On a year-over-year basis, Embassy Office Parks REIT recorded a 12% increase in net operating income to Rs 2,032 crore in FY 2020-21. Similarly, income increased 10% to Rs 2,360 crore during the same time. Embassy is Asia’s first and largest REIT in terms of area, with assets including eight office parks, two hotels, and a 100 MW solar power plant. It has leased 6.4 MSF(million sq feet) under 135 deals, including the JP Morgan campus. Since listing it has distributed Rs 5,800 cr to unitholders.
On the other hand, Brookfield India REIT’s net operating income increased roughly 4% yearly to around Rs 170 crore in Q2 2021. It also paid out Rs 181.7 crore in dividends. It leases over 1.6 MSF in FY22. The REIT has distributed Rs 690 cr since listing( including Rs 170 cr in Q4).
HDFC Bank leased 2.5 lakh sq ft office space in Mindspace REIT’s business park. The office tower, part of Mindspace business park’s first phase, is currently under development. As on the February report of Q3, the REIT has a net operating income of 371.5 cr. It has achieved Rs 64/ sq ft monthly. The company confirmed distribution of Rs 275 cr during the period.
During FY 2020-21, the India Grid InvIT generated a return of 56% for its unitholders, while the IRB InvIT delivered an even greater return of 83%.ICICI Securities Ltd forecasts, that the three real estate investment trusts in India will deliver dividend yields of 6% to 9% commencing in the financial year 2022 to 2024, as well as capital appreciation of 12% to 18%.
The international economy was volatile in the fiscal year 2020-21, with advanced countries experiencing negative interest rates. REITs and InvITs raised Rs 54,761 crore by taking advantage of this situati
A relatively new concept, REITs officially made their debut in India in 2019. After three years, there are now three (Mindspace REIT, Brookfield REIT, Embassy REIT) REIT funds in India. Institutional and individual investors alike have embraced REITs as a viable investment choice. In India, the market regulator exclusively regulates public-listed REITs registered with the Securities and Exchange Board of India (SEBI), whereas in the United States, private and public non-listed firms are regulated as well.
A Real Estate Investment Trust (REIT) is a corporation that owns, operates, and funds income-producing real estate. REITs are comparable to mutual funds in that they own and run a portfolio of rent-generating commercial buildings. REITs typically provide investors with the opportunity to own high-priced real estate while also allowing them to collect dividend income to grow their wealth over time.
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REITs are supposed to deliver significant dividend income and stable capital appreciation over time.REIT funds in India can use the bond market to raise funds. As a result, rather than relying entirely on debt instruments, more developers will be able to raise funds for their projects through REITs. As a result, investor confidence will improve as developers must now comply with SEBI.
Investing in REIT funds in India provides individuals with risk-adjusted returns while also assisting in generating consistent cash flow. It provides them with a reliable income stream, even when the inflation rate is high.
Because most REITS are exchanged frequently on stock exchanges, investors can diversify their real estate holdings. Small investors will benefit from SEBI’s move to lower the entrance requirements in the REIT funds in India. This will minimize the percentage of REITs set aside for institutional allotment and lower commercial real estate market volatility.
A single share of a REIT fund in India can be purchased for around Rs.300-400 per share. That’s the equivalent of buying a house for a few hundred rupees.
REITs are required by law to transfer 90% of their income to shareholders through dividends and interest income. Even better, the dividends you receive from certain REITs are tax-free more than 90%. However, you should seek the advice of a tax professional.
REITs are obliged to file financial reports that have been audited by specialists, as the SEBI regulates them. It allows investors to obtain information on taxation, ownership, and zoning, making the entire process more open.
There are three listed REITs in the Indian market as of now and some Infrastructure Investment Trusts or InvITs.
1) Embassy REIT (started in 2017)
2) Brookfield REIT (started in 2019)
3) Mindspace REIT (started in 2020)
Traditional health indicators like PE ratio, EPS growth, and margin expansion don’t apply in this case. When analyzing REITs, there are a few things to keep in mind. Let’s take a closer look at each of them.
• Net Distributable Cash Flow: It is an important indicator for determining how much money is remaining to disperse to unit holders. According to SEBI standards, 90% of the SPV’s NDCF must be distributed to the InvIT. The constancy of NDCF is a critical measure to monitor.
• Weighted Average Lease Expiry(WALE): Vacancy is the most dangerous aspect of owning a commercial property. WALE is a program that calculates how long it will take for a property to become unoccupied.
• Loan To Value: This ratio determines how much debt was borrowed with the value of the underlying asset. The lower the leverage, the better, as in any other firm.
You can purchase REIT funds in India through standard trading accounts on the BSE and NSE, the two major exchanges, just like shares. To invest in REITs in India, you’ll need a Demat Account. You can go with Angelbroking, Zerodha, and Upstox to buy REIT funds in India.
Despite REITs in India having a good performance in tough times, fundraising through developing investment vehicles such as REITs and InvITs fell by 59% to Rs 22,145 crore in 2021-22, owing to global uncertainties and stock market volatility. In comparison, in 2020-21, Rs 54,731 crore was raised. According to data from the SEBI, Rs 11,496 crore was raised through these channels in 2019-20.
Finally, individuals should make it a point to learn how their investments will be repaid. For example, they should examine the REIT’s management team and their track record using measures such as funds from operations or financial management rates. To maximize gains, it’s also a good idea to consider a REIT’s Quarter performance, MSF(million sq feet) growth, and existing dividend income before investing.
The REIT funds in India have beaten the Covid slump by ensuring they give value to all stakeholders, including investors, sponsors, trustees, and others. Investors in REITs should also remember that equities assets are best suited for long-term investments, while short- and medium-term gains may be insufficient.
Read the article and pick among Embassy REIT, Brookfield REIT, or Mindspace REIT. All are doing good amid the worldwide volatile capital market .
The highest dividend yield and occupancy rate are seen in Embassy REIT. When compared to the other REITs, Mindspace REIT has the greatest tax-free distribution.
As of now, there are only three REIT funds in India, and all are doing well with almost similar prices.
In this article, you will get three REIT funds of India with their financial health. You can pick anyone as all of them are passed the SEBI scanner and accelerating similarly.
With GDP predictions of 8-8.8%, REIT funds in India are likely to have a faster entry into the market as a result. This will result in a win-win outcome for all parties involved. Occupants will benefit from higher-quality, better-managed properties, and investors will have a wider range of REITs to choose from across asset classes. In addition, the market will be considerably more transparent.
Both REITs and equity shares can be purchased in single units. You can use a share purchasing platform like Upstox, Angel broking, Zerodha to buy REIT funds in India.
Kotak International REIT Fund is India’s only international mutual fund that invests exclusively in international REITs.
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All the information are used for education purpose only. Investing in REITs Fund poses a risk of financial losses. Investors must therefore exercise due caution. InvestoAxis is not liable or responsible for any losses caused as a result of decisions based on the article.