REIT Regulations in India for Dummies

SEBI has approved the SEBI (Real Estate Investments Trusts) Regulations. In its Finance Bill 2014,
the Government cleared a majority of tax regulations for the eventual listing of the REITs in India.
SEBI is yet to release a detailed notification, which is expected in the next two months. Most
regulations from the proposed draft (REIT regulations 2013) were passed, with a few relaxations.

• 80% should be invested in rent yielding projects versus 90% mentioned in the drafts
• Value of the REIT for an IPO has been reduced to Rs 5 bn from Rs 10 bn.
• Multiple sponsors are permitted with a maximum of three.
• Borrowings shall not exceed 49% of the value of the REIT assets, versus 50% in the draft
• Minimum size of the IPO shall be 25% of post issue share capital or `2.5 bn whichever is higher,
  versus Rs 2.5 bn in the draft
• REIT shall have at least two assets with a maximum 60% investment in one asset; versus REIT can invest 100% in one asset.

We await clarity from detailed notifications over the next one-two months. The Finance Act 2014
has already specified tax related incentives proposed by the Government. We wait further/changes
if any in the tax structure for the eventual listing of REIT instruments.