A Wealth Professional roundtable brought together Pier 4's Randal Warrington and Jake Levy alongside advisors John De Goey of Designed Wealth Management and Dylan Bredo of Bilyk Financial Private Client to examine how private REITs earn their place in client portfolios, what due diligence looks like in a harder rate environment, and how the questions advisors are asking have shifted in recent years.
Real estate earns its place through what it doesn't give up. Randal Warrington, VP of national sales at Pier 4, leads with that point in every client meeting. "It's the opportunity to have an asset class that is uncorrelated to the public equity markets," he said, adding that advisors can pursue diversification "without necessarily sacrificing long-term return potential." John De Goey, portfolio manager at Designed Wealth Management, traces that logic to Harry Markowitz's Nobel Prize-winning work on modern portfolio theory. "You want to get multiple asset classes that are ideally weakly or negatively correlated, so that you can, by combining them, get a better risk-adjusted return in aggregate than you could if you didn't use as many asset classes," De Goey said. Real estate has historically shown low correlation to traditional stocks and bonds.
The most immediate difference is valuation. Dylan Bredo, partner and portfolio manager at Bilyk Financial Private Client, starts each client relationship with a strategic asset allocation that reflects their existing exposure, then adjusts it as the macro environment changes. Income is the second pillar. Distributions from rental properties can fund ongoing cash flow needs for retirees. For clients still accumulating wealth, those same distributions can be reinvested. "There's multiple benefits in how we use it within a portfolio," Bredo said.
Roughly 40 percent of Canada's private sector, across private equity, private debt, and private REITs, has dealt with some form of restricted redemption or gating since the stress cycle began, according to Warrington. He doesn't view that as inherently bad. "I don't necessarily see gating as a negative," he said. "I think it's prudent from some firms' standpoint to protect the value for those investors." De Goey draws a line between a standard redemption window and a full suspension. Even when gating occurs, he argued, the concern is largely psychological. The underlying value remains and distributions may continue. For Bredo, the real risk is manager quality. "The two most important things for us, in any space, is we want to find a quality asset with a quality manager," he said.
De Goey said he is already at his target allocation but believes the second half of 2026 could be an attractive entry point for advisors who remain underweight. He traces that view to the interest rate cycle. Decades of falling rates supported real estate values before inflation forced central banks to tighten. That tightening pushed up cap rates and weighed on prices. De Goey also follows Robert Shiller's cyclically adjusted price-to-earnings ratio and the Buffett Indicator, which compares total stock market capitalisation with GDP. Both suggest US equities remain expensive by historical standards. "Real estate, while it's not cheap, is not anywhere near as expensive as traditional stocks are," De Goey said. Bredo sees a more favourable entry point for investors deploying fresh capital than in recent years.
Jake Levy, VP of finance at Pier 4, points to gap-to-market as one indicator of future growth potential. A property's gap-to-market measures the difference between what existing tenants pay and what those units could rent for today. A large positive gap means room to grow rental income as leases expire and renew at higher market rates. Levy also flags occupancy, same-store NOI growth, and distribution consistency. Financial measures such as loan-to-value ratios, interest coverage, and payout ratios help show how conservatively a REIT is managed. Cost per door divides total property value by residential units to show per-unit worth against replacement cost. "Our deal flow remains significant despite the market headlines," Levy said. Pier 4 currently underwrites between 10 and 15 new deals a week.
De Goey adds governance to the evaluation checklist. Independent boards, credible auditors, and transparent valuation processes give advisors confidence that reported values reflect underlying market conditions rather than management assumptions. Reviewing a fund's weighted average capitalisation rate against comparable properties can help determine whether assets are valued appropriately. While critics argue that private assets can understate volatility, De Goey believes the answer is understanding how valuations are produced rather than dismissing the asset class. From the operator's side, Levy said that conservative debt management, maintained reserves, tightened operating costs, and careful tenant screening have all helped Pier 4 manage through the cycle. Discipline, not dramatic strategy changes, is how Pier 4 has navigated the rate environment. Advisors researching the space will find further sponsored analysis and expert reports on Wealth Professional Canada.
Education has become a much bigger part of Pier 4's approach. Discussions today spend less time on what private REITs are and more time on how they work. Advisors want to understand redemption mechanics, valuation methodology, and the metrics that distinguish one manager from another before they discuss returns with clients. Warrington's team focuses on helping advisors understand why measures such as loan-to-value ratios, interest coverage, and cost per door matter. The pitch for private real estate has not changed. "The pitch itself hasn't moved," Warrington said. "What it takes to earn an advisor's trust has." Gating terms, once rarely raised up front, are now among the first things advisors want to discuss alongside whether the manager and the asset actually hold up.