SEBI PROPOSES REITs GUIDELINES

The long wait for retail investors in India to participate more widely in India’s rapidly growing real estate sector is nearing an end. The Securities and Exchange Board of India (SEBI) has announced
guidelines for Real Estate Investment Trusts (REITs). REITs are listed entities, similar to mutual funds that use collective funds for owning and managing investment in real estate projects. SEBI has suggested that these schemes to invest only in income generating real estate and not in vacant land and property development.

• 5% cap of investment on a single real estate project and 25% cap on all the projects developed by a single group of companies.
• Indian REITs to be close ended,  listed and not to offer guaranteed returns.
• Each scheme must be appraised by an appraisal agency, rated by a credit rating agency and valued by a qualified valuer, all of whom have to be pre-approved by the regulator.
• Net Asset Value (NAV) of REIT to be disclosed annually.
• Not less than 90% of the net income to be distributed each year after paying tax.