India: Real Estate Investment Trust In India

The concept of Real Estate Investment Trusts (REITs) has been seen across the world since a lot of years. However, it is a new concept in India. The Securities and Exchange Board of India (SEBI) recently framed the SEBI (REITs) Regulations, 2014 (REIT Regulations) for the regulation of REITs in India.

REITs basically pool money from investors and invest them in income-generating assets offering investors a way to diversify their portfolios by investing in property. This gives an opportunity to those people to invest in the real estate who cannot otherwise afford to invest in the expensive real estate sector. REITs will be registered and listed on the stock exchange. The units issued in return of investor's investment (i.e. unit holders) will be trade on the stock exchange like securities.

"Participation in REITS extends beyond financial returns. It assists socio-economy objectives of filling the gaps on the rising need of affordable dwelling for masses and helping balance urbanization by aiding creation of smart cities with economic and superior quality of life", was rightly held by Mr. Bharat Banka at the time he was CEO at the Aditya Birla Private Equity.

Briefly, some key aspects of the REIT Regulations are covered in this article to understand the working of REITs in India.

For grant of certificate of registration as a REIT, an application in the prescribed form1 accompanied by non-refundable prescribed fee2 has to be made with the SEBI.3 The applicant has to be a trust with a registered trust deed4 and such trust deed is required to have the main objective as undertaking activity of REIT in accordance with the REIT Regulations5. On considering the application, SEBI may reject it after giving reasonable opportunity to the applicant and the decision to reject has to be communicated to the applicant within 30 days of such decision.6 The registration could also be granted with such conditions as the SEBI would consider appropriate.

The important roles with regards to a REIT would be played by 'sponsor', 'manager' and 'trustee'. 'Sponsor' would be the one to set up the trust. 'Manager' would be a company or LLP or body corporate incorporated in India which manages assets and investments of the REIT and undertakes operational activities of the REIT. 'Trustee' would be the one to hold the REIT assets in trust for the benefit of unit holders. All of these three have to be separate entities7 and all of them have to meet the specific requirements as required by the REIT Regulations8. Further, the REIT Regulations clearly provide the roles and responsibilities of all of them along with the role and responsibilities of a 'valuer' (who would be appointed by the manager to undertake valuation of the REIT assets) and 'auditor' as well.9

The REIT Regulations permit a maximum of 3 sponsors. The sponsors are required to hold a minimum of 25% of the total units of the REIT after initial offer on a post-issue basis for at least 3 years from the date of listing of such units and if the holding requirement exceeds the minimum then for at least 1 year from the date of listing of such units. Further, sponsors together are required to hold minimum 15% of the outstanding units of the listed REIT at all times and individually each sponsor is required to hold minimum 5% of the outstanding units of the listed REIT at all times.

There are various other requirement provided under the REIT Regulations. There is a requirement for the value of assets owned by REIT to not be less than INR 500 crore.10 Further, the initial offer size of units is required to be not less than INR 250 crores.11 However, these two requirements can be complied with after the initial offer subject to: a binding agreement with the relevant party(ies) that the requirements would be fulfilled prior to allotment of units; a declaration to the SEBI and the designated stock exchanges to that effect; and adequate disclosures in this regard in the initial offer document.12 Further, REIT Regulations for the purposes of initial offer of units, require the units proposed to be offered to the public to be minimum 25% of the total outstanding units of the REIT and the units being offered by way of offer document13. However, for initial offer of more than INR 500 crores, if prior to the initial offer units are held by public, the units proposed to be offered to the public should be calculated after reducing such existing units.14

In relation to the subscription, the minimum subscription requirement for an initial offer and follow-on offer is required to be INR 2 Lakh for an applicant.15 The REIT would have to refund money: (a) to all applicants in case it fails to collect subscription amount exceeding 75% of the issue size16; (b) to all applicants in case the number of subscribers to the initial offer forming part of the public is less than 200; and (c) to the extent of oversubscription in case the moneys received is in excess of the extent of over-subscription17 subject to the right to retain such over subscription not exceeding 25% of the issue size.18 Further, the REIT Regulations require the trading lot for the purpose of trading of units of the REIT to be INR 1 Lakh.19

The REIT Regulations also provide the investment conditions and distribution policy. As per these regulations, minimum 90% of net distributable cash flows of the REIT are required to be distributed to the unit holders.20 Such distributions are to be declared and made at least once every 6 months in every financial year.21 The distributions declared have to be made within 15 days of such declaration and failure to make distributions within 15 days of the declaration will make the manager liable to pay interest to the unit holders at the rate of 15% per annum till the distribution is made.22


1 Form A specified in the Schedule I to the REIT Regulations.

2 Manner of fee specified in the Schedule II to the REIT Regulations.

3 Regulation 3 of the REIT Regulations.

4 Registration of the trust deed under the provisions of the Registration Act, 1908.

5 Regulation 4(2)(a) and (b) of REIT Regulations.

6 Regulation 8 of REIT Regulations.

7 Regulation 4(2)(c) of the REIT Regulations.

8 Regulations 4(2)(d), (e) and (f) of the REIT Regulations.

9 Regulations 9 to 13 of the REIT Regulations.

10 Regulation 14(2)(b) of the REIT Regulations.

11 Regulation 14(2)(d) of the REIT Regulations.

12 Proviso to Regulation 14(2) of the REIT Regulations.

13 Regulation 14(2)(c) of the REIT Regulations.

14 Proviso to Regulation 14(2)(c) of the Regulations.

15 Regulation 14(14) of the REIT Regulations.

16 as specified in the initial offer document or follow-on offer document.

17 as specified in the initial offer document or follow-on offer document.

18 Regulation 14(20) of the REIT Regulations.

19 Regulation 16(4) of the REIT Regulations.

20 Regulation 18(16)(b) of the REIT Regulations.

21 Regulation 18(16)(c) of the REIT Regulations.

22 Regulations 18(16)(c) and (e) of the REIT Regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions