Allied Properties Real Estate Investment Trust T.AP.UN

Scotia comments

[incomedreamer11]

 

Office. We’re finally seeing some stabilization in cap rates. Office cap rates were flat across the board, except Vancouver DT Class B (+25bp q/q); AP has some exposure in Vancouver but unlikely Class B. Overall, both DT and Suburban Office cap rates were flat q/q in Q2/24 after suffering significant expansion in Q1/24 (+19bp and +111bp, respectively) and in 2023 (+88bp and +81bp). Since 2022, DT private market cap rates are +181bp vs. +200bp and +260bp AP and D implied cap rate. As highlighted in our Q2/24 Sector Update, Office fundamentals appear to be stabilizing with new supply (as a percentage of inventory) at the lowest since 2005. For AP, we still believe that investors may have to wait until Q3 results in late October for critical occupancy gains. For D, stabilizing cap rates could be more important in order to spur asset monetizations, which we believe is more critical (than improving occupancy)..

Top Value Picks = AP, BN, DIR, GRT. 

Top Income Picks = AP, CHP, CRR, CRT, SIA.
Office. We’re finally seeing some stabilization in cap rates. Office cap rates were flat across the board, except Vancouver DT Class B (+25bp q/q); AP has some exposure in Vancouver but unlikely Class B. Overall, both DT and Suburban Office cap rates were flat q/q in Q2/24 after suffering significant expansion in Q1/24 (+19bp and +111bp, respectively) and in 2023 (+88bp and +81bp). Since 2022, DT private market cap rates are +181bp vs. +200bp and +260bp AP and D implied cap rate. As highlighted in our Q2/24 Sector Update, Office fundamentals appear to be stabilizing with new supply (as a percentage of inventory) at the lowest since 2005. For AP, we still believe that investors may have to wait until Q3 results in late October for critical occupancy gains. For D, stabilizing cap rates could be more important in order to spur asset monetizations, which we believe is more critical (than improving occupancy).