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Types of REITs
Previously we have learned the concept of REITs and how a REIT generates a return for investors. However, the concept of REITs in India is not well developed. There are different types of REITs that we are going to discuss over here.
A. Equity REIT: This is the most popular type of REIT and usually earns income from rents. It generates income by operating and managing commercial properties.
B. Mortgage REIT: Mortgage REITs directly/indirectly lend money to property owners by purchasing/originating mortgages or Mortgage-Backed Securities (MBS) Mortgage REITs also generate income in the form of interest accrued on the money they lend to proprietors.
C. Hybrid REIT: This option allows investors to diversify their portfolio by parking their funds in both mortgage REITs and equity REITs. The income source for hybrids include both rent and interest.
D. Publicly Traded REIT: These are Corporations that list their shares on the stock exchanges such as the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Individual investors and traders can buy shares from the exchange.
E. Private REIT: These types of corporations work as private placements, where a limited set of people invest in the properties managed by that REIT.
Listed REITs in India:
A. Embassy Office Parks: Incorporated in 2012, Bengaluru-based Embassy Office Parks Private Limited is in the business of real estate including renting, selling, buying, and operating leased or self-owned real estate properties. It is a joint venture of the Blackstone Group L.P, a New York City-based largest alternative investment firm in the world. Embassy REIT owns, operates, and invests in rent or income-generating office real estate and related assets in India in accordance with the REIT Regulations. It was the first REIT to list on the Indian exchanges in April 2019.
B. Mindspace REIT: is the second REIT to be listed in India in July 2020 after Embassy Park’s debut in the previous year. Mindspace Business Parks REIT has a quality office portfolio in Mumbai, Hyderabad, Pune, and Chennai with a total leasable area of 30.2 MSF. The business parks in Mumbai include Mindspace Business Park Airoli (E&W), Paradigm Mindspace, Malad, and The Square, Avenue 61, BKC.
C. Brookfield REIT: Brookfield India Real Estate Trust is India's only institutionally managed public commercial real estate company, sponsored by an affiliate of Brookfield Asset Management (BAM), part of Brookfield Group. The Company's portfolio consists of campus-format office parks in prominent metros such as Mumbai, Gurgaon, Noida, & Kolkata.