Hey there,
While the dividend is certainly creeping up there in terms of yield, we aren't immediately concerned. That said, we have to recognize the fact that REITs are currently under pressure and some, such as True North have already cut the dividend. That said, True North was in a far different position than AP. It was the most leveraged office REIT and had unsustainable payout ratios. The cut was not a surprise. There are naturally concerns about others in the industry as a result of True North's 50% distribution cut.
Allied Properties is in a completely different scenario. The current difficult macro environment notwithstanding, Allied is in one of the better financial positions. The company has some of the lowest debt ratios in the industry and the best interest coverage ratio in the industry. That means it generates enough cash to more than cover interest payments on debt. True North on the other hand had one of the lowest interest coverage ratios. Furthermore, Allied has AFFO and FFO payout ratios of 80% and 71% respectively - both near the low end of industry averages. In comparison, True North had ratios consistently above 100% for the better part of a year. In Allied's case, the distribution is well covered and given that it is the ONLY one in the industry expected to achieve double-digit revenue growth, I'd expect the distribution to be well covered.
Now, all this said - the entire REIT industry is being impacted by higher rates, so there is always a chance that distributions get cut across the board. However, we believe that Allied's lower debt profile, strong coverage ratios, and expected growth rates have it better position than most in the Office REIT industry.
Mat