First of all, let's understand what are REITs. REITs, or Real Estate Investment Trusts, are companies that own, operate, or finance income-producing real estate properties. They are similar to mutual funds, but instead of owning stocks or bonds, REITs own and manage real estate properties such as apartments, office buildings, shopping centers, and warehouses.
REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, which makes them a popular investment choice for income-seeking investors. In addition, REITs can provide diversification benefits for investors looking to add real estate exposure to their portfolios without directly owning physical properties.
REITs can be publicly traded on stock exchanges, privately held, or non-traded. Publicly traded REITs can offer investors the ability to buy and sell shares on stock exchanges, providing liquidity to their investment. Private REITs are not traded on public exchanges, and are typically only available to accredited investors. Non-traded REITs are not traded on public exchanges, but they are registered with the Securities and Exchange Commission and are subject to regulation.
Secondly, let's understand the major difference between Canadian REITs and US REITS. While the basic concept of a REIT is similar in Canada and the USA, there are some differences between Canadian and American REITs.
One difference is in the tax treatment. In Canada, REITs are generally not subject to corporate income tax, provided that they meet certain conditions, such as distributing a minimum of 90% of their taxable income to unitholders. In the USA, REITs are also exempt from paying federal income tax, as long as they distribute at least 90% of their taxable income to shareholders.
Another difference is in the regulatory environment. In Canada, REITs are regulated by the provincial securities commissions, while in the USA, they are regulated by the Securities and Exchange Commission (SEC).
In terms of structure, Canadian REITs often have a more concentrated portfolio, with a smaller number of properties. In contrast, American REITs tend to have a more diversified portfolio, with a larger number of properties in different regions and sectors.
Finally, Canadian REITs tend to have a higher proportion of their assets in the residential sector, while American REITs tend to have a higher proportion in the commercial and office sectors.
Overall, while there are some differences between Canadian and American REITs, the basic concept and benefits of investing in REITs are similar in both countries.
This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. This investment is intended for tax residents of Canada who are accredited investors. Residency restrictions apply. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. All investments contain risk and may gain or lose value.
The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.