What Is the Difference Between a REIT and a MIC?

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May 25, 2023

Real estate related investments are one of the most popular investment options out there. The ability to earn passive income from properties and the potential for long-term growth are just a few reasons investors are drawn to this asset class. Two common ways of investing in real estate include REITs (Real Estate Investment Trusts) and MICs (Mortgage Investment Corporations). As a leading provider of mortgage investment solutions, PHL Financial Group understands the importance of making informed decisions regarding your finances. That is why we want to help you understand the difference between Real Estate Investment Trusts (REITs) and MICs. While both can offer attractive returns, there are significant differences between them.


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Difference Between REITs and MICs

There are essential differences between REITs and MICs that investors should understand before investing their money.

REIT (Real Estate Investment Trusts)

A REIT is a company that owns or finances income-producing real estate properties. REITs invest directly in income-producing properties such as shopping centres, apartment buildings, and office complexes. An investor buys shares of the REIT like they would for any other publicly traded company on a stock exchange. It raises investors’ money by selling company shares and then uses that money to purchase or develop properties. REITs must distribute at least 90% of their taxable income as dividends to shareholders, making them an attractive option for investors seeking regular income streams.

When you invest in a REIT, you become part-owner of the underlying assets held by the trust. The returns from your investment come primarily from the rental income generated by these properties and capital appreciation when the property’s value increases over time. Additionally, they offer diversification benefits, often holding properties in various locations.

MIC (Mortgage Investment Corporation)

A MIC is an investment and lending company that pools funds from investors to lend out as mortgages secured against real property. This means that with a MIC, you are investing in loans rather than owning a physical property like a REIT.

One significant advantage of investing in a MIC is that it allows for diversification beyond just one property or project. MIC investors have more control over their investments since they can choose which specific mortgage(s) to invest in based on their personal risk tolerance and investment goals. MICs provide investors with cash flow stability since they receive regular interest payments from borrowers, which get passed on to shareholders as dividends. This makes MIC investments more attractive for passive income due to less volatility than REITS.

To learn more about our investment solutions, contact PHL Financial Group today. Our experienced advisors are available by phone at 604-579-0844 or through our online contact form. We will happily answer any questions and help you make informed investment decisions.