Boardwalk, CAPREIT and the Business of Canadian Rental Housing

The business of Canadian rental housing is a game of regulatory geography, financing structure and timing, and 2026 is the year all three turned at once. For a decade the sector’s listed landlords enjoyed a simple formula: chronic undersupply, record immigration, rent control that protected sitting tenants but allowed large increases on turnover, and CMHC-backed mortgages at rates no other property type could match. That formula produced Boardwalk’s 9% same-property net operating income growth in 2025 and allowed CAPREIT to build a $14.4 billion portfolio. It also triggered a construction response, aided by CMHC’s MLI Select programme, that has delivered record numbers of new rental apartments just as the federal government cut temporary immigration and asking rents began to fall. This article explains how the two REITs are built, why Alberta and Ontario now behave like different countries, how MLI Select changed the economics of building, and what the softening of 2025–26 means for the next cycle. It is part of the Canadian Company Stories hub.

How does an apartment REIT actually make money?

An apartment REIT earns the spread between rents collected and the cost of operating and financing its buildings, then grows that spread by raising rents faster than costs, buying buildings below replacement cost and refinancing with cheap insured debt. The two numbers that matter most are same-property net operating income (NOI) growth and funds from operations (FFO) per unit, which strips out the non-cash fair-value swings that dominate IFRS earnings.

Boardwalk’s 2025 results show the model at its best. Rental revenue rose 5.9% to $638.6 million, NOI rose 9.2% to $417.6 million, the operating margin widened 200 basis points to 65.4%, and FFO per unit climbed 11.2% to $4.65. The trust raised its annual distribution by 14% during 2025 and a further 11.1% in early 2026 to $1.80, while still paying out only 37.6% of FFO. CAPREIT’s 2026 same-property NOI margin of around 64% to 66% is comparable, but its growth has been slower because most of its tenants are protected by provincial guidelines.

Financing is the second engine. Both trusts borrow almost exclusively through CMHC-insured mortgages, which price close to Government of Canada bond yields plus a thin spread because the federal agency bears the default risk. Boardwalk reports 99% of its $3.66 billion of mortgage principal as CMHC-insured. That allows debt-to-EBITDA of 9.34 times, high by the standards of office or retail landlords, at an interest coverage of 2.97 times.

The third engine is capital recycling. Selling buildings at low capitalisation rates and buying back units at a discount to net asset value has been CAPREIT’s main source of per-unit growth in 2025–26, while Boardwalk has started selling non-core assets such as its Grande Prairie portfolio and bringing in institutional co-investors. The big banks and CMHC between them make the leverage possible; the provinces decide how fast the rents can rise.

Why does Boardwalk look so different from CAPREIT?

Boardwalk is an Alberta landlord: 20,266 of its 32,722 same-property suites and 63.5% of its NOI are in the province, split between Edmonton (33.9%), Calgary (24.5%) and smaller cities. Alberta has no rent control, so when migration pushed Calgary and Edmonton vacancy to multi-decade lows in 2023–24, Boardwalk could reprice its entire portfolio within a lease cycle, not just the units that turned over.

The second quarter of 2026 shows that market normalising. Same-property NOI grew 1.7%, down from 9% for 2025, with Edmonton up 2.2%, Calgary down 1.2%, Quebec up 4.9% and Ontario up 5.1%; the small British Columbia portfolio fell 6.3%. Average occupied rent was $1,612 against a market rent of $1,693, and same-property occupancy slipped to 97.0% from 97.8% a year earlier before recovering to 97.2% in September and October on late-summer leasing. The trust trimmed its 2026 guidance to FFO of $4.60 to $4.80 per unit and same-property NOI growth of 1% to 3.5%.

Chief executive Sam Kolias, who with his family owns a large stake in the trust (combined insider ownership is about 25%), frames the strategy around affordability. Boardwalk’s rents are well below those of Toronto or Vancouver, which it argues sustains in-migration to Alberta and keeps its occupancy above market. The July 2026 co-ownership with Desjardins’ DGAM fund, which bought 50% of four Calgary and Victoria communities valued at $292 million (about $446,000 per suite, a 4.7% cap rate), brought in institutional capital while leaving Boardwalk the operator and a 4.25% management fee.

CAPREIT is the opposite profile. Its 45,460 suites at 30 June 2026 are concentrated in Ontario, Quebec and British Columbia, with a residual Netherlands portfolio it has been winding down. Canadian same-property occupancy was 97.5% at the end of June, down from 98.4%, and 97.3% at the end of July. Same-property NOI grew 0.9% in the quarter and occupied average monthly rent reached $1,738. But the leasing spreads tell the story: the weighted average change in monthly rent on turnover and renewal was just 1.1% in Q2 2026 against 3.8% a year earlier, with turnovers down 1.2% and renewals up 2.3%; by July turnovers were up only 0.2%.

How does Canada’s rent-control patchwork shape the sector?

Canada has no national rent control; each province sets its own rules, and the differences determine where landlords can grow income. Ontario capped guideline increases for existing tenants at 2.5% in 2025 and 2.1% in 2026, but exempts units first occupied after 15 November 2018 and allows unlimited increases when a tenant leaves. British Columbia ties its cap to inflation. Quebec’s Tribunal administratif du logement publishes annual recommendations that have been above 5% in recent years. Alberta and Saskatchewan have no caps at all.

The Ontario design created the “turnover premium” business model. Because sitting tenants are protected but vacated units reset to market, landlords with long-tenured tenants paying far below market earned large uplifts on every move-out. CMHC’s 2025 rental market report found vacant units in Ottawa renting for about 13% more than occupied ones, with turnover driving two-thirds of rent growth, and a 27% premium to move in St Catharines. In Montreal, turnover rents on two-bedroom units rose 17.2% in 2025 against 6% for non-turnover units.

That model has now gone into reverse in Toronto. CMHC recorded two-bedroom turnover rents in the Greater Toronto Area falling 2.5% in October 2025, and CAPREIT’s negative turnover spreads in 2026 are the direct consequence: when market rents fall below what departing tenants were paying, the premium becomes a discount. In a controlled market, falling asking rents hit the landlord harder than in Alberta, where Boardwalk can at least reprice renewals toward market in both directions.

The post-2018 exemption in Ontario is the other key lever. New purpose-built rental buildings are uncontrolled, which is why institutional developers and REITs have been willing to build them, and why CAPREIT and others have been selling older, rent-controlled buildings to smaller private owners and redeploying into newer stock. The exemption also means that a growing share of Ontario’s rental supply, including the thousands of investor-owned condos now flooding the market, has no ceiling on renewal increases.

What is CMHC MLI Select and why did it change everything?

MLI Select is CMHC’s multi-unit mortgage loan insurance product, in force since 7 March 2022, which rewards affordability, energy efficiency and accessibility with financing terms far more generous than any conventional lender offers. A project scoring 50 points can borrow up to 85% of value on an existing building or 95% on new construction with a 40-year amortisation; 70 points lifts both to 95% with 45 years; 100 points brings a 50-year amortisation and limited-recourse debt, all at a minimum debt coverage ratio of 1.10.

Points come from three sources. Affordability scores 50, 70 or 100 points depending on the share of units rented at 30% of median renter income (10%, 15% or 25% of units in a new building; 40%, 60% or 80% in an existing one), with a 30-point bonus for a 20-year commitment. Energy efficiency scores 20 to 50 points for performance 15% to 40% better than code. Accessibility adds 20 or 30 points. Because the affordability thresholds are set against median renter income rather than market rent, a new building in a high-rent city can qualify for 100 points while charging rents that are “affordable” only relative to the local median.

The effect on the industry was immediate. A 95% loan at 50-year amortisation with CMHC’s guarantee can cut the equity a developer needs to a fraction of a conventional project and reduce monthly debt service enough to make rental construction feasible where it was not. Combined with the federal removal of GST on new purpose-built rentals in September 2023 and the Apartment Construction Loan Program, MLI Select is why CMHC’s fall 2026 supply report found purpose-built rentals making up about two-thirds of apartment starts in major markets, roughly 60% in Vancouver (from under 20% a decade earlier), 78% of starts and 89% of units under construction in Halifax, and rental starts up 82% in Toronto in the first half of 2026 while condo starts collapsed.

For the REITs, MLI Select cuts both ways. It is the financing that lets Boardwalk and CAPREIT carry high leverage cheaply, and it has created a pipeline of new, uncontrolled rental buildings that they can buy once stabilised. It has also financed the competitors now delivering record supply into a softer market, which is why the trusts’ occupancy has slipped below 97.5% for the first time in years.

Why did the purpose-built rental boom arrive at the wrong moment?

The rental boom was designed to fix a shortage that policy then removed from the demand side: developers responded to MLI Select, GST relief and record immigration with the largest rental pipeline in decades, and the first big wave of completions landed in 2025–26 just as Ottawa cut temporary residents by more than 40% and the population began to shrink. The result is a supply-demand crossover that CMHC’s own data record as a national purpose-built vacancy rate of 3.1% in October 2025, up from 2.2% a year earlier and above the ten-year average.

The regional pattern is stark. Calgary’s purpose-built vacancy reached 5.0% in October 2025, with two-bedroom rent growth not statistically different from zero, which explains Boardwalk’s Calgary NOI falling 1.2% in Q2 2026. Edmonton was at 3.8%, Vancouver 3.7%, Toronto 3.0% and Montreal 2.9%. A record number of units were under construction in the Greater Toronto Area in the third quarter of 2025, London completed a record 2,585 units in the first nine months of that year, and Halifax had 14,400 units under construction in mid-2026, more than double the 2021 level.

Asking rents, which lead the REITs’ in-place rents by a year or more, have been falling since late 2024. Rentals.ca and Urbanation’s September 2026 report put the national average at $2,034, down 4.2% year over year, 7.3% over two years and 9.2% below the May 2024 peak of $2,202. Toronto ($2,554, down 1.4%) and Vancouver ($2,741, down 1.3%) were at five-year lows for the month; Calgary was down 3.9% to $1,823 and Edmonton down 3.2% to $1,522. Purpose-built apartments at $2,036 were the most resilient category, down 2.7%, while condo rentals fell 7.8%.

The optimistic reading, which both REITs lean on, is that the boom is already over. CMHC forecasts starts falling to 223,000 in 2027, condo completions in Toronto are heading toward near zero by 2029, and the rental pipeline will thin from 2027 as projects financed in 2022–24 are delivered. Kolias has argued that reduced construction starts will limit new supply in Alberta over the medium term, and CAPREIT’s chief executive Brad Cutsey has acknowledged soft conditions while arguing that long-term fundamentals favour the trust. The federal supply push, if it works, would be the next wave of competition.

How is CAPREIT reshaping itself under new leadership?

CAPREIT is shrinking to grow per unit: in the first half of 2026 it sold 522 suites for $173.9 million (most of them in the Netherlands), bought a 51-suite Vancouver property and a Mississauga leasehold for $37.1 million, and spent $59.5 million buying back about 1.6 million of its own units at an average of $36.16. The suite count fell from 46,924 in June 2025 to 45,460 a year later, and the trust closed a $98.7 million transaction with its former European affiliate ERES on 1 May 2026 as part of the exit from the Netherlands.

The logic is arbitrage between private and public markets. CAPREIT’s older rent-controlled Canadian buildings sell to private buyers at capitalisation rates well below the implied yield on its own units, so every disposition funds buybacks that raise FFO per unit even as absolute NOI shrinks. Brad Cutsey, president and chief executive, has set out three priorities: deploying capital into accretive opportunities including the buyback, growing sustainable cash flow and strengthening the balance sheet.

Operationally the trust is defending occupancy rather than pushing rent. Canadian same-property occupancy of 97.5% in June and 97.3% in July 2026 is still high by international standards but is the lowest in several years, and renewal increases of 1.8% to 2.3% are roughly the Ontario guideline. With turnover uplifts negative, the trust’s revenue growth now depends almost entirely on the regulated renewal increase and on newer, exempt buildings, which is why its acquisitions have targeted recently built stock.

The contrast with 2023 is sharp. Then, CAPREIT’s turnover spreads were in the double digits and it was criticised in Parliament and the press for raising rents aggressively; the federal government’s 2024 budget even floated restrictions on institutional ownership of single-family homes. In 2026 the political heat has shifted to the condo investors and the sheer volume of new supply, and the REIT is a price-taker in most of its markets.

What role do the banks, CMHC and the bond market play?

CMHC is the sector’s central bank in all but name: by insuring multi-unit mortgages it turns apartment debt into a quasi-government credit, allowing lenders to fund it through Canada Mortgage Bonds and National Housing Act mortgage-backed securities at spreads of a few dozen basis points over federal bonds. Boardwalk’s 99% insured mortgage book and its $3.66 billion of principal at a weighted cost well below conventional commercial rates are a direct product of that system.

The federal government has leaned on it harder since 2023. The annual Canada Mortgage Bond issuance limit was raised to $60 billion with the increment earmarked for multi-unit rental, the Apartment Construction Loan Program provides low-cost construction debt, and the GST was removed from new purpose-built rentals. Each measure lowers the cost of capital for rental housing relative to every other property type, which is why pension funds such as Ontario Teachers’ through Cadillac Fairview are now building apartments rather than offices.

The risk inside the system is interest-rate exposure on refinancing. Both trusts stagger maturities, but the ten-year Government of Canada yield has moved from under 1% in 2020 to above 3% in 2026, so mortgages originated in the pandemic era reset at materially higher coupons. Boardwalk’s interest coverage fell from 3.08 to 2.97 times between December 2025 and June 2026 as a result. With the Bank of Canada holding its policy rate at 2.25% since October 2025 and warning in September 2026 of rising inflation risks from tariffs and energy prices, the refinancing tailwind the sector enjoyed in 2024–25 has faded.

The banks’ role is in the equity market. The REITs trade at discounts to their IFRS net asset values (Boardwalk reported NAV of $96.37 per unit), which is why both are buying back units instead of issuing them. That discount reflects investor doubt about whether reported cap rates of around 4.7% to 5.25% will hold as rents soften; a wider discount would push both trusts further toward asset sales and joint ventures like the DGAM deal.

What can founders and investors learn from Boardwalk and CAPREIT?

The first lesson is that regulation is a product feature. Boardwalk chose Alberta decades ago and built an operating culture around high turnover and rapid repricing; CAPREIT built a portfolio around Ontario’s turnover premium. When the cycle turned in 2025–26 the Alberta model kept growing and the Ontario model stalled, not because one management team was better but because the rules of their markets responded differently to falling demand. Founders in any regulated industry should map how their jurisdictions behave in a downturn, not just in a boom.

The second is that subsidised capital creates its own competition. MLI Select lowered the REITs’ cost of debt but also financed the record supply now pressing on their occupancy. A business that benefits from a government programme should assume the programme will eventually fund its rivals, and plan for the moment when the subsidy’s second-order effects arrive.

The third is that capital recycling beats growth when assets trade below private value. CAPREIT’s disposals and buybacks and Boardwalk’s DGAM joint venture are the right response to units trading at a discount to NAV; issuing equity in that environment would destroy value. Investors should read a shrinking suite count alongside rising FFO per unit, not as a sign of weakness.

The fourth is that the long-term thesis survives the cycle. Canada still has a 187,000-to-238,000-unit annual supply gap according to CMHC, rental starts are forecast to decline from 2027, and household formation will resume when immigration targets rise again. The softening of 2025–26 is a demand pause meeting a supply wave, and both trusts are using it to tidy their balance sheets. The question for investors is whether the recovery arrives before the refinancing wall, a dynamic explored further in the mortgage renewal story.

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