A Stable Return, Without Riding the Market’s Ups and Downs?
Real estate investment trusts can offer stable income with little correlation to stock market headlines. An overview.
When stock markets become unpredictable, it can be reassuring to have part of your portfolio remain stable, no matter the headlines.
That is exactly what a real estate investment trust like the Pier 4 REIT fund can offer.
A REIT (Real Estate Investment Trust) is a fund that invests directly in real estate — in this case, residential buildings across Canada — and redistributes the income generated (such as rents) to investors in the form of distributions.
Since its inception in 2020, Pier 4 has delivered an average annual net return of more than 11% — even in 2022, when the stock market was falling and interest rates were soaring.
What sets Pier 4 apart?
- Stable rents in growing markets
- Active management to revitalize buildings and increase value
- Stable monthly distributions (8% net targeted)
- A long-term strategy focused on stability and diversification
Since inception
An investment of $100,000 in the RRD class would have reached $177,205 by the 4th quarter of 2024.
(Source: Pier 4 REIT – internal, unaudited data)
This type of investment does not replace a diversified portfolio… But it can be an excellent complement for those looking for:
- Predictable income
- Low volatility
- Real estate exposure without the management hassles
If you would like to learn more about the fund, its liquidity or the eligibility criteria, don’t hesitate to schedule a call with me.
“Stable” does not mean “guaranteed”
An important clarification is in order. When we talk about a “stable” return, we are describing a target and a track record, not a promise. Past returns, including those mentioned above, are no guarantee of future results, and targeted distributions can be adjusted, reduced or suspended depending on the fund’s performance.
Unlike a guaranteed investment certificate or a savings account, a private real estate investment carries a risk of capital loss. Property values can decline, rental income can fluctuate, and no distribution is ever assured.
The risks to understand before investing
Like any non-traditional investment, a private real estate investment trust has specific features you should fully understand:
- Liquidity is limited: unlike publicly traded stocks, redemptions may be subject to notice periods or restrictions.
- Property valuations are based on periodic appraisals, not on a continuously quoted market price.
- The real estate market remains sensitive to interest rates, occupancy levels and overall economic conditions.
- Eligibility criteria may apply depending on your investor profile and your province of residence.
That is why this type of investment is generally suited to only a portion of a portfolio, determined by your risk tolerance, your investment horizon and your liquidity needs.
A piece of the puzzle, not the foundation
Private real estate can play an interesting diversification role, because it often behaves differently from public stock markets. But it does not replace an emergency fund, nor a portfolio diversified across several asset classes.
Before investing, it is essential to read the offering documents, understand the fees and confirm that the investment fits within your overall plan. Every situation is unique: what suits one investor may not suit another.
If you are wondering what place — if any — this type of investment could have in your strategy, the Pérennité team can look at the question with you, in light of your goals. Contact us: we would be happy to discuss it, with no pressure whatsoever.
