News / Canada / globe_inside_market
TD Cowen Sees Buying Opportunity in REITs Amid Valuation Reset and Growth Outlook
Finance · Real Estate Investment Trusts · globe_inside_market · 2026-10-23
TD Cowen analysts suggest the recent pullback in REIT valuations offers a strategic entry point for investors as sector growth is expected to re-accelerate by 2027.
What Happened
REIT Valuation Reset: TD Cowen analyst Sam Damiani notes that rising bond yields have pressured REIT valuations, with the sector's price-to-NAV ratio dropping to 83 percent. Despite short-term interest rate headwinds, the firm maintains a constructive outlook on fundamentals and anticipates a growth re-acceleration starting in early 2027.
Sector Preferences and Picks: Analysts have lowered target prices for 22 names under coverage to reflect higher interest rate environments, particularly impacting the Office sector. Seniors and Healthcare REITs have emerged as the top sector preference, with specific buy recommendations including CSH.un, REI.un, and SIA among others.
Energy Infrastructure Outlook: RBC Capital Markets highlights strong global interest in Canadian energy infrastructure, driven by favorable policy and a robust commodity price environment. Analysts raised EBITDA estimates for companies like AltaGas, Tidewater Midstream, and TransAlta, citing strong export volumes and emission credit recognition.
Regional Market Dynamics: Scotiabank analysts identified shifting winners in the domestic REIT market, noting strength in Montreal office and retail assets compared to laggard performance in industrial segments. While lender appetite remains selective, particularly regarding office space, overall debt sentiment remains constructive despite concerns over future interest rate hikes.