The board of Securities and Exchange Board of India (SEBI) on Monday made a number of changes in Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) regulations, to make these instruments attractive including allowing REITs and InvITs to raise capital by issuing debt securities. The market regulator also introduced the concept of strategic investor in REITs on similar lines of InvITs. SEBI also allowed single-asset REIT on similar lines of InvIT. Currently, a REIT requires two projects. Further REITs have allowed to lend to underlying special purpose vehicle (SPV).
The markets regulator also amended the definition of valuer for both REITs and InvITs. The Board also decided to have further consultation with the stakeholders on a proposal of allowing REITs to invest at least 50% of the equity share capital or interest in the underlying holding company and similarly allowing holding company to invest at least 50% of the equity share capital or interest in the underlying SPVs.
Real Estate Investment Trusts (REIT)
The regulator had notified the REITs and InvITs Regulations in 2014, allowing setting up and listing of such trusts which very popular in some advanced markets. However, only two InvITs — IRB InvIT Fund and India grid Trust — have got listed on the stock exchanges so far and no REIT has been listed. REITs are instruments that raise funds from investors and invest that sum in income-generating real estate properties.
The trusts listed on stock exchanges and investors can buy units in the trust. REITs provide unit holders with dividends, usually generated from rental income and capital gains from the profitable sale of real estate assets. Despite various earlier relaxations, listings have not taken place as they have failed to attract investors. Regarding REITs, Sebi has allowed ‘strategic investors’ like registered NBFC, scheduled commercial bank, and international multilateral financial institutions to participate in the public issues of such trusts. Such investors already allowed in InvITs.
Now, a REIT would require single asset under it from the current two projects. This is on similar lines of InvIT. Also, Sebi has allowed REITs to lend to the underlying holding company. Sebi updates board on action on suspected shell firms Sebi on Monday updated its board on action taken against suspected shell firms, vowing to take appropriate steps against those indulging in stock price manipulation and falsification of books.
The regulator also told its board that steps taken to fast-track all pending cases in a time bound manner, especially those where final orders have got delayed for more than a year since interim directions, regulatory sources said. It observed that the pendency has accumulated mostly due to human resources-related constraints and legal issues.
At a board meeting here, Sebi also discussed coordinated efforts made along with stock exchanges and other agencies including SFIO (Serious Fraud Investigation Office) and the Income Tax Department against such firms, regulatory sources said.”
The stock exchanges have asked to submit a report on all suspected firms at the earliest about their credentials and fundamentals, as also about the trading patterns and past non-compliances on taxation-like matters. Besides, forensic audit done in several cases,” an official said. “Based on the inputs from the stock exchanges, SFIO and other agencies, Sebi will assess the appropriateness of the preventive surveillance actions initiated against the shell firms and pass appropriate orders,” he added.