REIT stands for Real Estate Investment Trust
A REIT is a trust that owns, operates or finances income-producing real estate
REITs give all investors access to the benefits of real estate investment with the advantage of investing in publicly traded units
A REIT is a tax-efficient vehicle that enables owners of real estate to pool income generating assets together in a portfolio
It allows investors to buy ownership in real estate assets in the form of equity
REITs globally are a US$2 trillion asset class; first REIT started in the US in the 1960s
REITs are universally accepted by global institutions and individual investors as a product that provides: – Liquidity – Transparency – Diversification – Dividends – Performance
REITs must pay out majority of earnings as distribution to Unitholders
Indian regulations require REITs to pay out 90% of distributable cash flows
REITs must have at least 80% of their assets be completed and income-producing
A low level of development (20% or less) means less risk to the cash flows
REITs are typically listed on stock exchanges through an Initial Public Offering (IPO)
Once listed, they serve as permanent capital vehicles to raise debt and equity in the capital markets to acquire new assets to grow.