Where Canadian Real Estate Income Is Starting to Reprice
Real estate income is becoming more selective. After two years of pressure from higher rates, cautious consumers and slower housing turnover, the better signals are now appearing in operating fundamentals rather than broad market sentiment.
That is the useful takeaway from BNN Bloomberg’s interview with Lorne Kalmar, real estate analyst at Desjardins, who highlighted Primaris REIT, Chartwell Retirement Residences and StorageVault Canada as names with further upside. For investors, the story is not simply about three stock picks. It is about three subsectors where earnings power may be improving before valuations fully reflect it.
Primaris is the clearest example of operational recovery becoming an investment thesis. Retail real estate has been unfashionable for years, but that has also kept valuations disciplined. Kalmar noted that Primaris has already delivered a strong year-to-date total return, yet the core drivers remain in place: occupancy recovery, replacement leasing and better cost recovery.
The key number is former Hudson’s Bay space. Roughly 1.3 million square feet in the Primaris portfolio was tied to the failed retailer. Management has indicated that backfilling that space could contribute about $17 million in annualized net operating income. Add improving recovery ratios and small-unit leasing, and Kalmar sees more than $70 million of potential incremental annual NOI against a 2026 forecast base of about $400 million.
That matters because REIT values ultimately follow durable cash flow. If 2026 absorbs the full vacancy impact, then 2027 becomes the year investors may start underwriting a cleaner earnings base. The risk is execution. Large-format retail boxes are not all equal, and replacement tenants must support traffic, rent and long-term relevance.
The opportunity is not in chasing real estate broadly, but in identifying where occupancy, rent growth and demand are turning at the same time.
Chartwell presents a different signal: demographics meeting pricing power. Occupancy has recovered to roughly 95 per cent, which suggests the first phase of the turnaround is largely complete. The next phase is rent growth. Kalmar argued that blended rent growth could reach the high-single-digit range for several years, supported by renewals, turnover and demand from aging baby boomers.
For investors, seniors housing is less cyclical than retail but not risk-free. Labour costs, regulation, capital spending and affordability all matter. Still, the demand curve is difficult to ignore. The oldest baby boomers are turning 80, and the demographic runway extends well into the next decade. If EBITDA grows as expected, Chartwell’s leverage profile could improve naturally rather than through dilutive balance-sheet repair.
StorageVault sits closer to the housing cycle. Self-storage was pressured as Canadian home-sale volumes slowed, reducing move-related demand. The important shift is that organic growth has returned to the company’s target range of four to six per cent, while traditional self-storage demand drivers are reasserting themselves. A modest rebound in housing activity could add another layer of earnings growth.
The broader lesson for KG Invest readers is that Canadian real estate is no longer a single-rate story. Lower financing stress helps, but the stronger opportunities are where asset-level fundamentals are improving independently. Retail needs leasing execution. Seniors housing needs rent growth without affordability backlash. Storage needs housing mobility to normalize.
For portfolios, this argues for precision. Investors should focus less on headline discounts to net asset value and more on the path of NOI, occupancy, renewal spreads and balance-sheet resilience. The next phase of real estate returns will likely reward operators that can convert improving demand into visible cash-flow growth.
Source: BNN Bloomberg
