Vision Capital's Andrew Moffs Reveals His October 2024 Picks

Exploring Top Real Estate Picks from Vision Capital’s Andrew Moffs Amid Market Recovery and Renewed Investor Interest

Editorial Team (ET)May 21, 2025

The real estate sector is experiencing a pivotal shift as restrictive lending conditions ease, paving the way for the resurgence of publicly traded real estate securities. Andrew Moffs, Senior Vice President and Portfolio Manager at Vision Capital, identifies three top picks within the real estate stocks sector that stand out amid the early recovery: First Capital Realty, Chartwell Retirement Residences, and Empire State Realty Trust. In this article, we’ll dive into Moffs’ investment rationale, the market dynamics driving these picks, and what investors can expect from each asset.

Market Outlook: Renewed Opportunities in Real Estate

The market is showing early signs of a recovery, spurred by the Bank of Canada and U.S. Federal Reserve’s rate-cutting cycles. This policy shift loosens financial conditions, creating a promising landscape for real estate investment trusts (REITs) that have faced challenges over the past years due to economic volatility and tight lending conditions. Lower borrowing rates and increased access to capital support real estate operators, enabling them to refinance existing loans on favorable terms.

The stabilizing borrowing costs offer a degree of certainty, which is crucial for real estate portfolios. With more reliable loan-to-value ratios, financiers can manage underwriting risk more effectively. This stability is expected to boost transaction volume and enable price discovery, both essential factors for the recovery and growth of listed REITs.

Many publicly listed REITs are now tapping into the unsecured bond market, securing borrowing rates below those available in private markets. This competitive edge allows them to bid on growth-oriented assets that promise long-term returns, marking a promising outlook for investors eyeing high-quality real estate stocks.

Andrew Moffs’ Top Real Estate Picks for October 2024

First Capital Realty (FCR.UN TSX)

First Capital Realty is a leading Canadian REIT focused on necessity-based retail real estate in urban centers. With over 22 million square feet of grocery-anchored properties, First Capital strategically holds more than half of its assets in Toronto, one of Canada’s most dynamic markets.

In early 2024, First Capital unveiled a three-year strategic plan aimed at raising its net asset value (NAV) and funds from operations (FFO) per unit by over three percent annually. The REIT is focused on reducing its debt-to-EBITDA leverage, enhancing financial stability, and monetizing non-core assets to maximize shareholder returns. Notably, First Capital is also tapping into its substantial development pipeline, planning to add 23 million square feet in future projects.

First Capital’s disciplined approach has resulted in the sale of over $700 million in non-core assets at a premium, strengthening its financial footing. The REIT trades at a 15 percent discount to its IFRS valuation, presenting a lucrative opportunity for investors interested in urban, grocery-anchored properties.

Chartwell Retirement Residences (CSH.UN TSX)

Chartwell Retirement Residences stands as Canada’s largest senior housing owner, operating over 25,000 suites across key markets. The company has recently seen significant growth, especially in occupancy rates, positioning itself as a resilient choice for real estate investors focused on demographic-driven demand.

Chartwell achieved an impressive occupancy rate of 88.9 percent as of September 2024, a significant improvement from the start of the year. As occupancy levels rise toward the 95 percent target, the Trust’s net operating income (NOI) is set to benefit, since higher occupancy doesn’t require a proportional increase in staffing expenses.

In June 2024, Chartwell raised $345 million through a unit offering, using the proceeds to acquire high-quality retirement residences in Quebec and Vancouver Island. These strategic acquisitions capitalize on the growing demand for senior housing and strengthen Chartwell’s presence in high-barrier markets.

Empire State Realty Trust (ESRT NYSE)

Empire State Realty Trust, a prominent REIT with a diversified portfolio across office, retail, and multifamily assets in New York City, boasts the iconic Empire State Building as part of its holdings. This REIT offers exposure to a unique mix of high-demand real estate, particularly in New York’s competitive office and retail markets.

Despite challenges in North America’s office market, New York City has maintained robust leasing activity. Empire State Realty has improved occupancy across its office portfolio from 85 percent in 2021 to 93 percent today, outpacing its peers by catering to tenants priced out of premium Class A spaces.

With a strong balance sheet and no significant debt maturities until 2026, Empire State Realty is well-prepared for potential market disruptions. Trading at a 28 percent discount to its NAV, this REIT offers an attractive entry point for investors interested in iconic, well-located assets.

Factors Driving REIT Outperformance

As REITs improve their credit profiles, they are better positioned to access unsecured debt markets. This strength gives operators like First Capital, Chartwell, and Empire State a unique edge, allowing them to grow portfolios and compete aggressively for desirable assets.

With interest rates stabilizing, REITs benefit from predictable financing conditions, which are key to planning capital expenditures, acquisitions, and refinancing activities. Investors are increasingly viewing REITs as a viable investment avenue in this lower-rate environment.

Data from S&P Global reveals that Canadian REIT capital-raising activity has risen by 35 percent year-over-year as of Q3 2024. Investors are showing renewed interest in REITs, indicating confidence in a sector-wide recovery.

Conclusion: A Promising Landscape for Real Estate Investments

Andrew Moffs’ top picks underscore the potential within the real estate market as conditions shift favorably. With strategic assets in necessity-based retail, senior housing, and prime office locations, First Capital Realty, Chartwell Retirement Residences, and Empire State Realty Trust stand out as high-quality investments with strong growth prospects. Investors seeking exposure to real estate should consider these REITs, as each demonstrates a unique strategy for capitalizing on favorable market dynamics and long-term demand drivers.

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