Context:
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) have gained traction in India. According to industry bodies Indian REITs Association (IRA) and Bharat InvITs Association (BIA), their combined Assets Under Management (AUM) have crossed ₹9 lakh crore in just nine years.
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in India
To provide alternative investment avenues and deepen capital markets, SEBI introduced Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in India in 2014. These are collective investment vehicles that pool investor money to invest in income-generating real estate or infrastructure assets.
Real Estate Investment Trusts (REITs)
- An investment vehicle that owns and operates income-generating commercial real estate assets (like office buildings, malls, hotels).
- Structure:
- Sponsor: Promoter who sets up the REIT.
- Trustee: Ensures compliance and safeguards investor interests.
- Manager: Manages the assets and operations.
- Regulatory Body: SEBI (REIT Regulations, 2014).
- Minimum Public Offer: At least ₹250 crore issue size, with minimum public float of 25%.
- Unit Listing: Units are listed and traded on stock exchanges, like shares.
Examples in India
- Embassy Office Parks REIT (launched 2019, India’s first REIT)
- Mindspace Business Parks REIT
- Brookfield India Real Estate Trust REIT
What Are SM REITs?
Introduced by the Securities and Exchange Board of India (SEBI) in March 2024 as a sub-category under the broader REIT framework, SM REITs enable investors to pool funds to co-own real estate assets valued between ₹50 crore and ₹500 crore much smaller than traditional REIT thresholds.
Asset Size –> Minimum asset value of ₹500 crore (Regular REITs) || Asset value between ₹50 crore and ₹500 crore (SM REITs (Small & Medium REITs)).
Infrastructure Investment Trusts (InvITs)
- Investment vehicle that owns and operates infrastructure assets like roads, power transmission lines, telecom towers, gas pipelines.
- Structure: Similar to REITs – Sponsor, Trustee, and Investment Manager.
- Regulatory Body: SEBI (InvIT Regulations, 2014).
- Minimum Public Offer: At least ₹250 crore issue size, with minimum public float of 25%.
- Unit Listing: Listed on stock exchanges, providing liquidity.
Examples in India
- IRB InvIT Fund (first InvIT in India, 2017)
- PowerGrid InvIT (launched 2021)
- IndiGrid InvIT (focused on power transmission assets)
