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In a recent report, Sundaram Alternates, a leader in alternative investments and a subsidiary of the Sundaram Group, has highlighted significant opportunities within the real estate credit funds sector.

The report, titled " Real Estate backed High Yield Credit - A unique opportunity," sheds light on the immense potential presented by these funds against the backdrop of India's evolving economic landscape.

India's economy is currently estimated at around USD 3.5 trillion, with a debt-to-GDP ratio of 0.9x as of the end of FY23. The real estate (RE) sector holds significant credit exposure, totaling approximately USD 90 billion, representing roughly 4% of overall debt. This ratio is in sharp contrast to that of developed markets like the EU and USA, where the risk capital ratio is comparatively higher.

Real estate market in India was around USD 120 billion (~15% of GDP), expected to grow at ~18% CAGR to reach ~USD 1 trillion in 2030. The Indian real estate sector is expected to grow at a CAGR of 7-9% over the next five years. The residential sector is expected to be the primary driver of growth, followed by the commercial and logistics sectors.

Real estate credit funds offer investors exposure to a diversified portfolio of real estate assets.

Key Findings:

1.Robust Investment Landscape Analysis:

The report provides an in-depth analysis of the current real estate credit funds market, showcasing opportunities for diverse investor profiles. From High-Net-Worth Individuals (HNIs) to Family Offices, Insurance Companies, Corporate Treasuries, Non-resident Indians (NRIs), and offshore capital pools, the report outlines a comprehensive investment landscape.

"Our report identifies the diverse range of opportunities within the real estate credit funds market. It is tailored to assist investors in navigating through various investment avenues based on their risk appetite and financial objectives," stated Mr. Karthik Athreya, Director & Head of Strategy – Alternative Credit at Sundaram Alternates.

2. Risk and Return Dynamics Explored:

The report delves into the risk-return profile of real estate credit funds, providing investors with a comprehensive understanding of the historical performances and expectations from the latest offering, RE Credit Fund IV.

"We believe transparency is key in the financial landscape. Our report aims to empower investors with insights into the risk and return dynamics of real estate credit funds, aiding them in making informed investment decisions," added Mr. Athreya.

3.Market Trends and Expert Perspectives:

With a focus on prevailing market trends, the report analyzes the impact of regulatory changes and economic dynamics on real estate credit investments. It also features insights from industry experts, including Mr. Karthik Athreya, Director & Head of Strategy - Alternative Credit at Sundaram Alternates.

"Our expert perspectives are rooted in a deep understanding of the market. We aim to guide investors through the evolving real estate investment landscape, providing them with actionable insights," commented Mr. Athreya.

Conclusion:

The Sundaram Alternates report, " Real Estate backed High Yield Credit - A unique opportunity," acts as a comprehensive guide for investors looking to capitalize on the unique opportunities presented by the real estate sector.

Sundaram Alternates Real Estate Fund Delivers Consistent Returns and Capital Protection

Sundaram Alternates has a proven track record of success in the real estate sector, its Our 4th real estate credit fund launch is a strong testament to our track record in this space amidst difficult credit events and volatile markets over the last 5-6 years. The firm has deployed over 2200 crores with the benefit of capital recycling, demonstrating its ability to generate strong returns for investors. The first fund has generated a gross investor level IRR of 15.2%, while Funds II and III are currently yielding around 17%.

The fund is designed to provide investors with capital protection by investing in secured real estate assets. This has resulted in zero capital losses between 2018 and 2022-2023. With Active Cash Yield Model  The fund distributes 100% of income every quarter, providing investors with a regular stream of income.

This fund is designed to provide investors with access to a diversified portfolio of secured real estate investments, with a primary focus on self-liquidating residential projects across key South Indian micro-markets, in addition to interesting opportunities such as last-mile financing, project acquisitions, select rescue financing etc at attractive returns around 18% – 22% gross portfolio returns while being secured from a capital protection perspective.

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