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What is the difference between REIT and InvIT?

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Infrastructure investment trusts (InvIT) are investment trusts designed to pool small sums of money from a number of investors to invest in assets that give cash flow over a period of time. They are similar to REIT but invest in infrastructure projects such as roads or highways which take some time to generate steady cash flows.

Real Estate Investment Trust (REIT) is an investment vehicle that owns & manages investment grade and income-producing real estates properties such as offices, malls, industrial parks, warehouses, hospitality, healthcare centers, and almost any asset that can produce an annuity revenue stream.

REIT Vs InvIT

CriteriaREITInvIT

Income Stability

REITs provide stable income and certain yield as 80% of REIT assets are income generating properties that have long term rental contracts.

InvITs Cash flows are less certain as they are dependent on various factors affecting their daily capacity utilization and scalability of tariffs.

Regulatory/ political risks

REITs are better insulated from regulatory/ political risks. REITs hold land and buildings with on a freehold basis or on lease from a government authority.

InvITs have the concessions given on infrastructure projects which are more prone to regulatory changes and political interference

Property Ownership

REIT's underlying assets see growth in value over time and have high terminal value. REITs own the property leased out whose value grows over time like all real estate classes

InvITs comprise of concessions where the projects are returned to the authority or are rebid post the concession period.

Visibility of Growth

REITs has greater visibility of growth which can be achieved through the redevelopment of existing assets, new construction, and acquisition of completed/ leased assets.

InvITs, growth depends on the successful acquisition of concession assets through a bidding process.

Liquidity

REITs are more accessible to small investors and have higher liquidity due to lower unit price and trading lot.

InvITs has bigger trading lot size and thus poor liquidity.


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