Definition
REIT
A Real Estate Investment Trust is a SEBI-regulated, listed vehicle that owns income-generating commercial property and passes most of its rental income to unitholders as distributions.
A REIT pools investor money to own and operate rent-earning commercial real estate like offices and malls. It trades on the stock exchange like a share, giving retail investors exposure to large properties without buying them directly.
SEBI rules require REITs to distribute the bulk of their net distributable cash flows to unitholders at regular intervals, making them an income-oriented investment. Distributions can comprise dividend, interest and capital-return components, each taxed differently in the investor's hands.
REIT unit prices fluctuate with markets and interest rates, and returns combine distribution yield plus any price change. They offer liquidity and diversification but are not risk-free.
Related terms
- Fractional OwnershipFractional ownership lets multiple investors collectively own a share of a high-value asset, such as commercial property, splitting cost, income and risk among them.
- InvITAn Infrastructure Investment Trust is a SEBI-regulated vehicle that owns operating infrastructure assets like roads or power lines and distributes their cash flows to unitholders.
- Digital Gold vs SGBDigital gold is online-bought, vault-stored physical gold, while a Sovereign Gold Bond is a government security tracking gold's price that also pays interest; they differ sharply in risk and tax.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.