We have been getting quite a number of calls and emails from investors in Ontario, BC and quite a number from Alberta (Edmonton, Calgary, Fort Mac area) looking for investment properties in St. John’s, Mount Pearl areas. With a price range of $180,000 - $210,000 for a 2-apartment in St. John’s ($240,000 for newly a constructed 2-apt) this is a huge price difference from what the similar home would sell for in their area as well it’s a significant increase in prices from what we locally are accustomed to.

Not everyone wants to purchase or has the ability to purchase a second home as an investment so what are other options. REIT’s are the first thing that come to my mind.

A Real Estate Investment Trust or REIT is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income.

Ok so that was the “formal” definition. What does this mean to you?

Basically a REIT allows you to purchase equity or shares of stock in a company that holds and purchases real estate. For example, you can purchase shares of Northern Property Real Estate Investment Trust (NPR.UN) who own properties located in the Northwest Territories, Nunavut, Alberta and recently moved into the Newfoundland market by purchasing Hillview Terrace Suites. Most of Northern Property’s portfolio is held residential income producing properties.

Most REIT’s pay monthly distributions to share holders (similar to you collecting a rent check from a tenant). The distributions have the potential to increase ( similar to increasing your rent) and the cost per share of the stock has the potential to increase ( similar to your property increasing value).

A few other REIT’s that own property/companies in Newfoundland are:

• Crombie REIT (CRR.UN) - Avalon Mall & Village Mall and more
• Fortis Properties (FTS) - while not a REIT it owns a significant amount of commercial real estate, hotels and hydroelectric generation in Newfoundland
• Calloway REIT (CWT.UN) - Kelsey Drive box stores - Boston Pizza, Home Depot etc