Sebi standards revised to improve the liquidity of the REIT market
The relaxation of investment standards for real estate investment trusts by the Securities and Exchange Board of India (Sebi) is expected to improve liquidity for Indian Reits and investors, attract more retail investors and encourage more public listings in the future.
On Tuesday, Sebi revised the minimum subscription and trading lot for publicly issued Reits and Infrastructure Investment Trusts (InvITs), with the minimum demand value to be lowered from ₹50,000 now at a range of Rs 10,000-15,000 and the revised trading lot will be one unit.
“We welcome Sebi’s regulation to reduce the minimum application value of ₹50,000 to Rs. 10,000 to 15,000 and a one-unit exchange lot. The earlier ₹50,000 ceilings limited participation to a number of investors. We believe this amendment makes investing in REITs on par with other stock options in India. Reducing the minimum demand amount will attract more investors, thereby improving the liquidity of REITs, ”said Vinod Rohira, CEO of Mindspace Business Parks REIT.
In July 2020, Mint first reported that Sebi was considering opening REITs and InvITs to small investors by lowering the minimum trading lot size for REIT shares from ₹50,000 for the value of a single unit, much like how stocks are traded.
Currently there are three publicly traded REITs in the country – Embassy REIT, Mindspace Business Parks REIT and the more recent Brookfield India REIT listed.
Michael Holland, CEO of Embassy REIT, said: “We welcome this proactive initiative by the regulator to reduce trading lots for REITs and InVITs. The Embassy REIT listing in 2019, coupled with our strong and resilient performance since then, paved the way for Indian REITs to evolve a traditional asset class. With approximately $ 2 billion of primary REIT shares listed in India over the past two years, major global and domestic asset managers and a growing number of retail holders now form the backbone of unitholder registers of REIT. The reduction in lot size will increase liquidity for the entire REIT market, allow REITs to be included in national benchmarks and allow greater participation from new pools of institutional and retail investors. “
India’s largest developer, DLF Ltd, is already preparing to set up a Reit office and has appointed advisers. More office developers are expected to join us in the coming years, even as the global commercial office market faces uncertainty in the wake of the covid-19 pandemic.
“… We have the best Class A office portfolios in India in all three listed REITs and there is no reason that retail investors and small investors should be denied the opportunity to generate returns on these generating assets. rents. This decision will improve the trading liquidity of units of the existing REITs. REITs are transparent, well-managed investment assets for regular dividend income and a much better way to own commercial real estate. I think it will also speed up new REIT listings by developers like DLF and Prestige Group, among others, ”said Gagan Randev, Executive Director of India Sotheby’s International Realty.
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