REITs/InvITs in a Retail Portfolio: Cash Flows, Yields, and Rate Sensitivity

REITs own income‑producing real estate. InvITs own operating infrastructure. You are buying cash flows with a quasi‑equity risk profile. Treat them as equity‑like in allocation, not as FDs with bells.

What To Expect

• Distributions: Mix of interest, dividend, and capital repayment. The tax character depends on the vehicle. Track the split in investor updates.
• Yield vs growth: Higher yields usually mean slower growth in net operating income. Check leasing pipelines and capex plans.
• Rate sensitivity: Valuations compress when rates rise because discount rates move up. Avoid chasing at the top of a rate cycle.

How To Evaluate Quickly

• Occupancy and WALE: Higher occupancy and longer lease tenors add stability.
• Debt metrics: Look at net debt to EBITDA and interest cover. Lower is safer.
• Sponsor quality: Balance sheet strength and governance record matter a lot.

Sizing and Use Case

• Keep exposure modest inside equities: 5 to 10% combined REITs plus InvITs for most investors.
• Use for diversification of income sources, not for core growth.

Tools

• Mutual Fund Calculator: Track total return if you reinvest distributions.