Allied Properties Real Estate Investment Trust

Sound bite for Twitter and StockTwits is: Probably cheap. On a number of measures this REIT is showing as cheap. Not so using dividend yield but dividend yields go very high around 2008 that we may never see them that high again. See my spreadsheet on Allied Properties Real Estate Investment Trust.

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.

There has been a lot of growth in shares. Over the past 5 and 10 years shares have grown at 13% and 17% per year. Shares have grown due to Share Issues, DRIP and Stock Options. When such growth in shares occurs you have to look at per share values to see how well the company is doing.

For example, Revenue growth looks great at 14.7% and 21.6% per year over the past 5 and 10 years. However, Revenue per Share growth is a lot lower and not great at 1.3% and 3.8% per year over the past 5 and 10 years. Growth in AFFO, FFO and CFPS has been moderate, so not a problem as the lack of growth for Revenue per Share.

The dividends yield is good and the dividend growth is low. This is sort of what you expect from a REIT. The current dividend yield is 4.52% based on a stock price of $33.19. The 5 year median dividend yield is at 4.34%. The dividend growth is at 2.03% and 2.23% per year over the past 5 and 10 years. The most recent increase was in 2016 and it was for 2.8%.

The growth in dividends is better than the rate of inflation which the Bank of Canada says is at 1.37% and 1.07% for core and total inflation over the past 5 years and at 1.56% and 1.49% per year for core and total inflation over the past 10 years.

It is probably best to look at the Dividend Payout Ratios using Adjusted Funds from Operations (AFFO) and Funds from Operations (FFO). This is generally what is look at in REITs rather than EPS. In 2015 the DPR for AFFO was 80.6% and for FFO was 67%. The 5 year median DPR for AFFO was 85% and for FFO was 73%. This would suggest that the REIT can afford its dividends.

It is interesting to me that there are insider buyers and sellers. Insider selling is at 0.18% and insider buying is at 0.10% to get net insider selling at 0.08%. Insider selling is rather high and is just a bit higher than the increase in shares for this REIT for stock options which is at 0.15%. The insider selling is by directors.

The Liquidity Ratio is very low and generally Liquidity Ratios tend to be low in REITs. The Liquidity Ratio for 2015 was 0.21. Adding in Cash Flow after dividends only gets us to 0.47. When ratio is below 1.00, it means that current assets cannot cover current liabilities. This can make a company vulnerable in bad times. The other debt ratios are fine.

To check the current stock price, I am looking at Price/AFFO and Price/FFO Ratios rather than Price/Earnings per Share Ratios. The 5 year low, median and high median P/FFO Ratios are 15.24, 16.73 and 18.22. The 10 year values are a lot lower at 13.11, 15.17 and 17.24. The current P/FFO Ratio is 14.24 based on a stock price of $33.19 and 2016 FFO estimate of $2.33. This stock price testing suggests that the stock is close to cheap, if not cheap.

The 5 year low, median and high median P/FFO Ratios are 17.79, 19.92 and 22.60. The 10 year values are a lower at 16.17, 18.17 and 19.93. The current P/FFO Ratio is 16.51 based on a stock price of $33.19 and 2016 FFO estimate of $2.01. This stock price testing suggests that the stock is close to cheap, if not cheap.

I get a Graham Price of $41.62. The 10 year low, median and high median P/GP Ratios are 0.81, 0.90 and 1.01. The current P/PG Ratio is 0.80 based on a stock price of $33.19. This stock price testing suggests that the stock price is cheap.

This REIT had very high dividend yield in 2008/2009. It was not the only REIT to do this. As a result of this this REIT has very high historical yields with the historical high at 12% and the historical median at 6%. The 5 year median dividend yield is 4.34% and this is some 4% lower than the current dividend yield of 4.52%. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month stock price is $37.52. This implies a total return of 17.57% with 13.01% from capital gains and 4.52% from dividends.

Kay Ng of the Motley Fool likes this stock. One reason is their diversified tenant base. Doug Madison of Financial Market News talks about a Director buying shares and what several research firms have said about this stock.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

On my other blog tomorrow I will write about Dividend Stocks for March 2016, learn more on Tuesday, March 8, 2016 around 5 pm. The last stock I wrote about was Canadian Real Estate Investment Trust (TSX-REF.UN, OTC- CRXIF)... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC- RIOCF)... learn more on Wednesday, March 9, 2016 around 5 pm.

Also, on my book blog I have put a review of the book How Civilizations Die by David Goldman,learn more...

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 Properties Real Estate Investment Trust.

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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