By laksh5382 
Fund raising by Infrastructure Investment Trusts (InvITs) has declined significantly in FY20 so far compared to last year, partly due to lower allocation to road projects and partly due to transfer of assets from parent entities and others to InvITs. Due to regulatory delays in.
Real Estate Investment Trust (REIT) However, they have more or less maintained the fund raising pace as they are busy adding to their portfolio.
Most InvITs in India have roads as their underlying asset, whereas, three out of four REITs in the country have office properties as their underlying asset and the fourth includes malls.
According to data from Prime Database, InvITs have raised ₹24536 crore so far in FY25 compared to ₹44188 crore in FY24. The data shows that the amount raised through equity so far in FY2015 has been Rs 11088 crore, while in FY2014 it was Rs 34423 crore. The amount of ₹13448 crore raised through debt has already surpassed the total of ₹9765 crore in the previous financial year.
Putting together the funds raised by REITs and InvITs so far in FY20, this is a little less than 60 per cent of the funds raised in the entire FY24.
According to CareEdge Ratings, assets under management of InvITs stood at ₹5.4 lakh crore at the end of FY24, up by a quarter year-on-year, while office REITs account for one-tenth of the total Grade A office space in the country.
invitation
Rajshree Murkute, senior director, CareAge Ratings, said fund raising activity has slowed down in FY20 due to the shift of toll roads and HAM projects to InvITs, which have an enterprise value of Rs 20,000 crore.
He said the low project allocation on roads last year and so far this year is not expected to have an immediate impact on asset transfers to InvITs in the next 2-3 years. Monetization potential of road InvITs, estimated to be ₹2 lakh crore over the next two years, will be driven by transfer of operational toll roads to NHAI InvIT, upcoming TOT projects, change in hands of mature toll projects and operational hybrid annuity model projects .
“Despite significant monetization potential, there is a need to closely monitor valuation multiples and investor appetite due to perceived risks in the quality of road construction,” Murkute said.
Mature toll roads hold a large share in road AUM, with more than half of the assets being toll road assets, followed by HAM assets at about 25 percent.
Debt is being supported partly because equity is a more time-consuming process and also because the existing leverage is below the 49 per cent limit of enterprise value in both InvITs and REITs. Annuity cash flow also increases their financial flexibility.
REITs
REITs have expanded their total sector by about 10 per cent in the first half of FY25. They are using their fund proceeds either to fund acquisitions or to deleverage, thereby making room for more assets.
For example, Embassy Office Parks REIT raised ₹2,500 crore in April to partially fund the acquisition of a tech park in Chennai. This month, Brookfield India Real Estate Trust raised ₹3500 crore to reduce leverage.
“The outlook for InvITs and REITs over the next two years is favorable due to the strong asset monetization pipeline for roads, commercial real estate and transmission sector,” Murkute said.