Analyzing the top 10 REITs on the TSX

Written by Brian Donovan on July 15, 2025. Posted in Canada.

What are we looking for?

Stock markets in Canada and the United States recently hit all-time highs and some investors are asking if there will be a pullback. Along with this, trade policies and challenges to the U.S. Federal Reserve chair are adding to market and interest-rate volatility.

Part of an individual’s investing strategy should include dividend-paying stocks, especially for people nearing or in retirement. Real estate investment trusts (REITs) are low-beta (a measure of volatility), interest-rate-sensitive investments and are a good choice for many portfolios. For this Number Cruncher, we look at valuations for the 10 largest publicly traded REITs in Canada.

The screen

We used stockcalc’s screener to select the top 10 listed REITs by market capitalization on the Toronto Stock Exchange. We then used stockcalc’s valuation tools to calculate fundamental (or intrinsic) valuation for each stock to see if it is undervalued or overvalued compared with its market price.

Overview of the techniques used:

Discounted cash flow (DCF value) is a valuation technique in which cash-flow projections are discounted back to the present to calculate value per share;
A price comparables (price comps) technique values the company on the basis of ratios from selected comparable companies;
An adjusted book value (ABV) is calculated by multiplying book value per share by a stock’s 10-year average price-to-book ratio;
If a stock has analyst coverage, we may look at the consensus target price.

More about stockcalc

stockcalc is a fundamental valuation platform with tools to calculate and report on value per share for thousands of companies listed on major North American stock exchanges. stockcalc also contains numerous tools to understand what the stocks you are investing in are worth. Globe Unlimited subscribers can subscribe to stockcalc using the promo code “Globe30,“ which offers a 30-day free trial and special pricing for the second month.

What we found

This sector is comprised of real estate operations that cover a wide spectrum of the Canadian landscape and economy. These companies’ holdings include housing and apartment complexes, hotels, commercial and industrial space, retail locations and office buildings. Like other asset-intensive businesses, our valuation models weigh the adjusted book value highly in the overall calculation.

Markets expect two more U.S. interest-rate cuts for the balance of this year. The current forecast (derived from the futures market) shows one cut for the Bank of Canada’s policy rate for the rest of this year with less certainty on a second cut. A falling rate environment reduces borrowing costs for this asset-intensive industry and makes dividend yields more attractive compared with fixed income. Both of those factors support underlying REIT prices and dividends.

Over the past 12 months, returns for retail and health care REITs (17.8 per cent) have exceeded those for residential and industrial property REITs (minus 2.8 per cent) by a large margin. Over the next 12 months, some analysts are optimistic about seniors’ housing, multifamily residential and grocery-anchored retail.

The average dividend yield for companies on this list is 5 per cent. From a valuation perspective, our weighted models are showing most companies at or near their current market price with a small upward bias. These REITs all pay distributions on a monthly basis as well.

Let’s look at a few of these companies:

Canadian Apartment Properties Real Estate Investment Trust, or CAP REIT owns and manages interests in multiunit residential rental properties in Canada, the Netherlands, Germany and Belgium. A majority of its revenue is derived from income-producing real estate in Canada and, to a lesser extent, in Europe. Our models have CAP REIT both above and below the current market price, with our weighted valuation above the most recent close price driven by our adjusted book value.

Dream Industrial Real Estate Investment Trust has industrial properties in key markets across Canada, Europe and the U.S. Dream’s portfolio consists of 336 industrial assets (549 buildings) that total approximately 72.6 million square feet of gross leasable area. We show upside to Dream – again driven by the adjusted book value.

You can see in the accompanying table the percentage difference between each REIT’s recent close price and its intrinsic value. The “stockcalc Valuation” column is a weighted calculation derived from the models and analyst target data if it’s used.

Brian Donovan, CBV, is the president of stockcalc, a Canadian fintech based in Miramichi, N.B.