What Are REITs and InvITs? (Meaning, Difference & Examples)
Investors today are no longer limited to traditional options like stocks, mutual funds, or fixed deposits. With the rise of new-age investment vehicles, REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) have become popular choices in India. Both are designed to help investors gain exposure to large-scale real estate and infrastructure projects without directly owning or managing them.
At their core:
REITs pool money from investors to invest in income-generating real estate assets such as office buildings, shopping malls, or commercial complexes.
InvITs, on the other hand, pool funds to invest in infrastructure projects such as highways, power transmission lines, or renewable energy assets.
The main idea behind both structures is to give retail and institutional investors a steady income stream through dividends and an opportunity for capital appreciation, while also making large-scale projects accessible to smaller investors.
In simple terms:
REITs = Real Estate investments (earning from rent and property value).
InvITs = Infrastructure investments (earning from tolls, usage charges, or project revenues).
Both are regulated by SEBI (Securities and Exchange Board of India) to ensure transparency, investor protection, and compliance with rules.
As more investors look for diversification, understanding what REITs and InvITs are — and how they differ — is crucial before deciding where to put your money.
Understanding REITs (Real Estate Investment Trusts)
A Real Estate Investment Trust (REIT) is a company or trust that owns, operates, or finances income-generating real estate. Instead of buying an entire property, investors can purchase units of a REIT, similar to how they buy shares of a company. This allows retail investors to participate in large-scale commercial real estate projects with relatively small amounts of money.
How REITs Work
REITs pool money from multiple investors.
These funds are then used to buy, manage, or lease commercial properties such as offices, IT parks, retail malls, and warehouses.
The income generated (mainly rental income) is distributed to investors as dividends.
In India, SEBI regulations require REITs to distribute at least 90% of their net distributable cash flows to unit holders, ensuring regular income.
Benefits of Investing in REITs
Regular Income – Since REITs are mandated to share most of their income, investors receive a steady stream of dividends.
Diversification – Investors can access a portfolio of premium real estate projects without directly purchasing property.
Liquidity – Unlike physical property, REIT units are listed and traded on stock exchanges, making it easier to buy and sell.
Transparency – REITs are regulated by SEBI, which ensures disclosure of financial and operational data.
Understanding InvITs (Infrastructure Investment Trusts)
An Infrastructure Investment Trust (InvIT) is a financial structure that allows investors to pool money and invest in large-scale infrastructure projects. Instead of directly building or operating highways, power lines, or renewable energy plants, investors can buy units of an InvIT and earn returns from the revenues these projects generate.
How InvITs Work
InvITs raise funds from multiple investors, both retail and institutional.
These funds are invested in completed and revenue-generating infrastructure projects such as toll roads, gas pipelines, power transmission networks, and solar/wind power plants.
The revenue generated (toll fees, usage charges, tariffs, or government-backed payments) is distributed to investors as dividends and interest.
As per SEBI rules, InvITs in India are required to distribute at least 90% of their net distributable cash flows to unit holders, ensuring predictable cash returns.
Benefits of Investing in InvITs
Stable Cash Flow – Since infrastructure projects usually have long-term contracts and steady demand, investors benefit from consistent income.
Diversification Beyond Real Estate – InvITs open the door to sectors like roads, power, and energy, which are otherwise inaccessible to retail investors.
Liquidity – Like REITs, InvIT units are also listed and traded on stock exchanges, offering flexibility compared to traditional infrastructure investments.
Government Support – Infrastructure is a national priority, and InvITs often benefit from policy support, regulatory clarity, and long-term growth opportunities.
Difference Between REITs and InvITs
While both REITs and InvITs are designed to pool investor money and generate regular income, they focus on different types of assets and offer distinct investment opportunities. Understanding the differences helps investors decide which is more suitable for their financial goals.
| Factor | REITs (Real Estate Investment Trusts) | InvITs (Infrastructure Investment Trusts) |
|---|---|---|
| Asset Type | Commercial real estate (offices, malls, IT parks, warehouses) | Infrastructure (highways, toll roads, power grids, pipelines, renewable energy) |
| Income Source | Rental income + appreciation of property value | Toll collections, user charges, tariffs, and long-term project revenues |
| Regulation | SEBI regulated, must distribute ≥90% of net income | SEBI regulated, must distribute ≥90% of net distributable cash flows |
| Investor Returns | Dividends (steady) + capital appreciation over time | Predictable yield (6–8% initially, can rise to 12–14% as debt reduces) |
| Capital Structure | Mostly equity-backed real estate holdings | Typically a mix of ~45% equity and ~55% debt (as seen in NHIT) |
| Risk Level | Linked to occupancy rates, rental demand, and property values | Linked to traffic volumes, operational costs, and policy changes |
| Liquidity | Listed on stock exchanges, relatively higher investor participation | Listed on stock exchanges, liquidity improving with retail participation |
| Minimum Investment | Around ₹10,000 (depending on lot size post SEBI norms) | As low as ₹10,000–₹15,000 for retail investors (post-2021 SEBI reforms) |
| Best Suited For | Investors seeking a mix of income + growth potential | Investors seeking stable, bond-like cash flows over long horizons |
| Examples in India | Embassy REIT, Mindspace REIT, Brookfield REIT | NHIT, IRB InvIT, IndiGrid, PowerGrid InvIT |
Key Differences Explained
Nature of Assets
REITs invest in real estate assets such as office buildings, malls, warehouses, and IT parks.
InvITs invest in infrastructure assets like highways, power transmission lines, pipelines, and renewable energy projects.
Source of Returns
REITs generate income primarily through rental income and appreciation of property values.
InvITs generate returns from tolls, tariffs, usage charges, or government contracts linked to infrastructure usage.
Risk Profile
REITs are relatively less risky since demand for commercial property in prime areas remains strong.
InvITs carry risks related to government policies, regulatory changes, and usage of infrastructure assets (e.g., toll roads depending on traffic volumes).
Liquidity
Both REITs and InvITs are listed on stock exchanges, making them far more liquid than directly owning property or infrastructure.
However, REITs tend to have slightly higher trading volumes due to stronger demand in the real estate sector.
Investor Returns
REIT investors benefit from steady dividends (from rental income) and long-term property value appreciation.
InvIT investors benefit from stable cash flows based on long-term infrastructure contracts, though growth may be slower compared to real estate.
Suitability
REITs are more suited for investors looking for steady income plus growth potential through property appreciation.
InvITs are suitable for investors seeking predictable, bond-like income from infrastructure projects.
NHIT - National Highway Infra Trust
The National Highways Infra Trust (NHIT), sponsored by NHAI, has raised over ₹46,000 crore across
four monetisation rounds and now manages ~2,345 km of toll roads with 20–30 year concessions.
Its capital structure typically involves 45% equity and 55% debt. Based on current cash flow
assumptions, equity investors receive an initial yield of 7%, rising to 12–14% as debt amortises. This
translates to a projected IRR of 11–12%, consistent with other listed InvITs. the structure provides
stable, long-term distributions backed by institutional investors (CPP, OTPP, EPFO, etc.). A public
InvIT (~₹10,000 crore IPO) is being planned to allow retail participation with smaller ticket sizes.
Key features
- Portfolio: 2,345 km, 26 stretches, 41 toll plazas (20–30 yr concessions)
- Cumulative capital raised across 4 rounds: ₹46,000+ crore
- Round-5 (Planned): Targeting ₹12,500 crore for 550 km.
- Investor Base: CPP Investments, Ontario Teachers’ Pension Plan, EPFO, insurers, domestic banks; NHAI retains ~11%.
- Structure: 45% equity / 55% debt.
- Current Dividend Yield: 6%, rising to ~12–14% as debt amortises
- Expected HTM IRR: 12%+ (Subject to purchase price)
- Risks: Traffic volatility, O&M inflation, arbitration exposures, evolving creditor rights
- Rating: AAA (for Debt Issuances)
Public InvIT (Proposed)
For private NHIT investors, a public listing mainly means liquidity and market-driven price
discovery, with potential valuation upside as retail and HNI demand broadens. It also brings
stricter disclosure and governance, though unit prices may face volatility and yield compression.
Overall, it offers more flexibility and transparency than the current private structure.
- Goal: Broaden investor base—particularly retail investors—and increase participation in highway asset monetisation.
- Size: The initial public InvIT IPO is expected to be ₹10,000 crore.
- Advisors appointed: SBI Capital Markets (lead financial adviser) and JSA (legal counsel).
- Minimum Subscription: Retail investors can participate with a ticket size of ₹10,000– ₹15,000 and trading lot of one unit (post-2021 SEBI norms)
Forward Outlook
NHIT forms part of NHAI’s broader monetisation program, with the government targeting ₹3.5 lakh crore from road assets under NMP 2025–30. Strong institutional appetite and policy support suggest continued expansion, with public listing creating a deeper, more liquid market for infrastructure investments.
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