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Indian REITs Association, ET RealEstate


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NEW DELHI: The Indian REITs Association (IRA), a non-profit trade organization, has rejected the recent claims made by US-based Hindenburg Research as baseless and misleading.

Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, and Nexus Select Trust are the founding members of the IRA.

“Recent claims suggesting that the REIT framework serves the interests of a select few are baseless and misleading. The IRA commends SEBI and its leadership for crafting a rigorous regulatory environment that includes comprehensive periodic reporting requirements, mandatory independent valuations, and strict governance standards. These measures are designed to enhance transparency and protect investor interests,” the association said in a statement.

Currently, there are four listed REITs on the Indian stock exchanges, collectively managing assets worth
over Rs 1,40,000 crore and serving more than 240,000 unitholders. These REITs claims to have distributed over
Rs 18,000 crore, with the market capitalization of this rapidly growing asset class reaching approximately Rs 80,000 crore.

Since the introduction of Real Estate Investment Trust (REIT) regulations in 2014, India has established a strong and transparent regulatory framework that aligns with global best practices. Developed in consultation with all market participants, this framework ensures the highest levels of investor protection for both: domestic and international institutional investors, as well as retail investors, said the association.

On August 10, 2024, Hidenburg Research alleged that SEBI has shown a surprising lack of interest in Adani Group’s alleged undisclosed web of Mauritius and offshore shell entities. Our report exposed a web of offshore, primarily Mauritius-based shell entities used for suspected billions of dollars of undisclosed related party transactions, undisclosed investment and stock manipulation. Since then, despite the evidence, along with over 40 independent media investigations corroborating and expanding on our original work, Indian securities regulator SEBI has taken no public action against the Adani Group.It further alleged that whistleblower documents show that Madhabi Buch, the current chairperson of SEBI, and her husband Dhaval Buch, had stakes in both obscure offshore funds used in the Adani money siphoning scandal.

During Madhabi Buch’s tenure as a whole time member at SEBI, her husband was appointed as a senior advisor to Blackstone in 2019. Blackstone has been one of the largest investors and sponsors of REITs, a nascent asset class in India. India’s first ever REIT, Embassy, obtained SEBI approval and IPO’ed on April 1st, 2019, sponsored by Blackstone, just 3 months before Dhaval Buch reported joining Blackstone in July 2019. 13 months later, in August 2020, Mindspace REIT, backed by Blackstone, became India’s second REIT to IPO, after SEBI approval. Blackstone now sponsors Nexus Select Trust, described as India’s largest retail platform of assets, by ICICI Research, which listed in May, 2023 and became India’s fourth publicly traded REIT. Blackstone has multiple other interests across retail estate.

During Dhaval Buch’s time as advisor to Blackstone, SEBI has proposed, approved and facilitated major REIT regulations changes. These include seven consultation papers, three consolidated updates, two new regulatory frameworks and nomination rights for units, specifically benefiting private equity firms like Blackstone, the company alleged.

Sebi in its response to the allegations said, “SEBI takes note of the report published by Hindenburg Research on August 10, 2024. These issues warrant an appropriate response. The report has stated that the implementation of the SEBI (REIT) Regulations 2014 as well as changes in such regulations had resulted in significant benefit to a large multinational financial conglomerate. In this regard, it may be noted that the SEBI (REIT) Regulations, 2014 has been amended from time to time.

As with all cases involving introduction of a new regulation or amendment to an existing regulation, a robust consultation process for seeking inputs and feedback of the industry, investors, intermediaries, relevant Advisory Committee and the public at large is in place. Only after consultation, a proposal for introduction of a new regulation or change in the existing regulation is placed for the consideration of and deliberation of the SEBI Board. Regulations are notified after approval of the SEBI Board. As a measure of transparency, the agenda papers for Board meetings and outcomes of Board discussions are also published on SEBI website. Hence, claims that such regulations, changes to regulations or circulars issued related to REITs were to favour one large multinational financial conglomerate,are in appropriate.

For the development of the Indian securities market, SEBI has at various times underscored the potential of REITs, SM REITs, InvITs and Municipal Bonds amongst other asset classes for democratisation of markets, financialisation of household savings and for capital formation through the capital markets. These are also highlighted in the latest SEBI Annual Report, as part of Chairperson’s Statement. Therefore, the claim that promoting REITs and SM REITs among various other asset classes by SEBI was only for benefitting one large multinational financial conglomerate, is inappropriate.

Lastly, it is emphasized that SEBI has adequate internal mechanisms for addressing issues relating to conflict of interest, which include disclosure framework and provision for recusal. It is noted that relevant disclosures required in terms of holdings of securities and their transfers have been made by the chairperson from time to time. Chairperson has also recused herself in matters involving potential conflicts of interest.”

Adani Group in its response said, “The latest allegations by Hindenburg are malicious, mischievous and manipulative selections of publicly available information to arrive at pre-determined conclusions for personal profiteering with wanton disregard for facts and the law. We completely reject these allegations against the Adani Group which are a recycling of discredited claims that have been thoroughly investigated, proven to be baseless and already dismissed by the Supreme Court in March 2023. The Adani Group has absolutely no commercial relationship with the individuals or matters mentioned in this calculated deliberate effort to malign our standing. We remain steadfastly committed to transparency and compliance with all legal and regulatory requirements.”

Both Madhabi and Dhaval denied the allegations as baseless and asserted their finances are an open book.

  • Published On Aug 12, 2024 at 05:26 PM IST

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