Listed REIT
Another means of investing in real estate
A real estate investment trust whose units are listed on a stock exchange and bought through a brokerage account.
What is a real estate investment trust and how it works
How REIT structures work, how to invest in REITs in Canada, and the questions worth asking before investing.
Start readingWhat you’ll learn
How a REIT works
See how a REIT brings investor capital together to own and operate professionally managed, income-producing real estate.
Understand the structureHow private real estate compares
See how private real estate funds and direct ownership differ.
Compare the routesWhat to look at before you invest
Review the real estate, financing, fees, liquidity and operating team behind the investment.
See what to evaluate
Understanding REITs
What is a REIT, and how does it work?
A real estate investment trust (REIT) brings together capital from multiple investors to own and operate income-producing real estate.
Instead of purchasing and managing a property directly, investors hold units in a professionally managed real estate portfolio. Rental income, property performance and changes in asset value may contribute to returns and distributions over time.
Your ownership share in the trust — similar in concept to a share of a company.
A payout of income to investors, made after operating costs and fees, on the schedule set out in the trust’s documents. Amount and frequency are set by the trust and are never guaranteed.
Animated illustration of how investor capital flows through a REIT or private real estate fund. Illustration only.
Illustrative modelIllustrative only
Illustrating Potential Investment Outcomes
- Illustrative annual return range
- $12,000 – $16,000
- Illustrative monthly cash distribution
- $500
The results of this investment calculator is provided for informational purposes only. All charts and illustrations are used to illustrate the effects of growth of a hypothetical investment based on inputs provided and are not intended to reflect future values of any investment. The deduction of fees, commissions and any other expenses that would have been paid may not be reflected in the calculation results. The information provided herein should not be interpreted as financial, investment, tax, legal or accounting advice. Investments should be evaluated according to an investor’s investment objectives and risk profile. You should consult with a professional advisor before taking action.
All figures shown on this page are shown before tax. No treatment, tax deferral or after-tax outcome is modelled or implied. Tax consequences depend on each investor’s own circumstances and must be discussed with their own tax advisor.
The 12%–16% annual return range and 6% annual cash distribution used here are for illustration only and should not be read as the target, forecast or expected return of any investment. The annual return illustration is calculated as the selected investment amount × 12%–16%, while the monthly distribution illustration is calculated as the selected investment amount × 6% ÷ 12. The 6% distribution forms part of the 12%–16% annual return and is not additive.
Comparing your options
How private real estate compares
There are different ways to invest in real estate. The experience can vary depending on what you own, how the investment is managed and how involved you want to be.
Private REIT / Fund
Direct real estate exposure through a fund
- What you’re investing inUnits in a fund that owns a portfolio of propertiesNot traded on a public exchange
- Who manages the propertiesA professional real estate manager or operator
- What drives performanceRental income, occupancy, financing, capital programs and property values
Limited liquidity · Minimums vary by fund
Direct Ownership
Owning a property yourself
- What you’re investing inA specific property or ownership interestTypically concentrated in one or a few assets
- Who manages the propertiesYou, or a manager you hire
- What drives performanceAsset performance, financing and local market conditions
Low liquidity · Higher capital commitment
| Compared on | Private REIT / Fund | Direct Ownership |
|---|---|---|
| What you’re investing in | Units in a fund that owns a portfolio of properties directly | A specific property or ownership interest |
| Who manages the properties | A professional real estate manager or operator | You, or a manager you hire |
| What drives performance | Rental income, occupancy, operations, financing and property values | Property performance, financing and local market conditions |
| Portfolio diversification | Depends on the fund portfolio | Often concentrated in one or a few properties |
| Your involvement | Generally passive | Hands-on unless management is outsourced |
| Liquidity | Limited; fund redemption terms apply | Low; the property generally needs to be sold |
| Investment minimum | Varies by fund and offering | Typically a higher capital commitment |
What to evaluate
What to look for beyond the headline return
Returns are only part of the picture. Before investing in a REIT or private real estate fund, look at the properties behind the investment, how they are financed, how they are operated and the experience of the team managing them.
The Real Estate
What does it hold, and where?
What to look at
- Asset type
- Location
- Vintage
- Concentration
What to look at — the specific properties or portfolio behind the REIT or fund: asset type (multi-family, industrial, retail, office), location and vintage. A diversified portfolio tends to behave differently than a single-asset vehicle.
Questions worth asking — what does it actually hold, and where? Is the portfolio concentrated in one city, one asset type, or one kind of lease?
Occupancy & Rental Income
What is occupancy, and how has it trended?
What to look at
- Occupancy rate
- Lease terms
What to look at — reported , lease terms, and how much of the income depends on a small number of leases or on leases renewing around the same time.
Questions worth asking — what is the current occupancy, and how has it trended? How much of the income relies on a handful of leases or a cluster of renewals?
Financing
What is the loan-to-value ratio, and when does the debt come due?
What to look at
- Loan-to-value
- Fixed or floating
- Maturity schedule
What to look at — , whether the interest rate is fixed or floating, and the debt maturity schedule. Leverage amplifies outcomes in both directions — it can improve returns when values rise and worsen them when values fall.
Questions worth asking — what is the loan-to-value ratio? Is the debt fixed or floating, and when does it come due?
Fees
What fees apply, and are returns net or gross of them?
What to look at
- Management fee
- Performance fee
- Net or gross
What to look at — management fees, any performance or promote fees, how each is calculated, and whether the returns being discussed are stated .
Questions worth asking — what fees apply, and on what base are they calculated? Are the returns net or gross of fees?
Liquidity
How often can capital be redeemed, and is there a cap?
What to look at
- Redemption schedule
- Notice period
- Redemption cap
What to look at — whether units trade on an exchange or redeem through the fund directly, the redemption schedule, and any notice period or cap on redemptions in a given period. Redemptions from a private structure are never guaranteed, even inside a stated window.
Questions worth asking — how often can capital be redeemed, and is there a cap on redemptions? What happens if requests exceed what the fund can pay out?
The Operating Team
Is the manager hands-on, and through what cycles?
What to look at
- Operator or allocator
- Team tenure
- Cycles operated through
What to look at — who is actually responsible for acquisitions, financing, property management, leasing and capital planning. In private real estate, the operating team matters because day-to-day execution can directly affect property performance.
Questions worth asking — is the manager hands-on with the real estate, or mainly allocating capital to others? How long has the team worked together, and what market cycles have they managed through?
REIT FAQ
Questions investors ask about REITs in Canada
Straightforward answers on how REITs work, how investors access them, distributions, liquidity and registered accounts.
A real estate investment trust (REIT) is an investment structure that pools money from multiple investors to own or finance income-producing real estate. Investors buy units rather than purchasing and managing a property themselves. In Canada, REIT exposure may be available through publicly traded REITs as well as privately offered real estate investment structures.
Most equity REITs earn income from rent collected across their properties. After operating, financing and other expenses, a REIT may distribute part of its cash flow to investors; investor returns may also reflect changes in the value of the underlying portfolio. Distribution amounts and frequency vary and are not guaranteed. Lankin Investments’ private real estate fund currently targets monthly cash distributions, subject to the fund’s terms and applicable risk factors.
A private REIT is a real estate investment trust whose units are not listed on a stock exchange. Units are offered through a private offering, and are typically valued periodically using the fund’s stated valuation methodology and the value of the underlying assets. Private REIT units are illiquid: redemption terms are set out in the offering documents and should be reviewed before investing.
REITs can be a way to add real estate exposure without becoming a landlord, but whether one is appropriate depends on an investor’s goals, risk tolerance, time horizon and need for liquidity. Investors should evaluate the properties, debt, fees, distributions, valuation method, redemption terms and manager. REITs involve risk, and returns or distributions are not guaranteed.
A private REIT is generally purchased through a private offering rather than on a stock exchange. The process typically includes reviewing offering documents, confirming eligibility, completing KYC and suitability with a registered dealer, and signing subscription documents. Minimum investment amounts vary by fund and offering. Investments offered by Lankin Investments are sold through registered dealers.
Some private REITs and private real estate trust units may qualify for registered accounts, depending on the investment structure, plan rules and applicable regulations. Eligible trust units offered through Lankin Investments may be held in certain registered accounts, including RRSPs, TFSAs and LIRAs, subject to the specific offering and investor eligibility.
Not freely. Private REIT units do not trade on an exchange, so redemptions may only be available at specified times and can be subject to notice periods, limits, suspensions or other fund terms. Investors should review the redemption provisions of the specific offering before investing.
More questions about private REITs? Read our private REIT FAQ