9 types of REITs in Canada: Build wealth through real estate

What they do: Equity REITs own and manage real estate properties that generate income from rent. These REITs invest in everything from shopping centres and office buildings to apartment complexes and industrial warehouses. They focus on both collecting rental income and, in some cases, selling properties for capital gains.

Who is it for? Investors looking for steady dividend income and long-term appreciation from real estate holdings.

Pros

• Steady income from rent

• Potential for property appreciation

• Diversification across multiple properties

Cons

• Property market fluctuations affect values and income

• High maintenance and management costs

What they do: Residential REITs invest in rental housing, including apartment buildings, multi-family units and single-family rentals. With Canada’s growing population and high housing demand, residential REITs can provide stable income.

Who is it for? Investors who want exposure to Canada’s housing market without buying property themselves.

Why it matters to Canadians:  Housing affordability is a major issue in Canada. With high home prices and a growing rental market, residential REITs play a bigger role in Canadian real estate investment than in other countries such as the U.S.

Pros

• Reliable rental income, especially in high-demand cities

• Professional property management

• Potential for long-term property appreciation

Cons

• Market downturns can impact rental demand

• Rent control and housing regulations may limit returns

What they do: Retail REITs own shopping centres, malls and retail plazas. These REITs make money by leasing space to businesses like grocery stores, pharmacies and big-box retailers.

Who is it for? Investors seeking steady income from long-term leases with retail tenants.

Why it matters to Canadian investors: Canada has strong urban retail hubs and an expanding e-commerce-driven warehouse sector including major players like RioCan and Granite REIT.

Pros

• Consistent rental income from established retailers

• Prime locations attract strong tenants

Cons

• E-commerce competition is hurting brick-and-mortar retail

• Economic downturns can reduce consumer spending and occupancy rates

What they do: Industrial REITs invest in warehouses, logistics centres and manufacturing facilities. The boom in e-commerce has driven demand for these spaces, making industrial REITs one of the fastest-growing real estate sectors in Canada.

Who is it for? Investors looking for exposure to the growth of online shopping and global trade.

Pros

• Strong demand from e-commerce companies like Amazon

• Long-term leases with reliable tenants

Cons

• Sensitive to economic slowdowns and supply chain issues

• High construction and maintenance costs

What they do: Office REITs own office buildings and rent space to businesses. They generate revenue from long-term leases, though the rise of remote work has introduced new challenges for the sector.

Who is it for? Investors looking for stable income from corporate tenants.

Pros

• Long-term leases provide predictable cash flow

• Prime office locations in major cities attract stable tenants

Cons

• The shift to remote work has reduced office space demand

• Economic downturns can affect occupancy rates

What they do: Healthcare REITs invest in properties like hospitals, medical offices, retirement homes and long-term care facilities. These REITs benefit from aging demographics and growing healthcare needs.

Who is it for? Investors looking for stability and long-term growth in the healthcare sector.

Why it matters to Canadian investors: The healthcare real estate market in Canada is smaller compared to the U.S. due to more centralized healthcare funding and fewer private hospital operators. However, given the rising need for long-term care, nursing homes and assisted living centres, Healthcare REITs could benefit from long-term leases and demographic trends, particularly in Canada's aging population. 

Examples: In Canada, companies like Chartwell Retirement Residences (CSH.UN) and Extendicare (EXE.TO) are examples of REIT-like investments focused on senior living and long-term care. These REITs benefit from steady demand due to the country’s aging population but also face risks from government regulations, funding changes, and staffing shortages.

Pros

• Aging population drives long-term demand

• Long-term leases provide stable income

Cons

• Healthcare regulations and government funding changes can impact profitability

• High costs for managing specialized properties

What they do: Hospitality REITs own hotels and resorts, earning income from short-term stays. They are highly dependent on tourism and business travel, making them more volatile than other REITs.

Who is it for? Investors who want exposure to the travel and hospitality industry.

Why they matter to Canadian investors: Tourism and hotel investments are relevant to the Canadian market, especially in cities like Vancouver, Toronto and Montreal.

Pros

• High revenue potential during peak travel seasons

• Strong demand in major tourist destinations

Cons

• Highly sensitive to economic downturns and travel restrictions

• Seasonal income fluctuations

What they do: Unlike equity REITs, mortgage REITs don’t own properties. Instead, they invest in real estate debt, earning income from mortgage interest.

Who is it for? Income-focused investors comfortable with interest rate risks.

Pros

• Higher dividend yields than equity REITs

• Benefits from rising demand for mortgage lending

Cons

• Highly sensitive to interest rate changes

• More volatile than traditional REITs

What they do: Private REITs are not traded on stock exchanges and are usually available only to institutional or accredited investors. They have more flexibility in investment strategies but come with higher risks and lower liquidity.

Who is it for? Accredited investors willing to accept higher risk for potentially higher returns.

Pros

• Potential for higher returns

• More investment flexibility than public REITs

Cons

• Not easily bought or sold like publicly traded REITs

• Higher management fees and risks