The market source says the REIT last month bought a 67,393-sf building at 179 John St. and 91,215-sf building at 96 Spadina Ave., both in Toronto. The REIT's purchase agreement, reported in mid-February, says the two assets were under contract for $28 million.

The REIT develops class 1 office space through adaptive re-use of light-industrial structures in urban infill areas. The space typically attracts architects, media and advertising firms as tenants. According to a management presentation, the REIT is buying properties with "considerably less GLA than is permissible under the current zoning."

In his March report, Emory says the Toronto portfolio, then 48 properties, spanned 19.3 acres with about 2.6 million sf of gross leaseable area or slightly more than three times the land's coverage. Based on current zoning, Emory estimates 2.6 million sf of additional GLA could be built. "Because of structural limitations and existing lease commitments, the amount of additional GLA that we could, in practice, create in the near term is considerably less," he says in the report. A property-by-property analysis shows "it is practically possible to create between 500,000 and 750,000 sf of additional GLA in the near term, market conditions permitting," says Emory, who was unable to comment about the Allied Properties' deals due to the quiet period.

Come August, the six-year-old REIT's portfolio will total 5.6 million sf, of which 52% in 55 buildings are in Toronto. Montreal will account for 36% of the real estate; Winnipeg, 7%; Quebec City, 3%; and Waterloo, 2%. At the Q1 close, the REIT's portfolio was 97.6% leased, excluding a long list of properties under development.

The REIT admits it has lease roll-over risk: 12.8% of the portfolio coming due this year; 11.4% in 2009; 22.5% in 2010; 15.7% in 2011; and 13.2% in 2012. The weighted average lease term is four years.

In addition to its acquisition pipeline, the REIT has several redevelopment plans in the works, with a heavy concentration in Downtown West and King West submarkets, which have total inventories of 9.2 million sf and 1.9 million sf, respectively, of office space and vacancy rates of 3.4% and 8.5%, respectively. The third submarket, Downtown East, contains 2.1 million sf and a 7.5% vacancy, according to market reports.

At 544 King St. West, the REIT is planning to break ground in spring 2009 on a 150,000 sf of GLA in a LEED-certified design. The 19,400-sf tract will include 66 parking spaces. Preleasing will begin in September, according to the REIT's report.

At 96 Spadina Ave., the REIT has a partially renovated building with 91,000 sf of GLA. The plan is to finish the renovation on the 60%-leased asset before 2008 ends. Also in Toronto, the REIT is planning a 150,000-sf, LEED-certified building at 230 Richmond St. East and another large-scale office project at 134 Peter St.

The Montreal development docket includes a 22,000-sf office building, which is being preleased, for 4450 Saint Laurent Blvd. which abuts an 82,688-sf building at 4446 Saint Laurent Blvd. that was bought in 2006.