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Market Intelligence › Basic Terminologies
The structure of rental income, distributions, and the risks
Published by The Retail Trader · JUL 26, 2026 · AIF, PE & Alternates
A REIT is a listed vehicle that holds commercial properties and distributes their rent among unit holders. It is a liquid form of property exposure, but it is not the same as property.
A REIT owns income-generating properties — often office parks and malls. Their rent comes in, expenses are deducted, and a large part of what is left has to be distributed.
Its units trade on the exchange, so entry and exit work just like shares — no registry, no stamp duty, no hunting for a buyer.
These points come with a REIT:
• If occupancy falls, the distribution can fall — it is not fixed income.
• When interest rates rise, the listed price often comes under pressure.
• The portfolio can be concentrated in just a few cities and a few tenants.
• Different parts of the distribution are taxed differently.
Treating a REIT as a substitute for a fixed deposit is the most common mistake. Its yield looks attractive, but its price changes every day and its payout is not guaranteed — it behaves like equity, not like a deposit.
This article is educational only — it is not a buy or sell recommendation, it makes no claim of guaranteed returns, and it is not advice. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.