PRO Real Estate Investment Trust (TSX:PRV.UN), or PROREIT, has just completed a radical transformation, and it’s a move that deserves your immediate attention if you intend to boost your portfolio’s passive income. This small-cap Canadian REIT has officially shed its non-core assets to become a pure-play industrial landlord. For investors searching for a high-yield REIT to buy, PROREIT offers a juicy 7.3% distribution paid monthly, all while flying almost completely under the radar of mainstream financial news.
From a diversified REIT to a dominant asset class
Founded just 12 years ago, PROREIT has aggressively reshaped its identity. In September, the trust completed the sale of 12 non-core retail properties. This strategic disposal marks the final step in the $400 million REIT’s journey to become a pure-play light industrial REIT.
PROREIT’s portfolio now boasts a formidable 92% of gross leasable area (GLA) dedicated to industrial properties, which generate 90% of its base rent. This sharp focus on small and mid-bay warehouses – the backbone of e-commerce and logistics – positions PROREIT squarely among some of the best industrial property holders in Canada.
Light industrial properties continue to enjoy strong occupancy rates since the pandemic.
A cash flow growth engine waiting to ignite
PROREIT’s compelling investment thesis goes beyond today’s juicy current yield of 7.3% to its powerful potential for organic revenue, earnings, and cash flow growth. The trust’s in-place rental rates are significantly below current market levels. Going into the third quarter, its industrial properties had a weighted average net rent of $9.67 per square foot, while the estimated market net rent was $12.64. This implies a potential positive spread of 31%.
As leases expire over the next few years, PROREIT is poised to re-lease this space at much higher rates, significantly boosting its rental income. This isn’t just theoretical; the trust is already demonstrating this capability. By June, it had renewed over half of its 2026 lease expiries at a staggering 33.8% average positive spread. This trajectory points to potentially higher same-property net operating income (NOI), a key profitability metric for real estate, in the near future.
A Canadian REIT to buy for safer payouts at a glaring discount
A high yield is only good for passive income if it is sustainable. Thankfully, PROREIT’s distribution safety is improving. Its AFFO payout ratio, which measures the distribution as a percentage of Adjusted Funds From Operations (AFFO, a key measure of a REIT’s cash flow), has improved significantly. It fell to 91.8% in the first half of 2025 from 94% at the end of 2024, making the monthly distributions much safer.
Perhaps the most attractive feature for new investors is the glaring discount on the REIT’s units. PROREIT’s units recently traded at $5.92, a full 23% below its net asset value (NAV) of $7.69 per unit from June 30, 2025. This means new investors are buying a dollar’s worth of underlying real estate assets for about 77 cents.
As more investors discover this hidden gem, this gap is likely to narrow, offering the potential for substantial capital gains on top of that handsome yield. With a manageable debt ratio and a clear path to growth, this Canadian REIT’s secret is one worth uncovering for your portfolio.
