REITs in Canada 2025: Best Canadian REITs

What Is a REIT?

A Real Estate Investment Trust (REIT) is a publicly traded company that owns, operates, or finances income-producing real estate. Canadian REITs trade on the TSX and allow ordinary investors to gain exposure to commercial real estate — apartments, office towers, industrial warehouses, retail centres, healthcare facilities — without the capital required to buy property directly.

REITs are required to distribute the majority of their taxable income to unitholders as distributions, making them high-yield investments. Most Canadian REITs pay monthly distributions, providing regular income.

How Canadian REITs Work

Most Canadian REITs are structured as trusts (income trusts) rather than corporations. They collect rent from tenants, pay operating expenses, and distribute the remainder to investors. By distributing most income, REITs avoid paying corporate income tax — passing the tax obligation to investors directly.

Types of Canadian REITs

REIT Type	Properties	Examples
Residential	Apartments, condos	Canadian Apartment Properties (CAR.UN), Killam Apartment REIT (KMP.UN)
Industrial	Warehouses, logistics	Dream Industrial (DIR.UN), Granite REIT (GRT.UN)
Retail	Malls, plazas	Choice Properties (CHP.UN), SmartCentres (SRU.UN)
Office	Office towers	Allied Properties (AP.UN), Slate Office (SOT.UN)
Healthcare	Senior living, medical	Chartwell (CSH.UN), Sienna Senior Living (SIA)
Diversified	Multiple property types	H&R REIT (HR.UN), Cominar REIT

REIT Distribution Tax Treatment

REIT distributions are taxed differently from stock dividends — and this is important to understand:

Return of capital (ROC): The largest portion of most REIT distributions. Not taxable when received, but reduces your cost base in the units, increasing your capital gain when you eventually sell.
Other income: Taxed as ordinary income at your marginal rate.
Capital gains distributions: 50% inclusion, like other capital gains.
Eligible dividends: Eligible for the dividend tax credit.

REIT Distributions ≠ Canadian Dividends: REIT distributions do not qualify for the dividend tax credit in most cases. Unlike Canadian stock dividends that receive preferential tax treatment, most REIT "other income" distributions are taxed at your full marginal rate. Inside a TFSA or RRSP, this distinction disappears.

Best Place to Hold REITs: RRSP or TFSA

Because the "other income" portion of REIT distributions is taxed at full marginal rates, REITs are best held inside registered accounts:

TFSA: All distributions and gains are tax-free. Ideal for Canadian REITs where no US withholding tax applies.
RRSP: Distributions grow tax-deferred. Also good for US REITs (RRSP gets treaty exemption from 15% US withholding tax).

Industrial REITs Outperformed: The rise of e-commerce has made industrial and logistics REITs among the strongest performers over the past decade. Dream Industrial (DIR.UN) and Granite REIT (GRT.UN) benefited massively from demand for warehouse and distribution space.

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REIT Risks

Interest rate sensitivity: Rising rates increase REIT borrowing costs and make their yields less attractive vs. bonds
Occupancy risk: Economic downturns reduce tenant demand and occupancy rates
Leverage: REITs use significant debt to finance properties — high leverage amplifies losses in downturns
Sector-specific risk: Office REITs face structural headwinds from remote work; retail REITs face e-commerce pressure

How to Buy Canadian REITs

Canadian REITs trade on the TSX like stocks. Purchase them through any discount brokerage — Questrade, Wealthsimple Trade, TD Direct Investing, etc. Look for the ".UN" suffix, which indicates a trust unit rather than a corporate share.

Bottom Line

Canadian REITs offer accessible real estate investing with monthly income, TSX liquidity, and no direct property management. They are best held inside TFSAs or RRSPs to minimize the tax drag on distributions. Industrial and residential REITs have shown strong long-term performance — diversifying across sectors reduces single-property-type risk.