A Canadian portfolio's alternative allocation includes units of a publicly traded infrastructure REIT. This REIT primarily invests in toll roads and utility assets. What is a key characteristic of this type of REIT that would attract a long-term investor?

Question: A Canadian portfolio's alternative allocation includes units of a publicly traded infrastructure REIT. This REIT primarily invests in toll roads and utility assets. What is a key characteristic of this type of REIT that would attract a long-term investor?

Answer options:

• High growth potential from new technology adoption.
• Exposure to volatile commodity prices for revenue generation. ✅ Stable, predictable cash flows supported by long-term contracts and essential services.
• Significant tax advantages from rapid depreciation of assets.

Correct answer: Stable, predictable cash flows supported by long-term contracts and essential services.

Explanation: Infrastructure REITs, particularly those in essential services like toll roads and utilities, are known for stable and predictable cash flows. These cash flows often come from long-term contracts, regulated pricing, or essential public services, making them attractive for long-term investors seeking income and stability.