REITs, InviTs get easier funding norms

Real Estate Investment Trusts (REITs)
With market regulator SEBI permitting single-asset real estate investment trusts (REITs), fence-sitting developers, enthused by the tweaked norms, are all set to opt for REITs soon. Even as SEBI continues to make amendments to make investments in REITs attractive, developers on their part are focusing more on acquiring and developing commercial properties to create assets for REITs. SEBI has permitted single-asset REITs as against the earlier requirement of investing in at least two properties, with no more than 60% of the total asset value invested in one property, Shubham Jain, VP & Sector Head, Corporate Ratings, said, explaining that this change could enable a larger pool of developers to access the REIT market; nonetheless, the market appetite for such single-asset offerings remains to be seen, given that one of the key benefits expected of the REITs is the diversification of underlying assets and cash flows. Recently, SEBI tweaked norms governing REITs and infrastructure investment trusts (InvITs), allowing them to raise funds through debt securities and permitting even single-asset REITs. Under the current norms, REITs are required to have at least two projects under them.

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