Assets worth Rs 2.1 trillion have been released on these platforms too far, with InvITs accounting for 64% and REITs accounting for 36%.
InvITs (infrastructure investment trusts) and REITs (real estate investment trusts) are expected to monetize about Rs 3.5 trillion worth of assets in the coming year, according to rating company ICRA.
“InvIT and REIT structures are expected to see healthy traction in the near to medium term, supported by the track record of entities which have already floated such structures, enabling regulatory developments and focus on attracting investments into the infrastructure space.”
In the previous two years, assets worth Rs 85,300 crore have been monetized in the InvIT market. All three REITs were launched at the same time, with a combined value of Rs 77,100 crore.
With InvITs and REITs being recognized as borrowers under the Sarfaesi Act, lenders to these trusts will have proper statutory enforcement tools, which were previously a barrier for bankers lending directly to trusts, according to the statement.
In an article Business Standard reported Shubham Jain, group head & senior vice president, corporate ratings, ICRA, said: “The supporting regulatory framework for various stakeholders attracted both debt and equity investors towards these trusts. 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 the NCD route (62 percent) and term loans (37 percent). The capital raising by these trusts is also aided by the favorable view that investors have taken on the long-term revenue generation potential of such infrastructure and real estate assets in the country.”
In addition, the Insurance Regulatory and Development Authority of India (IRDAI) recently allowed insurers to invest in debt instruments of InvITs and REITs rated AA and above as part of their approved investments, indicating that lenders and investors are becoming more comfortable with such structures. Clarifications on the tax-free nature of dividend distributions from these trusts (subject to specific criteria) have further improved their reputation.