Canada’s real estate investment trust sector has effectively flatlined over the past year, with aggregate market capitalization holding steady at $76 billion, according to figures presented by RBC Capital Markets Real Estate Group managing director David Holden at the RealREIT conference on Sept. 16 in Toronto. That figure remains well below the sector’s record high of $101 billion and is dwarfed by the roughly $1.6-trillion U.S. REIT market, underscoring how modest in scale Canada’s publicly traded property sector remains relative to its southern neighbour.
Holden, co-head of Canadian real estate investment banking at RBC, said the flat headline number masks divergent performance underneath. “While the stand-alone REIT market cap was unchanged, we did see growth across a number of sub-sectors of the REIT market,” he said, adding that gains were offset by a wave of privatizations, particularly in multi-residential. Four apartment-focused trusts — Dream Residential REIT, European Residential REIT, InterRent REIT and Minto Apartment REIT — exited the public market over the period, together removing $3.5 billion in equity market capitalization from the sector.
Retail and Seniors Housing Lead a Shifting Mix
Retail remains the dominant property type among Canadian REITs, now accounting for 46 per cent of the sector, up three percentage points from a year earlier. Seniors housing has grown fastest, rising seven percentage points to 17 per cent of the market, while residential’s share fell seven points to 15 per cent as the wave of take-private deals thinned out that segment. New issuance totalled roughly $2 billion over the past 12 months, an improvement on 2023 and 2024 but still tracking about $300 million behind 2025’s $2.3-billion total, and concentrated largely in seniors housing. There were no initial public offerings in the Canadian REIT market during the period.
Performance also varied sharply by property type. Seniors housing delivered a 47 per cent return, building on a 34 per cent return the prior year, while retail and industrial each returned 17 per cent. Diversified, residential and office REITs all posted negative returns. Across the sector as a whole, Canadian REITs generated a total return of four per cent — a one per cent price decline offset by distributions — matching the prior year’s total return despite a smaller price drop. By comparison, U.S. REITs returned 16 per cent, European REITs matched Canada at four per cent, and Asian REITs lost one per cent.
Discounted Valuations Are Fuelling a Deal Wave
Holden noted that mergers and acquisitions activity has picked up considerably as private buyers continue to value real estate more richly than public markets, where many REITs trade at a discount to net asset value. Six M&A transactions closed over the past 12 months, several of them related-party deals in which an insider of the target already held a meaningful equity or debt stake. “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, adding that such buyers moved to acquire portfolios at premiums to public trading values while still expecting healthy returns over their holding period. Two additional trusts, Slate Grocery REIT and Plaza Retail REIT, are currently in play to be acquired. Separately, a number of REITs have used capital to buy back their own units given the steep discounts to net asset value, with the heaviest activity concentrated in residential, industrial and retail names.
Balance Sheets Hold Up, but Office Remains a Weak Spot
Leverage trends were mixed: industrial and seniors housing REITs improved their balance sheets, while office, residential and diversified trusts saw leverage rise; retail was largely unchanged. Sector-wide liquidity — cash plus available credit lines as a share of total debt — stood at 16 per cent, down slightly from 17 per cent a year earlier but still near the highest levels recorded since 2009. Distribution activity also softened modestly, with 16 REITs raising payouts and one cutting over the past year, compared with 20 increases and one decrease previously. The weighted average yield across the sector was 4.7 per cent at the end of August, 20 basis points tighter than a year earlier.
Office exposure continues to weigh on individual names. Allied Properties REIT shares fell 4.06 per cent in early September amid what market commentary attributed to office-market pressure, earnings concerns and distribution risk. H&R REIT, whose diversified portfolio spans office, residential and other assets, has also drawn attention following a major proposed acquisition transaction disclosed alongside its latest quarterly results, with completion of that deal now seen as a key near-term checkpoint for the trust. Grocery-anchored operators such as Choice Properties REIT, by contrast, have been framed by market commentators as relatively defensive amid the current interest-rate backdrop, reflecting the broader split Holden described between resilient sub-sectors and those still working through structural pressure.
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