REAL

ESTATE
INVESTMENT
TRUST
PRESENTED BY
SONALI
 Industry overview Investing in REITS

Table Of What are REITS

Benefits of Investing in
REITS

Content Types of REITS Legal Framework

Structure of REITS Risk Associated in

REITS
 • India’s real estate sector is expected to expand to US$ 5.8
trillion by 2047, contributing 15.5% to the GDP from an
existing share of 7.3%.
• Commitment of Rs.79000 crore in PM Awas Yojna Scheme
in 2023-2024 budget.
• The Private Equity Investments in India’s real estate sector,

Industry stood at US$ 4.2 billion in 2023.

• The Securities and Exchange Board of India (SEBI) has
Overview given its approval for the Real Estate Investment Trust
(REIT) platform, which will allow all kind of investors to
invest in the Indian real estate market. It would create an
opportunity worth Rs. 1.25 trillion (US$ 19.65 billion) in
the Indian market in the coming years.
 What are REITs?
• REITs are like Mutual Funds.
• It allows pooling money from multiple investors into
single trust.
a) Trust is managed professionally by a manager.
b) Manager invest in immovable and rent yielding
properties or special purpose vehicle holding such
kind of properties.
• REITs give investors access to the benefits of owning real
estate assets in small ticket sizes.
• Listing of REITs is mandatory. Thus they are traded on
stock exchanges and investors can buy and sell REIT units
just like trading of shares of any listed company.
 RETAIL REIT
1 SHOPPING MALLS,
SHOP HOUSES
RESIDENTIAL REIT
RENTAL APPARTMENTS,
2
LODGING
HEALTHCARE REIT
3 Hospitals, clinics, nursuing
and special care homes
TYPES COMMERCIAL REIT
4
OF OFFICE BUILDINGS

REITS 5
MORTGAGE REIT
PROVIDE LOANS OR
MORTGAGES TO REAL
ESTATE OWNERS AND
EARNS INCOME ON
INVESTI
NG
IN
REITS
 • Diversification
•
BENEFITS •
Affordability
Lower Liquidity risk

OF •
•
Higher Dividends
Low Chances of Foul Play as they
INVESTIN are regulated by SEBI
• High Yield
G • Transparency and Flexibility

IN REITS • Stable Revenue Stream

 Legal Framework-1/2
• REIT shall be a Trust set up under the Indian Trust Act, 1882 and it must be registered under the SEBI (Real Estate
Investment Trusts), Regulations 2014
• Minimum asset size, to be proposed by REITs, is prescribed as Rs 500 crore and the minimum offer size for initial
offer is prescribed as Rs 250 crore •
• Minimum 200 subscribers required to form a REIT (excluding related parties) • REIT units are mandatorily
required to be listed on recognized stock exchanges in India. Besides, they need to be in dematerialized form.
• Minimum public share in initial offer should not be less than 25% of the number of units of the REIT on post issue
basis.
• Declaration of Net Asset Value (“NAV”) within 15 days from the date of valuation/ updation of valuation of assets.
• Mandatory requirement for a full-fledged valuation of all REIT assets on a yearly basis through a registered valuer.
Semi-annual updating made mandatory.
• All assets should be situated in India.
 Legal Framework-2/2
• REIT Assets to include: -land and any permanently attached improvements to it (whether leasehold or freehold)
including buildings, sheds, garages, fences, fittings, fixtures, warehouses, car parks, etc -Transferable Development
Rights (TDRs) -any other assets incidental to the ownership of real estate
• Assets Not forming a part of REITs -hospitals , hotels, with project cost of more than Rs 200 crore each in any
place in India and of any star rating. 3-star or higher category classified hotels located outside cities with
population of more than 1 million, common infrastructure for industrial parks, Special Economic Zones (SEZs),
tourism facilities and agriculture markets . Mortgages not eligible to be REIT Assets
• REIT shall invest in at least two projects and investment in one project should not exceed 60% of the value of
assets owned by REIT.
• REIT Assets could be held directly by the REIT or via Special Purpose Vehicles (SPVs).
• REIT to hold not less than 50% equity and controlling interest in SPVs .
• SPV to hold 80% equity in REIT Assets .
 INTEREST RATE
SENSITIVITY
1 REITs are vulnerable to rising interest rates, which
affect their borrowing costs and property values.

MARKET RATE SENSITIVITY

They are subject to the volatility and 2
RISK
cyclical nature of the real estate
market.
REGULATORY COMPLIANCE
3
ASSOCIAT Change in laws and regulations can affect
REITS

ED TAX TREATMENT
Tax applicable is that of normal
4
WITH income tax which is higher than
normal dividend tax rate LEVERAGE RISK
REITS applicable on stocks.
5 Arises when investors decides to use borrowed money
to purchase securities which causes additional
expense and increases fund loses,
THANK
YOU