NEW SEBI circular ,mutual funds could raise their exposure to REITs in 2026, A Investment opportunities ?

 NEW SEBI circular ,mutual funds could raise their exposure to REITs in 2026 

Sebi has released a new circular announcing the investment made by mutual funds and specialised investment funds in real estate investment trusts (REITs) to be reclassified as equity related instruments from 1 January 2026 onwards.

What is the key announcement made in circular?

Starting January 01, 2026, any investment made by Mutual Funds and SIFs in REITs will be considered as investment in equity related instruments. The Sebi circular reads that InvITs will continue to be classified as hybrid instruments for the purpose of investments by Mutual Funds and SIFs.

What is a REIT

• At its core, a REIT is a company or trust that owns, operates, or finances income-producing real estate — e.g. office buildings, shopping malls, warehouses, apartments, hospitals, etc. 

• It pools money from many investors (like a mutual fund) to buy and manage these properties — so you do

  n’t need to buy or manage a property yourself.

• Investors buy “units” or “shares” in the REIT, and earn returns from:

  1. Rental income from properties, distributed as dividends.

  2. Potential appreciation in the value of the properties (capital gains) over time. 

So in effect, a REIT gives you exposure to real estate — with lower capital outlay, lower hassle, and higher liquidity (because you can buy/sell REIT units like stocks) compared to direct real-estate ownership.

Types of REITs

REITs come in different forms depending on how they invest, and which kinds of properties they manage.

Main categories:

Type	How they earn	Comments / Features
Equity REITs	Own and operate real properties (office buildings, malls, apartments, warehouses, etc.), collect rent, perhaps sell properties.	Most common type. Good for those who want steady rental income + property-value growth.
Mortgage REITs (mREITs)	Instead of owning properties, they invest in mortgages or mortgage-backed securities — earn via interest.	Potentially higher yields, but more sensitive to interest-rate changes and economic cycles.
Hybrid REITs	Combine both equity and mortgage strategies — own properties and hold mortgages/loan securities.	Offers diversified income streams — rent + interest — which can lower risk vs pure mortgage REITs.

Why People Invest in REITs — Pros

• Access to real estate with small capital: Instead of buying a house/building, you can invest a smaller amount just by buying REIT units

• Liquidity: Most REITs are listed publicly, so you can buy/sell units like stocks — much more flexible than owning a propert

• Dividend income: Rental income from properties (or interest income from mortgages) is shared with the investors, offering regular returns

• Diversification: By investing in a REIT, you get exposure to a diversified real-estate portfolio (maybe offices, malls, warehouses) instead of single property risk

Should You Consider REITs (Given You Are in India)

Yes — REITs can be a useful part of a diversified portfolio, especially if:

• You want real-estate exposure but lack large capital or don’t want the hassles of managing physical property.

• You prefer liquidity (buy/sell anytime) over illiquid real estate investments.

• You want periodic income (dividends) plus long-term capital growth.

However, as with all investments, it’s smart to: understand the type of REIT (equity, mortgage, hybrid), look at what properties/real-estate sectors it invests in, check the REIT’s financial health (debt levels, occupancy rates etc.), and match with your risk tolerance + investment horizon.

Popular REITs in India (2025) & Their Snapshot

REIT (Ticker)	What they focus on / Portfolio type	Recent yield / distribution / financial highlights
Embassy Office Parks REIT	Office/commercial — India’s first listed REIT; large “campus-style” office parks.	In Q2 FY26, the five listed REITs (incl. Embassy) distributed ₹ 2,331 crore collectively.  Strong recent financials: e.g. for quarter ending Sept 30, 2025 — revenue from operations rose 13 % YoY to ₹ 1,124 crore; Net Operating Income (NOI) up 15 % YoY.
Mindspace Business Parks REIT	Office/commercial — “Grade-A” business parks and office spaces across cities.	Dividend yield ~ 2.6 – 3.5 % (recent), as per latest share price.  Recent share price ~ ₹ 460.38; 52-week range ₹ 354–475.
Brookfield India Real Estate Trust	Office/commercial assets, large diversified real-estate portfolio.	Dividend yield around ~ 3.5 %.  Part of growth seen in Q2 FY26 distributions (collectively by all listed REITs).
Nexus Select Trust REIT	Retail-focused: malls and retail real-estate across India.	Among the five listed REITs; gets exposure to retail real-estate demand.
Knowledge Realty Trust (recent/ newer entrant)	(Mixed/commercial/office — depending on its portfolio)	Recently listed

Mahesh pv

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