Let’s take an example to understand better. Suppose there’s a company that operates toll roads. They decide to form an InvIT. Now, they invite people like you to invest in this InvIT. When you invest, you become a unit holder of the InvIT. The money collected from investors is used to build new roads or maintain existing ones.

As a unit holder, you receive a portion of the toll collected from these roads as income. This income is distributed to you regularly, just like dividends from stocks. So, by investing in an InvIT, you not only contribute to building important infrastructure but also earn money from it.

What are REITs?

REITs, on the other hand, stands for Real Estate Investment Trusts. Have you ever dreamt of owning an apartment complex or a retail shop? These are valuable properties that can generate a lot of income. But buying them requires huge investment.

This is where REITs come in handy. REITs work similarly to InvITs, but instead of investing in infrastructure projects, they invest in real estate properties. When you invest in a REIT, you become a part-owner of these properties. In return, you receive a share of the rental income generated by these properties.

Let’s say there’s a company that owns several shopping malls. They decide to form a REIT. Now, they invite people like you to invest in this REIT. When you invest, you become a unit holder of the REIT. The money collected from investors is used to buy new properties or maintain existing ones.

As a unit holder, you receive a portion of the rent collected from these properties as income. This income is distributed to you regularly, just like dividends from stocks. So, by investing in a REIT, you not only own a piece of valuable real estate but also earn money from it.

In a jist, InvITs and REITs are investment options that allow you to invest your money in big infrastructure projects and real estate properties, respectively. By investing in these trusts, you become a part-owner of these assets and receive a share of the income they generate. It’s a way to contribute to the development of essential infrastructure and own valuable properties while earning a regular income.

Both InvITs and REITs have witnessed significant growth, despite being introduced relatively recently in India. Although the regulatory framework for these investment vehicles was established in 2014, the first InvIT was registered with the Securities and Exchange Board of India (SEBI) in 2016-17. Since then, the number of registered InvITs and REITs has been steadily increasing.

Currently, there are 24 registered InvITs and 5 REITs in India, collectively holding assets worth over Rs 5.5 lakh crore.

Notably, in FY24, fundraising through InvITs and REITs reached an impressive Rs 17,116 crore, marking a remarkable 14-fold surge compared to the previous year, according to Prime Database.com.

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