Canada’s publicly traded real estate investment trust sector has essentially flatlined in aggregate value over the past year, even as sharp divergences emerge beneath the surface between struggling residential and office trusts and booming retail and seniors housing portfolios.
According to RBC Capital Markets Real Estate Group managing director David Holden, speaking at the Sept. 16 RealREIT conference in Toronto, the aggregate Canadian REIT market capitalization sat at $76 billion, unchanged from the prior year’s conference. That figure remains well below the sector’s record high of $101 billion and is dwarfed by the $1.6-trillion REIT market in the United States.
Holden attributed the stagnant headline number to a wave of privatizations that offset growth elsewhere in the market. Multi-residential REITs were hit hardest, with Dream Residential REIT, European Residential REIT, InterRent REIT and Minto Apartment REIT all taken private — a combined loss of $3.5 billion in equity market capitalization. New issuance over the past 12 months totalled roughly $2 billion, concentrated mostly in seniors housing, and there were no IPOs in the Canadian REIT market during that period.
Retail and Seniors Housing Lead the Pack
Retail remains the largest asset class among Canadian REITs, representing 46 per cent of the market, up three percentage points from a year earlier, Holden said. Seniors housing has climbed to 17 per cent, up seven points, while residential has fallen to 15 per cent, down seven points. By total return over the TSX REIT index, seniors housing was the standout performer, delivering a 47 per cent return after a 34 per cent return the prior year, followed by retail and industrial, both at 17 per cent. Diversified, residential and office REITs all posted negative returns.
Andrew Moffs, senior vice-president and portfolio manager at Vision Capital, pointed to similar dynamics in naming Chartwell Retirement Residences among his top picks. Chartwell, Canada’s largest owner of seniors housing with more than 30,000 suites, is seeing occupancy forecast to reach 95 per cent in September 2026 and adjusted same-property net operating income growth of 11.9 per cent in the second quarter. Moffs noted Canada’s 80-plus population is growing three to four per cent annually while demand for seniors housing exceeds new supply by more than four to one, with the country needing roughly 20,000 new units a year against an actual pace of about 7,300 annually over the past decade.
At the retail level, enclosed shopping centre specialist Primaris REIT was singled out at the RealREIT conference as the top performer in its segment, according to chief investment officer Julian Schonfeldt, who said the trust has often been the only bidder on acquisition opportunities. Primaris announced a $200-million equity offering on Sept. 14 to fund further acquisitions, and is negotiating deals with an aggregate potential purchase price exceeding $1 billion.
Smaller Players Carve Out Niches
Away from the largest trusts, smaller REITs are finding footholds in specific niches. Montreal-based Canadian Net REIT, formerly known as Fronsac, focuses on single-tenant net-leased retail properties in secondary and tertiary markets across Quebec, Ontario, Nova Scotia and New Brunswick. President and CEO Kevin Henley said the trust now owns 98 fully leased properties totalling 1.54 million square feet, with $319 million in assets and a market capitalization of $133.3 million, run by a team of just four full-time employees. About 66 per cent of its portfolio consists of necessity retail, with grocers Loblaw, Sobeys, Walmart and Metro among its top tenants. Henley said the trust’s size allows it to compete where “we compete with less buyers” — transactions too large for private investors but too small for institutional ones.
M&A Activity and Capital Competition
Mergers and acquisitions have picked up as private markets continue to value real estate above what public markets are paying, with REITs broadly trading at a discount to net asset value. Holden counted six M&A deals over the past 12 months, several involving related parties who saw opportunity to acquire portfolios at a premium to depressed public valuations. Slate Grocery REIT and Plaza Retail REIT are both currently in play to be acquired.
Panelists at RealREIT also discussed real estate’s weakened competitive position against other asset classes. Lora Gotcheva, an independent board member of SmartStop Self Storage and former CPP Investments portfolio manager, said public and private real estate are complements rather than substitutes, but acknowledged that “absolute returns for real estate and relative returns for real estate have been weak” in recent years. BGO managing partner Simon Holmes said the past four years have been the most difficult for Canadian commercial real estate since the early 1990s, though he expressed confidence the sector remains undervalued.
Aurelio Baglione, CEO of Virtus Group of Companies, told BNN Bloomberg that apartment rents have softened in some markets and new rental projects are taking longer to lease, while federally insured mortgages below four per cent still make some residential developments viable. He said his retail holdings have seen no impact from tariffs and remain the strongest part of his portfolio, while he views data centre REITs as risky given uncertainty over which operators will emerge as long-term winners.
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