What is a Real-Estate Limited Partnership?

A truly diversified investment portfolio is rarely present in the absence of real estate. Favoured for its tangible nature and limited supply, real estate has long been considered by investors to be the cornerstone of an investment portfolio.

A First Leaside real-estate limited partnership (RELP) is, at heart, a business organization with pooled resources from partners to own and operate real-estate assets. In Canada, investors in limited partnerships enjoy favourable tax treatment: income from a partnership attains deferral of its associated income tax, while accounting losses flow directly through to investors to be claimed as tax write-offs.

Structurally speaking, a RELP is composed of a General Partner, who manages the assets and assumes legal debt obligations, and one or more Limited Partners with liability only to the extent of their investment.* The General Partner in a managerial role is responsible for day-to-day operations, while passive Limited Partners enjoy the benefits of economies of scale without the accompanying duties of being a landlord.

Since 1992, First Leaside Limited Partners have received continuous monthly cash distributions.

What are the benefits of economy of scale?

An individual real-estate investor often faces significant barriers when he/she acts alone. The following disadvantages typically apply to an individual investment in real estate:

 Limited capital, which narrows choice of supply
 Inefficient access to financing
 Full scope of landlord duties
 Exposure to debt with recourse
 Unlimited personal liability

Under these circumstances, an individual real-estate investor is often perceived as a limited resource buyer when compared to large-scale partnerships with the advantage of access to valuable opportunities.

Furthermore, the group effort reduces the investor's exposure to business risk by minimizing the financial impact of vacancy. A single rental unit vacancy often results in a 25% to 100% decrease in cash flow on a typical residential property. Real-estate assets managed by First Leaside are classic multi-family residential properties ranging from 144 to 420 rental suites.

Partnership Benefits:

 Monthly cash distribution
 Limited liability protection
 Potential deduction against other Canadian taxable income
 Deferral of associated tax on income