By Accommodation Times News Services
Considering the important role that REITs play, a separate regulatory framework under draft SEBI (Real Estate Investment Trusts) Regulations, 2013 (referred to as “Regulations” hereafter) has been proposed for introducing REITs in India. Salient features of the proposed framework are as under:
a. Structure of the REIT
1. The REIT shall be set up as a Trust under the provisions of the Indian Trusts Act, 1882. REITs shall not launch any schemes.
2. The REIT shall have parties such as trustee (registered with SEBI), sponsor, manager and principal valuer.
b. Registration of REIT 1. The Trust shall initially apply for registration with SEBI as a REIT in the specified format. It shall fulfil eligibility criteria as specified in the draft Regulations.
2. SEBI, on being satisfied that the eligibility conditions are satisfied, shall grant the REIT certificate of registration.
c. Offer of units to the public and listing of units
1. After registration, the REIT shall raise funds initially through an initial offer and once listed, may subsequently raise funds through follow-on offers.
2. Listing of units shall be mandatory for all REITs. The units of the REIT shall continue to be listed on the exchange unless delisted under the Regulations. Provisions for delisting have also been specified in the Regulations.
3. For coming out with initial offer, it has been specified that the size of the assets under the REIT shall not be less than Rs. 1000 crore which is expected to ensure that initially only large assets and established players enter the market.
4. Further, minimum initial offer size of Rs. 250 crore and minimum public float of 25% is specified to ensure adequate public participation and float in the units.
5. General procedure for initial/follow-on offer, filing of offer document/follow-on offer document, allotment and listing of units has been specified in the Regulations. Detailed disclosures required in the offer document/follow-on offer document have also been specified in the Regulations.
6. The REIT may raise funds from any investors, resident or foreign. However, initially, till the market develops, it is proposed that the units of the REITs may be offered only to HNIs/institutions and therefore, it isproposed that the minimum subscription size shall be Rs. 2 lakhs and the unit size shall be Rs. 1 lakh.