A good article on REIT Payout Ratios is this 2011 article from the Globe and Mail by John Heinzl. Basically what this article is saying that if a REIT is not continuing payout more than the AFFO there is generally no problems with the Payout Ratio. This article also talks about the accounting changes done around 2011 which affected how EPS was determined on REITs. Looking at my spreadsheets on REITs, the EPS values increased generally considerably with the new IFRS accounting rules.
There is a more recent article dated 2013 from the Globe and Mail by John Heinzl that suggests that a good payout ratio for REIT is 75% to 95% of the AFFO. I think that this is a reasonable goal for a REIT.
In the second article John Heinzl also talks about some REITs paying more than the AFFO because not all distributions are paid in cash. Sometimes REITs count on Dividend Reinvestment Programs in which shareholders get more shares rather than cash distributions.
On my other blog I am today writing about Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... continue...
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.