REIT History, Returns
Indian REITs and InvITs : The Short History that we have
History and Returns
REITs & InvITs in India
REITs & InvITs: Financialization of Real estate in India
Real Estate Financing in India has traditionally been done by direct investment i.e. by way of own finances in properties. Only in the last 15 years has there been an exponential growth in properties financed by way of debt (home loans, extension loans, loan against property, etc). In a further growing bond between the two markets (realty and capital markets) we shall soon see the inflow of large finances in capital markets directed towards real estate assets since both the capital & realty markets are gaining maturity over time.
The vehicles that are making this possible today are REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). These Regulations were notified on September 26, 2014, and we currently have 3 listed InvITs and 4 listed REITs which have gathered together several thousand crores from the capital markets. Several amendmends have been done to suit the market needs till now. In India, several mutual funds have already incorporated an option to allocate up-to a specified percentage of their corpus to REITs/ InvITs units as per the amended SEBI rules notified in 2017
Returns from REITs & InvITs in India
REITs and InvITs are capable of generating high recurring income as well as capital appreciation for investors. Such investments have stability and investors also receive periodically recurring income (at least twice in a year). Additionally, the value of the units tend to appreciate over time along with the value of its underlying assets. For REITs, the recurring yearly income can be approximately 8 to 10 percent annually (pre-tax) with an additional capital appreciation of 5 percent per annum, on an average.
About Distributions, the payouts from REITs and InvITs
The money paid to unitholders of REITs and InvITs is known as distribution. A normal equity stock holder gets dividend on the equity share held. In the case of owners of REITs and InvITs units, dividend payment is only one category in the total payment made. The total money paid out per unit held is called distribution, and parts of this distibution can be categorized as dividend, interest income, amortization proceeds or return of capital, rental income etc. This categorization has implications on taxation for the moneys received by unitholders. REITs are tax efficient investments and a substantial portion of incomes are tax free (or tax deferred) incomes for investors, depending on this categorization
Distribution history (dividend history) of Embassy Office Park REIT
https://www.embassyofficeparks.com/investors/distribution-history/
Distribution history (dividend history) of Brookfield REIT
https://www.brookfieldindiareit.in/distribution-history
Distribution history (dividend history) of Mindspace REIT
https://www.mindspacereit.com/investor-relations/distribution#ir
Distribution history (dividend history) of Nexus Select Trust
https://www.nexusselecttrust.com/nexus-distrubution-history#Distribution-History
Distribution history (dividend history) of IndiGrid InvIT Trust
https://www.indigrid.co.in/investor/unit-information/
Distribution history (dividend history) of Powergrid / PG InvIT Trust
https://www.pginvit.in/distribution.aspx
For much more information about REITs and InvITs, Download our FREE Resources HERE (Resources contain several files including distribution history formats that may be updated by you and used to calculate returns on own investment)
Why REITs and InvITs are the future of real estate investing in India
You may see in the links below how both REITs in commercial space and InvITs in infrastructure space are set to alter real assets investing, for both retail as well as institutional investors. Niti Ayog, the apex public policy think tank of the Government of India, envisages InvITs as the foremost means for asset monetization in infrastructure sector.
See this article about REITs in financial express: Click to read
See this for InvITs at Niti Ayog site: Click to read