Why Private REITs Belong in the Modern Family Office

In today’s world of abundant investment choices and inflated returns across many asset classes, owning private real estate remains as relevant as ever. Its appeal has long rested on a combination of stable distribution income, long-term capital appreciation and portfolio diversification. In the current environment, those foundational benefits make private real estate even more essential.

For the modern family office, real estate is more than just a complementary diversifier. It serves as a flexible tool for tax-efficient investing and a low-correlation counterweight to the ‘everything bubble’—a phenomenon in which multiple asset classes become richly valued simultaneously.

Below are five reasons why private real estate investing, particularly through real estate investment trusts (REITs) belongs at the heart of the modern family office strategy.

I.Income stability amid ongoing rate volatility

The five years during and after the COVID pandemic were marked by violent swings in interest rates, which brought a much needed (if short-lived) suppression of valuations across many asset classes. Early in the pandemic, investors flocked to safe-haven assets like Canadian government bonds, which generated strong short-term returns. But by 2022 into 2023, an aggressive increase in short-term interest rates, driven by soaring inflation and central bank tightening, lead to one of the worst downturns for Canadian bonds in decades.

(Source: Yahoo Finance, iShares Core Canadian Universe Bond Index ETF (XBB.TO)

Year		XBB.TO
2024		3.98%
2023		6.64%
2022		-11.67%
2021		-2.80%
2020		8.58%

In contrast, both unit value and distribution income in Skyline REITs increased throughout this period, allowing investors to harvest consistent distribution income without suffering a corresponding decline in asset value. As a result, overall returns remained stable throughout and outperformed most Canadian bond funds by a considerable margin during this period.

In today’s market, private real estate offers a form of stability distinct from fixed income, providing steady income through long-term leases and reduced sensitivity to short-term interest rate fluctuations. This combination of predictable cash flow and stable valuation profile can enhance risk-adjusted returns for investors seeking private alternative investments or reliable alternatives to rate-sensitive bond market funds.

II.Direct control and customization

Unlike publicly traded REITs or passive investments such as ETFs, private REITs allow family offices to directly shape their exposure. Through private REITs, family offices can directly influence their exposure by taking a tactical approach such as targeting pure-play asset classes. This flexibility is valuable in a world where each client’s needs and principles are unique.

For some clients, stable returns and predictable income may be considered a top priority. Others may seek opportunistic capital appreciation through an investment in emerging communities. Still others may want exposure to sustainable infrastructure projects, green-certified buildings or renewable energy assets that align with their values.

Private real estate investing can give family offices more tailored exposure to the things that matter to , including ethical or values-based investing themes. While some tradeoffs in liquidity and certain considerations can be expected versus their public counterparts, private REITs can leverage flexible financing options built on strong relationships, without the regulatory hurdleit allows them to capitalize on investment opportunities with favourable return on investment in a timely manner.

In the race for yield, the ability to pivot quickly toward attractive opportunities matters.

III.Inflation protection in an uncertain era

One of the timeless advantages of real estate is that it helps protect against inflation—a benefit that feels especially important is today’s environment. Even though inflation has cooled from the post-pandemic highs, the root causes of higher costs have not changed. With governments running persistent fiscal deficits, debasing of the money supply and global tariff outlays at historic highs, the transitory effects of recent lower readouts likely aren’t going away.

Historically, real estate has been a reliable inflation hedge for a multitude of reasons. Unlike stocks or bonds, it is a tangible asset tied to physical land and buildings; as inflation pushes up construction and materials costs, property values generally increase over time to account for these higher outlays.

This dynamic applies not only to multi-family rentals but also to retail and commercial properties, where leases may include Consumer Price Index (CPI) or other index-based adjustments.

For modern family offices, this built-in protection acts as a steadying force in portfolios where real returns might suffer from above-trend inflation and interest rate shocks.

IV.Defensive positioning and non-correlation to public equity

Stock markets today are heavily driven by a handful of big tech companies. In fact, we are seeing some of the narrowest leadership metrics ever recorded on U.S. equity markets. That means if any market leaders or categories undergo a valuation adjustment, stocks could fall and your client’s portfolios can be severely impacted.

At the same time, bonds—once the go-to “safe” investment—may not offer the same protection they used to.

From this perspective, private REITs can be considered a reliable mechanism since unit values don’t move in lockstep with the stock market and are not affected by day-to-day sentiment swings. Since real estate values aren’t tethered to public market price moves, investors can adapt without being pressured into selling at the worst moment.

Furthermore, some types of real estate often remain steady, or actually increase in value, when uncertainty remains elevated. The COVID pandemic is a notable example, with investors bidding up the price of residential units as work-from-home mandates exploded onto the scene, and essential retail appreciated rapidly once social distance rules were relaxed. These are two recent examples of real estate demonstrating a strong inverse price relationship to risk assets.

For modern family offices, these traits make private REITs a steady anchor that’s difficult to substitute with other investments.

V.Wealth transfer and succession planning in Canada

By some quantifiable measures, Canada is currently undergoing its greatest wealth transfer of all time, with over $1 trillion scheduled to be passed to younger generations through 2026. With the average inheritance approaching $1 million dollars, beneficiaries will likely focus not only on growing that wealth, but also on protecting the legacy their parents carefully provided.

For many, much of that nest egg was built and sustained through real estate investment, both direct and through managed funds. In fact, a 2021 Royal LePage survey found that 40% of Baby Boomers have at least half of their net worth in real estate. Within this group, 27% of respondents estimate that between 50-74% of their wealth resides in property, while 14% of respondents report that between 75-100% of their net worth is connected to real estate. Overall, recent figures by Statistics Canada reveal that about 55% of household wealth is held in the property market.

For modern family offices, real estate continues to be a cornerstone of legacy planning. Beyond the many benefits outlined here, Canadian real estate carries a deep sense of familiarity and trust that end investors consistently rely on when building generational wealth. While much of this wealth will likely remain in multi-residential rental property ownership, REITs that have demonstrated a track record of above-peer returns and stability will undoubtedly remain attractive to this new investor class.

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For modern family offices navigating today’s market, private REITs are not a static investment, but a dynamic and strategic one. Beyond their well-known benefits of portfolio diversification, they and capital appreciation over time. In the current environment where modern portfolio construction is being reimagined to include a larger sleeve of , the benefits of private REITs for family offices are clear: these assets can often provide strong risk-adjusted returns without the ups & downs of daily market sentiment.

To find out how to invest in private real estate for a family office, contact a Skyline representative today.