Canadian REITs adopt investor protections

Investors in Canadian REITs have traditionally lacked the protections given to investors in corporations, but several REITs are moving to close that gap

Some of Canada’s real estate trusts are adding more protections and opening up more avenues of recourse for dissatisfied investors, according to a Financial Post report.

Last year, ReoCan Real Estate Investment Trust, Canada’s largest REIT, added investor protections like an “oppression remedy” to ensure fair treatment to its unit holders. Other REITs, such as Allied Properties REIT and Boardwalk REIT, have recently followed suit.

More and more REITs are adding investor protections largely because of public pressure from the Canadian Coalition for Good Governance, according to the Financial Post. Last year, the CCGG issued a statement that investors’ rights at most REITs weren’t up to the standards of corporations. The CCGG said the declarations of trust in many REITs left “significant gaps” in investor protection.

Most REITs – unlike corporations – aren’t governed by the protections enumerated in the Canada Business Corporations Act.

“CCGG believes that unit holders of REITs and other public business trusts should have the fundamental rights and remedies that are available to shareholders of public corporations,” Stephen Erlichman, executive director of the CCGG, told the Financial Post.

But REITs appear to be catching up. Erlichman told the Financial Post that nearly a third of the 19 business trusts in the S&P/TSX Income Trust Index have recommended amending their declarations of trust to expand investor rights.

“We hope that other public trusts follow their lead,” he said.

There are no good investments
Private REITs hold considerable cachet for investors