FAQ

A Real Estate Investment Trust or REIT is an investment vehicle that allows many investors to combine their capital to facilitate the purchase of real estate. This combining of capital is beneficial in that it allows investors to participate in segments of the real estate market that were unavailable to them in the past due to the cost of entry. Through strength in numbers, investors can now participate in real property investments. These opportunities were once almost exclusively the domain of the very wealthy or institutional investors. A normal REIT unit represents a share in a trust. The trust will normally distribute income to investors regularly or from time to time. An investor in a REIT can experience a gain or loss on the real estate owned by the trust.

First Reliance REIT is available to qualified investors in amounts beginning at $1000 or available to other investors who invest a minimum of $150,000. A qualified investor is one who meets certain income or net worth criteria set by securities regulators. Securities laws vary from province to province. If you are unsure of your eligibility, please contact us to discuss.

Ontario residents who qualify may purchase units directly through First Reliance Asset Management Inc. or through participating investment dealers. In provinces other than Ontario units may be purchased through participating investment dealers.

A REIT has the ability to deduct expenses such as depreciation and amortization against income. This depreciation of the assets is not a certainty and is an unknown until the asset is eventually sold. If the asset has not depreciated, there will be a recapture of the previous deduction. This depreciation will often offset the income of the trust to a great degree, generally somewhat more so in early years than later years. Often to the point where a great portion of any distribution is considered “return of capital” and thus is not subject to taxation. An investor who receives a return of capital distribution will have a change in the value of their ACB (adjusted cost base) that will have the effect of creating a capital gain when the units are eventually sold. The unique tax treatment of REITs is a major consideration for investors.

Apartments are often considered the lowest risk in the commercial real estate space. Our belief is that positioning apartments as the preferred asset class for First Reliance will provide the benefits of lower risk and increased stability to unitholders. The investment guidelines allow the manager to purchase other types of real estate if desirable. Please see the offering memorandum for more information.

*Investment in real estate involves significant risks. Past performance may not be repeated. Please refer to the First Reliance REIT Offering Memorandum for more information.

Units of First Reliance REIT are redeemable quarterly. Redemptions are subject to an early redemption charge if sold within three years of purchase. There is a requirement for advance notice of redemptions, and cash redemptions are subject to a quarterly limit. Please see the offering memorandum for more information.

First Reliance REIT does not currently pay a monthly distribution. The intention is to begin paying a monthly distribution in the future.

First Reliance REIT does not trade on a stock exchange. First Reliance REIT is what is commonly referred to as a private REIT.