Sebi issues new set of disclosure norms for REITs

Putting in place a few more disclosure norms for real estate investment trusts (REITs), Sebi today asked such entities to inform stock exchanges about actual utilisation of the funds raised.

REITs will also have to provide justifications for the fees paid to investment and project managers as also share details about the methodology for computation, Sebi said in a circular.

The Trusts will have to make financial disclosures on half-yearly and annual basis as well as unit holding pattern. Furthermore, they would have to ensure that adequate steps are taken for expeditious redressal of investor complaints.

Securities and Exchange Board of India (Sebi), last week, issued disclosure norms that need to be followed by REITs while filing the offer documents and a set of new norms have been added in the latest round today.

The regulator, earlier this month, had issued detailed norms for public issuance of REITs, including allocation of units to institutional investors. To facilitate growth of REITs, Sebi last month notified revised and easier regulations for raising capital through this instrument.

Sebi had notified the REIT Regulations in 2014, allowing setting up of and listing of such trusts, which are very popular in some advanced markets. However, not a single trust has been set up in India as of now, as investors await further measures, including tax breaks, to make these instruments more attractive.

REITs will have to submit a statement "indicating deviations, if any, in the use of proceeds from the objects stated in the offer document/placement memorandum or explanatory statement to the notice for general meeting, as applicable," to exchange on a quarterly basis for any private issue, public issue, rights issue and preferential issue.

"Every credit rating, wherever required to be obtained by an REIT...Shall be reviewed once a year, by the registered credit rating agency," Sebi said.

REIT will have to furnish an explanation for the variation in its annual report. They will have to disclose its unit holding pattern for each class of unit holder to bourses.

It will have to maintain proper books of account, records and documents relating to a period of not less than eight financial years immediately preceding a financial year, or where the REIT had been in existence for a period of less than eight years, in respect of all the preceding years.

Sebi said that REIT would have to make disclosure about net distributable cash flows, as well as of all the underlying holding companies and special purpose vehicle (SPVs).