What is Real Estate Investment Trust (REIT)?

Example

In Canada, several REITs are popular:

• RioCan (REI-UN.TO) — shopping centres and mixed-use properties
• Canadian Apartment Properties (CAR-UN.TO) — residential apartment buildings
• ZRE.TO (BMO Equal Weight REITs Index ETF) — a diversified Canadian REIT ETF

A REIT ETF like ZRE.TO offers distribution yields often between 4% and 7%, paid monthly.

Why It Matters

REITs offer regular income and diversification beyond traditional stocks and bonds. They provide exposure to Canadian real estate without the hassles of property management, without a 20% down payment, and with daily liquidity on the stock exchange. It is often advantageous to hold REITs in a TFSA or RRSP to avoid the complex taxation of distributions.