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Mumbai, Sep 26: Market regulator Sebi today notified norms for listing of business trust structures, REITs and InvITs that would help attract more funds in a transparent manner into realty and infrastructure sectors. Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvITs), whose norms were approved by the regulator in August, would get tax incentives. Also Read - Sensex climbs to record high of 31,500 on SEBI measures, banking stocks rise
For both trusts, the minimum initial offer size should be Rs 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 is Rs 500 crore. To ensure transparency, these trusts would be subject to stringent norms on disclosure as well as related party transactions. In separate but similarly-worded regulations for the two trusts, Sebi said that all related party transactions should be at “arms-length” in accordance with relevant accounting standards. Also Read - Iris Mediaworks settles case with Sebi, pays Rs 6.37 lakh
REIT and InvIT are required to make investments either directly or through Special Purpose Vehicles. In case of PPP projects, money can be put in only through SPV. In the case of REITs, the minimum public holding should be 25 per cent while the total number of outstanding units at all times as well as the number of unit holders — who are part 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 than two lakh rupees from an applicant, as per the norms.
Sebi has said that at least 80 per cent of the value of REIT assets should be invested in completed and rent generating properties. REIT is barred from investing in vacant land or agricultural land or mortgages other than mortgage backed securities. “Not less than seventy five per cent of the revenues of the REIT and the SPV, other than gains arising from disposal of properties, shall be, at all times, from rental, leasing and letting real estate assets or any other income incidental to the leasing of such assets,” Sebi said.
At least two projects should be held by a REIT, either directly or through SPV. Out of that, only up to 60 per cent of the asset value can be invested in one project.