Canaccord Genuity analyst surveys industrial REITs, reiterates top picks

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

REIT opportunities

Canaccord Genuity real estate analyst Mark Rothschild presented new data on industrial REITs,

“CoStar Group hosted a webinar this past week with a presentation on the Canadian industrial market, and in this Weekly, we provide an update on industrial property fundamentals with highlights from the presentation … . A key point from CoStar’s presentation was how industrial leasing has held up in the face of a slower Canadian economy. In fact, there has been healthy demand for industrial space driven by near[1]record volumes of consumer goods imports. According to CoStar, industrial leasing activity (renewals and new leases) was 27 million sf in H1/25, in line with the historical average for the first half of the year since 2016 and compared to ~24 million sf in H1/24. Geographically, the strongest market in Q2/25 was Calgary … Though leasing has remained healthy, a large volume of new supply delivered over the past three years has exerted upward pressure on availability rates … A slower pace of construction activity and a lower volume of deliveries in 2025 and 2026 (relative to 2024 and 2023) bodes well for stronger fundamentals … Canadian industrial REITs trade at attractive valuations relative to U.S. peers. Canadian industrial REITs are currently trading at, on average, 11.7 times 2026 AFFO, compared to 22.8 times for large U.S.-listed industrial REITs. Canadian industrial REITs trade at an average discount to NAV of 18.8 per cent, compared to a discount of 8.3 per cent for U.S. industrial REITs, based on consensus estimates. For larger cap industrial REITs, Dream Industrial trades at a 19.1-per-cent discount to our NAV estimate compared to 23.1 per cent for Granite”

Mr. Rothschild has “buy” ratings in the broader rea estate sector on Dream Office REIT, Allied Properties REIT, True North Commercial REIT, BTB REIT, PRO REIT, DREAM Unlimited Corp, Minto Apartment REIT, Parkit Enterprise Inc, Plaza Retail REIT, Chartwell Retirement Residences, Killam Apartment REIT, Granite REIT, Crombie REIT, Flagship Communities REIT, Dream Industrial REIT, Primaris REIT, First Capital REIT, StorageVault Canada, Choice Properties REIT, Automotive Properties REIT and Granite REIT.

Trade consequences

BMO senior economist Sal Guatieri points out the severe negative effects of the trade war on industrial investment,

“Canadian real construction spending rose a solid 5.9 per cent in the past year to July (n.s.a.), led by gains in residential (9.3 per cent) and institutional/government (5.2 per cent). But the overall advance masks weakness in both commercial (down 4.8 per cent) and industrial (down 7.1 per cent). The latter sector is notable, as seasonally-adjusted spending has fallen each month since the trade war began in February. Notably, spending on factories has fallen 10.5 per cent year-over-year (n.s.a.), while that for smaller industrial players has plunged 20.2 per cent. The respective figures for Ontario are down 10.4 per cent and down 21.6 per cent amid punishing U.S. tariffs on steel and motor vehicles. Don’t expect much revival until the USMCA is signed, sealed, and delivered”

Macro-immune

Wells Fargo strategist Ohsung Kwon updated an interesting list of stocks,

“Macro is noisy, especially in the post-COVID world. We introduce four baskets, mixing macro sensitivity and EPS revisions. Our macro immune stocks with positive revisions (i.e., fundamental longs - BBG ticker: WFIMMP INDEX) have been consistent outperformers, especially since GFC, whereas our macro sensitive stocks with negative revisions (i.e., macro shorts - WFSENN INDEX) have consistently underperformed”

The list of macro-immune stocks with positive earnings revisions is Broadcom Inc, Palo Alto Networks Inc, Fiserv In, Epam Systems Inc, Essex Property Trust Inc, Dayforce Inc, Vistra Corp, Alphabet Inc, Uber Technologies Inc, Akamai Technologies Inc, Fortinet Inc, Intl Business Machines Corp, Cvs Health Corp, Solventum Corp, Paycom Software Inc, Equity Residential, Edwards Lifesciences Corp, Dexcom Inc, T-Mobile Us Inc, AES Corp, NRG Energy Inc, C.H. Robinson Worldwide Inc, Boston Scientific Corp, Corning Inc and Brown & Brown Inc.

Bluesky post of the day

Diversion

“The Winners of the 2025 Gizmodo Science Fair” – Gizmodo