Sebi to ease REIT norms to attract investors, realtors

At a meeting held here, Sebi’s board also approved proposals to remove restrictions on REITs (Real Estate Investment Trusts) relating to investment in the Special Purpose Vehicle (SPV) structures, while the norms relating to related party transactions would also be eased. The proposed move would allow up to 20 per cent investment by REITs in under-construction projects, up from a maximum of 10 per cent allowed currently.

Besides, relaxations would be made to provisions relating to compliance of minimum public holding norms, as also for investments by the associate entities of the trustees.

After the meeting, during which Sebi’s Annual Report for 2015-16 was also approved, the regulator said the board approved issuance of a consultation paper to amend the REIT Regulations. Final norms would be framed after taking into account public comments to the draft paper.

Sebi had notified the REIT Regulations in 2014, allowing setting up and listing of such Trusts, which are very popular in some advanced markets. However, no single Trust has been set up as yet as investors wanted further measures, including tax breaks, to make these instruments more attractive. While the government provided for certain tax benefits in the Budget this year, Sebi has now decided to relax the rules. 

“With a view to smoothen the process of registration of REIT with Sebi and also the process of launching of the offer, Sebi Board has approved bringing out a consultation paper proposing certain changes and providing some clarification in the REIT Regulations,” the regulator said.

The new changes have been proposed by Sebi after taking into account representations received from various quarters.