SEBI (Securities and Exchange Board of India) has recently updated the disclosure rules for REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts).
These changes are expected to make both investment options more attractive to investors.
Experts believe the updated rules will provide investors with detailed information about cash flows, enabling them to better assess the risk and potential returns based on specific projects.
SEBI issued two important circulars on May 7, outlining these changes.
Changes in Disclosure Requirements
Under the revised rules:
REITs and InvITs are now required to disclose information for every Special Purpose Vehicle (SPV) and holding company (HoldCo) involved.
The disclosure includes pro forma financial statements for any material acquisitions or divestitures.
Alignment with International Standards
The updated disclosure rules aim to bring India’s practices in line with global standards.
Experts, like Kinjal Champaneria, partner at Solomon & Co., suggest that this will make it easier for investors to evaluate the transparency and credibility of these investment vehicles.
Furthermore, these changes are expected to promote ease of doing business, making it simpler to raise funds and provide clear financial details.
Guidelines for Asset Classification
Another significant change is how assets owned by REITs and InvITs will be classified.
The updated rules provide a clear framework for asset categorization, which is likely to boost investor confidence in these vehicles.
What Are REITs and InvITs?
Earlier this year, a working group presented a report on REITs and InvITs.
REITs (Real Estate Investment Trusts) allow investors to invest in real estate assets like commercial buildings.
InvITs (Infrastructure Investment Trusts) focus on infrastructure assets, such as highways, airports, and power plants.
Both REITs and InvITs provide a way for investors to gain exposure to real estate and infrastructure sectors, which were previously difficult for individual investors to access directly.
