Market Update : Key Points: ITIR Project Chief minister Siddaramaiah on Thursday directed the Karnataka Industrial Areas Development Board (KIADB) to issue the final notification for acquiring 2,072 acres of land for developing an Information Technology Investment Region (ITIR) near the city Siddaramaiah told KIADB and IT department officials that the project was one of UPAs flagship schemes and should be implemented in a time-bound manner The chief minister issued this directive at a meeting of the state high-level empowered committee (SHLEC) on ITIR project The KIADB has already issued a preliminary notification under Section 28 (1) of the KIAD Act. When the board said it lacked funds for the land acquisition process, the chief minister asked the officials to approach banks and government financial institutions like Hudco saying that the government would stand guarantee The ITIR is an integrated investment region housing IT, ITeS and hardware parks, supported by residential townships, a mini airport, a high-speed railway network, shopping malls, hospitals and educational institutions among others. The 40sqkm ITIR project, which commenced in 2013, will come up in Devanahalli and Doddaballapur taluks, around 14km from Kempegowda International Airport(KIA). The project will be developed in two phases. The ambitious project has the potential to make Karnataka the largest IT cluster in the world Key Point : REIT This investment option opens up real estate to small investors too. It will also help developers source funds The Securities and Exchange Board of India (SEBI) recently laid down guidelines for a REIT. It is a pooled investment entity registered with the SEBI. The rentals received from these properties will be distributed among the investors as dividends REITs will be allowed to own only commercial property . In order to be eligible for listing, the value of the assets owned or proposed to be owned by a REIT should be worth at least Rs 500 crores. Assets must be valued and net asset value updated at least twice in every financial year. REITs must distribute at least 90 percent of their net distributable cash flows to their investors every six months. Also, at least 80 percent of assets must be in properties that are generating revenue. A REIT can invest only 10 percent in properties under construction. This means they can also invest a small portion (about 20 percent or less) in mortgage-backed securities and cash equivalent assets like money market funds. No REIT will be allowed to invest in vacant or agricultural land, or mortgages other than mortgage-backed securities. Not less than 75 percent of the revenues of a REIT, other than gains arising from disposal of properties, should be from rentals from real estate assets at all time A minimum initial offer size of Rs 250 crores and minimum public float of 25 percent is mandatory to ensure adequate public participation. The REIT may raise funds from any investor, resident or foreign. The minimum sub-scription size will be Rs 2 lakhs and the unit size will be Rs 1 lakh . In order to ensure regular income to the investors, it has been mandated to distribute at least 90 percent of the net distributable income after tax of the REIT to the investors A REIT need not pay tax on the income it distributes .The major advantage of a REIT is availability of exposure to real estate with a smaller ticket size as well as diversification of investment portfolio for the investor Source : The Times of India
Posted on: Fri, 17 Oct 2014 05:02:55 +0000
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