Simplification of REITs Regulation Will Benefit the Growth of CRE: Ramesh Nair, CEO & Country Head, JLL India

MUMBAI, December 29, 2017 /PRNewswire/ --

Glad tidings emerged for the commercial real estate sector in the country with the Securities and Exchange Board of India (SEBI) Board further easing as well as simplifying regulations for REITs. Under the new announcements, REITs can now invest at least a 50% stake in the Holding Company (Hold Co)/SPVs with a holding of 50% stake similarly allowed for the Hold Co in the SPVs. This, however, is subject to some safeguards and previous rules applicable to the REIT structure. "This will help the growth of commercial real estate in the country," said Ramesh Nair, CEO & Country Head, JLL India.  

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To enable efficient capital raising and capacity building for promoters, SEBI has enabled measures to achieve the minimum public shareholding threshold of 25% by allowing for QIP (Qualified Institutional Placement) which will facilitate the listed entity to choose its financial partners more prudently. By also enabling promoters to sell upto 2% of their shares in the open market, short-term working capital requirements can be adequately addressed while meeting the regulatory norms for the public float.

He further added, "Additionally, SEBI has enabled REITs to invest in unlisted shares under the 20% investment category. This should allow access to funds for smaller development players who have the potential for future growth and may go ahead and list their shares in near future. This should benefit such smaller, unlisted firms while REITs can undertake investments at attractive valuations."  

Earlier in the year, REITs were allowed to issue debt securities and even single-asset REITs were allowed, thus paving the way for further easing of accessing public capital markets. The regulator and the government have heeded the call of the sector participants and eased the norms considerably and created an enabling environment over the past year or so after multiple rounds of consultations. Considering the capital requirement of CRE developers and the investment avenue that REITs provide, these simplifications of rules are likely to further boost investments in the sector.

In India, SEBI notified the REIT Regulations on 26 September 2014 that provided a regulatory framework for registration and regulation of REITs in India. We are yet to see any REIT listings, but the progress seems to be on track for a listing in the near future.

As per JLL Research, close to 306 million sq ft of office space in India is REITable. With Bengaluru, NCR and Mumbai leading among the major cities, the top seven cities collectively have more than 900 REIT-worthy properties.

Real estate investments trusts are listed entities that primarily invest in income-generating properties and distributing most of the income proceeds to the unit holders. They are a very acceptable manner of capital raising from public markets while enabling suitable exits to institutional investors.

About JLL India:  

JLL is India's premier and largest professional services firm specializing in real estate. With an extensive geographic footprint across 11 cities (Ahmedabad, Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and a staff strength of 9,300 the firm provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, analytics, consultancy, transactions, project and development services, integrated facility management, property and asset management, sustainability, industrial, capital markets, residential, hotels, health care, senior living, education and retail advisory. The firm was awarded the Property Consultant of the Decade at the 10th CNBC-Awaaz Real Estate Awards 2015 and the Best Property Consultancy in India at the International Property Awards Asia Pacific 2016-17.

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Media Contact:
Devesh Chandra Srivastava
Media Relations, Marketing & Communication
JLL India


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