Canadian Apartment Magazine featured Centurion Apartment REIT in the recent December/January 2013 edition. It provides an outlook for this private apartment REIT.
The one-year return for the REIT was 19%. Since inception, the return has averaged 12.6%. Some of the return is credited to cap rate compression that may not continue in the future. Going forward, Centurion Apartment REIT's target return is 7 to 8 percent - that is the current distribution. On top of that, a 2 to 5% capital growth on the value of units is targeted, for a total return of close to 10%. Obviously this beats bond fund returns hands down. An added enhancement to your return is a DRIP program discount on unit value. I don't know about you, but my online broker never passes on DRIP discounts to me on publicly traded stocks.
From a tax perspective, distribution returns are return of capital - that is, tax deferred until you sell, which is a lot better than the 'tax me now' income of bonds, GICs, MICs, etc. If you have capital losses in a year that the REIT takes a jump in capital growth (like last year), you could consider selling and re-buying units to trigger the gain. That could be effective if your are past the early redemption penalty period for holding your REIT units.
Centurion's portfolio includes 40 separate apartment properties in 17 cities, including 4,200 units. A lot of the portfolio has been described as 'turn around stuff' where there is market re-positioning after upgrades. Growth opportunities are being sought in the student housing field, and as part of financing for new construction (given limited housing stock).
PS - A long-time family friend cautioned us on buying into private REITs ... the next month Centurion bought his apartment building. In the Toronto area we often see their properties when commuting, and take comfort in owning tangible bricks and mortar assets that are well managed. On top of that, friends are paying the distributions. Keep up the great job Centurion!