Investor FAQs
Please see below for some basic information on what a REIT is, and how you can know more about the structure and the prevalence of the asset class.
REIT stands for Real Estate Investment Trust. A REIT is a tax-efficient vehicle that enables owners of real estate to pool income generating assets together in a portfolio, and allows investors to buy ownership in real estate assets in the form of equity.
No. The first REIT started in the US in the 1960s, and was
designed to allow small investors to participate in the
benefits of owning commercial real estate.
REITs
globally are a US$2 trillion (publicly-listed) asset class.
Please refer to resources section for more information on
REITs around the world.
In fact, listed real estate is
such an integral part of US stock market that the S&P Index
committee moved Real Estate out of financials and into its
own Global Industry Classification Standard (GICS).
REITs exist in a number of different subsectors of the
economy including office, industrial, apartments, hotels,
logistics, shopping centers, malls and data centers, among
others.
REITs are universally accepted by global institutions and
individual investors as a safe and transparent way to play
invest in income producing real estate
Real estate has
always played an important role in a global asset allocation
strategy. REITs enable investors to participate in the
capital appreciation that the real estate has
provided.
REITs are liquid, allow investors to invest and
trade in small amounts, and represent ownership in a real
estate vehicle while leaving the management to
professionals.
REITs are highly governed and transparent. Please refer to
the SEBI REIT regulations under the governance tab for rules
that govern Nexus Select Trust.
In India, the
regulations mandate that REITs have to pay out at least 90%
of net distributable cash flow to unitholders on a
semi-annual basis.
REITs must have at least 80% of their
assets (by value) invested in income-producing assets. A low
level of development (20% or less) means less risk to the
cash flows.
The unitholder does NOT pay dividend
distribution tax on the dividend portion of the
distributions they receive.
Conceptually, REITs are a mix of both. The distributions give
the REITs the regularity of a fixed-income coupon, but an
investor also gets the underlying growth of the business
backing the REIT (much like an equity instrument). This
growth could be through rental growth or through the
macroeconomic drivers leading to higher rates of employment
and hence, demand for Class A Office space.
REITs trade
on equity exchanges like stock. In developed markets, there
are ETFs and Mutual funds that focus entirely on REITs. In
certain markets, the number of listed REITs outweighs that
of Real Estate Operating Companies
Investor Contact
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