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.
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 accounts for most of the total square feet area.
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. IT, finance, government, marketing, and telecommunication industries are among Allied Properties’ primary tenants. Within its balanced portfolio, the corporation also has various telecommunications/IT and retail properties. 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 the great bulk 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 to Allied Properties REIT in Toronto, Vancouver, and Montreal.
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 were destroyed by COVID-19. In order 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, advancement, and administration of 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 the majority 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.
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, as well as 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). Apartment, MHC, and Commercial divisions are the company’s three primary operating segments. 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.
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.
REITs generate high dividend payments and, therefore, 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 fact that their payouts are maintained by a steady stream of guaranteed rents (contractual) offered by their tenants is the real deal clincher.
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 along with 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.
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.
Also, check out:
Top REITs in Canada
2020 will be challenging for the Canadian Real Estate Investment Trust (REIT) sector. The cap has fallen dramatically from its February highs to March lows and has fallen 46% from its February high since its March low. It lists names not on the index or Canadian but belongs to investors in the U.S., Europe, Asia, the Middle East, Latin America, Africa, and the Asia-Pacific region.
If you find it too difficult to invest in a particular REIT, you can always buy a Canadian REIT ETF, but of course, you can invest in any way you like: ETFs, individual REITs or U.S. REITs.
If you’re looking for more exotic pastures, choose the Canadian REIT ETF, first launched 20 years ago. XRE has more assets than some of its competitors, but it has a much longer maturity, having been in existence since 2002. It has a 0.35 percent cost ratio, but this is lower than even some ETFs and gives you the chance to invest across assets such as oil and gas, property and natural gas.
It is a 4.8 percent return, but the high dividend yield already makes it one of the best returns if you aim for income by 2021. Check out our list of Canadian REITs and their earnings, which considers the average annual dividend yield over the past five years. Although we have incorporated some of our recommendations and those of many other investors, we believe that a comprehensive list like this can help you do your research.
First of all, they account for 22% of the income and dividends in our portfolio, even though they represent only 12% of the portfolio value. So, for example, we own Dream Industrial REIT, which we mentioned above as Canada’s best-performing, and you would find that 28 of them are in your portfolio and contribute 22% of your income.
REF – U.N.) is a diversified REIT that derives 50% of its net income from retail real estate. Granite has transformed itself into one of Canada’s best retail real estate investment trusts (REI) in recent years. We are a big fan of investing in high quality, low cost and high-quality retail assets and are following the growth of the retail sector in Canada and other parts of the world.
This has proved a boon for the average investor, as REITs have outperformed equities in recent years, with many subsectors – specific REITs – achieving higher returns. Experienced investors who have held on to these bonds over several years have delivered an average annual return of 13%, as measured by the MSCI U.S.REIT Index. In addition, DOC has maintained its dividend stable over the past five years and has an annual dividend yield of 1.5%.
While most home REITs offer low dividend yields, Northview offers one of the best. You will be delighted to know that the dividend is being reinvested at a discount price of 5%. As a result, Canadian REITs can boost the value of their properties, which are worth just 37.62% of the market.
There are several other Canadian REITs you may not know, but you will find them all in this list. Some are listed on the Toronto Stock Exchange, such as the Canadian Real Estate Investment Trust (REIT) and the Canadian Reit Income Trust (CREIT).
Some of the exciting names that make up Morningstar’s Robdy Canadian Stocks are Artis REIT and Canadian Tire Real Estate, both of which are part of the Canada Real Estate Investment Trust (REIT). Like the other Canadian Reits in 2015, Art is heavily exposed to the office market in Calgary but is also heavily involved in developing its shares.
U.S. REITs have kept pace with Canadian equities, so it’s a cheap start, “said Michael J. Gartner, an analyst at Morningstar Robdy Canadian Stocks.
The best REIT to invest in Canada to achieve the best safe returns would be Choice Properties REIT, and it is the latest REIT Loblaw has created with its real estate assets. However, with Vancouver-based Pure Industrial Real Estate Trust recently completing a $3.8 billion sale, Russo said there was no need for a Canadian REITE to be engaged in the U.S. ZRE was founded in 2010 and has invested 23 REITs in its portfolio of more than 1,000 properties in the U.S., with a market value of about $1.5 billion, according to its website.
Canada’s largest apartment REIT, Canadian Apartment Properties REIT, has outperformed its peers in recent years, raising its market capitalization to $9 billion.