Real estate investors have had a lot to think about lately. Interest rates are still high, housing affordability is stretched thin, and demand for rental housing continues to grow in urban centres. Amid all this, one company that continues to draw investor attention is Canadian Apartment Properties REIT (TSX:CAR.UN). With a strong history and a well-diversified residential portfolio, it raises a good question: where will CAPREIT be in five years?
The stock
CAPREIT trades around $42.70 per unit at writing. It has a market cap close to $6.83 billion and offers a monthly distribution with a current yield of approximately 3.58%. The REIT owns over 63,400 suites across Canada and the Netherlands, giving it an enviable mix of geographic and asset-class diversification. Its properties range from mid-tier to premium apartments, townhomes, and manufactured home communities. This diversity has helped CAPREIT weather various market cycles and economic headwinds.
In the first quarter of 2025, CAPREIT reported operating revenues of $253.3 million, which represented a sequential decline of 8.16%. This was mostly attributed to divestments made as part of its capital-recycling strategy. While that may seem concerning at first glance, the bigger picture tells a different story. CAPREIT maintained an impressive occupancy rate of 98%, with the average monthly rent increasing to $1,617. With rental demand high and vacancy rates historically low, CAPREIT’s income remains steady and reliable, which is key for a long-term investment.
Setting up for success
Over the last year, CAPREIT has taken major steps to reposition its portfolio for future growth. In 2024 alone, it executed nearly $1 billion worth of real estate transactions in Canada and divested $219 million in European assets. This strategic pivot has allowed it to focus more on high-performing and core urban markets, especially those with strong demographic trends and tight housing supply. These moves also give CAPREIT the financial flexibility to take advantage of new opportunities as they arise, particularly in regions where rent growth is accelerating.
One of CAPREIT’s most notable initiatives is its recent partnership with the Canada Infrastructure Bank. In early 2025, it secured $70 million in financing to retrofit about 60 multi-unit buildings across the country. The goal is to improve energy efficiency and cut greenhouse gas emissions by 40% at those sites. These upgrades will not only reduce operating costs over time but also position CAPREIT as a sustainability leader in the Canadian residential rental market.
Future outlook
Financially, CAPREIT remains in solid shape. It has managed its debt conservatively, with a total debt-to-gross book value ratio of just under 41%. This gives it ample breathing room to raise capital if needed while still maintaining the flexibility to return capital to unitholders or reinvest in new projects. Its payout ratio remains conservative as well, which protects the dividend and leaves room for reinvestment. In a higher-rate environment, this cautious approach to leverage is particularly important.
So, what might CAPREIT look like five years from now? If current trends continue, the REIT could grow meaningfully through a combination of organic rent growth, strategic acquisitions, and potential new developments. Canada’s housing market continues to experience affordability pressures, pushing more people toward rentals, especially in urban centres. As the federal government increases immigration targets and cities face housing shortages, demand for professionally managed rental housing is likely to remain high.
Bottom line
For long-term investors, especially those looking for steady income and exposure to residential real estate, CAPREIT offers a compelling package. It combines a defensive business model with room for capital appreciation. And with housing affordability unlikely to improve dramatically any time soon, rental housing will likely stay in strong demand. While no investment is without risk, CAPREIT looks well-positioned to benefit from the structural tailwinds in Canada’s rental housing market. Looking out to 2030, it’s not just about stability; it’s about smart, sustainable growth.
