Canada’s real estate investment trust sector has gone largely sideways over the past year, with aggregate market capitalization holding at $76 billion even as individual sub-sectors posted strong gains, according to figures presented by RBC Capital Markets at the RealREIT conference in Toronto.
David Holden, managing director and co-head of Canadian real estate investment banking at RBC, told the Sept. 16 event that the figure compares to a record high of $101 billion for the Canadian REIT market, and remains far below the $1.6-trillion U.S. REIT market. New issuance over the past 12 months totalled roughly $2 billion, up from 2023 and 2024 levels but still tracking about $300 million behind 2025’s $2.3-billion total. There were no initial public offerings in the Canadian REIT market over the period.
Privatizations Reshape the Multi-Residential Space
The flat overall market cap masks a wave of consolidation. Holden said privatizations, most notably in the multi-residential sector, erased an aggregate $3.5 billion in prior-year equity market capitalization, with Dream Residential REIT, European Residential REIT, InterRent REIT and Minto Apartment REIT all exiting public markets. Retail remains the largest asset class for Canadian REITs at 46 per cent of the market, up three points from a year earlier, followed by seniors housing at 17 per cent (up seven points) and residential at 15 per cent (down seven points).
Mergers and acquisitions activity has also picked up, with six deals over the past year, several of them related-party transactions in which insiders took portfolios private at premiums to depressed public valuations. “The insiders saw the lack of support for their business in the public markets and they still had conviction on the real estate’s long-term potential,” Holden said. Slate Grocery REIT and Plaza Retail REIT are both currently in play to be acquired.
Canadian REIT Market Snapshot
Why Public Real Estate Keeps Losing to Private Capital
At the same conference, a panel moderated by Real Property Association of Canada CEO Michael Brooks examined why institutional capital has drifted away from real estate toward competing 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 not substitutes for each other… they’re complements,” offering different liquidity, leverage and fee structures, though she acknowledged absolute and relative real estate returns have been weak in recent years.
Simon Holmes, managing partner and Canadian chief investment officer at BGO, said the past four years have been the most painful for Canadian commercial real estate since the early 1990s, as energy, infrastructure and private credit have offered pension funds double-digit returns that real estate has struggled to match. Still, Holmes said he expects the market to turn as real estate reprices to more attractive levels.
Many REITs are trading at a discount to net asset value, prompting a number of trusts to buy back their own units, with the most activity in residential, industrial and retail, Holden said. Brooks noted that limited trading volume in some Canadian REITs continues to deter institutional capital. Primaris REIT chief investment officer Julian Schonfeldt said becoming more “investor-friendly” is key to drawing in capital and eventually supporting more IPOs.
Seniors Housing and Retail Outperform as Residential Struggles
By property type, seniors housing was the standout performer on the TSX, delivering a 47 per cent return over the past 12 months after a 34 per cent return the year before, Holden said. Retail and industrial followed with 17 per cent returns, while diversified, residential and office REITs posted negative returns. Canadian REITs overall delivered a four per cent total return, matching the prior year, compared with 16 per cent for U.S. REITs, four per cent for European REITs and a one per cent loss for Asian REITs.
Chartwell Retirement Residences chief investment officer Jonathan Boulakia said seniors housing has moved toward the investment mainstream, driven by demographic demand that outpaces new supply. Andrew Moffs of Vision Capital, naming Chartwell among his top picks, pointed to a “generational supply-demand mismatch,” noting Canada would need to deliver 20,000 new seniors housing units annually to meet demand, compared with roughly 7,300 units a year actually built over the past decade.
On the ground, Aurelio Baglione, CEO of Virtus Group of Companies, said apartment rents have pulled back in some markets and new rental projects are taking longer to lease, while retail has shown no impact from tariffs. He said federally insured CMHC mortgages, still available below four per cent, can keep some residential developments viable, while properties bought at low capitalization rates have become harder to make profitable — a dynamic he said is pushing some owners of stalled development projects to sell apartment buildings and commercial plazas, creating opportunities for buyers like himself.
Separately, industrial-focused Nexus Industrial REIT priced a $300-million private offering of senior unsecured debentures on Sept. 18, maturing in March 2030 and carrying a fixed annual interest rate of 4.563 per cent, with proceeds earmarked for repaying existing debt and general trust purposes.
This article references reporting from:
