Buying real estate in Canada can seem impossible for most individual investors. The good news is that you don’t need a huge mortgage to become a landlord. Since 1993, investors have been able to buy units in Real Estate Investment Trusts (REITs), which are companies that own large real estate portfolios and pay out part of the rental income they receive through regular (monthly) distributions.
But where do you start? If you have $1,000 in your TFSA or RRSP, you don’t have to choose just one Canadian REIT to buy. A smart strategy is to divide that thousand dollars and immediately build a diversified “forever” portfolio of professionally managed apartments, e-commerce warehouses and essential shopping centers.
If you are looking for fundamental holdings, consider Canadian Apartment Properties REIT (TSX:CAR.UN), or CAPREIT, Granite REIT (TSX:GRT.UN), and SmartCentres REIT (TSX:SRU.UN). Together they can create a powerful and reliable passive income stream.
CAPREIT: The accommodation provider
As Canada’s largest residential rental company, Canadian Apartment Properties REIT, or CAPREIT, has one of the simplest and most powerful business models in the housing market. It owns more than 40,000 apartment suites. The core product is a human necessity: shelter.
With Canada facing an ongoing structural housing shortage, while immigration and high homeownership costs keep demand for rental properties relentless, CAPREIT’s occupancy rate is incredibly stable, above 98%. The residential buildings are always full and the operational cash flow is predictable. Investors will take a fresh look at this stability when the REIT reports its third-quarter 2025 results on November 6.
For income investors, that cash flow stability is crucial. The trust has paid monthly distributions since 1997. The REIT distributed 61.8% of its adjusted funds from operations (AFFO) as distributions in the first half of 2025. The benefit is well covered.
Because residential leases are renewed every twelve months, CAPREIT investors enjoy long-term inflation protection. The trust has a clear path to continue growing its revenues and cash flow over the coming decades.
A Canadian industrial REIT to buy: Granite REIT
Granite REIT is an industrial real estate giant with vast manufacturing, logistics and distribution properties that are essential for fulfilling e-commerce orders. It represents how Canadians are becoming more and more to get their stuff.
Companies need these warehouses to power their online stores and repair their disrupted supply chains. Granite’s tenant list includes leading companies, with giants like Amazon.com And Magna International locked in long-term leases. This makes the distributable cash flow exceptionally safe.
The industrial REIT has been paying monthly distributions continuously for 22 years and has consistently increased them for 14 consecutive years. The current monthly payout yields 4.3% annually. The REIT’s distribution remains well covered with an AFFO payout ratio of 64% for the first half of 2025.
Most notably, Granite REIT continues to see strong occupancy rates, with portfolio occupancy expected to rise to 96.5% by mid-2025, with a fairly long weighted average remaining lease term of 5.5 years, supporting high visibility into future distributions to long-term investors.
Granite will report third-quarter 2025 results on November 5.
SmartCentres REIT
When looking for Canadian REITs to buy now, some investors may be nervous about the retail sector. SmartCentres REIT proves why you shouldn’t be. This retail REIT is nowhere near a struggling fashion mall. The portfolio is built on a rock-solid, defensive foundation: a Walmart anchor and needs-based businesses.
Approximately 73% of locations are connected to Walmart, ensuring resilient traffic in all weather conditions. People always need groceries, pharmacy supplies and household items. The occupancy rate remains high: 98.6%. This makes SmartCentres’ income stream one of the most sustainable in the REIT asset class. The REIT’s distribution remained intact while peers cut payouts during 2020’s pandemic shutdowns.
The trust has been paying monthly distributions for 23 years. The current payout is 6.8% per year and appears well covered with an AFFO payout rate of 84% for the first half of 2025.
Most notably, shareholder interests are strongly aligned with those of insiders, given CEO Mitchell Goldhar’s equity stake of more than 20% in the trust. Even better, units are trading at a significant 25% discount to their most recent net asset value (NAV) as the REIT executes its expansive mixed-use development strategy. Long-term investors can enjoy capital gains when units rise higher because execution eliminates doubt.
SmartCentres REIT will announce its third quarter operating results on November 12, 2025.
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