Research Roundup: Top takeaways from CIBC’s 31st annual real estate conference

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

Relative yields on REITs depressed

CIBC analyst Dean Wilkinson provided the takeaways from CIBC’s 31^st annual real estate conference,

“Institutions appear to be focused more on total return prospects and asset quality than asset class at this point in the cycle. With participants from La Caisse, Oxford Properties, KingSett, and Starlight, we did not observe any strong asset class preferences across the group … Relative yields on real estate remain compressed, so the ability to add further value to assets is important. The panelists noted that returns are shifting back to a total return framework as yields have become compressed due to rising treasury rates, which increased by almost 40 bps (CAD 10-Year) … The last 12-18 months have already seen a pick-up in transaction activity, with the increase in debt availability cited as a catalyst … Panelists noted that international investors continue to view Canada as stable and rules-based, even amid U.S. political and trade uncertainty … With fewer new entrants into the labour force and slower household formation, population growth is no longer providing the same structural tailwind to housing activity, resulting in weak home sales and underpinning the market’s adjustment through prices rather than volume’

Mr. Wilkinson has “outperformer” ratings on GO Residential REIT, BSR REIT, Flagship Communities REIT, RioCan REIT, Brookfield Corp., Smartcentres REIT, Killam Apartment REIT, Morguard North American Residential REIT, First Capital REIT abd Brookfield Asset Management Ltd.

Economy not inflationary

National Bank economists and strategists pleaded with the Bank of Canada not to get hawkish,

“In this de facto memo to the Bank of Canada, we argue that Governing Council shouldn’t be too hasty in reacting to a headline inflation spike In Canada at least, inflation had been well-contained prior to the recent oil price shock ➢ The latest available reading (for February) put Canadian headline inflation at 1.8 per cent. In contrast, CPI inflation was already red hot when an oil price shock hit in 2022 … Inflation expectations, while moving higher, have not fundamentally de-anchored … The pass through from higher energy prices to ‘core’ inflation is less-than-certain, perhaps unlikely. Simply put, core inflation momentum has been better behaved in Canada than elsewhere … There remains excess slack in the Canadian economy and recent momentum is concerning … Notwithstanding some mixed signals, the labour market appears weak/vulnerable and is likely to remain so … Key housing markets have remained sluggish, with buyers understandably reluctant to enter the fray … Wealth destruction (observed and threatened) will dull consumer enthusiasm … Homeowners are having more difficulty servicing their mortgages. As it is, more Canadians are falling behind on their mortgage, with delinquencies above pre-pandemic levels … Business confidence and investment intentions are generally handicapped by ongoing trade uncertainty”

“Memo to BoC: Don’t take your cue from the market on oil shock” – National Bank Economic Analysis

Jet engines for electricity

BofA Securities analyst Ronald Epstein underscores the scarcity of U.S. electrical power by detailing the use of aircraft turbine engines for data centre power,

“There is undeniable demand for rapid deployment of aeroderivative turbines by data centers. In July 2025, GE Vernova (GEV; covered by BofA US Multi-Industrial analyst Andrew Obin) won an order for 29 gas turbines to provide 1.0 gigawatts of power for the Oracle/Crusoe Stargate data center in TX. GE Vernova’s LM2500XPRESS aeroderivative gas turbines generate 35 megawatts and are pre-packaged into 10 modules. Installation can be completed in as little as 14 days by a team of 20 people, according to the company. New aeroderivatives of engines like CFM56 could address market need given the engine’s prevalence and operating legacy. However, development of aeroderivatives is a complex engineering process, with prior iterations taking years to reach production. Creation of a new and high-value industrial end market for engine cores and components could stress parts production capacity and have downstream effects for operators”.

Bluesky post of the day

Diversion

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