Real estate has been one of the most effective wealth-building vehicles over the past several decades. Beyond capital appreciation, it provides investors with a reliable source of passive income and portfolio diversification. However, direct property investment in Canada has become increasingly expensive. With average home prices near $700,000—and much higher in cities like Toronto and Vancouver—the financial barriers are steep. Add to that property taxes, maintenance costs, and vacancy risks, and it’s easy to see why many investors are turning to a simpler alternative: real estate investment trusts (REITs).
REITs allow investors to gain exposure to income-generating real estate portfolios without the hassle of property management. They are also known for paying out most of their earnings as dividends, making them especially attractive to income-oriented investors. Among the best REIT options on the TSX today is Granite Real Estate Investment Trust (TSX:GRT.UN)—a proven performer with a strong balance sheet and steady growth outlook.
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Granite REIT: Consistent Performer with Growing Cash Flows
With a market capitalization of $4.8 billion, Granite REIT has delivered impressive total returns over the past decade, tripling investor wealth when accounting for reinvested dividends. Despite this success, the REIT continues to offer value, with a forward yield of 4.3% expected in 2025.
Granite focuses on logistics, warehouse, and industrial properties across North America and Europe, owning 141 properties with 60.6 million square feet of gross leasable area. In the second quarter of 2025, funds from operations (FFO) per unit rose 5.3% to $1.39, supported by strong lease renewals and new rental agreements. Management renewed about 80% of 2025 expiries at an average rent increase of more than 40%, including a notable 58% rent uplift from a major Atlanta lease.
Given the strong leasing momentum, Granite raised its same-property net operating income guidance to between 5% and 6.5%, while increasing FFO per unit guidance to $5.75–$5.90, representing 6%–9% growth over 2024. The REIT now expects occupancy to reach 96.5%–97% by year-end, supported by stable demand in its core markets.
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Strategic Growth and Capital Efficiency
Granite continues to pursue a disciplined growth strategy. During the quarter, it completed an industrial acquisition in Miami and is evaluating $65 million worth of new opportunities across the U.S. and Europe. As part of its capital recycling program, management also plans to sell five non-core assets worth approximately $310 million, which currently generate $14.8 million in annual revenue.
The REIT has been actively buying back units, repurchasing 2.2 million units year-to-date at an average price of $67.01, capitalizing on what management views as a discount to its net asset value. While net leverage temporarily increased to 36% from 32%, Granite expects to normalize its balance sheet after completing planned asset sales and will use operating cash flow to reduce the $91 million credit facility balance in 2025.
Outlook: Still Room for Growth
Granite’s long-term growth trajectory remains intact. Revenue is forecast to rise from $569 million in 2024 to $678 million by 2027, while adjusted earnings are expected to expand from $5.22 per share in 2025 to $6.62 per share in 2027. At a forward valuation of around 13 times earnings, the stock could appreciate roughly 10% over the next 18 months. When factoring in dividends, total potential returns approach 16%.
With a solid pipeline of development projects, rising rental income, and consistent dividend growth—expected to climb from $3.30 per unit in 2025 to $3.61 by 2027—Granite REIT stands out as one of Canada’s most reliable income-generating investments for long-term investors seeking steady cash flow and moderate capital appreciation.
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