REIT stands for real estate investment trust. REITs typically own income producing real estate, and flow most of their earnings through to unitholders. REITs are usually publicly traded, and investors like REITs because they generally have high yields. That’s because they flow at least 90% of their taxable income through to their unitholders.
A REIT company owns real estate and produces income from it. This includes shopping malls, office buildings, hotels and so on. They may also manage real estate for third parties, such as providing property management for condominiums or apartments.
Canadian REITs must be a corporation that’s taxable, and follow all the rules of being a corporation. They must invest 75% or more of their total assets in real estate and make at least 75% of their gross income from their properties, including rent, financing and sales. Like most stocks that are publicly traded, they operate by the rules of exchanges, and require no less than 100 shareholders, and must have more than 50 shareholders.
Like anything in real estate, hidden risks often come dressed up as “investor benefits.” For example, “small town” may sound like a benefit, but small towns often depend on at most a handful of employers. If one of the town’s main employers reduces its operations or shuts down, tenants leave town. As populations shrink, the town’s rental accommodation vacancy rate can go up and stay high indefinitely. Small-town real estate has to provide above-average returns in good times to offset the higher risk of loss when the market turns downward.
If you’re looking to invest in REITs, please keep TSI Network’s three-part Successful Investor philosophy in mind:
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These two REITs own some of the best properties in Canada’s biggest cities. Despite the disruptions caused by the work from home and online shopping trends, those high-quality holdings should continue to attract tenants.
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST, $20.10, is a buy. The REIT (Toronto symbol… Read More
Investing in REITs (Canada) can help you minimize the risk of owning investment property
REITs (Canada), as the one remaining large category of income trusts, continue to pay distributions before they pay tax—and that’s good for unitholders of RioCan REIT and others. The 2011 law that… Read More
H&R’s spinoff of Primaris let both REITs better focus on their main businesses and expand their cash flow. That improves the sustainability of their current distributions.
H&R REAL ESTATE INVESTMENT TRUST $9.75 is a buy. The REIT (Toronto symbol HR.UN; Cyclical-Growth Dividend Payer Portfolio, Manufacturing sector; Units outstanding:… Read More
SYSCO CORP., $73.54, symbol SYY on New York, is a global leader in food distribution. It operates 334 distribution facilities worldwide, serving approximately 725,000 customers.
On December 4, 2023, Sysco announced that it completed the acquisition of Edward Don & Company, a leading distributor of foodservice… Read More
Higher interest rates in Canada, the U.S. and many other parts of the world have made high-yielding securities, including real estate investment trusts (REITs), much less appealing compared to bonds for income-seeking investors. In fact, over the past two years or so, ETFs focused on… Read More
BETAPRO EQUAL WEIGHT CANADIAN REIT 2X DAILY BULL ETF $13.24 (Toronto symbol HREU) aims to use a combination of derivatives and debt to offer daily returns that correspond to twice the daily gains of the Solactive Equal Weight Canada REIT Index. If HREU is successful in meeting… Read More
In early 2022, most real estate stocks and REITs were well on their way to recovering their pre-COVID highs. That was before investor worries about rising interest rates and a potential economic downturn set them back.
Nonetheless, for most real-estate classes (except for offices), occupancies are… Read More
Consumers are spending less on furniture in response to higher interest rates and inflation. However, Leon’s strong brands will help its sales rebound with the economy. Its plan to spin off its real estate holdings as a REIT will also unlock hidden value.
LEON’S FURNITURE LTD… Read More
ENBRIDGE INC., $47.47, Toronto symbol ENB, is a buy.
The company operates pipelines that pump oil and natural gas from Western Canada to eastern Canada and the U.S. It also distributes gas to 3.8 million consumers in Ontario and Quebec.
With the March 2024, payment, Enbridge will raise… Read More
You Can See Our CWA REIT & Trust Portfolio For December 2023 Here.
The federal government’s tax on income-trust distributions took effect on January 1, 2011. Most trusts have since converted to corporations.
Real estate investment trusts (REITs) were exempted from the income-trust tax. As a result,… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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