Sebi Notifies Norms for Realty ,Infra Investment Trusts

Mumbai :The Securities and Exchange Board of India (SEBI) Friday notified norms for listing of business trusts - the real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) - that would help attract more funds into these sectors.Last month, the market regulator had cleared norms for the creation and listing of business trusts in real estate and infrastructure, which would now get tax incentives.

As per the norms notified, the minimum initial offer size for both trusts should be 250 crore with a public float of at least 25 percent. The minimum asset base for these trusts to get listed is 500 crore.REITs and InvITs have to make investments either directly or through Special Purpose Vehicles (SPVs). In case of public-private partnership (PPP) projects, money can be invested only through the SPV route.

For REITs, the minimum public holding is required to be 25 percent 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 is not allowed to accept subscription of an amount less than 200,000 from an applicant.REIT is also barred from investing in vacant land or agricultural land or mortgages other than mortgage backed securities.

Sebi also said that at least 80 percent of the value of REIT assets should be invested in completed and rent generating properties."Not less than seventy five percent 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," it said.

Finance Minister Arun Jaitley had in his maiden budget presentation in July said REITs, which have been successfully used for pooling of investment in several countries, would be granted necessary tax incentives, as also InvITs.The government is keen to push foreign and domestic investments into the infrastructure and construction sectors in order to revive the economy and generate jobs.

Through InvITs, the government aims to raise funds to meet infrastructure investment requirements of 65 lakh crore for the 12th Five Year Plan (2012-17).The new guidelines would allow listing and trading of REITs and InvITs on the stock exchanges.The changed norms would also allow foreign investment into the units of REITs and InvITs at the time of public offer (IPO) and for acquisition from secondary markets, as also permit insurance companies, pension funds and provident funds to invest.