When it comes to high-yield real estate investment trusts (REITs), more often than not, the smart move is to balance attractive dividends with a close look at the underlying business stability. That’s because a high dividend yield sometimes can be a red flag if it’s masking deeper problems like declining income, rising debt, or other weak fundamentals.
So, when a REIT is yielding nearly 10%, like Allied Properties Real Estate Investment Trust (TSX: AP.UN), it’s not unfair to ask whether its payout is sustainable or too good to be true. Allied has had its share of ups and downs in recent years, but its recent moves signal that it’s focused on turning the page. It’s been actively reshaping its portfolio, shedding non-core assets, and doubling down on properties in urban hubs.
In this article, I’ll talk about why this monthly dividend stock may still be worth a close look despite the risks that come with a sky-high dividend yield.
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Allied Properties REIT’s ultra-high dividend yield
To give you a little background, Allied Properties REIT owns and operates urban workspace with a presence across Toronto, Vancouver, Calgary, Montréal, Edmonton, and Kitchener. Over the past two years, Allied stock has plunged nearly 30% despite a solid broader market rally. As a result, it currently trades at $18.72 per share with a market cap of $2.6 billion. The recent sharp declines, however, have made its annualized dividend yield look even more attractive, which currently stands at an eye-popping 9.6%. The company distributes these dividend payouts every month.
Although the stock has recovered by 25% in the last six months, its recent volatility reflects shifting investor sentiment and the short-term pressure on Allied’s fundamentals.
Some early signs of progress
To understand the whole story, it’s worth looking at Allied’s recent financial growth trends. In the second quarter of 2025, the REIT reported a minor 1.2% YoY (year-over-year) drop in its rental revenue to $145 million. Similarly, its operating income declined 3% YoY, but the same asset net operating income still grew by 1.5% from a year ago, showing some resilience in its core operations.
At the same time, its adjusted FFO (funds from operations) payout ratio hit nearly 99%, which may raise eyebrows about sustainability if cash flow doesn’t improve. However, Allied’s actual cash-generating ability, as reflected in its adjusted FFO, has only softened slightly of late, not collapsed — something income investors may want to keep in mind.
Focus on asset sales and strength in new leasing activity
Despite continued short-term challenges, the more important factor is what Allied has been doing behind the scenes. In recent quarters, the company has moved aggressively to clean up its balance sheet. In 2024 and 2025, it sold or put under contract a total of 28 non-core properties across Montréal, Toronto, Vancouver, Calgary, and Edmonton with an aim to raise over $500 million. These proceeds are being used to reduce debt and support the REIT’s shift toward higher-quality assets in key urban nodes.
In Vancouver, Allied’s 400 West Georgia property is now 96% leased, with a long-term deal just signed with a global educational institution. Meanwhile, Netflix has expanded its presence in Allied’s M4 building at Main Alley Campus, now occupying 136,544 square feet and pushing the property to 90% leased.
In September, Allied also raised $450 million through a green bond offering, which it is using to repay construction and term loans — a move aimed at improving its debt metrics.
What makes this REIT worth watching right now
Clearly, Allied’s current strategy is focused on urban, amenity-rich neighbourhoods with long-term growth potential. Its leasing activity, especially with major brands like Netflix and Whole Foods Market, shows that demand still exists for the right type of properties. And by selling off weaker properties and lowering leverage, the REIT is working toward its goal of getting net debt below 10 times adjusted earnings before interest, taxes, depreciation, and amortization.
While a recent dip in its adjusted FFO may make its dividend look fragile at first glance, Allied is already addressing the root issues, including debt load, asset mix, and tenant base. That’s what gives this REIT potential upside for investors who can tolerate a little near-term noise in exchange for long-term monthly income.
