Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)are investment vehicles that pool money from various investors and invest in revenue generating real estate projects and infrastructure projects respectively. These companies are formed as trusts and they issue units to the investors to raise money.
• Regulated by SEBI, REITs are catching up big way in the Indian economy and the real estate sector. These companies own, operate, or finance income-producing commercial real estate (from the Indian perspective). Pooling together the capital of multiple investors, REITs make it possible for them to earn dividends from office property investments. This is without the investors needing to buy, manage, or finance any real estate themselves.
• As Real Estate is probably “Most preferred Investment decision of an average Indian REIT is a very good option for investing in real estate. Most of us cannot afford to invest in real estate but REIT presents a very good low cost professionally managed REIT.
• SEBI Regulations state that a REIT should hold 80% of the asset in real estate asset. Similarly an InvIT should invest 90% of the unit capital in revenue generating infrastructure projects. These projects can be held directly or through a Special Purpose Vehicle (SPV).
• In both REIT’s and InvIT’s the trust has to distribute at least 90% of the distributable surplus cash flow to the unit holders.
• REIT and InvITs are publicly traded on the stock exchanges and offers high liquidity in form of shares and also ensures transparency as they are under regulatory compliance and mandatory disclosure.
• REIT and InvIT the new asset class investments have been available to general public with a minimum investment of ₹10,000 – 15,000. This ensures enhanced liquidity of the asset class and also makes appealing for all types of investors.
• Many Big Infrastructure projects and real estate projects are stuck and face last mile financial troubles due to which these projects are never completed or face many legal and financial issues. But, REIT’s and InvIT’s have changed this structure completely and have ensured that all small or big Infra and Real Estate players have access to cheaper capital in turn they accomplish their goals so do the investors of the Trust.
• India is on the cusp of major development path and Infrastructure will play a major role in advancement of our nation. REIT and InVIT will help in achieving this goal and fast track India towards growth and development.
• There are some REIT’s and InvIT’s that are listed on the stock exchanges and are live example of its success story.
REIT- e.gEmbassy REIT, Brookfield REIT, MindspaceREIT
INviT - India Grid Trust and IRB InvIT