Allied Properties Real Estate Investment Trust

On my other blog I am today writing about REIT Payout Ratios continue...

Sound bite for Twitter and StockTwits is: Young growing REIT. The REIT has grown quite rapidly since going public in 2003. They have raised their distributions 8 times in the past 11 years. See my spreadsheet at ap.htm.

I do not own this stock of Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF). Since several stocks that I followed last year 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.

This is a REIT and what I would expect from dividends would be a good dividend rate and growth at or just above the inflation level. For this stock, the current dividend yield is 3.85% with a 5 year median of 4.71%. The 5 and 10 year distribution growth is 1.33% and 3.09% per year. The last dividend increase was for 3.5% and it occurred in 2015.

The 5 year growth may look low, but it is above the 5 year rate of inflation. According to the Bank of Canada, inflation in Canada is running at 1.45% over the past 10 years, 1.13% over the past 5 years and 0.85% over the past 3 years for total inflation. Also it is running at 1.56% over the past 10 years, 1.34% over the past 5 years and 1.24% over the past 3 years for core inflation.

The Dividend Payout Ratios for EPS for 2014 was 66% and the 5 year median is 40%. The problem with looking at this is that the new accounting rules of IFRS saw a big improvement in this ratio. The DPR for CFPS for 2014 is 71% and the 5 year median is 85%.

Because this is a REIT, we need also to look at DPR under Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2014 is 67% and the 5 year median is 76%. The DPR for AFFO for 2014 is 77% and the 5 year median is 95%. These are acceptable DPRs.

Shareholders have done well recently. The 5 and 10 year total return to date is 17.21% and 14.10% per year. The portion of this return that is capital gains is 11.98% per year and the portion of this return that is dividends is 5.23% and 5.71% per year over these periods.

Outstanding shares have increased by 14% and 22% per year over the past 5 and 10 years. Shares have increased due to Stock Options, DRIP and Share Issues. The company has grown by acquisition and they even have a Vice President of Acquisitions. This means that per share values will be what we will be looking at to see if the company has grown for the shareholders. Growth is low to good.

Revenue has grown over the past 5 and 10 years by 17% and 34% per year. The Revenue per Share growth is much lower at 2.8% and 9.9% per year over the past 5 and 10 years.

The EPS growth is good, but this is because of accounting rules changes in 2011. The growth in FFO and AFFO is moderate. FFO has grown at 4% and 4.7% per year over the past 5 and 10 years. AFFO has grown at 3.8% and 4.4% per year over the past 5 and 10 years.

Cash Flow growth is very good, but CFPS growth is only moderate. The growth is Cash Flow is at 21% and 28% per year over the past 5 and 10 years. However, the CFPS growth is at 5.8% and 5.3% per year over these periods.

The Debt Ratios and Leverage and Debt/Equity Ratios are good. For 2014 the Debt Ratio is 2.43 and the 5 year median is 2.40. Leverage and Debt/Equity Ratios for 2014 are 1.69 and 0.69 and the corresponding 5 year median ratios are 1.72 and 0.72.

This is the first of two parts. The second part will be posted on Thursday, March 12, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Allied Properties REIT owns a portfolio of predominantly Class I office properties in Toronto, Montreal, Winnipeg, Quebec City, Ottawa, Victoria, Calgary, Edmonton, Vancouver, and Kitchener-Waterloo. Its web site is here Allied REIT.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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