REITs – Real Estate Investment Trusts

Introduction

Buying a commercial IT park usually costs Crores. A REIT allows you to invest just ₹300-400 and own a piece of it.

1. What is a REIT?

• It acts like a Mutual Fund.
• Pools money from investors -> Buys rent-yielding commercial properties (Offices, Malls).
• Distributes 90% of the rent collected to unitholders as dividends/interest.

2. Structure

• Trust: The legal entity.
• Sponsor: The developer who sets it up (e.g., Blackstone, Embassy).
• Manager: Manages the properties.
• Unitholders: Investors (You).

3. Benefits for Investor

1. Regular Income: 90% of Net Distributable Cash Flow (NDCF) is compulsory distributed.
2. Liquidity: Traded on Stock Exchange.
3. Low Ticket Size: Minimum 1 unit (approx ₹300).

4. REITs in India

Currently, there are a few listed REITs:

1. Embassy Office Parks REIT (Asia’s first).
2. Mindspace Business Parks REIT.
3. Brookfield India REIT.
4. Nexus Select Trust (Retail REIT).

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Summary

• Concept: Mutual Fund for Real Estate.
• Requirement: 80% assets must be completed & rent-yielding.
• Payout: 90% of income distributed.

Quiz Time! 🎯

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