Realty investment trusts: SEBI working on norms for IPOs, listing

K R Srivats New Delhi | Updated on March 13, 2018

REITs unlikely to take off until income tax hurdles are addressed, say industry players

The two committees appointed by market regulator SEBI to recommend norms for IPOs and listing of REIT units are expected to submit their reports shortly, a top official has said.

Road map

“The guidelines will spell out the route to be adopted for the initial public offerings – whether it could be book-building or offer-for-sale,” Ananta Barua, Executive Director, Securities and Exchange Board of India, said at an Assocham-organised national conference on Real Estate Investment Trusts (REITs) here on Friday.

The SEBI-approved regulatory framework that is sought to be put in place for REITs in India requires compulsory listing of such units on a recognised stock exchange. Also, about 25 per cent of these units have to be allocated to retail investors and, therefore, an IPO is a must for REIT structures.

The SEBI board had in early August approved final regulations for REITs, but these are yet to be notified.

Panels to finalise norms

The capital market regulator had appointed two separate committees to finalise norms for IPOs and listing of REIT units.

Meanwhile, industry players are of the view that REITs may not take off in India until the income tax challenges are sorted out by policymakers. They are anticipating more tax-related clarifications coming their way in the Budget for 2015-16 in February next year.

Ajit Krishnan, Partner & Leader — Real Estate & Infrastructure, Ernst & Young, said public sector biggies should take the lead and sponsor REITs. Mridul Upreti, CEO, Segregated Funds Group, Jones Long La Salle, said there was no dearth of REITable assets in India and that most of these assets are new.

Of the estimated 400 million square feet of commercial real estate space, as much as 100 million square feet is REITable, he noted.

Upreti expressed confidence that REIT structures will take off as more policy support comes its way once more deals happen on the commercial mortgage-backed securities (CMBS) space.

“More transactions are likely to happen on the CMBS in the coming months.

“This will only ensure that policymakers focus more on ensuring the success of REITs as a product and remove the policy roadblocks,” Upreti told BusinessLine.


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Published on September 19, 2014
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