The new amendments on InvITs and REITS are aimed at refining the existing framework and regulation-Care Ratings

SEBI Board has approved certain amendments to facilitate growth of Infrastructure Investment Trusts (InvITs) and Real Estate investment Trust (REITs).

SEBI has been continuously introducing amendments to both REIT and InvIT regulations post their introduction in 2014. REITs have not been able to start effectively, even though the regulations were introduced in 2014. The new amendments are aimed at refining the existing framework and regulation. Some large players in the past had expressed their interest to list REITs. REITs are however yet to see a single listing in India.

The latest amendments seem to be aimed at providing the much needed comfort to various stakeholders that includes both developers and investors.

- Developers and PEs have the flexibility to list their rent-yielding property as debt-oriented REIT which would require them to pay fixed yield, without diluting their ownership in their assets/properties. It is however still difficult to estimate the quantum or size of listing that may happen in this form.

- By allowing single assets as an underlying in REIT, the regulator intends to open up REIT to more participants, both large and small. These participants as per the earlier regulations were unable to list REITs due to limited number of assets in their portfolio.

- By allowing Strategic investors, SEBI is trying to develop the much needed initial pool of investors for REITs.

SEBIs new amendments make REITs not only a possible route of exit for large PEs and investment funds who have invested in Indian Real Estate but they also provide an avenue for real estate developers to raise funds going forward.

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