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  1. IRDAI issues norms for REIT, InvIT; here’s what it means for investors, policy holders

IRDAI issues norms for REIT, InvIT; here’s what it means for investors, policy holders

The Insurance Regulatory and Development Authority of India (IRDAI) has issued certain amendments to investments in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

By: | Updated: March 17, 2017 3:03 AM
Insurers can invest in units of REITs and InvITs that are rated not less than AA.

The Insurance Regulatory and Development Authority of India (IRDAI) has issued certain amendments to investments in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

Here’s what the new norms mean to investors and policy holders:

*Insurers can invest in units of REITs and InvITs that are rated not less than AA. They will form part of the approved investments. REITs and InvITs rated less than AA shall form part of other investments.

Insurers can invest in units of REITs and InvITs that are rated not less than AA. They will form part of the approved investments. REITs and InvITs rated less than AA shall form part of other investments.

*An insurer can invest not more than 3% of the respective fund size of the insurer or not more than 5%of the units issued by a single REIT/InvIT, whichever is lower.

*No investment can be made in REITs and InvITs where the sponsor is under the promoter group of the insurer.

*Investment in units of InvITs will form part of infrastructure investments for the purpose of pattern of investment under IRDAI (Investment) Regulations.

*The investment in units of REITs and InvITs will be valued at market value (last quoted price should not be later than 30 days). Where the market value is not available for the last 30 days, the units shall be valued as per the latest NAV (not more than six months old) of the units published by the trust.

*REITs are companies that own and then lease out real estate, whether commercial or residential. Investors in a REIT are given units, similar to those in a mutual fund scheme. InvITs function in the same manner, except they own infrastructure instead of real estate.

*Real estate and infrastructure trusts will raise as much as R60,000 crore this year as India rolls out the much-anticipated investment products mooted in 2007.

*Also, in a bid to give a fillip to REITs and InvITs, the board of directors of Securities and Exchange Board of India (Sebi) has approved their classification as ‘hybrid instruments’, and has allowed mutual fund schemes to invest up to 10% of their net asset value into units of the two.

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