REITs and InvITs Indices

REITs and InvITs Indices

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April 13, 2023

NSE Indices Ltd, a National Stock Exchange (NSE) subsidiary, established India's first-ever REITs and InvITs Indices. The recently launched Index attempts to measure the accomplishments of publicly listed and traded REITs and InvITs on the NSE. Every quarter, the Index will be evaluated and recalibrated. InvITs and Reits are entities of investment that possess infrastructure and revenue-generating real estate assets. Investors seeking consistent income from a diverse portfolio of real estate or infrastructure assets may choose Reits and InvITs.

The Index weights securities based on their free-floats market capitalization, subject to a security cap of 33% each, while the aggregate weight of the top three securities is limited at 72%. The Nifty Reits & InvITs Index's key members are Powergrid Infrastructure Investment, Embassy Office Parks Reit, and others.

REITs

• It is a business that owns, manages, or funds income-producing real estate.

• The majority of them are openly traded like stocks, making them extremely liquid (unlike actual real estate assets).

• Similar to mutual funds, REITs aggregate the capital of many investors.

• Individual investors may now receive dividends from real estate investments without having to acquire, manage, or finance any properties themselves.

InvITs

• These are mutual fund-like organisations that enable infrastructure investments by combining modest quantities of money from a large number of individual investors for direct investment in infrastructure.

• These are established as trusts and registered with SEBI

A REIT and an InvIT are structurally quite similar. They are investment trusts with a trustee, sponsor, and management that pool money from investors. REITs are companies that invest in finished and under-construction real estate developments. They must ensure that at least 80% of the assets are placed in finished and income-producing buildings. InvITs, on the contrary, invest in infrastructural projects such as motorways, roads, power- plants and warehouses, among others. They must make certain that at least 80% of the assets are invested in finished and revenue-generating infrastructure project(s). Additionally, they are not permitted to invest more than 20% of their assets in other authorised investments.

InvITs additionally have to guarantee their investments in below-construction projects, infrastructure-related debt, listed equity shares of firms with more than 80% of their revenue coming from infrastructures securities issued by governments, and instruments in the money market are not in excess of 10% of the InvIT's value.

Source - Business Times & Financial Express