MUMBAI, July 19: Capital market regulatior, the Securities and Exchange Board of India (Sebi) has proposed easier norms for real estate investment trusts (REITs) and said that such entities do not need to buy or sell assets at prices suggested by independent valuers while undertaking related-party deals. At present, for related-party transactions, REITs are required to purchase or sell assets at a price that is not greater or less than the average of two independent valuations. In order to allow more flexibility, SEBI proposed that REITs can purchase properties at any value as long as the price is not greater than 110 percent of the average of the two independent valuations. And REITs can sell a property at any price as long as the value is not less than 90 percent of the average of the two independent valuations, Sebi said in a consultation paper. SEBI has proposed relaxed norms for related party transactions and allowed these Trusts to invest more in under-construction assets. Sebi also proposed removal of restrictions on Reits relating to investment in special purpose vehicle (SPV) structures while norms relating to related party transactions would also be eased. The proposed move would allow up to 20 per cent investment by Reits in under-construction projects, up from a maximum of 10 per cent allowed currently. Although Sebi cleared the launch of REITs in 2014, unfavourable tax structures and stringent holding norms have so far prevented companies from floating such trusts. Besides, relaxations would be made to provisions relating to compliance of minimum public holding norms as also for investments by associate entities of trustees, according to the consultation paper. The draft papers have been put in place after Sebi’s board last month approved a proposal for issuance of a consultation paper to amend the Reit regulations.
(AGENCIES)
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