SM REITs to have their own SRO

Small and medium real estate investment trusts (SM REITs) will have their own self-regulatory organisation as an apex body, a move that is being favoured by Securities and Exchange Board of India (SEBI), sources said.

SM REITs, formerly fractional ownership platforms that have just started registering with SEBI, will not be brought under the ambit of the Indian REITs Association, they said.

According to the sources, the regulator feels that SM REITs need to be regulated differently from the traditional REITs and should have their own apex organisation to deal with their unique characteristics. An apex organisation is likely to be formed soon as there are already three registered SM REITs – Property Share Investment Trust, Impact R SM REIT, and Emberstone SM REIT.

IRA, the non-profit organisation set up under the guidance of SEBI, has the four larger listed REITs as its members. The four REITs are Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield Indian Real Estate Trust, and Nexus Select Trust.

While fractional ownership platforms were brought under the ambit of REIT regulations through an amendment in March 2024 and notification of the new regulatory framework, they function a bit differently from the traditional REITs.

They also invest in and develop commercial real estate assets in which investors can participate through subscribing to units, but when raising funds they function like mutual funds. Each property or asset added is associated with a scheme for which funds are raised through an issue of units. They have multiple scheme structures and different assets may be put under different schemes.

PropShare SM REIT IPO

Meanwhile, SM REITs are closely following the fortunes of Property Share’s and the country’s first SM REIT IPO scheme, PropShare Platina, raising ₹353 crore with a price band of ₹10-10.5 lakh per unit. A lot will depend on the response that the REIT garners from investors.

The issue is open from December 2-4 and exchange data showed that it has been subscribed 0.08 times and institutional investors have not yet bid for the units on offer.

A top official of a SM REIT, which is awaiting SEBI approval for its registration, said that if the response were poor, they would likely look at raising a lower amount rather than the ₹500 crore they are planning.