Sebi finalises REIT, InvIT norms; addresses industry concerns

To make its proposed REIT norms more attractive, capital markets regulator Sebi has agreed to incorporate industry suggestions to reduce their minimum asset size to Rs 500 crore and to allow foreign investors at IPO and later stages.

At the same time, the regulator is keen on REITs (Real Estate Investment Trusts) being limited to larger investors in the initial stages due to higher risks, and therefore the minimum investment amount would remain higher at Rs two lakh.

The final REIT regulations, along with that for another new product Infrastructure Investment Trusts (InvITs), are likely to be considered for approval by the Sebi board this Sunday, sources said.

Along with foreign investors, domestic institutions like insurers, pension funds and provident funds would also be allowed to invest in these trusts.

Through InvITs, the regulator is aiming to create a new avenue for raising funds to meet infrastructure investment requirements to the tune of Rs 65 lakh crore for the 12th Five Year Plan (2012-17).

The new norms would enable listing and trading of REITs and InvITs as any other security on the stock exchange platforms and also help create new platforms for raising of funds by real estate and infrastructure companies, respectively.

Despite significant tax benefits for the sponsors of these business trusts, these new regulations would also be "revenue accretive" for the government in form of taxes, sources said.