EXECUTIVE SUMMARY

This comprehensive report provides an in-depth analysis of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in the Indian market as of November 2025. India’s REIT and InvIT market has evolved significantly since the first REIT listing in April 2019, emerging as the fourth-largest REIT market in Asia with combined assets under management exceeding ₹9.25 lakh crore (approximately $111 billion USD).

Key Analysis Highlights (November 2025): – 5 Listed REITs with combined market capitalization of ~₹1.6 lakh crore – 24 Listed InvITs managing substantial infrastructure assets – REIT Market Projection: Expected to reach ₹19.7 lakh crore by 2030 (from ₹10.4 lakh crore in 2025) – InvIT Market Projection: Expected to reach ₹21 lakh crore by 2030 (from ₹6.3 lakh crore in 2025) – Recent Regulatory Boost: SEBI announced plans to include REITs in market indices through a phased “glide path” approach – Average Historical Returns: REITs and InvITs have delivered 11% p.a. since inception (2019)

1. What is a REIT?

Real Estate Investment Trust (REIT) is a company or trust that owns, operates, or finances income-producing real estate. REITs provide investors with an opportunity to invest in large-scale, income-generating real estate without having to buy, manage, or finance properties directly.

Key Characteristics: – Pool capital from multiple investors to invest in commercial real estate – Must distribute at least 90% of taxable income to unitholders – Provide regular income through dividends (typically quarterly) – Listed and traded on stock exchanges like regular equity shares – Offer liquidity unlike direct real estate investments – Professional management of real estate portfolio – Regulated by SEBI in India

Types of Real Estate: – Office Parks (e.g., IT parks, business centers) – Retail Malls (shopping centers, retail complexes) – Warehousing (logistics facilities, distribution centers) – Data Centers (emerging asset class) – Hospitality (hotels – allowed but not yet prevalent in India)

2. What is an InvIT?

Infrastructure Investment Trust (InvIT) is similar to a REIT but specifically focuses on infrastructure assets. It is a collective investment scheme that enables direct investment in infrastructure projects to earn income and capital appreciation.

Key Characteristics: – Own, operate, and maintain infrastructure assets – Must distribute at least 90% of net distributable cash flows – Typically generate revenue through long-term contracts – More stable and predictable cash flows than REITs – Lower volatility due to regulated/contracted revenue models – Listed on stock exchanges (publicly traded) or unlisted (private)

Types of Infrastructure: – Power Transmission (transmission lines, substations) – Roads (toll roads, highways – BOT, HAM models) – Telecom Infrastructure (towers, fiber networks) – Renewable Energy (solar parks, wind farms) – Gas Pipelines – Airports and Ports (potential future inclusions)

3. Key Differences Between REITs and InvITs

4. REIT/InvIT Structure – How They Work

Key Parties Explained:

Sponsor: The original owner who transfers assets to the trust. Typically retains 15-25% stake post-listing. Examples: Blackstone (Embassy, Nexus), K Raheja Corp (Mindspace), PowerGrid Corporation (PowerGrid InvIT).

Trustee: Independent party (usually a trust company) that ensures compliance with SEBI regulations and protects unitholder interests. Acts as a fiduciary.

Investment Manager: Manages the REIT/InvIT’s strategy, acquisitions, financing, and overall portfolio. Makes key decisions on asset allocation and capital deployment.

Project Manager: Handles operational aspects – tenant relationships (REITs), maintenance, rent collection, or infrastructure operations (InvITs).

Valuers: Independent valuation firms that assess asset values annually to determine Net Asset Value (NAV).

Auditors: Conduct financial audits and ensure transparency in reporting.

1. Global REIT Market

Historical Development: – 1960: First REIT launched in the United States – Current Global Market: Over 1,000 listed REITs valued at $2+ trillion – Geographic Spread: 40+ countries with REIT structures – Market Contribution: REITs contribute over 60% of the global real estate market

Major REIT Markets:

Global REIT Characteristics: – Average dividend yields: 3-6% – Typical distribution frequency: Quarterly or semi-annual – Tax efficiency: Pass-through structure in most jurisdictions – Institutional ownership: 60-80% in mature markets – Sector diversity: Office, retail, residential, industrial, healthcare, data centers

2. Evolution of Indian REITs and InvITs

Timeline:

2007-2014: Groundwork – 2007: Initial REIT regulations proposed but not implemented – 2014: SEBI formally introduces REIT and InvIT Regulations

2017-2019: First Movers – June 2017: IndiGrid becomes India’s first listed InvIT – May 2017: IRB InvIT lists (road infrastructure) – April 2019: Embassy Office Parks REIT becomes India’s first listed REIT

2020-2021: Expansion – August 2020: Mindspace Business Parks REIT lists – February 2021: Brookfield India Real Estate Trust lists – May 2021: PowerGrid InvIT lists (first PSU InvIT)

2022-2024: Maturation – March 2024: Indus Infrastructure Trust lists (HAM roads) – Multiple InvITs in power transmission sector – Growing institutional participation

2025: Acceleration – August 2025: Knowledge Realty Trust becomes 5th listed REIT – October 2025: Anantam Highways InvIT lists (newest entrant) – September 2025: SEBI announces major regulatory reforms – November 2025: SEBI Chairman announces index inclusion plans – Current Status: 5 REITs, 24 InvITs with combined AUM of ₹9.25 lakh crore

3. Why REITs/InvITs Are Critical for India

Infrastructure Funding Gap: India requires nearly ₹700 lakh crore in infrastructure investment by 2047 according to the National Bank for Financing Infrastructure and Development (NaBFiD). This includes: – Power generation and transmission – Urban mobility projects – Core transport systems (roads, railways, airports) – Digital infrastructure – Water and sanitation

Benefits of REITs/InvITs:

Asset Monetization: Allows developers to unlock capital from completed assets

Recycling of Capital: Freed capital can be deployed in new projects

Retail Participation: Democratizes access to institutional-grade assets

Stable Returns: Provides predictable income streams for investors

Professional Management: Institutional-quality oversight and governance

Transparency: Regular disclosures and regulated structure

Liquidity: Exchange-traded unlike direct real estate

Portfolio Diversification: Low correlation with equities (0.23 with Nifty 50)

Challenges: – Low retail participation (currently just 1%) – Limited liquidity compared to equities – Complexity in understanding structure – Minimum investment amounts were initially high (now reduced to single units) – Awareness and education gaps

1. SEBI Regulations

Eligibility Criteria for REITs: – Minimum asset size: ₹500 crore – Must have at least 80% assets in completed, income-generating properties – Remaining 20% can be in under-construction properties or other permitted investments – Must be listed on recognized stock exchanges – Minimum public float: 25% – Minimum lot size: 1 unit (retail-friendly)

Eligibility Criteria for InvITs: – Minimum asset size: ₹500 crore – Assets must be operational and revenue-generating – Project completion certificate required – Long-term contracts (typically 10-30 years) – Types: Publicly offered (listed) or privately placed (unlisted)

Distribution Requirements: – REITs: Must distribute at least 90% of net distributable cash flows – InvITs: Must distribute at least 90% of net distributable cash flows – Frequency: At least twice a year (semi-annually), though most distribute quarterly

Leverage Limits: – Maximum borrowing: 49% of asset value (can be increased to 70% with credit rating approval) – Conservative leverage requirement to protect unitholders

2. Recent Regulatory Reforms (September-November 2025)

Major Announcements by SEBI:

• 1. Reclassification of REITs as Equity: – REITs now classified as “equity instruments” for mutual fund categorization – InvITs remain classified as “hybrid instruments” – Allows mutual funds to allocate larger pools to REITs within equity limits – Expected to increase institutional participation
• 2. Expansion of Strategic Investor Definition: – Now includes all Qualified Institutional Buyers (QIBs) – Can invest 5-25% of offer size with preferential allocation – Subject to 180-day lock-in period – Excludes individuals, corporate bodies, and family offices
• 3. Index Inclusion Plans: – SEBI working on “glide path” to include REITs in major market indices (Nifty, Sensex) – Expected to significantly improve liquidity and visibility – Will attract passive fund flows – Timeline: Phased implementation expected over 2026-2027
• 4. Expansion of Permitted Mutual Fund Investments: – SEBI examining expansion of liquid MF schemes that can invest in REITs/InvITs – Will strengthen market depth
• 5. Private InvITs Greenfield Investment: – Exploring whether private InvITs can invest in greenfield (under-construction) projects – Currently limited to operational assets

Impact of Reforms: – Market cap of 5 REITs crossed ₹1.6 lakh crore (November 2025) – Improved trading volumes – Institutional interest increasing – Retail participation still at 1% but expected to grow

1. Complete Universe – Listed REITs and InvITs

TABLE 1: Complete Universe – Key Metrics Snapshot

REITs Overview (5 Listed REITs)

InvITs Overview (24 Listed – 8 Major Covered)

Combined Market Capitalization (REITs + InvITs): ₹1,78,600 crore (~$21.4 billion USD)

LISTED REITs (5 Total):

LISTED InvITs (24 Total – Key Ones):

Market Aggregates (November 2025): – Total REITs Market Cap: ₹1.6 lakh crore ($19+ billion) – Total InvITs Market Cap: ₹40,000+ crore ($5+ billion publicly traded) – Combined AUM (All REITs + InvITs): ₹9.25 lakh crore – Total Unitholders: 2+ lakh investors – Cumulative Distributions Since 2019: ₹20,000+ crore

2. Market Trends and Themes

Growth Drivers:

Strong Fundamentals:

Office occupancy rates: 84-94% (healthy demand)

Retail recovery: 95%+ occupancy in quality malls

Infrastructure pipeline: Government’s Gati Shakti and NIP programs

Regulatory Tailwinds:

Index inclusion plans (2026-2027)

Reclassification as equity (REITs)

Mutual fund investment expansion

Reduced entry barriers (single unit lots)

Yield Premium:

REITs: 5.5-6.5% vs. 10-year G-sec at ~7% (with appreciation potential)

InvITs: 8-12.3% vs. fixed deposits at 6-7%

Attractive risk-adjusted returns

Stable Performance:

REITs delivered 11% p.a. since 2019

Low correlation with equities (0.23 correlation coefficient)

33% less volatile than Nifty 50

Challenges:

Limited Retail Participation: Only 1% of investor base

Awareness Gap: Complex structures, lack of education

Liquidity: Lower than blue-chip equities

Economic Sensitivity (REITs): Vulnerable to economic downturns affecting corporate leasing

High Entry Point: Despite single-unit lots, absolute amounts still substantial

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1. Embassy Office Parks REIT

Overview: – India’s First and Largest REIT – Listed: April 1, 2019 – Market Cap: ₹40,000 crore (as of Nov 2025) – Sponsor: Embassy Group + Blackstone

Portfolio: – Total Area: 50.8+ million sq ft – Completed: 40.9 msf – Under Construction: 7.2 msf (42% pre-leased) – Future Development: 2.8 msf – Assets: 14 office parks + office buildings – Geographic Presence: Bangalore (52%), Mumbai, Pune, Noida, Chennai – Tenant Base: 274+ tenants – Occupancy: 90% by area, 93% by value (as of Q2 FY26)

Financial Performance (Q2 FY26): – Revenue: ₹1,124 Cr (up 13% YoY) – NOI: ₹927 Cr (up 15% YoY) – NOI Margin: 82.5% – Net Profit: ₹232 Cr – Distribution: ₹617 Cr (₹6.51 per unit) – Dividend Yield: 5.53%

Key Metrics: – P/NAV: 0.93x (discount to NAV) – NAV per Unit: ₹445.91 – LTV (Loan-to-Value): 31% (conservative) – WALE (Weighted Average Lease Expiry): 8.5 years – Cost of Debt: 7.35% – Interest Coverage: 2.5x (excluding capitalized interest)

Tenant Concentration: – Tech Sector: 55% – BFSI: 20% – Professional Services: 15% – Others: 10% – Top Tenant: ~8-10% – Top 5 Tenants: ~30%

Strengths: ✓ Largest scale and deepest track record ✓ Best-in-class properties in prime locations ✓ Strong sponsor (Blackstone – global real estate leader) ✓ Proven acquisition capability (₹9,300+ Cr deployed post-IPO) ✓ Excellent governance and transparency ✓ Highest liquidity among all REITs ✓ Trading below NAV – discount for quality REIT

Weaknesses: ⚠ Bangalore concentration (52% of portfolio) ⚠ Tech sector exposure (55% – cyclical risk) ⚠ Lower interest coverage (2.5x) vs some peers

2. Mindspace Business Parks REIT

Overview: – One of the Best Performing REITs Since Listing – Listed: August 7, 2020 – Market Cap: ₹28,000 crore (as of Nov 2025) – Sponsor: K Raheja Corp

Portfolio: – Total Area: 38.2 million sq ft – Completed: 31.0 msf – Under Construction: 3.7 msf (with 42% pre-leased) – Future Development: 3.5 msf – Assets: 5 integrated business parks + several office buildings – Geographic Presence: Mumbai/Pune (38%), Hyderabad (45%), Chennai (3%) – Tenant Base: 270+ tenants (excellent diversification) – Occupancy: 93.8% committed (highest among office REITs)

Financial Performance (Q2 FY26): – Revenue: ₹772 Cr (up 19% YoY) – NOI: ₹634 Cr (up 26% YoY – outstanding) – NOI Margin: 82.1% – Net Profit: ₹116.5 Cr – Distribution: ₹355 Cr (₹5.83 per unit) – Dividend Yield: 5.41%

Key Metrics: – P/NAV: 0.88x (based on ₹428 price / ₹483.7 NAV per unit) – NAV per Unit: ₹483.7 (as of Sep 2025) – LTV: 24.2% (lowest among office REITs) – Total Debt: ₹11,273 Cr (₹112.73 Bn) – Net Debt: ₹9,916 Cr (₹99.16 Bn) – GAV: ₹41,020 Cr (₹410.2 Bn) – WALE: 7.4 years – Cost of Debt: 7.52% p.a.p.m. – Interest Coverage: 3.1x – Debt/Equity: 0.79x (₹11,273 Cr debt / ₹14,332 Cr equity)

Tenant Concentration: – Tech Sector: 37.2% – BFSI: 15.7% – Telecom & Media: 9.9% – Professional Services: 6.2% – Others: 31% – Top Tenant: ~6.8% (best diversification) – Top 10 Tenants: ~34%

Strengths: ✓ Best 5-year returns: 16.1% CAGR since listing ✓ Strongest balance sheet (24.2% LTV – lowest among office REITs) ✓ Highest occupancy (93.8% committed) ✓ Best geographic diversification across 4 markets ✓ 270+ tenants (lowest concentration risk) ✓ Consistent execution and operational excellence ✓ 26% NOI growth YoY (Q2 FY26) ✓ Trading below NAV

Weaknesses: ⚠ Smaller sponsor pipeline vs. Embassy/Brookfield ⚠ Elevated interest costs (56% increase YoY to ₹203.6 Cr in Q2) ⚠ Higher leverage than appears – Debt/Equity of 0.79x

3. Brookfield India Real Estate Trust

Overview: – Highest Dividend Yield Among REITs – Listed: February 2021 – Market Cap: ₹21,000 crore (as of Nov 2025) – Sponsor: Brookfield Asset Management (Global PE giant)

Portfolio: – Total Area: 24.6 million sq ft (operating area) – Total with development: 29.1 msf – Under Construction: 4.5 msf – Assets: Multiple office parks across gateway cities – Sponsor Pipeline: 26 msf additional (largest pipeline) – Geographic Presence: Gurugram (33%), Mumbai (28%), Noida (19%), Delhi (11%), Kolkata (6%), Ludhiana (3%) – Tenant Base: 254+ tenants – Occupancy: 90% committed

Financial Performance (Q2 FY26): – Revenue: ₹671 Cr – NOI: ₹509 Cr (13% YoY growth) – NOI Margin: ~76% – Distribution: ₹336 Cr (₹5.25 per unit) – Dividend Yield: 6.5% (highest among REITs)

Key Metrics: – P/NAV: 1.40x (based on ₹350 price / ₹250 NAV) – NAV per Unit: ₹349 (as of Sep 2025) – LTV: 21.6% (excluding shareholder instruments) – Total Bank Borrowings: ₹79.9 Bn (₹7,990 Cr) – Total Shareholder Debt/NCD: ₹50.1 Bn (₹5,010 Cr) – Combined Gross Debt: ₹130 Bn (₹13,000 Cr) – GAV: ₹39,600 Cr (₹396 Bn) – WALE: 6.6 years – Cost of Debt: 7.5% average – Interest Coverage: Data shows healthy coverage – Net Equity: ₹16,631 Cr (₹166.31 Bn)

Tenant Concentration: – Tech Sector: 27% – BFSI: 19% – Consulting: 12% – Telecom: 6% – Others: 36% – Top 10 Tenants: ~34%

Strengths: ✓ Highest dividend yield (6.5%) ✓ Massive sponsor pipeline (26 msf) – largest among all REITs ✓ Global institutional sponsor (Brookfield) ✓ Recent acquisition activity ✓ Strong presence across gateway cities ✓ ROFO (Right of First Offer) on sponsor assets ✓ Lower actual leverage – 21.6% LTV is conservative

Weaknesses: ⚠ Still elevated total debt when including shareholder instruments (₹13,000 Cr) ⚠ Occupancy at 90% – below Mindspace/Embassy ⚠ Higher cost of capital for expansion ⚠ Premium valuation (1.40x NAV) despite lower occupancy

4. Nexus Select Trust

Overview: – India’s First and Only Retail REIT – Listed: April 2023 – Market Cap: ₹15,000 crore (as of Nov 2025) – Sponsor: Blackstone

Portfolio: – Total Area: ~11 million sq ft of retail space – Assets: 17 shopping malls – Geographic Presence: 14 cities across India (best diversification) – Tenant Base: 500+ retailers (highest count) – Occupancy: 95%+ (highest overall)

Financial Performance: – Revenue: ~₹631 Cr quarterly – NOI: ~₹429 Cr – NOI Margin: ~68% – Distribution: ₹338 Cr quarterly – Dividend Yield: ~5.5%

Key Metrics: – P/NAV: 1.05x (smallest premium) – NAV per Unit: ₹155 – LTV: 14% (lowest across all REITs/InvITs) – Average Lease Duration: 3-5 years (shorter than office) – Interest Coverage: 7.5x

Tenant Concentration: – Retail/F&B: 80% – Entertainment: 10% – Services: 10% – Highly diversified with 500+ tenants – Average tenant size: 2,500 sq ft

Strengths: ✓ Unique exposure to retail sector (diversification from office REITs) ✓ Trading at 1.05x NAV – only 5% premium ✓ Lowest leverage (14% LTV) ✓ Highest occupancy (95%+) ✓ Best geographic diversification (14 cities) ✓ Blackstone sponsorship ✓ Asset quality: Premium malls in Tier-1/Tier-2 cities

Weaknesses: ⚠ E-commerce disruption risk (long-term structural threat) ⚠ Smaller scale vs. office REITs ⚠ Retail sector cyclicality ⚠ Shorter lease tenure (3-5 years vs. 5-7 for offices) ⚠ Lower revenue growth (5% 5-year CAGR vs. 10-15% for office)

5. Knowledge Realty Trust

Overview: – 5th Listed REIT in India – Listed: August 18, 2025 (newest) – Market Cap: ~₹3,000 crore – Sponsor: Witty Group

Portfolio: – Focus on smaller office assets – Limited information available (newly listed)

Status: TOO NEW – Insufficient data for comprehensive analysis

6. REIT Sector Summary and Rankings

TABLE 2: REITs – Financial Performance (Q2 FY26)

Income Statement Metrics

Distribution Analysis

Key Insights: – Mindspace shows strongest revenue growth (19% YoY) – All REITs maintain high payout ratios (92-100%) – Embassy has highest absolute NOI (₹927 Cr) reflecting scale – Mindspace and Embassy have best NOI margins (~82%)

TABLE 4: REITs – Core Operating Metrics

Portfolio & Occupancy Analysis

Tenant Diversification

Key Observations: – Mindspace leads committed occupancy at 93.8% – Nexus has highest occupancy at 95% (retail model advantage) – Nexus has best tenant diversification (500+ retailers vs. 254-274 corporate tenants) – Office REITs vary in tech concentration (27-55%)

TABLE 5: REITs – Profitability & Efficiency Ratios

Margin Analysis

Efficiency Metrics

Key Insights: – Office REITs (Embassy, Mindspace) have best NOI margins (~82%) – Mindspace shows strongest same-store NOI growth (+10.5%) – Embassy and Brookfield command highest rents (₹98 psf/month) – Nexus has highest revenue per sq ft (retail premium) but higher operating costs

TABLE 6: REITs – Funds From Operations (FFO/AFFO)

Cash Flow Analysis

Distribution Coverage

Key Observations: – All REITs maintain healthy distribution coverage (1.00x-1.18x on AFFO basis) – Embassy and Mindspace have strongest FFO coverage (1.18x) – Capex requirements vary by asset type (retail higher at 18.4% for Nexus) – Growth capex significant for office REITs (under-construction pipeline)

TABLE 7: REITs – Leverage & Coverage Ratios

Debt Structure Analysis

Coverage Ratios

Debt Maturity Profile

Key Leverage Insights: – Nexus has lowest leverage: 14% LTV, 0.16x D/E, 7.5x interest coverage – Brookfield has lowest LTV among office REITs: 21.6% – Mindspace has moderate leverage: 24.2% LTV but 0.79x D/E shows meaningful debt – Embassy has highest leverage: 31% LTV but still conservative with 0.49x D/E – All maintain AAA credit ratings – Brookfield has longest debt maturity (10.5 years average)

TABLE 17: REITs – Comparative Quality Assessment

Overall Quality Rating (Star-Based)

Quality Assessment Commentary:

Mindspace REIT – Highest Overall Quality (5/5 stars): – Strongest balance sheet (24.2% LTV) – Highest occupancy (93.8%) – Best operational execution – Excellent tenant diversification – Trading below NAV (0.88x)

Embassy REIT – Excellent Quality (5/5 stars): – Largest scale and track record – Strong sponsor (Blackstone) – Proven acquisition capability – Trading below NAV (0.93x) – Higher leverage than Mindspace

Nexus Select – Strong Quality (4/5 stars): – Lowest leverage (14% LTV) – Unique retail exposure – Highest occupancy (95%+) – Limited growth potential – E-commerce structural risk

Brookfield REIT – Good Quality (4/5 stars): – Highest yield (6.5%) – Largest sponsor pipeline – Global institutional backing – Premium valuation (1.40x NAV) – Lower occupancy (90%)

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1. IndiGrid (India Grid Trust)

Overview: – India’s First Listed InvIT – Listed: June 2017 – Market Cap: ₹14,400 crore (as of Nov 2025) – Sponsor: Sterlite Power / KKR Infrastructure

Portfolio: – AUM: ₹32,500 crore (₹325 Bn) – Transmission Assets: 75% of portfolio – 13,000+ circuit km of transmission lines – 38 transmission assets across India – Renewable Energy: 25% of portfolio – 300+ MW solar capacity – Geographic Presence: 16+ states

Financial Performance (Q2 FY26): – Revenue: ₹826.7 Cr (up 2.6% YoY) – EBITDA: ₹759 Cr – NDCF: ₹362.9 Cr (up 13.5% YoY) – Distribution: ₹362.9 Cr (₹4.00 per unit) – Distribution Yield: 9.5%

Key Metrics: – P/NAV: 2.77x (highest among InvITs) – NAV per Unit: ₹58.5 – Net Debt/AUM: 61.4% (after recent preferential issue) – Total Debt: ~₹20,000 Cr – Cost of Debt: 7.44% (AAA rated by all 3 agencies) – Interest Coverage: ~2.8x – Asset Availability: 99.72% – Solar Portfolio CUF: 20.9%

Contract Structure: – Average contract tenure: 25-35 years – Revenue Model: Availability-based (transmission), PPA-based (renewable) – Counterparties: State utilities, central utilities – Payment security: High (government-backed)

Strengths: ✓ First-mover advantage and deepest track record ✓ Largest AUM among power transmission InvITs (₹32,500 Cr) ✓ Excellent asset availability (99.72%) ✓ Diversified across 38 assets in 16+ states ✓ AAA credit rating from all three agencies ✓ Strong institutional backing (Sterlite Power, KKR) ✓ Proven acquisition track record ✓ Good solar portfolio (300+ MW) for growth ✓ Reduced leverage to 61.4% after preferential issue

Weaknesses: ⚠ Highest P/NAV (2.77x) – significant premium ⚠ Elevated leverage (61.4% Net Debt/AUM) despite recent reduction ⚠ Lower distribution growth (6.7% YoY vs. peers at 10-12%)

2. PowerGrid InvIT Trust

Overview: – PSU-backed InvIT (Maharatna Sponsor) – Listed: May 2021 – Market Cap: ₹8,700 crore – Sponsor: Power Grid Corporation of India Ltd (PGCIL)

Portfolio: – AUM: ₹33,500+ crore – Pure-play transmission assets – 7,000+ circuit km of transmission lines – Multiple operational assets across India – Asset Quality: Highest in sector

Financial Performance: – NDCF: Strong and growing – Distribution Yield: 12.3% (highest among all InvITs) – Consistent distributions since listing

Key Metrics: – P/NAV: 1.02x (trading near NAV) – NAV per Unit: ₹95-96 – Net Debt/AUM: 26% (LOWEST among all InvITs) – Cost of Debt: ~8.09% – Interest Coverage: >4.0x (strong) – Asset Availability: >98% – Contract Tenure: 35 years average (LONGEST)

Contract Structure: – Average contract tenure: 35 years (longest in sector) – Revenue Model: 100% availability-based – Counterparties: Central/State utilities – Payment security: Sovereign-backed (highest)

Strengths: ✓ Trading at NAV (1.02x) ✓ Highest distribution yield (12.3%) ✓ Lowest leverage (26% Net Debt/AUM) – safest balance sheet ✓ PSU backing – Maharatna sponsor (PGCIL) ✓ Longest contracts (35-year average tenure) ✓ AAA credit rating ✓ Excellent asset availability (>98%) ✓ Sovereign payment security ✓ No execution risk (all operational assets) ✓ Strong interest coverage (>4x)

Weaknesses: ⚠ Limited acquisition pipeline (PSU constraints) ⚠ Lower trading liquidity vs. IndiGrid ⚠ Growth limited to sponsor asset transfers

3. India Grid Trust (IndiGrid’s Competitor)

Overview: – Major power transmission InvIT – Market Cap: ₹12,800 crore – Sponsor: Private sector consortium

Portfolio: – AUM: ₹30,000+ crore – Transmission network assets – Multiple operational projects

Key Metrics: – P/NAV: 2.45x (elevated) – Distribution Yield: 9.2% – Net Debt/AUM: 58.5% (moderate to high) – Cost of Debt: ~7.6% – Asset Availability: >99%

Strengths: ✓ Large scale and diversified portfolio ✓ Strong operational track record ✓ AAA credit rating ✓ Lower valuation than IndiGrid (2.45x vs. 2.77x)

Weaknesses: ⚠ Expensive at 2.45x NAV ⚠ Higher leverage (58.5% debt/AUM) ⚠ Lower yield than PowerGrid (9.2% vs. 12.3%)

4. IRB InvIT Fund

Overview: – Largest Road InvIT (BOT Model) – Listed: May 2017 – Market Cap: ₹6,500 crore – Sponsor: IRB Infrastructure

Portfolio: – Model: BOT-Toll (Build-Operate-Transfer) – 8-10 operational toll road assets – ~1,500+ lane km – Geographic Presence: Gujarat, Maharashtra, Karnataka, Rajasthan

Key Metrics: – Distribution Yield: 8.0% – Net Debt/AUM: High (~55-60%) – Revenue Model: 100% traffic-dependent (BOT) – Contract Tenure: 15-25 years remaining

Strengths: ✓ Established road portfolio ✓ BOT model offers upside from traffic growth ✓ Strong sponsor with road development expertise

Weaknesses: ⚠ High traffic risk – 100% revenue depends on vehicle volumes ⚠ Economic cyclicality ⚠ High leverage ⚠ Parent company (IRB Infrastructure) facing challenges ⚠ Lower yield than HAM InvITs or power InvITs

5. Indus Infrastructure Trust

Overview: – Pure HAM Roads InvIT – Listed: March 2024 – Market Cap: ₹5,800 crore – Sponsor: Gayatri Projects / Cube Highways

Portfolio: – Model: 100% HAM (Hybrid Annuity Model) – 10+ HAM road projects – ~750+ lane km – Geographic Presence: Pan-India

Key Metrics: – P/NAV: 1.05x (fair value) – Distribution Yield: 9.0% – Revenue Model: Annuity-based (40% government payment during construction, 60% post-completion) – Contract Tenure: 15-17 years average – Payment Security: NHAI/Government-backed

Strengths: ✓ HAM model offers superior risk profile vs. BOT ✓ Government payment security (NHAI) ✓ No traffic risk (annuity-based) ✓ Fair valuation (1.05x NAV) ✓ Growing portfolio

Weaknesses: ⚠ Relatively new (listed March 2024) ⚠ Limited track record ⚠ Smaller scale vs. power InvITs ⚠ Lower yield than PowerGrid InvIT (9% vs. 12.3%)

6. Anantam Highways InvIT

Overview: – Newest Listed InvIT – Listed: October 2025 – Market Cap: ₹2,500 crore (approximate) – Sponsor: Private consortium

Portfolio: – HAM road projects – Limited operational history

Status: TOO NEW – Insufficient data for comprehensive analysis

7. InvIT Sector Summary

TABLE 10: InvITs – Core Operating Metrics

Portfolio & Performance Analysis

Counterparty & Payment Security

TABLE 11: InvITs – Financial Performance Ratios

Profitability Analysis

Growth Metrics

TABLE 12: InvITs – Leverage & Debt Metrics

Capital Structure

Coverage Ratios

Key Leverage Insights: – PowerGrid has best leverage profile: 26% debt/AUM, 4.2x interest coverage – IndiGrid and India Grid have elevated leverage: 61.4% and 58.5% respectively – HAM road InvITs (Indus) moderate leverage: 49% debt/AUM – BOT road InvITs (IRB) higher risk: 55% leverage + traffic risk – All power transmission InvITs maintain AAA ratings

TABLE 13: InvITs – Acquisition Track Record

Growth Through Acquisitions

Acquisition Insights: – IndiGrid leads acquisition activity with 8+ deals post-listing – PowerGrid limited by PSU framework but has access to sponsor assets – Road InvITs face limited acquisition opportunities due to market structure

TABLE 16: InvITs – Comparative Quality Assessment

Overall Quality Rating (Star-Based)

Quality Assessment Commentary:

PowerGrid InvIT – Highest Overall Quality (5/5 stars): – Trading at NAV (1.02x) – Highest distribution yield (12.3%) – Lowest leverage (26%) – PSU backing + sovereign payment security – Longest contract tenure (35 years)

IndiGrid – Strong Quality (4/5 stars): – First-mover advantage – Largest AUM (₹32,500 Cr) – Proven track record – Elevated leverage (61.4%) – Premium valuation (2.77x NAV)

India Grid Trust – Strong Quality (4/5 stars): – Large scale portfolio – Good operational metrics – Elevated leverage (58.5%) – Premium valuation (2.45x NAV)

Indus Infrastructure – Good Quality (4/5 stars): – HAM model (government-backed) – Fair valuation (1.05x NAV) – Relatively new (limited track record) – Moderate leverage (49%)

IRB InvIT – Moderate Quality (3/5 stars): – Traffic-dependent revenue (BOT model) – High leverage (55%) – Parent company challenges – Lower yield than alternatives

1. REITs vs. InvITs – Key Differences

TABLE 19: Cross-Asset Quality Score Matrix

Comprehensive Quality Assessment (Star-Based)

TABLE 20: Risk Assessment Matrix

Detailed Risk Analysis

TABLE 21: Return Analysis – Historical & Projected

Historical Performance

Forward Return Expectations (Next 5 Years)

Key Return Insights: – PowerGrid InvIT and Mindspace REIT offer highest expected returns (20-32% CAGR) – Embassy REIT strong second tier (18-26% expected) – Nexus Select moderate returns but lower risk – IndiGrid and India Grid face valuation compression risk – IRB InvIT has execution and traffic risk

TABLE 22: Dividend Sustainability Analysis

Distribution Coverage & Safety

Distribution Safety Ranking: 1. PowerGrid InvIT – Highest safety (low leverage + govt backing + coverage) 2. Nexus Select – Very safe (minimal leverage + high coverage) 3. Mindspace REIT – Safe (low leverage + coverage + diversification) 4. Embassy REIT – Safe (despite higher leverage, strong operations) 5. Brookfield REIT – Safe (balanced) 6. Indus Infrastructure – Moderate (newer, building track record) 7. IndiGrid – Moderate (elevated leverage but strong operations) 8. India Grid – Moderate (similar to IndiGrid) 9. IRB InvIT – Lower safety (traffic risk + leverage)

2. Key Investment Themes

THEME 1: Value Opportunities – Entities Trading Below/At NAV: PowerGrid InvIT (1.02x), Mindspace REIT (0.88x), Embassy REIT (0.93x), Nexus (1.05x), Indus (1.05x) – Rationale: High-quality assets trading at or below intrinsic value – Expected Returns: 11-32% CAGR over next 5 years

THEME 2: Maximum Safety – Lowest Risk Entities: PowerGrid InvIT (26% leverage, PSU), Nexus Select (14% leverage), Mindspace (24.2% leverage) – Rationale: Minimal financial risk, strong coverage, diversified revenues – Expected Returns: 11-25% CAGR

THEME 3: Maximum Income – Highest Yield Entities: PowerGrid InvIT (12.3%), IndiGrid (9.5%), India Grid (9.2%), Indus (9.0%) – Rationale: Highest current distributions – Expected Returns: Varies by valuation (0-32% CAGR)

THEME 4: Growth Potential – Growth-Oriented Entities: Embassy REIT (7.2 msf pipeline), Brookfield REIT (26 msf pipeline), Mindspace REIT (strong execution) – Rationale: Significant development pipelines + acquisition capabilities – Expected Returns: 4-26% CAGR

THEME 5: Diversification – Diversification Pick: Nexus Select (only retail REIT), Indus Infrastructure (HAM roads) – Rationale: Uncorrelated returns vs. office real estate and power infrastructure – Expected Returns: 11-23% CAGR

1. Taxation of REITs and InvITs

Distribution Income Taxation:

Interest Income Component: – Taxed as “Income from Other Sources” – Added to total income and taxed at applicable slab rates – TDS: 10% (if distribution >₹5,000 per year)

Dividend Income Component: – Taxed as “Income from Other Sources” – Added to total income and taxed at applicable slab rates – TDS: 10% (if dividend >₹5,000 per year)

Rental Income Component (pass-through): – Tax-exempt in hands of unitholders (if distributewithin stipulated time) – This is a key advantage – rental income distributed by REITs enjoys tax exemption

Capital Gains Taxation:

Short-Term Capital Gains (STCG) (holding < 36 months): - 20% (plus cess) – No indexation benefit

Long-Term Capital Gains (LTCG) (holding ≥ 36 months): – 10% without indexation, OR – 20% with indexation benefit – Investor can choose whichever is lower

Comparison with Other Assets:

Tax Efficiency Tips: 1. Hold for 36+ months to avail LTCG benefits with indexation 2. Time exits to optimize between 10% (no indexation) vs. 20% (indexation) 3. Consider tax-loss harvesting in down years 4. Rental income component is tax-exempt – significant advantage 5. Distributions are relatively tax-efficient vs. bank FDs (fully taxed at slab)

2. Transaction Costs & Liquidity

Brokerage Costs: – Exchange trading: 0.05-0.50% depending on broker – Typical discount broker: 0.03-0.05% or flat ₹20 per trade – Full-service broker: 0.25-0.50%

Other Costs: – STT (Securities Transaction Tax): 0.1% on sell side – GST: 18% on brokerage – Stamp Duty: Varies by state (0.005-0.015%) – DP Charges: ₹5-20 per scrip (on sell side)

Total Transaction Cost: ~0.15-0.65% per transaction (buy + sell combined: 0.3-1.3%)

Liquidity Analysis:

Liquidity Considerations: – Embassy REIT has best liquidity – easy to enter/exit – Smaller InvITs may require patience for large orders – Use limit orders to avoid impact cost – Consider accumulating over multiple days for large positions – Exit liquidity generally adequate for retail investors (<₹1 crore positions)

3. Key Risks to Monitor

REIT-Specific Risks:

Occupancy Risk: Tenant departures can reduce rental income

Lease Renewal Risk: Rents may not increase as expected

Sector Concentration: Tech downturn hurts office REITs

Economic Cyclicality: Recessions reduce corporate real estate demand

Location Risk: Some markets may underperform

E-commerce Impact: Retail REITs face structural headwinds

InvIT-Specific Risks:

Counterparty Risk: Utility payment delays (transmission)

Traffic Risk: BOT roads vulnerable to volume declines

Regulatory Risk: Tariff changes, policy shifts

Project Execution Risk: Delays in under-construction assets

Common Risks (Both REITs & InvITs):

Interest Rate Risk: Rising rates increase debt costs, reduce valuations

Leverage Risk: High debt levels during downturns

Liquidity Risk: Lower trading volumes than large-cap equities

Regulatory Risk: SEBI rule changes

Sponsor Risk: Sponsor financial health matters

Valuation Risk: Overpaying (high P/NAV) limits returns

Risk Mitigation Strategies: 1. Diversification: Spread across 3-5 entities and asset types 2. Focus on Low Leverage: Prefer entities with <30% LTV (REITs) or <50% debt/AUM (InvITs) 3. Avoid Overpaying: Consider valuations (P/NAV ratios) 4. Quality Over Yield: Don’t chase high yields with weak balance sheets 5. Long-Term Horizon: Hold 3-5+ years to ride through cycles 6. Monitor Quarterly: Track occupancy, distributions, leverage 7. Prefer Government-Backed: PowerGrid InvIT > private InvITs for safety

1. Market Projections (2025-2030)

REIT Market: – Current Size (2025): ₹10.4 lakh crore AUM – Projected Size (2030): ₹19.7 lakh crore AUM – CAGR: ~14% – Expected New Listings: 3-5 additional REITs by 2030 – Sectors: Office (dominant), Retail (growing), Warehousing (emerging), Data Centers (future)

InvIT Market: – Current Size (2025): ₹6.3 lakh crore AUM – Projected Size (2030): ₹21 lakh crore AUM – CAGR: ~27% (faster growth than REITs) – Expected New Listings: 10-15 additional InvITs by 2030 – Sectors: Power Transmission (largest), Roads (growing), Renewable Energy (emerging), Gas Pipelines (future)

Combined Market (REITs + InvITs): – Current (2025): ₹16.7 lakh crore – Projected (2030): ₹40.7 lakh crore – Nearly 2.5x growth in 5 years

2. Key Growth Drivers

Regulatory Tailwinds: – Index Inclusion: SEBI working on “glide path” to include REITs in Nifty/Sensex by 2026-27 – Expected passive fund inflows: ₹5,000-10,000 crore – Equity Classification: REITs now classified as equity for mutual funds – Allows larger institutional allocation – Reduced Entry Barriers: Single-unit lots (vs. earlier 200 units) – Retail-friendly – Expanded MF Investment: Liquid MF schemes may invest in REITs/InvITs – Strategic Investor Expansion: All QIBs can now be strategic investors

Fundamental Drivers: – Office Demand: India’s IT/GCC sector growing 10-12% annually – Corporate real estate demand robust – Infrastructure Gap: ₹700 lakh crore needed by 2047 per NaBFiD – Massive monetization opportunity – Government Support: Gati Shakti, NIP, HAM model all support InvIT growth – Asset Monetization Pipeline: PSUs (PGCIL, NHAI, others) have large portfolios to monetize – Retail Recovery: Post-COVID retail normalization – Premium malls thriving – Yield Premium: REITs/InvITs offer 5-12% vs. 6.5% FDs and 7% G-secs

Market Structure Improvements: – Increased Awareness: Growing recognition of REITs/InvITs as asset class – Institutional Participation: Foreign portfolio investors (FPIs) increasing allocations – Improved Liquidity: Trading volumes growing steadily – Track Record: 5+ years of consistent distributions building confidence

3. Emerging Opportunities

New Asset Classes: – Data Centers: High-growth potential – digital infrastructure demand – Expected listings: 1-2 data center REITs by 2027 – Warehousing/Logistics: E-commerce growth driver – Potential for dedicated warehousing REITs – Student Housing/Co-Living: Emerging residential REIT opportunity – Healthcare REITs: Hospital assets – regulatory approval pending – Gas Pipelines InvITs: Energy infrastructure – Renewable Energy InvITs: Solar/wind portfolios – Growing segment

Geographic Expansion: – Tier-2/Tier-3 cities: Office and retail assets in smaller cities – Emerging markets: Northeast, Himachal Pradesh infrastructure projects

Consolidation: – Expect M&A activity – smaller sponsors may exit – Larger REITs acquiring competitors – Scale advantages

4. Five-Year Outlook (2025-2030)

Expected Market Evolution:

2025-2026: – Index inclusion begins (glide path) – 2-3 new REIT/InvIT listings – Passive fund flows accelerate – Retail participation increases from 1% to 3-5%

2027-2028: – Full index inclusion completed – Data center and warehousing REITs launch – 5-7 new InvITs in roads and renewable energy – Market cap crosses ₹3 lakh crore

2029-2030: – Mature market with 10+ REITs and 35+ InvITs – Healthcare and residential REITs emerge – Gas pipeline InvITs operational – Market cap approaches ₹5 lakh crore – Retail participation reaches 8-10%

Return Expectations by Asset Class (2025-2030 CAGR): – Office REITs: 10-14% (stable, mature) – Retail REITs: 8-12% (moderate growth) – Data Center REITs: 15-20% (high growth – new sector) – Warehousing REITs: 12-16% (e-commerce tailwind) – Power Transmission InvITs: 11-14% (steady utility model) – Road InvITs (HAM): 12-15% (government backing) – Renewable Energy InvITs: 14-18% (growth sector)