What types of REITs are available in Canada and are they all stable investments?
Established in 1993, Canadian real estate investment trusts, commonly referred to as REITs, have evolved to become a profitable investment class that benefit investors and the economy as a whole.
Investing in a REIT is much like purchasing a mutual fund or common stock. Daily unit prices are listed in all major business media under “trust units.” REIT units can be purchased from any broker/dealer licensed to sell equities in Canada.
Determining the appropriate REIT allocation depends on an owner’s portfolio and objectives. In Canada, there are six types of REITs that are all considered attractive investment options:
- Office: Prudent development practices, long-term tenancies and strong growth markets throughout Canada are attractive characteristics for ownership of Canadian office buildings.
- Industrial: Industrial is the largest real estate asset class in Canada, offering a highly stable tenant base and low costs in terms of maintenance, capital improvements and tenant inducements.
- Retail: Diversified new shopping retail centre formats are meeting consumer demand for both convenience and entertainment experience. Canadian REITs play a leading role in meeting the changing demands of this fast-evolving industry.
- Residential: Properties such as apartment buildings are an extremely stable investment as tenant demand is high in good times and bad. Relaxed rent controls, rising home prices and a trend among one-time homeowners choosing to rent for flexibility and location are all driving growth.
- Seniors residential: Canada’s aging population stands behind the increasing demand for nursing and retirement facilities, a situation that will only accelerate over the next 40 years.
- Hotels: Canada’s popularity as a vacation and business destination fuels the hospitality industry. Canadian REITs are consolidating a fragmented hotel market and making possible the development of new supply that meets the needs of today’s consumer.
Investors can also choose a single REIT that diversifies in some or all of the above categories.
Carolyn Lane is vice-president of membership, marketing and communications for the Real Property Association of Canada (REALpac). She can be reached at 416.642.2700 ext. 223 or clane@realpac.ca.
