Regulation 26U - Modes of fund raising - Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014

1 [ Modes of fund raising. 26U . (1) The scheme of the SM REIT may raise funds from any investor whether Indian, or foreign by way of issuance of units: Provided that investment by foreign investors shall be subject to the guidelines as may be specified by Reserve Bank of India and the Government of India from time to time. (2) The scheme of a SM REIT and the SPV(s) thereunder may undertake leverage if the option to undertake leverage is disclosed in the scheme offer document filed for initial offer. (3) With regard to modes of fund raising by a scheme of SM REIT, the following shall apply: (a) The scheme of the SM REIT shall raise capital only by way of issuance of units pertaining to the particular scheme. (b) For a scheme of SM REIT opting to utilize leverage in accordance with sub-regulation (2), the scheme may undertake leverage through borrowings or issuance of debt securities under Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021. (4) With regard to modes of fund raising by a SPV of a scheme of SM REIT, the following shall apply: (a) The SPV shall raise capital only from equity investment from the scheme of SM REIT. (b) The SPV may raise funds by way of borrowings from the scheme of SM REIT. (c) For a scheme of SM REIT opting to utilize leverage in accordance with sub-regulation (2), the SPV(s) under such scheme may undertake leverage through external borrowings or issuance of debt securities under Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021. (5) For a scheme of SM REIT opting to utilize leverage in accordance with sub-regulation (2), the total borrowings and deferred payments net of cash and cash equivalents, at the scheme level, shall not exceed forty nine per cent. of the value of the scheme assets: Provided that if the total borrowings and deferred payments net of cash and cash equivalents, at the scheme level, exceeds twenty five per cent. of the value of the scheme assets, then for any further borrowings, - (a) 2 [ issuer credit rating of the scheme of SM REIT ] shall be obtained from a credit rating agency registered with the Board; and (b) approval of unit holders shall be obtained in the manner as specified in regulation 26ZM. ] 3 [ Explanation 1 . - Borrowings and deferred payments shall not include any refundable security deposits received from tenants and the refundable security deposits from tenants shall be invested in liquid assets as defined in regulation 2(1)(ta) of these regulations. Explanation 2 . - Investment by a scheme of SM REIT in overnight mutual funds, characterized by their investments in overnight securities, having maturity of one day, shall be considered as cash and cash equivalent. Explanation 3 . - The amount of cash and cash equivalent shall be excluded from the value of the assets of the scheme of SM REIT. ] 4 [ (6) If the leverage limit specified in sub-regulation (5) of this regulation is breached on account of decline in the price of the underlying assets or securities, the investment manager shall inform the same to the trustee and ensure that the conditions as specified in sub-regulation (5) of this regulation are satisfied within six months of such breach. ] ************** NOTES:- 1. Inserted vide Notification No. SEBI/LAD-NRO/GN/2024/166 dated 08-03-2024 2. Substituted vide F. No. SEBI/LAD-NRO/GN/2025/241 dated 22-04-2025 before it was read as, credit rating 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