Andrew Moffs, Senior Vice President & Portfolio Manager, Vision Capital
Focus: Real Estate Stocks
Top picks: Digital Core REIT, GO Residential REIT, Chartwell Retirement Residences
MARKET OUTLOOK:
Constructive real estate fundamentals continue to support the backdrop for listed Real Estate Investment Trusts (REITs) today, including:
Falling New Supply: Inflation over the prior three years— exacerbated by new tariffs and the crackdown on immigration resulting in a smaller and more expensive labour pool— has made new development returns uneconomic. It has also significantly reduced new construction growth across nearly all property types and increased replacement cost value of stabilized assets.
Access To Capital: Loosening lending standards from banks, combined with listed REITs’ low leverage profile and access to cost-advantaged unsecured debt is improving refinancing activity and enabling REITs to play offence to advance accretive acquisitions.
Earnings Growth: Accelerating leasing volumes and capital markets resulted in U.S. REITs delivering normalized core funds from operations (funds from operations) growth of seven per cent in Q3 2025, well above consensus estimates of four percent.
Dispersion in Cash Flows: 41 per cent of listed U.S. REITs and 22 per cent of listed Canadian REITs have increased their dividends/distributions year-to-date, yet select REITs suffering from challenged fundamentals are projecting cuts into 2026, validating a long-short approach to the listed.
REIT sector M&A: The majority of listed REITs continue to trade at a discount to their net asset values 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, surfacing value for shareholders.
Renewal Of Rate Cut Cycle: Opposing economic readings within its dual mandate have forced the U.S. Federal Reserve into a cautionary stance, as above-trend inflation contends against a weakening labour market. Notwithstanding, the Federal Open Market Committee (FOMC) has delivered two consecutive quarter-point rate cuts through October 2025, as downside risks to employment prompt a shift toward a more accommodative policy rate.
A commensurate reduction in the U.S. 10-year Treasury Bond Yield may not materialize, as the term premium oscillates between the risks of a growing U.S. fiscal debt load and weaker economic growth projections. Though critical to underwriting publicly traded real estate securities (as the 10-year is viewed as a proxy for mortgage financing), materially lower financing costs are not necessary to underpin the ongoing recovery in commercial real estate.
A research report from BMO Capital Markets Investment Strategy Group highlights stability in bond yields ( 50 basis points to over 50 basis points on a rolling one-year basis), while trading within a range of four per cent to five per cent, has produced the strongest relative outperformance for U.S.
REITs Relative to Broad Equities. Dovetailing with historical data, Blackrock Investment Institute’s capital market assumptions project listed REITs to outperform U.S. large cap equities by 260 basis points annually over the next five years.
TOP PICKS:
Andrew Moffs’ Top Picks: Digital Core REIT, Digital Core REIT & Chartwell Retirement Residences Andrew Moffs, senior vice president & portfolio manager at Vision Capital, shares his top stock picks to watch in the market.
Digital Core REIT
Digital Core REIT (Digital Core or the REIT) listed in Singapore and backed by Digital Realty Trust (NYSE: DLR), owns 11 Class A, stabilized data centre assets located across power-constrained global markets, including Northern Virginia, Frankfurt, Silicon Valley, Osaka, Toronto and Los Angeles, reporting 98 per cent occupancy at the end of Q3 2025, and 81 per cent of its tenant base classified as investment-grade.
As data centres benefit from generationally positive supply-demand fundamentals, over 60 per cent of Digital Core’s portfolio value is concentrated in Northern Virginia and Frankfurt, both reporting vacancy below 1 per cent.
This underpins strong earnings growth on releasing spreads and net asset value (NAV) growth. The REIT benefits from operational scale, global customer relationships and consistent deal flow from its sponsor, DLR at no incremental cost.
Additionally, Digital Core retains a global right of first refusal on any dispositions from DLR, granting privileged access to a best-in-class global portfolio. The key overhang on the stock today is the June 30th lease expiry of its 8217 Linton Hall Road asset, where a tenant representing nine per cent of total rent vacated.
Digital Core views the expiry as an opportunity to reposition the asset, committing US$30 to US$40 million to refurbish and re-lease the asset, and is projected to be completed at the end of Q2 2026.
Digital Core recently repositioned two Los Angeles properties, resulting in a 175 per cent increase in rent versus the prior in place rent, which equates to an unlevered yield on incremental capital spend of nearly 27 per cent. Alongside the forecasted re-leasing of its Linton Hall asset in Q2 2026, stabilizing occupancy and mark-to-market rents are internal catalysts to surface value.
Externally, the sector has a long history of listed REITs benefiting from privatization, including QTS Realty Trust (NYSE: QTS), CyrusOne (NASDAQ: CONE), CoreSite Realty Corp. (NYSE: COR), Interxion (NYSE: INXN) and DuPont Fabros (NYSE: DFT).
Vision’s views Digital Core as an attractive investment, operating one of the highest-quality portfolios globally in an asset class supported by generationally positive demand-supply imbalance, concentrated in critical submarkets reporting vacancy below one per cent, while trading at the widest discount to NAV across its listed peer group.
GO Residential REIT (GO-U TSX)
GO Residential REIT (GO or the REIT) is an owner, operator, and acquirer of luxury high-rise multi-family properties, with a uniquely exclusive focus in New York City.
Launched through its IPO in July 2025, the REIT’s initial portfolio consists of over 2,000 suites in the Manhattan submarkets of Lenox Hill and Murray Hill, where demand has been strong and supply has been limited.
According to CoStar, Q3 2025 Class A vacancy rates in these submarkets stood at 0.7 per cent and 1.7 per cent, respectively, well below 5.2 per cent in New York City and 10.1 per cent for the U.S. overall.
Due to these factors, Vision believes GO has significant net operating income (NOI) growth potential. In the near term, the REIT has been benefitting from its mark-to-market opportunity, with average in-place monthly rents estimated to be 10 per cent below market rents, as of July 2025.
As such, GO will be able to meaningfully increase revenue by increasing rents to market rates on lease renewals or unit turnovers. Additionally, over the medium term, management anticipates driving additional revenue growth through value-add capital investment through suite repositioning and reconfiguration initiatives, which Vision anticipates could generate returns of more than 20 per cent on investment.
Despite the prospect for strong NOI growth, the REIT’s units trade at a significant discount to NAV, with an implied cap rate of 6.2 per cent, approximately 100 basis points above recent private market transactions. Given the signification valuation disconnect relative to its intrinsic value and growth potential, Vision views GO’s units as an attractive investment.
Chartwell Retirement Residences (CSH-U TSX)
Chartwell Retirement Residences (Chartwell or the Trust) is the largest owner of seniors housing in Canada, operating over 25,000 suites across Ontario, Quebec, Alberta and British Columbia.
According to Cushman & Wakefield, supply and demand fundamentals in Canadian seniors housing continue to be strong. Population growth in the 80+ age cohort is expected to average over four per cent annually for the next 10 years and new supply as a percent of inventory is currently less than one per cent. Chartwell is seeing these strong fundamentals drive performance in its retirement homes with occupancy at 93.1 per cent as of Q3 2025 and expected to increase through 95 per cent as the busy fall leasing season continues.
The Trust benefits from cost-advantaged and flexible sources of capital, completing over $1.0 billion in acquisitions year-to-date as of November 6th, 2025, with a $700 million pipeline of incremental commitments that have been announced. These transactions have been financed primarily through the Trust’s at-the-market equity distribution program (“ATM”), with approximately $500 million issued since Q4 2024, recently upsized by a further $500 million in November 2025. Strong acquisition volume has allowed Chartwell to simultaneously increase its ATM program while reducing its debt load, targeting a 7.5 times debt/Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) ratio in 2026.
Between rising occupancy and its accretive external growth platform, funds for operations per unit has increased 23.6 per cent year-over-year.
Chartwell remains well-positioned for long-term earnings growth supported by strong demographic trends and limited new supply in the sector. The Trust has efficient access to capital through its ATM equity issuance program and is actively executing both accretive acquisitions and development opportunities. Stable cash flows, combined with visible earnings growth potential, support the long-term upside in Chartwell’s units.
DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDDCRU SGXNNYGO-U TSXNNYCSH-U TSXNNY
PAST PICKS: JAN. 30, 2025
Andrew Moffs’ Past Picks: First Capital REIT, Dream Industrial REIT & Sienna Senior Living Andrew Moffs, senior vice president & portfolio manager at Vision Capital, discusses his past stock picks and how they’re doing in the market today.
First Capital REIT (FCR-U TSX)
Then: $16.74
Now: $19.58
Return: 17%
Total Return: 21%
Dream Industrial REIT (DIR-U TSX)
Then: $11.97
Now: $12.37
Return: 3%
Total Return: 8%
Sienna Senior Living (SIA TSX)
Then: $15.84
Now: $20.92
Return: 32%
Total Return: 37%
Total Return Average: 22%
DISCLOSUREPERSONALFAMILYPORTFOLIO/FUNDFCR-U TSXNNYDIR-U TSXNNYSIA TSXNNY
