Minimum Subscription for InvIT and REIT’s Reduced

Pursuant to notifications both dated April 22, 2019, the market regulator SEBI has amended the SEBI (Real Estate Investment Trusts) (“REIT”) Regulations, 2014 and the SEBI (Infrastructure Investment Trusts) (“InvIT”) Regulations, 2014.

The following changes have been made in SEBI (REIT) Regulations, 2014:
  • Reduction in the ‘minimum subscription’ requirement for publicly offered REITs as per the following:

    Initial offer:
    The minimum subscription value of each lot of allotment shall not be less than Rs 50,000/ (Rupees Fifty Thousand only). Such allotted lot should comprise of a minimum one hundred (100) units or multiples thereof.

    Follow-on offer:
    Minimum allotment should comprise of such number of lots, whose aggregate value is not less than Rs 50,000/- (Rupees Fifty Thousand only). Further, each such lot shall consist of the same number of units as its trading lot, or multiples thereof. The size of the trading lot shall be decided by recognized stock exchanges within six (6) months from the notification of this amendment.

  • The following changes have been made in the SEBI (InvIT) Regulations, 2014:

  • Reduction in the ‘minimum subscription requirement’ for publicly offered InvITs, as per the following:

    Initial offer:
    The minimum subscription value of each allotment lot shall not be less than Rs 1,00,000 /- (Rupees One lac only). Such allotted lot should comprise of a minimum one hundred (100) units or multiples thereof.

    Follow-on offer:
    Minimum allotment shall be of such number of lots, whose value is not less than Rs 1,00,000/- (Rupees One lac only). Further each lot shall consist of the same number of units as its trading lot, or multiples thereof. Similar to REITS, the size of the trading lot shall be decided by the recognized stock exchanges within six (6) months from the notification of this amendment.

  • InvITs which have their aggregate consolidated borrowings and deferred payments higher than 49% are now required to make the following additional disclosures:
    • Asset cover available;
    • debt-equity ratio;
    • debt service coverage ratio;
    • interest service coverage ratio; and
    • net worth.
  • These amendments provide higher flexibility to the issuers at the time of fund raising while also providing prospective investors easier access to investment vehicles thereby widening the existing investor base.