Over Rs 3.5 lakh crore worth asset monetisation through REITs, InvITs likely in one year: Report


Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT) structures are expected to see healthy traction in the near to medium term, supported by the track record of entities that have already floated such structures, enabling regulatory developments and focus on attracting investments into the infrastructure space.

Over 3.5 lakh crore assets likely to get monetised through InvITs and REITs over the next one year. Of this, assets worth over Rs.2.5 lakh crore are expected to be monetized through InvIT while 1 lakh crore worth monetisation is likely to be through REITs, said ratings agency


In the last two years, the InvIT space had witnessed monetisation of assets worth Rs 85,300 crore. During the same period, all three REITs valued at Rs 77,100 crore were listed.

With InvITs and REITs now recognised as borrowers under the SARFAESI Act, lenders to these trusts, shall have adequate statutory enforcement options, absence of which was earlier becoming a constraint for bankers to lend directly at trust level.

Further, Insurance Regulatory and Development Authority of India (IRDAI) has recently allowed insurers to invest in debt instruments of InvITs and REITs rated AA and above as a part of their approved investments, which evidences growing comfort of lenders as well as investors around such structures.

Clarifications on the tax-free nature of dividend distribution from these trusts (subject to certain conditions) have also resulted in them being viewed more favourably.

“The supporting regulatory framework for various stakeholders attracted both debt and equity investors towards these trusts. Till date assets worth Rs 2.1 lakh crore have been floated through these platforms – 64% through InvITs and 36% through REITs. Lenders are also increasingly becoming comfortable lending to such structures. InvITs and REITs together raised debt of Rs 70,800 crore so far majorly through NCD route (62%) and term loans (37%),” said Shubham Jain, Group Head & Senior Vice President, Corporate Ratings, ICRA.

According to him, the capital raising by these trusts is also aided by the favourable view that investors have taken on the long-term revenue generation potential of such infrastructure and real estate assets in the country.

“In the real estate space, there are various developers and asset managers who have steadily built-up large portfolios of REIT-ready assets which can be monetized through this route. Of such portfolios, assets worth over Rs 1 lakh crore are likely to be listed in the near to medium term. Infrastructure assets with 3 to 5 years of operating track record across various segments like, roads, gas pipeline, digital fibre, power transmission and renewables are ideal candidates for monetisation through this platform,” Jain added.

With a track record of more than five years for InvITs and two years for REITs, supporting regulatory framework and the increase in comfort levels of various stakeholders on these platforms; the potential remains huge.



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