Sebi looks to revive REITs, issues draft guidelines

The Securities and Exchange Board of India (Sebi) on Thursday issued draft guidelines to set up real estate investment trusts (REITs) in the country, reviving an effort it had put on hold in 2008 during the global financial crisis.

REITs are tax-efficient listed entities that mainly invest in income-producing real estate assets from which most of the earnings are distributed to their shareholders.

India's draft regulation for REITs comes at a time when its debt-laden developers are struggling to raise money for future growth and development in an economy which is growing at its slowest pace in a decade.

REITs would allow property developers to monetise their developed, revenue-generating assets by off-loading them in a separate listed entity.

The draft rules propose that only companies with assets worth at least 10 billion rupees could list as a REIT, provided they sell at least 2.5 billion rupees worth of stock in the initial public offering.

The Sebi has proposed limiting investment in REITs initially to institutional investors and high net worth individuals - a departure from most global REIT structures — aimed at protecting small investors in an as-yet untested investment product.