Allied Properties REIT (AP.UN-T)

Tough space for investors, office has had a tough time since Covid. Looking for the turnaround for a long time, and it's been slow. Now trades at 9x PE for 2026, but no growth. Balance sheet is fair. Yield is 11.7%, which they can make.

Don't buy just yet; you have to try to anticipate that "magic moment" when it's time. Hold if you own it. If economy turns down, so will this. If economy's OK, then stock's probably in a bottoming process.

Very high yield. Office market's gone through a lot of pressure post-Covid. Pressure on rents and earnings. Hasn't cut dividend. Wishes they'd cut dividend during Covid, but didn't, and they're not going to cut it now (so they say). It's a waiting game of when will the office market recover? He doesn't think it's going to get worse in the main cities. It'll be a year or two of slowing improving numbers. He can handle flat when he's getting that almost 12% yield. Yield is 11.90%.

Really likes. Only part of the office space that's any good is luxury. For example, high end in New York is booming. Allied owns buildings that are top level and edgy. Huge conglomerate, giving tenants lots of choice. Unique position. Wonderful development opportunities.

Good business, solid financials, great properties, stock's cheap. Dividend's not hugely well covered, but it is covered; doesn't think it will be cut.

Recent results reflect a challenged operating environment. Q4 earnings below expectations. FFO was down 13% YOY. Interest rate headwinds, negative internal growth, earnings headwind. Goal of 90% occupancy by year's end is ambitious, especially with new supply in the key market of Toronto.
 
Payout ratio hovering around 100%; but when you adjust for non-cash revenues, distribution is not covered. Company's adamant in not cutting dividend, willing to borrow to cover it. That's not a formula for success. So don't buy it for the yield.

Continues to like it here. About 80-85% is office, rest is retail and parking. Occupancy around 85%, versus 96-97% pre-Covid. In his dividend growers mandate, though it may not for the foreseeable future. Shedding non-core assets. Trades ~40 cents on the dollar of book value, should attract a re-rating.

Not entirely clear to him what future of back-to-the-office is. Not sure we'll have the same office boom we did pre-Covid. Lower 10-year yield in Canada is helpful, but other sectors in the space are preferable.

Would recommend holding shares. Payout ratio is high, but appears to be able to manage. Occupancy numbers will be interesting to watch. As Toronto grows, will be good for business. Just takes time. 

Thinks rates are heading higher, so REITs are going to come under pressure. If the S&P 500 real estate sector is down 2%, perhaps the Canadian sector won't be hit as hard, but it'll still head lower. If his call is correct about a bigger correction later on, it'll be a better opportunity.

Look to energy names instead for a strong dividend yield.

Doing the best it can, but fundamentals have been really difficult. Vacancy rates are quite high. Sold off data centre assets to build up balance sheet, but then acquired more assets. Distribution coverage not what it once was. Yield is ~10%.

In his dividend growers mandate. Very high dividend yield, over 10%, and is sustainable (though may not grow in near term). Debt to capital ratio ~40%, selling non-core properties. Closing deals will add cash this year. Vacancy rates should stabilize. Private market value is significantly higher. Needs patience.

Dark horse candidate. Former market darling. Trades at 0.4x book value. Office and retail in Toronto. 6M square feet of space in Montreal; 3M across Vancouver, Calgary, Ottawa and Kitchener. 17% compound growth rate total return since IPO, until their Covid fall. Yield is 10%, very sustainable.

Lots of "brick and beam" properties, very beautiful. Redevelopment of those heritage buildings is much more difficult. Smaller square footage actually hurt them more from Covid, as many decided they didn't even need an office. Rental dynamics have changed since Covid.

Office has suffered since the pandemic, supply/demand are out of balance everywhere. Occupancy has slipped to lowest level in 2 years. Leverage is quite high, while net operating income is down this quarter. An execution story. Some wonder if distribution can be sustained.

They rank among the top REITs in Canada and the U.S. They have a history of buying and spending well and adding a lot of value. They were a darling until Covid hammered the office market. Now, AP.UN faces a tough office market. Toronto remains a major city that hasn't returned to the office, so vacancy rates remain high. He doesn't know if this huge wave will return. But AP's dividend is sustainable, though it should be cut to do things like buyback stock and paying down debt.