When it comes to locking in passive income, few things are more attractive than a high-yield monthly payer. With interest rates still elevated and volatility making it hard to trust short-term market moves, many Canadians are turning to reliable real estate investment trusts (REIT) to generate cash flow. One that stands out today is True North Commercial REIT (TSX:TNT.UN). It currently yields a hefty 7.5% and pays distributions monthly, something that’s become rare in today’s cautious income landscape.
Why TNT
If I had $5,000 to invest and wanted to put it to work right away, True North would be high on my list. But as always, it’s worth understanding the risks and rewards before jumping in. High yields can be a trap if a business is struggling, but that’s not necessarily the case here.
True North focuses on office and commercial properties across Canada. As of the first quarter of 2025, the dividend stock reported revenue of $31.1 million, down slightly from $32.5 million in Q1 2024. Net income came in at $563,000, a steep drop from $5.1 million a year prior, largely due to higher operating costs and a fair value adjustment loss of $3.8 million on its investment properties. That number should be watched, but it doesn’t reflect core cash-generating operations.
With declared distributions of $804,000 and 14 million units outstanding, the REIT appears to be paying about $0.0575 per unit per month. That lines up with the reinstated distribution announced on March 18, 2025, which resumed after a pause in late 2023. This means an investor putting $5,000 into the REIT today would receive around $30 per month or $363 annually in tax-free income if held in a TFSA!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| TNT.UN | $9.48 | 527 | $0.69 | $363.63 | Monthly | $4,994. 96 |
More to come
The return is appealing, especially for retirees or conservative investors looking for consistent income. And it’s not just the yield that’s notable, management also appears to be working hard to preserve the balance sheet. The REIT refinanced $129.6 million in mortgages during the quarter at an average interest rate of 4.8%, while extending terms to reduce near-term risk. Total mortgage payable stood at $735.6 million, with a weighted average interest rate of 4.2% and average term of 2.6 years. That’s manageable but should be monitored as the rate environment evolves.
One thing that adds confidence is the REIT’s tenant base. It continues to emphasize government and credit-rated tenants, which make up a large portion of its leases. As of the latest report, occupancy stood near 89%, which while not perfect, is still reasonable in today’s office space market. Management has also continued repurchasing units under its normal course issuer bid, a sign it believes shares are undervalued.
Still, there are risks. The REIT’s exposure to office properties could remain a headwind if more companies shift to remote work or if economic uncertainty lingers. And although the REIT resumed monthly distributions, the coverage is tight. If property income falters or vacancies rise, that yield could be cut again. That said, the reinstatement of the payout suggests confidence from management that cash flow has stabilized.
Bottom line
From a valuation standpoint, the REIT trades at a steep discount to book value, which sat at just under $30 per square foot of real estate. That suggests the market hasn’t caught on to the value of the properties, or remains cautious because of the sector’s broader challenges.
In the end, this isn’t a growth stock. It’s a monthly cash flow machine for those who want income right now and can tolerate some bumps along the way. If you’re looking to lock in high yield and trust management to keep things steady, this is a name to watch closely. With careful oversight, $5,000 invested today could deliver years of steady monthly income, before the rest of the market catches on.
