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      Question

      As per SEBI regulations, REITs and InvITs are required

      to distribute at least what percentage of their net distributable cash flows to unit holders?
      A 50% Correct Answer Incorrect Answer
      B 75% Correct Answer Incorrect Answer
      C 80% Correct Answer Incorrect Answer
      D 90% Correct Answer Incorrect Answer
      E 100% Correct Answer Incorrect Answer

      Solution

      Under the regulations set by theĀ Securities and Exchange Board of India (SEBI), specifically the SEBI (Real Estate Investment Trusts) Regulations, 2014, and the SEBI (Infrastructure Investment Trusts) Regulations, 2014, both REITs and InvITs are mandated to distribute a significant portion of their earnings to investors.Ā Both entities must distribute at leastĀ 90%Ā of theirĀ Net Distributable Cash Flows (NDCF)Ā to their unit holders.

      • ForĀ REITs, the distribution must be made at leastĀ once every six monthsĀ (semi-annually).
      • ForĀ public InvITs, the distribution must also occur at leastĀ once every six months, though many choose to distribute on a quarterly basis.
      • Dividend Treatment:Ā The cash flows typically consist of dividends, interest income, and sometimes the repayment of debt.Ā 
      This regulatory requirement ensures that these investment vehicles function as income-generating instruments, providing regular liquidity to investors while enjoying certain tax pass-through benefits

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