Skip to main content

Real Estate Investment Trust (REIT)

 

What is Real Estate Investment Trust?

Real Estate Investment Trust is a mutual funds for Real Estate. Under mutual funds underlying assets are equity and debts, similarly REIT will have the real estate as its underlying assets fetching rental incomes.

How to Incorporate:

  1. Trust should be registered under Registration Act 1908.
  2. Trust deed has its main objective as undertaking activity of REIT.
  3. Trust deed should specify the responsibilities of the Trustee.

Application to Whom:

Applicant (Trust) sends application in Form A to SEBI for registration.

  1. Application fees is Rs.1,00,000/- (Non-refundable)
  2. After getting intimation from the SEBI further non-refundable fees Rs.10,00,000/- to be paid.

Parties to the REIT:

  1. Sponsors:
    a) Sponsor should be one person but not more than 3 persons and each of the sponsors holding or proposing to hold not less than 5% of the number of units of REIT post issue basis and
    b) Net worth on collective basis not less than 100 crores, provided each sponsor should has a net worth not less than 20 crores and
    c) Should have not less than 5 years of experience in development of real estate or fund management in real estate.
  1. Manager:
    a) The Manager of REIT may be body corporate, company or LLP.
    b) Should have 5 years of experience in fund management or advisory services or property management in real estate industry.
  1. Trustee:
    Trustee should registered with SEBI and not an associate of the sponsors or manager.

Note:

  • Sponsors, Manager and Trustee should be separate entity.

How REIT function?

REIT can directly invest in Income generating commercial property or Invest through SPV.

Special Purpose Vehicle (SPV):

  • LLP or company set up by REIT and having controlling interest not less than 50% of the equity share capital or interest.
  • SPV should hold at least 80% of wealth in properties not in other SPV.
  • SPV should not engage in any other activity other than developing or holding property.
 

Structure of REIT:

Structure of REIT in India

How REIT raise funds:

  1. REIT raise fund from any investors either in India or foreign.
  2. Investors has to invest at least Rs.2,00,000/- Minimum unit size should be Rs.1,00,000/- i.e. investors should hold at least two units.
  3. There should at least 200 investors for a REIT.

Conditions for REIT:

Not less than 75% revenue of REIT should be from rental income, leasing and letting of real estate assets, other than Capital gains on disposal of properties.

Income of REIT:

  1. Rental income from direct investment in real estate properties.
  2. Capital gain from sale of real estate properties.
  3. Dividend income from SPV.
  4. Interest income from loan advanced to SPV.

REIT Investment Condition:

Not more than 20% of REIT assets in

  1. Developmental properties (Property held by REIT not less than 3 years and leased out)
  2. Listed and unlisted debt of companies.
  3. Equity shares of company not less than 75% of its activities from real estate field.
  4. Government securities.

Not less than 80% of the Value of REIT assets should be invested in completed revenue generating properties.

Note:

The Investment by a REIT shall only be in SPVs or Properties or securities in India other than Vacant land or Agricultural land or mortgages.

Taxability in the Hands of REIT:

Under section 115 UA distributed income of REIT to be taxed in the hands of investors in the same nature as in hands of REIT.

  1. Interest income fully exempt under section 10(23FC).
  2. Long term capital gain taxable @ 20% short term gain @15%
  3. Other income taxable at 30%.
  4. Dividend received by REIT from SPV is exempt provided SPV should pay DDT.

Taxability in the hands of Investors:

  1. Interest Income received from REIT is fully taxable.
  2. Any Other income is fully exempt.

Initial Public offer condition:

  1. REIT registered under SEBI.
  2. Value of assets hold by REIT not less than 500 Crores.
  3. Units proposed to be offered to public not less than 25% of the total outstanding units of REIT and offered only by offer document.
  4. Offer size is not less than 250 crores.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

Invest in Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Good time to invest in Infrastructure Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...
Read more

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
Read more

PPF lock in may be extended

The Finance Ministry is considering a proposal to extending the minimum lock-in period for withdrawal from PPF from 6 to 8 years. The purpose is to attract long-term funds for infrastructure development. The time limit for maturity of PPF may also be increased from the current 15 years. The limit up to which investors can avail of tax deduction under Section 80C on investment in PPF was hiked from `1 lakh to `1.5 lakh in the previous Budget. Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara Robeco Equity Tax Saver 8. IDFC Tax Advantage (ELSS) Fund 9. Axis Tax Saver Fund 10. BNP Paribas Long Term Equity Fund You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds Invest in Tax Saver Mutual Funds Online - Invest Online Download Application Forms For further ...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now