State PCS

Edit Template
Edit Template

Small and Medium REIT (SMREIT)

Small and Medium REIT (SMREIT)

Why in news?

The Securities and Exchange Board of India (SEBI) has issued regulations to establish guidelines for creation of Small and Medium Real Estate Investment Trusts (SM REITs).

  • The upcoming regulations will bear the title SEBI (REIT) (Amendment) Regulations 2024.
  • Aim – To regulate the fractional ownership industry and safeguard investor interests,bincorporating both commercial and residential properties within the new framework.
  • Fractional ownership allows individual investors to co-own commercial or residential properties as an alternative investment route.

Real Estate Investment Trust (REIT)

  • A company that owns, operates, or provides financing for income-generating real estate properties.
  • Current asset base – Rs.500 crore.
  • Role – These pool funds from investors, directing them toward various commercial real estate ventures.
  • These investments resemble shares and trade on stock exchanges.
  • 3 REITs in India – Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust.
  • SMREITs – Small and Medium REIT (SMREIT), which may raise funds from Indian and foreign investors by the issuance of units.
  • Fund pooling – It may gather funds starting from ₹50 crore by issuing units to a minimum of 200 investors.
  • Fund utilization – Used for acquiring and managing real estate assets, generating income for the investors.
  • Ownership of assets – It will be structured through 1 or more schemes, each operating under special purpose vehicles (SPVs).
  • An investment manager They is responsible for setting up an SM REIT and required to
    • Have a net worth of at least ₹20 croreHave a separate trustee for oversight.
    • Maintain a website detailing all SM REIT schemes enhancing transparency and investor access to information.
 Existing REITsSMREITs
ListingInitial Public Offering (IPO)Similar to REIT
Asset completion requirementsAt least 85%At least 95%
Minimum subscription amountRs.25 Lakh per investorReduced to Rs.10 Lakh per investor
Investment ManagerTo retain minimum of 20% of the total outstanding limits for 2 yearsReduced to minimum of 5%

Significance – We’re gearing up to introduce fractional ownership opportunities for rent-generating real estate assets, including ultra-luxurious second homes all over the country.

Read Also: IPC Section 406: Punishment for criminal breach of trust

Demo Class/Enquiries

blog form

More Links
What's New
IAS NEXT is a topmost Coaching Institute offering guidance for Civil & Judicial services like UPSC, State PCS, PCS-J exams since more than 10 years.
Contact Us
Social Icon

Copyright ©  C S NEXT EDUCATION. All Rights Reserved