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’re looking to boost your portfolio’s passive income. This small-cap Canadian REIT has officially divested its non-core assets to become a pure-play industrial landlord. For investors looking for a high-yield REIT to purchase, PROREIT offers a monthly distribution of 7.3% 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 twelve non-core retail properties. This strategic sale marks the final step in the $400 million REIT’s journey to become a pure-play, light industrial REIT.
PROREIT’s portfolio now has a formidable 92% of gross lettable area (GLA) dedicated to industrial properties, which generate 90% of base rent. This sharp focus on small and mid-sized warehouses – the backbone of e-commerce and logistics – places PROREIT among the top industrial real estate holders in Canada.
Light industrial properties have continued to see strong occupancy rates since the pandemic.
A cash flow growth engine waiting to ignite
PROREIT’s compelling investment thesis goes beyond its current juicy 7.3% yield to its powerful potential for organic revenue, earnings and cash flow growth. The trust’s local rents are significantly below current market levels. At the start of the third quarter, industrial properties had a weighted average net rent of $9.67 per square foot, compared to the estimated market net rent of $12.64. This implies a potential positive spread of 31%.
As leases expire in the coming years, PROREIT is poised to re-rent this space at much higher rates, significantly increasing rental income. This is not just theoretical; the trust is already demonstrating this ability. As of June, it had renewed more than half of its 2026 leases with a stunning average positive spread of 33.8%. This trajectory points to potentially higher net operating income (NOI) for the same property, a key measure of real estate profitability, in the near future.
A Canadian REIT to buy for safer payouts at a notable discount
High returns are only good for passive income if they are sustainable. Fortunately, PROREIT’s distribution security is improving. The AFFO payout ratio, which measures the payout as a percentage of Adjusted Funds From Operations (AFFO, a key measure of a REIT’s cash flow), has improved significantly. It dropped from 94% at the end of 2024 to 91.8% in the first half of 2025, making monthly benefits much safer.
Perhaps the most attractive feature for new investors is the striking discount on the REIT’s units. PROREIT’s units recently traded at $5.92, more than 23% below net asset value (NAV) of $7.69 per unit as of 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 significant capital gains on top of those nice returns. With a manageable debt ratio and a clear path to growth, the secret of this Canadian REIT is worth discovering for your portfolio.
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