REITs and InvITs for Regular Income: 2026 Guide

A Real Estate Investment Trust is a registered trust that owns completed, income-producing property through special purpose vehicles, issues units, and distributes the rent. The SEBI (Real Estate Investment Trusts) Regulations, 2014 put hard constraints around the product:

• Completed, revenue-generating assets. At least 80% of the asset value must be in completed and revenue-generating property — SEBI's REIT FAQ defines the universe as "completed and rent/income generating properties", and the 80% threshold is stated in the Regulations. No land banking, no under-construction gambles with your income layer.
• The 90% payout. A REIT must distribute at least 90% of its net distributable cash flows (NDCF) to unitholders, at least once every six months. In practice the listed REITs pay quarterly.
• Other rails: a minimum of 200 investors, single class of units, a trading lot of just one unit, and leverage capped at 49% of REIT assets. Sponsors must bring serious balance sheets — ₹100 crore collective net worth with ₹20 crore each.

Source: SEBI Frequently Asked Questions for Real Estate Investment Trusts (May 2022), sebi.gov.in, summarising the SEBI (REIT) Regulations, 2014; the 80%-completed-assets threshold per the Regulations as reflected in Embassy REIT's own investor communications. InvITs run on parallel rules — SEBI's framework mandates a minimum 90% NDCF distribution at both the trust and the SPV/holding-company levels (Source: InvIT distribution policies such as Citius Transnet's, November 2025, and SEBI's 2025 ease-of-doing-business papers standardising the NDCF computation).

InvITs — Infrastructure Investment Trusts — are the same architecture over infrastructure concessions: transmission lines, roads, gas pipelines. The cash flows are contracts or regulated tariffs rather than leases, which makes them steadier and rate-sensitive in a different way.

Five REITs are listed as on 2 November 2026 — four office/retail veterans and one new large entrant:

Sources: each trust's own distribution-history page (embassyofficeparks.com, mindspacereit.com, brookfieldindiareit.in, nexusselecttrust.com, knowledgerealtytrust.com), all accessed 2 November 2026. Distribution per unit is the gross figure before the component split that the tax section explains — and it includes a repayment-of-capital slice that is not fully "income" in the tax sense.

Turn distributions into yields against the unit price and the honest range emerges. Embassy distributed ₹25.28 per unit in FY2026 and another ₹7.07 for the July-September quarter (declared 28 October 2026 — its highest-ever quarterly payout); with the unit around ₹411-420 in late October 2026, the trailing yield works out to roughly 6.2% (arithmetic on official DPU and screener.in/exchange-tracked prices). Mindspace's recent quarterly payouts of ₹5.79-6.64 put its trailing yield near 5.1-5.2% on a unit price around ₹487 (Source: trendlyne.com and indmoney.com trackers, 30-31 October 2026). Brookfield paid ₹5.60 per unit in Q1 FY2027; its trailing DPU of ₹21.75 (REIT-InvIT Tracker, 13 August 2026) at the 30 October 2026 close of ₹314.70 works out to about 6.9%. Nexus Select's FY26 distribution of ₹9.081 per unit against a unit price in the ₹160-170 range implies roughly 5.5-6%. Knowledge Realty Trust, listed at ₹100 on 18 August 2025, has paid ₹6.44 per unit across four quarters and trades near ₹109-110 — an annualised yield near 6% (Source: ICICI Direct, 31 October 2026).

Two readings of that 5-7% band. It beats the ~3.8% gross residential rental yield with none of the tenant headaches. But it sits only slightly above the 10-year government bond at about 7.3% — you are taking equity-like price risk for a modest spread, which is precisely why the unit price falls hard when rates or leasing wobble.

The InvIT shelf is deeper and the yields wider:

• PowerGrid InvIT — power transmission, India's first PSU InvIT. It has paid ₹3.00-per-unit distributions through 2026; with the unit price at ₹103 (October 2026), income trackers quote a trailing yield near 11.6% (indmoney, 30 October 2026; tickertape, 1 November 2026), while screener.in's single-payout basis shows 2.9%. When two databases disagree that loudly, read it as a warning about both the quoting convention and a unit price that has fallen — not as free yield.
• IRB InvIT — road toll assets from IRB Infrastructure. Q4 FY26 distribution of ₹1.60 per unit, up 7% year-on-year (Source: irbinvit.co.in announcements, August 2026); NAV reported at ₹75.46 per unit as of 30 September 2026 (screener.in).
• Bharat Highways InvIT — the road trust (Indus Infra Trust) listed in March 2024; it filed a ₹3.50-per-unit distribution in April 2026 (Source: NSE corporate filing, 29 April 2026) and Economic Times counts trailing distributions of ₹9.20 per unit, an indicated yield of about 8.4% (indmoney quotes 10.67% on its own TTM basis as of 30 October 2026).

Others — IndiGrid, Anzen, National Highways Infra Trust and newer entrants — follow the same pattern: contract cash flows, quarterly or semi-annual distributions, yields above the REIT band because the assets carry refinancing, traffic-volume and concession-expiry risk. The extra 2-4 points of yield over a REIT is the market pricing exactly those.

This is the part most yield screenshots skip. A REIT or InvIT distribution is not one income type — Section 115UA passes each component through to you with its own treatment (Source: ICAI Journal, "New Tax on the Income Distributed by REITs and InvITs"):

The TDS plumbing is explicit on the trusts' own pages: Mindspace's distribution note deducts 10% TDS on the interest component for resident unitholders under Section 393 of the Income-tax Act, 2025 (erstwhile Section 194LBA) and none on the dividend component because its SPVs have not opted for the 115BAA regime (Source: mindspacereit.com distribution page, FY 2026-27).

The repayment component deserves a second look. Embassy's distribution history shows a "repayment of debt" slice — a quarter to four-fifths of some payouts in past years. It is a return of your own capital, not income: the trust is handing you back principal as SPV loans amortise. Section 48's Explanation 1 reduces your cost of acquisition by such receipts, and Section 56(2)(xii) — inserted by the Finance Act, 2023 — taxes cumulative repayments that exceed the issue price as income from other sources. Net effect: a REIT's cash yield overstates its taxable income, and your eventual capital-gains bill is bigger than the price move alone suggests.

Selling units has its own rates. Since the July 2024 capital-gains reset, listed business-trust units held more than 12 months are long-term, taxed at 12.5% without indexation — and the ₹1.25 lakh annual exemption does not apply, because Section 112A covers only listed equity shares and equity-oriented funds (Source: CBDT FAQs on the capital-gains regime, via PIB, 24 July 2024). Held 12 months or less, gains are short-term at 20% under Section 111A.

Buying is the easy part: any demat-and-trading account works, exactly like a stock — through the IPO window or on the secondary market, in multiples of a single unit. There is no ₹50 lakh property cheque and no registration office.

Liquidity is the honest caveat. These are small floats traded mostly by institutions; a ₹2-3 lakh order can move a thin REIT several notches, and in stressed weeks the bid can vanish. Use limit orders, avoid market orders, and size positions as if you might have to hold through a bad quarter — because you might.

• Rate sensitivity. With the 10-year G-Sec near 7.3%, a 6% REIT distribution yield is a thin spread over the risk-free rate. Rate spikes hit both the unit price and the trust's borrowing cost (leverage up to 49% of assets is permitted).
• Concentration. Embassy is Bengaluru-office heavy; Nexus is malls; PowerGrid InvIT is one counterparty ecosystem. One sector shock — remote-work policy, consumption slowdown, tariff disputes — is a single-line bet.
• Leasing cycles. Office REITs live and die by occupancy, rentals and weighted-average lease expiry. A soft leasing year compresses distributions; the 90% payout rule passes the weakness straight through.
• Distribution erosion. The repayment component that flatters cash yield is finite; as debt amortises, payouts re-balance toward taxable income — and InvIT payouts have historically been cut when traffic, tariffs or refinancing disappoints. PowerGrid InvIT's fallen unit price alongside high quoted trailing yields is the live illustration.

None of these make REITs or InvITs bad instruments. They make them equity-risk instruments with a coupon habit — a legitimate income layer inside a diversified plan, not a substitute for deposits or a magic rental yield.

The flat wins on one thing only: control and the option of self-use. On every income metric the REIT is the more honest instrument — and it cannot be encroached on, disputed over, or left vacant.

If you are fitting these into a plan, our passive income guide shows where the 5-7% band slots against FDs, bonds and SWPs, and our FD rate guide tracks the contractual floor. This is educational, not investment advice; distributions and prices are as on 2 November 2026 and change quarterly — verify on the trust's own pages before transacting.