When assessing the average return on a REIT in Canada, it is important to differentiate between the public and private market. While returns in specific segments are often comparable, key differences in liquidity, volatility, listing venue and regulatory requirements can lead to material imbalances in annual return profiles — drastically so in some cases.
Most available returns data is concentrated among the public issuers which have structured products to track cumulative sector performance. Among the largest of these products is the BMO Equal Weight REITs Index ETF (BMO ETF). BMO ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada REIT Index (Solactive), net of expenses. BMO ETF invests in Canadian REITs and holds the constituent securities of Solactive in the same proportion as they are reflected therein.
According to BMO ETF performance data dating back since inception (May 19, 2010), the total average annual return is 8.61%. This includes dividend reinvestment in the form of monthly distributions stretching back to 2011. We note that BMO ETF performance is net of fees, which naturally results in returns that trail the benchmark performance of the underlying index it tracks.
Fund Performance
Annualized Performance
For period ending September 30, 2024.
| Portfolio (%) | Benchmark (%) | |
|---|---|---|
| 1 mo | 7.25% | 7.32% |
| 3 mo | 23.01% | 23.22% |
| 6 mo | 18.02% | 18.41% |
| YTD | 17.74% | 18.30% |
| 1Y | 28.54% | 29.42% |
| 3Y | 1.75% | 2.38% |
| 5Y | 3.82% | 4.58% |
| 10Y | 7.17% | 7.94% |
| Since Inception | 8.61% | 9.26% |
| Year | Dividend Range ($) | Dividend Yield* |
|---|---|---|
| 2011 | 0.083-0.085 | 5.58% |
| 2012 | 0.081-0.086 | 4.92% |
| 2013 | 0.081 | 4.96% |
| 2014 | 0.083 | 5.09% |
| 2015 | 0.083-0.088 | 5.43% |
| 2016 | 0.085-0.088 | 5.56% |
| 2017 | 0.088 | 5.26% |
| 2018 | 0.085 | 4.80% |
| 2019 | 0.085-0.10 | 4.33% |
| 2020 | 0.09-0.10 | 5.14% |
| 2021 | 0.09 | 4.26% |
| 2022 | 0.09-0.10 | 4.49% |
| 2023 | 0.09 | 5.17% |
| 2024 | 0.09 | 4.77% |
Thus, it can be said that between the known returns of a benchmark-tracking ETF and inclusive of dividend reinvestment (net of fess), a diversified portfolio of Canadian public REITs can typically produce an average annual return of 8.61%.
Naturally, the index performance is heavily influenced by a confluence of economic factors associated with its position in the economic cycle. By approximate order of importance, these include interest rates, economic growth, inflation, property market trends, and regulatory policies.
Private REIT return data
Unlike its publicly traded cousins, private REIT performance data is challenging to find online because these trusts are not publicly traded, so they aren’t required to meet the same disclosure standards as public issuers.
While public REITs must disclose information through continuous disclosure requirements (e.g., quarterly and annual reports, material change reports) that are accessible to the public via the System for Electronic Document Analysis and Retrieval (SEDAR+), private REIT disclosures are limited. They are typically restricted to offering memoranda, financial reports, or other documents provided directly to accredited investors or qualified parties, as required by securities laws.
Therefore, we are unable to ascertain with certainty the average return on a private REIT (multiclass) in Canada, although some outlets have reported that in the U.S., “private REITs often provide yields in the 7% to 8% range, as reported by the National Real Estate Investor.”
Select private REITs yield historical annual returns exceeding public REITs
Unquestionably, many public REITs (expressed via ETF tracking/index performance) have exhibited strong and consistent annual returns over time. The data is clear and indisputable. However, select individual private REITs have demonstrated even stronger return profiles over extended intervals compared to such instruments as BMO ETF.
For example, Skyline Group of Companies (Skyline) operates multiple private REIT funds and businesses across Canada, specializing in real estate sectors—including apartment, industrial, and retail—as well as clean energy. Its assets are structured into four distinct private alternative investment funds: Skyline Apartment REIT, Skyline Clean Energy Fund**, Skyline Industrial REIT, and Skyline Retail REIT, each focusing on targeted acquisitions, management and development within its sector.
According to available data from Skyline, each of the investment firm’s three rental ‘occupancy’ funds has delivered gains that have exceeded the average annual returns of the BMO ETF since inception (Note: inception dates between Skyline ‘occupancy’ funds and BMO ETF vary):
| Fund Name | Annualized Return Since Inception | Description |
|---|---|---|
| Skyline Apartment REITInception: 2006 | 13.86% | Comprises over 21,631 apartment units across 239 properties in 57 secondary and tertiary markets with a fair market value of $5.02 billion |
| Skyline Industrial REITInception: 2012 | 14.93% | Consists of a diverse portfolio df Canadian industrial properties totaling over 10 million sq. ft. with a fair market value of $1.8 billion |
| Skyline Retail REITInception: 2013 | 12.13% | Primarily includes essential goods retail properties, totaling around 5.3 million sq. ft. with a fair market value of $1.6 billion |
** Skyline Clean Energy Fund (non-occupancy fund) inception date: 2018; return since inception: 9.09%; description: Invests in 100% clean energy assets with over $390 million AUM
As an added benefit, private REIT funds are often more resilient to market volatility compared to publicly traded REITs, as they are not influenced by the daily fluctuations of sentiment or performance correlations between equity indexes and their underlying components.
Furthermore, the application of quarterly (or longer) appraisal-based valuation methods mean unit value changes are more adaptive and less subject to market variance.
While not completely immune to changes in the economic cycle, Skyline’s ‘occupancy’ funds aim to buffer against cyclical downturns by focusing on assets classes with high occupancy rates (multi-family apartments, essential goods retailers) and insulated pricing power. These sectors, such as residential real estate, logistics, essential retail, and renewable infrastructure, are often characterized by stable demand and the ability to withstand economic uncertainty.
Conclusion
Our comparative analysis of public versus private REITs in Canada reveals important distinctions in return profiles that warrant consideration. Public REITs, represented by instruments such as BMO ETF, provide a well-documented average annual return, which, when combined with dividend yields, can yield an average annual return exceeding 8.5%. And while obtaining reliable data on private REIT returns can be challenging, evidence from prominent investment funds, such as those managed by Skyline, have historically achieved average annual returns of approximately 12-15% over extended periods (minimum 10 years since inception), outperforming their public REIT counterparts.
About Skyline Group of Companies
Skyline Group of Companies (“Skyline”) is a fully integrated asset acquisition, management, development, and investment entity.
It is comprised of companies that provide services in real estate management and development, as well as clean energy management and development.
Skyline currently manages more than $8.23 billion across its real estate and clean energy platforms.
With approximately 1,000 employees across Canada, Skyline works to provide safe, clean, and comfortable places for tenants to call home, great places to do business, sustainable solutions for a greener future, and an engaging experience for its investors.
View Skyline’s 20th Anniversary celebration video to see how Skyline is grounded in real estate, powered by people, and growing for the future.
For more information about Skyline Group of Companies, please visit SkylineGroupOfCompanies.ca.
For media inquiries, please contact:
Vice President, Marketing & Communications
Skyline Group of Companies
5 Douglas Street, Suite 301
Guelph, ON N1H 2S8
519.826.0439 x602