District REIT™ offers stability, high returns and tax efficiency for savvy investors – Financial Post

Investing in real estate has long been a cornerstone of wealth building, but the challenges of property ownership can deter many from this asset class. District Property Trust — known as District REIT™ — is a private real estate investment trust (“REIT”), which offers an appealing alternative for investing in real estate: it provides exposure to income-generating real estate without the stress of direct ownership and property management. 

A real estate investment trust (“REIT”) is a legally-recognized vehicle specifically designed to own, operate and finance income-producing real estate across a broad range of property sectors, explains Carmen Campagnaro, principal and trustee of District REIT™. 

As a private Canadian REIT, District REIT™, holds a diversified portfolio of multi-family residential, commercial and industrial real estate in southwestern Ontario.  

One key strength of District REIT™ lies in its portfolio, being heavily weighted in the multi-family real estate sector, which Campagnaro describes as “resilient during economic downturns”. 

One of District REIT™’s recent acquisition, comprising seven multi-family apartment buildings in urban Toronto, significantly elevated its portfolio weight in the residential segment. This strategic purchase provides substantial potential for appreciation and returns. 

“People always need a roof over their heads. Having a majority of our portfolio in multi-family properties has created excellent cash flow for District REIT™,” Campagnaro says. In addition to reliable income, unit-holders also enjoy the potential for capital appreciation.

Furthermore, District REIT™’s commercial and industrial portfolio includes strategically located neighbourhood plazas and industrial sites that supply a wide region, delivering strong yields and above-average returns for investors. Industrial properties have a strong demand, and rental rates are at a premium. This commercial and industrial portfolio is thoughtfully balanced by the larger multi-residential portfolio designed to provide long-term stability and security.  

According to Nick Wright, a securities lawyer and principal of exempt market dealer Startly Inc., REITs can be part of a powerful, tax-efficient investment strategy. 

“REITs are flow-through entities that avoid double taxation with tax payable only at the investor level. By contrast, a corporation is taxed on its corporate income and then the investor is taxed again on dividend distributions. A flow-through REIT can reduce tax liability and increase overall return on investment.”  

Private REITs also offer significant tax advantages. As flow-through entities, income is taxed only at the investor level, avoiding the double taxation faced by corporations. Distributions often include Return of Capital (ROC), deferring taxes until units are sold, and capital gains, taxed at lower rates. 

Campagnaro highlights the advantages of private REITs over public ones.

“A private REIT isn’t dictated by the stock market. Instead, investors are buying into the ownership of tangible, bricks-and-mortar assets.” Private REITs like District provide a more stable, high-yield opportunity for Canadians seeking long-term wealth growth as the unit price is based on asset values, rather than on stock market fluctuations. Private REITs offer access to unique investments and are focused on longer term investment horizons leading to stronger performance over time.   

Distributions are paid out monthly and an investor can participate in the Distribution Reinvestment Plan (DRIP), “which means reinvesting the distribution you earn monthly to benefit from compounding returns.” says Wright.  

The REIT has consistently distributed eight per cent annually over the past five years, with additional potential for capital appreciation. Investors participating in the DRIP enjoy additional benefits, as they earn compounded returns. The combination of the DRIP and the capital appreciation has averaged a return of over 15 per cent annually in the past five years for District REIT™ investors. 

With a minimum investment of $10,000 in District REIT™, individuals can diversify their portfolios and access tax-efficient returns through any registered funds, such as a Registered Retirement Savings Plan (RRSP), Registered Education Savings Plan (RESP) or Tax-Free Savings Account (TFSA).