SEBI extends deadline for submission of public comments on proposal on REITs, InvITs sponsors

regulator A consultation paper on placing sponsors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) was put out on February 23 and public comments were sought on it till March 8.

“It has been decided to extend the deadline for submission of comments up to March 15, 2023,” the Securities and Exchange Board of India (SEBI) said in a public notice.

In its consultation paper, the regulator has proposed changes to the rules governing REITs and InvITs, which would require sponsors to own a certain percentage of units in these investment vehicles.

The changes were proposed keeping in view the interest of the unit holders and the structural weaknesses associated with the absence of a sponsor for REITs and InvITs.

The watchdog suggested that sponsors of REITs/InvITs should hold 15 per cent of the capital for a period of three years from the date of listing as there is no mandatory unit holding requirement after three years.

The sponsors were also proposed to retain 5 per cent of the unit capital after 3-5 years, 3 per cent from 5-10 years, 2 per cent from 10-20 years and 1 per cent after 20 years.

As per SEBI, the REIT/InvIT industry is at a nascent stage and is constantly evolving, requiring investment managers to have at least one sponsor throughout their life.

REITs and InvITs are relatively new investment instruments in the Indian context but are extremely popular in global markets.

While a REIT includes a portfolio of commercial real property, a large portion of which is already leased, InvITs include a portfolio of infrastructure assets, such as highways and power transmission assets.

The text of this story is published from a wire agency feed without any modification.