NSE cuts REITs, InvITs lot size to one

Our Bureau Mumbai | Updated on August 08, 2021

It is to enhance liquidity and encourage retail investors' participation

NSE has reduced the trading lot size of the six REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts) listed in the exchange to a single unit. Currently, the lot size varies from 100 to 2,500.

The move will enhance liquidity and encourage retail investors' participation.

The change in lot size will come into force from August 11, it said.

Recently, market regulator SEBI amended REITs and InvITs regulations to bring them within the reach of a larger set of investors. According to the revised regulation, the minimum application amount in a REIT has been reduced from ₹50,000 to ₹10,000-₹15,000. The trading lot size of REITs has been reduced from around 200 units to 1 unit. The was expected to make them accessible to many retail investors who overlooked the investment option due to high entry barrier.

Entry of retail investors will bring in more liquidity through increased trading volumes.

REITs pooled in money from multiple investors into a single professionally managed Trust, and invests in immovable and rent yielding properties or special purpose vehicles holding such kind of properties.

At least 90 per cent of the rental income earned by the REIT has to be distributed to its unit holders. Listing of REIT is mandatory and till now three REITs have been listed– Embassy Office Parks REIT, Mindspace Business Parks REIT and Brookfield India Real Estate Trust.

Similar to REITs, InvITs allow companies to monetise their infrastructure assets and provide a channel for investors to buy a stake in infrastructure projects. Money raised through an InvIT can be used only to buy infrastructure assets – or invest in equity or debt instrument of SPVs holding such infrastructure assets.

Currently there are three listed InvITs -- India Grid Trust, IRB Invit Fund and Powergrid Infrastructure Investment Trust.

Published on August 08, 2021

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