There are various investment instrument that are gaining popularity. InvITs and REITs are two such options. But what exactly are InvITs and REITs? Let’s break it down in simple terms.
What are InvITs?
InvITs stands for Infrastructure Investment Trusts. Imagine you want to build a road, a bridge, or set up a power plant. These are huge projects that require a lot of money. Sometimes, companies don’t have enough money to fund these projects on their own. So, they look for investors who can help them.
This is where InvITs come into play. InvITs are like a group of people coming together to invest their money in big infrastructure projects. When you invest in an InvIT, you become a part-owner of these projects. In return, you get a share of the income generated by these projects.
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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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Here’s a list of registered InvITs compiled from SEBI:
Anzen India Energy Yield Plus Trust
Athaang Infrastructure Trust
Bharat Highways InvIT
Cube Highways Trust
Data Infrastructure Trust
Digital Fibre Infrastructure Trust
Highways Infrastructure Trust
India Grid Trust
India Infrastructure Trust
Indian Highway Concessions Trust
Indinfravit Trust
Intelligent Supply Chain Infrastructure Trust
IRB Infrastructure Trust
IRB InvIT Fund
National Highways Infra Trust
National Infrastructure Trust
NDR InvIT Trust
Nxt-Infra Trust
Oriental Infra Trust
Powergrid Infrastructure Investment Trust
Roadstar Infra Investment Trust
School House InviT
Shrem Invit
Sustainable Energy Infra Trust
Here’s a list of registered REITs from Sebi:
360 One REIT
Brookfield India Real Estate Trust
Embassy Office Parks REIT
Mindspace Business Parks REIT
Nexus Select Trust
