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Allied Properties Real Estate Investment Trust T.AP.UN

Alternate Symbol(s):  APYRF

Allied Properties Real Estate Investment Trust (Allied) is a Canada-based open-end real estate investment trust (REIT). Allied is an owner-operator of distinctive urban workspace in Canada's cities. Its business is providing knowledge-based organizations with workspace that is sustainable and conducive to human wellness, creativity, connectivity and diversity. Allied operates in seven urban markets in Canada, which includes Montreal, Ottawa, Toronto, Kitchener, Calgary, Edmonton and Vancouver. Its urban office properties are managed by geographic location consisting of approximately four groups of cities. Its subsidiaries include Allied Properties Management Trust, Allied Properties Management Limited Partnership, and Allied Properties Management GP Limited.


TSX:AP.UN - Post by User

Comment by incomedreamer11on Dec 03, 2024 9:00am
215 Views
Post# 36342465

RE:RE:Scotia comments

RE:RE:Scotia comments

Distribution Reaffirmed; Now Time to Roll Up the Sleeves to Win

OUR TAKE: Neutral. AP reaffirmed its Dec ’24 distribution ($0.15) + confirmed plan to keep it at $1.80 for 2025. AP also kept its $400M 2024-2025 asset sale target, with $231M in 2024 (leaving ~$170M target for 2025). The distribution was also flat last year (Exhibit 3; no expected Dividend Aristocrat change).

We believe the reaffirmed $1.80/un plan for 2025 is expected (even though we est. unit price reflects a 70% probability of a 50% cut; Exhibit 1) as it aligns with AP’s consistent messaging that it expects to grow into the distribution (our 2025E/2026E AFFO payout ratio is 99%/100%) on a 340bp and 290bp occupancy boost to 92.3% by Q4/26E (total = +670bp vs. Q3/24A); every 100bp = ~2% to AFFOPU. We think the unit price responds to actual occupancy gains (our Q4/24E is +40bp q/q) and not AP commitment to the distribution. Second, we’d like to see more 3%-4% cap rate sales (growing FFOPU while de-levering), so we’d prefer to see $400M+ of sales vs. keeping the existing target.

Bottom line, even reverting to a distribution yield spread to 10YR of 2 STDEV above mean (i.e., 8.2% yield) = ~$22.00 = 20%-25% upside; Exhibit 2, but we think the 670bp needs a solid economy, so recent U.S. Tariff news boosts downside risk, in our view. We Estimate AP Current Unit Price Reflects a 70% Probability of an ~50% Distribution Cut


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