The Securities and Exchange Board of India (SEBI) has issued Frequently Asked Questions (FAQs) on the preferential issue of units by Real Estate Investment Trusts (REITs), providing clarity on eligibility, pricing, participation, lock-in, allotment, and listing requirements.
The following has been stated:
Preferential issue: A preferential issue refers to an issue of units by a listed REIT to a select person or group of persons on a private placement basis, excluding public issue, rights issue, bonus issue and qualified institutions placement.
Eligibility and participation: A REIT must obtain the requisite unitholder approval, stock exchange in-principle approval, and comply with listing and disclosure requirements. Generally, any person may participate, subject to the 90-trading-day restriction on persons who have sold or transferred REIT units, with specified exceptions for asset acquisitions.
Pricing: For frequently traded units, the issue price cannot be lower than the higher of the 90-trading-day or 10-trading-day volume-weighted average price preceding the relevant date. For infrequently traded units, pricing must consider the REIT's NAV based on the required valuation.
Lock-in: Units allotted to persons other than sponsors/sponsor groups are locked in for one year, while sponsor/sponsor-group allotments are subject to a three-year lock-in for the prescribed portion, with additional six-month lock-in requirements for pre-preferential holdings.
Allotment and listing: Allotment must generally be completed within 15 days of the unitholders' resolution, and the units must be listed within two working days of allotment. Delayed refunds attract 15% per annum interest.
