Three real estate investment trusts are drawing attention as investors look for growth, valuation upside and resilience across the housing sector.
BNN Bloomberg spoke with Brad Sturges, managing director and equity research analyst at Raymond James, about why Primaris, Chartwell Retirement Residences and Flagship Communities stand out in today’s market.
Key Takeaways
- Primaris could benefit from a near-term catalyst as it advances re-leasing of former Hudson’s Bay space, supporting future cash flow growth.
- Retail REIT fundamentals are improving, with strong leasing demand and portfolio upgrades enhancing long-term asset quality.
- Seniors housing demand is expected to rise as demographics shift, while limited new supply supports occupancy and rent growth.
- Canadian seniors housing REITs may offer valuation upside, trading at discounts relative to growth prospects and global peers.
- Manufactured housing provides a defensive, affordable housing option with steady demand and lower sensitivity to interest rate changes.
Read the full transcript below:
LINDSAY: It’s time now for Hot Picks, and today we are zeroing in on three REITs you should have on your radar. Our next guest has Primaris at the top of his list. For more, let’s welcome Brad Sturges, managing director and equity research analyst at Raymond James. Good morning, great to have you with us.
BRAD: Thanks for having me.
LINDSAY: Let’s get started with your first top pick. It’s Primaris. What are you watching with this company?
BRAD: Yeah, so Primaris is a Canadian enclosed mall owner. They’re one of the largest operators in Canada. We’re seeing really positive fundamentals from a leasing perspective. They just reported earnings last week, and on their earnings call they were talking about leasing activity being at record highs for CRU space.
They’re also negotiating to re-lease 70 per cent of their former HBC anchor space. They expect to have more details in the next couple of months, likely in June, and we think that leasing update could be a real positive catalyst for the stock.
In the meantime, we see the stock as still pretty undervalued. It trades at a low cash flow multiple, and we think the re-leasing of HBC anchor space is going to drive meaningful cash flow per share growth over the next few years as that rental income ramps up.
Other things we like: they’ve been buying high-quality malls — pension-quality assets — over the past few years, which has improved the portfolio. They’ve added to the management team with Julian Schoenfeld as CIO, which adds bench strength.
We also see acceleration in non-core asset sales, a land disposition strategy, and an intensification development program that could drive meaningful accretion over time. The balance sheet is in great shape, with a sector-low debt-to-EBITDA multiple of about six times, and they’re an annual distribution grower. So there’s a lot to like here.
LINDSAY: We saw on the one-year chart that the stock price has really surged since the beginning of this year. Is that more of a rebound after taking a hit from Hudson’s Bay, or is it because of the factors you mentioned?
BRAD: We think it’s a combination of those factors. There are a lot of positives, but it did underperform last year due to the HBC news. We think that reaction was overdone.
The income stream coming online is going to be meaningful and isn’t fully reflected in the stock today. As that growth becomes more visible, we think there’s still more upside — not just on earnings, but on the valuation multiple as well.
LINDSAY: Next up is Chartwell Retirement Residences. What do you like about this one?
BRAD: We just launched coverage on Chartwell last week, along with Sienna, and we like both. We’re highlighting Chartwell because we see it as one of the top growth stories in Canada right now.
We’re forecasting double-digit cash flow per share growth over the next few years. Chartwell is a pure-play, private-pay retirement residence operator in the Canadian seniors housing sector.
There are strong demographic tailwinds driving demand. As baby boomers move into the 75-plus age cohort, we expect increasing demand for retirement residences. At the same time, supply is limited — the construction pipeline is less than one per cent of existing inventory, while demand growth is expected to be around four per cent.
That imbalance is driving higher occupancy, which is near all-time highs, and we expect that to support rent growth and margin expansion.
The balance sheet has also improved significantly. Debt-to-EBITDA is now around seven times, and they’ve benefited from a lower cost of capital to support acquisitions. They’ve acquired more than $2 billion in assets over the past couple of years, and we expect continued growth, partly funded by selling older properties and reinvesting in newer ones.
LINDSAY: Lastly, Flagship Communities is your third pick. Tell us more about that.
BRAD: This would be more of a smaller-cap pick, offering both value and growth. It’s essentially an affordable housing story.
They own and consolidate manufactured housing communities in the U.S. Midwest. It’s a capital-light land lease model where residents own their homes and pay rent for the land. This model is about 40 per cent cheaper than apartment living, which is often the closest alternative.
Management has a strong track record, with decades of experience. They focus on acquiring value-add communities and investing in improvements like amenities and infrastructure, which can drive occupancy and rent growth over time.
The stock also screens as inexpensive, trading at a low cash flow multiple while delivering low double-digit cash flow per share growth. They’ve increased distributions annually since their IPO, and we see a meaningful discount to net asset value, suggesting upside potential.
LINDSAY: Any risks for the sector? If mortgage rates rise, is there a risk of oversupply or other pressures?
BRAD: What we like about all three names is that leverage is relatively low and interest rate sensitivity is limited.
If rates rise, these companies are relatively well positioned. Low leverage and strong rent growth profiles make them more insulated compared to peers.
LINDSAY: We’ll leave it there. Brad Sturges, managing director and equity research analyst at Raymond James. Thanks for your time.
BRAD: Thanks for having me.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| PMZ.UN TSX | N | N | N |
| CSH.UN TSX | N | N | N |
| MHC.UN TSX | N | N | N |
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This BNN Bloomberg summary and transcript of the May 4, 2026 interview with Brad Sturges are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
