Is it a good company at a reasonable price? The problem with this REIT is that they have invested in office real estate. It would seem that currently companies are making efforts to get their staff back into the office. It is hard to say how successful this will be. I remember in the 1990’s people talked about a future time when people would all work from home. I do not think it quite worked out as imagined. This REIT is certainly cheap and the dividend is very high at 10.6%.
I do not own this stock of Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF). Since several stocks that I followed in 2015 were deleted from the stock exchange, I was looking for other stocks to follow. I am sure that I got this from a Canadian Dividend site called Think Dividends, but I cannot find it at present.
When I was updating my spreadsheet, I noticed they have earning losses because of Fair Value Loss on Investment Properties and Investments Properties held for Sale. This stock seems to have hit a high in February 2020 ($60.00) and has gone downhill ever since.
If you had invested in this company in December 2014, for $1,010.88 you would have bought 27 shares at $37.44 per share. In December 2024, after 10 years you would have received $450.58 in dividends. The stock would be worth $463.05. Your total return would have been $913.63. This would be a total loss of 1.26% per year with 7.51% from capital loss and 6.25% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $37.44 | $1,010.88 | 27 | 10 | $450.58 | $463.05 | $913.63 |
The current dividend yield is high with dividend growth low. The current dividend yield is High (7% or higher) at 10.60%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 4.74% and 4.10%. The historical median dividend yield is good (5% to 6% ranges) at 5.20%. The dividend yields only got really high in 2023. The dividend growth is low (below 8% per year) at 2.4% per year. The last dividend increase was in 2023 and it was for 2.9%.
The Dividend Payout Ratios (DPR) are probably too high. The DPR for 2024 for Earnings per Share (EPS) is not calculable because of earnings losses with 5 year coverage too high at 190%. The DPR for 2024 for Adjusted Funds from Operations (AFFO) is fine at 92% with 5 year coverage at 87%. The DPR for 2024 for Funds from Operations (FFO) is fine at 83% with 5 year coverage at 77%. The DPR for AFFO and FFO test to be high. The DPR for 2024 for Cash Flow per Share (CFPS) is too high at 106% with 5 year coverage at 62%. The DPR for 2024 for Free Cash Flow (FCF) is too high at 139% with 5 year coverage at 81%. There is not agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -86.91% | 190.01% |
| AFFO | 92.02% | 86.76% |
| FFO | 82.95% | 77.13% |
| CFPS | 105.59% | 62.13% |
| FCF | 139.18% | 80.63% |
I would give this stock a pass on Debt Ratios but they do have a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is fine at 1.56 and currently at 1.57 for a REIT. That is because we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.35 and currently at 0.35 because this is a more important one for a REIT. The Liquidity Ratio for 2024 is too low at 0.45 and 0.45 currently. If you added in Cash Flow after dividends, the ratios are still too low at 0.37 and currently at 0.40. If you add back in the current debt, the Liquidity Ratio fine at 1.01 and currently at 1.08, but it is low as they have a lot of debt. The Debt Ratio for 2024 is good at 2.10 and 2.10 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.91 and 0.91 and currently at 1.91 and 0.91.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.35 | 0.35 |
| Lg Term R | 1.56 | 1.57 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.45 | 0.45 |
| Liq. + CF | 0.37 | 0.40 |
| Liq. + CF +Dd | 1.01 | 1.08 |
| Debt Ratio | 2.10 | 2.10 |
| Leverage | 1.91 | 1.91 |
| D/E Ratio | 0.91 | 0.91 |
The Total Return per year is shown below for years of 5 to 21 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 2.43% | -14.31% | -19.92% | 5.61% |
| 2014 | 10 | 2.47% | -1.26% | -7.51% | 6.25% |
| 2009 | 15 | 2.09% | 13.08% | 7.37% | 8.17% |
| 2004 | 20 | 2.78% | 11.17% | 10.39% | 9.30% |
| 2003 | 21 | 3.79% | 11.17% | 10.88% | 9.49% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.94, 11.43, 13.24. The corresponding 10 year ratios are 7.85, 9.03 and 10.13. The corresponding historical ratios are 8.95, 11.23 and 12.92. The current P/E Ratio is 9.70 based on a stock price of $16.98 and EPS estimate for 20256 of $1.75. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 11.52, 16.94 and 22.04. The corresponding 10 year ratios are 16.87, 19.75 and 22.64. The current P/AFFO Ratio is 9.82 based on a stock price of $16.98 and AFFO estimate for 2025 of $1.73. The current ratio is below the low ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 10.28, 15.12 and 19.16. The corresponding 10 year ratios are 14.08, 16.81 and 19.50. The current P/AFFO Ratio is 8.12 based on a stock price of $16.98 and AFFO estimate for 2025 of $2.09. The current ratio is below the low ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $41.37. The 10-year low, median, and high median Price/Graham Price Ratios are 0.53, 0.64 and 0.71. The current P/GP Ratio is 0.41 based on a stock price of $16.98. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 0.96. The current P/B Ratio is 0.39 based on a stock price of $16.98, Book Value of $4,563M and Book Value per Share of $43.47. The current P/B Ratio is 59% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 16.10. The current ratio is 14.70 based on a stock price of $16.98, Cash Flow per Share for last 12 month of $1.16 and Cash Flow of $148M. The current ratio is 8.7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.20%. The current dividend yield is 10.60% based on dividends of $1.80 and a stock price of $16.98. The current dividend yield is 104% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.10%. The current dividend yield is 10.60% based on dividends of $1.80 and a stock price of $16.98. The current dividend yield is 159% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 8.72. The current P/S Ratio is 3.48 based on Revenue estimate for 2025 of $624, Revenue per Share of $4.87 and a stock price of $16.98. The current ratio is 60% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield testing is saying that the stock price is relatively cheap. This is confirmed by the P/S Ratio test. A number of the other tests are saying that the stock price is relatively cheap with one saying it is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1), and Hold (6). The consensus would be a Buy. The 12 month stock price consensus would be $19.03 with a high of $22.50 and a low of $17.50. The consensus stock price of $19.03. This implies a total return of 22.67% with 12.07% from capital gains and 10.60% from dividends.
For the current year there are three analysts on Stock Chase talking about this stock with recommendations of Wait, Do Not Buy and Buy. Stock Chase gives this stock 3 stars out of 5. One analyst likes the high yield and another thinks fundamentals are difficult and yet another thinks that it stock price would go lower for a better price to buy. Adam Othman on Motley Fool says buy for the high yield and the company’s stellar dividend history. Brian Paradza on Motley Fool likes the high yield and a bet on the return to the office. The company put out a press release via Global Newswire about their fourth quarter of 2024 results.
Simply Wall Street looks at this stock viaYahoo Finance and thinks it is undervalued. Simply Wall Street gives this stock 2 and one half stars out of 5. They give out 2 warnings of debt is not well covered by operating cash flow; and dividend of 10.47% is not well covered by free cash flows.
Allied Properties Real Estate Investment Trust is a real estate investment trust engaged in the development, management, and ownership of primarily urban office environments across Canada's major cities. Most of the total square footage in the company's real estate portfolio is located in Toronto and Montreal. Its web site is here Allied Properties Real Estate Investment Trust.
The last stock I wrote about was about was Canadian Pacific Kansas City Ltd (TSX-CP, NYSE-CP) ... learn more. The next stock I will write about will be ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more on Friday, February 14, 2025 around 5 pm. Tomorrow on my other blog I will write about Quick Market Update.... learn more on Thursday, February 13, 2025 around 5 pm.
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