Exploring the Best Performing REITs in the Indian Stock Market

Real Estate Investment Trusts (REITs) have been gaining traction in the Indian stock market, offering investors a unique opportunity to diversify their portfolios with exposure to real estate. While REITs may not have performed as impressively as other sectors, it’s always interesting to see which stocks lead within their sector. Over the past year, one REIT has stood out as the best performer, significantly outpacing its peers.

What is a REIT?

A REIT is a company that owns, operates, or finances income-producing real estate. They allow individual investors to earn a share of the income produced through commercial real estate ownership without having to buy, manage, or finance properties themselves. REITs are required to distribute at least 90% of their taxable income to shareholders in the form of dividends. This structure provides a consistent income stream for investors, making REITs an attractive investment option.

REITs in India

(source: screener)

In India, there are four listed REITs:

1. Embassy Office Parks
2. Nexus Select Trust
3. Mindspace Business
4. Brookfield India

Top Performer: Nexus Select Trust

(source: tijori finance)

Among these, Nexus Select Trust has emerged as the top performer over the past year, delivering a remarkable 32% return. The second-best performer, Embassy Office Parks, achieved a 20% return.

Nexus Select REIT Portfolio Overview

Nexus Select Trust is India’s first retail REIT and a leading Grade-A consumption centre platform. Here’s a closer look at what makes Nexus Select Trust a standout in the Indian retail real estate market:

Geographic Reach:

• 17 Consumption Centres across 14 Cities
• Major cities include Delhi, Bengaluru, Chennai, Hyderabad, Navi Mumbai, Pune, and Ahmedabad

Retail Portfolio:

• 9.9 million square feet of retail space
• Approximately 3,000 retail stores with over 1,000 brands

Operational Metrics:

• 97.6% Leased Occupancy
• FY24 Rent to Sales Ratio: 11.7%
• FY24 Footfalls: Approximately 130 million

Financial Metrics:

• Net Asset Value (NAV): INR 145 per unit
• Loan-to-Value (LTV) Ratio: 14%

This extensive portfolio, coupled with high occupancy rates and strong financial performance, positions Nexus Select Trust as a leading player in the Indian retail real estate market.

Comparative Performance

One of the key metrics highlighting Nexus Select Trust’s success is its occupancy rate of 97.6%, significantly higher than Embassy Office Parks’ 64%. Nexus Select Trust achieved its FY24 guidance with a Net Operating Income of Rs 16.1 billion and has set an ambitious target of Rs 17.6 billion for FY25, aiming for a retail occupancy of over 98%.

Conclusion

Nexus Select Trust’s robust portfolio, high occupancy rates, and strong financial performance underscore its leadership in the Indian REIT sector. As the first retail REIT in India, it has set a high benchmark for others to follow, offering investors an attractive option for diversifying their portfolios.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.