When the real estate market cools, investors often flee from anything tied to property. But for those looking for passive income, that’s often the perfect time to step in. One Canadian real estate investment trust (REIT) in particular has taken a hit, but that only makes it more appealing. Canadian Apartment Properties REIT (TSX: CAR.UN), or CAPREIT, has quietly become my top income play of the year.
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A strong value stock
CAPREIT stock is down around 18% from its 52-week high as of writing. It has been caught in the broader wave of weakness hitting real estate stocks thanks to high interest rates and affordability concerns in the housing market. But dig a little deeper, and you’ll see this REIT is still firing on all cylinders.
CAPREIT is Canada’s largest multi-residential REIT, with more than 66,000 apartment suites and manufactured home community sites. It’s spread across Canada, with a growing footprint in the Netherlands as well. This scale provides it with something many REITs lack: pricing power. And CAPREIT has been using that to its advantage.
Into earnings
In its first quarter 2025 earnings, CAPREIT reported same property net operating income growth of $149 million, with average monthly rents rising, and its occupancy holding strong at 97.6%. And it’s worth noting that these aren’t speculative condo buildings or office towers; they are homes. That’s a key distinction. Demand for rental housing remains high, and supply is tight, especially in major Canadian cities.
Of course, rising interest rates have impacted its bottom line. The REIT’s funds from operations (FFO) per unit fell slightly to $0.59 from $0.61 a year ago. But this dip is modest, and it’s being offset by rising rental income and ongoing cost controls. Meanwhile, the trust’s balance sheet remains healthy. CAPREIT has a conservative debt profile, with 94% of its mortgages fixed and an average term to maturity of over five years.
Considerations
It’s the kind of boring, dependable income generator that doesn’t need rapid growth to deliver returns. At today’s prices, CAPREIT trades at a price-to-FFO multiple below its historical average. And its monthly distribution, currently yielding about 3.3%, has remained safe and consistent. While some investors chase higher yields elsewhere, CAPREIT offers a combination of stability and long-term growth that’s hard to ignore.
The market seems to be punishing it for macroeconomic noise rather than operational weakness. That’s where opportunity lies. If interest rates hold steady, or even come down in 2025, REITs like CAPREIT could see a strong rebound. But even if that takes time, you’re still collecting solid income every month.
And unlike retail or office REITs, CAPREIT’s underlying asset remains in strong demand across Canada. The immigration boom, housing shortages, and higher mortgage costs are keeping more people in rentals for longer. That gives CAPREIT a tailwind that many other REITs simply don’t have.
Bottom line
What seals the deal for me is CAPREIT’s long-term track record. The REIT has grown its net asset value and FFO per unit steadily over the past decade, all while expanding its portfolio and maintaining a disciplined approach to acquisitions. The management team doesn’t chase risky projects or over-leveraged bets. They stick to what they know: rental housing. Right now, CAPREIT is being treated like every other real estate stock. But it’s not. It’s better positioned, better diversified, and more defensive than most. And it’s trading at a discount not seen in years. And right now, a $10,000 investment could bring in passive income of $332 each year, or about $27.50 each month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| CAR.UN | $46.00 | 217 | $1.53 | $332.01 | Monthly | $9,982.00 |
For income-focused investors who can look beyond short-term noise, CAPREIT offers a compelling mix of stability, upside, and steady yield. While others panic over interest rates, I’ll be happily collecting monthly distributions from what I see as the most reliable REIT on the TSX today. That’s why Canadian Apartment Properties REIT is my income play of the year.
