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What is REIT - Real Estate Investment Trusts

All About REIT – Real Estate Investment Trusts

The most popular investment choice has always been real estate ownership. But there is a limit to how much real estate a regular man can possess – a house, maybe two, a plot of land, a few shops…it already looks excessive! But, thanks to REIT, these limitations are no longer an issue.

 

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Real Estate Investment Trusts, or REITs, are a type of real estate investment trust.

  • These are businesses that own or finance income-producing real estate across a wide range of industries.
  • They are mostly real estate corporations that must meet a set of criteria in order to be classified as REITs.
  • According to SEBI laws, REITs must spend 80% of their assets in established & income-generating assets. Currently, REITs can only engage in commercial real estate and office space.
  • The majorities of REITs is traded on major stock exchanges and provide a variety of incentives to investors.

 

In layman’s words, REITs possess successful real estate properties such as prominent office spaces with consistent rent, retail real estate, healthcare, industrial, and residential properties, and they allow you to invest small amounts and become a fractional owner.

Real Estate Investment Trusts

Does this ring a bell? Yes! Simply said, it works in a similar way as mutual funds, but in a different industry. REITs have real estate holdings as their portfolio, whereas mutual funds have equities as their portfolio. REITs are a relatively new concept in India, but they are gradually gaining popularity. REIT solved the complex problem of the general public being able to own high-value real estate holdings by now providing a medium for fractional ownership. Similar to mutual funds that enable you invest small sums of money into otherwise expensive blue-chip companies.

 

All of the fundamentals of REIT have been explained for you. I hope this clarifies that this new – and seems difficult – concept is actually fairly simple. However, there are a few details to consider, such as REIT taxation, REIT minimum investment, REIT main players, and so on. 

 

Should you put your money into REITs (Real Estate Investment Trusts)?

REIT stands for Real Estate Investment Trusts, as we all know. REITs own successful real estate properties and allow you to become a fractional owner by investing small amounts in them. In our last blog (What is REIT), we gave a brief overview of REITs, and now we’re trying to determine whether or not REITs are a good investment.

REITs are young and have a lot of potential, but that alone isn’t enough to convince you to invest. But let’s take a closer look at it, and you’ll probably find that the sooner you do the better.

The validity of REITs is not a worry because they are controlled by SEBI. The REITs must follow the SEBI requirements, which include strict reporting and disclosure practices. Investors benefit from such transparency.

What is REIT - Real Estate Investment Trusts

REITs pay out a lot of money in dividends. They are obligated to distribute at least 90% of their taxable revenue as dividends to their shareholders, resulting in a large yield for REIT fund owners.

Because REITs are traded in listed units, similar to stocks, they allow ordinary investors to enter and exit at any time. As a result, fractional ownership provides flexibility in traditionally inflexible pathways.

REITs have a lower liquidity risk because they are required to spend at least 80% of their assets in finished revenue-generating projects.

 

REITs give investors the opportunity to profit from their investments.

i) Rental revenue obtained from REIT-owned properties, which could be in the form of dividends or interest income.

ii) Profits derived from capital gains realized on the sale of commercial assets

iii) Financial gains from the secondary market selling of REIT units (read: like capital gains on trading equity shares)

 

An investor might expect a rental yield of 7% to 9% plus capital appreciation of 4% to 5% over a lengthy period of time in REIT investments, resulting in total returns of 12 percent to 14 percent, according to a thorough research.

One of the things a prudent investor would do in a volatile market is to put their money in a safe basket of established & income-producing tangible assets. As a result, we’ve highlighted all of the factors above that may assist you in realizing the many advantages of a REIT investment. What are your REIT investment choices, though? Keep an eye out for the next installment in the REIT series!

 

REITs (Real Estate Investment Trusts) are a type of real estate investment trust that allows you to invest in real estate.

 

In India, REITs (Real Estate Investment Trusts) – your ticket to fractional ownership in profitable real estate inventory – were approved in 2014. Don’t worry if you’re new to REITs. Here are a few resources to help you understand what Real Estate Investment Trusts are and why you should invest in them.

REITs are a rich and relatively new investment option. REIT units list on the stock exchange can be purchase and sold in the same way that equity shares can. In India, there are now three REITs:

What is REIT - Real Estate Investment Trusts

Brookfield India Real Estate Trust REIT – Brookfield India Real Estate Investment Trust (“Brookfield India REIT”) is a real estate trust that is entirely manage by institutional investors. It is sponsor by a subsidiary of Brookfield Asset Management Inc. One of the world’s largest asset management firms, with a presence in 30 countries, 1, 50, 000 people, and assets under management approaching US$600 billion. Five huge campus-style business parks in key gateway cities make up the portfolio. Kensington, Powai, Mumbai; the Candor TechSpace, Sector 21, Gurugram; Candor TechSpace, Sector 62, Noida; the Candor TechSpace, Sector 135, Noida; Candor TechSpace, Rajarhat, Kolkata; and Candor TechSpace, Rajarhat, Kolkata are among our properties. The total area of the combined ‘business vital’ portfolio is 18.6 million square feet, with 13.9 million square feet of completed space, 0.2 million square feet of under construction space, and 4.4 million square feet of future development potential.

 

Embassy Office Parks REIT – Embassy REIT owns and runs a 42.6 million square foot (“msf”) portfolio of eight infrastructure-like office parks & four city-center office buildings in Bengaluru, Mumbai, Pune, and the National Capital Region (“NCR”) in India’s best-performing office markets. Embassy REIT’s portfolio includes 33.6 million square feet of completed operating space. And is home to 201 of the world’s most prestigious organizations, including Cognizant, Flipkart, and JP Morgan. Two operational business hotels, four under construction hotel. As well as a 100MW solar park giving sustainable energy to tenants are among the portfolio’s strategic assets.

 

Mindspace Business Parks REIT – Mindspace REIT owns one of India’s most extensive Grade an office portfolios. They have a well-diversified portfolio of business and IT parks in Mumbai, Hyderabad, Pune, and Chennai, as well as other significant commercial cities.

With all of the What, Why, and How of REITs under your belt. I believe you’re ready to begin your REIT investment adventure and become a fractional owner of high-performing real estate. With the dividend perks and the safety net (courtesy of SEBI), this is truly a once-in-a-lifetime opportunity. And, in some ways, it’s following in the footsteps of our forefathers’ safe investment approach, as its real estate. But with a minor adjustment that has made real estate investment better and much more accessible to the general public. I hope you enjoyed our Real Estate Investment Trust (REIT) series!

 

 

 

 

 

 

 

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