Sebi notifies norms allowing REITs, InvITs to issue bonds

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

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

Further, Sebi has amended REITs and InvITs regulations in order to facilitate the growth of such trusts, Sebi said in notifications posted on its website today.

According to the regulator, REITs and InvITs, "whose units are listed on a recognised stock exchange, may issue debt securities in the manner specified by the board provided that such debt securities shall be listed on a recognised stock exchange(s)".

It said debt securities means non-convertible debt securities which create or acknowledge indebtedness and include debentures, bonds and such other securities of a corporate or a Trust registered with Sebi as InvIT and REIT.

However, it excludes bonds issued by the government, security receipts and securitised debt instruments.

The Securities and Exchange Board of India (Sebi) has also amended the definition of valuer for both REITs and InvITs.

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, an 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.

The regulator had notified 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 India grid Trust - have got listed on 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.