What Is a Real Estate Investment Trust (REIT)?

Kishan Thakkar K

You might have heard about the REIT, if you are in the real estate sector, directly or indirectly. To put it simply, it is similar to mutual funds. The mutual funds provide for a prospect of the investment in equity stocks and the REIT allow an individual to invest in real estate assets.

A real estate investment trust is a collective investment vehicle that manages property portfolios and gives returns to investors. The Securities and Exchange Board of India (SEBI) mandates their listing on exchanges, as well as initial public offerings.

Three Types of REIT

  1. Equity REITs – purchase, own and manage income-generating properties;
  2. Mortgage REITs – provide financing directly or indirectly to property owners;
  3. Hybrid REITs – two of the above elements are combined

How Does a REIT Work?

Investment funds raised from a large number of investors are invested in income-producing properties directly by REITs. A REIT is structured as a trust. Therefore, an independent trustee holds REIT assets on behalf of unitholders. REITs are listed on stock exchanges so investors can purchase units in a trust.

Despite the impact of the COVID pandemic, the REIT sector has continued to grow in India. It has ensured that value is delivered to the entire set of stakeholders, including investors, sponsors, and trustees.

In Summary

Thank you for taking the time to read this. I hope you found it informative and interesting. You should carefully read it before investing. 

Research is a critical step before buying a home. That is where we come into the picture, you can reach out to us at info@roodland.com. Your comments and suggestions are important to us.


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