Investing in real estate investment trusts (REITs) is among the best options for long-term investors looking for exposure to this asset class. Indeed, there’s always the option of buying your own home or rental properties. But investing in REITs can provide exposure to other real estate asset classes (such as industrial, commercial, or retail) that are out of reach for most individuals.
The question is which REITs are the best options in these sectors? Let’s dive into a few of the best options the TSX has to offer right now.
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SmartCentres REIT
For those looking for retail exposure, SmartCentres REIT (TSX:SRU.UN) would be my top pick. This Canada-based giant owns 174 strategically located properties mainly focused in key regions of Canada. The company’s wholly-owned residential sub-brand, SmartLiving, offers complete, connected, and mixed-use communities on its existing retail properties.
For the first quarter of 2024, the trust reported an increase of 4% on the same property net operating income year over year. In addition, its net rental income and others increased by a whopping 4.7%, or $5.9 million. This is a top asset manager with key retail assets bolstered by some of the best blue-chip mega-cap companies out there. Thus, for those who believe retail real estate has a future, this would be my top option in this space.
And for those looking for a top dividend stock on the TSX, this REIT’s 8.5% yield is the best of the bunch.
Dream Industrial REIT
For those seeking industrial real estate exposure, Dream Industrial REIT (TSX:DIR.UN) continues to be my top pick. This is an open-ended, unincorporated real estate investment trust. The company’s portfolio comprises industrial properties located in the prime regions of Canada and the United States of America. Dream Industrial REIT’s primary objective is to build and grow its portfolio to provide stable cash distributions to investors.
For the first quarter of 2024, the trust reported diluted funds from operations of $0.21 per unit and net operating income of $87.8 million, a rise of 7.1% year over year. Moreover, the trust’s rental income for the period was $85.9 million, a growth of 5.4% year over year.
Dream Industrial’s focus on providing investors access to some of the best-located warehouses and distribution assets means this REIT also benefits from the secular tailwinds supporting the e-commerce revolution, as well as so many other trends. For those looking for such exposure, this is among the top picks to consider, in my view.
Canadian Apartment REIT
And finally, we have Canadian Apartment REIT (TSX:CAR.UN). This real estate investment trust is focused on acquiring the highest-quality multi-unit residential rental properties in Canada. The trust’s portfolio comprises townhouses and apartments situated near public amenities in Canada, and most of its holdings focus on mid-tier and luxury markets.
Like the other REITs on this list, Canadian Apartment REIT has seen strong financial performance of late, though its stock price doesn’t reflect this reality. I think investors looking for residential real estate exposure may want to consider this top REIT on this dip. After all, it’s among the most defensive of the group and still provides a dividend yield of 3.3%.
