Best Canadian REITs

Do you want to earn a steady income from the real estate market without getting your hands dirty?

Then REITs are the perfect choice for you. A real estate investment trust (REIT) is a business that possesses, manages, or funds income-producing properties. It enables individual investors to generate profit from real estate property investments without owning, managing or financing any properties themselves. REITs, like mutual funds, pool money from various sources (investors). REITs are a way to invest in real estate with a small amount of money.

Rental apartments, storage systems, medical centers, resorts, and warehouses are all examples of properties in a REIT portfolio. REITs are real estate investment trusts focusing on a specified property sector (real estate market). On the contrary, diversified and specialty REITs possess and specialize in multiple assets, such as both office space and retail buildings or industrial properties.

Also, read about the best Canadian REIT ETFs.

8 Canadian REITs You Should Invest In

Here are eight REITs with the most promising growth potential for Canadian investors who want to get ahead of the curve.

Canadian Apartment Properties REIT (TSX:CAR.UN)

The Canadian Apartment Properties Real Estate Investment Trust, or CAPREIT, is a REIT specializing in acquiring and renting multi-unit residential rental property holdings in and around major Canadian cities. The majority of the company’s investment portfolio consists of apartments and townhouses close to public services. Most of CAPREIT’s holdings are geared at the mid-tier and luxury markets, being the largest holding company.

Rent revenue accounts for approximately all of its revenue as it leases its assets to tenants. The assets in the Greater Toronto and Greater Montreal regions account for the majority of this revenue. The majority of Canadian Apartment REIT’s total housing sites are located in these structures. With about $17 billion in real estate assets under management, Canadian Apartment REIT holds or has stakes in over 67,000 residential apartment units, townhouses, and prefabricated housing community sites in Canada and the Netherlands. CAPREIT has increased monthly cash payments per Unit by 103 percent since its initial public offering in May 1997.

Trading on the stock exchange at $52.55 as of April 9, 2022 (8:19 AM), Canadian Apartment REIT promises a dividend distribution of 2.759%, paying monthly distribution of 0.121 CAD per share. The current EPS and P/E ratio of 8.03 and 6.50, respectively, highlight the profitability of this trust.

RioCan REIT (REI.UN)

As Canada’s largest real estate investment trust, RioCan owns, develops, and operates Canada’s largest portfolio of shopping centers. RioCan’s diversification across the retail, residential, and mixed-use sectors, coupled with its strong geographic spread across Canada, is a significant strength. Its resilient performance during economic downturns, combined with a commitment to sustainable growth, provide a positive outlook. The company has been investing in major urban markets, where population growth and urbanization trends are driving demand.

Allied Properties REIT (TSX:AP.UN)

Allied Properties real estate investment trust is a Canadian REIT that mainly develops, manages, and owns urban workplaces in Canada’s major cities. The company’s property investment portfolio is dominated by Toronto and Montreal, which comprise most of the total square feet area. As a monthly dividend payer, I have definitely included it in our list of Canadian REITs.

Allied Properties receives nearly all of its revenue from residents in its properties in the form of rental money. The majority of its profits come from its Central Canadian properties. Allied Properties’ primary tenants are IT, finance, government, marketing, and telecommunication industries. The corporation has various telecommunications/IT and retail properties within its balanced portfolio. On March 31, 2022, the Trustees of Allied Properties REIT declared a dividend distribution of $0.1458 per share for the month of March 2022, yielding an annual distribution yield of $1.75 per share, on March 15, 2022. The dividend will be paid to unitholders of record on April 18, 2022.

Trading on the stock exchange at $44.99 as of April 9, 2022 (8:38 AM), is one of the most profitable Canadian REITs in the industrial sector. With a market capitalization of 5,756,569,254, this firm is expected to deliver substantial returns on investment with a P/E ratio of 13.00 and an EPS of 3.47.

Choice Properties REIT (TSX:CHP.UN)

Choice Properties REIT is a Canadian real estate company that participates in, maintains, and develops retail, commercial, and industrial properties. The company’s diversified portfolio consists predominantly of shopping malls with supermarkets as anchors and freestanding stores. Most of the estates are in Ontario and Quebec, with Alberta, Nova Scotia, British Columbia, and New Brunswick following closely behind.

Most Choice Properties REIT’s earnings come from leasing residences to tenants. Loblaw Companies, the company’s primary tenant, contributes much of the overall rent. On March 31, 2022, Choice Properties REIT stated that it had completed the originally scheduled purchase of six high-quality office properties in Toronto, Vancouver, and Montreal to Allied Properties REIT.

Trading on the stock exchange at $15.82 as of April 9, 2022 (8:53 AM), it is among the leading Canadian office REITs performance-wise, having a market capitalization of 5,182,455,560. It pays a dividend of 0.062 CAD every month, averaging a distribution yield of 4.678%. The P/E ratio of 225.90 with a healthy trading volume of 523,215 makes it the best time to invest in this REIT.

H&R REIT (TSX:HR.UN)

H&R Real Estate Investment Fund is one of Canada’s largest REITs, surpassing SmartCentres REIT. It has total assets of about $10.7 billion in its diversified portfolio. Following the spin-off of Primaris, H&R REIT owns a North American portfolio of high-quality commercial, industrial, residential, and retail buildings totalling over 29.4 million square feet. H&R is in the midst of a five-year strategic restructuring to become a simpler, growth-oriented corporation focused on multi-residential and industrial assets to generate considerable value for shareholders.

Approximately 43% of its properties are in North America – primarily the United States, with Ontario accounting for 31% and Alberta for 17%. Furthermore, by the end of 2020, Retail and Office buildings accounted for nearly 70% of its overall portfolio, two verticals that COVID-19 destroyed. To weather the storm, the REIT boosted its liquidity position with a $500 million credit facility while also reducing dividend disbursements.

In January 2021, H&R sold a 172,039 square feet single-tenanted property in Culver City, California, for roughly $165.0 million. Trading on the stock exchange at $12.79 as of April 9, 2022 (2:57 PM), it is a diversified REIT, having one of the largest market capitalizations of 3,689,145,644 among Canadian industrial REITs. H&R promises a dividend yield of 5.395% and pays a dividend of 0.043 CAD per share on a monthly basis. Furthermore, the P/E ratio of 6.20 makes it a stable and sustainable prospect.

Boardwalk REIT (TSX:BEI.UN)

Boardwalk REIT is a real estate investment trust specializing in purchasing, advancing, and administrating multifamily residential communities across Canada. Although the company’s entire residential real estate market diversified portfolio includes assets in Alberta, Saskatchewan, Ontario, and Quebec, Alberta accounts for the majority of the company’s total units. The majority of Boardwalk REIT’s total residential suites are concentrated in Calgary and Edmonton’s submarkets. The company makes most of its money by renting out its premises to tenants on short-term leases. The majority of this revenue comes from Boardwalk REIT’s investments in Alberta.

Boardwalk REIT manages over 33,000 residential units totalling 28 million net rentable square feet in over 200 locations. It has an established long-term track record, and the stock provides a 2.65% future yield. Its funds from operations (FFO) increased 7.3 percent to $2.94 per unit in FY 2021. In the provinces of Ontario, Quebec, and Saskatchewan, it saw substantial same-property revenue and NOI growth. The REIT had $306 million in cash at the end of the third quarter.

Trading on the stock exchange at $57.63 as of April 9, 2022 (3:20 PM), this REIT has promising investment potential. In addition, it has an EPS of 9.59, making it the best time to invest in this trust.

Granite REIT (GRT.UN)

Granite REIT (GRT.UN) has consistently demonstrated strong financial performance with solid revenue growth and steady income, primarily driven by its specialization in the industrial and logistics sector. The rapid growth of e-commerce due to the global pandemic has boosted the demand for warehouse and logistics space, thereby increasing the REIT’s occupancy rates and rental income. Furthermore, Granite’s portfolio quality and diversification, alongside its excellent balance sheet, enable it to provide consistent and attractive returns to its shareholders.

The company’s growth prospects look promising, particularly in light of the persisting e-commerce boom, which continues to spur demand for industrial and logistics real estate. Granite has proactively acquired and developed high-quality properties in strategic locations to capitalize on this trend. Furthermore, with businesses increasingly valuing supply chain resilience, the need for warehousing and logistics spaces will likely remain robust, suggesting a positive future for Granite.

SmartCentres REIT (SRU.UN)

SmartCentres REIT (SRU.UN) has a strong financial performance underpinned by its large portfolio of shopping centres across Canada, housing some of the country’s major retailers. The trust’s tenant base assures stable cash flows, and its solid financial footing allows it to maintain an attractive dividend payout. Even in challenging retail conditions, SmartCentres’ grocery-anchored centres have demonstrated resilience, providing stable rental income.

Looking ahead, SmartCentres has embarked on a strategic initiative to diversify its portfolio by developing mixed-use properties combining residential, retail, and office spaces. These projects offer considerable growth potential as they cater to the evolving preferences of consumers and businesses for integrated live-work-play environments.

The trust’s foray into residential space, in particular, aligns it with one of the strongest-performing sectors in Canadian real estate. Given the REIT’s experience, extensive land holdings, and robust financials, it is well-positioned to execute its mixed-use development strategy and drive future growth.

Summit Industrial Income REIT (SMU.UN)

Summit Industrial Income REIT (SMU.UN) focuses on light industrial properties, a niche with solid fundamentals and growing demand, especially in the e-commerce era. The REIT has demonstrated healthy financial performance, showing robust revenue growth and high occupancy rates. Its strategic focus on owning and managing a portfolio of quality light industrial properties across Canada has ensured consistent cash flows and strong return on equity.

The growth prospects for Summit Industrial are promising, driven by the increasing demand for light industrial properties, which serve as critical nodes in e-commerce logistics and distribution networks. Additionally, the ongoing rise of e-commerce, accelerated by the global pandemic, is set to sustain demand for such properties over the long term. In response, Summit has adopted an aggressive acquisition strategy, acquiring strategically located properties that align with e-commerce growth, thereby positioning itself well for future growth in this thriving sector.

Slate Grocery REIT (TSX:SGR.UN)

Slate Grocery REIT is a grocery-anchored real estate owner and operator in the United States. The REIT owns and operates important real estate holdings worth approximately $1.9 billion in major U.S. metropolitan markets that communities rely on for their daily requirements. Unitholders benefit from the REIT’s stable grocery-anchored portfolio and excellent credit tenants, which provide stable cash flows and the opportunity for long-term capital gain. 

Bloomingdale Plaza, Errol Plaza, Meres Town Center, Oak Hill Village, and Salerno Village Square are among the company’s properties. Slate Grocery REIT promises a dividend yield of 6.742%. Slate’s financial report on March 15, 2022, stated that the Board of Trustees had determined a dividend of US$0.072 per class U unit of the REIT for the month of March 2022, or US$0.864 on an annual basis. 

Trading on the stock exchange at $16.43 as of April 9, 2022 (3:38 PM), this retail REIT has a market capitalization of 965,899,607. This trust is highly profitable, thanks to its 1.87 EPS and 8.80 P/E ratio and its consistent dividend income.

InterRent REIT (TSX:IIP.UN)

InterRent REIT is a growth-oriented real estate investment trust that acquires and owns multi-family buildings to boost Unitholder value and generate a growing and sustainable income. The company’s operations span the entire country of Canada. Rents from tenants under leases, parking, laundry, and other ancillary services are all sources of revenue for the company.

On March 16, 2022, InterRent Real Estate Investment Trust stated that its payout for March 2022 is $0.0285 per Trust unit or $0.3420 on a yearly premise. On March 31, 2022, Unitholders of record will receive payment on or around April 18, 2022. In Q4 2021, FFO grew by 22.7 percent overall and 22.3 percent per unit compared to Q4 2020, to $19.6 million ($0.137 per diluted unit). FFO for the full year 2021 was $72.8 million ($0.510 per diluted unit), up 15.8% overall and 9.4% per unit from the full year 2020.

Trading on the stock exchange at $15.23 as of April 9, 2022 (4:34 PM), this residential REIT holds a market capitalization of 2,134,939,025. The trading volume of 1,268,768 coupled with an EPS of 2.64 shines a light on this stock’s exceptional annual growth rate.

Killam Apartment REIT (TSX:KMP.UN)

Killam Apartment Real Estate Investment Trust is a mutual fund trust with an open-ended structure. The firm focuses on purchasing, maintaining, and developing multi-family apartment complexes and manufactured home communities (MHC). The company’s three primary operating segments are apartment, MHC, and Commercial divisions. Apartments is a component of the company that buys, maintains, manages, and develops multi-family residential buildings across Canada. In addition, the MHC sector buys and operates MHC communities in Ontario and Eastern Canada, while the Commercial segment owns and operates over seven commercial assets.

Killam’s net income in Q4-2021 was $74.8 million, up to $26.2 million from Q4-$48.6 2020s million, owing to higher fair value gains on property investments recognized in Q4-2021.

Trading on the stock exchange at $20.84 as of April 9, 2022 (4:50 PM), this Canadian REIT holds immense growth potential. With a market capitalization of 2,409,357,748, it is a leading name in the Canadian dividend stocks segment.

Best Retirement Home Stocks in Canada

Types of Real Estate Investment Trusts (REITs) in Canada:

• Residential REITs: These REITs own and manage various types of housing properties, including apartments, single-family homes, and student housing.
• Retail REITs: This sector includes REITs that own and manage retail properties like shopping malls, strip centers, and stand-alone stores.
• Office REITs: Office REITs primarily own and manage office buildings. Their revenues are generated from rent collected from their tenants.
• Industrial REITs: These REITs focus on industrial properties, such as warehouses and distribution centers. They’re in demand due to the rise of e-commerce.
• Healthcare REITs: These REITs invest in healthcare facilities, including hospitals, nursing homes, and healthcare office buildings.
• Diversified REITs: Diversified REITs hold properties in various sectors, thus reducing their risk by not being overly reliant on one sector.
• Mortgage REITs: Unlike most REITs that own properties, mortgage REITs invest in mortgages or mortgage-backed securities.
• Hotel REITs: These REITs own and operate hotel and motel properties. Their revenue comes from room rentals, food and drink sales, and other hotel services.
• Specialized REITs: This category includes REITs that don’t fit neatly into other categories, such as those investing in outdoor advertising spaces or prisons.

You could also consider Investing in Farmland REITs.

Why You Should Invest in REITs in Canada

REITs are investments that offer a total return with little or no risk of loss. They usually provide significant dividends and have a high probability of BMO equal financial growth. REIT stocks have long-term capital growth and ROI potentials comparable to value equities and higher than lower-risk bonds.

Therefore, REITs generate high dividend payments and are a significant investment for retirement savings and retirees who want a steady income stream to fund their living expenditures. Plus, there is minimal fluctuation in the dividends of these trusts because REITs are obligated to transfer at least 90% of their taxable profits to their stockholders each year, further improving their profitability for individual investors. With all of this in mind, the real deal clincher is that their payouts are maintained by a steady stream of guaranteed rents (contractual) offered by their tenants.

REITs are probably the best option for investors to diversify their portfolios with safe and low-risk Canadian stocks, ETFs, and trusts. There is very little influence on listed REIT stock returns from the returns of other equities and fixed-income investments. Thus offering diversification, affordability, liquidity, high yield, transparency, and flexibility. And also lowering overall volatility and improving investment returns for a given amount of risk in a portfolio.

Growth Potential of REITs in Canada

Real Estate Investment Trusts (REITs) in Canada represent a significant component of the real estate industry, providing investors an opportunity to gain exposure to portfolios of large-scale properties that generate income. REITs in Canada are known for their diversity, spanning several sub-sectors, such as residential, commercial, industrial, and others.

Given the solid fundamentals of the Canadian real estate market, the potential for steady population growth, and urbanization trends, the growth potential for Canadian REITs looks promising. Their appeal is further heightened by attractive and relatively stable yields, often exceeding those from other income-generating securities.

• REITs have a strong potential for growth in Canada due to the steady demand for real estate, spurred by urbanization and population growth.
• Canada’s stable economic and political environment makes it an attractive market for local and foreign investors.
• Infrastructure development and government initiatives to boost the housing market could further stimulate the growth of REITs.
• Increasing trends of work from home and e-commerce are anticipated to bring further growth to the residential and industrial/logistics REIT sectors respectively.

There are many private REITs in Canada; communities with growing urbanization often have real estate investors who start their own REITs, which you can find and invest in privately.

The Bottom Line

Given the ever-increasing demand for houses and other real estate sector properties to conduct our everyday lives, it isn’t easy to picture this stock market sector experiencing a downturn. However, analysts believe that the uncertain job environment and exorbitant apartment rates will make this a safe and reliable source of passive income. In addition, REITs are unique because they combine the return values of high-paying mutual funds and ETFs while also exceeding them in terms of safety and low-risk value.