The pandemic has rekindled a new trend: Financial Independence and Early Retirement (FIRE) among young individuals. However, this requires not just a significant retirement corpus but also sustainable passive income to manage expenses.
To this end, many prefer fixed deposits, whose returns just keep pace with inflation, while many prefer real estate. Real estate investment has dual benefits—one is capital growth, while the other is the rental yield if the property is rented out. However, buying property itself is a costly affair and is out of reach of many.
Having said that, there remains a lucrative way for investors to invest in real estate through Real Estate Investment Trust (REIT). REITs, by nature, are mandated to distribute 90% of their taxable income to unitholders as dividends. In addition, they can also generate returns through capital appreciation.
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This makes REIT a preferred choice for many who wish to generate long-term capital growth and steady income. Similarly, in this article, we have selected two of the largest listed REITs by market cap for investors.
#1 Embassy Office Parks REIT
Embassy REIT is sponsored by BRE Mauritius Investments (part of the Blackstone Group) and Embassy Property Development (part of the Embassy Group). It is India’s first publicly listed REIT and Asia’s largest official REIT by area.
The company owns, operates, and invests in rent- or income-generating real estate and related assets in India. It gives investors access to the benefits of real estate investment with the advantage of investing in publicly traded units.
It has 13 commercial properties (office parks and city-centric offices), six hotels (two of which are under construction), and a solar plant. These portfolio of properties is held through various special-purpose vehicles (SPVs).
The company has a total leasable area of 45.4 million sq ft, which has grown by 39% over the last five years during FY20-24. Notably, the company has maintained a strong occupancy ratio of around 85% throughout the period, indicating strong demand.
In addition, the company’s rental income has grown quite steadily during the period. Its average rental rates have grown 38% from ₹68 to ₹87 per square foot per month over the last five years.
This has helped Embassy grow its net operating income (NOI),
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