SM REITs can help investors bet on high-value assets
The Securities and Exchange Board of India (Sebi) recently introduced amendments to the REIT Regulations of 2014, outlining provisions for the establishment of small and medium real-estate investment trusts, known as SM REITs or micro REITs. The move aims to regulate fractional ownership of both commercial and residential properties as well as protect investor interests. But what are SM REITs and how do they differ from conventional REITs? ET finds out more:
What are SM REITs?
SM REITs are specialised real estate investment trusts that differ from conventional REITs in their scale and focus. While traditional REITs primarily invest in large-scale commercial properties, such as office buildings and shopping malls, SM REITs concentrate on smaller and medium-sized properties with lower value. This distinction is reflected in their market capitalisation, asset size and portfolio composition. Despite smaller scale, SM REITs maintain diversified portfolios, spreading risk across different property types within the real estate market.
What key regulations has Sebi set for SM REITs?
The minimum subscription size for SM REIT scheme units will be ?10 lakh and treated as one unit. The micro REITs will be able to list with an asset value of at least Rs 50 crore and a maximum of Rs 500 crore. SM REITs can leverage up to 49% of the scheme's assets. The investment manager must hold a minimum of 5% of outstanding units if the REIT is unleveraged and 15% if leveraged. The SM REIT scheme requires a minimum of 200 unit holders,
