RBC Capital Markets analyst Pammi Bir recapped the previous quarter for the REITs sector and restated top picks,
“Our Outperform-rated recommendations include Boardwalk, BSR, CAPREIT, Chartwell, Colliers, Dream Industrial, First Capital, Flagship, Granite, InterRent, Killam Apartment, Minto Apartment, Morguard Residential, Primaris, RioCan, SmartCentres, and StorageVault. On balance, Q3 results marked a decent quarter with healthy overall earnings growth. Strong operating metrics are fuelling above trend organic growth, although tailwinds are moderating. Still, the overall earnings picture continues to setup well for 2025. Stronger macro support remains a likely prerequisite for fund flows to pick-up … Q3/24 FFOPU [funds from operations per unit] increased 2% YoY, ahead of our +1% forecast and down from last quarter’s ~3.5% pace which had some help from lumpy income. Seniors housing led the way by a wide margin (+20% YoY), followed by retail (+5%, or +2% adjusted for unusual amounts), multi-family (+4%), and industrial (+3% YoY) … Perhaps not surprisingly, movements at the long end of the yield curve seem to be driving the bus on sector sentiment. Some stabilization (or ideally compression), coupled with further BoC rate cuts could provide some fund flow support. Nonetheless, from our vantage point, valuations seem reasonable across our gauges, with the sector trading at 15x N12M AFFO [adjusted funds from operations]/7% implied cap rate”