The Securities and Exchange Board of India (Sebi) has proposed allowing Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to take minority stakes in under-construction assets, which would help them secure long-term asset pipeline. According to the latest consultation paper, Sebi has proposed that REITs and InvITs be permitted to invest in under-construction projects without having a controlling interest, within the existing limits prescribed for exposure to such assets. As reported by Business Standard, investing a minority stake in under-construction assets would enable REITs and InvITs to build a pipeline of stable, revenue-generating assets while minimising exposure to construction-related risks. Karan Mehta, executive director, projects, Orion One32, noted that this framework could allow developers to sell a minority stake in an eligible project to a REIT or InvIT, giving them access to capital while retaining a stake in the asset and, potentially, control over it. The capital released could be used to acquire new land, fund construction, repay debt or invest in other projects, with the bigger benefit being better capital efficiency.
The regulator has proposed extending certain website disclosure requirements for clearing corporations to all segments, including disclosures relating to the policy on composition and contributions to the Core Settlement Guarantee Fund (SGF), quarterly break-up of contributions, investment policy for the Core SGF and the default waterfall for each segment. According to Livemint, Sebi has also proposed exempting clearing corporations registered as depository participants (DPs) from submitting periodic DP-related reports and filings to depositories, noting that clearing corporations retain DP registrations mainly for establishing connectivity with depositories for clearing and settlement activities and do not undertake retail client transactions like regular DPs.
Sebi has proposed reducing the cooling-off period for offer for sale (OFS) by privately listed InvITs from 12 weeks to 8 weeks, addressing the liquidity constraints faced by these investment vehicles. As reported by Business Standard, currently the cooling-off period for transactions is based on liquidity, standing at two weeks for the most liquid shares, four weeks for liquid shares and 12 weeks for illiquid shares. Privately listed InvITs face inherent liquidity constraints due to their high trading lot size of ₹25 lakh, which limits participation largely to institutional investors, body corporates and high-net-worth individuals. Consequently, trading volumes in such InvITs tend to remain thin and they may fall under the illiquid category because of these structural liquidity constraints.
Sebi has proposed recognising remote common infrastructure, such as captive renewable energy facilities, as 'real estate' under REIT regulations to address regulatory inconsistencies. According to Business Standard, currently REIT regulations allow investment in common infrastructure irrespective of whether such facilities are co-located with a REIT project, but the definition of real estate refers to common infrastructure for composite real estate projects, creating a regulatory inconsistency for infrastructure located away from the main property. Industry representatives have highlighted that this creates difficulties for remote captive renewable energy plants, which may be geographically distant but functionally integrated with commercial real estate. To address this issue and support green energy and sustainability initiatives, Sebi has proposed amending the definition of real estate to cover remote common infrastructure.
The proposed framework comes as the REIT and InvIT market has expanded rapidly, with Invits distributed ₹22,769 crore in FY26, taking cumulative distributions since inception to ₹91,000 crore, while assets under management rose to ₹7.1 trillion from ₹6.3 trillion in FY25, according to the Bharat InvITs Association. The listed REITs' market capitalisation rose from ₹271 billion in FY20 to ₹1.726 trillion in the first nine months of FY26, according to CBRE. As reported by Business Standard, the government has already identified REITs and InvITs as important channels for asset monetisation, with asset monetisation through these vehicles having unlocked more than ₹1.5 trillion, helping recycle funds into new projects and attract global investors. The proposal could be particularly relevant for assets with predictable cash flows and clear income generation paths, including roads, renewable-energy projects, Grade A offices, business parks, logistics facilities, data centres and retail developments.
Industry experts have identified governance as the primary concern for minority investments, with Anish Maheshwari, founder and CEO, Vsure Investment Affairs, noting that a Reit or Invit that owns only a minority interest will have less control over decisions affecting the underlying asset. According to Business Standard, independent valuations, board involvement, veto rights on important decisions, stricter related-party transaction rules and greater disclosure at the special purpose vehicle level could become important safeguards. Ram Raheja, managing director, S Raheja, emphasised that the consultation paper should be seen as an attempt to bring institutional capital into projects before they are fully stabilised, allowing developers access to longer-term capital that sits between construction debt and private equity. The structure could potentially offer a middle ground between asset sales and traditional financing methods, enabling developers to unlock capital without necessarily taking on additional debt or completely exiting quality assets.
Sebi has proposed amending the threshold for unitholder approval for certain matters, requiring that votes cast in favour of the resolution should be at least 75% of the total votes cast for that resolution instead of the current value-based system. As reported by Business Standard, the regulator has also proposed clarifying who will provide the exit option when one sponsor exits a REIT or InvIT having multiple sponsors. If public unitholding falls below the prescribed minimum threshold because of an exit offer given to dissenting unitholders, the REIT or InvIT would be required to restore minimum public unitholding within one year from the date of the breach. The regulator has also proposed specifying timelines for various activities related to such exit offers.
