Just came across an interesting market call from a few years back that's worth revisiting. A Desjardins Securities analyst was pretty bullish on Canadian retail REITs, particularly the ones anchored by grocery store chains. Even with recession concerns looming, he saw these grocery store reits as defensive plays - solid tenant mixes in Canada's major markets.

The timing was notable because Canadians had watched inflation triple between early 2020 and mid-2022, and everyone was pointing fingers at grocery chains. The big three - Loblaw, Empire (Sobeys), and Metro - got called before Parliament to explain themselves. Their story was consistent: food costs squeezed their margins, but they made it up on non-food items. Walmart Canada echoed the same thing.

Here's what made the grocery store reits interesting though - they collect rent regardless. Choice Properties and Crombie REIT both got upgraded to buy ratings, which meant investors could tap into that grocery anchor stability without worrying about margin pressure or inflation hitting their returns.

Choice Properties is massive. Over 700 properties, nearly 64 million square feet. Loblaw represents almost half their rental revenue, which sounds concentrated until you realize it's actually a strength - Loblaw's not going anywhere. The company spun out from Loblaw back in 2018, with George Weston holding the controlling stake. The analyst bumped his target price up to $16, about 10% above where it was trading. His thesis was straightforward: consistent earnings growth, solid distribution yield around 5.3%, and a portfolio well-insulated from economic slowdowns thanks to its scale and tenant quality.

Crombie REIT took a different approach. Around 300 properties with a more aggressive development pipeline - 27 projects valued north of $6.5 billion. About 58% of their rent comes from Empire and its various banners. Their occupancy rate was nearly identical to Choice's, but the risk profile was higher. They had 18 projects under active development and another 24 in medium to longer-term planning stages. The analyst gave Crombie an $18 target price, roughly 20% upside from where it was, but flagged that this was a more measured bet on development execution.

So if you're comparing the two grocery store reits, it really came down to risk tolerance. Choice offered stability - a beacon of consistency in uncertain times, as the analyst put it. You get steady, predictable returns from a massive portfolio anchored by Canada's largest grocery chain. Crombie offered more upside potential if their development pipeline hits, but you're taking on execution risk. Eighteen of their pipeline projects would be anchored by Empire banners, which is good, but still requires them to pull off the development strategy.

Both were considered excellent grocery store reits at the time, just serving different investor profiles. If you could stomach volatility and believed in their development story, Crombie had the higher ceiling. If you wanted defensive exposure with steady cash flow, Choice was the cleaner play. The broader point the analyst was making - that retail REITs had become a safe haven in the real estate sector - still holds up. When everything else feels risky, owning grocery store reits gives you something tangible: physical assets in dense urban markets with tenants that people rely on regardless of economic conditions. That's the appeal of grocery-anchored real estate.