REITs & InvITs emerge as the backbone of financial future

Subahoo Chordia, CEO of EAAA Alternatives joins Vivek Law on the Simple Hai! podcast.

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Chordia, who has been instrumental in achieving "many firsts" in the alternative investment space, particularly focusing on Real Assets like REITs and InvITs, believes they are the backbone of India's growth story. He shares how this financialisation process is making essential utility and infrastructure assets, which have already reached an impressive Rs 10 lakh crore im EV/AUM, accessible to the wider Indian investing public.

During the interaction, Chordia asserted that real assets are the backbone of India's growth story. A real asset is defined simply as something tangible that is an asset you can see, touch, and feel and one that also produces a steadyincome. Crucially, they must function as a necessity or utility used by the common person, such as power grids, highways, or buildings.

Democratisation through Financialisation

Chordia drew an analogy between the evolution of real assets and the equity market just as ordinary investors gained access to pharmaceutical or IT companies through equity, they are now gaining access to infrastructure through financialisation. This transformation was driven by REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). REITs and InvITs, launched in India in 2017, have already seen rapid growth, reaching an EV/AUM of Rs 10 lakh crore. These structures operate like mutual funds, collecting capital to acquire diversified assets. SEBI regulation mandates that 90% of the cash flow generated by these operating assets must be distributed to investors. Returns are thus derived from two sources: regular income distributions, quarterly or semiannually and appreciation in the unit price.

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