Small investors can invest in real estate, courtesy REITs
Updated: Aug 11, 2014 02:20:24pm
New Delhi, Aug 11 (KNN) With the market regulator, SEBI approving guidelines for the Real Estate Investment Trusts (REITs), the small investors who do not have enough money to invest in expensive flats will still be able to reap the benefits of investment in the real estate sector.
The final guidelines were issued after a meeting of the regulator's board here yesterday.
Sebi has said that Reits and Invits should have a starting asset value of at least Rs 500 crore and the initial offer has to be Rs 250 crore or more.
REITs are listed entities that mainly invest in income-producing real estate assets, the earnings of which are mostly distributed to their shareholders. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
The minimum investment amount for REITs has been fixed at Rs 2 lakh and at Rs 10 lakh for InvITs for now, given the complex nature and potential risks associated with them. For Invits, this will be Rs 5 lakh and Rs 10 lakh, respectively.
Reits will invest in commercial real estate through special purpose vehicles (SPVs) in which they must hold a controlling stake of more than 50 per cent.
The SPV in turn must hold at least 80 per cent of its assets directly in properties and won't be allowed to invest in other SPVs.
The new norms, into which the REITs and InvITs have been incorporated, are expected to come into force in a month or two after necessary notifications.
Whiles speaking to the media after the board meeting, Sebi Chairman U K Sinha said these trusts would help in the progress of the real estate and infrastructure sectors.
The decision follows Finance Minister Arun Jaitley’s Budget announcements that complete tax pass-through will be available for these two products.
In the meeting it was also decided to ease the registration requirements for stock brokers and clearing members. The Sebi board cleared the proposal for putting in place a simplified procedure for one-time registration of brokers to help them trade on different bourses with a single approval from the regulator. (KNN/SD)
The final guidelines were issued after a meeting of the regulator's board here yesterday.
Sebi has said that Reits and Invits should have a starting asset value of at least Rs 500 crore and the initial offer has to be Rs 250 crore or more.
REITs are listed entities that mainly invest in income-producing real estate assets, the earnings of which are mostly distributed to their shareholders. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
The minimum investment amount for REITs has been fixed at Rs 2 lakh and at Rs 10 lakh for InvITs for now, given the complex nature and potential risks associated with them. For Invits, this will be Rs 5 lakh and Rs 10 lakh, respectively.
Reits will invest in commercial real estate through special purpose vehicles (SPVs) in which they must hold a controlling stake of more than 50 per cent.
The SPV in turn must hold at least 80 per cent of its assets directly in properties and won't be allowed to invest in other SPVs.
The new norms, into which the REITs and InvITs have been incorporated, are expected to come into force in a month or two after necessary notifications.
Whiles speaking to the media after the board meeting, Sebi Chairman U K Sinha said these trusts would help in the progress of the real estate and infrastructure sectors.
The decision follows Finance Minister Arun Jaitley’s Budget announcements that complete tax pass-through will be available for these two products.
In the meeting it was also decided to ease the registration requirements for stock brokers and clearing members. The Sebi board cleared the proposal for putting in place a simplified procedure for one-time registration of brokers to help them trade on different bourses with a single approval from the regulator. (KNN/SD)
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