Sebi allows REITs and InvITs to raise funds by issuing debt securities

Sebi allows REITs to lend to underlying holding company

Aiming to make REITs and InvITs more attractive to investors, capital markets regulator Sebi today relaxed norms to allow these trusts to raise funds by issuing debt securities.

This will be allowed for REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) which are listed on national stock exchanges.

The Sebi board has decided to have further consultations with the stakeholders on a proposal to allow REITs to invest at least 50% stake in the underlying holding company.

Similarly, it has allowed a holding company, with at least 50% stake, to invest in the underlying special purpose vehicle.

Sebi's board has approved amendment to REITs and InvITs regulations in order to facilitate growth of such trusts, the regulator said in a statement after its board meeting.

Sebi has also decided to amend the definition of 'valuer' for both REITs and InvITs.

The regulator had notified the REITs and InvITs Regulations in 2014, allowing setting up and listing of such trusts which are very popular in some advanced markets.

However, only two InvITs -- IRB InvIT Fund and Indiagrid Trust -- have got listed on the stock exchanges so far and not a single REIT has been listed in the country.

Despite various earlier relaxations, listings have not taken place as they have failed to attract investors.

Regarding REITs, Sebi has allowed 'strategic investors' like registered NBFC, scheduled commercial bank, and international multilateral financial institutions to participate in the public issues of such trusts. Such investors are already allowed in InvITs.

Now, a REIT would require single asset under it from the current two projects. This is on similar lines of InvIT. Also, Sebi has allowed REITs to lend to the underlying holding company.