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SEBI has proposed key changes in Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) and Small and Medium (SM) REITs in which it is proposed to allow them to invest in liquid funds offered by mutual funds.
However, REITs, InvITs and SM REITs can invest only up to 20% of their corpus in liquid funds.
Also, such a scheme should fall under credit risk value of more than or equal to 12 under the Class A-1 in the potential risk class matrix.
Here are some key proposals impacting REITs, InvITs and SM REITs
- Lockin units can be sold within the existing sponsor group
- REITs/InvITs and SM REITs to set up nomination and remuneration committee (NRC)
- InvITs to place quarterly results before the board of directors of the investment managers
- InvITs will be allowed to use hedging instruments like swaps, futures and options to reduce interest rate risks
- REITs/InvITs should be permitted to liquidate their fixed deposits through premature termination/withdrawal option
- REITs should be allowed to invest in assets falling under the definition of infrastructure like warehouses, hotels, hospitals, affordable housing and data centres
- REITs/InvITs should not be permitted to invest in unlisted equity shares of companies other than holding companies or through special purpose vehicles as part of investment in real estate or property
Overall, SEBI said these changes aim to facilitate ease of doing business for REITs, InvITs and SM REITs, enhance operational framework and safeguard investor interests.