REITs & InvITs: Investing in Real Estate & Infra

REITs (Real Estate Investment Trusts)

Companies that own or finance income-producing real estate — offices, malls, hotels, warehouses, apartments.

How They Work

• Pool investor capital to buy commercial real estate.
• Legally required to distribute ≥90% of net income as dividends.
• Trade on stock exchanges like regular equity.

Indian REITs

• Embassy Office Parks REIT (first, 2019)
• Mindspace Business Parks REIT
• Brookfield India REIT
• Nexus Select Trust (retail malls)

Metrics That Matter

• Distribution yield (like dividend yield)
• NAV per unit (net asset value)
• Occupancy rate — >90% is healthy
• WALE (weighted average lease expiry) — longer = safer

InvITs (Infrastructure Investment Trusts)

Same structure but for infrastructure — highways, power lines, telecom towers.

Indian InvITs

• India Grid Trust (power transmission)
• PowerGrid InvIT
• IRB InvIT (highways)

Pros

• Regular income (typically 6–8% yield)
• Liquid unlike direct property
• Small ticket size (₹10K–15K entry)
• Diversification within real estate

Cons

• Interest-rate sensitive (bond-like behavior)
• Sector concentration
• Property market cycles

Taxation (India)

• Dividend portion: taxed at slab if company hasn't paid DDT.
• Interest income portion: taxed at slab rate.
• Capital gains: 12.5% (LTCG, >12 months); 20% (STCG).