Public REITs 101: The Basics

A public REIT allows investors to own shares in a company's portfolio of income properties through any public trading platform.

Initial Deposit

Risk Level

$25, 000

Aggressive growth

Public REIT
(Over 10 years)

$41,250

Cash Distributions
(Over 10 years)

$8,750

Traditional Investing
(Over 10 years)

$38,750

This chart shows the impact of compounding - actual returns will be different. We've assumed the market interest rates will go up by an average of 5.5% respectively. We used real estate fund data from both FTSE NAREIT Real Estate Equity REITs and NCREIF total returns. All data is as of December 2018. Investing in real estate is considered risky and historical performance of real estate return data should not be considered as a guarantee for future performance.

What is a public REIT?

A real estate investment trust, or REIT, is a company that owns real estate. Most REITs purchase large-scale properties, such as residential homes, commercial buildings, shopping malls, hotels, and other specialized properties.

As an investor, you can choose to invest in either a public or private REIT. In both cases, you would receive your income through payouts made by the company, based on the revenue earned from the properties it owns. 

A public REIT is traded on a public exchange, like the Toronto Stock Exchange, where you can easily own shares in a company’s real estate portfolio through any trading platform. This makes buying and selling shares in a public REIT very similar to trading mutual funds or publicly-traded company stocks.

Public REITs are generally less risky investments than their private counterparts, since the value of the share can be determined by the price on the exchange.

Real estate investing is risky, there is never a guarantee, and can result in the loss of invested capital.
An illustrative example of public REIT distributions. Initial deposit of $10,000. Annual cash yield of $450. Can sell your shares at any time (ex. year 10) of $16,500 (6.5%)*.

How do these funds work?

Every company that manages a public REIT makes bets on the right locations for the long-term. The most common factors that guide their strategy are based on:

Experienced Management
A strong public REIT always starts with a seasoned management team with decades of real estate investment experience. Based on their understanding of the market, they determine the best strategic decisions for their fund.
Due Diligence
Public REITs are vetted through a rigorous due diligence review with a team of experts and regulatory board, including assessments of real estate properties, financial underwriting details, and the execution strategy.
The Opportunity
All relevant financial documents are accessible to the public online for any interested investors – who must make their own informed decisions. Your investment term starts and ends whenever you choose to buy or sell your shares through any public trading platform.

How can you start?

01

Learn

Do your research

Before planning to invest in real estate, make sure that you review the risks.

02

Choose

Pick a REIT you like

Review any public information about the company that you believe will succeed.

03

Invest

Invest a small amount

Plan to diversify, which means investing in small amounts to lower your overall portfolio risk.

04

Wait

Play the long game

Receive updates and enjoy passive returns until you decide to sell your shares or re-invest.

Read next

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