Best Canadian REITs

Looking for a REIT for your portfolio? Want the best REIT? The reality is that REITs can have different focuses and therefore more than one can fit the bill thus allowing you to diversify your portfolio. In general, you are looking for income and not a stock like Netflix, Amazon or Shopify. During your search for income, don’t ignore the potential for distribution growth to keep up with inflation. As you can see there is more to think about than just the income.

You might not be aware but there are 37 Canadian REITs trading on the Toronto Stock Exchange (TSX). However, only 18 have a market capitalization above $1B.

Canadian REITs

Let’s start by looking at the full list of REITs and then drill down from there. The Canadian REIT sector has 7 industries to which a REIT belongs to based on the services they provide. Knowing the industry they serve is quite important as it highlights what can influence their business.

I admit that I was pretty surprised to find this many REITs in total. That’s a lot of real estate income trusts to filter through. Choice Properties is one of the most recent REIT created by Loblaw out of its real estate assets. The List is sort by market capitalization rather than yield. A REIT has a high yield just by the nature of the REIT and I am not looking for the REIT that pays the most but the REIT that will serve me best in the following criteria:

Most Canadian REIT investors will have the same criteria with different priorities but they are pretty standard. Below is the breakdown of all Canadian REITs by industries.

TickerKeyTickerCompanySectorIndustryScoreQuoteMarket CapP/EFPEEPSYield RawYieldPayoutRatioPaymentsAnnual DistributionChowderGrowthRatingIncomeRatingTollboothAmbassadorAchieverAristocratKingCountryGraph
TSE:CAR.UNCAR.UNCanadian Apartment Properties REITReal EstateREIT - Residential0.5945.687.867.777.775.880.03023.020.2347121.380.050013Tollbooth - UnregulatedNONOYESNOCanada1
TSE:REI.UNREI.UNRioCanReal EstateREIT - Retail0.5014.914.7453.6853.680.280.09669.665.1429121.440.1008110Tollbooth - UnregulatedNONONONOCanada1
TSE:AP.UNAP.UNAllied Properties REITReal EstateREIT - Office0.6537.124.726.086.086.100.04454.450.2705121.650.066214Tollbooth - UnregulatedNONOYESNOCanada1
TSE:GRT.UNGRT.UNGranite REITReal EstateREIT - Industrial0.5077.184.4611.1611.166.920.03763.760.4197122.900.090714Tollbooth - UnregulatedNONOYESNOCanada1
TSE:CHP.UNCHP.UNChoice Properties REITReal EstateREIT - Retail0.6812.614.1227.6827.680.460.05875.871.6087120.740.102916Tollbooth - UnregulatedNONOYESNOCanada1
TSE:SRU.UNSRU.UNSmartCentres REITReal EstateREIT - Retail0.5521.143.0634.1834.180.620.08758.752.9845121.850.100619Tollbooth - UnregulatedNONOYESNOCanada1
TSE:HR.UNHR.UNH&R REITReal EstateREIT - Diversified0.6210.202.930.000.00-2.620.06826.821.0000120.700.064017Tollbooth - UnregulatedNONONONOCanada1
TSE:NVU.UNNVU.UNNorthview Apartment REITReal EstateREIT - Residential0.4835.362.3912.3012.302.870.04614.610.5678121.630.046115Tollbooth - UnregulatedNONONONOCanada1
TSE:CSH.UNCSH.UNChartwell Retirement ResidencesReal EstateREIT - Healthcare Facilities0.3410.722.290.000.00-0.010.05715.711.0000120.610.027116Tollbooth - UnregulatedNONOYESNOCanada1
TSE:NWH.UNNWH.UNNorthwest Healthcare Properties REITReal EstateREIT - Healthcare Facilities0.5611.612.0413.4313.430.860.06896.890.9303120.800.068917Tollbooth - UnregulatedNONONONOCanada1
TSE:SMU.UNSMU.UNSummit Industrial Income REITReal EstateREIT - Industrial0.4612.601.936.676.671.890.04294.290.2857120.540.051814Tollbooth - UnregulatedNONOYESNOCanada1
TSE:IIP.UNIIP.UNInterRent REITReal EstateREIT - Residential0.6413.011.794.504.502.890.02382.380.1073120.310.096412Tollbooth - UnregulatedNONOYESNOCanada1
TSE:KMP.UNKMP.UNKillam Apartment REITReal EstateREIT - Residential0.6217.591.728.098.092.170.03873.870.3134120.680.051614Tollbooth - UnregulatedNONONONOCanada1
TSE:DIR.UNDIR.UNDream IndustrialReal EstateREIT - Industrial0.6411.141.7011.2711.270.990.06286.280.7070120.700.062816Tollbooth - UnregulatedNONONONOCanada1
TSE:CRT.UNCRT.UNCT REITReal EstateREIT - Retail0.3514.021.4737.8337.830.370.05735.732.1707120.800.089416Tollbooth - UnregulatedNONOYESNOCanada1
TSE:CUF.UNCUF.UNCominar REITReal EstateREIT - Diversified0.497.301.3314.2214.220.510.09869.861.4118120.720.0000110Tollbooth - UnregulatedNONONONOCanada1
TSE:CRR.UNCRR.UNCrombie REITReal EstateREIT - Diversified0.6013.201.2352.6152.610.250.06746.743.5602120.890.067317Tollbooth - UnregulatedNONONONOCanada1
TSE:AX.UNAX.UNArtis REITReal EstateREIT - Diversified0.588.531.16456.39456.390.020.06336.3327.0000120.540.063316Tollbooth - UnregulatedNONONONOCanada1
TSE:D.UND.UNDream Office REITReal EstateREIT - Office0.6219.681.086.676.672.950.05085.080.3390121.000.000015Tollbooth - UnregulatedNONONONOCanada1
TSE:BEI.UNBEI.UNBoardwalk REITReal EstateREIT - Residential0.4429.071.020.000.00-2.250.03443.441.0000121.000.000013Tollbooth - UnregulatedNONONONOCanada1
TSE:MRG.UNMRG.UNMorguard North American Residential REITReal EstateREIT - Residential0.5214.880.586.066.062.460.04704.700.2844120.700.067215Tollbooth - UnregulatedNONONONOCanada1
TSE:TNT.UNTNT.UNTrue North Commercial REITReal EstateREIT - Diversified0.615.900.5114.7314.730.400.100710.071.4850120.590.1007110Tollbooth - UnregulatedNONONONOCanada1
TSE:SGR.UNSGR.UNSlate Grocery REITReal EstateREIT - Retail0.4610.930.4411.4011.400.960.104410.441.1883120.860.1229110Tollbooth - UnregulatedNONONONOCanada1
TSE:APR.UNAPR.UNAutomotive Properties REITReal EstateREIT - Diversified0.6410.000.38150.47150.470.070.08048.0411.4857120.800.391218Tollbooth - UnregulatedNONONONOCanada1
TSE:PLZ.UNPLZ.UNPlaza Retail REITReal EstateREIT - Retail0.803.540.360.000.00-0.150.07907.901.0000120.280.117018Tollbooth - UnregulatedNONONONOCanada1
TSE:MRT.UNMRT.UNMorguard REITReal EstateREIT - Diversified0.374.770.300.000.00-3.250.100610.061.0000120.480.1006110Tollbooth - UnregulatedNONONONOCanada1
TSE:SOT.UNSOT.UNSlate Office REITReal EstateREIT - Diversified0.383.880.267.677.670.510.103110.310.7843120.400.0000110Tollbooth - UnregulatedNONONONOCanada1
TSE:INO.UNINO.UNInovalis REITReal EstateREIT - Office0.408.140.233.963.962.060.101410.140.4005120.830.1011110Tollbooth - UnregulatedNONONONOCanada1
TSE:HOT.UNHOT.UNAmerican Hotel Income Properties REITReal EstateREIT - Hotel & Motel0.302.510.200.000.00-0.770.00000.000.0000120.000.000010Tollbooth - UnregulatedNONONONOCanada1
TSE:BTB.UNBTB.UNBTB REITReal EstateREIT - Diversified0.473.050.194.684.680.650.09849.840.4615120.300.0984110Tollbooth - UnregulatedNONONONOCanada1
TSE:PRV.UNPRV.UNPRO REITReal EstateREIT - Diversified0.484.940.198.268.260.600.09119.110.7500120.450.091119Tollbooth - UnregulatedNONONONOCanada1
TSE:DRA.UNDRA.UNDream Hard Asset Alternatives Trust REITReal EstateREIT - Diversified0.775.100.000.000.000.000.07847.841.0000120.400.140818Tollbooth - UnregulatedNONONONOCanada1

Best Canadian REITs

To find the best Canadian REITs fitting my criteria, I choose to go through the following steps.

  • Filter the REITs based on my investing criteria
  • Get a better understanding of the filtered companies
  • Review their FFO (and AFFO) – That’s one of the most important metrics with REITs

Get all the details you need to make an investment decision with the Dividend Snapshot Canadian REIT List. A comprehensive list of metrics and a payout ratio calculated based on the company’s FFO. Don’t be fooled by the highest yield and get the right fit for your portfolio and income.

Related: Understanding REITs

Filtered Down Canadian REITs

I decided to eliminate the little players. They may well have a lot of growth but I want an established REIT of at least $1B in market capitalization. With that criteria, they can have funds to expand and play in the big cities. That leaves us with the following REITs.

For the purpose of my selection, I will go with $1B as a minimum market capitalization. I am going to exclude the industrial REIT industry as I don’t understand that industry. Healthcare is also not a REIT I understand. There is definitely a growing market but I am not sure how the business model works. It leaves me with the list below sorted by market capitalization.

Understanding the Filtered Canadian REITs

Now comes the hard part. The easy filtering is done. I could easily remove those with a yield under 5% but I am curious if they grow their yield and what the properties actually are. If you have Wal-Mart as a renter, the chances of long-term business are much stronger than having an arbitrary small business. Personally, I have invested in both REI.UN and CUF.UN in the past. See my portfolio holdings for details. At this point, I think many of those investments have their own strength but the best of the breed has been RioCan for many years according to many analysts.

RioCan  REIT

REI.UN - RioCanRioCan is a leading retail REIT in Canada. It is an unincorporated closed-end trust. As one of Canada's largest real estate investment trusts, RioCan owns, manages and develops retail-focused, mixed-use properties located in prime, high populated areas in leading cities like Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal. Each of RioCan’s sites is strategically selected to meet the demographic and geographic needs of its retailers. Its vast portfolio comprises of 230 properties, including 13 development properties spanning 39 million square feet of leasable property. The REIT derives 88% of its revenues (1Q19) from six of Canada’s major markets and 48% from the Greater Toronto Area, which is one of the fastest growing regions in Canada. RioCan’s portfolio is comprised of over 200 properties spanning across Canada, with some of the leading national retail businesses such as Walmart, Canadian Tire, Cineplex, Loblaws and Metro, being its leading tenants. It has a diversified portfolio of retail as well as mixed-use properties, as well as a well-balanced tenant base.

Investment Data

H&R REIT

HR.UN - HR ReitH&R REIT has interests in a portfolio of office, retail, industrial and residential properties spanning across 41 million square feet in North America. As one of Canada’s largest REITs, H&R has assets worth $14.4 billion. It enters into long-term lease including rent escalations with creditworthy tenants. H&R REIT has four types of assets - office (49% of total assets), retail (31%), multi-family (13%), industrial (7%). By asset type, H&R’s Office segment is the largest of the four segments and holds a portfolio of single tenant and multi-tenant office properties across North America, while its retail segment holds a portfolio of enclosed shopping centres, single tenant retail properties and multi-tenant retail centers throughout Canada and 16 single tenant retail properties in the USA. By geographic region, Ontario and the USA account for 33% each of total fair value, followed by Alberta (25%) and other Canadian provinces (9%). H&R REIT’s focus on diversified portfolio of high quality investment properties in North America with quality tenants ensure stable cash flows.

Investment Data

SmartCentres REIT

SRU.UN - Smart REITSmartCentres REIT is Canada’s largest developer and operator of unenclosed shopping centers. It engages in the acquisition, asset management, planning, development, leasing, operations, property management and construction of properties. SmartCentres’ growing platform includes value-oriented unenclosed shopping centers and destination outlets. The REIT currently has 3,100 tenants and 34 million square feet of leasable space available across 150 locations across Canada. These shopping centers are at prime locations within or near most of Canada’s fastest growing communities and experience high traffic and visibility. More than 100 of the centers are Walmart anchored shopping centers. SmartCentres has long enjoyed a reputation for consistent performance, making it one of Canada’s premier real estate investment trusts. Over the years, SmartCentres has developed a strong focus on retail development and operation. Its expertise has grown to include a variety of urban, mixed-use, residential and industrial developments, including a number of master planned communities.

Investment Data

Choice Properties REIT

Choice Properties is a Real Estate Investment Trust that owns, manages and develops retail and commercial real estate across Canada. Choice Properties was spun out by Loblaw Cos. Ltd. in 2013 and the grocery chain is its biggest tenant today. The REIT’s properties are well located across Canada majorly in the largest markets. Approximately 57% of the portfolio’s base rent is generated from large urban markets, mainly in Toronto, Calgary, Vancouver, and Montreal. Small and medium urban markets drive 28% and 15% of the portfolio’s base rent, respectively. Choice Properties manages operations in three reportable segments - retail (81% of net operating income), industrial (12%) and office (7%). As one of Canada’s largest REIT, Choice Properties owns and manages over 750 properties spanning approximately 66.8 million square feet of GLA across Canada. The REIT’s portfolio includes 599 retail properties, 113 industrial properties, 16 office complexes, three multi-family residential buildings, and 22 development properties.

Investment Data

Comparative AFFO

The adjusted funds from operations (AFFO) is the true metric you need to look at for REITs as it highlights how well they can pay their shareholders. A company with an AFFO below their payout means they can’t keep up paying the shareholders. A REIT that can increase their AFFO will be able to increase their distribution to shareholders.

Canadian REIT ETFs

If you find it too difficult to invest in a specific REIT, you can always buy a Canadian REIT ETF. Be sure to look at their holdings as they may only hold a subset of the REITs.

  • iShares S&P/TSX Capped REIT Index Fund 
  • BMO Equal Weight REITs Index ETF 
  • Vanguard FTSE Canadian Capped REIT Index ETF 

The above mentioned ETFs are probably the best Canadian REIT ETFs at this point in time. However, be on the lookout as most financial institutions are entering the ETF market and they should all be creating their own in due time.

Canadian REITs Summary

I will admit that it’s impressive to see the number of REITs available in Canada. I was pretty surprised at the business of H&R REIT with their corporate tenants. In the past, when I first purchased REITs, I had no understanding of the AFFO and since I learned about that metric, it changed how I evaluate REITs forever.

You HAVE to read their financial report for the year-end. It’s not just raw numbers. It highlights their businesses and strength. You get to understand the strength of their sector.

Which is the best Canadian REITs? Well, it really depends on your goals. Do you want to see dividend growth? Some of them have it. Do you want to only pick below 90% AFFO payout? Some of them fit the bill. Do you want to see growth in value? Some of them have it. Do you want high income? Some of them have it.

As you can see, there isn’t just one Best Canadian REIT. There is a best Canadian REIT for your portfolio based on your criteria. Are you nearing retirement? Are you starting and diversifying?

If you are new to REIT investing, you need to understand REIT taxation prior to making a purchase. The account you decided to use has a big tax impact.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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