InvITs/REITS

Infomerics Ratings has launched rating of Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). InvITs and REITs are innovative investment vehicles and allow developers to monetise revenue-generating infrastructure and real estate assets. The developers can access long term capital and use the released capital to invest in new projects. The investors are provided with regular income, an investment vehicle with a diversified income generating asset base, liquidity as it is listed and
traded on the stock exchanges, and an exposure to infrastructure/real estate sector without being burdened by purchasing and managing assets themselves. InvIT / REIT is set up in the form of a trust that owns, operates, and invests largely in completed income producing assets. In case of REITs these assets primarily are commercial properties such as office spaces, shopping malls, warehouses etc. while in the case of InvITs these assets can be from energy sector, telecom sector, transport sector etc. The Securities and Exchange Board of India (SEBI) released regulations on InvIT and REIT in August 2014 and amendments thereafter.

‘Already popular in developed countries, REITs and InvITs are gaining a foothold in India and can play a significant role in addressing financing needs of India’s humungous infrastructure and real estate sectors’, says Mr. B. K. Bajaj, CEO, Infomerics Ratings.

Says Mr. Amod Khanorkar, Chief Rating Officer, ‘Infomerics Ratings has developed specific methodology for rating of InvITs and REITs that focus on assessment of the quality of the underlying asset portfolio and cash flows, and take into account the leverage, experience of the investment manager and risk management policies. Infomerics’ rating of InvITs /REITS is an opinion on the ability of the trust to make timely payment on its debt obligations.’

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