Real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) are innovative vehicles that allow developers to monetise revenue-generating real estate and infrastructure assets, while enabling investors or unit holders to invest in these assets without actually owning them.
Such monetisation benefits developers by allowing them to release capital for funding new infrastructure/real estate projects, and provides liquidity to investors or unit holders as the units of the trust are listed on exchanges. Apart from these, REITs and InvITs enjoy favourable tax treatment, including exemption from dividend distribution tax and relaxation of capital gains tax.
CRISIL has developed specific criteria for rating of REITs and InvITs that focus on assessment of quality of the underlying asset portfolio and cash flows, take into account the leverage, experience of the investment manager, risk management policies, etc.
CRISIL assigned its first InvIT rating of “CCR AAA” to India Grid Trust, an InvIT established by Sterlite Power Grid Ventures.