Market regulator Sebi has notified the norms for listing of business trust structures, REITs and InvITs that would help attract more funds in a transparent manner into realty and infrastructure sectors on Friday, September 26, 2014.
Following are the key points:
1. Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvITs), whose norms were approved by the regulator in August, would get tax incentives. For both trusts, the minimum initial offer size should be Rs 250 crore with a public float of at least 25 percent. The minimum asset base for these trusts to get listed is Rs 500 crore
2.To ensure transparency, these trusts would be subject to stringent norms on disclosure as well as related party transactions.
3. All related party transactions should be at "arms-length" in accordance with relevant accounting standards.
4. REIT and InvIT are required to make investments either directly or through Special Purpose Vehicles.
5. In case of PPP projects, money can be put in only through SPV.
6. In the case of REITs, the minimum public holding should be 25 percent while the total number of outstanding units at all times as well as the number of unit holders -- who are part of the public -- should be 200.
7. Under both the initial offer and follow-on public offer, the REIT shall not accept subscription of an amount less than two lakh rupees from an applicant, as per the norms.
8. At least 80 percent of the value of REIT assets should be invested in completed and rent generating properties.
9. REIT is barred from investing in vacant land or agricultural land or mortgages other than mortgage backed securities.
10. Not less than seventy five percent of the revenues of the REIT and the SPV, other than gains arising from disposal of properties, shall be, at all times, from rental, leasing and letting real estate assets or any other income incidental to the leasing of such assets.
11. At least two projects should be held by a REIT, either directly or through SPV. Out of that, only up to 60 percent of the asset value can be invested in one project.
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