Did Loblaw just call a long-term top in the REIT market? Admittedly, that was our first thought. But a look at the numbers suggests that the rally in the sector is not threatened by current valuation levels and remains attractive.

The industry standard for valuation in the REIT sector is Adjusted Funds From Operations (AFFO) yield – essentially, operating profits after property maintenance costs – divided by the unit price. For individual REITs, the AFFO yield provides an important indication of how much cash flow an investor will likely receive for each unit purchased.