Key Difference REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts)

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Key Difference REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts)REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts)


REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) are investment vehicles that allow investors to invest in real estate and infrastructure assets, respectively, without directly owning the underlying properties. Both offer a way to diversify investments and potentially generate income, but they differ in the types of assets they hold and the income streams they generate. 


REITs (Real Estate Investment Trusts): 
  • Focus: Invest in income-generating real estate properties like malls, offices, and warehouses. 
  • Income Source: Primarily rental income from tenants. 
  • Distribution: Typically distribute a large portion of their income (e.g., 90% in India) to investors as dividends. 
  • Regulation: Listed on stock exchanges and regulated by SEBI (Securities and Exchange Board of India). 
  • Examples: Embassy Office Parks REIT, Mindspace Business Parks REIT. 
  • InvITs (Infrastructure Investment Trusts): 
  • Focus: Invest in infrastructure assets like toll roads, power plants, and pipelines. 
  • Income Source: Primarily from toll collections, power tariffs, or other operational revenue. 
  • Distribution: Distribute a significant portion of their net cash flow to investors. 
  • Regulation: Listed on stock exchanges and regulated by SEBI.
  • Examples: IRB InvIT, PowerGrid Infrastructure Investment Trust. 
  • Key Differences: 
  • Assets: REITs invest in real estate, while InvITs invest in infrastructure. 
  • Income Stability: REITs generally offer more stable income due to rental contracts, while InvITs income can be affected by factors like capacity utilisation. 
  • Risk: Both carry market-linked risks, but REITs may be more susceptible to real estate market fluctuations.
  • In essence, REITs provide exposure to the real estate market, while InvITs offer a way to participate in the infrastructure development

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