Regulation 26R - Conditions for initial offer - Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014

1 [ Conditions for initial offer. 26R. (1) The investment manager shall identify the real estate assets or properties it proposes to acquire or provide the features of the real estate assets or properties including location or such other details for the particular scheme in the draft scheme offer document. 2 [ (1A) A scheme of SM REIT shall make an initial offer of its units by way of public issue only and in the manner as may be specified by the Board. (1B) The initial offer shall be made by the scheme of SM REIT within a period of not more than one year from the date of issuance of observations by the Board: Provided that if the initial offer is not made within the specified time period, a fresh draft scheme offer document shall be filed. (1C) The minimum subscription amount shall be 90 per cent. of the fresh issue size as specified in the KIS in case of a scheme of SM REIT which opts to utilize leverage in accordance with these Regulations. (1D) The minimum subscription amount shall be 100 per cent. of the fresh issue size as specified in the KIS in case of a scheme of SM REIT which does not opt to utilize leverage in accordance with these Regulations. (1E) The amount for general purposes, including the issue expenses, the legal expenses and other eligible expenses, as the Board may specify, as mentioned in objects of the offer in the KIS filed with the Board, shall not exceed such amount as the Board may specify from time to time. (1F) The investment manager shall deposit the amount to comply with the minimum unitholding requirement specified in sub-regulation (1) of regulation 26ZB of these regulations in a cash escrow bank account, two working days prior to the opening of the offer and the allotment of such units to the investment manager shall be a part of the asset acquisition transaction. ] (2) The investment manager shall, through a merchant banker, file the draft scheme offer document with the Board, along with fees specified in Schedule IIA and with the designated stock exchange. 3 [ (2A) The scheme offer document shall consist of KIT and KIS. (2B) The investment manager shall file a single draft KIT, common for all schemes, with the Board along with draft KIS at the time of initial offer of the first scheme of the SM REIT and the Board may issue observations on the draft KIT and the draft KIS. (2C) For subsequent scheme offer documents, processing of KIT and KIS shall be done in the following manner - (i) if there is no change in the KIT vis- -vis the KIT filed with the Board as part of previous scheme offer document and the investment manager has submitted a declaration in this regard, then the KIT shall be filed by the investment manager with the Board only for records along with draft KIS of subsequent schemes and the Board may issue observations only on the draft KIS; or (ii) if there is any change in the draft KIT vis- -vis the KIT filed with the Board as part of previous scheme offer document, then the investment manager shall file the draft KIT along with the draft KIS of subsequent schemes with the Board and the Board may issue observations on the draft KIT as well as on the draft KIS. ] (3) The minimum price of each unit of the scheme of the SM REIT shall be rupees ten lakhs or such other amount as may be specified by the Board from time to time. 4 [ (3A) The price of units of the scheme of SM REIT issued by way of public issue shall be determined through the book building process or any other process in accordance with the circulars or guidelines issued by the Board and in the manner as may be specified by the Board; ] (4) Each scheme of the SM REIT shall be identified by a separate name, which shall not be misleading and shall not portray any guaranteed returns to the investors. (5) The value of real estate assets or properties in each scheme shall be at least fifty crore rupees. (6) The investment manager and the trustee shall ensure that the assets of each scheme, the bank accounts, investment or demat accounts and the books of accounts of each scheme are segregated and ring-fenced. (7) The investment manager and the trustee shall ensure that the property documents evidencing the title to the real estate assets or properties along with the related papers shall be duly maintained in safe-deposit boxes, at a scheduled commercial bank and be annually inspected by the trustee. (8) The draft scheme offer document filed with the Board shall be made public, for comments, if any, by hosting it on the websites of the Board, designated stock exchanges and merchant bankers associated with the issue, for a period of not less than twenty-one days. (9) The Board may issue observations, if any, to the merchant banker within thirty days from the later of: (a) the date of receipt of the draft scheme offer document; (b) the date of receipt of satisfactory reply from the merchant banker, where the Board has sought any clarification or additional information from the merchant banker; (c) the date of receipt of clarification or information from any regulator or agency, where the Board has sought any clarification or information from such regulator or agency; or (d) the date of receipt of a copy of in-principle approval letter issued by the designated stock exchange(s). (10) The merchant banker shall ensure that the observations issued by the Board are addressed in the scheme offer document prior to launch of the scheme. ] 5 [ (11) The Board may specify, by issuance of guidelines or circulars, any other requirements, as it deems fit, pertaining to the issue and allotment of units by a scheme of SM REIT. (12) The Board and the designated stock exchanges may specify any other requirements pertaining to listing and trading of units of the scheme of SM REIT by issuance of guidelines or circulars. (13) The investment manager shall ensure that the issue proceeds shall be used only for the acquisition of assets as disclosed in the scheme offer document: Provided that in case the SM REIT is unable to acquire one or more assets proposed to be acquired as disclosed in the scheme offer document, then the entire amount raised from the offer should be refunded to the investors in such manner and within such time as may be specified by the Board. ] ************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/166 dated 08-03-2024 2. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/241 dated 22-04-2025 3. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/241 dated 22-04-2025 4. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/241 dated 22-04-2025 5. Inserted vide F. No. SEBI/LAD-NRO/GN/2025/241 dated 22-04-2025