The 5.5% jump in cash flow in the most-recent quarter is partly derived from new assets in Montreal.
This REIT has grown steadily by acquisition, with additional properties ready to lift cash flow in the long term.
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST (Toronto symbol AP.UN; www.alliedreit.com) creates value for investors through its 198 office buildings, mainly in major Canadian cities. Most of those are classified as Class I buildings, and together they comprise over 12.9 million square feet of leasable area. The overall occupancy rate is a high 94.8%.
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Class I refers to 19th- and early-20th-century industrial buildings that are now used as office space. They often have exposed beams and brick walls, and hardwood floors.
Allied keeps growing steadily by well-timed and savvy acquisitions: It spent $549.5 million on properties in 2019 and $345.8 million in the latest quarter.
As a result, the trust’s revenue increased by 19.3% for the quarter ended March 31, 2020, to $139.0 million from $116.5 million a year earlier. Cash flow per unit rose 5.5%, to $0.501 from $0.475.
Despite COVID-19, Allied continues to make acquisitions. In May 2020, it acquired a 115-year-old mixed-use building in the Gastown area of downtown Vancouver. Allied did not reveal the price, but BC Assessments values the property at $121 million.
Dividend Stocks: 1.9 million square feet of properties coming online soon
Allied’s growth prospects are strong with eight properties currently under development.
When finished, they will represent 1.9 million square feet of office, retail, and residential space. That boost to the REIT’s mixed-use portfolio just enhances its outlook and your prospects for distribution increases and share-price gains.
With the January 2020 payment, Allied raised your monthly distribution by 3.1%. Investors now receive $0.1375 a unit instead of $0.133. Your annual $1.65 rate yields 4.0%.
Allied has raised its annual distribution rate by an average of 2.5% in the past five years. The REIT has an Above Average TSI Dividend Sustainability Rating.
Recommendation in Dividend Advisor: Allied Properties REIT is a buy.
Comments
Adelard
I am not sure If investing in reits currently is a good strategy as office buildings and malls may be less in demand due to covid 19. For example rio can lost half its value and it was a #1 pick . Is it a good idea to buy these stocks at a time where there could be a lesser demand for retail and office space ?
Thanks for your question. We recommend a number of REITs in our Canadian Wealth Advisor newsletter – and we plan to update our advice on the trusts, and their prospects given an increase in work-from-home and other pandemic effects, in an upcoming issue.
Thanks for your question. Allied Properties REIT is a recommendation of our Canadian Wealth Advisor newsletter – and we plan to update our advice on the trust, and its prospects given an increase in work-from-home, in an upcoming issue.
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I am not sure If investing in reits currently is a good strategy as office buildings and malls may be less in demand due to covid 19. For example rio can lost half its value and it was a #1 pick . Is it a good idea to buy these stocks at a time where there could be a lesser demand for retail and office space ?
Thanks for your question. We recommend a number of REITs in our Canadian Wealth Advisor newsletter – and we plan to update our advice on the trusts, and their prospects given an increase in work-from-home and other pandemic effects, in an upcoming issue.
Given the changes coming re an impetus to “Work from Home”, what impact do you think that this will have on Allied’s future revenues?
Thanks for your question. Allied Properties REIT is a recommendation of our Canadian Wealth Advisor newsletter – and we plan to update our advice on the trust, and its prospects given an increase in work-from-home, in an upcoming issue.