For investors looking to gain a foothold in the Canadian real estate sector, there are a number of options available. Of course, investors could simply own their own homes or invest in rental properties. But for those looking for stocks to buy, there are plenty of real estate investment trusts (REITs) and other vehicles to buy to gain exposure to this sector as well.
In this article, I’ll discuss two companies I think are worth considering right now for those looking to build a diversified portfolio and gain real estate exposure. Interest rates are already on the decline, with the Bank of Canada among the first to cut. Accordingly, those betting on a booming housing market may want to consider these two REITs right now.
Dream Industrial REIT
Dream Industrial REIT (TSX:DIR.UN) is an open-ended and unincorporated real estate investment trust. Its portfolio comprises industrial properties situated in key regions of Canada and the United States of America. The primary objective is to build and grow its portfolio and offer stable cash distributions to investors.
On May 8, the company reported its financial results for the first quarter of 2024, highlighting diluted funds from operations of $ 0.21 per unit. In addition, its net operating income was $87.8 million, a rise of 7.1% year over year. The net rental income was $85.9 million, an increase of 5.4% year over year. Moreover, it reported a net income of $74.6 million, a rise from the previous loss of $17.7 million.
Industrial real estate is only likely to become more in demand as companies source warehouses and distribution centers in prime locations. The company’s portfolio provides investors with exposure to such assets, which should see market-beating returns over the very long term.
Killam Apartment REIT
Another top REIT I’ve touted for some time is Killam Apartment REIT (TSX:KMP.UN). This fund is yet another open-ended trust specializing in acquiring, managing and developing manufactured home communities (MHC) and multi-residential apartment buildings. The trust has three main segments: apartment, MHC, and commercial.
On May 7, the company reported its financial results for the first quarter of 2024, highlighting 8.3% net operating income growth. It reported net income of $127.2 million and net operating income of $55 million. In addition, it earned $ 0.26 per unit as funds from operations, and adjusted funds from operations stood at $0.21. The company has also witnessed a 5.9% growth in revenue for the same property portfolio year over year.
The company’s exposure to up-and-coming parts of the Canadian market makes this REIT a unique option I think investors may want to consider. For those looking for more residential (apartment) real estate exposure, this would be my top pick right now.
