Canadian Real Estate Investment Trusts (REITs)

A lot of investors consider income trusts a big no-no or even a taboo subject. There are many reasons for this, among them include the fact that a lot of income trusts pay more in distributions than they receive in earnings. The biggest reason for their recent demise is that they will be faced with corporate taxes in a few years, thus a likely decrease in distributions.

There is one sector within the income trust world that managed to dodge the new federal tax rule, and those are Real Estate Investment Trusts (REITs).

What are REITs?

Real Estate Investment Trusts or REITs are companies that invest in real estate assets and distribute their income (primarily from rent) to their shareholders. The distributions are usually in portions of dividends, return of capital, and income.

How can you buy a REIT?

Equity REITs can be purchased like any other public company/stock through the stock market. If you are interested in REITs, and you haven’t opened a discount brokerage account yet, check out my Review of Canadian Discount Brokerages.

What are the different types of REITs?

As you know, there are many types of real estate investments, and there are REITs that cover them all.  They can range from residential rentals, hotels, super store leasing, apartment buildings and seniors housing.

What are the benefits of a REIT? Why wouldn’t I buy my own property?

The biggest benefits of REITs is that you can get exposure to the real estate market without being a landlord yourself. From my experiences as a landlord, it can become a second job and sometimes not a very fun one at that. On top of that, although hard real estate assets can mean high profits, they will never have the liquidity of a REIT (liquidity means to ability to buy/sell with relative ease).

Some Popular Canadian REITs are listed below:

Where do I start?

Those of you new to the REIT market, I realize that this can be a little intimidating. If you’re looking for a decent place to start, check out the iShares CDN REIT Index ETF. This REIT index is market weighted meaning that their position sizing/holdings depends on the market capitalization (size) of the REIT.

I personally would start my reading on the largest REIT in Canada, which is currently RioCan Trust – REI.UN. If you’re looking for some more info on XRE, Canadian Capitalist has some more info that you should read up on.

Which REIT do I like best?

That is out of the scope of this article, but I will post about this in the future. In the meantime, do some reading on the REITs listed above. If you already have a favorite REIT, please post your suggestion in the comments.

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FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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Paul
8 years ago

Mike…..you may want to check out Calloway REIT (CWT.UN). They have 76 properties in which Walmart is a tenant. http://www.callowayreit.com/Properties/Retail-Properties/

Cheers Paul

Mike
8 years ago

I have heard that a Canadian REIT is involved with new Walmart stores leasing land. Do you know which REIT is doing this commercial leasing? Mike

Betty
8 years ago

I transferred my REIT into my husband’s name. No money changed hands – just paperwork. Do I have to claim this on my taxes or can we wait until my husband sells.

Shiraz
9 years ago

While I personally invest in real estate I don’t like the idea of REIT’s. Between cash flow, mortgage pay down and appreciation, it isn’t uncommon to make a return of 10-15% in real estate if you purchase the right property. However, when I purchase the property myself at least I know what I’m buying and I’m doing my own research on each property.

Of course, a lot of investing comes down to personal preference and comfort levels. My own preference is to be more hands on.

Joe Ross
9 years ago

I get highly suspicious of any so-called investment that posts Youtube videos with titles like “Is League Assets REIT a Scam?”, along with other fake blogs with similar titles, and tiny Google ads all over the place promising 14% “ROI.” This does not strike me as a method by which a legitimate investment would be marketed.

Snowburn
9 years ago

Any thoughts on League Assets?

Denis
12 years ago

What are your thoughts on Dundee D.UN. They have been paying distribution of 0.183 cents since 2003, do you think they can maintain this distribution? I also like INN.UN, and HR.UN.

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