Assets worth over Rs 3.5 lakh cr to be monetised through InvITs, REITs in 1 yr: Icra

This is a big leap if one considers that only Rs 2.1 lakh crore of assets have been floated through the newly created routes, Icra said. 

The handsome growth will be supported by the track record of entities, which have already floated such structures, enabling regulatory developments and focus on attracting investments in the infrastructure space, it said. 

The agency said that a constraint has been removed with the recognition of InvITs and REITs as borrowers under the SARFAESI Act, and added that lenders to these trusts will have adequate statutory enforcement options now. 

Additionally, the 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 investment, which evidences the growing comfort of lenders as well as investors around such structures, the agency said. 

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, it added. 

“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,” Icra group head and senior vice president Shubham Jain said. 

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 monetised through this route. Of such portfolios, assets worth over Rs 1 lakh crore are likely to be listed in the near to medium term. 

Meanwhile, on the infrastructure side, 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 the InvITs platform, Jain said, pegging the total monetisation at Rs 2.5 lakh crore. 

“Over Rs 3.5 lakh crore of assets likely to get monetised through REIT and INvIT as platforms in the next one year,” Icra said. 

The monetisation on infrastructure may include the government using the platform for NHAI, PowerGrid and GAIL, Jain noted. 

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