What Is a Private REIT? A Canadian Investor's Complete Guide
Private REITs offer real estate exposure without the volatility of public markets. But they are fundamentally different products from their public counterparts. Here is everything you need to know before investing.
The term REIT — Real Estate Investment Trust — covers a wide range of investment structures. Public REITs trade on stock exchanges like any other security. Private REITs are a different product entirely, with different characteristics, different risks, and different potential returns.
If you are considering a private REIT investment, here is what you need to understand.
The Basic Structure
A Real Estate Investment Trust is a legal structure that allows multiple investors to pool capital to own income-producing real estate. REITs are required to distribute a significant portion of their income to unitholders — in Canada, typically structured to pass through the majority of taxable income — making them an income-oriented investment.
A private REIT is simply a REIT that does not trade on a public stock exchange. Units are sold through the exempt market under securities exemptions, typically to accredited investors.
How Private REITs Differ from Public REITs
The most obvious difference is liquidity. Public REIT units can be bought and sold on an exchange in seconds. Private REIT units typically have lock-up periods and redemption restrictions. Your capital is not immediately accessible.
In exchange for this illiquidity, private REITs typically offer a liquidity premium — higher target yields than their public counterparts — and are not subject to the daily mark-to-market volatility of public markets. During periods of market turbulence, private REIT unit values do not fluctuate with investor sentiment the way public REIT prices do.
Private REITs also tend to be more focused — on a specific geography, asset class, or strategy — than large public REITs that may hold dozens of asset types across many markets.
Who Can Invest?
In Canada, private REIT units are typically sold under the accredited investor exemption. To qualify as an accredited investor, you generally need financial assets of at least $1 million (excluding your primary residence), or net assets of at least $5 million, or annual net income before taxes of at least $200,000 in each of the two most recent years.
Some private REITs also use the offering memorandum exemption, which allows non-accredited investors to participate with certain investment limits.
What to Look For
Before investing in any private REIT, examine the track record of the management team, the quality and location of the underlying assets, the fee structure, the terms around redemption and liquidity, and the alignment of management interests with investors.
Fee structures vary widely. A well-structured private REIT has management fees that are reasonable relative to assets under management, and performance fees that are only earned when investors have received their preferred return first.
The Current Environment
In a softening rental market, the due diligence bar for private REIT investments should be higher, not lower. GTA multifamily cap rates have moved from roughly 3% before 2023 to 4.5 to 4.75% today, reflecting the changed financing and vacancy environment. Look carefully at the underlying assets, the vacancy rates of the specific properties in the portfolio, the debt structure, and the manager's track record through different market conditions.
Cushman and Wakefield's Q4 2025 Capital Markets report notes that multifamily faces headwinds, but that home ownership affordability at all-time lows will continue to support apartment demand — reinforcing the long-term investment case even in a period of near-term softness.
A private REIT with assets in markets experiencing rising vacancy requires more scrutiny than one operating in markets with stable fundamentals.