Evolving structures and strategies for real estate alternatives

Relevant Research

Key Takeaways

  • EduInfra offers a promising 10 – 11% entry cap rate for annuity investors with rental escalations in the region of 3 – 5%
  • Infrastructure classification allows for tax optimal exit through InvITs
  • Seller awareness needed – operators slowly moving towards asset light models; depth, but potential untapped
  • Significant international investor interest in annuities from EduInfra

Key Takeaways

  • Recent developments in the Indian tax regime have brought India closer to global norms though hybrid instruments that have come under increased scrutiny GAAR provisions have enabled tax authorities to examine the commercial sub- stance of transactions, underscoring the importance of purpose, pooling, and people

  • Hybrid debt instruments face varied treatment under DTAAs vis-à-vis capital gains. which may result in challenges when claiming treaty benefits

  • Beneficial ownership rules in DTAAS restrict treaty benefits to the entity exercising actual control over a return/income received

  • Is redemption premium interest income or capital gains? While DTAAs say interest, courts in India say capital gains. Conflicting classifications should not be a concern

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