Four listed REITs distribute Rs 1,505 crore to unitholders in Q3

The distributions rose by nearly 17 per cent from Rs 1,289 crore distributed in Q3 FY24

The four listed real estate investment trusts (Reits) in India distributed a total of Rs 1,505 crore to more than 2.6 lakh unitholders during the third quarter of the financial year 2024-2025 (Q3FY25), according to the Indian REITs Association (IRA).

 

The distributions increased by almost about 17 per cent, from Rs 1,289 crore distributed in Q3FY24.

 

The four publicly listed Reits in India are: Brookfield India Real Estate Trust, Embassy Office Parks Reit, Mindspace Business Parks Reit, and Nexus Select Trust.

 

As per the Securities and Exchange Board of India (Sebi), Reits are mandated to distribute at least 90 per cent of their taxable income to their unitholders. 

   

In Q3FY25, Embassy Office Parks REIT showed the highest growth among its peers in terms of distribution per unit (DPU). The Reit distributed Rs 5.9 per unit and overall Rs 559 crore, up 13 per cent year-on-year (Y-o-Y).

 

Meanwhile, for the quarter under review, Mindspace Business Parks Reit declared a distribution of Rs 315 crore or Rs 5.32 per unit, up 10.9 per cent Y-o-Y. Nexus Select Trust declared a distribution of Rs 332.7 crore or Rs 2.196 per unit, up 10 per cent Y-o-Y. Brookfield Reit declared a distribution at Rs 4.9 per unit, up 3 per cent Y-o-Y.

 

According to the latest IRA figures, the Indian Reit market now oversees gross assets under management (AUM) worth around Rs 1.52 trillion, with a market capitalisation surpassing Rs 95,000 crore as of February 7. The portfolios managed by these Reits cover over 126 million square feet (msf) of grade A office and retail space across the country.  Lokesh Manik, senior equity research analyst, Vallum Capital Advisors, said, “The REITs are doing well. The office spaces have seen a good upturn. The supply is being taken up consistently. As long as India hits more than 6 per cent of gross domestic product (GDP), office space should do well. We see pressure on the commercial part only when deceleration in the growth rate of an economy happens. Because then there is less visibility going forward with a business.”

 

In Q1FY25, the four Reits collectively distributed over Rs 1,371 crore to over 2.45 lakh unitholders, while in Q2FY25, they disbursed over Rs 1,383 crore to more than 2.55 lakh unitholders. Since their inception, the Reits have collectively distributed over Rs 21,000 crore to their unitholders. 

Besides, according to Shobhit Agarwal, managing director and the chief executive officer of Anarock Capital, in the last year, investment instruments like the Nifty realty index and gold witnessed index appreciation of 33 per cent and 55 per cent, respectively. On the other hand, Nifty Reits and infrastructure investment trusts (InvITs) saw an appreciation of 11 per cent.

 

According to a report by Vestian, an occupier-focused workplace solutions firm, 60 per cent of India’s total Grade-A office space qualifies as Reit-worthy, spanning an area of 526.3 million square feet (msf) with a building value of Rs 4.5 lakh crore.

 

However, the report stated that India’s Reit market is currently at a nascent stage compared to major global economies, with only four listed Reits, covering an area of 125 msf across the retail and office markets.

 

In terms of market capitalisation, the Indian Reits are just over 13.7 per cent of its total listed real estate against the USA’s 98.9 per cent, Australia’s 94.8 per cent, and the UK’s 92.5 per cent, according to the IRA.

 

India’s commercial real estate market growth is fuelled by global capability centres (GCCs), India-facing businesses, information technology (IT) services, flex space operators, etc.

 

ICRA, a ratings agency, estimates that the net absorption of commercial office leasing across the top six cities in India is likely to increase by 10-11 per cent to 59-60 msf in FY25 and witness a further growth of 3-4 per cent in FY26 on a high base.