The S&P/TSX Capped REIT Index rose 2.8% in June, outperforming the broader S&P/TSX Composite's 1.4% gain for the third consecutive month. The sector, which had been one of the worst performers on the TSX between 2022 and 2024 as interest rates rose sharply, has staged a meaningful recovery as the interest rate environment stabilises and investors rotate back toward yield-generating assets.
The outperformance reflects two converging dynamics: the removal of the interest rate headwind that had weighed on REIT valuations since 2022, and underlying operating performance that has been stronger than the share price declines of recent years suggested. Occupancy rates across Canadian office, industrial, and residential REITs have held up better than the most pessimistic scenarios, and several trusts have reported record rents on lease renewals.
Industrial REITs Lead the Recovery
Industrial and logistics REITs have been the standout performers, driven by persistent demand from e-commerce, logistics operators, and onshoring manufacturing. Vacancy rates in the industrial sector remain below 3% nationally, giving landlords substantial pricing power at lease renewal. Dream Industrial REIT and Granite REIT have both reported weighted average rent increases on renewals exceeding 40% over the past four quarters.
Five REITs Worth Watching
1. RioCan REIT (REI.UN) — Yield: 5.9% Canada's second-largest REIT has strategically repositioned its portfolio toward mixed-use urban properties, reducing its exposure to struggling suburban retail formats. The RioCan Living residential component now contributes 18% of revenue and growing.
2. Dream Industrial REIT (DIR.UN) — Yield: 4.8% The best-in-class industrial operator with properties in Canada, the Netherlands, and Germany. European exposure provides diversification and European industrial markets are structurally undersupplied.
3. Allied Properties REIT (AP.UN) — Yield: 7.1% Highly discounted urban office REIT whose unique brick-and-beam heritage properties in Toronto, Montreal, and Vancouver cater to the creative and tech sectors. Deep value for patient income investors.
4. Boardwalk REIT (BEI.UN) — Yield: 2.8% Canada's premier residential apartment REIT, with a portfolio concentrated in Alberta and Saskatchewan. Record occupancy and rent growth make this a high-quality growth story with improving income characteristics.
5. Granite REIT (GRT.UN) — Yield: 4.3% A premium industrial REIT with a blue-chip tenant base anchored by Magna International. 99% of revenue comes from investment-grade tenants under long-term leases, making it one of the most defensible income streams in the REIT sector.