Canadian REIT Stagnates at $76B Amid Privatizations
The total Canadian REIT market value held steady at $76 billion, the same figure noted at last year’s RealREIT summit, according to David Holden, MD and co-head of Canadian REIT investment banking for RBC Capital Markets’ Real Estate Group. He shared these figures during the September 16 gathering at the Metro Toronto Convention Centre, relying on August 31 valuations for the 2025 and 2026 outlooks future forecasts.
Canadian REIT market performance
The record high REIT market cap stands at $101 billion, which remains significantly below the $1.6 trillion market cap for U.S. REITs. While the stand-alone REIT market cap stayed flat, Holden noted that growth in several sub-sectors was offset by REIT privatizations, most notably in the multi-residential sector. Dream Residential REIT, European Residential REIT, InterRent REIT, and Minto Apartment REIT privatizations resulted in an aggregate loss of $3.5 billion in equity market capitalization.
Asset Class Composition and Growth
Retail remains the largest asset class for Canadian REITs at 46 per cent, up three per cent from a year earlier. Seniors housing holds 17 per cent, up seven per cent, while residential accounts for 15 per cent, down seven per cent. New issuance activity over the past 12 months totaled approximately $2 billion, contributing to market cap growth. This figure is materially higher than 2023 and 2024 year-end totals, though 2026 is projected to fall about $300 million short of 2025’s $2.3-billion total.
Sector leverage and liquidity trends
Activity remained modest compared to historical averages and was largely focused in the seniors housing sector. No initial public offerings occurred in the Canadian REIT market in the last 12 months. Improvements in leverage were observed in industrial and seniors’ housing REITs, while leverage increased in office, residential, and diversified REITs. Retail leverage remained unchanged.
The liquidity ratio, measured by cash plus available credit lines as a percentage of total debt, stands at 16 per cent, down marginally from 17 per cent last year but near the high end dating back to 2009. Over the past 12 months, 16 Canadian REITs increased distributions while one reduced them, compared to 20 increases and one decrease in the previous period. The weighted average yield at the end of August was 4.7 per cent, 20 basis points lower than last year’s average.
REIT Returns by Property Type
Canadian REITs delivered a price return of minus one per cent in the last 12 months, offset by distributions to achieve a total return of four per cent. This compares to a price performance of minus three per cent and a total return of four per cent over the previous 12 months. By property type, seniors’ housing led with a 47 per cent return, following a 34 per cent return in the comparable period last year. Retail and industrial posted healthy returns of 17 per cent, while diversified, residential, and office all delivered negative returns.
Global REIT Market Performance
Globally, U.S. REITs achieved a 16 per cent return, European REITs matched Canada at four per cent, and Asian REITs posted a one per cent loss. Mergers and acquisitions have increased as private markets value real estate at a premium relative to public markets, where REITs trade at discounts to net asset value (NAV). Six M&A deals occurred in the past 12 months, with several involving related-party transactions where insiders or acquirers had equity or debt interests in targets.
Private market valuations and REIT trends
Holden explained that insiders acted due to lack of public market support despite confidence in long-term real estate potential. They acquired portfolios at premiums to public market values, aiming for healthy returns over their hold period. Two additional entities, Slate Grocery REIT and Plaza Retail REIT, are currently in play for acquisition. Buybacks have been active in residential, industrial, and retail sectors as REITs attempt to address steep NAV discounts.
