What are Real Estate Investment Trusts (REITs)?

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The Sebi Board recently approved amendments to the SEBI (Real Estate Investment Trusts) Regulations 2014 (REIT Regulations) to create a new regulatory framework for small and medium REITs.

About Real Estate Investment Trusts (REITs)

  • A REIT is a company that owns and typically operates income-producing real estate or related assets. 
  • They pool money from the investors and invest it in commercial real estate projects.
  • These may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans.
  • Unlike other real estate companies, a REIT does not develop real estate properties to resell them. Instead, a REIT buys and develops properties primarily to operate them as part of its own investment portfolio.
  • REITs provide a way for individual investors to earn a share of the income produced through commercial real estate ownership without actually having to go out and buy commercial real estate.
  • In general, REITs specialize in a specific real estate sector. However, diversified and specialty REITs may hold different types of properties in their portfolios, such as a REIT that consists of both office and retail properties. 
  • Most REITs are publicly traded like stocks, which makes them highly liquid (unlike physical real estate investments). REITs are like shares that are listed on the stock exchange, which means you can buy or sell them anytime on the exchange.

Q1) What is the Securities and Exchange Board of India (SEBI)?

The Securities and Exchange Board of India (SEBI) was founded as the regulating authority for the Indian securities market on April 12, 1992, by the SEBI Act 1992.t was introduced to promote transparency in the Indian investment market.

Source: Small and medium REITs: Sebi launches new framework for fractional ownership of real-estate