14.32         ndian    onom
        real eState & infraStructure                                 Rs.2 lakh and at least 25 per cent of the
                                                                     units have to be offered to the public.
        inveStment truStS
                                                                (vi) Will be able to raise money through
     The SEBI firmed up regulations that will govern                 follow-on offers, rights issues or qualified
     Real Estate Investment Trusts (REITs), and the                  institutional placements and the trading
     Infrastructure Investment Trusts (InvITs).22 The                lot for such units will be Rs.1 lakh.
     long-pending proposal of 2008, the trusts have the          According to the norms, although a REIT may
     objective of enabling the cash-strapped real estate    raise funds from any type of investors, resident
     and infrastruture developers to have easy access to    or foreign, initially only wealthy individuals and
     funds. They create a new investment avenue for         institutions will be allowed to subscribe to REIT
     institutions and high net worth individuals, and       unit offers. The market regulator said a REIT may
     eventually ordinary investors.                         have up to three sponsors, with each holding at
                                                            least 5 per cent and collectively holding at least 25
     reits                                                  per cent for a period of at least three years from
     Major provisions announced by the SEBI for the         the date of listing. Subsequently, the sponsors’
     REITs are as given below:                              combined holding has to be at least 15 per cent
           (i) To be close-ended real estate investment     throughout the life of the REIT.
               schemes that will invest in property with         Similar to the practice in the US, Australia,
               the aim of providing returns to unit         Singapore and other nations where REITs
               holders.                                     are common, Sebi has decided to allow these
          (ii) The returns will be derived mainly from      trusts to invest primarily in completed revenue-
               rental income or capital gains from real     generating properties. To ensure that REITs
               estate.                                      generate continuous returns, Sebi said at least 80
                                                            per cent of the REIT’s assets has to be invested
         (iii) Allowed to invest in commercial real
                                                            in completed and revenue generating properties.
               estate assets, either directly or through
                                                            And only up to 20 per cent of assets can be
               special purpose vehicles (SPVs). In          invested in properties that are being developed,
               SPVs, a REIT must have a controlling         mortgage-backed securities, debt of companies
               interest of at least 50 per cent of the      in the real estate sector, equity shares of listed
               share capital and will have to hold at least companies that derive at least 75 per cent of their
               80 per cent of their assets directly in      income from real estate, government securities, or
               properties.                                  money market instruments. No REIT can invest
         (iv) To raise funds only through an initial        more than 10 per cent in properties that are under
               offering and units of REITs have to be       construction.
               mandatorily listed on a stock exchange,
               similar to initial public offering (IPO)     invits
               and listing for equity shares.               SEBI also announced the launch of InvITs
          (v) Required to have assets worth at least        which are somewhat similar to REITs. However,
               Rs.500 crore at the time of an initial offer an initial offer will not be mandatory for InvITs
               and the minimum issue size has to be         though listing will be mandatory for both publicly
               Rs.250 crore. The minimum subscription       and privately placed InvITs. Major provisions are
               size for units of a REIT on offer will be    as given below: