Sebi amends norms for REITs

• Sebi has amended REITs and InvITs regulations to facilitate the growth of such trusts.

• As per the amendments, REITs and InvITs will now have to provide a mechanism for resolution of disputes with their shareholders and partners in the holding firm.

=> Amendments Introduced

• Shareholders’ agreement or partnership agreement shall provide for an appropriate mechanism for resolution of disputes between the InvIT and the other shareholders or partners in the holdco and/or the SPV (special purpose vehicle).

• InvIT will have to file the final placement memorandum with Sebi within 10 working days from date of listing of the units issued therein.

=> About REITs

• REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.

=> How does an REIT work?

• REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate properties (which could be offices, residential apartments, shopping centres, hotels and warehouses).

• The trusts are listed in stock exchanges so that investors can buy units in the trust. REITs are structured as trusts.

• Thus, the assets of an REIT are held by an independent trustee on behalf of unit holders.

Share article