Real Estate Investment Trusts, or REITs, are a type of alternative investment where investors have pooled ownership of a portfolio of real estate properties.
REITs have been around since the 1960s when it was first introduced in the USA. The first Canadian REITs were created decades later in 1993. According to Grant Thornton LLP, REITs have since consistently risen in popularity in Canada, with success in both the public and private investment sphere.
Below are some of the potential benefits of investing in a REIT.
10 Potential benefits of REIT investing
REITs can help diversify your investment portfolio.
REITs and other real estate investments are classified as alternative investments, meaning they do not fall into the conventional categories of stocks, bonds, or cash assets. These types of investments may enhance your investment portfolio by allowing you to invest across a variety of markets. Learn more about alternative investments.
REIT investing may be an opportunity to earn passive income.
REITs are attractive to many investors as they may present an opportunity to receive passive income on an ongoing basis. For example, Skyline’s REIT investments offer monthly distributions, with historically steady and stable performance.
REITs are comprised of real assets.
When you invest in a REIT, you’re investing in a portfolio of tangible bricks-and-mortar properties. These types of physical assets are classified ‘real assets.’ As such, their valuation (especially if the REIT is private) may be more closely tied to the value of the asset itself.
The operating strategy of a REIT is fairly simple.
REITs are profitable based on the rental income they generate at the properties (after operating expenses), as well as the potential for their property valuation to increase over time. This income ultimately translates into investor distributions.
REITs are a great “hands-off” alternative to property management.
REIT investing is a great way to expand your investment portfolio to include real estate, without any of the hassles of owning and managing a property yourself. REITs have their own management teams that oversee day-to-day operations, management, and maintenance at the properties. Learn more about investing in a REIT vs. property management.
REITs can be private or public.
Depending on your investment preferences, you can choose whether to invest in a public or private REIT. Both have their share of potential benefits. Learn more about public vs. private REITs.
REITs are structured for pooled ownership rather than single property ownership.
When you invest in a REIT, you are investing in a portfolio of properties that have been selected according to the management team’s acquisitions and diversification strategy. By nature, REITs typically have more buying power than an individual investor, so they may be able to amass more well-diversified properties. For this reason, REITs are usually seen as potentially less risky than individual property ownership.
REITs can offer tax efficiency.
All, or a portion, of distributions to investors may be classified as Capital Gains or Return of Capital, rather than income.
REITs may offer the opportunity to invest via a registered account.
Many REITs offer the ability to invest through your Registered Retirement Savings Plan, Registered Retirement Income Fund or Tax Free Savings Account among other registered accounts, thus allowing for further potential tax savings.
Some REITs have not only survived, but thrived, in turbulent times such as the COVID-19 pandemic.
REITs encompass many different classes of real estate. Asset classes such as apartments, industrial and logistics facilities, and essential retail businesses, have proven their necessity amid the pandemic. As a result, some REITs specializing in these asset classes, such as Skyline’s REIT investments, have continued to see stable performance through the pandemic.
What REITs does Skyline Wealth offer?
Skyline Wealth offers three private REIT investment products, each focusing on a different real estate asset class:
- Skyline Apartment REIT
Professionally-managed multi-residential properties in secondary and tertiary Canadian markets
- Skyline Apartment REIT
- Skyline Industrial REIT
Professionally-managed light industrial properties along major Canadian transportation corridors, with a focus on logistics and warehousing
- Skyline Industrial REIT
- Skyline Retail REIT
Professionally-managed retail properties in secondary and tertiary Canadian markets, with a focus on ‘everyday essential’ brands
Skyline Wealth also offers Skyline Clean Energy Fund, a portfolio of professionally-maintained clean energy producing assets across Ontario. Although Skyline Clean Energy Fund is an equity fund, its origins are based in the Skyline team’s experience installing and managing solar assets at its REIT properties.
With our experience and insight, we’d be happy to discuss with you how our private investment products may be a suitable fit for your investment portfolio. Get in touch with us any time.
Vice President, Wealth Solutions
Ray Punn is an experienced leader in management across the public and private sectors, including the Financial, Automotive, and Private Equity industries. As Vice President of Skyline Wealth, he leads a comprehensive team of Advisors, and oversees business operations, marketing, investment management, and investor relations. With a deep understanding of how each component of wealth management contributes to an exceptional investor experience, Ray and his teams focus on building long-term partnerships with Skyline Wealth’s valued investors.
 Skyline, or Skyline Group of Companies, is an umbrella term used to generally refer to all associated entities.