REIT (Real Estate Investment Trust)

A REIT is a SEBI-regulated trust that owns and operates income-producing real estate (Grade-A offices, malls, warehouses) and is mandated to distribute ≥90% of net distributable cash flows to unitholders. Listed on NSE/BSE in lot sizes from ₹10,000-₹15,000, REITs give retail investors fractional exposure to institutional real estate.

Worked INR example

Embassy Office Parks REIT trades around ₹385/unit (FY25). Quarterly distribution of ₹5.20 → annual ~₹20.80 = 5.4% yield (mix of dividend, interest, capital-repayment components). On 10,000 units (₹38.5 lakh outlay) you receive ~₹2.08 lakh/year. Plus potential capital appreciation if NAV grows as new office leases close. India has 4 listed REITs as of 2026: Embassy, Mindspace, Brookfield, Nexus Select Trust (retail malls).

When to use

• 5-15% allocation for retirees seeking regular cash flow + inflation-linked rentals
• Diversification away from pure equity-bond mix
• Investors who want commercial real estate exposure without illiquid direct property

SEBI caveat

SEBI REIT Regulations 2014 mandate quarterly distributions, ≥80% in completed properties. Tax treatment is unitholder-level: dividend / interest / amortisation each taxed differently (Sec 115UA). NRIs face TDS at 5% on interest, 10% on dividend.

Related terms: InvIT, AUM, Credit Rating.