SM REIT

SM REIT in India are in the early stages of development. The Securities and Exchange Board of India (SEBI) introduced regulations for SM REITs in 2023 to regulate fractional ownership platforms and enhance transparency in real estate investments.

1. Eligibility & Structure

  • Minimum Asset Value: ₹50 crore (as opposed to ₹500 crore for regular REITs).
  • Minimum Issue Size: ₹25 crore for public issuance.
  • Sponsorship: At least one sponsor required, holding a minimum of 15% in the SM REIT for at least 3 years.
  • Trust Structure: Must be set up as a trust under the Indian Trusts Act, 1882 and registered with SEBI.
  • Management: Managed by a SEBI-registered Investment Manager.
  • Trustee: A SEBI-registered Debenture Trustee must be appointed.

2. Investment Criteria

  • Minimum Investment in Completed & Income-Generating Assets: 80% of the total asset value.
  • Under-Construction & Development Projects: Max 20% of the total value.
  • Ownership: Directly or through Special Purpose Vehicles (SPVs) where SM REIT owns at least 50%.

3. Listing & Compliance

  • Mandatory Listing: On recognized stock exchanges (NSE/BSE).
  • Minimum Public Holding: 200 investors post listing.
  • Leverage Limit: Cannot exceed 49% of total assets.
  • Valuation Reports: At least twice a year by a registered valuer.

4. Distribution & Taxation

  • Mandatory Distribution: At least 90% of net distributable income to investors.
  • Tax Benefits:
    • Pass-through taxation for rental income.
    • Capital gains tax for investors on sale of units.

5. Investor Participation

  • Minimum Investment: ₹10 lakh for non-institutional investors.
  • Institutional Investors Allowed: Includes banks, mutual funds, AIFs, pension funds, etc.
LATEST PLAYERS IN INDIAN MARKET 

PLAYERS IN PROGRESS

  • Property Share Investment Trust: PropShare Platina, aiming to raise ₹353 crore. The scheme proposed involves six floors of Prestige Tech Platina in Bengaluru, leased to a U.S.-based tech company. Registered as India's first SM REIT, it received its SEBI license on August 5, 2024. Mr. Kunal Moktan
  • Strata: A commercial real estate investment platform, Strata applied for an SM REIT license and received approval from SEBI. The company plans to launch up to six schemes in FY26, aiming to democratize real estate investments by lowering the minimum investment barrier to ₹10 lakh.Received its SEBI license on January 8, 2025. Ms. Smruthi Manchi
  • hBits: A fractional ownership platform, hBits applied for an SM REIT license and plans to launch its inaugural offering in the third quarter of the current financial year. The company aims to enhance transparency and investor confidence in fractional ownership of commercial real estate.
  • Rudrabhishek Enterprises Ltd (REPL): Announced plans to launch an SM REIT under the name ImpactR SM REIT, with REPL acting as the investment manager. This trust obtained SEBI approval on September 24, 2024.Mr. Kunal Sawhney 
  • Emberstone SM REIT: Approved by SEBI on October 29, 2024. Mr. Umesh Kumar
  • WiseX: WiseX is working closely with legal and tax advisors to register under the SM REIT regulations. The company aims to complete the registration and receive the license before the six-month deadline set by SEBI.
  • EFC (I) Ltd: EFC is in the process of forming an investment manager entity to manage assets and investments of an SM REIT through a wholly owned subsidiary. The company plans to file an application with SEBI within the next three to four months

CURRENT STATUS

As on March 2025, there are no fully operational SM REITs with publicly listed units in India. The sector is expected to evolve as more platforms receive regulatory approvals and launch their offerings.

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