REITs are becoming a popular investment option for Canadians. Industrial REIT is a type of REIT that owns and manages industrial properties like warehouses and distribution centers and rents the space. Industrial REIT is growing as it plays a significant part in the growth of the e-commerce sector.
The current trend has increased the demand for more warehouses, as companies want to deliver their products to their customers as quickly as possible. Warehouses are an essential and important element in the supply chain that can’t be ignored. As the demand and adoption of ecommerce is likely to grow in the coming years, industrial REITs has become one of the most popular investment options for Canadians.
How Industrial REIT works?
As mentioned above, industrial REITs are real estate trusts that own and leases industrial properties to set up factories, warehouses and distribution centers.
These properties are typically set up outside the city, as industrial units require large space to set up operations. The structure of industrial REITs may vary. Industrial REIT can be one building with one or multiple tenants. It can also be a group of buildings inside an industrial park.
Purchasing or building such industrial units requires a lot of capital. Industrial REITs lets investors to contribute their money that is used to purchase the industrial units. Investors don’t need to purchase any property or manage them. After the investment, investors receive dividends and can gain from the capital appreciation of the property.
Benefits of Industrial REITs
If you are looking for a regular source of income, industrial REITs have to pay at least 90% of revenues as dividends. Dividend is nothing but a part of profit and earnings that the real estate trusts pay to their investors.
Industrial REITs are highly adaptable and can be useful at different business cycles. Depending on the demand, these industrial properties can be put into different uses such as manufacturing units or storage facilities.
Industrial properties don’t require any cosmetic makeover as these units are large functional places with open spaces. In the case of residential places, a lot of capital is used to make the units attractive to tenants.
As the ecommerce space is likely to grow, warehouses and fulfillment centers will be the backbone of the industry. Industrial REITs that invest in units that located near cities with easy access to multiple places and routes may have an edge over other industrial REITs.
Industrial REITs are a popular investment option that has grown tremendously in the last few years, and it has the potential for future growth.