I want to know about REIT

Q: I am a student of Insurance Management. I am working on a project on Property Insurance with specific focus on Risk Management of Civil construction projects.I want know about REIT.
In an article I recently read there was something about banks playing a major role in REIT.The article read

" It is also expected that the banks in India can be a major contributor of assets in REITs. These banks own vast commercial real estate for their offices and branches. These assets can be revalued and swapped into a REIT and the asset can be leased to the banks. This would enable the money raised to flow back to the bank for shoring up their balance sheets, and at the same time be a very stable asset for the investors."

The article also mentioned about Budget 2016 exempting REIT from dividend distribution tax.I want to know how it will benefit the Real Estate sector.

The link to the article is
http://naredco.in/Article-details.asp?id=160&prYear=2016

Devidutta Mohanty,

1st May 2016

Real estate News in Delhi

reits

sebi

spv

ddt exemption

invits

Follow Discussion

Also see discussions for

Delhi Real estate News Real estate News in Delhi

Replies (4)

Thanks everyone for answering my question.Really appreciate !!

Devidutta Mohanty,

21st May 2016

Comment

Hi all!!!
REITs are investment trusts that operate much like MFs except for the fact that they invest in income-generating real estate assets and thereby look to generate return for the investors within the fund. REITs make it possible for even the smaller investors to invest in properties.

Bikram, Mumbai

12th May 2016

Comment

Yes, developer/promoter to hold at least 25% units in the business trust to start with. Prescribed minimum asset size of Rs.1000 crore for REIT and Rs. 500 crore for InvIT.

Compulsory distribution of 90% of post-tax income arising from assets held under REIT/InvIT whereas Minimum investment ticket size of Rs.2 lakh for REIT and Rs.5 lakh for InvIT by an investor.

Rahul Kumar, Delhi

12th May 2016

Comment

Right Rahul,
Since REITs invest in completed projects, revenue generating real estate assets and distribute the major part of the earning among their investors, they will be beneficial not only to the investors but also to the industry as they provide the developer or a private equity (PE) fund an additional avenue to exit thereby providing them the desired liquidity.

Krishnendu, Pune

12th May 2016

Experts believe that the way tax was structured on REITs in India, an additional layer of taxation was being enforced and as a result, no firm was launching the product. They also believe that since the SPV structure has been provided in India, it leads to double taxation.

Pranay Malhotra, Delhi-NCR

12th May 2016

Hi,
Real Estate Investment Trust and Infrastructure Investment Trust (REIT/InvIT) is a structured business trust model making easier entrepreneurs and corporate to monetize their capital locked in assets through issue of units to investors at large.

Rahul Kumar, Delhi

12th May 2016

Comment

Hi Devidutta!!!!
Rahul is partly right. I am giving you here detailed information about the REITs and InvIT. REIT is an investment vehicle that allows both small and large investors to acquire ownership in real estate assets through purchase of units.

Similarly, InvIT is an investment vehicle for owning undivided interest in other classes of assets such as hospitals, hotels, warehouses, shopping malls, roads, ports, etc.

Pranay Malhotra, Delhi-NCR

12th May 2016