This explainer series on SM REITs is brought to you by Property Share, where we break down everything you need to know about SM REITs - making real estate investment simple and accessible. Explore the various articles to learn about the fundamentals of SM REITs, their unique benefits and potential risks, how they are different from regular REITs, how to invest and how to evaluate them, along with their taxation norms.
What are SM REITs?
This explainer series is also available in the form of a video.
SM REITs are a new category of REITs introduced by SEBI, that make investing in real estate simpler, smarter, and more accessible. This revolutionary asset class is transforming the Indian real estate investment sector by reducing the high entry barriers in real estate, while offering transparency and control to investors.
For years, commercial real estate was limited to large investors with deep pockets. But that changed in 2016 with the introduction of the Fractional Ownership Platform (FOP) model by Property Share. By 2020, FOPs had gained momentum, making real estate investments more accessible to smaller investors.
The industry saw rapid growth, with assets under management reaching ₹4,000 crore by 2023, (the largest being Property Share). Recognizing this shift, SEBI officially introduced SM REITs in March 2024 - a regulated, market-listed investment avenue designed to bring structure, security, and transparency to real estate investing.
Property Share became the 1st company to obtain the SM REIT license from SEBI in August 2024 and in December 2024, registered India’s first SM REIT Scheme – PropShare Platina, on Bombay Stock Exchange.
So, what makes SM REITs unique?
-
SEBI Regulated & Market Listed – Ensuring transparency and investor protection
-
Strict Investment Manager Guidelines – Managers must have a net worth of ₹20 crore, with at least ₹10 crore in liquid assets
-
100% Completed, Income-Generating Assets – At least 95% of properties must generate revenue before being included
-
Co-Investment by Fund Managers – Ensuring skin in the game, with 5% to 15% of assets co-invested by the fund manager
-
Minimum Investment of ₹10 lakh – Making commercial real estate investing possible for more investors
SM REITs pool money from investors to acquire income-generating real estate properties. These properties are held through a Special Purpose Vehicle (SPV), which functions as the legal entity owning the assets. Think of the SPV as the vault holding the real estate assets. The shares of the SPV are owned by the SM REIT’s scheme, ensuring a structured and secure investment framework.
Unlike traditional REITs, SM REITs can create separate schemes for different properties. This means:
-
More flexibility in managing individual assets
-
Easier financing for specific properties.
-
Simplified fund-raising and exits, allowing investors to buy into select assets without impacting other schemes
SM REITs generate returns through two key channels:
-
Rental Income – Regular payouts from tenants occupying the properties
-
Capital Appreciation – The value of the property grows over time, increasing the investor’s wealth
These earnings are passed directly to investors, making SM REITs a compelling mix of stability and growth.
Small and Medium Real Estate Investment Trusts (SM REITs) democratize commercial real estate investment, extending the opportunity beyond high-net-worth individuals. This structured, regulated framework enables broader participation, bringing a transformative era for real estate investment.