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Hyderabad, December 4, 2024: The Indian REITs Association (IRA) and Bharat InvITs Association (BIA) jointly hosted their first product awareness programme in Hyderabad today, aimed at enhancing investor understanding of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). This programme seeks to educate investors, promote the adoption of REITs and InvITs, strengthen the operating and regulatory environment, deepen capital markets, and increase overall investor awareness.
Understanding REITs and InvITs:
Real Estate Investment Trusts (REITs) are vehicles that own or operate income generating real estate, allowing investors to earn a share of income produced without directly buying the properties. The four publicly listed Real Estate Investment Trusts (REITs) in India are Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust.
Similarly, Infrastructure Investment Trusts (InvITs) own, operate, and maintain revenue-generating assets in various infrastructure sectors like roads, transmission, pipelines, telecom, and warehousing. InvITs facilitate democratic ownership of large infrastructure assets providing a safer avenue to investors to participate in the infrastructure growth of the country. Additionally, it frees up capital for developers for reinvestment into newer projects. Currently, out of the 26 SEBI registered InvITs, 4 are publicly listed on the stock exchanges, while 15 are privately listed.
Both REITs and InvITs are regulated by SEBI and play a pivotal role in driving growth in India’s real estate and infrastructure sectors.
Speaking at the event, the Indian REITs Association stated, “REITs are required to distribute at least 90% of their net distributable cash flows to unitholders on a half-yearly basis, ensuring regular income. Investors also stand to benefit from the potential capital appreciation of the units they hold, making REITs an attractive investment instrument. We are excited to engage with stakeholders in Hyderabad, raise awareness about REITs, and look forward to welcoming more unitholders from this key market.”
Speaking at the event, the Bharat InvITs Association stated, “InvITs in India hold significant growth potential, driven by the country’s expanding infrastructure needs and government initiatives to build infrastructure for future growth while attracting private investments. With their ability to provide stable yields and liquidity, InvITs are becoming a preferred vehicle for institutional and retail investors. As infrastructure development accelerates, the scope for InvITs to finance and manage assets efficiently is poised to grow substantially.”
Highlights of Indian REITs:
- REITs are tax-efficient investment vehicles, distributing at least 90% of their net distributable cash flows on a semi-annual basis
- Affordability: Investors can purchase units for as low as ₹100–₹400 per unit
- AUM & Market Cap: Indian REITs manage gross assets worth over ₹1,50,000 crore, with a market capitalization exceeding ₹95,000 crore (as of November 1, 2024)
- Portfolio Scale: Over 125 million square feet (MSF) of Grade A office and retail space across four REITs
- Distributions: Since inception, the four REITs have collectively distributed more than ₹19,000 crore to unitholders
- In H1 FY2024–25, total distributions were ₹2,754 crore, a 14% increase from ₹2,417 crore in H1 FY2023–24
Highlights of Indian InvITs:
- Tax Efficiency: InvITs are tax-efficient investment vehicles, mandatorily required to distribute at least 90% of their net distributable cash flows on a semi-annual basis
- Operational Assets: At least 80% of an InvIT’s portfolio consists of operational revenue generating assets, thus circumventing the risk of under-construction exposure
- Varied Infrastructural Sectors: Provides avenue to investors to gain exposure to varied classes of assets like roads, transmission, generation, telecom, warehousing etc
- AUM & Market Cap.: InvITs manage gross assets worth over ₹ 5,00,000 crore, with a market capitalisation exceeding ₹ 1,60,000 crore (as of September 2024)
- Distributions: Over the past five years, InvITs have achieved a total pre-tax return of 17.1%, highlighting their effectiveness as a strategic tool for asset allocation
With the Government of India’s ambitious National Infrastructure Pipeline and visionary National Monetization Pipeline, InvITs have the potential to achieve an AUM of ₹21 lakh crore by 2030.
