ALLIED ROPERTIES REAL ESTATE INVESTMENT TRUST $39.54 - Toronto symbol AP.UN

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $39.54 (Toronto symbol AP.UN; Units outstanding: 74.7 million; Market cap: $3.1 billion; TSINetwork Rating: Extra Risk; Dividend yield: 3.7%; www.alliedreit.com) owns 138 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.9 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.

Allied bought $400 million of properties in 2012 and $182.4 million in 2013. In the first three quarters of 2014, it added seven more for $210.0 million.

The trust’s new buildings helped raise its revenue by 11.5% in the quarter ended September 30, 2014, to $85.8 million from $77.0 million a year earlier. Cash flow per unit rose 8.0%, to $0.54 from $0.50.

In July 2012, Allied entered into a joint venture with RioCan REIT to buy buildings in urban areas that the partners can “intensify” to increase revenue and cash flow, mainly by adding tenants. So far, they have completed three developments and have two more underway, all in Toronto.

The trust raised its monthly distribution by 3.5% with the January 2015 payment, to $0.1216 from $0.1175. The units now yield 3.7%.

Allied Properties REIT is a buy.

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