SEBI (REITs)
Regulation 2014:-
S.No.
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Particulars
|
Regulations
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1.
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Sponsor
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• Maximum number of sponsor restricted
to
3
• Minimum holding for each of the sponsor shall be equivalent to
5% of the no. of units of REITs (i.e. Post initial offer size)
• Aggregate
Net worth of sponsors
shall be of atleast Rs
100
crores. Moreover minimum
networth requirement for individual
sponsor is Rs 20 crores.
• Minimum 5 years experience in development of real estate or
fund management in real estate
industry. Moreover, where the
sponsor is
a developer, at
least
two projects have been completed.
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2.
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Manager
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• Minimum Net worth Rs. 10 Crores.
• Minimum 5 years experience in fund management or advisory or
property management in the real estate industry.
• Atleast 50% of directors
or
members
of
governing body as independent and not directors or members of governing body
of another REITs.
• Entered into an investment
management agreement
with
the trustee which provides for the responsibilities of the manager in accordance with regulation 10
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3.
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Trustee
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• Registered
with
SEBI under
SEBI (Debenture
Trustees)
Regulations,
1993 and not an
associate of the sponsor or
manager.
• Having such
infrastructure and personnel as specified by SEBI.
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4.
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Minimum Asset
Criteria for listing
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• In order to offer units to public the value of all the assets owned by REIT should be at least Rs 500
crores.
• The offer size is not less than
Rs.
250 Crores.
• Initial offer of REIT units has to
be through public issue only.
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5.
|
Investment
Conditions
|
• Investments only permitted in
following channels:
- SPVs (only if SPV holds 80% of the properties directly)
-Properties
-Securities
|
-TDRs (Transferable Development Rights)
• Can’t invest in vacant land,
agriculture land and mortgages other than
mortgage backed
securities.
• At least 80% of the value of REIT shall be invested in
completed and rent generating
properties. Lock-in-period of 3 years from
date of purchase.
• Investment in TDRs and
Unutilized
Floor Space Index
(FSI) now permitted under second tier
of Investment mode
with a maximum cap
of 20% of REIT’s Assets.
• If
investment
in under construction properties
under the sub second tier of Investment mode with maximum cap of 10% of
REIT’s Assets then,
lock-in-period of 3 years from date of completion.
• Not less than 75% of the revenues of REITs and SPVs, other
than gain arising
from disposal of
properties,
shall be from rental, leasing and income incidental to leasing of real estate.
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||
6.
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Approval of
Unitholders
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• In case of sale of properties of REIT or SPV exceeding 10% of the value of assets.
• Purchase of property for a value greater than 110% of the value
as assessed by valuer or sale of property which is less than 90%
of the value as assessed
by the valuer is allowed if approved by Unit Holders (Valuation
by two independent valuers is mandatory).
• In
case of transactions with related
parties on crossing
of
stipulated norms.
• If the aggregate consolidated borrowings and deferred payments
of the REIT net of cash and cash equivalents exceed twenty
five
per cent. of the value of the REIT assets, credit rating
from credit
rating agency is also required along with approval of unitholders.
• With
respect to the annual meeting of unit holders, approval of
- latest annual accounts and performance of the REIT
- auditor and fees of such auditor, as may be required
- latest valuation reports
- appointment of valuer, as may be required
- any other issue including special issues as specified under subregulation (6)
• Any
issue, in
the ordinary
course of
business,
which in
the
opinion of the sponsor(s)
or trustee or manager, is material and
requires approval of the unit holders. For instance- Any change in
manager
including
removal
of
the
manager
or
change in
control of
the
manager,
any material
change in
investment strategy or any change in the management fees of the REIT
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7.
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Cash Flows
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• Not less than ninety per cent of Net distributable cash flows of the
REIT
shall be
distributed to
the unit holders
once in 6 months.
• However if sale proceeds from any property are reinvested in
another property then
there is no requirement of distributing 90%
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of the proceeds to the Unit Holders.
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8.
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Related Party
Transactions
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• Transactions
such as acquisition
or sale
of properties
or
investments into
securities in
a financial year; or
• Value of funds borrowed from related parties in a financial year requires previous approval of Unit holders if the value of transaction exceeds
10% of the
value
of
REITs or consolidated borrowings
respectively
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9.
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Borrowings
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• Aggregated
consolidated borrowing
and
deferred payment of REIT net of cash and cash equivalents shall never exceed 49% of the value of REIT assets.
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10.
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Valuations
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• The valuer shall not be an associate of the sponsor(s) or manager or
trustee and
shall have not less than
five years of experience
in valuation
of
real estate.
• Full
valuation report
shall include
the mandatory minimum
disclosures as specified
in
Schedule V to
these regulations.
• A full valuation
shall be conducted at
the end of financial year i.e
at 31st March by the valuer within 3 months along with half
yearly valuations.
• Prior to any issue of units to the public and any
other issue of units as may be specified by
the Board,
the valuer shall
undertake full valuation of all the REIT assets and
include a summary of the report in the offer document.
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Other Conditions:
• No unit holder of the REIT enjoys preferential voting or any other rights over another unit
holder.
• Any
person other than the sponsor(s) holding units of the REIT prior to initial offer shall hold the units for a period of not less than one year from the date of listing of the units subject to circulars or guidelines as may be specified by the Board.
• General period
of disclosure of information, reports is half yearly.
• Parties to the REIT are Trustee, Sponsor and
Manager.
• Under both the initial offer and follow-on offer, rights issue, QIP, minimum subscription size
for
units of REIT shall be Rs 2 lakhs.
SEBI (Infrastructure Investment
Trusts) Regulations, 2014:-
On 26th September 2014, SEBI notified norms for InvITs which are somewhat similar to REITs. Salient features of the InvIT Regulations are as follows –
• InvITs shall be set up
as a
trust and registered
with
SEBI. It shall have parties such as Trustee, Sponsor(s),
Investment Manager and Project Manager.
• InvITs shall invest in infrastructure projects, either directly or through SPV. In case of PPP projects, such investments should only be through SPV. An InvIT shall hold or propose to hold
controlling
interest and more than 50% of the
equity
share capital or interest in the
underlying SPV, except where the same is not possible because of a regulatory
requirement/ requirement emanating from the concession
agreement.
• Sponsor(s) of an InvIT shall, collectively, hold not less than 25% of the total units of the
InvIT on post issue basis for a period
of at least 3 years.
• The proposed holding of an InvIT in the underlying assets shall be not less than Rs. 500 crore and the offer size of the InvIT shall not be less then
Rs.
250 crore at the time of initial offer of
units.
• An InvIT which proposes to invest at least 80% of the value of the assets in the completed and revenue generating infrastructure assets, should raise funds only through public issue of
units. The minimum
subscription from any
investor in initial and follow-on offer shall be ten
lakh
rupees.
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