Let us look at REITS first and then look at INVITs

Real Estate Investment Trusts (REITs)

Infrastructure and Real estate are the two most critical sectors in any developing economy. A well-developed infrastructure is the key driver for the overall development of a country. The real estate sector is closely related to infrastructure and is fundamental to its growth.

A well-developed infrastructural set-up propels the overall development of a country. It also facilitates a steady inflow of private and foreign investments, and thereby augments the capital base available for the growth of key sectors in an economy, as well as its own growth, in a sustained manner.

Real estate sector is one of the most globally recognized sectors. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space as well as urban and semi-urban accommodations. Given the importance of these two sectors in the country, and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place.

The REIT is designed as a tiered structure with Sponsor setting up the REIT which in turn invests into the eligible infrastructure/real estate projects either directly or via special purpose vehicles (SPVs).

Infrastructure Investment Trusts (InvIT)

An Infrastructure Investment Trust (InvITs) is Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.

The InvIT is designed as a tiered structure with Sponsor setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPVs).

The InvITs are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014. SEBI has vide its circular CIR/IMD/DF/55/2016 dated May 11, 2016 provided the detailed guidelines for the public issue of units of InvITs.