Sebi notifies small and medium Real Estate Investment Trusts

In a move to regulate the fractional ownership industry, the Securities and Exchange Board of India (Sebi) has issued regulations to amend the REIT Regulations 2014, to establish guidelines for creation of Small and Medium Real Estate Investment Trusts (SM REITs), the notification said.

The new regulations will be called Sebi (REIT) (Amendment) Regulations 2024, it said.

“In regulation 2, in sub-regulation (1), clause (zm) shall be substituted with the following, namely -”(zm) REIT” or “Real Estate Investment Trust” means a person that pools rupees fifty crores or more for the purpose of issuing units to at least two hundred investors so as to acquire and manage real estate asset (s) or property (ies) , that would entitle such investors to receive the income generated therefore without filing them the day -to-day control over the management and operation of such real estate asset (s) or property (ies),” the notification said.

This means that under the arrangement, an SM REIT will be permitted to gather funds starting from ₹50 crore by issuing units to a minimum of 200 investors that will be utilized for acquiring and managing real estate assets or properties.

Also Read: Have a crore to invest in a second home in Goa? Here’s what you should know

The amendments were approved by SEBI on November 25 last year.

This is also expected to open the doors to fractional ownership of rent yielding real estate assets, including uber-luxury second homes across the country.

Also Read: Have a crore to invest in a second home in Goa? Here’s what you should know

A REIT is a company that owns, operates, or provides financing for income-generating real estate properties.

They currently need to have an asset base of ₹500 crore. These pool funds from investors, directing them toward various commercial real estate ventures. They are similar to shares and are listed on stock exchanges.

There are only three office REITs in India – Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust.

Also Read: Commercial real estate market has the potential to increase REIT market size over 6 times: ICRA