Budget 2021 | Debt financing for investment in InVITs, REITs to be enabled further: FM Sitharaman
The move will attract more investment in the real estate and infra sectors, says FM Nirmala Sitharaman.
Debt financing of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) will be enabled by making a suitable amendment to attract more investment in the real estate and infrastructure sectors, Finance Minister Nirmala Sitharaman said on February 1 in her Budget speech.
Giving flexibility to REITs and Invits to raise more debt capital would provide additional funds to acquire assets and this could lead to faster closure of transactions with lower cost, said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers International India.
Debt financing of InvITs and REITs will be enabled by making a suitable amendment to attract more investment in the real estate and infrastructure sector. Rapid development in infrastructure requires a strong inflow of capital. The FM's announcement to set up a new development financial institution, capitalised with Rs 20,000 crore and the DFI lending 5 lakh crore in the next three years will bring in a big boost to infrastructure, said Honeyy Katiyal, founder, Investors Clinic.
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REITs are listed entities that invest in income-generating properties and distribute at least 90 percent of their income proceeds to unit-holders through dividends. After registration with SEBI, units of REITs will have to be mandatorily listed on exchanges and traded like securities.
SEBI notified REIT's regulations in 2014, allowing setting up and listing of such trusts, which are popular in some advanced markets.
InvITs is an infrastructure investment trust through which infra companies can raise money.