SEBI compresses listing time for REITs and INVITs

In a move to streamline the listing requirements in the capital markets, SEBI has cut the time for allotment and listing of REITs and INVITs from the current 12 days to 6 days. This will largely synchronize the allotment and listing process of REITs and INVITs with general equities in the capital markets. That does make sense considering that REITs and INVITs are also listed on the stock exchanges.

These new regulations will be applicable to all REIT and INVIT issues that open on or after 01st June 2022. 
In India REITs and INVITs were allowed in 2014 but they took off only about 3 years back after SEBI clarified on the pass-through status of the dividend pay-outs made by REITs and INVITs.

Incidentally, REITs and INVITs are investment vehicles that are structurally similar to mutual funds. Here the REIT or INVIT pools monies from a large number of investors and then allocates the pool of funds to real estate or infrastructure assets.

In India, REITs and INVITs have raised capital to the tune of more than $4 billion with the 3 listed REITs of Embassy, Mindspace and Brookfield having a combined market capitalisation of $7 billion. Apart from these 3 REITs, there are also 6 INVITs listed in India.

While REITs make a portfolio of commercial property, the INVITs make a portfolio of infrastructure assets like highways, power transmission lines etc.
 

To cut the total allotment and listing time for REITs and INVITs to 6 days, a number of procedural issues also need to be put in place.

SEBI, has therefore, also asked the self-certified syndicate banks (SCSBs), stock exchanges, depositories and intermediaries to coordinate and ensure that the listing process is completed within the stipulated time frame. SEBI wants REITs and INVITs to list within 6 working days of the closure of the issue.

This is a continuation of the other measures in August last year to make REITs more accessible to investors. SEBI had then reduced the minimum application amount for REITs from Rs.50,000 to the range of Rs.10,000-15,000.

In addition, the trading lot size of REITs was also reduced from 200 to just one single unit. The idea behind these amendments was to make REITs more attractive to retail investors. The cutting down of the allotment and listing period from 12 days to 6 days is a continuation of the effort in this direction.