Definition
A Real Estate Investment Trust (REIT) is an entity that pools capital from investors to acquire, manage and finance income-producing properties (commercial, residential, industrial, healthcare, etc.).
**Structure**: - Listed REITs: traded on stock exchanges (TSX, NYSE) — liquid, accessible from $1,000 - Unlisted (private) REITs: less liquid, often reserved for accredited investors - REITs must distribute at least 90% of their taxable income to unitholders
**Income for mortgage qualification**: - Distributions received (T3 or T5) count as investment income - Qualifying income: generally accepted if 2-year history of regular distributions - The 'return of capital' portion of distributions does not count as income (non-taxable but reduces adjusted cost base)
**Relevance for borrowers**: Some borrowers hold REITs as an alternative to direct real estate. A mortgage broker must know how to document and present this income to maximize qualification, distinguishing between ordinary dividends, capital gains and return of capital.