The Canadian REIT index returned just over 6 per cent in 2018, slightly below most expectations. However, if one looks at specific geography and sectors, it is the real estate investment trusts weighted towards industrial and multi-family properties in Western Canada that generally outperformed the index.
Full disclosure: our picks for the top REITs to buy for 2019 are prejudiced towards those based in or active in the western provinces.
Boardwalk Real Estate Investment Trust (TSX: BEI.UN) Based in Calgary, Boardwalk was a laggard last year, but we think December was its bottom. Trading March 5 at $41.81, it was up from $37.80 from the start of the first quarter. Boardwalk has focused on the mid-level rental apartment market, which appears recession proof, even in Alberta. It has also formed alliances with giant RioCan Real Estate Investment Trust on new retail/residential projects. Also in Boardwalk’s favour is the potential of stable, even lower, lending rates as mortgages are the biggest expense of multi-family investors.
Dream Industrial REIT (TSX: DIR.UN) is based in Toronto but is wise enough to hold most of its industrial real estate in Western Canada, representing the largest (29 per cent) share of its North American portfolio. Now trading in the $11.50 range, Dream posted net returns of 15.5 per cent over the past year. We expect similar performance in 2019 as Dream logistic space benefits from rise in e-commerce retail sales and rising industrial lease rates.
Canadian Apartment Properties REIT (TSX:CAR.UN) (CAPREIT) is one of Canada’s biggest, smartest and strongest landlords, holding more than 50,000 rental units and posting a stellar performance over the past year. As of March 11, 2019 it was trading at $50.72, up from $35.28 at the same time last year. CAPREIT is Toronto-based but active in Western Canada, where its holdings include some first-class properties in Vancouver, Victoria and, recently, Langley, B.C.