Real Estate Investment Trust (REITs)

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Context

• REITs can help investors bet on high-value assets

What is 'Real Estate Investment Trust (REITs)'

• REIT or Real Estate Investment Trust refers to an entity created with the sole purpose of channelling investible funds into operating, owning or financing income-producing real estate.
• REITs are modelled on the lines of mutual funds and provide investors with an extremely liquid way to get a stake in real estate. It is a type of security that provides all types of investors, big or small, an outlet for regular income, portfolio diversification, and long-term capital appreciation.
• Like any other security, REITs can enlist themselves on a stock exchange.

Description: 

• REITs are more than 50-years-old and were originally devised in the United States in 1960 under the Cigar Excise Tax Extension Act.
• The first REIT was listed on the New York Stock Exchange in 1965. In the coming decades, similar instruments debuted on European, Japanese, and Australian stock exchanges.
• In India, the Real Estate Investment Trusts were introduced by the Securities and Exchange Board of India (SEBI) in 2007.
• The securities watchdog only released draft regulations which due to certain limitations were later on rejected.
• In September, 2013, SEBI came out with revised regulations for REITs, which were approved on September 26, 2014.
• REITs have many advantages for interested investors. It provides a regular income stream along with reduced portfolio volatility and dividends and wealth accumulation.
• As a result of it being a listed entity, it is bought and sold with ease providing great liquidity.
• It is a natural hedge against inflation as returns have been seen to consistently outpace Consumer Price Inflation.
• There are primarily two types of REITs – equity and mortgage.
• Real Estate Investment Trusts are extremely beneficial for the development of an economy as they allow dormant investable funds to be channelled into infrastructure projects such as apartment complexes, hospitals, schools and the likes.

ALL ABOUT REITs:  https://www.iasgyan.in/daily-current-affairs/real-estate-investment-trusts-reits-and-infrastructure-investment-trusts-invits-index

https://www.iasgyan.in/daily-current-affairs/amendment-to-sebi-reti-regulations-2014