What is a REIT in Canada?

REITs are real estate investment trusts.

They allow investors to invest in real estate without needing to actively manage a property. Investors receive rental income asa. dividend. You can invest in many real estate sectors like residential, commercial, industrial, and more.

Residential REITs include high and low-rise apartment buildings, single-family rental homes, and multi-unit rental properties. Retail REITs will include strip malls, shopping malls, big box stores, retail plazas, and single-tenant properties. Commercial REITs will include retail, hotels, industrial buildings, multifamily residential properties, warehouses, and office buildings. Office REITs are simply office buildings. Industrial REITs include storage buildings, logistics, warehouses, manufacturing, and factories. Healthcare REITs include medical office buildings, health centres, medical clinics, and other spaces where health services are.

There are sometimes crossovers between these categories - for example, retail REITS are technically commercial, but a REIT organization may choose to specialize.

REITs can include all types of variations of investments including mutual funds, ETFs, or stocks. You can use these options to invest a small amount at a time. Others are not available in this manner and are only open to accredited or eligible investors.

REITs are companies that buy and manage properties using investors’ money. You will be paid back, but you will need to pay capital gains tax if you are holding your unit outside a registered account like a TFSA.

Some of the most commonly referred to REITs in Canada are as follows:

• SmartCentres REIT specializes in retail properties like malls.

• H&R REIT is Canada’s third largest and owns office, retail, industrial, and other investments.

• RioCan REIT is the second-largest REIT

• Artis REIT focuses on office, industrial, and retail properties and is the largest diversified REIT in Canada.

You can also invest in REIT ETFs and REIT Mutual Funds.

REIT ETFs are exchange-traded funds, They are like mutual funds with a portfolio of different stocks under a theme. ETFs are publicly traded on a stock exchange, unlike mutual funds. REIT ETFs, then, are ETFs that are made up of many REITs, helping you diversify your portfolio further.

REIT Mutual Funds typically require a minimum initial investment and typically have annual management fees. ETFs, in comparison, may have significantly lower fees and may be easier to enter and exit than mutual funds.