RBC Capital Markets head of global real estate research Pammi Bir surveyed the domestic real estate sector and reiterated his top picks,
“Since the BoC set course on its aggressive rate tightening campaign in 2022, our universe has traded at an average 20% NAV discount. Even after taking our NAVs down 14%, the outsized discount persists as investors have clearly taken a more cautious stance. Have NAVs lost some of their relevance in influencing REIT returns? Has cash flow growth moved to the forefront? As discussed in our feature section, NAV growth still demonstrates the strongest relationship with unitholder returns over multiple time periods, though AFFOPU and DPU are also relevant. Taking a closer look at total returns on a 10 and 15-year basis, top quartile performers were also typically leaders in NAV growth, while multi-family and industrial dominated the top quartile for returns on a 10YR basis … While macro aid is a likely prerequisite, we believe the key pieces for stronger sector returns remain in place. Yet, in the absence of lower rates, we believe our top picks (AP [Allied Properties REIT], BEI [Boardwalk REIT], CAR [Canadian Apartment REITs], CIGI [Colliers International Group], CSH [Chartwell Retirement Residence], DIR [Dream Industrial REIT], FCR [First Capital REIT], FSV [Firstservice REIT], GRT [Granite REIT], HOM [BSR REIT], IIP [Interrent REIT], KMP [Killam Apartment REIT], MHC [Flagship Communities REIT], MI [Minto Apartment REIT], MRG[Morguard REIT], REI [Riocan REIT], SRU [Smartcentres REIT], SVI [Storagevault Canada Inc.]) are positioned for superior growth, particularly given the weighting in multi-family, industrial, storage, defensive retail, & seniors housing”