Over Rs 3.5 lakh crore worth of assets are likely to get monetised through InvITs (Infrastructure Investment Trusts) and REITs (Real Estate Investment Trusts) as a platform in the next one year, rating firm ICRA said on Thursday. Till date, assets worth Rs 2.1 lakh crore have been floated through these platforms – 64 per cent through InvITs and 36 per cent through REITs, it said. 

“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,” it added. 

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, it said. 

Further, 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 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, it said. 

Shubham Jain, group head and 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 NCD route (62 per cent) and term loans (37 per cent). 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.”