In a major boost to the real estate and infrastructure sector and creating avenues for inflows of over $20 billion investment into these stressed sectors from both foreign and domestic investors, the Securities and Exchange Board of India (SEBI) on Sunday approved the SEBI (Real Estate Investment Trusts) Regulations, 2014, and SEBI (Infrastructure Investment Trusts) Regulations, 2014. The SEBI move will provide a framework for registration and regulation for setting up and listing of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) in India.
The SEBI Board, which met in New Delhi, approved these regulations which will now put India at par with developed nations such as the U.K., the U.S., Japan, Hong Kong and Singapore where such trusts are listed and traded. This development has come within a month of the announcement in the Union budget and will go a long way in addressing the problems faced by the infrastructure sector. As per SEBI guidelines, REITs and InvITs will be set up as trusts and registered with the SEBI.
REIT will invest in commercial real estate assets, either directly or through special purpose vehicles (SPVs). In such SPVs, a REIT will hold controlling interest and not less than 50 per cent of the equity share capital or interest. Further, such SPVs will hold not less than 80 per cent of their assets directly in properties and will not invest in other SPVs.
Once registered, the REIT will raise funds through an initial offer. Subsequent raising of funds would be through follow-on offer, rights issue and qualified institutional placement. The minimum subscription size for units of REIT will be Rs. 2 lakh.
The units offered to the public in initial offer will not be less than 25 per cent of the number of units of the REIT on post-issue basis. Units of REITs will be mandatorily listed on a recognised Stock Exchange.
As SEBI approved regulations, InvITs will invest in infrastructure projects, either directly or through a SPV.
