO 1.08 1 .05 0 .03

AFFO 0.90 0 .90 —

Per Unit - diluted

FFO 1.08 1 .05 0 .03

AFFO 0.90 0 .90 —

Payout Ratio

FFO 69.7% 69 .3% 0 .4%

AFFO 83.0% 81 .1% 1 .9%

(1) For the six months ended June 30, 2016 and 2015, incremental leasing costs have been excluded for the calculation of AFFO as they are related to development projects and would have otherwise been capitalized to investment properties.

CHANGEJUNE 30, 2016 JUNE 30, 2015

The following table reconciles Allied’s net income to FFO and AFFO for the six months ended June 30, 2016, and June 30, 2015.

61

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. In the three months ended June 30, 2016, Allied incurred (i) $402 in regular maintenance capital expenditures and (ii) $2,763 in regular leasing expenditures or $5.76 per leased square foot, slightly below the historical range of $7 to $10. In the six months ended June 30, 2016, Allied incurred (i) $564 in regular maintenance capital expenditures and (ii) $6,577 in regular leasing expenditures or $7.73 per leased square foot, in line with the historical range of $7 to $10.

For the three and six months ended June 30, 2016, Allied invested $54,172 and $112,368, respectively, of revenue enhancing capital into the rental portfolio to enhance its income-producing capability and in ongoing development activity.

The following table reconciles FFO and AFFO to cash flows from operating activities for the periods ended as indicated:

THREE MONTHS ENDED SIX MONTHS ENDED

Cash flows from operating activities $23,597 $60,808 $64,353 $104,600

Add (deduct) impact of the following:

Amortization of equipment and other assets (390) (252) (749) (483)

Amortization of straight-line rents 3,054 4,880 6,445 5,991

Amortization, (premium) discount on assumed debt (21) (56) (189) (105)

Unit-compensation expense (498) (655) (1,163) (988)

Change in other non-cash financing items (2,290) (433) (2,731) (746)

Change in other non-cash operating items 18,298 (22,812) 17,078 (27,831)

Incremental leasing costs 716 479 1,484 939

FFO 42,466 41,959 84,528 81,377

Add (deduct) impact of the following:

Amortization of straight-line rents (3,054) (4,880) (6,445) (5,991)

Regular leasing expenditures (2,763) (3,208) (6,577) (5,725)

Regular maintenance capital expenditures (402) (60) (564) (97)

AFFO $36,247 $33,811 $70,942 $69,564

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

62

THREE MONTHS ENDED SIX MONTHS ENDED

Regular leasing expenditures $2,763 $3,208 $6,577 $5,725

Regular leasing expenditures per leased square foot 5.76 9 .16 7.73 9 .52

Regular maintenance capital expenditures $402 $60 $564 $97

Regular maintenance capital expenditures per portfolio square foot 0.03 0 .00 0.05 0 .01

Revenue-enhancing capital and development costs $54,172 $53,734 $112,368 $87,206

JUNE 30, 2016 JUNE 30, 2016JUNE 30, 2015 JUNE 30, 2015

63

Section VI

—Quarterly History

64

Rental revenue from investment properties $94,220 $93,813 $94,024 $90,681 $91,129 $89,567 $88,685 $85,836

Property operating costs (39,415) (40,997) (40,818) (37,275) (36,047) (38,588) (36,996) (34,608)

Net rental income $54,805 $52,816 $53,206 $53,406 $55,082 $50,979 $51,689 $51,228

Net income (loss) and comprehensive income (loss) $69,145 $37,468 $45,165 $85,889 $126,942 $(3,629) $82,437 $35,272

Weighted average units (diluted) 78,717,035 78,566,949 78,355,768 78,062,347 77,839,513 76,818,461 75,050,618 71,371,273

Distributions $29,467 $29,433 $28,836 $28,453 $28,404 $27,981 $26,716 $25,093

FFO $42,466 $42,062 $44,318 $42,915 $41,959 $39,418 $40,274 $38,229

FFO per unit (diluted) $0 .54 $0 .54 $0 .57 $0 .55 $0 .54 $0 .51 $0 .54 $0 .54

FFO pay-out ratio 69 .4% 70 .0% 65 .1% 66 .3% 67 .7% 71 .0% 66 .3% 65 .6%

AFFO (1) $36,247 $34,695 $35,356 $35,763 $33,811 $35,753 $34,286 $34,161

AFFO per unit (diluted) $0 .46 $0 .44 $0 .45 $0 .45 $0 .43 $0 .46 $0 .46 $0 .48

AFFO pay-out ratio 81 .3% 84 .8% 81 .6% 81 .4% 85 .2% 79 .3% 77 .9% 73 .5%

Investment properties $4,599,657 $4,291,196 $4,197,277 $4,140,059 $4,008,398 $3,759,462 $3,726,757 $3,625,043

Total debt $1,949,110 $1,675,026 $1,587,503 $1,555,264 $1,506,858 $1,339,493 $1,359,461 $1,332,052

Total rental GLA 11,639 10,512 10,421 10,487 10,451 9,501 9,501 9,527

Leased rental GLA 10,593 9,691 9,516 9,523 9,461 8,681 8,742 8,726

% leased 91 .0% 92 .2% 91 .3% 90 .8% 90 .5% 91 .4% 92 .0% 91 .6%

(1) For the periods subsequent to Q4 2014, incremental leasing costs have been excluded for the calculation of AFFO as they are related to development projects and would have otherwise been capitalized to investment properties.

Q2 2016

Q1 2016

Q4 2015

Q3 2015

Q2 2015

Q1 2015

Q4 2014

Q3 2014

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

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

65

Section VII

—Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

Accounting policies and any respective changes are discussed in Allied’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016 and the notes contained therein.

Furthermore, the future accounting policy changes as proposed by the International Accounting Standards Board (the “IASB”) are discussed in Allied’s audited consolidated financial statements for the year ended December 31, 2015 and notes contained therein.

66

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 our design of internal controls over financial reporting during the period ended June 30, 2016, that 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.

67

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 total debt are between 2.0% and 6.9% with a weighted average interest rate of 4.1%. The weighted average term of our debt is 4.9 years. The aforementioned excludes the revolving Unsecured Facility, refer to Note 8(c) of the unaudited condensed consolidated financial statements for further details.

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.

68

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 $3,760 (approximately $0.05 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 GBV.

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 ARRANGEMENT RISK

Allied has entered into various joint arrangements and partnerships with different entities. If these joint arrangements or partnerships do not perform as expected or default on financial obligations, Allied has an associated risk. Allied reduces this risk by seeking to negotiate contractual rights upon default, by entering into agreements with financially stable partners and by working with partners who have a successful record of completing development projects.

69

Section X

—Property Table

32 Atlantic 50,434 — 50,434 — — 50,434 100 .0%

47 Jefferson 6,884 — 6,884 — — 6,884 100 .0%

64 Jefferson 78,820 — 78,820 — — 78,820 100 .0%

905 King W 102,691 7,085 109,776 79,011 1,343 29,422 26 .8%

College & Manning JV (1) 27,294 4,287 31,581 2,400 — 29,181 92 .4%

The Castle 132,174 35,628 167,802 — 17,761 150,041 89 .4%

King West 398,297 47,000 445,297 3 .8% 81,411 19,104 344,782 77 .4%

141 Bathurst 10,199 — 10,199 — — 10,199 100 .0%

159-161 Bathurst 4,000 — 4,000 — — 4,000 100 .0%

183 Bathurst 27,185 5,600 32,785 — — 32,785 100 .0%

241 Spadina 25,112 6,675 31,787 — — 31,787 100 .0%

379 Adelaide W 36,009 4,300 40,309 — — 40,309 100 .0%

383 Adelaide W 7,382 — 7,382 — — 7,382 100 .0%

420 Wellington W 33,813 3,137 36,950 — — 36,950 100 .0%

425 Adelaide W 73,908 3,940 77,848 1,855 — 75,993 97 .6%

425-439 King W 79,812 18,606 98,418 — 3,315 95,103 96 .6%

441-443 King W 8,415 3,065 11,480 — — 11,480 100 .0%

445-455 King W 30,102 22,335 52,437 — — 52,437 100 .0%

460 King W 12,934 4,787 17,721 — — 17,721 100 .0%

468 King W 65,027 — 65,027 — — 65,027 100 .0%

469 King W 67,505 11,250 78,755 — — 78,755 100 .0%

478 King W (2) — 3,277 3,277 — — 3,277 100 .0%

489 King W 21,421 4,850 26,271 — — 26,271 100 .0%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

JUNE 30, 2016 PROPERTIES

70

495 King W 10,684 — 10,684 — — 10,684 100 .0%

499 King W — 8,400 8,400 — — 8,400 100 .0%

500-522 King W 82,133 43,079 125,212 — — 125,212 100 .0%

511-529 King W 37,709 11,375 49,084 — — 49,084 100 .0%

552-560 King W 8,019 16,696 24,715 — — 24,715 100 .0%

539 King W 12,750 — 12,750 — — 12,750 100 .0%

544 King W 17,006 — 17,006 — — 17,006 100 .0%

555 Richmond W 255,248 40,139 295,387 4,152 — 291,235 98 .6%

579 Richmond W 28,515 — 28,515 — — 28,515 100 .0%

589-591 Richmond W 2,000 — 2,000 — — 2,000 100 .0%

662 King W 30,928 2,126 33,054 — — 33,054 100 .0%

80-82 Spadina 60,100 16,009 76,109 — — 76,109 100 .0%

96 Spadina 79,978 9,936 89,914 — — 89,914 100 .0%

The Well JV (3) 96,038 5,145 101,183 — — 101,183 100 .0%

King Portland Centre (1) 18,663 12,299 30,962 3,021 750 27,191 87 .8%

King West Central 1,242,595 257,026 1,499,621 12 .9% 9,028 4,065 1,486,528 99 .1%

116 Simcoe 15,637 — 15,637 — — 15,637 100 .0%

151 Front 265,666 6,000 271,666 2,441 6,000 263,225 96 .9%

179 John 69,866 — 69,866 — — 69,866 100 .0%

185 Spadina 55,814 — 55,814 — — 55,814 100 .0%

200 Adelaide W 28,191 — 28,191 — — 28,191 100 .0%

208-210 Adelaide W 11,963 — 11,963 — — 11,963 100 .0%

217-225 Richmond W 32,433 21,987 54,420 — — 54,420 100 .0%

257 Adelaide W 46,572 — 46,572 — — 46,572 100 .0%

312 Adelaide W 63,204 8,015 71,219 — — 71,219 100 .0%

331-333 Adelaide W 20,085 3,210 23,295 — 3,210 20,085 86 .2%

358-360 Adelaide W 53,054 — 53,054 — — 53,054 100 .0%

375-381 Queen W 21,791 10,648 32,439 — — 32,439 100 .0%

388 King W 28,899 15,012 43,911 4,536 — 39,375 89 .7%

82 Peter 39,422 8,287 47,709 8,029 — 39,680 83 .2%

99 Spadina 50,923 — 50,923 — — 50,923 100 .0%

Union Centre 11,332 29,239 40,571 — — 40,571 100 .0%

QRC West Phase I 336,250 11,858 348,108 9,436 — 338,672 97 .3%

Entertainment District 1,151,102 114,256 1,265,358 10 .9% 24,442 9,210 1,231,706 97 .3%

193 Yonge 34,349 16,318 50,667 — — 50,667 100 .0%

Downtown 34,349 16,318 50,667 0 .4% — — 50,667 100 .0%

106 Front E 24,347 10,465 34,812 — 3,137 31,675 91 .0%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

JUNE 30, 2016 PROPERTIES

71

35-39 Front E 40,356 13,804 54,160 — — 54,160 100 .0%

36-40 Wellington E 16,642 9,893 26,535 — — 26,535 100 .0%

41-45 Front E 27,043 14,079 41,122 — — 41,122 100 .0%

45-55 Colborne 28,563 14,639 43,202 — 6,004 37,198 86 .1%

49 Front E 9,320 10,441 19,761 — — 19,761 100 .0%

50 Wellington E 22,001 11,049 33,050 — — 33,050 100 .0%

60 Adelaide E 106,100 4,608 110,708 2,568 — 108,140 97 .7%

184 Front E 81,126 6,489 87,615 8,774 — 78,841 90 .0%

St. Lawrence Market 355,498 95,467 450,965 3 .9% 11,342 9,141 430,482 95 .5%

145 Berkeley 8,991 1,325 10,316 — — 10,316 100 .0%

204-214 King E 128,129 2,699 130,828 — — 130,828 100 .0%

230 Richmond E 73,767 — 73,767 — — 73,767 100 .0%

252-264 Adelaide E 47,607 — 47,607 — — 47,607 100 .0%

489 Queen E 32,659 — 32,659 — — 32,659 100 .0%

70 Richmond 35,118 — 35,118 — — 35,118 100 .0%

Dominion Square 110,507 — 110,507 6,501 — 104,006 94 .1%

QRC East 185,414 35,349 220,763 — — 220,763 100 .0%

QRC South 43,698 — 43,698 3,822 — 39,876 91 .3%

Queen Richmond 665,890 39,373 705,263 6 .1% 10,323 — 694,940 98 .5%

Total Toronto 3,847,731 569,440 4,417,171 38 .0% 136,546 41,520 4,239,105 96 .0%

72 Victoria 89,752 — 89,752 12,043 — 77,709 86 .6%

Breithaupt Phase I (4) 66,555 — 66,555 — — 66,555 100 .0%

The Tannery 257,158 74,242 331,400 466 — 330,934 99 .9%

Total Kitchener 413,465 74,242 487,707 4 .2% 12,509 — 475,198 97 .4%

The Chambers 209,793 12,223 222,016 616 — 221,400 99 .7%

Total Ottawa 209,793 12,223 222,016 1 .9% 616 — 221,400 99 .7%

3510 Saint-Laurent 85,977 16,223 102,200 3,825 2,139 96,236 94 .2%

3575 Saint-Laurent 166,943 18,412 185,355 15,153 — 170,202 91 .8%

400 Atlantic 85,629 292 85,921 9,314 — 76,607 89 .2%

425 Viger W 205,201 820 206,021 — — 206,021 100 .0%

4446 Saint-Laurent 73,280 7,455 80,735 7,942 3,693 69,100 85 .6%

451-481 Saint-Catherine 22,354 8,475 30,829 — — 30,829 100 .0%

480 Saint-Laurent 46,662 7,165 53,827 2,310 — 51,517 95 .7%

5445 Gaspé 481,788 955 482,743 52,729 — 430,014 89 .1%

5455 Gaspé 505,427 750 506,177 141,077 — 365,100 72 .1%

5505 Saint-Laurent 252,453 2,524 254,977 — — 254,977 100 .0%

6300 Parc 184,114 3,873 187,987 67,501 3,200 117,286 62 .4%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

JUNE 30, 2016 PROPERTIES

72

645 Wellington 137,843 3,773 141,616 — — 141,616 100 .0%

740 Saint-Maurice 67,869 — 67,869 9,988 — 57,881 85 .3%

8 Place du Commerce 40,702 16,534 57,236 — — 57,236 100 .0%

85 Saint-Paul 80,271 — 80,271 — — 80,271 100 .0%

Cité Multimedia 940,351 14,025 954,376 37,916 4,557 911,903 95 .5%

Le Nordelec 769,676 19,914 789,590 185,621 — 603,969 76 .5%

Total Montréal 4,146,540 121,190 4,267,730 36 .7% 533,376 13,589 3,720,765 87 .2%

390 Charest 67,043 6,348 73,391 45,524 — 27,867 38 .0%

410 Charest 3,229 21,508 24,737 — — 24,737 100 .0%

420 Charest 47,641 13,496 61,137 21,708 — 39,429 64 .5%

605 Saint-Joseph 27,145 8,504 35,649 2,000 — 33,649 94 .4%

622 Saint-Joseph 2,711 3,300 6,011 648 — 5,363 89 .2%

633 Saint-Joseph 15,873 6,568 22,441 9,407 — 13,034 58 .1%

Total Québec City 163,642 59,724 223,366 1 .9% 79,287 — 144,079 64 .5%

115 Bannatyne 39,906 — 39,906 1,371 — 38,535 96 .6%

123 Bannatyne 16,368 — 16,368 7,844 — 8,524 52 .1%

250 McDermot 42,785 12,482 55,267 21,438 6,077 27,752 50 .2%

54-70 Arthur 112,805 8,818 121,623 23,174 — 98,449 80 .9%

1500 Notre Dame 109,583 — 109,583 — — 109,583 100 .0%

Total Winnipeg 321,447 21,300 342,747 2 .9% 53,827 6,077 282,843 82 .5%

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 1,497 — 30,104 95 .3%

1240-20th SE 46,124 — 46,124 — — 46,124 100 .0%

129-8th SW 3,068 4,493 7,561 — 2,329 5,232 69 .2%

209-8th SW 26,606 5,022 31,628 5,495 — 26,133 82 .6%

237-8th SE 66,229 8,581 74,810 7,981 1,160 65,669 87 .8%

322-326 11th SW 198,034 15,660 213,694 21,717 2,778 189,199 88 .5%

402-11th SE 39,155 — 39,155 — — 39,155 100 .0%

438-11th SE 52,601 — 52,601 4,514 — 48,087 91 .4%

601-611 10th SW 46,786 2,592 49,378 15,059 — 34,319 69 .5%

603-605 11th SW 22,035 29,207 51,242 — — 51,242 100 .0%

604-1st SW 69,559 20,937 90,496 16,996 8,037 65,463 72 .3%

613-11th SW — 3,163 3,163 — — 3,163 100 .0%

617-11th SW 2,986 6,218 9,204 — 3,000 6,204 67 .4%

625-11th SW 33,277 1,409 34,686 19,682 — 15,004 43 .3%

805-1st SW 8,910 18,658 27,568 2,812 1,781 22,975 83 .3%

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

JUNE 30, 2016 PROPERTIES

73

808-1st SW 17,325 30,244 47,569 — 2,311 45,258 95 .1%

809-10th SW 35,742 — 35,742 — — 35,742 100 .0%

816-838 11th SW (5) 10,119 13,617 23,736 — — 23,736 100 .0%

Demcor Building 39,657 — 39,657 5,728 — 33,929 85 .6%

Total Calgary 847,119 159,801 1,006,920 8 .7% 101,481 21,396 884,043 87 .8%

10190-104 NW 16,989 5,767 22,756 9,783 — 12,973 57 .0%

Boardwalk & Revillon Building 217,909 45,442 263,351 6,567 — 256,784 97 .5%

Total Edmonton 234,898 51,209 286,107 2 .5% 16,350 — 269,757 94 .3%

128 West Pender 75,848 1,693 77,541 2,956 — 74,585 96 .2%

840 Cambie 91,437 — 91,437 — — 91,437 100 .0%

948-950 Homer 23,114 23,290 46,404 — 23,290 23,114 49 .8%

1040 Hamilton 35,889 8,765 44,654 2,121 1,791 40,742 91 .2%

1286 Homer 15,752 9,115 24,867 — — 24,867 100 .0%

Total Vancouver 242,040 42,863 284,903 2 .4% 5,077 25,081 254,745 89 .4%

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%

Rental Portfolio - before transfers from PUD in 2016 10,452,732 1,127,513 11,580,245 939,069 107,663 10,533,513 91 .0%

Add: Transfer from PUD in 2016

485 King W 12,143 — 12,143 — — 12,143 100 .0%

Breithaupt Phase II (4) 46,845 — 46,845 — — 46,845 100 .0%

Total Rental Portfolio 10,511,720 1,127,513 11,639,233 939,069 107,663 10,592,501 91 .0%

(1) RioCan/Allied Co-ownership(2) Lifetime/Allied Co-ownership(3) RioCan/Diamond Corp./Allied Co-ownership(4) Perimeter/Allied Co-ownership(5) First Capital/Allied Co-ownership

OFFICE GLA

RETAIL GLA

TOTAL GLA

%TOTAL GLA

OFFICE VACANT

RETAIL VACANT

TOTAL LEASED

LEASED %

JUNE 30, 2016 PROPERTIES

74

301 Markham, Toronto 47

388 Richmond, Toronto 117

78 Spadina, Toronto 24

7-9 Morrison, Toronto 25

650 King, Toronto 71

539 King, Toronto 107

560 King, Toronto 171

478 King JV, Toronto (5) 65

15 Brant, Toronto 203

105 George, Toronto 15

Total Parking 845

(5) Lifetime/Allied Co-ownership

ANCILLARY PARKING FACILITIES NUMBER OF SPACES

250 Front W, Toronto 173,800

180 John, Toronto 36,173

189 Joseph, Kitchener —

TELUS Sky, Calgary (1) —

Adelaide & Duncan, Toronto (2) 30,930

College & Palmerston JV, Toronto (3) 8,085

King Portland Centre, Toronto (3) —

138 Portage East, Winnipeg (4) 53,482

Le Nordelec - Development 74,396

Total Development Portfolio 376,866

(1) Telus/Westbank/Allied Co-ownership(2) Westbank/Allied Co-ownership(3) RioCan/Allied Co-ownership (4) This property has been sold subsequent to June 30, 2016.

PROPERTIES UNDER DEVELOPMENT CURRENT GLA

75

Unaudited Condensed Consolidated Financial Statements for the Three and Six Months Ended June 30, 2016 and 2015

76

Gordon Cunningham trustee

Michael R. Emory trustee

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)AS AT JUNE 30, 2016 AND DECEMBER 31, 2015

Assets

Non-current assets

Investment properties 4 $4,599,657 $4,197,277

Loans and notes receivable 5 21,712 22,245

Other assets 6 202,508 177,491

4,823,877 4,397,013

Current assets

Cash and cash equivalents 18 4,004 4,323

Loans and notes receivable 5 1,064 1,055

Accounts receivable, prepaid expenses and deposits 7 53,209 53,555

58,277 58,933

Total assets $4,882,154 $4,455,946

Liabilities

Non-current liabilities

Debt 8 $1,752,125 $1,446,916

Freehold lease and land lease obligations 9 143,533 130,648

1,895,658 1,577,564

Current liabilities

Debt 8 196,985 140,587

Freehold lease and land lease obligations 9 7,496 7,412

Accounts payable and other liabilities 10 139,046 138,652

343,527 286,651

Total liabilities 2,239,185 1,864,215

Unitholders’ equity 2,642,969 2,591,731

Total liabilities and unitholders’ equity $4,882,154 $4,455,946

Subsequent events (note 25) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NOTES(in thousands of Canadian dollars) JUNE 30, 2016 DECEMBER 31, 2015

77

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTCONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Rental revenue from investment properties 16 $94,220 $91,023 $188,033 $180,507

Property operating costs 16 (39,415) (35,941) (80,412) (74,446)

Net rental income 54,805 55,082 107,621 106,061

Interest expense 8 (f) (15,727) (14,107) (29,622) (27,291)

General and administrative expenses 17 (1,950) (2,408) (4,183) (4,229)

Amortization of leasing costs and other assets 6 (2,418) (1,810) (4,608) (3,631)

Interest income 18 335 373 667 544

Fair value gain on investment properties 4 36,411 86,001 44,055 55,909

Fair value gain (loss) on derivative instruments (2,311) 3,811 (7,193) (4,050)

Loss on disposal of investment properties 4 — — (124) —

Net income and comprehensive income 69,145 126,942 $106,613 $123,313

Income per unit

Basic $0.88 $1 .63 $1.36 $1 .60

Diluted $0.88 $1 .63 $1.36 $1 .59

Weighted average number of units 15

Basic 78,566,849 77,674,230 78,526,832 77,139,566

Diluted 78,717,035 77,839,513 78,631,138 77,331,276

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

NOTES(in thousands of Canadian dollars, except unit and per unit amounts) JUNE 30, 2016 JUNE 30, 2015 JUNE 30, 2016 JUNE 30, 2015

78

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTCONDENSED CONSOLIDATED STATEMENTS OF UNITHOLDERS’ EQUITY (UNAUDITED)FOR THE SIX MONTHS ENDED JUNE 30, 2016 AND 2015

Balance at January 1, 2015 12 $1,754,576 $568,714 $6,741 $2,330,031

Comprehensive income — 123,313 — 123,313

Public offering 12 82,436 — — 82,436

Distributions — (56,385) — (56,385)

Distribution reinvestment plan (“DRIP”) 12 14,517 — — 14,517

Unit option plan – options exercised 13 (a) 3,076 — (247) 2,829

Contributed surplus – unit option plan 13 (a) — — 367 367

Restricted unit plan (net of forfeitures) 13 (b) (1,688) — 621 (1,067)

Long-term incentive plan 14 9 — — 9

Balance at June 30, 2015 $1,852,926 $635,642 $7,482 $2,496,050

NOTES TRUST UNITSRETAINED EARNINGS

CONTRIBUTED SURPLUS TOTAL(in thousands of Canadian dollars)

Balance at January 1, 2016 12 $1,873,541 $709,407 $8,783 $2,591,731

Comprehensive income — 106,613 — 106,613

Distributions — (58,900) — (58,900)

Distribution reinvestment plan (“DRIP”) 12 3,422 — — 3,422

Unit option plan – options exercised 13 (a) 3,492 — — 3,492

Contributed surplus – unit option plan 13 (a) — — 600 600

Restricted unit plan (net of forfeitures) 13 (b) (1,021) — 563 (458)

Long-term incentive plan 14 72 — — 72

Purchase of units under normal course issuer bid 12 (3,603) — — (3,603)

Balance at June 30, 2016 $1,875,903 $757,120 $9,946 $2,642,969

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

NOTES TRUST UNITSRETAINED EARNINGS

CONTRIBUTED SURPLUS TOTAL(in thousands of Canadian dollars)

79

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Operating activities

Net income for the period $69,145 $126,942 $106,613 $123,313

Fair value (gain) on investment properties 4 (36,411) (86,001) (44,055) (55,909)

Fair value (gain) loss on derivative instruments 2,311 (3,811) 7,193 4,050

Loss on disposal of investment properties — — 124 —

Amortization of equipment and other assets 6 390 252 749 483

Amortization of leasing commissions 6 2,028 1,558 3,859 3,148

Amortization of tenant improvement allowances 6 4,677 2,792 9,310 5,836

Amortization of straight-line rents (3,054) (4,880) (6,445) (5,991)

Amortization of premium on debt 8 (f) 21 56 189 105

Unit-compensation expense 13 498 655 1,163 988

Change in other non-cash financing items 2,290 433 2,731 746

Change in other non-cash operating items 18 (18,298) 22,812 (17,078) 27,831

Cash provided by operating activities 23,597 60,808 64,353 104,600

Financing activities

Repayment of mortgages payable (36,259) (19,397) (65,785) (45,664)

Proceeds from senior unsecured debentures (net of financing costs) 8 (d) 149,199 148,999 149,199 148,999

Proceeds from unsecured term loan (net of financing costs) 8 (e) 99,825 — 199,300 —

Amortization of freehold lease and land lease obligations 2,076 88 2,437 184

Financing - freehold lease and land leases (5) — (10) —

Distributions paid to unitholders (27,976) (21,061) (55,458) (41,536)

Proceeds of public offering (net of financing costs) — (35) — 82,436

Proceeds from exercise of unit options 13 725 331 3,492 2,829

Proceeds from units issued under the LTIP 14 67 5 72 9

Purchase of units under normal course issuer bid 12 (1,535) — (3,603) —

Restricted unit plan (net of forfeitures) 13 8 216 (1,021) (1,688)

Proceeds from annuity loan receivable 262 258 524 515

Proceeds from unsecured revolving operating facility 8 (c) 19,349 36,000 29,487 113,000

Repayment of secured operating facility 8 (c) — — — (24,336)

Proceeds (repayments) of construction loan 8 (b) 4,514 1,334 11,392 (39,062)

NOTES JUNE 30, 2016 JUNE 30, 2015 JUNE 30, 2016 JUNE 30, 2015(in thousands of Canadian dollars)

80

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015 - continued

THREE MONTHS ENDED SIX MONTHS ENDED

Financing costs (339) (5) (391) (345)

Cash provided by financing activities 209,911 146,733 269,635 195,341

Investing activities

Acquisitions of investment properties 3 (188,454) (111,444) (230,616) (135,979)

Additions to investment properties 4 (29,031) (49,901) (80,676) (86,500)

Net proceeds on disposition of investment properties 4 — — 9,491 —

Additions to equipment and other assets 6 (295) (530) (998) (754)

Tenant leasing commissions 6 (3,974) (3,818) (6,682) (5,339)

Tenant improvement allowances 6 (12,232) (18,771) (24,826) (23,477)

Loans receivable issued to third-party 5 (a) — — — (21,173)

Cash used in investing activities (233,986) (184,464) (334,307) (273,222)

Increase in cash and cash equivalents (478) 23,077 (319) 26,719

Cash and cash equivalents, beginning of period 4,482 8,902 4,323 5,260

Cash and cash equivalents, end of period $4,004 $31,979 $4,004 $31,979

Supplemental cash flow information (note 18) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

NOTES JUNE 30, 2016 JUNE 30, 2015 JUNE 30, 2016 JUNE 30, 2015(in thousands of Canadian dollars)

81

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUSTNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSFOR THE PERIOD ENDED JUNE 30, 2016 AND 2015 (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER UNIT AND UNIT AMOUNTS)

1 .. nature.of.operations

Allied Properties Real Estate Investment Trust (“Allied” or the “Trust”) 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 12, 2016. 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 and are traded under the symbol “AP.UN”. Allied is the ultimate parent of its group of companies. The unaudited condensed consolidated financial statements of Allied include the accounts of Allied and its consolidated subsidiaries.

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 134 Peter Street, Suite 1700, Toronto, Ontario, M5V 2H2.

2 .. significant.accounting.policies

The significant accounting policies and critical accounting estimates and judgments as disclosed in Allied's December 31, 2015, audited annual consolidated financial statements have been applied consistently in the preparation of these unaudited condensed consolidated financial statements.

The unaudited condensed consolidated financial statements are presented in Canadian dollars.

(a) Statement of compliance

The unaudited condensed consolidated financial statements of Allied for the three and six months ended June 30, 2016 and 2015 are prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). The policies set out below were consistently applied to all the years presented, expect as descried below:

ACCOUNTING STANDARDS IMPLEMENTED IN 2016

Allied implemented the amendments to IAS 1, “Presentation of Financial Statements” (“IAS 1 amendments”), beginning January 1, 2016, with no significant impact on Allied’s unaudited condensed consolidated financial statements.

The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2016, were approved and authorized for issue by the Board of Trustees on August 3, 2016.

82

(b) Comparative figures

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

3 .. acquisitions

During the six months ended June 30, 2016, Allied completed the following acquisitions from third-parties:

Calgary, AB Feb. 29, 2016 Office, Retail $10,534 50%

Toronto, ON Mar. 29, 2016 Office 32,396 100%

Montreal, QC May 31, 2016 Office, Retail 172,986 100%

Montreal, QC May 31, 2016 Office, Retail 56,607 100%

$272,523

DATE OF ACQUISITION

PROPERTY TYPE

INVESTMENT PROPERTY OWNERSHIPLOCATION

Toronto, ON Feb . 20, 2015 Development 24,573 50%

Toronto, ON Apr . 15, 2015 Office 8,581 100%

Toronto, ON Jun . 29, 2015 Office, Retail 102,939 100%

$136,093

DATE OF ACQUISITION

PROPERTY TYPE

INVESTMENT PROPERTY OWNERSHIPLOCATION

The net cash consideration paid to acquire the above noted properties was $230,616 which included assumption of other assets of $510, mortgages payable of $35,485 (including a mark to market premium of $1,800) other liabilities of $6,932.

In the six months ended June 30, 2015, Allied completed the following acquisitions from third-parties:

The net cash consideration paid to acquire the above noted properties was $135,979, which included the assumption of other assets of $109 and other liabilities of $223.

83

4 .. investment.properties

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

Balance, beginning of period $3,854,076 $343,201 $4,197,277 $3,490,057 $236,700 $3,726,757

Additions:

Acquisitions 238,023 34,500 272,523 140,261 24,573 164,834

Transfers from PUD 22,633 (22,633) — 230,531 (230,531) —

Transfers to PUD (10,992) 10,992 — (186,892) 186,892 —

Capital expenditures 32,927 47,749 80,676 72,363 115,859 188,222

Dispositions (9,615) — (9,615) (6,275) — (6,275)

Freehold lease and land leases — 14,741 14,741 — 6,301 6,301

Fair value gain (loss) 88,179 (44,124) 44,055 114,031 3,407 117,438

Balance, end of period $4,215,231 $384,426 $4,599,657 $3,854,076 $343,201 $4,197,277

DECEMBER 31, 2015

RENTAL PROPERTIES

RENTAL PROPERTIES

PROPERTIES UNDER DEVELOPMENT

PROPERTIES UNDER DEVELOPMENTTOTAL TOTAL

JUNE 30, 2016

Included in the amounts noted above is $466,920 (December 31, 2015 - $468,861) which represents the adjusted fair value of Allied’s interest in four land leases as well as a freehold lease (collectively referred to as the “Finance Leases”). The Finance Leases maturities range from 28.3 years to 86.0 years from period end. The freehold lease and land lease obligation was adjusted in 2016 to reflect the additional square footage leased subsequent to the inception of the lease.

DISPOSITIONS OF INVESTMENT PROPERTIES DURING THE SIX MONTHS ENDED JUNE 30, 2016:

On February 17, 2016, Allied disposed of a property in Toronto, Ontario for a selling price of $9,615 and gross cash proceeds of $9,491, which were net of selling costs and other working capital amounts.

The reconciliation between the valuation obtained for IFRS purposes and the adjusted valuation for the carrying amounts of investment properties is as follows:

Total fair value $4,796,178 $4,369,013

Less:

Tenant improvement allowances (115,030) (99,565)

Leasing commissions (40,519) (37,793)

Straight-line rents receivable (40,972) (34,378)

Adjusted fair value $4,599,657 $4,197,277

JUNE 30, 2016 DECEMBER 31, 2015

84

VALUATION METHODOLOGY

For the six months ended June 30, 2016, the fair value of investment properties was determined using a similar combination of methodologies as disclosed in the audited consolidated financial statements as at December 31, 2015.

Management verifies all major inputs to the valuations, analyzes the change in fair values at the end of each reporting period and reviews the results with the independent appraiser every quarter. There were no changes to the valuation techniques during the 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 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. Below are the rates used in the modeling process for valuations.

Discount rate 7.1% 7 .1%

Terminal capitalization rate 6.3% 6 .3%

Overall capitalization rate 6.0% 6 .0%

Discount horizon (years) 10 10

JUNE 30, 2016 DECEMBER 31, 2015

WEIGHTED AVERAGE

Increase (decrease) in fair value

Investment Properties $418,151 $199,985 $(183,986) $(353,820)

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

The analysis below shows the maximum impact on fair values of possible changes in capitalization rates, assuming no changes in NOI:

85

5 .. loans.and.notes.receivable

Loans and notes receivable are as follows:

(a) In February 2015, Allied entered into a joint arrangement with Westbank and completed the acquisition of an undivided 50% interest in Adelaide & Duncan, advancing $42,346 to the arrangement 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 a rate of 6.2%. The loan is repayable when the arrangement obtains external construction financing.

(b) Included in notes receivable is an annuity loan receivable of $1,603 (December 31, 2015 - $2,127), bearing interest of 1.8% and maturing on December 1, 2017.

6 .. other.assets

Other assets consist of the following:

Loans receivable (a) $21,173 $21,173

Notes receivable (b) 1,603 2,127

$22,776 $23,300

Current $1,064 $1,055

Non-current 21,712 22,245

$22,776 $23,300

JUNE 30, 2016 DECEMBER 31, 2015

Tenant improvement allowances (1) $115,030 $99,565

Leasing commissions (2) 40,519 37,793

Straight-line rents receivable 40,972 34,378

Equipment and other assets (3) 5,987 5,738

Unsecured term loan interest swap asset — 17

$202,508 $177,491

(1) During the three and six months ended June 30, 2016, Allied recorded amortization of tenant improvement allowances of $4,677 and $9,310, respectively (June 30, 2015 - $2,792 and $5,836, respectively), which was netted against rental revenue.

(2) During the three and six months ended June 30, 2016, Allied recorded amortization of leasing commissions of $2,028 and $3,859 respectively, (June 30, 2015 - $1,558 and $3,148, respectively).

(3) During the three and six months ended June 30, 2016, Allied recorded amortization of equipment and other assets of $390 and $749, respectively (June 30, 2015 - $252 and $483, respectively).

JUNE 30, 2016 DECEMBER 31, 2015

86

7 .. accounts.receivable,.prepaid.expenses.and.deposits

Tenant trade receivables - net of allowance (a) $14,808 $20,848

Other tenant receivables (b) 5,138 10,341

Miscellaneous receivables (c) 9,593 10,654

Prepaid expenses and deposits (d) 23,670 11,712

$53,209 $53,555

JUNE 30, 2016 DECEMBER 31, 2015

(a) Tenant trade receivables

Tenant trade receivables include tenant rental payments that are due at the beginning of each month and annual common area maintenance (“CAM”) and property tax recovery billings.

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.

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

(b) Other tenant receivables

Other tenant receivables pertain to unbilled CAM and property tax recoveries and chargebacks.

(c) Miscellaneous receivables

Miscellaneous receivables consist primarily of property taxes recoverable from municipalities and insurance claims. As at June 30, 2016, there are no indicators that the debtors will not meet their payment obligations.

(d) Prepaid expenses and deposits

Prepaid expenses primarily relate to property operating expenses (realty taxes) and deposits relating to acquisitions.

Allowance for doubtful accounts, beginning of period $1,769 $3,265

Additional provision recorded during the period 563 1,519

Reversal of previous provisions (87) (545)

Receivables written off during the period (962) (1,373)

Allowance for doubtful accounts, end of period $1,283 $2,866

JUNE 30, 2016 JUNE 30, 2015

SIX MONTHS ENDED

87

Mortgages payable (a) $1,144,493 $1,172,468

Construction loans payable (b) 33,181 21,789

Unsecured revolving operating facility (c) 49,085 19,598

Senior unsecured debentures (d) 373,457 224,161

Unsecured term loans (e) 348,894 149,487

$1,949,110 $1,587,503

Current $196,985 $140,587

Non-current 1,752,125 1,446,916

$1,949,110 $1,587,503

JUNE 30, 2016 DECEMBER 31, 2015

8 .. debt

Debt consists of the following items:

(a) Mortgages payable

Mortgages payable have a weighted average stated interest rate of 4.7% as at June 30, 2016 (December 31, 2015 - 4.7%). The mortgages are secured by a first registered charge over specific investment properties and first general assignments of leases, insurance and registered chattel mortgages.

Remaining 2016 $18,293 $24,116 $42,409

2017 34,667 123,887 158,554

2018 33,853 56,900 90,753

2019 31,265 129,365 160,630

2020 25,531 4,456 29,987

2021 24,715 104,344 129,059

2022 20,619 100,102 120,721

2023 16,421 220,957 237,378

2024 3,438 165,326 168,764

2025 172 8,788 8,960

Mortgages, principal $208,974 $938,241 $1,147,215 $1,177,514

Net discount on assumed mortgages 2,634 568

Net financing costs (5,356) (5,614)

$1,144,493 $1,172,468

MORTGAGES PAYABLE,

PRINCIPAL REPAYMENTS

DECEMBER 31, 2015

MORTGAGES PAYABLE,

BALANCE DUE AT MATURITY

JUNE 30, 2016

88

(b) Construction loans payable

Allied provided a guarantee (limited to $114,000) to a Canadian chartered bank to support a $342,000 construction lending facility to assist with the financing of construction costs associated with the development of TELUS Sky, in which Allied has a 33.33% joint arrangement interest. The loan matures on August 31, 2019, and bears interest at bank prime plus 70 basis points or banker’s acceptance rate plus 195 basis points. Allied’s obligation of the balance outstanding under the facility as at June 30, 2016 was $11,624 (December 31, 2015 - $3,126).

Allied has provided a guarantee (limited to $22,870) to a Canadian chartered bank to support a $45,740 construction lending facility to assist with the financing of construction costs associated with the development of the Breithaupt Block project, in which Allied has a 50% joint arrangement interest. On March 23, 2016, the loan maturity was extended to September 30, 2016 (December 31, 2015 - maturity of March 31, 2016). The loan bears interest at bank prime plus 80 basis points or bankers’ acceptance rate plus 180 basis points. Allied’s obligation of the balance outstanding under the facility as at June 30, 2016, was $21,557 (December 31, 2015 - $18,663).

(c) Unsecured revolving operating facility

On January 28, 2015, Allied obtained an unsecured revolving operating facility (the “Unsecured Facility”) of $200,000. The Unsecured Facility contains a $100,000 accordion feature, allowing Allied to increase the amount available under the facility to $300,000. On April 26, 2016, the limit under the Unsecured Facility was increased to $250,000 and the maturity date was extended to January 29, 2019 (December 31, 2015 - maturity of January 18, 2018). The Unsecured Facility bears interest at bank prime plus 70 basis points or bankers’ acceptance plus 170 basis points, at Allied’s current credit rating. The Unsecured Facility had a balance of $49,085 outstanding at June 30, 2016 (December 31, 2015 - $19,598). The Unsecured Facility replaced the $100,000 secured operating facility in January 2015, at which point $24,336 of the secured operating facility was repaid.

(d) Senior unsecured debentures

On May 12, 2016, Allied issued $150,000 of 3.934% Series B unsecured debentures (the “Series B Debentures”) due November 14, 2022, with semi-annual interest payments due on May 14 and November 14 of each year commencing November 14, 2016. Debt financing costs of $801 were incurred and recorded against the principal owing. Funds from the issuance were used to fund acquisitions, repay amounts drawn on the Unsecured Facility and for general working capital purposes.

TELUS Sky 33 .33% $114,000 August 31, 2019 $11,624 $3,126

Breithaupt Block 50% 22,870 September 30, 2016 21,557 18,663

$33,181 $21,789

OWNERSHIPJOINT ARRANGEMENT

DATE OF MATURITY

ALLIED’S GUARANTEE

LIMITJUNE 30,

2016DECEMBER 31,

2015

89

(e) Unsecured term loans

On March 16, 2016, Allied entered into a $150,000 unsecured credit facility with a Canadian chartered bank for a term of five years and bearing interest at a floating rate of CDOR plus 1.70% per year (the “Unsecured Term Facility”). On May 25, 2016, the credit limit for the Unsecured Term Facility was increased to $200,000. Allied drew on the Unsecured Term Facility in two tranches, on March 16, 2016 for $100,000 at an effective interest rate of 2.83%, and on May 25, 2016 for $100,000 at an effective interest rate of 2.89%. The Unsecured Term Facility provides for the interest rate to be adjusted up or down based on changes in the credit rating of the Unsecured Debentures. In addition, Allied entered into interest rate swap agreements which will have the effect of fixing the floating CDOR interest rate for the term of the Unsecured Term Facility. After giving effect to the interest rate swaps, the current effective rate for the Unsecured Term Facility is 2.86%. Financing costs of $700 were incurred and recorded against the principal owing.

Funds from the Unsecured Term Facility were used to fund acquisitions, repay amounts drawn on the Unsecured Facility and for general working capital purposes. The interest rate swap agreements have a notional amount of $200,000.

On May 13, 2015, Allied issued $150,000 of 3.748% Series A unsecured debentures (the “Series A Debentures”) due May 13, 2020, with semi-annual interest payments due on May 13 and November 13 of each year commencing November 13, 2015. Debt financing costs of $1,001 were incurred and recorded against the principal owing. Furthermore, on August 18, 2015, Allied issued an additional $75,000 of 3.748% Series A Debentures with the same terms and conditions as the May 13, 2015, issuance described above. Allied recognized a premium of $731 on the secondary offering of the Series A Debentures. Debt financing costs of $700 were incurred and recorded against the principal owing.

The Series A Debentures and the Series B Debentures are collectively referred to as the “Unsecured Debentures”.

The respective financing costs and premium recognized are amortized using the effective interest method and recorded to Interest Expense (note 8 (f)).

Series A 3 .748% May 13, 2020 May 13 and November 13 $225,000 $225,000

Series B 3 .934% November 14, 2022 May 14 and November 14 150,000 —

375,000 225,000

Net financing costs (1,543) (839)

$373,457 $224,161

INTEREST RATESERIES

INTEREST PAYMENT DATE

DATE OF MATURITY

JUNE 30, 2016

DECEMBER 31, 2015

90

On December 14, 2015, Allied entered into a credit agreement with a Canadian chartered bank to obtain a $150,000 unsecured term loan in the form of a revolving bankers’ acceptance at prime plus 170 basis points which matures December 14, 2018 (the “Unsecured Term Loan”). Concurrently, with the closing of the Unsecured Term Loan, Allied entered into an interest rate swap agreement to fix the variable interest rate on the bankers’ acceptance to 0.945%, resulting in a total fixed interest rate of 2.645% for the full term of the Unsecured Term Loan. The interest rate swap agreement has a notional amount of $150,000. Financing costs of $522 were incurred and recorded against the principal owing.

Funds from the unsecured term loans were used to repay amounts drawn on the Unsecured Facility and for general working capital purposes.

The Unsecured Term Loan and Unsecured Term Facility are collectively referred to as the “Unsecured Term Loans”.

The respective financing costs are amortized using the effective interest method and recorded to Interest Expense (note 8 (f)).

Unsecured Term Loan 2 .645% December 14, 2018 Monthly $150,000 $150,000

Unsecured Term Facility

Tranche 1 2 .830% March 16, 2021 Quarterly 100,000 —

Tranche 2 2 .890% March 16, 2021 Quarterly 100,000 —

350,000 150,000

Net financing costs (1,106) (513)

$348,894 $149,487

INTEREST RATE

INTEREST PAYMENTDATE OF MATURITY

JUNE 30, 2016

DECEMBER 31, 2015

91

Borrowing costs have been capitalized at a weighted average rate of 4.2% per annum ( June 30, 2015 – 4.6%).

(g) Schedule of principal repayments

(f) Interest expense

Interest expense consists of the following:

THREE MONTHS ENDED SIX MONTHS ENDED

Interest on debt $18,704 $15,870 $35,954 $31,267

Interest on freehold lease and land lease obligations 1,140 818 2,244 1,632

Amortization, premium (discount) on debt 21 56 189 105

Amortization, net financing costs 502 326 958 719

$20,367 $17,070 $39,345 $33,723

Less: interest capitalized to qualifying investment properties (4,640) (2,963) (9,723) (6,432)

Interest expense $15,727 $14,107 $29,622 $27,291

JUNE 30, 2016 JUNE 30, 2015 JUNE 30, 2016 JUNE 30, 2015

Mortgages payable, principal repayments 18,293 34,667 33,853 31,265 25,531 65,365 208,974

Mortgages payable, balance due at maturity 24,116 123,887 56,900 129,365 4,456 599,517 938,241

Construction loans payable 21,557 — — 11,624 — — 33,181

Unsecured revolving operating facility 49,085 — — — — — 49,085

Senior unsecured debentures — — — — 225,000 150,000 375,000

Unsecured Term Loans — — 150,000 — — 200,000 350,000

Total $113,051 $158,554 $240,753 $172,254 $254,987 $1,014,882 $1,954,481

REMAINING 2016 2017 2018 2019 2020 THEREAFTER TOTAL

A description of Allied’s risk management objectives and policies for financial instruments is provided in note 23.

92

Current $7,496 $7,412

Non-current 143,533 130,648

$151,029 $138,060

(1) The future minimum lease payments prior to 2020 are less than the effective interest on the freehold lease and land lease obligations.

Future minimum lease payments $3,844 $36,637 $506,464 $546,945 $529,806

Interest accrued on lease obligations 1,185 4,538 — 5,723 —

Less: amounts representing interest payments (5,029) (41,175) (355,435) (401,639) (391,746)

Present value of lease payments $— $— $151,029 $151,029 $138,060

REMAINING 2016 (1)

2017 - 2020 (1) THEREAFTER

JUNE 30, 2016

DECEMBER 31, 2015

JUNE 30, 2016

DECEMBER 31, 2015

Trade payable and other liabilities $69,010 $77,651

Prepaid tenant rents and tenant deposits 31,082 29,891

Accrued interest payable 5,609 4,961

Distributions payable to Unitholders 9,824 9,804

Unsecured Term loans interest swap liability 2,700 —

Mortgage interest swap liability 20,821 16,345

$139,046 $138,652

JUNE 30, 2016 DECEMBER 31, 2015

9 .. freehold.lease.and.land.lease.obligations

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

For the three and six months ended June 30, 2016, minimum lease payments of $1,777 and $3,614, respectively, were paid by Allied ( June 30, 2015 - $1,780 and $3,560, respectively). 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 options or purchase options, escalation clauses or restrictions concerning distributions, additional debt and further leasing.

10 ..accounts.payable.and.other.liabilities

Accounts payable and other liabilities consists of the following:

93

11 ..fair.values.measurements

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 condensed consolidated balance sheet after initial recognition. The fair value hierarchy reflects the significance of inputs used in determining the fair values.

- Level 1 – quoted prices in active markets for identical assets and liabilities;

- Level 2 – inputs other than quoted prices in active markets or valuation techniques where significant inputs are based on observable market data; and

- Level 3 – valuation technique for which significant inputs are not based on observable market data.

The classification and measurement of the various assets and liabilities are disclosed in Allied’s 2015 audited consolidated financial statements.

The following table presents the hierarchy of assets and liabilities:

Assets:

Investment properties (note 4) $— $— $4,599,567 $— $— $4,197,277

Loans and notes receivable (note 5) — 22,776 — — 23,300 —

Other assets (note 6) — 202,508 — — 177,491 —

Cash and cash equivalents (note 18) 4,004 — — 4,323 — —

Accounts receivable, prepaid expenses and deposits (note 7) 53,209 — — 53,555 — —

Liabilities:

Debt (note 8)

Mortgages — 1,232,870 — — 1,246,836 —

Construction loans payable — 33,181 — — 18,692 —

Unsecured revolving operating facility — 49,085 — — 19,598 —

Senior unsecured debentures — 383,450 — — 225,144 —

Unsecured term loans — 352,700 — — 150,000 —

Freehold lease and land lease obligations (note 9 and note 4) — — 466,920 — — 468,861

Accounts payable and other liabilities (note 10) 115,525 23,521 — 122,324 16,328 —

LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 1 LEVEL 2 LEVEL 3

JUNE 30, 2016 DECEMBER 31, 2015

94

The carrying value of Allied’s financial assets and liabilities approximates the fair value except for debt (note 8) and freehold lease and land lease obligations (note 9).

There were no transfers between levels of the fair value hierarchy during the periods.

Other than described in investment properties (note 4), the following summarizes the significant methods and assumptions used in estimating the fair value of Allied’s financial assets and liabilities measured at fair value:

INTEREST RATE DERIVATIVE CONTRACTS

The fair value of Allied’s interest rate derivative contracts, which represent a net liability as at June 30, 2016, is $23,521 as compared to a net liability as at December 31, 2015, of $16,328. The fair value of the derivative contracts is determined using forward interest rates observable in the market (Level 2).

12 ..unitholders'.equity

The following represents the number of Units issued and outstanding, and the related carrying value of Unit equity, for the six months ended June 30, 2016 and June 30, 2015.

DECEMBER 31, 2015JUNE 30, 2016

Trust Units, beginning of period 78,430,153 $1,873,541 75,068,912 $1,754,576

Units issued under the DRIP 102,377 3,422 1,028,659 35,195

Net cash used to purchase and allocate Units to the Restricted Units Plan (net of forfeitures) — (1,021) — (1,672)

Repayments of long-term incentive plan installment loan receivable — 72 — 18

Units issued under the unit based compensation arrangement 159,366 3,492 118,832 3,076

Units issued, net of issuance costs — 2,213,750 82,348

Units canceled under NCIB (102,377) (3,603) — —

Trust Units, end of period 78,589,519 $1,875,903 78,430,153 $1,873,541

UNITS UNITSAMOUNT AMOUNT

On February 2, 2015, Allied raised gross proceeds of $86,336 through the issuance of 2,213,750 Units at a price of $39 per unit. Costs relating to the issuance were $3,988 and were applied against the gross proceeds of the issuance and charged against Unitholder’s equity.

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

95

NORMAL COURSE ISSUER BID

In December 2015, Allied received approval from the Toronto Stock Exchange (“TSX”) for its normal course issuer bid (“NCIB”), which entitles Allied to purchase for cancellation up to 7,685,791 of its outstanding units, representing approximately 10% of its public float at December 15, 2015. The NCIB commenced December 22, 2015, and will terminate December 21, 2016 or such earlier date as the Trust determines or completes its purchase pursuant to the NCIB. All purchases under the NCIB will be made on the open market through the facilities of the TSX or alternate trading systems in Canada at market prices prevailing at the time of purchase. Any units that are repurchased will either be cancelled or delivered to participants under Allied’s Restricted Unit Plan.

On March 9, 2016, the Trust entered into an automatic unit repurchase plan with a broker in order to facilitate repurchase of its Units under the NCIB at times when the Trust would ordinarily not be permitted to purchase its Units due to self-imposed trading blackout periods.

During the six months ended June 30, 2016, Allied purchased 133,371 Units under the NCIB, of which 102,377 Units were purchased for cancellation and 30,994 Units were purchased for delivery to participants under the Trust’s Restricted Unit Plan (December 31, 2015 - nil).

13 ..unit.option.and.restricted.unit.plans

(a) Unit option plan

Allied adopted a Unit Option Plan providing for the issuance, from time to time, at the discretion of the trustees, of options to purchase Units for cash. Participation in the Unit Option Plan is restricted to certain employees of Allied. The Unit Option Plan complies with the requirements of the 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 and vest evenly over three years from the date of grant. All options are settled in Units.

March 6, 2012 March 6, 2017 226,132 $26 .51 (78,576) (13,494) 134,062 134,062

March 5, 2013 March 5, 2018 209,235 $34 .25 (50,844) (26,448) 131,943 131,943

March 4, 2014 March 4, 2019 266,174 $33 .29 (13,182) (65,914) 187,078 124,719

May 6, 2014 May 6, 2019 8,474 $34 .59 — — 8,474 5,649

March 3, 2015 March 3, 2020 302,706 $40 .60 — — 302,706 100,902

March 1, 2016 March 1, 2026 540,480 $31 .56 — (1,563) 538,917 5,462

1,553,201 (142,602) (107,419) 1,303,180 502,737

Expiry dateDate granted VestedNet

outstandingForfeited to date

Exercised - life to date

Exercise price

Units granted

SUMMARY OF UNIT OPTION GRANTS:

96

DECEMBER 31, 2015

YEAR ENDED

JUNE 30, 2016

SIX MONTHS ENDED

For the units outstanding at the end of the period $26.51-40.60 5.50 $21 .91-40 .60 2 .57

The range of exercise prices

The range of exercise prices

Weighted average remaining contractual

life (years)

Weighted average remaining contractual

life (years)

DECEMBER 31, 2015

YEAR ENDED

JUNE 30, 2016

SIX MONTHS ENDED

Balance at the beginning of the period 923,629 $32.89 778,889 $28 .54

Granted during the period 540,480 31.56 302,706 40 .60

Forfeited during the period (1,563) 31.56 (39,134) 33 .60

Exercised during the period (159,366) 21.91 (118,832) 23 .81

Balance at the end of the period 1,303,180 $33.68 923,629 $32 .89

Units exercisable at the end of the period 502,737 $33.20 440,417 $27 .29

Number of units Number of unitsWeighted average

exercise priceWeighted average

exercise price

YEAR ENDEDSIX MONTHS ENDED

Unit options granted 540,480 302,706

Unit option holding period (years) 10 5

Volatility rate 25.74% 17 .80%

Distribution yield 4.75% 3 .60%

Risk free interest rate 1.14% 0 .70%

Value of options granted $2,140 $1,062

JUNE 30, 2016 DECEMBER 31, 2015

Allied accounts for its Unit Option Plan using the fair value method, under which compensation expense is measured at the date options are granted and recognized over the vesting period.

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

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

97

The underlying expected volatility was determined by reference to historical data of Allied’s units over 5 or 10 years.

For the Unit Option Plan, $600 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in net income for the six months ended June 30, 2016, and credited to Unitholders’ equity (for the six months ended June 30, 2015 - $367).

(b) Restricted unit plan

Certain employees and the Trustees of Allied may be granted Restricted Units pursuant to the terms of the Restricted Unit Plan, which are subject to vesting conditions and disposition restrictions, in order to provide a long-term compensation incentive. The Restricted Units remain subject to forfeiture until the participant has held his or her position with Allied for a specific period of time. One third of the Restricted Units vest on each of the first, second and third anniversaries from the date of grant. 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. The following is a summary of Allied’s Restricted Unit Plan:

Outstanding Restricted Units, beginning of period 220,216 178,755

Granted 30,994 47,695

Transferred to participants on expiry of restriction period (27,329) —

Forfeited (164) (6,234)

Outstanding Restricted Units, end of period 223,717 220,216

JUNE 30, 2016 DECEMBER 31, 2015

YEAR ENDEDSIX MONTHS ENDED

For the Restricted Unit Plan, a total of $563 of employee remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in net income for the six months ended June 30, 2016, and credited to Unitholders’ equity (for the six months ended June 30, 2015 - $621).

14 ..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 subscribe for units at 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 is payable as to 5% upon issuance and to the balance (“installment loan receivable”) over a term not exceeding ten 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 June 30, 2016, and December 31, 2015, were $303 and $537, 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.

98

15 ..weighted.average.number.of.units

The weighted average number of units for the purpose of calculating basic and diluted income per unit is as follows:

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 (1,086) (3) (1,083)

Distributions applied against installment loans receivable 3,630 13 3,617

Repayment of installment loans 3,351 68 3,283

(73) 78 (151)

$6,683 $78 $6,605

CUMULATIVE AS AT JUNE 30, 2016

SIX MONTHS ENDED

JUNE 30, 2016CUMULATIVE AS AT DECEMBER 31, 2015

UNITS ISSUED UNDER THE LTIP

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.

Basic 78,566,849 77,674,230 78,526,832 77,139,566

Unit option plan 133,820 148,283 87,623 174,710

LTIP 16,366 17,000 16,683 17,000

Fully diluted 78,717,035 77,839,513 78,631,138 77,331,276

JUNE 30, 2016JUNE 30, 2015JUNE 30, 2016 JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

99

16 ..net.rental.income

Rental revenue from rental properties $91,394 $83,939 $182,532 $168,635

Rental revenue from properties under development 2,826 7,084 5,501 11,872

94,220 91,023 188,033 180,507

Property operating costs - rental properties (38,478) (35,327) (78,879) (73,094)

Property operating costs - properties under development (937) (614) (1,533) (1,352)

$(39,415) $(35,941) $(80,412) $(74,446)

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Salaries and benefits $1,690 $1,888 $3,786 $3,429

Professional and directors fees 718 791 1,302 1,256

Office and general expenses 198 248 397 581

$2,606 $2,927 $5,485 $5,266

Capitalized to investment properties (656) (519) (1,302) (1,037)

Total $1,950 $2,408 $4,183 $4,229

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Future minimum rental income is as follows:

18 ..supplemental.cash.flow.information

Cash and cash equivalents include the following components:

Cash $3,857 $4,176

Short-term deposits 147 147

Total cash and cash equivalents $4,004 $4,323

JUNE 30, 2016 DECEMBER 31, 2015

Future minimum rental income $194,480 $1,275,330 $1,030,936 $2,500,746

2016 2017 - 2020 THEREAFTER TOTAL

17 ..general.and.administrative.expenses

100

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

The following summarizes the change in non-cash operating items:

Supplemental

Interest paid on debt $20,479 $15,272 $36,414 $30,807

Interest received $335 $373 $667 $544

Non-cash transactions

Units issued under DRIP $1,487 $7,316 $3,422 $14,517

Freehold lease and land leases $12,400 $600 $12,970 $1,200

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

Net change in accounts receivable, prepaid expenses and deposits 741 (6,147) 346 (9,306)

Less: Prepaid expenses and deposits (3,099) (1,059) (4,199) (1,931)

Add back: Amounts from acquired properties 510 109 510 109

Net change in accounts payable and other liabilities (7,971) 26,309 394 43,564

Less: Distributions payable to Unitholders (4) (26) (20) (332)

Less: Unsecured Term Loan interest swap liability (1,540) — (2,700) —

Less: Mortgage interest swap liability (771) 3,811 (4,477) (4,050)

Less: Amounts from acquired properties (6,164) (185) (6,932) (223)

Change in non-cash operating items (18,298) 22,812 (17,078) 27,831

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

101

19 ..joint.arrangements

Properties under joint arrangements 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.

478 King Toronto, ON Rental Property 50% 50%

57 Spadina Toronto, ON Rental Property — 50%

816-838 11th SW Calgary, AB Rental Property 50% —

Adelaide & Duncan Toronto, ON Property Under Development 50% 50%

Breithaupt Block I & II Kitchener, ON Rental Property and Property Under Development 50% 50%

College & Manning Toronto, ON Rental Property 50% 50%

College & Palmerston Toronto, ON Property Under Development 50% 50%

King Portland Centre Toronto, ON Rental Property and Property Under Development 50% 50%

TELUS Sky Calgary, AB Property Under Development 33.33% 33 .33%

The Well Toronto, ON Rental Property 40% 40%

OWNERSHIP

LOCATIONJUNE 30,

2016DECEMBER 31,

2015CURRENT STATUSPROPERTIES

Total assets $320,465 $238,288

Total liabilities $112,674 $80,110

JUNE 30, 2016 DECEMBER 31, 2015

Revenue $2,666 $2,807 $4,688 $5,459

Expenses (1,581) (1,883) (3,239) (3,599)

Income before fair value gain on investment properties 1,085 924 1,449 1,860

Fair value gain (loss) on investment properties 65,229 4,815 62,008 (1,158)

Net income $66,314 $5,739 $63,457 $702

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

102

20 ..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 improvement of the properties. Similarly, general and administration expenses, interest income and fair value of derivative instruments are not allocated to segments. These are disclosed below as Other.

SEGMENTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

Rental revenue from investment properties $23,830 $55,940 $14,450 $94,220 $ — $94,220

Property operating costs (11,111) (22,352) (5,952) (39,415) — (39,415)

Net rental income 12,719 33,588 8,498 54,805 — 54,805

Interest expense — — — — (15,727) (15,727)

General and administrative expenses — — — — (1,950) (1,950)

Amortization of leasing costs and other assets (694) (1,115) (219) (2,028) (390) (2,418)

Interest income — — — — 335 335

Fair value gain (loss) on investment properties (11,965) 45,819 2,557 36,411 — 36,411

Fair value loss on derivative instruments — — — — (2,311) (2,311)

Net income (loss) and comprehensive income (loss) $60 $78,292 $10,836 $89,188 $(20,043) $69,145

EASTERN CANADA

CENTRAL CANADA

WESTERN CANADA

SEGMENT TOTAL OTHER TOTAL

Three months ended June 30, 2016

103

Rental revenue from investment properties $46,233 $112,214 $29,586 $188,033 $— $188,033

Property operating costs (22,362) (45,228) (12,822) (80,412) — (80,412)

Net rental income 23,871 66,986 16,764 107,621 — 107,621

Interest expense — — — — (29,622) (29,622)

General and administrative expenses — — — — (4,183) (4,183)

Amortization of leasing costs and other assets (1,405) (2,028) (426) (3,859) (749) (4,608)

Interest income — — — — 667 667

Fair value gain (loss) on investment properties (19,943) 56,010 7,988 44,055 — 44,055

Fair value loss on derivative instruments — — — — (7,193) (7,193)

Loss on disposal of investment properties — (124) — (124) — (124)

Net income (loss) and comprehensive income (loss) $2,523 $120,844 $24,326 $147,693 $(41,080) $106,613

EASTERN CANADA

CENTRAL CANADA

WESTERN CANADA

SEGMENT TOTAL OTHER TOTAL

Six months ended June 30, 2016

SEGMENTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

104

Rental revenue from investment properties $21,108 $53,298 $16,617 $91,023 $— $91,023

Property operating costs (10,164) (19,164) (6,613) (35,941) — (35,941)

Net rental income 10,944 34,134 10,004 55,082 — 55,082

Interest expense — — — — (14,107) (14,107)

General and administrative expenses — — — — (2,408) (2,408)

Amortization of leasing costs and other assets (698) (626) (234) (1,558) (252) (1,810)

Interest income — — — — 373 373

Fair value gain (loss) on investment properties (4,621) 95,525 (4,903) 86,001 — 86,001

Fair value gain on derivative instruments — — — — 3,811 3,811

Net income (loss) and comprehensive income (loss) $5,625 $129,033 $4,867 $139,525 $(12,583) $126,942

EASTERN CANADA

CENTRAL CANADA

WESTERN CANADA

SEGMENT TOTAL OTHER TOTAL

Three months ended June 30, 2015

Rental revenue from investment properties $43,069 $104,354 $33,084 $180,507 $— $180,507

Property operating costs (21,156) (39,574) (13,716) (74,446) — (74,446)

Net rental income 21,913 64,780 19,368 106,061 — 106,061

Interest expense — — — — (27,291) (27,291)

General and administrative expenses — — — — (4,229) (4,229)

Amortization of leasing costs and other assets (1,367) (1,298) (483) (3,148) (483) (3,631)

Interest income — — — — 544 544

Fair value gain (loss) on investment properties (8,050) 92,639 (28,680) 55,909 — 55,909

Fair value loss on derivative instruments — — — — (4,050) (4,050)

Net income (loss) and comprehensive income (loss) $12,496 $156,121 $(9,795) $158,822 $(35,509) $123,313

EASTERN CANADA

CENTRAL CANADA

WESTERN CANADA

SEGMENT TOTAL OTHER TOTAL

Six months ended June 30, 2015

SEGMENTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

SEGMENTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

105

21 ..income.taxes

Allied is taxed as a “Mutual Fund Trust” for income tax purposes. Pursuant to its Declaration of Trust, it 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.

22 ..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 and six months ended June 30, 2016 real estate service revenue earned from these properties was $48 and $87, respectively (three and six months ended June 30, 2015 - $61 and $114, respectively).

The transactions are in the normal course of operations and were measured at the amount set out in agreement between the respective property owners. Related party transactions were made on terms equivalent to those that prevail in arm’s length transactions.

Transactions with key management personnel are summarized in the table below:

Salary, bonus and other short-term employee benefits $936 $843 $1,904 $1,622

Unit-based compensation 559 473 1,063 802

$1,495 $1,316 $2,967 $2,424

JUNE 30, 2016

JUNE 30, 2015

JUNE 30, 2016

JUNE 30, 2015

THREE MONTHS ENDED SIX MONTHS ENDED

106

23 ..risk.management

(a) Capital management

Allied defines capital as the aggregate of Unitholders’ equity, mortgages payable, construction loans payable, Unsecured Facility, Unsecured Debentures, Unsecured Term Loans 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 activities of properties, and to provide stable and growing cash distributions to Unitholders.

Various debt, equity and earnings distributions ratios are used to monitor capital adequacy requirements. For debt management, debt to gross book value and fair value, debt average term to maturity, and variable debt as a percentage of 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 June 30, 2016, and December 31, 2015, debts having variable interest rates and debts having maturities of less than one year aggregated to 4.1% and 3.2% of gross book value, respectively.

On November 28, 2014, Allied filed a short form Base Shelf Prospectus allowing for the issuance, from time to time, of units and debt securities, or any combination there of having an aggregate offering price of up to $1,000,000. This document is valid for a 25-month period.

Allied has certain key covenants in its Unsecured Debentures, Unsecured Facility and Unsecured Term Loans. The key financial covenants include debt service ratios and leverage ratios, as defined in the respective agreements. These ratios are evaluated by the Trust on an ongoing basis to ensure compliance with the agreements. Allied was in compliance with each of the key financial covenants under these agreements as at June 30, 2016, and June 30, 2015.

(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 as at June 30, 2016, are at fixed interest rates and are not exposed to changes in interest rates during the term of the debt. However, there is interest rate risk associated with Allied’s fixed interest rate term debt due to the expected requirement to refinance such debts upon maturity. As fixed rate debt matures and as Allied utilizes additional floating rate debt under the Unsecured Facility, Allied will be further exposed to changes in interest rates. As at June 30, 2016, the Unsecured Facility, which is at floating interest rates and is exposed to changes in interest rates, has a balance of $49,085 (December 31, 2015 - $19,598). In addition, there is a risk that interest rates will fluctuate from the date Allied commits to a debt to the date the interest rate is set with the lender. As part of its risk management program, Allied endeavours to maintain an appropriate mix of fixed rate and floating rate debt, to stagger the maturities of its debt and to minimize the time between committing to a debt and the date the interest rate is set with the lender.

107

(c) Credit risk

Credit risk from tenant receivables arises from the possibility that tenants may experience financial difficulty and be unable to fulfil 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 an allowance for doubtful accounts and the amount of any loss is recognized in the condensed consolidated statements of income and comprehensive income within property operating costs. As at June 30, 2016, and June 30, 2015, allowance for doubtful accounts totals $1,283 and $2,866, 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. An aging of trade receivables, including trade receivables past due but not impaired can be shown as follows:

-1.0% +1.0%

AS AT JUNE 30, 2016CARRYING

AMOUNT INCOME

IMPACTINCOME IMPACT

Unsecured Facility $49,085 $491 $(491)

Mortgages and construction loans payable maturing within one year $147,900 $1,479 $(1,479)

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.

Less than 30 days $3,468 $10,749

30 to 60 days 2,361 2,298

More than 60 days 8,979 17,060

Total $14,808 $30,107

JUNE 30, 2016 JUNE 30, 2015

108

(d) Liquidity risk

Liquidity risk arises from the possibility of not having sufficient capital available to fund ongoing operations or ability to refinance or meet obligations as they come due. Mitigation of liquidity risk is also managed through credit risk as 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 June 30, 2016, and December 31, 2015.

As at June 30, 2016, Allied has entered into interest rate derivative contracts to limit its exposure to fluctuations in the interest rates on $244,219 of its variable rate mortgages payable and $350,000 of its variable rate Unsecured Term Loans (December 31, 2015 - $247,773 and $150,000, respectively). 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. For the three and six months ended June 30, 2016, Allied recognized, as part of the change in fair value adjustment on derivative instruments, a net loss of $2,311 and $7,193, respectively, (for the three and six months ended June 30, 2015 – net gain of $3,811 and loss of $4,050, respectively).

Liquidity and capital availability risks are mitigated by maintaining appropriate levels of liquidity, by diversifying Allied’s sources of funding, by maintaining a well-diversified debt maturity profile and actively monitoring market conditions.

(e) Maturity Analysis

The un-discounted future principal and interest payments on Allied’s debt instruments are as follows:

24 ..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 June 30, 2016, and December 31, 2015, were $90,924 and $36,914, respectively.

Mortgages payable $31,840 $206,725 $133,550 $198,973 $59,931 $733,476 $1,364,495

Construction loans payable 21,557 — — 11,624 — — 33,181

Unsecured revolving operating facility 49,085 — — — — — 49,085

Senior unsecured debentures 7,167 14,334 14,334 14,334 235,118 161,802 447,089

Unsecured term loans 4,678 9,356 159,032 5,465 5,465 200,000 383,996

Total $114,327 $230,415 $306,916 $230,396 $300,514 $1,095,278 $2,277,846

REMAINING 2016 THEREAFTER TOTAL2017 2018 2019 2020

109

Allied is subject to legal and other claims in the normal course of business. Management and legal counsel evaluate all claims. In the opinion of management these claims are generally covered by Allied’s insurance policies and any liability from such claims would not have a significant effect on the condensed consolidated financial statements.

Allied, through a financial intermediary, has issued letters of credit in the amount of $1,936 representing deposits on financing requirements (December 31, 2015 - $7,634).

25 ..subsequent.events

On July 19, 2016, Allied disposed of a property in Toronto, Ontario for a sale price of $3,300.

On July 19, 2016, Allied disposed of a property in Winnipeg, Manitoba for a sale price of $2,550.

Subsequent to June 30, 2016, Allied entered into an agreement to dispose of two properties in Victoria, British Columbia for $12,200.

On July 21, 2016, Allied and RioCan Real Estate Investment Trust (“RioCan”) entered into an agreement to purchase a property in Toronto, Ontario for $25,000, with each of Allied and RioCan acquiring an undivided 50% interest. The acquisition is expected to close in the third quarter of 2016, subject to customary closing conditions.

On July 26, 2016, Allied, RioCan and Diamond Corp. entered into an agreement to sell the residential component of The Well to a third party for approximately $180,000. The sale is scheduled to close upon requisite land severances being granted and upon completion of the underground parking structure and building podiums. This is estimated to occur in early 2020.

On July 28, 2016, Allied purchased a property in Toronto, Ontario for $6,200.

On July 28, 2016, Allied entered into an agreement to purchase a property in Toronto, Ontario for $82,000. The acquisition is expected to close in the third quarter of 2016, subject to customary closing conditions.

Le Nordelec, Montréal

ALLIED PROPERTIES REIT

134 PETER STREET, SUITE 1700 TORONTO, ONTARIO M5V 2H2 T 416.977.9002 F 416.306.8704 alliedreit.com