Investors jubilant: InvITs, REITs record massive 55% rise in payouts in Q2FY26

Kolkata: REITs and InvITs are crucial investment instruments since they help pool investments into two crucial sectors of the economy -- real estate and infrastructure. Recently, Sebi gave REITs a shot in the arm by categorising them as equities. The sector is passing through a buoyant and growing phase and ICRA Analytics has mentioned in a recent report on these emerging sectors that they have registered a huge 55% rise in the payouts, which is referred to as distribution.

ICRA Analytics has said that better utilisation of assets, higher income in the form of rentals, robust toll traffic and strong cash flows have pushed up distributions by publicly listed InvITs and REITs by as much as 55.4% in Q2FY26 period. Compared on a q-o-q basis, the rise is by 34.2%. The amount of distribution stood at Rs 3,300, said ICRA Analytics.

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Distributions in REIT and InvIT refer to payouts that have to be carried out mandatorily amounting to a minimum of 90% of their net distributable cash flows to investors. In effect, it becomes a regular income for the investors. Therefore, distributions become like steady income (along with potential growth) for investors. Distributions are generated by rental income in REITs or tolls/fees in InvITs. REITs and InvITs are also listed on stock exchanges which lends them liquidity. Payouts also originate from sale of assets.

ICRA Analytics has said that strong operating performance across key asset classes was responsible for the spectacular rise in distributions by both REITs and InvITs in the second quarter of the current financial year. Road InvITs have also recorded strong gains, and their distributions jumped 23.6% q-o-q, thanks to bigger toll collections for festive travel. InvITs in the power and energy sector have displayed stable performance.

Distributions of private InvITs rose to more than Rs 4,700 crore in Q2FY26, which marked a 13.4% rise in Q2FY26 compared over the Q1FY26 period. On a y-o-y basis, the jump was to the tune of 27.5%.

Telecom infrastructure trusts too performed well and the tailwinds were higher tenancy of telecom towers and rising requirements of digital infrastructure. Warehouse and logistics too performed well.

ICRA Analytics pointed out that new listings pointed to the growing significance of the sector. TVS Infrastructure Trust and Knowledge Realty Trust were remarkable cases in July=September of this year. Anantam Highways Trust (an InvIT) was listed on BSE and NSE in mid-October. They all point to rising investor participation in the InvIT and REIT markets.

ICRA Analytics said the Q3FY26 outlook is positive since traction in commercial real estate leasing, rising road traffic, growing demand for telecom infrastructure, solar power and energy assets were noticed.