New Delhi, Aug. 20 -- Real estate investment firm Strata, which operates a fractional ownership platform, is making a fundamental shift in its business model, moving away from its earlier retail-led model to one around its own, rent-yielding assets and private credit, a top company executive told VCCircle.

The company, which is backed by Elevation Capital, Kotak Investment Advisors and Gruhas, had built its initial business by enabling retail investors to participate in commercial real estate through fractional ownership.

Strata is now increasingly investing its own capital alongside other family offices, institutional investors and banks.

The pivot is driven by regulatory changes that have made retail fundraising through fractional ownership platforms difficult, said Sudarshan Lodha, founder and chief executive officer, Strata. It is also driven by the company's experience in sourcing, underwriting, managing and exiting assets over the past several years, he added.

In May 2025, Strata had surrendered its registration as small and medium real-estate investment trust (SM REIT) with the Securities and Exchange Board of India (SEBI), following a dispute with a developer. Following this, SEBI had issued a note to investors advising them to exercise caution when dealing with the platform.

Under the new model, Strata is building two parallel businesses - a long-term balance-sheet portfolio of rent-yielding assets and a private credit platform focussed largely on residential development.

"The experience accumulated through the earlier business is now being transferred to Strata's own portfolio. The capabilities have not changed; the capital model has.

"The company is using its experience in asset identification, underwriting, acquisition, leasing, asset management and exits to build a proprietary portfolio, while bringing in institutional partners where additional equity is required," said Lodha.

Rent-yielding assets

Under commercial real estate strategy, Strata is acquiring mid sized, rent-yielding commercial assets. It largely targets assets valued in the range of Rs 100-250 crore (around $10.5-26 million) but can increase its cheque size to Rs 500 crore (around $52 million) when needed.

It is looking at assets in Bengaluru and Mumbai, which it calls are its core markets and is open to look at opportunities in Pune and Chennai as well. In asset classes, office is the primary focus of the platform, followed by hospitals, while Strata is also looking at distressed and repurposing opportunities and industrial assets.

It has bought three assets so far, shelling out over Rs 700 crore (around $73.2 million) and several deals are under discussion. "These are expected to take the portfolio to approximately Rs 1,500-1,800 crore over the following twelve months," Lodha said,

Private credit

Under credit, Strata has so far disbursed roughly Rs 200-250 crore, starting December, 2025. It deploys its own capital and also co-lends alongside select investors and other capital providers.

The lending strategy is predominantly focussed on residential developments across Bengaluru, Mumbai and Pune. Commercial real estate lending forms a smaller part of the private credit portfolio.

The private credit business provides debt capital to developers and operators and is positioned as an alternative to traditional real estate financing.

"Over the longer term, the business could potentially be structured as an NBFC [non-banking financial corporation]," said Lodha.

Winding down the FOP

The firm continues to manage 34 assets, totalling 3-3.5 million sq ft under its earlier strategy of fractional ownership. As it winds down this business, it is looking at exiting 70-80 per cent of the current third-party managed portfolio over the next three years to transition fully into this new mode.

In last two years, it has exited approximately Rs 200-250 crores worth of projects and intends to exit projects worth another Rs 200-250 crores this year. "The exit journey started in 2024 with one project, followed by three in 2025, and two so far in 2026, with an aim for two more by year-end," Lodha said.

To streamline the business, the company has also reduced its workforce from 70 members to 32, and the tech team has been trimmed from 17 to 3, as the focus is now on internal operational management rather than a public-facing retail platform.

In 2025, Strata had to surrender its SM REIT licence amidst a legal dispute with a developer-partner, Avigna, relating to a warehouse project in Hosur, Tamil Nadu. The details of the case were not shared because it is still sub-judice.

Published by HT Digital Content Services with permission from VC Circle.