It’s the 20th anniversary of REITs (Real Estate Investment Trusts) in Canada. In the Report on Business today, Tara Perkins goes through their history, from being a accidental solution to a “disaster” to a thriving part of our capital markets today. It’s an excellent piece and well worth reading by anyone who has REITs in their portfolio.

The article is a reminder that real estate can go the other way from time to time (lower rents, high vacancies, bankruptcies, restructurings) and that REITs are not a substitute for bonds. Stephen Johnson, the CEO of Canadian Real Estate Investment Trust (CREIT), is referenced in the article as saying that investors shouldn’t think of REITs as bond investments, but as a way to own commercial real estate.  In our view, REITs belong squarely in the equity portion of your portfolio.