REITs

 REIT stands for ‘Real Estate Investment Trust’.

 REITs own, operate and manage a portfolio

of income generating real estate assets.
 REITs give investors access to the benefits of
owning high-quality real estate assets in
small ticket sizes.
 REITs are listed on the stock exchanges and
investors can buy REIT units just like they
would buy shares of any listed company.
 REITs are regulated investment structures
that MUST pay out 90% of the Net
Distributable Cash Flows (NDCFs).
 Indian REITs have adopted stringent
corporate governance standards, with
transparent quarterly and semi-annual
reporting, robust related party safeguards,
caps on leverage, and professional
management teams.
Structure of REIT

REITs:- Hybrid Product between

Equity and Fixed Income
Who can Invest in REITs?
 Any investor (domestic / foreign / retail /
institutional) can buy REIT units in India
 Minimum lot size of 200 units (and multiples
thereof)
 Unit-holders can purchase REIT units
through a Demat account, similar to how
they would purchase equity shares
 REIT units can be bought / sold freely on Stock
Exchange platform
 Investors can also buy REIT units
through participation in REIT
IPO whenever a REIT gets listed
Benefits of investing in REITs

What Assets Can a REIT Own?

How do REITs Generate and Distribute
income?

Types of REITs:
There are several types of REITs, each with its own
investment strategy:

Equity REITs: These REITs invest in and own income-

producing properties, generating revenue primarily
through rental income.
Mortgage REITs (mREITs): mREITs provide financing
for real estate transactions by investing in mortgages
and mortgage-backed securities. They earn income
from the interest on these loans.
Hybrid REITs: These REITs combine elements of both
equity and mortgage REITs, diversifying their
investment portfolios across different types of real
estate assets and financing instruments.
Structure of REITs in India:

Regulatory Framework: The Securities and Exchange Board

of India (SEBI) is the regulatory authority responsible for
overseeing REITs in India. SEBI has issued regulations and
guidelines governing the establishment, operation, and listing
of REITs.

Legal Structure: In India, REITs are typically structured as

trusts. These trusts are established by a sponsor, who is
usually a real estate developer or a real estate fund manager.
The sponsor appoints a trustee, who holds the properties on
behalf of the unit holders (investors).

Ownership and Governance: REITs in India are governed by

a board of directors, responsible for overseeing the
operations of the REIT. The board typically consists of
representatives from the sponsor, the trustee, and
independent directors.

Investment Portfolio: Indian REITs invest primarily in income-

generating real estate assets, such as commercial properties
(office buildings, shopping malls, etc.) and income-yielding
residential properties (apartment complexes, rental housing,
etc.). SEBI regulations mandate that at least 80% of the value
of the REIT's assets must be invested in completed and
revenue-generating properties.

Unit Structure: Investors in Indian REITs purchase units of

the trust, which represent ownership interests in the
underlying real estate assets. Unit holders are entitled to
receive distributions from the rental income generated by the
properties and any capital appreciation upon the sale of
assets.

Dividend Distribution: Indian REITs are required to distribute

at least 90% of their net distributable income to unit holders in
the form of dividends. This distribution is typically made on a
periodic basis, such as quarterly or semi-annually.

Listing and Trading: REIT units are listed and traded on stock
exchanges in India, providing liquidity to investors. Investors
can buy and sell units of REITs through their brokerage
accounts, similar to trading stocks.
Taxation: Indian REITs enjoy tax benefits similar to those in
other jurisdictions. They are exempt from income tax at the
trust level, provided they distribute the majority of their
income to unit holders. Unit holders are taxed on their share
of distributed income, similar to dividends from stocks.

Asset Management: The asset management of Indian REITs

is typically handled by professional fund managers or asset
management companies appointed by the REIT. These
managers are responsible for property acquisition, leasing,
management, and disposal activities.