The Real Estate Investment Trusts (REITS) regulations, inter alia, prescribe conditions for making a public offer, initial and continuous disclosures, investment conditions, unit-holder approval requirements, related party disclosures, etc as per the SEBI regulations provided vide the REITs Regulations, 2014.
Thus REITs are private trusts registered with SEBI and listed on the stock exchange in order to facilitate investing in real assets in India. The earnings generated there in shall be distributed among the prescribed unit holders.
The prerequisites for REITs are as follows:It must be a Trust Deed under the Trust India Act. Such Trust Deed must be duly registered and must set out that its main objectives is to undertake the activity of REITs. The REITs can invest either in Transferable Development Rights directly or through Special Purpose Vehicles indirectly. The Regulations as provided by SEBI prescribe that 90% of the net distributable cash flows received from underlying SPVs to the REITs must mandatorily be distributed to the investors. Foreign Direct Investment in trusts other than venture capital funds is prohibited under the present FDI Policy.