|CAR.UN||Canadian Apartment Properties||Residential||$10.13 B||2.44%|
|MRG.UN||Morguard North America||Multi-suite residential||$749.8 M||3.64%|
|MI.UN||Minto Apartments||Multi-suite residential||$901.7 M||2.10%|
|GRT.UN||Granite Real Estate||Industrial properties||$6.5 B||3.02%|
1. Canadian Apartment Properties
Canadian Apartment Properties (CAPREIT) is a significant player in the Canadian residential property sector.
In total, CAPREIT owns approximately 70,000 properties across the country and overseas in the Netherlands and Ireland.
This exposure outside of Canada makes them an excellent choice for investors looking to diversify their portfolios with some international exposure.
One of the most unique properties is the Montreal Olympic Village, acquired in 2012.
The village consists of two towers built to house athletes during the 1976 Olympics and have been converted into residential properties.
The company was founded in 1997 and has over 28,000 employees.
Headquartered in Toronto, the company focuses on residential interests in major urban centres like Montreal and Toronto.
Did You Know?
The first REIT in Canada was created in 1993
RioCan operates mainly in the retail property sector.
The company owns and operates approximately 200 properties across the country, totaling over 36 million square feet of leasable area.
One of the company’s strengths is that the majority of tenants are stable and long-term.
Over 85 percent of the company’s revenue comes from strong (National office / essential / necessity / value and specialty retail) and stable (strong or medium consumer offering) tenants who have a strong rent paying ability, and over 94 percent of spaces are currently occupied.
The company focuses operations in Ontario, with 87 assets in Toronto and 34 in Ottawa.
In total, these two cities account for over half of the square footage owned by RioCan.
The company has indicated that it will be focusing its efforts on mixed-used spaces in the future.
As more malls are being redeveloped to include residential high-rise apartments, the company’s vision is well in line with the way urban planning is moving forward.
Thirty-four percent of properties owned by RioCan have been zoned for mixed use development.
3. Morguard North America
Morguard North America owns and operates a diverse portfolio of multi-suite rental units across Canada and the United States.
The company’s portfolio includes over 12,000 suites, with properties mainly consisting of low to mid-rise apartment buildings.
The properties span across nine states and two provinces, with occupancy rates above 93% in both countries.
The properties total $3.2 billion in value.
Despite pandemic-related job losses, 98.4% of tenants were able to pay rent in Q1 of 2021.
This stability is a good sign that Moguard’s properties are located in areas with high housing demand.
In addition, the CEO has also stated in recent comments that they are looking to continue growing their portfolio in the sunbelt area of the United States.
4. Minto Apartments
Minto Apartments is a REIT that focuses on multi-residential rental properties in urban areas of Canada.
The company owns 29 properties across Toronto, Ottawa, Montréal, Calgary, Vancouver, and Edmonton.
Over half of these properties are located in the dense urban areas of Toronto and Ottawa.
The properties total 7,277 units with an average monthly rent of $1,650.
Minto is unique in that it is Canada’s only REIT focused solely on urban residential units.
As immigration continues to drive the growth of Canada’s major cities, Minto is well-positioned to see an increase in the value of their existing properties.
While the pandemic slowed down demand from new immigrants and students, the company has positioned itself well exiting the pandemic.
In addition, Minto Apartments also has its sights set on growing its portfolio.
The company is currently developing six additional properties that will add another 1,572 units to its portfolio.
5. Granite Real Estate
Granite Real Estate is a REIT that focuses on logistics, warehouse, and industrial properties.
The Canadian company has a total of 151 commercial properties across Canada, the United States, and Europe.
These properties cover 51.3 million square feet of leasable area.
The total value of all properties is $7.3 billion.
With demand for commercial space worldwide continuing to grow, the company has reported a 99.2% occupancy rate.
In addition, the properties are strategically located near major metropolitan areas with large labour pools.
Many of these properties are in various stages of expansion, and many of their existing properties have room to grow.
What is a REIT?
Short for Real Estate Investment Trust, a REIT is a company that owns and operates real estate that generates profits.
Rather than buying real estate individually, investing in a REIT allows one to benefit from the profits of a company which is purchasing, operating and maintaining a large portfolio of property.
Many companies that operate REITs are publicly traded, meaning you can buy and sell shares just like any other stocks or ETFs.
Different REIT companies focus on different segments of the real estate market.
Some may focus on apartment buildings, while others may focus on shopping malls, office buildings, or even infrastructure like cell towers.
REITs generate revenue by leasing out the properties that they own.
How to Invest in a Canadian REIT
There are dozens of investible REITs for Canadians.
Each REIT usually specializes in a specific sector of the real estate market.
Investors will need to do their research when deciding which has the best investment outlook.
Investors should also look at metrics like dividends and funds from operations (FFO).
Once you have decided which REIT to invest in, there is little difference from buying stocks.
Each REIT has a ticker that can be searched on any brokerage platform.
Once you find the REIT you are looking for, you can purchase just like you do on any other stock.
Key Criteria to Consider When Investing in REITs
When choosing a REIT, investors must look at what sector they are operating in.
From residential to commercial to retail, each REIT specializes in specific sectors.
Depending on the economic environment, certain REITs may do better than others.
For example, during times of high immigration, residential REITs are likely to do well.
During periods of economic growth where many companies are expanding, retail REITs may see lease prices increase as demand for space increases.
Another critical factor to consider is geographic location.
Within Canada, properties in rural versus urban areas will perform differently.
Factors such as population demographics and industries that operate in the area will all impact how well a REIT performs.
In addition, a diversified portfolio that includes properties around the world can help decrease the risk for investors.
Key REIT Definitions
Capitalization rate (cap rate):
Amount of operating income generated by a specific property relative to the cost of the purchase.
Funds from operations (FFO):
Figure that is calculated using a formula to measure cash flow from operations.
FFO is used to measure the performance of REITs, just like earnings per share or net income are used to measure traditional stocks.
Funds available for distribution (FAD):
Amount of money available to pay out shareholders after subtracting recurring expenditures and other expenses.
Net Asset Value (NAV):
The total value of all assets owned by a REIT
Frequently Asked Questions
- What are the largest REITs in Canada?
According to the latest data, Canadian Apartment Properties REIT is the largest in Canada, with over $18 billion in assets across 70,000 residential properties. This is followed by RioCan, with a total of $14 billion in assets across 289 retail properties
- Do REITs pay dividends?
Yes, dividends are the primary way that investors earn income from REITs. All REITs in Canada are forced to pay out 100 percent of taxable income as dividends, in exchange for the company not needing to pay any corporate taxes. Many REITs distribute dividends monthly.
- Are REITs suitable investments?
REITs are a good way to generate stable dividends in your portfolio. They’re also a great way to diversify your portfolio. While real estate can take time to buy and sell, REITs are highly liquid and traded just like stocks.