REITs offering stable returns to unitholders

Mumbai: NSE’s index services subsidiary, NSE Indices has recently launched India’s first ever Real Estate Investment Trusts (REITs) & Infrastructure Investment Trusts (InvITs) Index - Nifty REITs & InvITs Index.

The Nifty REITs & InvITs index aims to track the performance of REITs and InvITs that are publicly listed and traded (listed and traded or not listed but permitted to trade) on the National Stock Exchange. The weights of securities within the index are based on their free-float market capitalization subject to a security cap of 33 per cent each and aggregate weight of top 3 securities is capped at 72 per cent. The Nifty REITs & InvITs Index has a base date of July 01, 2019, and a base value of 1000. The index will be reviewed and rebalanced on a quarterly basis.

Talking to Bizz Buzz, Vimal Nadar, Head of Research at Colliers India, said, “REITs and InvITs are emerging as strong alternative financial instrument, that are backed by cash generating real estate & infrastructure projects, for retail investors. REITs have ensured stable returns to unitholders, with yields in the range of 6-7 per cent. Consistent returns and success of REITs for office market assets has laid a strong foundation for other asset classes as well.”

The launch of the REITs & InvITs index aims to track the performance of these listed & traded instruments, thereby providing a credible tool for investors to monitor, invest & expand their portfolios. The launch of this index only shows the growing scale, relevance and popularity of REITs & InvITS in the Indian financial market, he said.

A real estate investment trust (REIT) or an infrastructure investment trust (InvIT) is an investment vehicle that owns revenue-generating real estate or infrastructure assets. REITs invest in real estate projects whereas InvITs invest in infrastructure projects with long gestation period. Through REITs & InvITs index, investors get exposure to diversified regular income generating real estate and infrastructure asset.

Mukesh Agarwal, CEO, NSE Indices, said. “REITs and InvITs are recognised as strong alternative financial instruments to raise funds against the cash generating infrastructure and real estate projects. For investors, these instruments provide exposure to real estate or infrastructure assets and offer diversification of risk from regular asset classes like equity, debt and gold and generate regular income.”

The launch of the Nifty REITs & InvITs Index - India’s first ever REITs & InvITs Index aligns with NSE’s vision to provide market representative benchmarks for different asset classes.

The Nifty REITs & InvITs Index will track the performance of publicly listed REITs & InvITs and act as a benchmark for active funds.