REITs and InvITs Investing in India for Beginners in 2026

Table of Contents

Introduction

Real estate and infrastructure are among the most reliable long-term wealth-creating asset classes. They generate predictable cash flows, benefit from economic growth, and offer strong inflation protection.

However, direct investment in these assets is difficult for most investors because:

Commercial real estate requires ₹50 lakh to ₹5 crore or more
Infrastructure assets like highways and power grids are inaccessible
Properties are illiquid
Asset management requires expertise

This is where REITs and InvITs come in.

They allow investors to own institutional-grade real estate and infrastructure assets through liquid, exchange-traded instruments with low investment minimums.

Today, REITs and InvITs have become essential portfolio components for income-focused investors. There are other real estate investment options, like Altdrx, if someone is interested in land or residential assets!

What is a REIT?

A Real Estate Investment Trust (REIT) is a SEBI-regulated trust that owns income-generating commercial real estate.

Instead of buying a physical office building, investors buy units of a REIT, which owns multiple office buildings.

The REIT collects rent from tenants and distributes income to investors.

Types of properties owned by REITs

Office parks
IT campuses
Commercial buildings
Shopping malls
Corporate campuses

Key regulatory requirement

REITs must distribute at least:

90% of distributable cash flow to investors

This makes REITs income-focused investment instruments.

What is an InvIT?

An Infrastructure Investment Trust (InvIT) is similar to a REIT but invests in infrastructure assets instead of real estate.

Types of infrastructure owned by InvITs

Power transmission lines
Highways
Renewable energy assets
Telecom towers

InvITs generate income from usage fees and distribute it to investors.

Why REITs and InvITs Exist

REITs and InvITs are often explained from the investor perspective, but they were primarily created to help asset owners unlock capital and improve capital efficiency.

Real estate developers and infrastructure companies typically own mature assets that generate steady income but tie up large amounts of capital. REITs and InvITs allow them to monetize these assets without fully selling or losing operational control.

1. Unlocking capital from mature assets

Commercial real estate and infrastructure assets are highly valuable but illiquid.

By transferring assets into a REIT or InvIT, sponsors can raise capital from public investors.

For example:

A developer owns office parks worth ₹10,000 crore
Transfers them into a REIT
Raises ₹10,000 crore from investors
Uses capital for new developments

This converts illiquid assets into usable capital.

2. Recycling capital to fund growth

REITs and InvITs allow sponsors to recycle capital efficiently.

Typical cycle:

Build asset → Lease asset → Transfer to REIT/InvIT → Raise capital → Build new assets

This accelerates growth without increasing debt.

3. Reducing debt and improving the balance sheet

Developers and infrastructure companies often carry significant debt.

By monetizing assets through REITs or InvITs, they can reduce leverage and strengthen their balance sheets.

This improves financial stability and credit ratings.

4. Retaining ownership while raising capital

Sponsors typically retain partial ownership in the REIT or InvIT.

This allows them to:

Continue earning income
Benefit from future appreciation
Maintain strategic control

For example, sponsors of Embassy REIT and PowerGrid InvIT continue to hold significant stakes.

5. Lower cost of capital compared to traditional funding

REITs and InvITs provide access to public equity capital, which is often cheaper than private equity or high-cost debt.

This reduces overall financing costs and improves long-term profitability.

REITs and InvITs were created to solve major limitations of direct real asset investing.

Why do investors invest in REITS and InvITs?

Problem 1: Large capital requirement

Direct commercial real estate investment typically requires:

₹50 lakh to ₹5 crore

REIT investment can start with:

₹500–₹1,000

Problem 2: Illiquidity

Selling property can take months.

REITs and InvITs can be sold instantly on stock exchanges.

Problem 3: Lack of diversification

Buying one property creates concentration risk.

REITs and InvITs own diversified portfolios.

Problem 4: Operational complexity

Direct ownership requires:

Tenant management
Maintenance
Legal compliance

REITs and InvITs are professionally managed.

Legal Structure of REITs and InvITs

REITs and InvITs operate using a four-layer structure.

Layer 1: Sponsor

The sponsor creates the REIT or InvIT and transfers assets.

Examples

Embassy Group → Embassy REIT
PowerGrid Corporation → PowerGrid InvIT
Brookfield → Brookfield REIT, Altius InvIT

Sponsors usually retain ownership, aligning incentives.

Layer 2: Trust (Listed Entity)

This is the entity listed on NSE or BSE.

Investors buy units of this trust.

Layer 3: SPVs (Special Purpose Vehicles)

SPVs legally own the assets.

Examples

Office buildings
Highways
Transmission lines
Telecom towers

SPVs generate income.

Layer 4: Asset Level

This is where income originates.

Income sources include

Office tenant rent
Transmission charges
Government annuity payments
Telecom tower lease payments

Cash Flow Structure

The income flow works as follows:

Tenant / Utility / Telecom Operator
            ↓
SPV earns income
            ↓
Trust receives income
            ↓
Trust distributes income
            ↓
Investor receives distribution

By regulation, at least 90% of distributable cash flow must be paid to investors.

Taxation of REITs and InvITs

REIT and InvIT distributions consist of multiple components.

Each component is taxed differently.

Understanding this is essential.

Component 1: Interest Income

SPVs borrow money from the trust.

Interest payments are distributed to investors.

Tax treatment

Taxed at a slab rate

Example

Interest received: ₹10,000
Tax slab: 30%
Tax payable: ₹3,000

Net income: ₹7,000

Component 2: Dividend Income

SPVs may distribute dividends.

Tax treatment depends on the SPV tax regime

Maybe tax-free
Or taxed at a slab rate

Most InvIT distributions are taxable.

Component 3: Rental Income (REITs specific)

Rental income is distributed to investors.

Tax treatment

Taxed at the slab rate.

Component 4: Capital Repayment (Return of Capital)

This is the most tax-efficient component.

Key feature

Not taxed immediately.

Instead, reduces purchase cost.

Example

Purchase price: ₹100
Capital repayment received: ₹20

New cost basis: ₹80

Tax is paid only when selling.

Capital Gains Tax

Holding period	Tax rate
Less than 1 year	15%
More than 1 year	10%

Detailed Business Model of Each REIT in India

Embassy Office Parks REIT

reits

Sponsor: Embassy Group, Blackstone
Asset type: Commercial office real estate
Portfolio size: 50+ million sq ft

Locations

Bangalore
Mumbai
Pune
NCR

Major tenants

Microsoft
Google
IBM

Business model

Companies lease office space under long-term contracts.

Revenue flow:

Corporate tenant
      ↓
Pays rent
      ↓
Embassy REIT
      ↓
Investor receives distribution

Risk level

Low

Investor suitability

Income-focused investors seeking stable income.

Mindspace Business Parks REIT

Sponsor: K Raheja Corp
Asset type: Office parks

Locations

Mumbai
Hyderabad
Pune
Chennai

Business model

Office leasing to corporate tenants.

Revenue flow:

Tenant rent → Mindspace REIT → Investor

Risk level

Low

Brookfield India REIT

Sponsor: Brookfield Asset Management

Locations

Gurgaon
Mumbai
Noida
Kolkata

Business model

Commercial office leasing.

Revenue flow:

Corporate tenant → Rent → Brookfield REIT → Investor

Risk level

Low

Nexus Select Trust REIT

Sponsor: Blackstone
Asset type: Retail malls

Business model

Retail stores lease space.

Revenue flow:

Retail store → Rent → Nexus REIT → Investor

Risk level

Moderate

Detailed Business Model of InvITs in India

InvITs generate income from infrastructure assets such as power transmission lines, highways, and telecom towers. These assets typically operate under long-term contracts, making cash flows predictable.

PowerGrid Infrastructure Investment Trust (PGINVIT)

Sponsor: PowerGrid Corporation of India (Government of India)
Sector: Power transmission
Risk level: Very low
Typical yield: 8–10%

Assets owned

Power transmission lines across India.

These lines transport electricity from generators to distribution companies.

Business model

PowerGrid earns revenue by charging transmission fees.

Revenue flow:

Electricity generator / distribution company
                ↓
Pays transmission fee
                ↓
PowerGrid InvIT
                ↓
Investor receives distribution

Key strength

Revenue is regulated and backed by long-term contracts.

Investor relevance

One of the safest InvITs in India.

IndiGrid Infrastructure Trust (INDIGRID)

Sponsor: KKR, Sterlite Power
Sector: Power transmission and renewable infrastructure
Risk level: Low
Typical yield: 9–12%

Assets owned

Power transmission infrastructure across multiple states.

Business model

Revenue comes from electricity transmission charges.

Revenue flow:

Electric utility
       ↓
Transmission fee
       ↓
IndiGrid InvIT
       ↓
Investor receives distribution

Key advantage

Higher yield compared to PowerGrid InvIT.

Cube Highways Trust (CUBEINVIT)

Sponsor: Cube Highways
Sector: Highway infrastructure
Risk level: Moderate
Typical yield: 9–12%

Assets owned

Highways across India.

Revenue sources

Two main sources:

Toll collections
Government annuity payments

Revenue flow:

Vehicles / Government
        ↓
Pays toll or annuity
        ↓
Cube InvIT
        ↓
Investor receives distribution

Indus Infra Trust (INDUSINVIT)

invit

Sponsor: GR Infraprojects
Sector: Highway infrastructure
Risk level: Low
Typical yield: 8–10%

Business model

Operates annuity-based highways.

Revenue flow:

Government
    ↓
Annuity payment
    ↓
Indus InvIT
    ↓
Investor

Key strength

Revenue does not depend on traffic volume.

National Highways Infra Trust (NHIT)

Sponsor: National Highways Authority of India (Government of India)
Sector: Highway infrastructure
Risk level: Very low
Typical yield: 8–10%

Business model

The government pays a fixed annuity.

Revenue flow:

Government → NHIT → Investor

Extremely stable income profile.

IRB Infrastructure InvIT (IRBINVIT)

Sponsor: IRB Infrastructure
Sector: Toll roads
Risk level: Moderate
Typical yield: 10–12%

Business model

Revenue comes from toll collection.

Revenue flow:

Vehicle toll → IRB InvIT → Investor

Risk factor

Revenue depends on traffic volume.

Anantam Highways Trust InvIT

Sponsor: Alpha Alternatives
Sector: Highway annuity infrastructure
Risk level: Low
Typical yield: 8–11%

Business model

Government annuity payments.

Revenue flow:

Government → Anantam InvIT → Investor

Altius Telecom Infrastructure Trust

Sponsor: Brookfield Asset Management
Sector: Telecom infrastructure
Risk level: Low
Typical yield: 8–10%

Assets owned

Telecom towers are leased to telecom operators.

Revenue flow

Telecom operators (Airtel, Jio, Vodafone Idea)
              ↓
Lease payments
              ↓
Altius InvIT
              ↓
Investor receives income

Cube Highways Trust InvIT (CUBEINVIT)

Sponsor: Cube Highways and Infrastructure (backed by global institutional investors)
Listed on: NSE and BSE
Sector: Highway infrastructure
Risk level: Moderate
Typical yield: 9–12%

1. Toll revenue

Vehicles using toll roads pay toll charges.

Revenue flow:

This revenue depends on traffic volume and economic activity.

2. Government annuity income

Some highway projects operate under the Hybrid Annuity Model (HAM).

Under this model, the government pays a fixed annuity regardless of traffic volume.

Revenue flow:

This provides stable and predictable cash flows.

Valuation of REITs and InvITs (How to Determine Fair Value)

Unlike stocks, REITs and InvITs are valued primarily based on income.

The most important valuation metrics are:

Distribution yield
Net Asset Value (NAV)
Price to NAV ratio

Method 1: Distribution Yield (Primary Valuation Metric)

Formula:

Distribution Yield = Annual Distribution ÷ Current Price

Example: PowerGrid InvIT

Price: ₹95
Annual distribution: ₹9.5

Yield:

Yield = 9.5 / 95 = 10%

Compare with government bonds (7%).

Higher yield indicates an attractive valuation.

Method 2: NAV-Based Valuation

NAV represents asset value per unit.

Formula:

NAV = (Asset value − Debt) ÷ Units

If price < NAV → undervalued
If price > NAV → premium

Method 3: Yield Spread vs Government Bonds

Example:

Government bond yield: 7%
InvIT yield: 10%

Spread: 3%

This spread compensates for risk.

Historical Performance of REITs and InvITs in India

Instrument	Yield	Total Return
Embassy REIT	6–7%	11–13%
Mindspace REIT	6–7.5%	10–12%
Brookfield REIT	6–8%	11–14%
IndiGrid InvIT	9–12%	12–15%
PowerGrid InvIT	8–10%	8–10%
Cube InvIT	9–12%	11–14%

InvITs typically provide higher income.

REITs provide slightly better capital appreciation.

REIT vs InvIT Comparison

Feature	REIT	InvIT
Asset type	Real estate	Infrastructure
Yield	5–8%	8–12%
Risk	Low	Low–moderate
Growth potential	Moderate	Moderate
Income stability	High	Very high

Portfolio Allocation Strategy

Recommended allocation:

Beginner investor: 5–10%
Intermediate investor: 10–15%
Income-focused investor: 15–20%

REITs and InvITs are ideal income-generating portfolio components.

Alternative Investment List

Comparative Analysis of all Listed REITS and InvITS

Name	Type	Sector	Key Assets	Portfolio Size / Assets	Revenue Source	Typical Yield	Historical Total Return	Risk Level
Embassy Office Parks REIT	REIT	Office Real Estate	Office parks in Bangalore, Mumbai, Pune, NCR	51+ million sq ft office space	Office rent from tenants like Microsoft, Google	6–7%	11–13%	Low
Mindspace Business Parks REIT	REIT	Office Real Estate	Office parks in Mumbai, Hyderabad, Pune, Chennai	Large Grade-A office portfolio across major cities	Office leasing income	6–7.5%	10–12%	Low
Brookfield India REIT	REIT	Office Real Estate	Office campuses in Gurgaon, Mumbai, Noida	Premium office assets in prime commercial locations	Corporate office leasing	6–8%	11–14%	Low
Nexus Select Trust REIT	REIT	Retail Real Estate	Shopping malls and retail centers	Retail mall portfolio across major urban centers	Retail lease income, revenue share	5–7%	9–12% (early stage)	Moderate
PowerGrid Infrastructure InvIT	InvIT	Power Transmission	Power transmission lines across India	Transmission infrastructure owned and operated nationwide	Regulated transmission fees	8–10%	8–10%	Very Low
IndiGrid Infrastructure Trust	InvIT	Power Transmission	Transmission and renewable infrastructure	Nationwide transmission asset portfolio	Transmission charges, renewable contracts	9–12%	12–15%	Low
Cube Highways Trust InvIT	InvIT	Highways	Toll and annuity road infrastructure	Diversified highway portfolio across India	Toll revenue + government annuity	9–12%	11–14%	Moderate
Indus Infra Trust	InvIT	Highways	Highway infrastructure projects	Highway annuity asset portfolio	Government annuity income	8–10%	9–12%	Low
National Highways Infra Trust (NHIT)	InvIT	Highways	National highway infrastructure	Government highway asset portfolio	Government annuity payments	8–10%	9–11%	Very Low
IRB Infrastructure InvIT	InvIT	Toll Roads	Toll road infrastructure	Toll highways across India	Toll collection income	10–12%	10–14%	Moderate
Anantam Highways Trust	InvIT	Highways	Highway annuity infrastructure	SEBI-registered highway InvIT platform	Government annuity	8–11%	Early stage	Low
Altius Telecom Infrastructure Trust	InvIT	Telecom Infrastructure	Telecom towers across India	Telecom tower infrastructure portfolio	Tower lease income from telecom operators	8–10%	Early stage	Low