Home >Markets >Stock Markets >What is REIT or Real Estate Investment Trust?

Mindspace Business Parks REIT launched its initial public offer (IPO) on Monday. The company aims to raise a sum of 4,500 crore through the IPO which will close on July 29. It will be the second REIT to get listed after 'Embassy Office Parks REIT', if it succeeds . Once listed, REITs can be traded on stock exchanges.

REITs were first introduced in India by Securities and Exchange Board of India (SEBI) in 2007. Through a circular issued on 23 April, Sebi reduced the minimum subscription limit for REITs from 2 lakh to 50,000.

REIT or Real Estate Investment Trust is a company that allows investors to invest in the units of portfolio of real estate assets without having to own the physical property itself. It is a pool of investors just like mutual funds, who invest in the real estate as the underlying asset to generate return for investors.

The investor makes money on a yearly basis. REITs are mandated to give investors a certain portion of the money back on a yearly basis. Investors also earn from capital appreciation.

There are three types of REITs: equity REITs which purchase, own and manage income-generating properties; mortgage REITs which lend money directly or indirectly to real estate owners; and hybrid REITs which are a combination of the first two, according to a report by Care Ratings.

REITs allow any investor- small or big to invest in portfolios of real estate assets. The stockholders of a REIT earn a share of the income produced through real estate investment.

'Embassy Office Parks REIT' is the only listed REIT in India.

Embassy Office Parks REIT was trading at 361.50 at 11:20 am on Tuesday. It has a total market cap of 27,896 crore.

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