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SEBI Allow Fundraising Norms for REITs, InvITs

Published on September 19, 2017
The Securities and Exchange Board of India (Sebi) has amended norms allowing governing real estate investments trusts (REITs) and infrastructure investment trusts (InvITs) to raise funds through debt securities and also permitting single-asset REITs in a bid to boost the financial instruments
SEBI Allow Fundraising Norms for REITs, InvITs

  • Only two InvITs have listed on the stock exchanges—IRB InvIT Fund and Indiagrid Trust over the past three years
  • Embassy Office Parks REIT registered with Sebi on 28 July has become the first realty trust in the country to be registered with the markets regulator
  • REITs and InvITs listed on national stock exchanges will be allowed to issue debt via debt securities
  • Currently the REITs and InvITs are allowed to raise funds via External Commercial Borrowings (ECB) which has certain end-use restrictions
  • Real estate investments trusts are listed entities that mainly invest in leased office and retail properties, allowing developers to raise funds by selling completed buildings to investors.
  • SEBI has also allowed REITs with a single asset. As per the current norms, REITs were required to have at least two projects under them.
  • Strategic investors such as scheduled commercial banks and non-banking finance companie are allowed s to invest in REITs and also permitting REITs to lend to their underlying holding companies.
  • SEBI proposed to allow REITs with 50-50% shareholding. The current norm requires a REIT to have a holding company with a 51% stake.
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