Your investment portfolio may have stocks, bonds and cash investments, but what about real estate? For most people, real estate investing is limited to home ownership, with little thought of ever owning an office tower, a shopping mall or an industrial warehouse. But thanks to real estate investment trusts (REITs – pronounced "reet”), individuals can participate in the ownership of commercial properties and reap the benefits of stability, growth and diversification that institutional investors have enjoyed for decades.
With investment choices becoming more complex, and financial markets more and more volatile, the simple solution for all investors is to be well diversified. REITs provide access to an asset class that can perform independent of your other investments, which means better balance for your portfolio. In addition, Canadian REITs offer unique benefits to their unit holders that other equity investments do not. Typically, REITs provide investors with monthly or quarterly cash distributions at attractive yields with tax deferral benefits. REITs also offer capital gains potential as the portfolio grows and individual properties benefit from synergies and professional management. With the critical mass to diversify over a number of real estate properties, a REIT can expose its investors to the entire real estate market, reducing the risks that come with owning just one property in one location. Many REITs now specialize by sector (retail, industrial, hotels, nursing homes, apartment buildings, etc.), while others provide general exposure to the real estate market as a whole.
For more information, download Report on REITs