REITs, or Real Estate Investment Trusts, have recently attracted a lot of interest from Indian investors, who have a renowned obsession for real estate. REITs are a type of pooled investment vehicle that owns, operates, and finances real estate assets that generate income.
REITs must invest 80% of their assets in established and income-generating assets, according to Sebi regulations. REITs can currently only invest in commercial real estate and office premises.
They must pay out 90 percent of their rental income in dividends. REITs also earn interest through special purpose vehicles (SPVs), which they use to hold properties. They make loans to SPVs and then distribute the interest to unitholders.
Brookfield India Real Estate Trust REIT
Brookfield India Real Estate Trust REIT is a commercial real estate vehicle established in India. The Company's goal is to offer its unitholders with risk-adjusted total returns. During the quarter ended June 30, 2021, Brookfield India Real Estate Trust recorded a 3.8 percent increase in net operating income to 169.6 crores. It also announced a 181.7 crore payout to unitholders.
Operating lease rental collections remained strong at nearly 99 percent. Operating lease rental income increased by 7.3 percent to 161.6 crores in the April-June quarter, up from 150.7 crores in the previous year's quarter.
During the first quarter of this fiscal year, total revenue was 222.67 crore, with a profit of 73.83 crores, according to the company.
Embassy REIT owns and runs a 42.4 million square foot ("msf") portfolio of eight infrastructure-like office parks and four city-center office buildings.
Embassy REIT, sponsored by Embassy and Blackstone, is Asia's first and largest REIT (by area). The corporation owns and operates 42.4 million square feet of space (million square feet). It has eight office parks, two hotels, and a 100 megawatt solar power facility. Embassy Office Parks REIT reported a 12 percent increase in net operating income to Rs 2032 crore for the fiscal year ended March 2021, compared to the preceding financial year.
India's first listed Real Estate Investment Trust (REIT) and Asia's largest also recorded a 10% growth in revenues for FY2021 to Rs 2,360 crore, up from Rs 2144 crore in FY19-20, according to the company.
K Raheja Corp Group is the sponsor of Mindspace REIT. With a total leasable area of 30.2 msf, it has a solid portfolio of office spaces across Mumbai, Pune, Hyderabad, and Chennai. Mindspace Business Parks REIT, which is sponsored by K Raheja Corp and Blackstone Group, has announced a net operating income of over Rs 358 crore, with a portfolio size of 30.2 million sq ft, up from 29.5 million sq ft.
It has raised Rs 375 crore in market-linked debentures at a rate of 6.65 percent per annum, as well as Rs 75 crore in non-convertible debentures at a rate of 6.69 percent per annum. As of March 31, the REIT's average cost of debt was 7.1 percent.
3 Listed REITs Stocks In India 2021
|Brookfield India Real Estate Trust REIT||267.51||267.34|
|MINDSPACE BUSINESS REIT||290.44||290.00|
How do REITs generate returns for investors?
Any investment should aim to build wealth for investors and/or provide a steady stream of income. REITs provide unitholders with both of these advantages. Investors can get monthly dividends and/or interest payouts, providing consistent income, while also receiving capital gains through the sale of REIT units on stock exchanges.
REITs use their Net Rental Income to pay out dividends and interest. After deducting some important expenses connected to management and maintenance of the facilities, this is the income that a REIT obtains from renting out and leasing Commercial Real Estate.
Because REITs are listed on stock exchanges and traded, the price of individual units fluctuates based on their performance and market demand. A REIT's outstanding performance, like that of Equity Stocks and Mutual Funds, leads to an increase in the price of REIT units, which can then be sold for a profit and deliver Capital Gains to the investor.
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