August 26, 2013
The 20th anniversary of the Canadian REIT, along with its recent strength in the market—including the new Loblaw REIT announced in July—have put the REIT success story in the spotlight. Partners Pat Koval and Simon Knowling offered the Financial Post forward-looking comment on where the REIT is headed as well as historical analysis of how the structure first began with the help of Torys. Below is an excerpt of the article.
This past June marked the 20th anniversary of the Canadian real estate investment trust (REIT).
REITs were a product of the turmoil that engulfed the real estate mutual fund industry in the early ’90s. A redemption spree by investors in the face of tumbling real estate values motivated the federal government to pass legislation allowing a number of open-ended funds to convert to publicly traded REIT vehicles.
“What emerged from the ashes was an overwhelming success story in the Canadian capital markets,” says Patricia Koval of Torys LLP’s office in Toronto, whose lawyers were the legal architects of RealFund, the first Canadian REIT.
Indeed, between January 1998 — when REITs achieved a critical mass — and January 2013, the S&P/TSX Capped REIT Total Return Index stood at 494.3%, roughly three times the 167.1% achieved by the S&P/TSX Composite Total Return Index.
To read the full article, click here.
For more about the evolution and success of REITs, Pat Koval and Simon Knowling’s “Real Estate Investment Trusts” from Torys’ Capital Markets 2013 Mid-Year Report is available here.