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Strata had registered as a Small and Medium Real Estate Investment Trust (SM REIT), to offer real estate investment products and received Sebi approval in January. It had planned to launch six schemes in FY26.
In a latest development, it has now surrendered its SM REIT license which has been accepted by the market regulator.
SEBI’s decision to accept the surrender follows a review of legal proceedings against the promoter of Strata SM REIT.
Sebi clarified that the decision followed legal proceedings against the promoters of Strata SM REIT. The regulator held discussions with the company, its independent director, compliance officers, and the trustee. Subsequently, Strata surrendered its registration.
The company, which aimed to facilitate investments in commercial real estate with a lower entry barrier compared to traditional REITs, had not launched any SM REIT schemes or migrated any existing fractional real estate entities under the SM REIT framework prior to the surrender.
Strata's surrender of its license follows reports of a legal dispute with a Tamil Nadu-based realty developer over a warehousing asset in Hosur. The dispute has triggered investor concerns over due diligence and asset control
Consequently, Strata SM REIT will no longer be permitted to present itself as a SEBI-regulated intermediary or SM REIT, and SEBI has advised investors to exercise caution while dealing with the entity.
SEBI regulations related to fractional ownership are primarily focused on formalizing the space and enhancing investor protection, particularly through the framework of Small and Medium Real Estate Investment Trusts (SM REITs).
This new turn of events highlights the increasing regulations for fin-tech and the real estate sector, targeted towards protecting the investors. SEBI regulations ensure that t fractional ownership platforms (FOPs) must adhere to specific requirements.
