Real Estate Investment Trust (REIT)

What is a REIT?

Real Estate Investment Trust is a mutual fund that focuses on investment in properties and real estate and derives income from such investments for its unit holders.

A REIT Management Company (RMC) identifies a project and raises public money through an Initial public offering (IPO). The RMC then buys a property (in case of Rental REIT Scheme) and rents it out. The rent is then distributed to the unit holders (The shareholders of REIT Scheme are known as unit holders).

In case of a developmental or Hybrid REIT Scheme, an RMC identifies the project, raises public money through IPO, constructs and then either sells the project or rents it out. The money received due to sale or rent is distributed among the unit holders.

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