Frequently Asked Questions

FAQ - Funding and Exit

The land is the security. Once the tenant LoI or lease is signed and the bank funds the balance of the project cost, the land is offered as security towards those loans and advances. In a leased asset the rental stream itself additionally supports LRD (lease rental discounting) borrowing for the later phases of the project.

The land is the security, and the loan is repaid out of rental income. Once the shed is leased, the rental stream services the debt and supports LRD (lease rental discounting) borrowing against the asset. CIPD uses Convertible Debentures (CCDs) to distribute that rental income as interest, avoiding double taxation for investors.

LRD sizing follows the capitalised value of the lease stream — the stronger, longer-locked and better-tenanted the rent, the more can be raised against it. The same rental-capitalisation logic values a stabilised asset: annual rent divided by the market yield, so ₹82.8 lakh of annual rent at an 8% RoI gives ₹10.35 crore. Rent, lock-in and tenant grade are the drivers.

LRD sizing follows the capitalised value of the lease stream — the stronger, longer-locked and better-tenanted the rent, the more can be raised against it. The same rental-capitalisation logic values a stabilised asset: annual rent divided by the market yield, so ₹82.8 lakh of annual rent at an 8% RoI gives ₹10.35 crore. Rent, lock-in and tenant grade are the drivers.

Lending turns on the lease and the land. Financial institutions fund only once a tenant LoI or lease agreement with a lock-in and a received security advance is in place, with the land offered as security — so the lease deed, evidence of the security advance and clear, marketable title sit at the core, alongside sanctioned building approvals (CMDA/DTCP) and statutory clearances such as Fire NoC and TNPCB consent.

LRD proceeds fund the construction of later phases. Across CIPD’s SPVs the pattern holds: equity buys the land and builds Phase 1, then Phases 2, 3, 4 and 5 are funded by LRD — rental income from completed, leased phases is discounted to build out the remainder, recycling capital through the project instead of raising fresh equity for each phase.

CIPD targets a 15–17% IRR to investors over a 4–8 year hold, while the promoter references delivering an RoI of 10%+ or an IRR of 20%+ annually. Individual projects are underwritten to expected exit IRRs of roughly 14.8% to 24% — Tiruvallur at 24%, North Chennai/Sricity at 20.9%, Sriperumbudur at 14.8%, and MM Nagar, Hosur and Coimbatore at about 20% each. The carry structure sets the real hurdle: the fund manager shares in excess returns only beyond a 12% IRR, on a 20–80% profit-sharing structure. The demonstrated exit sits far above target — Ezhichur returned a 128% IRR.

A REIT listing converts ownership of an income-producing asset into a tradeable security, making exit continuous rather than transactional. A REIT works just like a mutual fund: several shareholders receive their share of the monthly rentals, and the REIT is listed on a stock exchange with a daily price and can be traded as a financial security. That listing is what makes it an exit mechanism — unlike a fractional ownership asset, where you must find a buyer through your platform, a REIT is listed on the stock market and buyers are easier to find. Entry starts at ₹1 lakh, against ₹5 lakh per asset for fractional ownership, and its advantages — liquidity from small investment sizes, a diversified portfolio across many assets, and professional management — are precisely the qualities that let a holder exit at market price on any trading day. The trade-off is average returns spread across the basket and no choice of asset. CIPD’s own institutional exit remains an outright ROI-based sale of stabilised assets; the REIT is the route that gives smaller holders A-grade exposure with an exchange-traded exit.

An industrial asset can be sold at any stage — the pricing logic stays rental capitalisation, but the exit multiple rises with stabilisation. Pre-construction: legally cleared, well-shaped developed land is easy to liquidate, and a CIPD SPV lists “Land: JD & Outright” as a disposal route, so cleared land can be sold outright or contributed into a Joint Development before any shed is built. Under-construction / pre-leased: once an LoI or lease with a lock-in and security advance is signed, the asset carries committed demand and can change hands on the strength of that lease — pre-leased assets typically trade at around 7% RoI, against the 10%+ RoI achievable on a freshly developed property within 15 months. Post-lease / stabilised: the primary and highest-value route — the asset is sold in the market at 8% RoI once rentals begin, with valuation starting as soon as rental starts, typically after a 4–8 year hold that compounds rental yields. The later and more stabilised the sale, the tighter the yield and the higher the price.

The process is phased, and each phase unlocks the next. Hold 15–25% of construction cost as liquid funds to cover approvals, sanctions, site pre-development and foundation. Acquire the land through equity — in the CIPD model, raised from UHNIs and family offices into a project SPV as equity plus Convertible Debentures (CCDs). Fund Phase 1 construction from that equity (or equity-JV). Sign a tenant LoI or lease with a lock-in and a received security advance: at that point financial institutions and the bank become comfortable funding the balance money needed to cover the complete expenses, with the land offered as security. Once rentals begin, fund later phases through LRD against the lease rentals. The cycle runs acquisition to approvals to construction to leasing to a stabilised exit.

In a JDA the landowner contributes the land as his equity — the value of his land calculated upfront — and the developer funds construction and development in exchange for a portion of that land. Landowners receive a percentage of the developed building while CIPD covers the construction and development costs. The split is fixed in advance: CIPD’s pipeline shows owner-to-developer shares of 79:21 at Hosur and 75:25 at Coimbatore. It suits the builder because the initial investment is low and working capital goes into construction, and the JDA states how the developer funds the build — own funds, borrowed against other assets, or the developer’s share in the development. Fix upfront the security advances, FSI, specifications, timelines with penalties, and the exit option if the project stalls.

Equity buys ownership and upside; debt buys leverage and is serviced out of rent. In the CIPD structure, equity comes from UHNIs and family offices who take equity shares in the project SPV — it funds the land purchase and Phase 1 construction, carries the development and leasing risk, and shares in the profits and appreciation (in a JV, income is distributed according to equity held). Equity is also what the lender expects you to bring: roughly 15–25% of construction cost held as liquid funds for approvals, sanctions, pre-development and foundation. Debt is the borrowed leg — LRD (lease rental discounting) raised against the lease rentals to fund Phases 2 to 5, plus bank funding of the project balance secured on the land once a tenant LoI or lease with a lock-in and security advance is signed. Convertible Debentures (CCDs) sit between the two, distributing rental income as interest to avoid double taxation before converting to equity. Equity is patient, risk-bearing and rewarded at exit (a 15–17% IRR over a 4–8 year hold); debt is claim-first, secured on land and rentals, and repaid from rental cash flow.

Both are valued the same way — capitalise the annual rent at a market yield, so a stabilised asset sells at 8% RoI and ₹82.8 lakh of annual rent becomes ₹10.35 crore — but the quality of that income is what moves the multiple. A long-term anchor (A-grade) tenant delivers a stable, long-locked lease and a long-term occupation guarantee, which supports better financial leverage and makes the property exactly the stabilised, A-grade pre-leased asset institutional buyers pay premium valuations for; that security is what justifies the tighter yield and higher exit multiple, and it also maximises LRD capacity against the rentals. A multi-tenant property trades lock-in for diversification: the owner can rent to a single company or hire multiple tenants, and by facilitating the property for dual tenants or more, you can create more cash flow and reliable returns, spreading vacancy risk rather than concentrating it. The exit trade-off is anchor-tenant stability and lock-in versus multi-tenant cash-flow resilience — with the fully stabilised, long-lease asset commanding the tighter yield.

Private equity is now the principal growth capital behind Indian warehousing. PE inflows surged 124% YoY, touching USD 1.5 billion by September 2024, cementing warehousing as one of the most attractive real estate asset classes in India, with capital concentrated in Grade A, 3PL- and e-commerce-aligned assets. It is chasing a market sized at USD 16.6 billion in 2024 and projected to reach USD 37.5 billion by 2027 (a CAGR of about 15%), where Grade A is roughly 41% of inventory and Chennai leads at 77%. CIPD raises its own equity from UHNIs and family offices through SPV equity and CCDs, and institutional investors are its exit buyers, acquiring stabilised assets at ROI-driven valuations.

The capital-unlocking route used here is LRD (lease rental discounting): the owner borrows against the rental income of a leased asset while retaining ownership, and deploys those proceeds into later construction phases. The signed lease — with its lock-in and received security advance — is what makes the asset bankable, with the land offered as security.

Build-to-suit is financed on a signed tenant; speculative development is financed on equity until a tenant arrives. In a BTS, the investor puts up 15–25% of construction cost as liquid funds for approvals, sanctions and foundation, and once the LoI or lease with a lock-in and a received security advance is signed, financial institutions and the bank fund the balance of the project cost against the land as security — the pre-committed lease is what unlocks the debt, so leasing risk is largely resolved at the point of borrowing. In a speculative development the shed is built ahead of demand, so it must be carried on SPV equity for the land and early phases, with LRD available only once the asset is actually leased; the developer absorbs holding cost and vacancy risk in the interim. The upside compensates: Koppur, India’s best speculative shed, was leased at ₹27 per sq ft against a market rental of about ₹21 — a premium of more than 30%.

Construction finance bridges the gap between spending and rent, because institutional funding only arrives after a lease is signed. The investor carries the early phase from liquid funds — about 15–25% of construction cost — covering approvals, sanctions, site pre-development and foundation, and absorbs the holding cost of that period: interest accrues on the land and construction cost from the day of land acquisition until the date of rent realisation, illustrated at roughly ₹300 per sq ft. In the CIPD model, equity bridges Phase 1; once the shed is leased and rentals begin, LRD raised against those rentals funds subsequent construction, so lease-backed debt takes over from equity.

Exit timing is decided by asset stabilisation, then by letting rental growth compound into the capitalised value. The rule in practice: hold 4–8 years, sell once the asset is fully leased and stabilised, and time it to benefit from compounding rental yields and higher exit multiples, targeting a 15–17% IRR. The cycle read behind that is a recovering market — rentals corrected 15% post-Covid and land values fell 30%, creating a favourable entry, and rentals are now growing steadily at 4–5% YoY in Chennai and 3–4% YoY across major cities. Because value is rent divided by yield, every year of rental escalation lifts the exit price mechanically: an asset capitalised at 8% RoI re-prices upward as rent grows, and valuation begins the moment rental starts, 15 months from first investment. The decision rule is therefore to enter post-correction, hold through leasing and rental escalation, and sell into institutional demand once the asset is stabilised — converting years of rental growth and land appreciation into a higher exit multiple.

The structured layer in this capital stack is the Compulsorily Convertible Debenture (CCD). CIPD raises capital from UHNIs and family offices into each project SPV as equity plus CCDs, and uses the CCDs to distribute rental income as interest, avoiding double taxation — investors benefit from regular cash flows while CIPD gains through structured payouts and reinvestment. Economically the CCD occupies the mezzanine position: it sits above equity, is serviced out of rental cash flow, and converts to equity later. Senior debt sits beneath it — LRD against the lease rentals for later phases, plus bank funding of the project balance secured on the land once a lease with a lock-in and a received security advance is signed.

Value the asset by capitalising its rent. Annual rent divided by the market yield gives the value — ₹82.8 lakh of annual rent at an 8% RoI equals ₹10.35 crore — and asset valuation starts as soon as rental starts, 15 months from first investment. RoI itself is (monthly rent × 12), less maintenance, taxes, insurance and depreciation, divided by the total acquisition cost. Because LRD is raised against that same lease-rental stream, the inputs that drive the loan are the inputs that drive the value: rent per sq ft, tenant grade, lock-in period, escalation, and clear title with all approvals in place. A strong A-grade tenant on a long lock-in produces a tighter yield and a higher value to lend against.

Land-stage funding risk is managed at acquisition: legally cleared land is bought below market rates directly from farmers at low or no risk, with full title due diligence and approvals processed in parallel to cut holding cost. The risks that strain cash flow are failed legal diligence, fragmented ownership, and low-demand locations that produce prolonged vacancies.

Borrowing capacity on an industrial asset rests on the lease, not on the building. Once the shed is leased, the rental stream supports LRD (lease rental discounting) against the asset, with the land as security — so the lever that improves terms is the strength of the lease: an A-grade tenant, a long lock-in, a received security advance, and clear title with all approvals in place.

Roughly 15–25% of construction cost, held as liquid funds to cover approvals, sanctions, site pre-development and foundation, before the bank funds the balance against the land as security. In the CIPD fund model, equity covers the land purchase and Phase 1 in full, with LRD taking over for later phases — one SPV shows 24% equity available.

 

Weigh the compounding yield of holding against the capitalised value released by selling. Holding pays a double-digit RoI — 10%+ within 15 months of first investment — and over a 4–8 year hold delivers compounding rental yields and higher exit multiples, plus land appreciation (a suburban industrial location like Madhavaram grew about 80x in 22 years as it turned urban). Selling converts that into a lump sum immediately: a stabilised asset is sold at 8% RoI, so ₹82.8 lakh of annual rent realises ₹10.35 crore. The test is whether the next few years of rental escalation and appreciation beat locking in the gain now and redeploying the capital into a fresh asset.

Institutional capital plays two roles: it buys the stabilised assets, and it funds the growth. As buyers, institutions are the primary exit — CIPD sells stabilised assets at premium, ROI-driven valuations to institutional investors — and private equity inflows surged 124% YoY to USD 1.5 billion by September 2024, drawn especially to Grade A, 3PL- and e-commerce-aligned warehousing. As funders, large-ticket development equity is raised from UHNIs and family offices into project SPVs as equity plus CCDs, with the fund targeting an AUM of USD 1 billion by FY27-28. The institutional capital active in this market is private equity, UHNIs and family offices.

A multi-city portfolio is assembled SPV by SPV, not as a single bundled purchase. Each project sits in its own SPV, funded with equity (plus CCDs) from UHNIs and family offices for the land and Phase 1, and LRD against the rentals for later phases, with JD/JV structures used where a landowner contributes the land. Newer SPVs are launched in locations showing more traction beyond Chennai — a pipeline spanning Tiruvallur, Sriperumbudur, North Chennai/Sricity, MM Nagar, Hosur and Coimbatore, each raising its own ticket. The 19.75-acre Tiruvallur SPV (3 phases) is already closed; the North Chennai/Sricity SPV seeks about ₹35 crore, and the five-phase Sriperumbudur SPV about ₹42 crore, with 24% equity available. Above the SPVs sits a single fund-management platform charging a 2% fee to actively manage real estate portfolios for multiple investors, recycling returns from existing projects into fresh land acquisition and targeting an AUM of USD 1 billion by FY27-28. Investors get diversified multi-city exposure without a single multi-asset acquisition.

The fund manager runs the asset end to end — managing acquisition, design, construction, leasing and exits with minimal risk. CIPD structures each project as an SPV, raises equity and CCDs from UHNIs and family offices, executes the build, secures A-grade tenants, and then sells the stabilised asset at an ROI-based valuation to institutional buyers. It is paid an annual fund-management fee of 2% on total fund size, covering project execution, leasing and asset management, and is aligned through performance carry — sharing excess returns beyond a 12% IRR threshold, on a 20–80% profit-sharing structure based on fund performance. Its target for investors is a 15–17% IRR over a 4–8 year hold.

LRD only becomes drawable once the asset is leased and rentals begin — and rental, and therefore asset valuation, starts around 15 months from first investment. Until that point the project runs on liquid funds (15–25% of construction cost) and SPV equity; the tenant lease with a lock-in and a received security advance is the trigger that makes lease-backed debt available.

Plan the exit around the debt. An LRD is secured on the lease rentals and the land, and the exit is an outright sale of the stabilised, leased asset at an RoI-based valuation — so the sale price (annual rent ÷ 8% RoI) must clear the outstanding facility, and the lease and lock-in that support the loan are exactly what the incoming buyer is acquiring.

Capital for further acquisitions is recycled rather than topped up: returns from existing projects are ploughed into fresh land acquisition in newer SPVs. Against an existing asset, the borrowing route is LRD — debt raised on the leased asset’s rental stream — while developed, legally cleared land appreciates and is easy to liquidate in its own right.

Financial institutions and banks operate as a single funding channel here: they become comfortable funding the balance money needed to cover the complete expenses once a tenant LoI or lease with a lock-in and a received security advance is in place, with the land offered as security. The lease — not the lender type — is what makes an industrial warehouse investment bankable.

Lender diligence has two layers. First, the income: a tenant LoI or lease agreement with a lock-in and a received security advance must be in place — a verified, locked-in rental stream — before financial institutions and the bank are comfortable funding, with the land offered as security. Second, the asset: clear, marketable and unencumbered title; planning and local-body approvals (CMDA/DTCP) sanctioned; and statutory clearances including Fire NoC and TNPCB/pollution consent. The asset is then valued by capitalising the rent at a market yield (8% RoI) to establish what is being lent against — so tenant grade, lock-in and rent per sq ft drive the sanction directly.

A single-tenant BTS carries a signed tenant into the loan; a multi-tenant speculative development carries vacancy risk into it. In a BTS, the bank funds the balance of project cost only after the LoI or lease with a lock-in and a received security advance is signed, so leasing risk is effectively resolved at the moment of borrowing — the rental stream that will service the debt already exists on paper, and the land secures it. The counterweight is concentration: the whole facility rests on one covenant, so tenant grade and lock-in length carry the deal. A multi-tenant speculative development is built ahead of demand, funded on SPV equity, and exposed until leasing is achieved — generic space in low-demand locations can face prolonged vacancies, and holding cost accrues from land acquisition until rent realisation (around ₹300 per sq ft). Once leased, it diversifies income across tenants and can capture a premium: Koppur leased at ₹27 per sq ft against a market rental of about ₹21, a premium of more than 30%.

Insurance is a standing asset-protection cost carried within property management: AWH’s scope covers taxes, insurance and CAM, plus renewal of AMCs, Fire licences and NOCs on the owner’s behalf, and project cash flows carry a “Property Maintenance, Other Taxes and Insurance” line. Keeping that cover current, alongside valid statutory approvals, is what keeps a leased asset compliant and bankable.

For family-owned industrial assets the exit is deliberately deferred — the asset is held, and its value is harvested in two stages by two generations. Warehousing creates generational wealth if done properly: the generation that builds the asset today enjoys the cash flow, and the next generation enjoys the appreciation and the benefits of redevelopment. So the first generation lives off the rental yield — hassle-free passive income at a double-digit RoI, 10%+ within 15 months of first investment — with a regular cash flow that helps in liquidity crunches and a rent-yielding asset that serves as the family’s financial back-up.

The real exit lands a generation later, when a suburban industrial location becomes urban: Madhavaram moved from ₹50 lakh per acre to ₹40 crore per acre, roughly 80x in 22 years, and such land is now being redeveloped into residential townships.The structuring implication is to own more land than building (land appreciates, buildings depreciate), hold clean freehold title, and treat eventual redevelopment or bulk sale as the exit event rather than a fund-style 4–8 year trade.

Pooling is what puts an A-grade asset within reach of a mid-sized investor. An A-grade tenant needs 25,000+ sq ft of office or 100,000+ sq ft of warehousing, which means investments of ₹25 crore and upwards — out of reach for one individual. Fractional ownership solves it: investors pool in money to invest and jointly own the asset, either as a demarcated portion in the sale deed or as shareholders in an SPV (LLP or Private Limited), sharing rental income in proportion to their investments, with entry starting at ₹5 lakh per asset. AWH also arranges part-investment opportunities of ₹50 lakh to ₹1 crore that deliver an A-grade tenant, an A-grade asset and a strong RoI. CIPD’s own vehicles are exactly this — small multi-investor SPVs, with Fund 1 holding 6 investors and Fund 2 holding 4.

Fix the funding stack and the exit thesis before capital is committed.

Funding

  • Hold 15–25% of construction cost liquid for approvals, sanctions, pre-development and foundation.
  • Secure a tenant LoI or lease with lock-in and security advance received before drawing bank debt; offer the land as security.
  • Structure in an SPV: equity (plus CCDs) for land and Phase 1, LRD against rentals for later phases.
  • Use CCDs to distribute rental income as interest and avoid double taxation.
  • In a JDA, fix upfront: security advances, FSI and revenue share, specifications, timelines with penalties, developer funding of the build, and the exit option if it stalls.

Exit

  • Confirm clear, marketable title with all approvals and statutory clearances in place.
  • Lease to an A-grade tenant on a long lock-in — tenant quality sets the yield.
  • Plan a 4–8 year hold so rental yields compound into a higher exit multiple.
  • Value the stabilised asset at market yield (8% RoI) against your target IRR — CIPD’s is 15–17%, carry only above a 12% hurdle.
  • Sell fully leased and stabilised to institutional buyers at an ROI-based valuation.