All figures as of late August 2026. I don’t currently own any REITs; I used to own Granite and RioCan. This is analysis, not personalized advice. This article was created with assistance from AI, utilizing my video transcript to create the article. AI can easily make mistakes, so look to the video for the source of truth.
Canadian REITs pay some of the biggest yields on the TSX, most of them monthly, and the whole sector has been in the dumpster since rates ripped in 2022. Now rates are falling again, and a lot of people are asking whether these beaten-down income machines are finally buys.
So I ranked every major Canadian REIT, S tier to E tier. Not the six largest overall; the largest in each property segment, head to head: CAPREIT (CAR.UN) for apartments, Granite (GRT.UN) for industrial, RioCan (REI.UN) for retail, Choice Properties (CHP.UN) for grocery-anchored retail, Allied Properties (AP.UN) for office, and Chartwell (CSH.UN) for seniors housing. Every one of these is a REIT, and every one is a completely different business. That’s what made this the hardest ranking I’ve done.
Two spoilers to set the stakes. The highest-yielding REIT on this list is the one I wouldn’t touch. And the best performer of the six, by a mile, landed in D.
REITs 101: the four ideas that explain the sector
Why the yields are so high. A REIT pays little to no corporate tax as long as it hands its income to you, which is why the yields are big, why most pay monthly, and why the structure caps growth at a mid-single-digit pace by design. You’re buying the income, not a rocket.
Why the whole sector crashed. Pre-2022, rock-bottom rates gave REITs an endless runway: cheap debt, rising rents, rising property values. Rampant inflation ended that. Rates went through the roof, property values got marked down over and over, and the sector got thrashed. REITs move opposite to interest rates, the same mechanism as utilities: bond-like income trades like bonds. With the Bank of Canada cutting again, that headwind is finally turning.
Take NAV with a grain of salt. Net asset value is management’s estimate of what the buildings are worth minus debt. But a downtown tower is not a detached house with daily comparables. These assets rarely trade, so the number is an educated guess that keeps getting written down in bad markets. When you see a huge discount to NAV, be skeptical, especially in office.
The payout ratio rule of thumb. Distributions divided by funds from operations. Below 80% is comfortable. Past 85, 90, 95%, the cushion vanishes. Past 100%, the REIT is paying you money it isn’t making. One of these six is at 104%. Remember that when we get there.
Here’s how different the six stories are, side by side:
Now the board, worst to first.
E tier: Allied Properties (AP.UN): the yield trap
Unless you’ve been living under a rock, you know Allied has been one of the worst-performing REITs in the country. Down about 80% from the peak, and the monthly distribution was already cut 60% in early 2026. And here’s the thing: I don’t think the trust was doing anything wrong. Allied’s whole strategy was owning the premier heritage offices of Toronto and Montreal, the brick-and-beam character space tech firms used to fight over. Then Covid hit, work from home gutted demand, and national office vacancy went to 17%. The newer trophy towers still fill up; Allied’s older buildings sit at 84% occupancy against 98% for the winners.
The squeeze feeds itself: property values fell, which pushed debt ratios up, interest costs rose at exactly the wrong moment, and with one in six floors empty, net operating income is still declining double digits. Leverage is 12 times debt to EBITDA against 7 or 8 for the healthy names on this list. They even sold the crown jewel, the downtown Toronto data centre portfolio, for $1.35 billion to pay down debt, and still had to cut the distribution anyway. That tells you everything.
So why does anyone own it? The yield is now about 7.8%, and the units trade at a 52% discount to even the written-down NAV. There are genuine green shoots: quarters of positive absorption, occupancy beating the company’s own targets. But the payout ratio is 104% of adjusted funds from operations after the cut, which means a second cut is not out of the question. And this is the most important lesson in the whole video: a distribution is not a return. That 7.8% does not guarantee you earn 7.8%. If they cut again, the unit price likely falls another 30 to 40%. The biggest paycheque on this list is the biggest trap. E tier.
D tier: Chartwell (CSH.UN): the best one, at the worst price
This is the ranking people will argue about, so let me say it plainly: Chartwell has crushed every other REIT on this list. Twelve straight quarters of double-digit growth in funds from operations per unit. Same-property net operating income up 12%. FFO per unit up 16.7%. Occupancy at 95%. It might be the second-best business on this board after Granite.
The demand story is the best in the sector, full stop: Canada’s 85+ population is expected to roughly triple by the mid-2040s, the boomers control most of the wealth in the country, and there aren’t nearly enough retirement residences to go around. Residents pay about $4,915 a month on average, growing mid-single digits. The distribution has been maintained for 24 consecutive years, including straight through the pandemic.
So why D? Three reasons. First, the price: 18 to 19 times funds from operations, against 13 to 14 for everything else here. You’re paying a 30%-plus premium, the lowest yield on the list, and the largest premium to NAV. Everything has to keep going right. Second, this is an operating business, not a passive landlord. Granite rents a warehouse to a tenant; Chartwell feeds, cleans and cares for human beings. Staffing costs, execution risk, and the tail risk Covid exposed brutally: the units fell from about $16 to under $4 in short order when the pandemic hit congregate care.
Third, the risk nobody prices in: move-ins depend on seniors selling the family home. Private pay is discretionary, and in a bad housing market, which I’d argue we’re in, seniors delay the move, keep the house, and hire part-time help instead. If that pressure hits occupancy while you’re paying peak multiple, the valuation contracts fast. Great business. Wrong price. D tier, and drop a comment if you think I’m crazy.
C tier: Choice Properties (CHP.UN): the fortress
Choice is the real estate arm of Loblaw and the Weston family. Most of its buildings are grocery-anchored plazas where Loblaws, Superstore, No Frills or Shoppers Drug Mart is the anchor tenant, and Loblaw pays 64% of retail rent. That’s about as reliable as rent gets in this country. Around 560 plazas anchored by a supermarket, 83% of tenants necessity-based, plus a quietly excellent industrial portfolio of 124 properties where renewals are coming in 40% higher, the fastest-growing rent line in the company.
And here’s the stat that defines Choice: when rates ripped in 2022-23 and the whole sector cratered, Choice’s maximum drawdown was about 23%. CAPREIT fell 46%. Allied fell 80%. The boring grocery landlord barely flinched.
The balance sheet matches the story: 7 times debt to EBITDA, well below peers, BBB credit, about $2 billion in liquidity. The First Capital deal (Choice takes the grocery-anchored assets, KingSett Capital buys the rest, closing in the second half of 2026) even dilutes the Loblaw dependence while adding to the moat. And nobody is building new shopping centres, which means real pricing power.
Why only C? There’s just not much growth. Cash flow is up under 1%, the distribution barely rises, you’re paying a slight premium to NAV for the safety, and the AFFO payout is near 90% (though I’d be shocked if that doesn’t improve; it looks like one-time noise). The most defensive REIT on this list, and if that’s specifically what you want, move it up a tier in your own book. For me: C.
B tier: CAPREIT (CAR.UN): the best apartment landlord, at the wrong moment
CAPREIT is Canada’s biggest apartment landlord: 45,000-plus rental suites, mostly in the big cities, 97.5%-plus occupancy, a 4.5% yield on a 59% payout ratio, and one of the safest distributions in the sector. Long seen as the safest bet in apartment real estate, it now trades at a record discount to the stated value of its buildings: roughly 63 cents per dollar of NAV. Management clearly agrees the units are cheap, because they’re buying back a billion dollars of them below NAV.
But the big thesis has reversed. Ottawa is cutting immigration targets and capping students, and population growth was THE driver of apartment demand and rents. National asking rents have now fallen year over year for 20 straight months, and vacancy is rising for a third year. The gain-to-lease engine is stalling: long-tenured tenants still renew higher, but tenants who signed at the 2023 peak now renew lower. Toronto and Vancouver are going through real corrections; even Alberta rents are cooling.
Long term, I’m genuinely bullish. The balance sheet is excellent (41% debt to gross book value, a 3.35% average mortgage rate, investment grade), the buybacks are shareholder-friendly, and the paused rent engine should restart once the lower renewals wash through. Best-in-class apartment REIT at a record discount. But the endless runway is over for now, and two names on this list are simply better setups today. B tier.
A tier: RioCan (REI.UN): left for dead, quietly thriving
RioCan got wrecked by Covid through no fault of its own. Malls were shut, tenants were defaulting, and the 2020 distribution cut was forced; I don’t hold it against them at all. What’s emerged since is a leaner, better business: 164 plazas anchored by grocery, pharmacy and value retailers, over half in the GTA, now 98.8% leased with rents jumping double digits.
The engine here is the mirror image of CAPREIT’s problem. RioCan is sitting on years of old, cheap leases, and as they expire, new leases are coming in at 23% higher rents, because nobody has built new shopping centres and tenants have nowhere else to go. Old leases roll up, not down. That’s a built-in growth machine for years. Management also simplified the story, selling down the residential and condo ambitions to cut debt and buy back units below NAV, which quietly lifts the value of every remaining unit.
The bear case: it’s still 85% retail, so a real recession hits its tenants (softened by the necessity-based mix), and leverage is higher than I’d like at 9.4 times. But 70% of the debt is unsecured and only about $30 million matures in 2026, so there’s essentially no near-term refinancing risk. A 5.4% yield on a 74% payout, at a discount to a realistic NAV, with double-digit rent spreads. One of the best REITs in the country. A tier.
S tier: Granite (GRT.UN): boring is beautiful
The best REIT in Canada, in my opinion, and it’s not particularly close. Granite owns logistics warehouses and distribution centres, the buildings e-commerce runs on: 145 properties, 61.5 million square feet, 53% in the US, 22% in Canada, the rest in Europe. It was born as Magna’s landlord, and the concentration that once defined it is mostly gone: Magna is 26% of rent today versus 93% back in 2012, and Magna is a very good tenant anyway.
The numbers are the cleanest on this list, category after category. Occupancy at 98%. An AFFO payout ratio of 66%, the lowest of the six. Fifteen straight years of distribution increases, which almost no REIT in Canada can claim. Debt to EBITDA of 6.6 times, the lowest in the group, with a 2.61% average borrowing cost, 5.1 times interest coverage, and about a billion in liquidity. A fortress.
And the growth is built in. Warehouse rents roughly doubled over the past decade, but many of Granite’s leases were signed years ago at old rates. As they expire, Granite re-signs about 20% higher, no new buildings required. That’s 7 to 8% cash flow growth without needing the economy to cooperate. The honest bear case: the industrial boom has cooled (Toronto industrial vacancy hit an 11-year high, so future spreads may be smaller than today’s 20%), there’s some Magna concentration left, and the short-term debt structure makes refinancing a little more active than I’d like. None of it threatens the distribution or the thesis. Cooled is not done. S tier.
The bottom line
| Tier | REIT | One line |
|---|---|---|
| S | Granite (GRT.UN) | Best balance sheet, 15 straight raises, growth built into the leases |
| A | RioCan (REI.UN) | Record occupancy and 23% rent spreads, the comeback nobody noticed |
| B | CAPREIT (CAR.UN) | Best apartment landlord in Canada, at a record discount, in a stalled market |
| C | Choice Properties (CHP.UN) | The Weston-backed fortress that barely flinched in the crash |
| D | Chartwell (CSH.UN) | The best performer of the six, at a price with no room for error |
| E | Allied Properties (AP.UN) | The highest yield on the board, and the definition of a yield trap |
The questions I get most:
Why is Chartwell in D if it’s the best performer? Because this is a ranking of what I’d buy today, not a trophy case. At 18 to 19 times FFO against 13 to 14 for the field, all the good news is in the price, and the risks (an operating business, a soft housing market slowing move-ins) are not.
Isn’t Allied’s 7.8% yield worth the risk? Ask what the yield is telling you. A payout over 100% of cash flow after a 60% cut is the market pricing the next cut before management announces it. High yield on a broken payout is not income.
Are REITs a buy now that rates are falling? Selectively. Falling rates help the whole sector, but the six stories above could not be more different. Buy the specific machine (Granite’s lease roll-ups, RioCan’s rent spreads), not “the REITs.”
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