Real Estate Investment Trusts (REITs) let Canadians invest in real estate without buying property directly. You purchase units on the Toronto Stock Exchange (TSX), receive regular distributions, and benefit from professional management of large property portfolios. REITs are one of the most accessible real estate investments for Canadians of all income levels.
A REIT is a trust that owns income-producing real estate — apartments, shopping centres, office buildings, industrial warehouses, healthcare facilities, and more. By law, Canadian REITs must distribute the majority of their taxable income to unitholders. This is why they typically offer high distribution yields (3–7% or more).
REITs trade on the TSX like stocks. You can buy and sell units during market hours, making them far more liquid than direct property ownership. Minimum investment can be as little as the price of one unit — often $5–$50.
Own and manage apartment buildings. Examples: Canadian Apartment Properties REIT (CAPREIT), Killam Apartment REIT, Boardwalk REIT. Benefit from strong rental demand across Canada.
Own warehouses, logistics facilities, and light industrial properties. Examples: Granite REIT, Summit Industrial (acquired by GIC/Dream). Strong demand from e-commerce growth.
Own shopping centres, strip malls, and commercial retail. Examples: RioCan REIT, Choice Properties REIT. Navigating e-commerce pressures; grocery-anchored centres perform best.
Own commercial office space. Examples: Allied Properties REIT, Slate Office REIT. Facing headwinds from remote work trends and higher vacancy in many markets.
Own multiple property types. Examples: Dream Unlimited, H&R REIT.
Own seniors' residences, medical buildings, long-term care. Examples: Chartwell Retirement Residences, Sienna Senior Living (not technically a REIT but similar structure).
The tax complexity of REIT distributions makes them candidates for holding in registered accounts.
Canadian REITs are eligible investments for TFSAs and RRSPs. Holding REITs in a TFSA shelters all distributions from tax permanently. Holding in an RRSP defers tax until withdrawal.
However, if you hold US REITs in a TFSA, the IRS charges a 15% withholding tax on dividends that cannot be recovered (unlike in an RRSP, which has a US treaty exemption). For US REITs, an RRSP is generally preferable to a TFSA.
FFO is the REIT equivalent of earnings per share. It adds back depreciation to net income — a more accurate measure of cash generation. Look for consistent FFO growth.
AFFO also deducts maintenance capital expenditures. The AFFO payout ratio (distributions ÷ AFFO) should ideally be under 90% — leaving retained cash for growth and a buffer for downturns.
Estimate of the REIT's per-unit value based on property valuations. Comparing unit price to NAV shows whether the REIT trades at a premium or discount to its underlying assets.
Leverage ratio. Lower is safer. Most Canadian residential REITs target under 45% leverage; some specialty REITs carry more.
Rising interest rates hit REITs hard in 2022–2023 — their high yields became less attractive relative to bonds, and higher borrowing costs squeezed margins. Industrial and residential REITs recovered faster than office REITs. As rates came down in 2024, REIT valuations improved. REITs remain attractive for income-focused investors in 2025.
Many Canadian investors use both — REITs for liquid, passive exposure and direct property for leveraged, higher-return positions.
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