SEBI NOTIFICATION ON REAL ESTATE MUTUAL
FUND SCHEMES (REMFs)
SEBI, vide
Notification dated
The salient features
of REMFs are as under:
v
Existing Mutual Funds are eligible to launch real estate mutual funds if
they have adequate number of experienced key personnel / directors.
v
Sponsors seeking to set up new Mutual Funds, for launching only real estate
mutual fund schemes, shall be carrying on business in real estate for a period
not less than five years. They shall also fulfill all other eligibility
criteria applicable for sponsoring a MF.
v
Every real estate mutual fund scheme shall be close-ended and its units
shall be listed on a recognized stock exchange.
v
Net asset value (NAV) of the scheme shall be declared daily.
v
At least 35% of the net assets of the scheme shall be invested directly
in real estate assets. Balance may be invested in mortgage backed securities,
securities of companies engaged in dealing in real estate assets or in
undertaking real estate development projects and other securities. Taken
together, investments in real estate assets, real estate related securities (including
mortgage backed securities) shall not be less than 75% of the net assets of the
scheme.
v
Each asset shall be valued by two valuers, who
are accredited by a credit rating agency, every 90 days from date of purchase.
Lower of the two values shall be taken for the computation of NAV
v
Caps will be imposed on investments in a single city, single project,
securities issued by sponsor/associate companies etc.
v
Unless otherwise stated, the investment restrictions specified in the
Seventh Schedule shall apply.
v
No mutual fund shall transfer real estate assets amongst its schemes.
v
No mutual fund shall invest in any real estate asset which was owned by
the sponsor or the asset management company or any of its associates during the
period of last five years or in which the sponsor or the asset management
company or any of its associates hold tenancy or lease rights.
v
A real estate mutual fund scheme shall not undertake lending or housing
finance activities.
v
The amended regulations have also specified accounting and valuation
norms pertaining to Real Estate Mutual Fund schemes.
Click Here
to see the amended regulation.