Andrew Moffs’ Top Picks for Sept. 30, 2026

Andrew Moffs, Senior Vice President & Portfolio Manager, Vision Capital

Focus: Real Estate Stocks

Top Picks: Chartwell Retirement Residences, First Industrial Realty Trust, RioCan REIT

MARKET OUTLOOK:

In recent weeks, an orderly expansion of U.S. 10-year Treasury bond and Canadian 10-year Government bond yields has primarily been driven by an inflection in the policy path of short-term interest rates toward a hiking cycle, and a rising term premium.

In short, investors are demanding higher compensation for duration risk due to rising fiscal debt loads, geopolitical uncertainty and competition for capital with the private sector as the artificial intelligence (AI) capex buildout intensifies.

As a capital-intensive business, this challenges the ongoing recovery of real estate lending and transaction volumes, as investors reprice deals to reflect higher borrowing costs, and triggered recent weakness in listed real estate securities.

Notwithstanding, economic growth appears to be strengthening. As reflected in the August release of S&P Global’s U.S. Flash Purchasing Manager’s Index (PMI), price pressures appear to be building in supply chains as economic activity accelerates at the fastest pace in five years, broadening to include expansion in both manufacturing and service sectors. This dynamic points to attractive operating potential for listed real estate investment trusts (REITs), as rental rates typically track inflation, and occupancy levels remain elevated within a growing economy.

Generally, strong operating fundamentals continue to support the backdrop for listed REITs today:

Falling new supply: Higher base rates and above-trend inflation have resulted in 48 per cent higher construction costs since 2020, resulting in decelerating new construction growth across nearly all property types, increasing both the replacement cost and the value of stabilized assets – it is “cheaper to buy than build”.

Access To Capital: Loosening lending standards from banks, combined with listed REITs’ low leverage profile, staggered debt maturities, and access to cost-advantaged unsecured debt is improving refinancing activity.

Resilient, Rising Cash Flows: Generally, constructive supply-demand fundamentals across the listed REIT landscape shifts pricing power from tenants to landlords. Through the second quarter (Q2) 2026 earnings season, 70 per cent of U.S. REITs “beat” consensus funds from operations (FFO) expectations, and 86 per cent increased full-year 2026 guidance.

Mergers and acquisitions (M&A): The median listed REIT continues to trade at a discount to its net asset value on both sides of the border today. The private real estate market dwarfs the listed REIT market, and has a proven track record of acquiring listed REITs to close the gap to Net Asset Value (NAV), surfacing value for its unitholders. A wave of listed REIT privatizations continue to gain momentum, with 21 takeovers of listed REITs in North America at an average 40 per cent premium to unaffected share/unit pricing over the last two calendar years.

Supply-demand fundamentals by property type and geographic region will create leaders and laggards, serving as the key determinant to which REITs/Real Estate Operating Companies (REOCs) can capture earnings growth in a regime where cap rates are pressured.

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TOP PICKS:

Chartwell Retirement Residences (CSH.UN TSX)

Chartwell Retirement Residences is the largest owner of seniors housing in Canada, with more than 30,000 suites concentrated in core markets in Ontario (44 per cent of adjusted Net Operating Income or NOI), Quebec (34 per cent), Alberta (11 per cent) and British Columbia (11 per cent).

Canada faces a generational supply-demand mismatch in seniors housing. The 80 plus population is growing three to four per cent annually, and demand exceeds new supply by more than four-to-one. With new supply below one per cent of inventory and obsolete assets being demolished at 1.5 per cent, total inventory is shrinking. Canada would need to deliver 20,000 units a year to meet demand, versus only 7,300 annually over the past decade. Additionally, rising construction costs create high barriers to entry and push market rents toward replacement values. Chartwell’s occupancy is forecast to reach 95 per cent in September 2026, and adjusted same-property NOI grew 11.9 per cent in the second quarter.

The trust has announced approximately $1.4 billion of accretive acquisitions from 2024 to 2026 in sought-after markets, including Montreal, Victoria and Southwestern Ontario, at roughly 30 per cent below replacement cost. These acquisitions are funded through Chartwell’s at-the-market equity program, which has raised over $600 million since late 2024 (with $500 million of additional capacity through 2029), minimizing earnings dilution.

Approximately 72 per cent of its debt is low-cost CMHC-insured mortgages, with a weighted average interest rate below four per cent and a low leverage ratio of 32.2 per cent. Vision believes the strong supply-demand backdrop, accretive acquisitions and efficient access to capital are not fully priced into Chartwell’s units, which look particularly compelling relative to the higher valuations of U.S.-listed seniors housing REITs.

First Industrial Realty Trust (FR NYSE)

First Industrial Realty Trust owns approximately 70 million square feet of U.S. industrial real estate in land-constrained submarkets, led by Southern California (24.5 per cent of rental revenue), Central/Eastern Pennsylvania, Dallas/Fort Worth and South Florida, with 16 million square feet of additional landholdings earmarked for future development.

The U.S. industrial sector is reaching a positive inflection point. The construction pipeline of approximately 237 million square feet is among the lowest levels since 2017 and 65 per cent below its 2022 peak, while demand from e-commerce, supply chain investment and reshoring is driving a recovery in leasing, with national vacancy declining for the first time in four years to 6.5 per cent in Q2 2026, according to CBRE. The data centre boom adds a second-order tailwind, as each gigawatt of new capacity requires an estimated 2-3 million square feet of warehouse space.

A 15-year portfolio transformation has lowered the average age of First Industrial’s portfolio to 13 years and exited non-core assets, while an accretive development program continues to drive NAV growth. Occupancy is forecast to exceed 95.5 per cent by the end of 2026, supported by same-store NOI growth of 5.75 per cent and cash rental rate increases of more than 35 per cent on new and renewal leases.

Vision views First Industrial as mispriced relative to peers operating more mature portfolios, trading near the widest discount to Vision’s forward-looking NAV among U.S.-listed industrial REITs.

RioCan REIT (REI.UN TSX)

RioCan REIT is one of Canada’s largest independent retail landlords, owning urban, necessity based shopping centres and mixed-use properties in Canada’s six largest markets, with the Greater Toronto Area representing 58 per cent of fair value. With no parent company or sponsoring retailer, RioCan is one of the few remaining scaled, independent Canadian retail platforms. RioCan’s properties serve dense, affluent communities, with 277,000 people and an average household income of $155,000 within a five-kilometre radius.

Approximately 86 per cent of the portfolio includes a grocery component, anchoring a tenant base of essential services, grocery, pharmacy, liquor and value retailers such as Dollarama and TJX. Demand is also broadening into fitness, medical services and discount grocery banners, highlighted by the backfill of former Hudson’s Bay space at Georgian Mall with Longo’s, GYMVMT Fitness Club and Mark’s, and at Oakville Place with Nations Fresh Foods.

With virtually no new retail supply, retail committed occupancy reached a record 98.8 per cent, giving RioCan meaningful pricing power: Q2 2026 blended leasing spreads were 23.1 per cent and same-property NOI grew 4.3 per cent, prompting management to raise 2026 guidance to 4.0 per cent – 4.5 per cent. At its November 2025 Investor Day, management outlined a simplified, retail-focused plan targeting average Core FFO per unit growth of 3.5 per cent annually through 2028, despite an approximately 1.5 per cent headwind from refinancing low-rate debt.

The REIT is nearly complete in monetizing its RioCan Living residential rental portfolio, with $1.26 billion of dispositions closed or under contract against a $1.3 billion target, and is using the proceeds to pay down debt. Longer term, RioCan’s centres use only about 25 per cent of their underlying land, providing significant future density potential. Vision believes management’s outlook is conservative, and that RioCan is well-positioned to deliver stronger growth.

PAST PICKS: SEPT. 29, 2025

Dream Industrial REIT (DIR.UN TSX)

Then: $12.36

Now: $12.75

Return: 3%

Total Return: 9%

Sienna Senior Living (SIA TSX)

Then: $18.72

Now: $20.13

Return: 8%

Total Return: 13%

GO Residential REIT (GO.U TSX)

Then: $12.10

Now: $7.44

Return: -39%

Total Return: -33%

Total Return Average: -4%