In relation to high-yield actual property funding trusts (REITs), as a rule, the good transfer is to stability enticing dividends with a detailed take a look at the underlying enterprise stability. That’s as a result of a excessive dividend yield generally could be a pink flag if it’s masking deeper issues like declining revenue, rising debt, or different weak fundamentals.

So, when a REIT is yielding practically 10%, like Allied Properties Actual Property Funding Belief (TSX:AP.UN), it’s not unfair to ask whether or not its payout is sustainable or too good to be true. Allied has had its share of ups and downs in recent times, however its current strikes sign that it’s targeted on turning the web page. It’s been actively reshaping its portfolio, shedding non-core belongings, and doubling down on properties in city hubs.

On this article, I’ll discuss why this month-to-month dividend inventory should still be value a detailed look regardless of the dangers that include a sky-high dividend yield.

Allied Properties REIT’s ultra-high dividend yield

To present you a bit background, Allied Properties REIT owns and operates city workspace with a presence throughout Toronto, Vancouver, Calgary, Montréal, Edmonton, and Kitchener. Over the previous two years, Allied inventory has plunged practically 30% regardless of a stable broader market rally. In consequence, it presently trades at $18.72 per share with a market cap of $2.6 billion. The current sharp declines, nonetheless, have made its annualized dividend yield look much more enticing, which presently stands at an eye-popping 9.6%. The corporate distributes these dividend payouts each month.

Though the inventory has recovered by 25% within the final six months, its current volatility displays shifting investor sentiment and the short-term strain on Allied’s fundamentals.

Some early indicators of progress

To know the entire story, it’s value Allied’s current monetary progress traits. Within the second quarter of 2025, the REIT reported a minor 1.2% YoY (year-over-year) drop in its rental income to $145 million. Equally, its working revenue declined 3% YoY, however the identical asset web working revenue nonetheless grew by 1.5% from a 12 months in the past, exhibiting some resilience in its core operations.

On the identical time, its adjusted FFO (funds from operations) payout ratio hit practically 99%, which can increase eyebrows about sustainability if money circulate doesn’t enhance. Nonetheless, Allied’s precise cash-generating potential, as mirrored in its adjusted FFO, has solely softened barely of late, not collapsed — one thing revenue buyers might want to bear in mind.

Deal with asset gross sales and power in new leasing exercise

Regardless of continued short-term challenges, the extra vital issue is what Allied has been doing behind the scenes. In current quarters, the corporate has moved aggressively to scrub up its stability sheet. In 2024 and 2025, it offered or put underneath contract a complete of 28 non-core properties throughout Montréal, Toronto, Vancouver, Calgary, and Edmonton with an purpose to boost over $500 million. These proceeds are getting used to cut back debt and help the REIT’s shift towards higher-quality belongings in key city nodes.

In Vancouver, Allied’s 400 West Georgia property is now 96% leased, with a long-term deal simply signed with a world instructional establishment. In the meantime, Netflix has expanded its presence in Allied’s M4 constructing at Predominant Alley Campus, now occupying 136,544 sq. toes and pushing the property to 90% leased.

In September, Allied additionally raised $450 million by a inexperienced bond providing, which it’s utilizing to repay building and time period loans — a transfer geared toward bettering its debt metrics.

What makes this REIT value watching proper now

Clearly, Allied’s present technique is concentrated on city, amenity-rich neighbourhoods with long-term progress potential. Its leasing exercise, particularly with main manufacturers like Netflix and Complete Meals Market, reveals that demand nonetheless exists for the best kind of properties. And by promoting off weaker properties and reducing leverage, the REIT is working towards its purpose of getting web debt under 10 instances adjusted earnings earlier than curiosity, taxes, depreciation, and amortization.

Whereas a current dip in its adjusted FFO could make its dividend look fragile at first look, Allied is already addressing the basis points, together with debt load, asset combine, and tenant base. That’s what offers this REIT potential upside for buyers who can tolerate a bit near-term noise in alternate for long-term month-to-month revenue.