SM REIT Rules and Sebi Warning on Strata
Why in the news
Sebi issued a public warning concerning Strata, a commercial real estate platform, after it surrendered its Small and Medium REIT licence of its own accord. Sebi had earlier framed rules to open real estate investing to smaller investors.
Key facts
- An SM REIT is a REIT built for smaller properties; the entry threshold falls from ₹500 crore (regular REIT) to ₹50 crore.
- Minimum real estate asset value: ₹50 crore.
- Pooling: units issued to raise at least ₹50 crore from at least 200 investors.
- Money is used to buy and manage property and earn income for unit holders.
- Each scheme owns assets through its own Special Purpose Vehicle (SPV).
Investment manager conditions
- Net worth of at least ₹20 crore.
- A separate trustee for oversight.
- A dedicated website disclosing all SM REIT schemes.
Significance
- Access to smaller regional projects.
- Diversification through separate schemes: residential, commercial, industrial infrastructure, mixed-use.
- Transparency via compulsory online disclosures.
About InvIT
An Infrastructure Investment Trust is a pooled vehicle, similar to a mutual fund, in which retail and institutional investors fund infrastructure projects. It is regulated by Sebi.
| Component | Role |
|---|---|
| Trustee | Monitors compliance and performance |
| Sponsor(s) | Set up the InvIT |
| Investment Manager | Runs assets and operations |
| Project Manager | Executes and manages projects |
Exam angle
- Regulator: Sebi.
- Thresholds: ₹50 crore, 200 investors, ₹20 crore net worth.
- Each SM REIT scheme uses a dedicated SPV.