Sebi cautions investors as Strata SM REIT surrenders registration

Similar to REITs, SM REIT units are required to be listed on stock exchanges but with a minimum lot size of 1 unit of Rs 10 lakh.

Markets regulator Sebi on Wednesday cautioned investors against dealing with Strata Small and Medium Real Estate Investment Trust (SM REIT) as it is no longer a regulated intermediary or an SM REIT.

The decision came after the markets regulator reviewed “certain legal proceedings against the promoter of a Sebi-registered SM REIT — Strata SM REIT.” The regulator said it had engaged with Strata SM REIT, its independent director, compliance and other officers and the trustee.

“Based on the engagement and discussions thereat, Strata SM REIT has surrendered its certificate of registration as an SM REIT and will not hold out or represent itself as a Sebi-regulated intermediary or SM REIT,” the regulator said in a statement.

Accordingly, the regulator advised investors to exercise caution while dealing with the entity.

Sebi said Strata SM REIT has, as on date, not launched any SM REIT schemes nor migrated any pre-existing fractional real estate entities as an SM REIT scheme.

Strata had registered as an SM REIT, a new asset class introduced by the Securities and Exchange Board of India (Sebi) as a sub-class within the REIT framework for assets valued between Rs 50–500 crore.

Similar to REITs, SM REIT units are required to be listed on stock exchanges but with a minimum lot size of 1 unit of Rs 10 lakh.

Under the framework, SM REITs are not permitted to invest in under-construction assets or land and must distribute 95 per cent of earnings as distributions to unit holders.