Investor Education

How REITs Work in Canada: A Guide to Real Estate Investment Trusts

Published November 9, 2026 · 19 min read

A real estate investment trust in Canada gives investors a way to participate in income-producing real estate without personally buying, financing and managing an entire commercial property.

Instead of purchasing a warehouse, apartment building or shopping centre directly, investors purchase units in a trust that owns or participates in real estate assets.

That sounds simple.

But not every REIT works the same way.

Some trade publicly on a stock exchange.

Others are private investments.

Some own apartments.

Others own offices, retail centres, industrial buildings or specialized properties.

Some use relatively modest debt.

Others use substantially more.

Some hold dozens or hundreds of properties across the country.

Others deliberately concentrate on one property type or geographic region.

For an investor trying to understand REITs in Canada, the important question is not simply:

“Should I invest in a REIT?”

A more useful set of questions is:

What does this REIT actually own? How do the properties make money? How much debt is involved? How are investors paid? What are the risks? And how can I eventually exit the investment?

Those questions become especially important when comparing a public REIT with a private industrial REIT such as InvestPlus Industrial REIT.

What Is a REIT in Canada?

REIT stands for Real Estate Investment Trust.

At a basic level, a REIT pools investor capital and uses that capital to participate in real estate.

Investors own units of the trust rather than directly owning an individual warehouse or commercial building themselves.

The underlying portfolio can include property types such as:

• industrial buildings;
• apartments;
• shopping centres;
• office buildings;
• healthcare facilities;
• self-storage;
• hotels;
• data centres; and
• mixed commercial portfolios.

InvestPlus Industrial REIT has a narrower mandate.

It focuses on industrial real estate across Western Canada.

That distinction matters because the word “REIT” only describes part of the investment.

It does not tell you what is actually inside it.

How Does a Canadian REIT Work?

The basic structure can be understood as a series of steps.

Step 1: Investors Purchase Units

Investors contribute capital to the trust by purchasing units.

The conditions for purchasing those units depend on the type of REIT.

A publicly traded REIT may generally be purchased through a brokerage account.

Private REIT securities are distributed differently and may be available only to investors who meet applicable Canadian securities-law requirements.

Step 2: The REIT Uses Capital to Acquire Real Estate

The REIT combines investor equity with financing and uses that capital to purchase properties.

For an industrial REIT, those properties might include:

• warehouses;
• distribution facilities;
• small-bay industrial buildings;
• flex-industrial properties;
• service-commercial properties;
• manufacturing facilities; and
• logistics buildings.

The acquisition price matters.

So does the debt used to purchase the property.

A good building can still become a poor investment if it is purchased at an unsupportable price or financed too aggressively.

Step 3: Businesses Lease the Properties

The properties generate revenue primarily through rent.

For example, an industrial tenant might lease 1,500 square metres of warehouse and office space for its operations.

Its lease sets out items such as:

• base rent;
• lease duration;
• scheduled rent changes;
• operating expense recoveries;
• renewal options;
• maintenance responsibilities; and
• other contractual obligations.

A diversified industrial portfolio may contain many different tenants occupying multiple buildings.

That can reduce dependence on one property or tenant, although diversification does not remove risk.

Step 4: Net Leases Help Make Property Income More Predictable

One of the advantages of industrial real estate is the way leases are typically structured.

Under a net lease, tenants typically pay property taxes, insurance and maintenance costs in addition to their base rent. Depending on the lease, tenants may pay these expenses directly or reimburse the property owner through additional rent.

This means the owner generally does not have to absorb those day-to-day property costs out of base rent. Separating base rent from recoverable operating expenses gives the owner a clearer view of property income and can make cash flow more predictable.

The exact responsibilities depend on each lease. Some costs, including certain major building repairs or replacements, may remain with the owner, and vacant space may not generate expense recoveries.

Property revenue, including expense recoveries, less property operating expenses is commonly referred to as net operating income, or NOI. Net leases help explain why the lease structure matters alongside the amount of rent a building generates.

Step 5: The REIT Manages Financing and the Buildings

The REIT's management team arranges financing, plans building improvements and manages portfolio administration. These responsibilities are accounted for when determining the cash available for reinvestment and distributions, while investors participate through units rather than managing the properties themselves.

For a detailed explanation, see InvestPlus Industrial REIT's guide to How Industrial Real Estate Actually Makes Money.

Step 6: The REIT May Make Distributions to Unitholders

REITs are often associated with distributions.

These are payments made from the trust to its investors.

But there is an important distinction:

A distribution is not guaranteed interest.

The Canada Revenue Agency sets detailed requirements governing Canadian REITs and the types of revenue and properties that qualify under the Income Tax Act.

For example, Canadian REIT rules generally require qualified REIT properties to represent at least 90% of the total fair market value of the trust's non-portfolio properties and at least 90% of gross REIT revenue to come from specified sources such as rent, interest, certain capital gains, dividends and royalties.

At least 75% of gross REIT revenue must generally come from rent from real property, interest on mortgages on real property and certain gains from real property.

Those are Canadian REIT qualification tests.

They should not be confused with U.S. REIT rules frequently quoted online.

The U.S. framework commonly discussed in American REIT articles includes a requirement to distribute at least 90% of taxable income.

Canadian REIT taxation works differently.

Investors researching a REIT in Canada should therefore rely on Canadian sources rather than applying American rules directly.

How Can Investors Make Money From a REIT?

A real estate investment can potentially create economic returns in several ways.

None is guaranteed.

1. Property Income

Tenants pay rent for the use of the buildings.

After expenses, financing and other costs, part of the available cash may be distributed to investors.

2. Rental Growth

If rents increase over time, property revenue and NOI may rise.

That can occur through:

• contractual rent increases;
• lease renewals;
• new tenants paying current market rent; or
• improved occupancy.

Rent growth is not automatic.

Market conditions can move in either direction.

3. Improving Occupancy

A building with vacant units may produce more income if those units are successfully leased.

This is one way active property management can create value.

It also involves risk.

Leasing vacant space can require incentives, renovations, commissions and months without rent.

4. Increasing Property Value

Commercial real estate values are heavily influenced by the income properties produce and the capitalization rates investors apply to that income.

If NOI rises, property value may increase.

If market cap rates fall, valuation may also increase.

Both can reverse.

A property can lose value even while it remains occupied.

5. Selling Properties

A REIT may eventually sell properties.

A successful sale can produce a gain.

A property can also sell for less than anticipated.

Investors should never assume that real estate automatically appreciates.

Why Use a REIT Instead of Buying Property Directly?

Direct real estate ownership can make sense for some investors.

But it comes with substantial responsibilities.

Imagine personally purchasing a $4 million industrial property.

You may need to:

• provide substantial equity;
• arrange financing;
• complete environmental due diligence;
• negotiate the purchase;
• review leases;
• manage tenants;
• collect rent;
• handle maintenance;
• arrange insurance;
• replace building systems;
• negotiate renewals;
• fill vacancies;
• complete accounting;
• manage contractors; and
• eventually sell the property.

You are also exposed to one specific property unless you have enough capital to acquire several buildings.

A REIT changes that structure.

Instead of owning the building directly, you own units in a trust that owns or participates in a portfolio of properties.

The management team handles the day-to-day real estate operations.

That can make passive real estate investing in Canada more practical for investors who want property exposure but do not want to become landlords themselves.

Passive does not mean risk-free.

It means management responsibility is delegated.

Direct Industrial Ownership vs. an Industrial REIT

Neither structure is automatically better.

They serve different investor needs.

Public REIT vs. Private REIT in Canada

This is one of the most important distinctions for Canadian investors.

Public REITs

Public REITs generally trade on a securities exchange.

Their units can normally be bought and sold through brokerage accounts while the market is open.

That provides liquidity.

It also means market sentiment can change the trading price every day.

The stock-market price may react to:

• interest-rate expectations;
• economic news;
• bond yields;
• investor sentiment;
• market volatility;
• quarterly earnings; and
• broader equity-market movements.

The buildings might not have changed at all during that day.

The market price can still move.

Private REITs

A private REIT in Canada does not trade continuously on a public stock exchange.

Units are generally distributed through Canada's exempt securities market.

That changes several characteristics of the investment.

Most importantly, liquidity can be substantially lower.

There may be:

• redemption restrictions;
• minimum holding periods;
• redemption limits;
• notice requirements; or
• no secondary market for the units.

InvestPlus Industrial REIT states that there is currently no secondary market through which its units may be sold and no assurance that one will develop.

That is a material difference from buying a TSX-listed REIT.

Private investments should therefore be considered with a longer investment horizon.

Private Does Not Mean Less Risk

A private REIT does not receive a continuously changing public-market quote.

That can make reported valuations appear less volatile than publicly traded securities.

It does not make the underlying investment immune to changing market conditions.

Properties can still:

• decline in value;
• lose tenants;
• require repairs;
• experience lower rents;
• face higher financing costs; or
• become harder to sell.

Private REITs also introduce other considerations, including limited liquidity and greater dependence on the fund's management team and valuation methodology.

The correct comparison is not:

Public REIT = risky

Private REIT = safe

The better comparison is:

What risks does each structure introduce, and which fit the investor's circumstances?

InvestPlus has prepared a separate investor report examining this subject in detail: The Trade-Off in Private REITs.

Who Can Invest in a Private REIT?

Private securities operate under Canadian securities laws and prospectus exemptions.

Eligibility can depend on:

• the investor's province;
• which exemption is being used;
• financial circumstances;
• investor status; and
• advice received through a registered dealer.

For example, Canadian securities laws include exemptions for accredited investors and, in some circumstances, investments made under an Offering Memorandum.

Rules and investment limits can differ by province.

This is one reason private investments should not be marketed as automatically available to everyone.

InvestPlus states that its units may only be purchased by investors who qualify under applicable Canadian securities laws.

Its currently published minimum subscription is CA$10,000, with qualification and dealer requirements governed by the current offering documents.

A discovery call does not mean someone is automatically eligible to invest.

What Is an Offering Memorandum?

An Offering Memorandum, often shortened to OM, is one of the most important documents a prospective private-market investor can review.

It can contain information about:

• the securities being offered;
• the trust structure;
• management;
• financial statements;
• use of investor funds;
• fees;
• conflicts of interest;
• redemption provisions;
• investment strategy;
• risk factors; and
• subscription requirements.

The Alberta Securities Commission notes that investors purchasing securities under the Offering Memorandum exemption receive an offering document and risk acknowledgement, and that investment limits and eligibility requirements can apply depending on the investor's circumstances.

The OM deserves more attention than any advertisement.

For InvestPlus Industrial REIT, prospective investors can request the current Offering Memorandum before making an investment decision.

How Are REIT Distributions Taxed in Canada?

REIT taxation can become complicated quickly.

The tax treatment of a distribution depends on what the distribution represents.

Trust distributions can include components such as:

• income;
• capital gains;
• eligible Canadian dividends in some circumstances;
• foreign income;
• return of capital; or
• combinations of these amounts.

The Canada Revenue Agency notes that mutual fund trust investors may receive a T3 slip outlining allocated income.

A return of capital can reduce the investor's adjusted cost base.

That becomes relevant when the units are eventually sold or redeemed.

This is why a headline distribution rate does not tell an investor what their after-tax return will be.

Tax treatment also depends on individual circumstances and the type of account holding the investment.

Investors should speak with a qualified tax professional rather than relying on general marketing material for tax decisions.

Can REITs Be Held in an RRSP or TFSA?

Some REIT investments may qualify for registered accounts.

Eligibility depends on the investment and its structure.

InvestPlus Industrial REIT currently states that its units are eligible for registered plans including RRSPs, TFSAs and RESPs.

That does not mean every private REIT in Canada automatically qualifies.

Investors should confirm registered-plan eligibility, trustee or custodian requirements and their own tax circumstances before subscribing.

Why Industrial Real Estate?

The next decision is not simply public versus private.

Investors also need to decide what type of real estate they want exposure to.

Industrial properties play a practical role in the economy.

Businesses use them to:

• store goods;
• distribute products;
• manufacture equipment;
• repair vehicles;
• fabricate components;
• operate trade businesses;
• support construction;
• provide logistics services;
• maintain equipment; and
• run regional operations.

These aren't abstract financial assets.

They are operating properties used by businesses.

That does not make industrial real estate immune to economic cycles.

Industrial tenants can fail.

Vacancies can increase.

Rents can decline.

Buildings can require substantial investment.

Purchase prices can be too high.

Debt can create financial pressure.

But understanding what the building actually does can make the underlying investment easier to analyze.

Why Western Canada Industrial Real Estate?

InvestPlus focuses specifically on Western Canada industrial real estate, rather than owning every type of property across the country.

That focus includes markets across Alberta and Saskatchewan.

Western Canada's industrial economy is supported by sectors including:

• transportation;
• logistics;
• construction;
• energy;
• agriculture;
• manufacturing;
• infrastructure;
• trades;
• equipment services; and
• distribution.

Recent leasing data also shows meaningful activity.

CBRE reported 10.3 million sq. ft. of Canadian industrial net absorption in Q3 2026, the strongest quarterly level since 2022.

Calgary alone accounted for approximately 3.8 million sq. ft. of net absorption during the quarter — its second-highest quarterly result on record.

Eight of the 11 Canadian markets tracked by CBRE saw industrial availability decline during the quarter.

Those figures describe current market conditions.

They are not a promise of future rental growth, occupancy or investment returns.

They do, however, show why market selection deserves attention when evaluating an industrial portfolio.

Why Property Type Matters Inside an Industrial REIT

Even two industrial REITs can look very different.

One might own massive distribution centres occupied by a handful of national tenants.

Another might own smaller multi-tenant buildings.

Another may specialize in cold storage.

Another may focus on manufacturing.

InvestPlus holds a mixture of industrial properties across Western Canada, including light-industrial and multi-tenant assets.

That means investors should examine factors such as:

• property size;
• bay size;
• tenant type;
• lease duration;
• occupancy;
• location;
• building age;
• replacement cost;
• future capital expenditures; and
• ability to re-lease the space.

The more you understand the physical properties, the easier it becomes to understand the REIT.

What Should You Review Before Investing in a REIT?

A website headline should never be enough.

Before investing in any real estate investment trust in Canada, review the following.

1. The properties

What buildings does the REIT actually own?

2. Geography

Where are those properties located?

3. Property type

Industrial? Multifamily? Office? Retail? Mixed?

4. Occupancy

How much of the portfolio is leased?

5. Tenants

Who pays the rent?

6. Lease expirations

When could significant portions of revenue be exposed to renewal or vacancy?

7. Debt

How much leverage is being used?

8. Debt maturity

When must loans be refinanced?

9. Interest rates

What does financing currently cost?

10. Valuation methodology

How are private properties and REIT units valued?

11. Fees

What management, dealer or other fees apply?

12. Distributions

Where does the cash used for distributions come from?

13. Liquidity

How and when can units be redeemed or sold?

14. Management

Who selects, finances and operates the properties?

15. Offering documents

What risks does the Offering Memorandum identify?

The answers help separate an attractive marketing presentation from an investment you actually understand.

How InvestPlus Industrial REIT Works

InvestPlus Industrial REIT is a private industrial real estate investment trust based in Calgary, Alberta.

Its stated strategy focuses on acquiring, managing and operating revenue-generating industrial properties across Western Canada.

Its published portfolio currently includes:

• CA$118 million in assets under management
• approximately 750,000 sq. ft.
• 54 acres of land
• 20 industrial buildings
• properties across Alberta and Saskatchewan

These figures describe the portfolio as currently reported by InvestPlus.

They should not be interpreted as a promise of future size, value or investment performance.

For prospective investors, the next step should be examining what sits underneath those numbers:

• What buildings are owned?
• Who occupies them?
• How are they financed?
• How are units valued?
• What fees apply?
• What are the redemption rules?
• What risks does the Offering Memorandum identify?

That is where a proper REIT evaluation begins.

REIT Investing Is Ultimately Real Estate Investing

A REIT can make commercial property easier to access.

It does not remove the economics of owning real estate.

Someone still needs to:

• select the building;
• negotiate the purchase;
• finance it;
• lease it;
• maintain it;
• improve it;
• manage tenants;
• manage debt; and
• eventually decide when to sell.

The difference is that a REIT places those responsibilities with a professional management team while investors participate through units.

That structure can be useful for people who want exposure to income-producing real estate without personally managing industrial property.

But structure is only one part of the decision.

The quality of the properties, leases, debt and management still matters.

Understand the REIT Before Evaluating the Return

One of the simplest ways to approach REIT investing is to work backwards.

Don't start with the advertised return.

Start with the buildings.

Ask:

• What owns them?
• Who leases them?
• How much rent do they generate?
• What expenses do they have?
• How much debt sits against them?
• What could cause the investment to perform differently than expected?

Once those questions make sense, numbers such as distributions, valuation and potential total return have much more context.

That is the purpose of investor education.

Start With the Research

If you're researching private REITs in Canada, InvestPlus has several resources designed to explain the investment before you speak with Investor Relations.

Investor Overview

Learn how InvestPlus Industrial REIT is structured, how the portfolio is built and the risks investors should consider.

The Trade-Off in Private REITs

Compare private and publicly traded REIT structures, including liquidity, valuation and market-price considerations.

How Industrial Real Estate Makes Money

Learn how rent, NOI, cap rates, debt and property values interact.

Western Canada Industrial Portfolio

Review the actual properties currently reported by InvestPlus Industrial REIT.

Current Offering

Review current investment information and request the Offering Memorandum.

After reviewing the information, investors who want to discuss the structure, portfolio and current offering can speak directly with Investor Relations.

Book a Discovery Call

Frequently Asked Questions

What does REIT stand for in Canada?

REIT stands for Real Estate Investment Trust. It is a trust structure commonly used to own or participate in income-producing real estate.

How does a REIT make money?

A property-owning REIT generally earns revenue from tenants leasing its properties. After property expenses, financing, capital expenditures and other costs, available cash may be used for distributions, reinvestment, debt repayment or other trust purposes.

Do Canadian REITs have to distribute 90% of their income?

Canadian REIT rules should not be confused with U.S. REIT rules. Canada's Income Tax Act applies specific asset and revenue tests to qualifying REITs. The frequently quoted requirement that REITs distribute at least 90% of taxable income comes from the U.S. REIT framework and should not automatically be applied to Canadian REITs.

What is the difference between a public and private REIT?

A publicly traded REIT generally trades on a securities exchange and offers greater day-to-day liquidity. A private REIT does not continuously trade on an exchange and can have significant redemption and liquidity restrictions. The underlying property portfolio, valuation process, fees and investment risks can also differ.

Are private REITs safer than public REITs?

No. A private REIT may experience less visible daily price movement because its units do not trade continuously, but the underlying real estate remains subject to market, tenant, financing, valuation and operating risks. Private REITs can also have limited liquidity.

Can I invest in a REIT without managing property?

Yes. One reason investors use REITs is to obtain real estate exposure while leaving property acquisition, leasing and day-to-day management to a professional management team.

What is an industrial REIT?

An industrial REIT focuses primarily on properties used by industrial businesses, such as warehouses, logistics facilities, flex properties, service buildings and manufacturing or distribution space.

Can anyone invest in a private REIT in Canada?

Not necessarily. Private securities are sold under exemptions from normal prospectus requirements. Investor eligibility depends on securities laws, the exemption being used, province of residence and individual circumstances.

What is the minimum investment in InvestPlus Industrial REIT?

InvestPlus currently publishes a minimum subscription of CA$10,000. Eligibility, additional investment requirements and dealer requirements are set out in the current offering documents.

Are REIT distributions guaranteed?

No. Distributions depend on the financial condition and policies of the trust. InvestPlus Industrial REIT states that distributions may be reduced or suspended.

Can private REIT units be sold whenever I want?

Not necessarily. InvestPlus Industrial REIT states that there is currently no secondary market through which its units may be sold and no assurance that one will develop. Investors should review the redemption provisions and only consider an investment if limited liquidity fits their circumstances.

Investor Notice