InvITs vs REITs for a property-minded saver: what a unit is, what the trust owns, how much it can borrow

Rules and rates as of 16 October 2026.

Listed REITs and InvITs are often pitched together as "property-like income" you can buy on a stock exchange for the price of a few units. They are built on near-identical legal frames, both written by SEBI in 2014. But what sits underneath, how much the trust may borrow, and what each payout actually consists of differ in ways that matter to a saver who thinks in terms of rent. This explainer sets out the rules from SEBI's own texts.

What a unit actually is

Neither a REIT unit nor an InvIT unit is a share in a building or a road. Both sets of regulations define a "unit" the same way: a beneficial interest in the trust (regulation 2 of the REIT Regulations; regulation 2(1)(zzc) of the InvIT Regulations, which since 2024 also calls it an "ordinary unit"). A unit holder is simply "any person who owns units".

The trust, in turn, usually does not own the asset directly. It holds shares in companies or LLPs, called special purpose vehicles (SPVs), sometimes through a holding company. Those SPVs own the building or the infrastructure project. So your chain of ownership runs: you, then a unit, then the trust, then (often) a holdco, then the SPV, then the asset. You get no title deed, no say over a particular floor or toll lane, and no right to occupy anything. What you do get, per SEBI's FAQs, is a right to distributions, to vote at unit holder meetings, and to the disclosures the trust must make.

What sits underneath

A REIT holds real estate. The REIT Regulations define real estate as land and permanently attached improvements, freehold or leasehold. A REIT's SPV must hold at least 80% of its own assets directly in properties. At the trust level, the 2014 regulations (as amended in 2016) require that not less than 80% of the value of REIT assets be in completed, rent-generating properties, with at most 20% in other assets, including under-construction property that the REIT must then hold for at least three years after completion. In practice, listed REITs in India mostly hold office parks and, increasingly, malls.

An InvIT holds infrastructure. The InvIT Regulations define infrastructure by reference to the Finance Ministry's notification of 7 October 2013 listing infrastructure sub-sectors, as amended. That covers roads, power transmission, telecom towers, pipelines and similar assets. An InvIT's SPV must hold at least 90% of its assets directly in infrastructure projects. Income comes from tolls, annuities, transmission charges or tower rentals, not from tenants.

That is the first big difference for a property-minded saver. A REIT's income depends on office and retail leasing. An InvIT's income depends on traffic, tariff orders and concession agreements, and many concessions end after a fixed number of years, after which the asset goes back to the government. When a concession ends, there may be no building left to own.

The rules side by side

Rule	Public REIT	Public InvIT
What a unit is	Beneficial interest in the REIT	Beneficial interest in the InvIT
Underlying assets	Completed, rent-generating property (at least 80% by value)	Completed, revenue-generating infrastructure (per SEBI FAQ)
Minimum payout	At least 90% of net distributable cash flows, at least once every six months	At least 90% of net distributable cash flows, at least once every six months
Borrowing cap	49% of the value of REIT assets; above 25%, a credit rating and unit holder approval are needed	70% of the value of InvIT assets (SEBI FAQ); above 49%, extra conditions apply
Of every ₹100 of assets, debt can be up to	₹49	₹70
Minimum application in a public issue	₹10,000 to ₹15,000	₹10,000 to ₹15,000
Trading lot	One unit	One unit

The leverage row is worth pausing on. Under the REIT Regulations, aggregate consolidated borrowings and deferred payments, net of cash, "shall never exceed" 49% of the value of REIT assets, and refundable tenant deposits are left out of the count. InvITs were allowed to go further in 2019: SEBI's board paper that year proposed raising the cap from 49% to 70%, with conditions for borrowing beyond 49% that included a AAA rating, a track record of six continuous distributions after listing, and unit holder approval. SEBI's InvIT FAQ gives the cap for public and private listed InvITs as 70%. More debt means more of the trust's cash goes to lenders first, and a sharper effect if interest rates rise.

Privately placed InvITs are a different product. The current InvIT Regulations set a minimum of ₹25 lakh per investor for private placement; SEBI's 2022 FAQ still shows the older ₹1 crore, which the consolidated text records as replaced. Per that FAQ, private InvITs may also hold under-construction assets and need to distribute only once a year.

The 90% rule, and what a payout is made of

Both trusts must pass at least 90% of their net distributable cash flows (NDCF) to unit holders. NDCF is cash, not accounting profit, so a payout can exceed the trust's reported profit. SEBI's June 2025 investor charter for REITs adds that payouts must reach you within five working days of the record date.

The cash reaches the trust from its SPVs in several forms, and each keeps its label when it is passed to you. The usual ones are interest on loans the trust gave the SPV, dividends from the SPV, rent (where the trust owns property directly) and repayment of debt, which is the SPV paying back the trust's loan. That last one is not income earned on your money. It is, in substance, part of the trust's capital coming back. Tax treatment differs by component; our separate explainer on REIT payout tax covers it, and a CA should confirm how it applies to you.

Worked example: an illustrative ₹1 lakh holding

Illustrative figures only. They are not the record of any listed trust. Assume you hold units worth ₹1,00,000, the trust pays out 7% of that a year in four equal quarters, and the trust's statement splits each payout 40% interest, 10% dividend and 50% repayment of debt.

• Annual payout = ₹1,00,000 × 7% = ₹7,000; per quarter = ₹7,000 ÷ 4 = ₹1,750.
• Interest = ₹7,000 × 40% = ₹2,800 a year (₹700 a quarter).
• Dividend = ₹7,000 × 10% = ₹700 a year (₹175 a quarter).
• Repayment of debt = ₹7,000 × 50% = ₹3,500 a year (₹875 a quarter).
• Under the 90% rule, a ₹7,000 payout implies NDCF of at least ₹7,000 ÷ 0.9 = about ₹7,778 attributable to your units.

The point: in this example, half of the "7% yield" is a return of capital. Read every distribution notice for the split; the trusts publish it each time.

Questions to ask before you compare

• Is this a REIT or an InvIT, and is it publicly offered or privately placed?
• What are the underlying assets, and for an InvIT, when do the concessions end?
• What is current borrowing as a share of asset value, against the 49% or 70% cap?
• Over the last few payouts, what share was repayment of debt?

None of this tells you whether a unit is worth holding. That depends on price, your tax slab and the rest of your savings, which is a conversation for a SEBI-registered investment adviser.