Sebi decisions to encourage retail investors’ participation in REITs, say realty players

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Realty firms on Tuesday hailed markets regulator Sebi’s decision to reduce the minimum subscription amount and trading lot size for REITs, saying it will encourage retail investors to participate in the publicly traded instrument.

The minimum application value will be in the range of Rs 10,000-15,000 and trading lot will be of one unit for real estate investment trusts (REITs), Sebi said.

Anarock Chairman Anuj Puri said, “Revising the minimum application value in REITs to Rs 10,000-15,000 from the earlier Rs 50,000 is a major move that will yield a positive response from the market. The earlier minimum limit was still quite high for many retail investors.” Embassy REIT Chief Executive Officer Michael Holland said, “We commend this proactive initiative by the regulator to reduce the trading lots of both REITs and InVITs (infrastructure investment trusts).” The reduction in lot size will increase liquidity for the entire REIT market, enable REITs to be included into benchmark domestic indices, and allow greater participation from newer pools of institutional and retail investors, he added.

Mindspace Business Parks REIT CEO Vinod Rohira said the earlier Rs 50,000 cap restricted participation to only a certain set of investors.

“We believe that this amendment makes investment in REITs at par with other equity options in India. Reduction in minimum application amount will further bring in more investors, thus improving the liquidity in REITs,” Rohira said.

Gagan Randev, executive director of India Sotheby’s International Realty, said the timing was absolutely ripe for the Securities and Exchange Board of India (Sebi) to have enabled investments in REITs.

“We have India’s best grade-A office portfolios in the three listed REITs, and there is no reason why retail and small investors should be denied an opportunity of earning returns in these rent generating assets,” he added.

Randev said the move will improve the trading liquidity in units of existing REITs of Embassy Office Parks, Mindspace, and Brookfield.

“REITs are transparent, well-governed investment assets for regular dividend income and a far superior way of owning commercial real estate.

“I believe this will also accelerate new REIT listings by developers like DLF and Prestige Group, among others,” he said.

REIT is a tax-efficient vehicle that enables owners of real estate to pool income-generating assets together in a portfolio.

It allows investors to buy ownership in real estate assets in the form of equity.