K Raheja Investment pays Rs 68.73 lakh to settle Reit norms case with Sebi

K Raheja Investment Managers on Thursday settled with capital markets regulator Sebi a case on alleged violation of REIT rules by paying Rs 68.73 lakh towards settlement fee in the matter of Mindspace Business Parks REIT.

K Raheja Investment Managers LLP (now known as K Raheja Corp Investment Managers Pvt Ltd) is the manager of Mindspace Business Parks REIT.

Mindspace Business Parks REIT, sponsored by K Raheja Corp group, was listed on the Indian bourses in August 2020. It owns office portfolios in the Mumbai Region, Pune, Hyderabad, and Chennai.

The settlement order came after the noticee (K Raheja Investment Managers LLP) proposed to settle the instant proceedings initiated against it, without "admitting or denying the findings of facts and conclusions of law".

The Securities and Exchange Board of India (Sebi) initiated adjudication proceedings against K Raheja Investment Managers LLP for the alleged violation of the provisions of Sebi's REIT (Real Estate Investment Trusts) rules in the matter of Mindspace Business Parks REIT.

Thereafter, a show cause notice was issued by the markets watchdog to K Raheja Investment Managers on August 24, 2023, for the alleged violation of the norms.

The show cause notice stated that K Raheja Investment Managers allegedly made errors in calculating the net distributable cash flows (NDCF) figures at the Special Purpose Vehicle (SPV) level. They also made incorrect and incomplete disclosures of NDCF made in half-yearly reports and annual reports.

The SCN also alleged that despite having negative cash balances in SPV, the distribution of NDCF was made by SPV to REIT by borrowing funds, which was ultimately distributed to the unit holders.

"In view of the acceptance of the settlement terms and the receipt of settlement amount by Sebi, the instant adjudication proceedings initiated against the noticee (K Raheja Investment Managers) dated August 24, 2023, is disposed of in terms of the settlement regulations," Sebi's adjudicating officer Asha Shetty said in the order.

K Raheja Investment Managers applied to settle the proceedings that may be initiated against it for allegedly violating the REIT rules by filing a settlement application.

Pursuant to the receipt of the settlement application, the noticee proposed revised settlement terms, which were approved by Sebi's High Powered Advisory Committee (HPAC), which recommended the matter to be settled.

Accordingly, after remitting the settlement fee of Rs 68.73 lakh, K Raheja Investment Managers LLP settled the matter with the regulator.