This REIT Just Slashed Its Monthly Payout By 60%

Allied Properties Real Estate Investment Trust (TSX:AP) recently announced a steep reduction in its monthly distribution. Unitholders will see their monthly payments decrease by 60% starting in December 2025, dropping from 15 cents to 6 cents per unit. This difficult decision reflects management's urgent priority to lower debt and reduce interest costs.

The trust's financial health has been complicated by a leasing environment that remains sluggish despite some improvements in urban office fundamentals. In its third-quarter results for the period ended September 30, 2025, CEO Cecilia Williams confirmed that the company will miss its objective of reaching 90% occupancy by the end of the year. One bright spot amidst the challenges was securing a renewal with Google for nearly 195,000 square feet at The Breithaupt Block in Kitchener.

To further stabilize its financial position, Allied is doubling down on its portfolio optimization strategy. The trust has already raised $46 million through property sales in Vancouver, Edmonton, and Montreal, and anticipates closing more transactions before the end of 2025.

This year, the stock has declined by 24%, as investors have grown concerned about the real estate investment trust's financials, and the safety of its payout. Prior the cut, it was already looking incredibly unsubstantial with its yield north of 13%. Now, with the reduction, the yield remains high at about 5.5%. But given the uncertainty around the stock, there isn't a compelling reason to take a chance on it and to trust that things will get better anytime soon. When a stock cuts its dividend, it often leads to more declines in the future.

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