TransGlobe REIT in C$247 million IPO

* Could raise C$272 mln with overallotment option

* Plans to buy 65 residential properties

* First distribution in July

TORONTO, May 14 (Reuters) - TransGlobe Apartment Real Estate Investment Trust (TGA_u.TO) said on Friday it raised C$247.3 million in an initial public offering to help fund acquisitions of residential rental properties across Canada.

The REIT, which is taking advantage of healthy investor appetite for companies that pay dividends, could raise as much as C$272.0 million if underwriters exercise an overallotment option within the next 30 days.

TransGlobe said it sold about 24.7 million trust units at C$10.00 a unit. The overallotment option is for another 2.47 million units.

Real estate investment trusts, or REITs, are happy to raise capital these days because of rising valuations as they are rewarded by investors seeking higher returns than those on Canada's benchmark 10-year bond CA10YT=RR, currently at about 3.42 percent. Some say REITs may return more than 10 percent.

TransGlobe said its first distribution, for the period from closing to June 30, will be paid on or about July 15 and will be in the amount of C$0.099 per trust unit.

"The REIT has been formed to indirectly acquire ... 65 residential rental properties containing approximately 8,200 suites, principally located in urban centers in Alberta, Ontario, Quebec, New Brunswick and Nova Scotia that are currently owned or co-owned and operated by affiliates of TransGlobe Investment Management Ltd," it said.

The REIT started trading on the Toronto Stock Exchange on Friday under the symbol TGA_u.TO. Its units were down 0.93 percent at C$9.63 around midday.

The offering was underwritten by a syndicate led by CIBC and including RBC Capital Markets, TD Securities Inc., BMO Nesbitt Burns Inc., Citigroup Global Markets Canada Inc., Canaccord Genuity Corp., Scotia Capital Inc., National Bank Financial Inc. and Dundee Securities Corporation.

The REIT said it intended a subsequent monthly cash distribution in the amount of $0.0625 per trust unit starting on or around Aug. 16 for the month of July. (Reporting by Pav Jordan; editing by Rob Wilson)