Fractional ownership platform hBits plans to register with the Securities and Exchange Board of India as a ‘small and medium real estate investment trust’ (SM REIT) in the next three weeks.
The SM REIT regulations were notified by SEBI in March and several fractional platforms are readying their REIT structures; hBits intends to be first off the block, according to its founder and CEO, Shiv Parekh.
“We’ve been working aggressively to apply as soon as possible,” Parekh told businessline, adding that with regulations in place “we thought why not operate under the regulatory framework… and we’d like to be the first one.”
hBits currently has ₹365 crore worth assets under management and targets ₹1,000 crore during the fiscal year.
‘Mini-IPO process’
SM REITs differ slightly from the larger REITs, which are already listed in the market. After registering as an SM REIT, funds are raised asset by asset. Each time an asset is listed, funds are raised for that. There is a separate scheme for each asset and investors can pick and choose the assets they want to subscribe to, much like mutual fund investors can choose schemes.
“When we launch, it will be just one asset and then we’ll keep adding new assets and schemes. It is like a mini-IPO process.”
Parekh said the first asset to be listed would be worth ₹75-100 crore. Three potential assets have been shortlisted, one each in Mumbai, Pune, and Bengaluru. “Every month we will be launching an asset,” Parekh said. He added that the chosen asset will be known close to the launch of the scheme.
Approval is required for every asset that is listed, and Parekh said discussions were on with the regulator as well as the exchanges to speed up the process.
The notification of SM REIT regulations has created more investor interest in such platforms, Parekh said, pointing out that it has created legitimacy and trust.
In late April, the fractional platform acquired a 44,328 sq ft campus in CyberCity Magarpatta, in Pune, with an investment opportunity of ₹55 crore. In February it acquired a 24,816 sq ft asset in Bengaluru of a similar value.