Real Estate Investment Trust (REIT)
What is Real Estate Investment Trust (REIT)?
Ans: REIT or Real Estate Investment Trust alludes to an element made with the sole reason for diverting investable assets into working, possessing or financing income generating real estate. REITs are demonstrated on the lines of mutual funds and give investors a liquid approach to get a stake in real estate. It is a sort of security that gives a wide range of investors, large or small, an outlet for regular income, portfolio expansion, and long term capital appreciation. Like some other security, REITs can enroll themselves on a stock trade.
History: REITs are over 50-years of age and were initially formulated in the United States in 1960 under the Cigar Excise Tax Extension Act. The principal REIT was recorded on the New York Stock Exchange in 1965. In the coming decades, comparative instruments appeared on European, Japanese, and Australian stock trades.
In India, the Real Estate Investment Trusts were presented by the Securities and Exchange Board of India (Sebi) in 2007. The protection guard dog just delivered draft guidelines which because of specific limitations were later dismissed. In September, 2013, Sebi came out with revised guidelines for REITs, which were affirmed on September 26, 2014.
REITs have numerous focal points for interested investors. It furnishes a regular income stream alongside decreased portfolio unpredictability and dividends and wealth accumulation. Because of it being a listed entity, it is purchased and sold easily giving extraordinary liquidity. It is a characteristic fence against inflation as returns have been seen to reliably outpace Consumer Price Inflation.
There are fundamentally two kinds of REITs – equity and home loan. Real Estate Investment Trusts are very valuable for the development of an economy as they permit dormant investable assets to be diverted into infrastructure projects, for example, apartment complexes, hospitals, schools and the preferences.