The COVID-19 market plunge saw REIT prices fall on investors fears that those landlords would struggle to collect rents.
However, payments from this REIT should be secure thanks to its high-quality properties and tenants. It also continues to add to its portfolio with mixed-use properties that enhance its outlook.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST (Toronto symbol AP.UN; www.alliedreit.com) creates value for investors through its 200 office buildings, mainly in major Canadian cities. Most of those are classified as Class I buildings, and together they comprise over 14.1 million square feet of leasable area. The overall occupancy rate is a high 94.7%.
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 continues to add high-quality properties to its portfolio. For example, in May 2020 it paid $225.4 million for a 115-year-old mixed-use building in downtown Vancouver’s Gastown area. As a result, the trust’s revenue increased by 16.8% for the quarter ended June 30, 2020, to $136.9 million from 117.2 million a year earlier. Cash flow per unit rose 3.3%, to $0.497 from $0.481.
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.
Starting January 2020, the REIT raised its monthly distribution by 3.0%. Investors now receive $0.1375 a unit instead of $0.133. The annual rate of $1.65 yields a high 4.9%.
Recommendation in Dividend Advisor: Allied Properties REIT is a buy.
Comments
David
What impact do you thing that the reduced demand for office space following the Coronavirus will have on Allied’s future occupancy rate and therefore earnings?
Allied continues to create value for investors through its existing office buildings and its several properties under development. Its focus on major Canadian cities and continuing high occupancy rate bode well for its recovery once lockdowns end.
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What impact do you thing that the reduced demand for office space following the Coronavirus will have on Allied’s future occupancy rate and therefore earnings?
Allied continues to create value for investors through its existing office buildings and its several properties under development. Its focus on major Canadian cities and continuing high occupancy rate bode well for its recovery once lockdowns end.