More funds for realty: Sebi notifies norms for REITs, infrastructure investment trusts

Mumbai: Market regulator Sebi today notified norms for listing of business trust structures, REITs andInvITs that would help attract more funds in a transparentmanner into realty and infrastructure sectors.

Real Estate Investment Trust (REIT) and InfrastructureInvestment Trust (InvITs), whose norms were approved by theregulator in August, would get tax incentives.

For both trusts, the minimum initial offer size should beRs 250 crore with a public float of at least 25 per cent,according to the Securities and Exchange Board of India(Sebi).

The minimum asset base for these trusts to get listed isRs 500 crore.

To ensure transparency, these trusts would be subject tostringent norms on disclosure as well as related partytransactions.

In separate but similarly-worded regulations for the twotrusts, Sebi said that all related party transactions shouldbe at “arms-length” in accordance with relevant accountingstandards.

REIT and InvIT are required to make investments eitherdirectly or through Special Purpose Vehicles. In case of PPPprojects, money can be put in only through SPV.

In the case of REITs, the minimum public holding shouldbe 25 per cent while the total number of outstanding units atall times as well as the number of unit holders – who arepart of the public – should be 200.

Under both the initial offer and follow-on public offer,the REIT shall not accept subscription of an amount less thantwo lakh rupees from an applicant, as per the norms.

Sebi has said that at least 80 per cent of the value ofREIT assets should be invested in completed and rentgenerating properties.

REIT is barred from investing in vacant land oragricultural land or mortgages other than mortgage backedsecurities.

“Not less than seventy five per cent of the revenues ofthe REIT and the SPV, other than gains arising from disposalof properties, shall be, at all times, from rental, leasingand letting real estate assets or any other income incidentalto the leasing of such assets,” Sebi said.

At least two projects should be held by a REIT, eitherdirectly or through SPV. Out of that, only up to 60 per centof the asset value can be invested in one project.

PTI