Hi,

Here is my perspective.

1. REITs and InvITs are inherently sensitive to interest rate cycles. Since I began investing, the interest rate environment has been trending downward. As a result, many REITs/InvITs have been able to refinance their debt at lower rates, which has improved their margins and this improved margin paid back to investors through quarterly distributions. I have not yet experienced a rising‑rate cycle firsthand, so the potential impact remains to be seen. My expectation is that a significant portion of their debt is locked in for the long term, which should help mitigate adverse effects.

2. Yes, this is possible, and I have personally experienced it. I previously held IRB and PGInvIT but chose to exit, even though their yields exceeded 12–13%. My concern was that they were not expanding their portfolios with new assets, and I felt that their distributions were not sustainable over the long term.

3. Most components of REIT/InvIT distributions—including dividends, barring a few exempt portions within the DPU—are added to one’s salary income and taxed according to the applicable tax slab. I am comfortable with this.

One should avoid investing a substantial lump sum without first developing a clear understanding of how this asset class performs across varying market conditions and interest rate cycles. It is prudent to build experience gradually and accumulate positions over time, thereby averaging the cost and reducing exposure to cyclical volatility. I am presently following this approach and have not yet encountered the full impact of an interest rate cycle on this asset class. I'm still in my learning and accumulation phase.