SM-REITs seek lower lot size of  ₹1-2 lakh, simplified compliance

Industry players have also requested that the cap on asset size per scheme be doubled to ₹1,000 crore from ₹500 crore to enable larger transactions and attract more institutional participation.
| Photo Credit:
FRANCIS MASCARENHAS

Small and Medium REITs (SM-REITs) have approached the Securities and Exchange Board of India (SEBI) seeking a reduction in the minimum investment lot size to ₹1–2 lakh from the current ₹10 lakh, along with a rationalisation of compliance requirements to speed up scheme launches, people familiar with the matter said.

Industry players have also requested that the cap on asset size per scheme be doubled to ₹1,000 crore from ₹500 crore to enable larger transactions and attract more institutional participation.

Under SEBI’s SM-REIT framework, introduced last year, the minimum ticket size is set at ₹10 lakh. Each scheme must acquire assets worth at least ₹50 crore and less than ₹500 crore, though multiple schemes can be launched under one SM-REIT without a cap on their combined value.

“These high thresholds effectively keep retail investors out and also limit the scale of transactions that institutional players can participate in,” said a person aware of the discussions.

Faster approvals

SM-REITs are structured with ring-fenced assets, segregated bank and demat accounts, and involve a trustee and an investment manager with defined eligibility, net worth, and operational requirements. Schemes—similar in concept to mutual funds—are launched through a public offering process akin to an initial public offering (IPO).

The process begins with filing a Draft Red Herring Prospectus (DRHP) with SEBI, disclosing details of assets, financials, and risk factors. SEBI reviews the document and issues observations, after which it is converted into a Red Herring Prospectus (RHP) before final filings, pricing, allotment, and listing.

“We have asked if this process can be simplified… because the difference between a two-month turnaround and a five- to six-month turnaround is huge,” another industry source said.

Scheme launches

Currently, the end-to-end process—including board and shareholder approvals, DRHP drafting, SEBI review, and final issuance—can take over six months. Industry representatives believe easing these norms could broaden access for smaller investors, boost capital flows, and help the sector reach its estimated $60-billion potential in the coming years.

So far, only Property Share—now rebranded as PropShare Investment Trust—has launched SM-REIT schemes, raising a total of ₹750 crore through two offerings in Bengaluru and Mumbai. Four SM-REITs are currently registered with SEBI, including PropShare, EFC, iBits, and Rudrabhishek Enterprises, with the latter three also preparing to roll out schemes.

An email sent to SEBI for comments did not elicit a response.

Published on August 24, 2025