CRA indicates that the test of a real property security under the Canada-U.S. Treaty is a point-in-time test
The question of whether a share or trust interest derives its value from Canadian real property for purposes of the Canada-U.S. Treaty is a point-in-time test so that the sale of such share or interest immediately after the sale of the Canadian real property for cash will be exempt, even though under the 60-month look-back rule, the share or interest may be taxable Canadian property.
CRA also stated that in both the Treaty and TCP context,
the phrase “derived principally from real property”… allows one to look through a particular property (which is, for example, a share of a corporation or an interest in a trust) to the real property situated in Canada and held, directly or indirectly, by such corporation or trust
without indicating any exception for where intermediate interests are held as debt.
Neal Armstrong. Summary of 1 March 2017 External T.I. 2016-0658431E5 under Treaties – Art. 13.