Allied Properties REIT has reported about a $500-million net loss due to a portfolio writedown.

Toronto-based Allied ranks among Canada’s office landlords while holding a portfolio of mixed-use assets. Allied reported the net loss in its latest quarterly report, attributing the red ink mainly to lower rental-and-development-property valuations.

The declines come as Allied and other Canadian office investors are struggling to balance high vacancy with tenants’ changing employee work patterns following several interest-rate hikes..

Allied’s rental-property value declines totalled $425 million and occurred in Toronto, Montreal, Calgary and Vancouver. Development-property valuations fell by $70 million altogether, covering assets in Toronto and Montreal.

Despite taking the writedown, Allied reported a 6% year-over-year rise in operating income to $82 million. The REIT said its occupancy level is 86.4%, which is well below pre-pandemic standards.

During a conference call with analysts and reporters, Allied President and CEO Cecilia Williams said she is confident that occupancy levels will return to their former stable range of 94% to 95%.

But Williams declined to say when she expects stability to resume.