Property Share becomes first fractional ownership platform to receive SM REIT licence

Property Share (PropShare Investment Manager Pvt. Ltd) became the first fractional ownership platform (FOP) to receive the Small and Medium Real Estate Investment Trust (SM REIT) licence from the Securities and Exchange Board of India (Sebi), it said on Friday. 

The firm has got the licence under the name of Property Share Investment Trust (PSIT). Property Share will become the investment manager to PSIT.

In March 2024, the markets regulator issued regulations to amend the REIT Regulations 2014, establishing guidelines for the creation of SM REITs, bringing FOPs within the regulatory framework as a sub-class within the REIT regulations for assets valued between ₹50 crore and ₹500 crore. 

Also Read: Large-caps & Reits: India’s largest investment adviser’s shifts

This move intended to safeguard investor interests, incorporating both commercial and residential properties within the new framework. 

Similar to REITs, SM REITs are fully regulated by Sebi, with units of each of the schemes listed on the stock exchanges.

Kunal Moktan, co-founder of Property Share, said the regulator has been proactive in bringing this new product into the regulatory mainstream that is set to make real estate more inclusive to a larger audience of retail and institutional investors. 

Also Read: Will SM Reits be safe for India’s retail investors?

“Any regulated product comes with significant benefits for investors like high-net-worth requirements for the investment manager, compliance and reporting standards, transparency, investor protection mechanisms and marketing restrictions. We look forward to continue working closely with Sebi in launching the initial public offering of the first SM REIT scheme in the weeks to come,” he said. 

Founded in 2016 by IIM Ahmedabad batchmates Moktan and Hashim Khan, Property Share was one of the first platforms to pioneer fractional ownership of commercial real estate in India. The platform has around 300,000 users in more than 20 countries. 

In June 2022, Property Share raised ₹347 crore in a Series B round from WestBridge Capital.

Also Read: Will return to office give a new lease of life to Reits?

“With the introduction of SM REITs, the regulator has effectively introduced an entirely new asset class to the retail and institutional investor universe, continuing the march towards securitization of real estate assets that started with REIT regulations in 2014," said Khan, co-founder of Property Share.