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[np_storybar title=”REITs can be sexy, too” link=”http://business.financialpost.com/2011/12/24/126659/”]

How would you like a nice 14% average total return each year for the past decade from your real estate holdings?

Before you rush out and start looking for something in the red-hot condominium sector, you might want to take a quick glance at the Canadian real estate investment trust sector.

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REITs may lack the sexiness of floor to ceiling glass windows with views of the skyline but they have something else to offer — a return that continues to the outpace the housing market even as residential prices stand at all-time highs.

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You want to bet on the U.S. housing marketing turning around, but you’re not ready to buy a retirement property. There’s a new vehicle developing for just that type of investment.

The next wave of real estate investment trusts south of the border is likely to be made of distressed properties bought by private-equity investors so cheaply that they can be rented out and still produce good returns despite the high management costs. This asset class does not exist now among REITs, which, in terms of rental properties, has been restricted to apartment buildings.