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In just over a month since the market regulator Securities and Exchange Board of India notified the framework for Small & Medium Real Estate Investment Trusts (SM REIT), integrated co-working firm EFC (I) Limited plans to incorporate an investment manager entity to set up and manage the assets and investments of SM REIT through its wholly owned subsidiary EFC Ltd. As a part of the plan, the company will acquire and manage commercial real estate and lease out as managed or service office spaces, which have been one of their core businesses for more than a decade.
The company’s board has approved the proposal to incorporate a step-down subsidiary under EFC Ltd to act as an investment manager to SM REIT in the name of “EFC REIT Private Limited” or any other name as approved by the competent authority. EFC REIT is in the process of incorporation, and an application before the SEBI will be filed within the next 3 to 4 months.
The company has also forayed into sponsoring and managing a Category II Alternative Investment Fund (AIF), a Rental Yield Fund, to acquire premium commercial real estate and lease it as managed or serviced office spaces.
EFC (I) Ltd’s Board has approved the incorporation of a wholly-owned subsidiary to act as the investment manager to an Alternate Investment Fund in the name of “EFC Investment Advisors Private Limited” or any other name as approved by the competent authority.
Commenting on the initiative, Umesh Sahay, Founder & CEO of EFC (I) Limited, said, “India’s economy is on a growth trajectory, and this is likely to spur investments across sectors including real estate – both commercial and residential. With SEBI notifying amended regulations for SM REITs, investors can now own rent-yielding real estate assets by making a minimum investment of Rs 10 lakh. The move will help enhance transparency and boost participation of both domestic and foreign retail investors, thereby leading to better liquidity in the market.”
“At EFC, we remain confident of the growing demand, and this move to set up and manage the assets and investments of SM REIT will help further boost our core business of acquiring and managing commercial real estate and leasing it out as managed office spaces,” added Umeash
Amid rising demand for high-value realty assets and to boost investments in the sector, SEBI notified the framework for SM REITs in March this year. The move was aimed at regulating the fractional ownership industry, thereby safeguarding investor interests by including both residential and commercial properties under the guidelines. Under the framework, investors can have fractional ownership of rent-yielding assets by making a minimum investment of Rs 10 lakh.
According to a recent report by JLL India and PropShare, the fractional ownership market in India is estimated to be close to $500 million. This market is expected to witness exponential growth in the next five years and reach around $5 billion by 2030.
