REITs jump up to 8% in 2 days as Sebi grants equity status – News Air Insight

Units of India’s five listed Real Estate Investment Trusts (REITs) surged as much as 8% over the past two sessions, after the market regulator Securities and Exchange Board of India (Sebi) reclassified REITs as equity instruments. The move, according to industry groups, is a landmark reform that will broaden participation and deepen the market.

Mindspace Business Parks REIT rose 5.6% in two days to Rs 446.89 per unit on Tuesday, lifting its market capitalisation to Rs 27,114.76 crore. Nexus Select Trust gained 7.6% to Rs 157.70, valuing the REIT at Rs 23,785.50 crore.

Embassy Office Parks REIT climbed 3.8% to Rs 413.99, with a market cap of Rs 39,199.20 crore. Brookfield India Real Estate Trust advanced 5.6% to Rs 338.00, taking its valuation to Rs 21,440.35 crore. Knowledge Realty Trust rose 4.1% to Rs 112.35, also pegging its market cap at Rs 21,440.35 crore.

SEBI’s landmark reform

The Sebi on Monday approved the reclassification of REITs as equity instruments, opening the door to greater participation by mutual funds and potential inclusion in equity indices.The regulator said the move reflects the equity-like characteristics of REITs, which are relatively more liquid, and brings India in line with global practices. Infrastructure Investment Trusts (InvITs), however, will continue to be classified as hybrid products.

REITs are investment vehicles that own or operate income-generating real estate, allowing investors to earn a share of the income without directly purchasing property.

Industry welcomes decision

Industry stakeholders hailed Sebi’s move as a watershed moment. The Indian REITs Association (IRA) called it “a significant milestone in strengthening the REIT ecosystem in India.”

It added that, just like the regulator’s earlier reform in 2021 to reduce REIT lot sizes, the latest step would “foster greater market participation, improve liquidity, and position India as a progressive destination for institutional capital.”

The group also urged stock exchanges to update index eligibility norms. “We now hope the stock exchanges make the necessary changes in the eligibility criteria of indices to enable REITs to be part of the eligible ones,” IRA said.

Amit Shetty, CEO of Embassy REIT, echoed the optimism. “We welcome and commend SEBI’s landmark move to classify REITs as equity instruments. At Embassy REIT, we see this as a catalyst to broaden investor participation, enhance liquidity, enable future index inclusion, and further strengthen REITs as a mainstream investment asset class,” he said.

Broader implications

Market experts said the reform is likely to strengthen India’s REIT ecosystem by providing domestic mutual funds with an opportunity to allocate more meaningfully to the asset class, mirroring practices in developed markets.

Also read | SEBI reclassifies REITs as equity; move set to boost MF participation and index inclusion

At present, India has five listed REITs — Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust and Knowledge Realty Trust.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)