MIC vs REIT: What's the Difference, and Why Does It Matter for Your Portfolio?

Mortgage Investment Corporations (MICs) and Real Estate Investment Trusts (REITs) are two popular ways Canadians invest in real estate — without owning property themselves. At a glance, they can look similar: pooled real estate exposure, passive income, and diversification.

But once you get under the hood, the differences become important — especially when it comes to risk.

Let’s break it down.

What is a REIT?

A Real Estate Investment Trust owns and operates income-generating real estate. Think malls, apartment buildings, warehouses — physical assets that earn rental income. Publicly traded REITs are often bought and sold like stocks.

How investors make money:

• Dividends from rent
  
  

• Capital appreciation if the value of the real estate or stock increases
  
  

How REITs lose money:

• Falling property values
  
  

• Higher vacancies
  
  

• Rising interest rates
  
  

• Poor management or failed development projects
  

What is a MIC?

A Mortgage Investment Corporation is a pool of private mortgages. The MIC doesn’t own property — it lends against property. Investors earn returns through interest payments from borrowers.

At Blue Pearl MIC, we focus on short-term, high-interest mortgages in the Lower Mainland of BC — typically second mortgages or bridge loans with conservative loan-to-value (LTV) ratios.

The Hidden Risks in REITs: 2023–2024 Taught Us a Lesson

The last couple of years have exposed some of the structural vulnerabilities in the REIT and developer landscape.

• Major Canadian developers like Mattamy Homes, Dream, and others faced pressure from high interest rates, stalled sales, and cost overruns.
  
  

• Several private REITs suspended redemptions, leaving investors unable to access their money.
  
  

• Some public REITs dropped 30–40% in value in 2023 as rate hikes squeezed margins and lowered asset values.
  
  

• Commercial real estate vacancies skyrocketed in cities like Calgary and Toronto, hurting income streams.
  
  

The bottom line: REITs carry operating risk. They are, at their core, real estate businesses. When those businesses underperform, so do investor returns.

How MICs Avoid These Risks

MICs sidestep the operational exposure of REITs by staying on the debt side of the real estate equation.

We don’t:

• Build condos
  
  

• Lease offices
  
  

• Flip houses
  
  

• Wait for market appreciation
  
  

We simply lend to borrowers, and collect interest — backed by real property as collateral.

At Blue Pearl MIC, we:

• Focus on BC’s Lower Mainland — one of Canada’s strongest, most liquid real estate markets.
  
  

• Underwrite every deal with conservative LTVs (so even if a borrower defaults, the property is still worth more than the loan).
  
  

• Avoid speculative lending and ensure every mortgage has a defined exit plan (refinance or sale).
  
  

• Diversify across dozens of short-term mortgages so no single deal can derail the portfolio.
  
  

In 2024, while some real estate funds posted redemptions and losses, Blue Pearl MIC delivered our best returns to date — 10.69% annualized.

Final Thought: Where Do You Want to Sit — Equity or Debt?

There’s no one-size-fits-all answer. But you need to know where you’re sitting in the real estate capital stack:

• REITs = equity = you win or lose with the property’s success
  
  

• MICs = debt = you get paid first, regardless of the property’s long-term appreciation
  
  

If you’re looking for short-term income, reduced volatility, and a portfolio insulated from the rollercoaster of development and sales cycles, a MIC might deserve a place in your portfolio.

Let’s talk about how it fits with your goals.

Disclaimer

* Past performance may not be indicative of future results. Investments in MICs are not guaranteed and carry risk. Returns are not insured. Please review our Offering Memorandum and speak with a registered dealing representative before investing.