The Securities and Exchange Board of India (SEBI) announced guidelines pertaining to rights issue of units by listed real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).
Key highlights of guidelines:
- The issuer will have to disclose objects of the issue, related-party transactions, valuation, financial details, review of credit rating and the grievance redressal mechanism in the placement document.
- The investment manager on behalf of the REIT and InvIT, in consultation with lead merchant banker(s), will decide the issue price before determining the record date.
- The minimum subscription to be received in the rights issue should be 90% of the issue size through the letter of offer.
Important Info :
- Real Estate Investment Trusts (REITs): They are like mutual funds in the stock market in the field of real estate sector. REITS sells units to investors. This money is invested in real estate projects to earn rental income. This income is then distributed to unit holders and the units are listed and traded on stock markets like any other equity share.
- Infrastructure Investment Trusts (InvITs): It is a modified REITS type structure for infrastructure projects. It will attract long term finance from foreign and domestic sources including the NRIs. An InvIT would be a trust with parties such as sponsor, investment manager, trustee and project manager.
- Timeline: The Securities and Exchange Board of India (SEBI) had first notified REITs and InvIT Regulations in 2014. Since then, the market witnessed listing of two public and three InvITs. On the other hand, Embassy Office Parks REIT is the only listed real estate investment trust.
Source : LiveMint