Strategic Management and Corporate Finance · Real Estate Investment Trusts

REIT Public Offer, Listing and Unit Holders' Rights

Updated 11 October 2026 · Fact-checked

A REIT raises money by offering units to the public under the SEBI (REITs) Regulations, 2014. The offer must meet size and minimum subscription conditions. The units are then listed on a stock exchange. Unit holders vote on key matters, and related parties cannot vote on deals in which they are interested.

Understand Public Offer, Listing and Unit Holders' Rights

A REIT pools money from many investors and invests it in income-producing real estate. Investors hold units, much like shares. Because the public puts money in, SEBI sets strict rules for how units are offered, listed and governed.

The initial offer is the first sale of units to the public. SEBI tests whether the REIT is big enough to be viable. It looks at the value of the assets the REIT will own and at the size of the offer. It also requires a spread of investors, so that the REIT is not just held by insiders.

Minimum subscription protects investors. If the issue does not collect the required share of the offer size, the REIT cannot go ahead. Application money is refunded within the time the Regulations allow. Sponsors must also hold a stated minimum of units for a lock-in period, so they stay committed.

Listing gives units a market price and liquidity. Units are issued in dematerialised form and must be listed on a recognised stock exchange after the offer. A REIT cannot delist without following the Regulations, which include unit holder approval.

Unit holders' rights are exercised mainly by voting. Important decisions, such as a change of manager, related-party transactions above set limits, or changes to investment strategy, go to unit holders. Related parties are barred from voting on matters in which they are interested. This is the core idea: those who benefit from a deal should not decide it. Thresholds and timelines are amended from time to time, so confirm figures against the current text of the Regulations before the exam.

Key rules to remember

Minimum asset value and offer size: Value of REIT assets ≥ ₹500 crore; initial offer size ≥ ₹250 crore; These are the figures in the Regulations as amended. Both conditions apply to an initial public offer, and they are two separate tests. Confirm against the current text.
Minimum subscription: Minimum subscription = 90% of the offer size; If not received, the offer fails and money is refunded within the period stated in the Regulations.
Spread of allottees: Number of subscribers, other than the sponsor(s), its associates and the sponsor group, ≥ 200; Ensures the units are not closely held. Confirm the exact exclusions against the current text of the Regulations.
Sponsor holding: Sponsors collectively ≥ 25% of total units after the initial offer, for at least 3 years from listing; a sponsor must hold ≥ 5% to count towards this; Any holding above 25% is locked in for 1 year from listing. The lock-in keeps sponsors committed. Figures are as per the Regulations as amended; confirm against the current text.
Public holding: Public unit holding ≥ 25% of outstanding units after listing; This comes from the minimum public offer and public holding conditions, so read it with the offer rules. Confirm the figure and any relaxation against the current Regulations.
Ordinary resolution: Votes in favour > votes against; Votes of related parties and their associates who are interested in the matter are excluded.
Special resolution: Votes in favour ≥ 2 × votes against; Used for the weightier matters listed in the Regulations. Interested related parties and their associates cannot vote here either.

How to solve Public Offer, Listing and Unit Holders' Rights questions

Case questions on this topic ask whether an offer, listing or resolution is valid. Use the same method each time: rule, facts, conclusion.

1Identify what the question tests: the offer, subscription, listing, sponsor or public holding, or a unit holder vote.
2Write the rule in plain words with its number or percentage.
3List the facts from the case in rupees or units and mark any related party.
4Compare each fact with the rule, one condition at a time.
5For votes, remove related-party votes first, then check the majority needed.
6State the conclusion clearly: valid, invalid, or what must be done to comply.
7Add one practical point, such as refund, disclosure to the exchange or notice to unit holders.

Quickest way: Three-check shortcut

When to use it: Use it for short-answer or case questions with limited time.

Size check: assets ₹500 crore, offer ₹250 crore (figures as per the Regulations as amended).
Subscription and spread check: 90% subscribed, at least 200 subscribers other than the sponsor(s), its associates and sponsor group.
Holding check: sponsors together 25% for 3 years (each sponsor at least 5% to count), excess over 25% locked in for 1 year; public holding 25%. Say that figures are as per the current Regulations.
For votes: strike out interested related parties and their associates, then apply more than half for ordinary or twice the against votes for special.
Write the conclusion in one line and add the consequence, such as refund or non-approval.

Common mistakes in Public Offer, Listing and Unit Holders' Rights

Counting related-party votes in the result.
Students treat all units as equal for every vote.
Fix: Always remove votes of related parties and their associates who are interested in the matter before computing the majority.
Mixing up ₹500 crore asset value with ₹250 crore offer size.
Both figures look alike and appear together.
Fix: Remember: assets 500, offer 250. They are two separate tests, so check each one on its own.
Applying the company IPO rules to a REIT.
Both are public offers, so the rules seem the same.
Fix: Use the SEBI (REITs) Regulations, 2014 for REITs. Companies Act and ICDR rules are different.
Treating a special resolution as 75% of votes.
Older company law thresholds are recalled.
Fix: For REIT unit holders, use the Regulations' test: votes in favour at least twice the votes against.
Forgetting the sponsor lock-in and public holding.
Students focus only on offer size.
Fix: Add sponsor holding (sponsors together 25% for 3 years, each sponsor at least 5% to count, excess over 25% locked in for 1 year) and public holding (25%) to every eligibility answer. Confirm the figures against the current Regulations.
Stating figures with no caution on amendments.
Students memorise one version.
Fix: Write the rule as per the current Regulations and show the logic, so marks are kept even if a threshold has changed.

Worked examples

Example 1

Skyline REIT plans an initial offer of units worth ₹300 crore. It will own assets valued at ₹620 crore. Applications received total ₹255 crore, from 340 subscribers, none of whom is a sponsor, an associate of the sponsor or part of the sponsor group. Can the offer proceed?

Show the solution

Rule: assets must be at least ₹500 crore and the offer at least ₹250 crore; minimum subscription is 90% of the offer; subscribers, other than the sponsor(s), its associates and sponsor group, must be at least 200.
Asset test: ₹620 crore ≥ ₹500 crore, so it is met.
Offer size test: ₹300 crore ≥ ₹250 crore, so it is met.
Minimum subscription: 90% × ₹300 crore = ₹270 crore required.
Applications received are ₹255 crore, which is less than ₹270 crore.
Subscriber spread: 340 ≥ 200, so it is met.

Answer: The offer cannot proceed. Minimum subscription is not met (₹255 crore against ₹270 crore). Application money must be refunded within the period stated in the Regulations.

Example 2

Harbour REIT proposes to acquire a property from its sponsor. The matter needs a special resolution. Units voting: sponsor group (the sponsor and its associates) 40,000 units in favour; other unit holders 54,000 in favour and 30,000 against. Is the resolution passed?

Show the solution

Rule: related parties and their associates cannot vote on a matter in which they are interested. The sponsor and its associates are interested here.
Remove the sponsor group's 40,000 votes.
Valid votes in favour: 54,000. Votes against: 30,000.
Special resolution test: favour ≥ 2 × against, so 2 × 30,000 = 60,000.
54,000 is less than 60,000, so the test fails.
Note: with the sponsor group's votes, 94,000 would have passed, which shows why the exclusion matters.

Answer: The resolution is not passed. After excluding the sponsor group's votes, 54,000 in favour is below the 60,000 needed. The acquisition cannot go ahead on this approval.

Exam tips

Open each answer with the rule in one sentence, then apply the facts. This follows the provision, analysis, conclusion pattern.
Show your arithmetic for 90% subscription and 2 × votes. Examiners give marks for working.
In related-party cases, state clearly that interested parties are excluded from voting.
Add a practical point, such as refund of application money, stock exchange intimation or notice of the unit holders' meeting.
If unsure of a figure, state the rule and the principle behind it, and say it is as per the current SEBI Regulations.

Practice questions from Real Estate Investment Trusts

Public Offer, Listing and Unit Holders' Rights: frequently asked questions

What is the minimum subscription for a REIT initial offer?

The REIT must receive at least 90% of the offer size. If it does not, the offer fails and the application money is refunded within the time the Regulations prescribe.

Must REIT units be listed?

Yes. Units issued through a public offer must be listed on a recognised stock exchange within the prescribed time. Units are held in dematerialised form.

How do unit holders vote in a REIT?

Unit holders vote at meetings on matters the Regulations list. An ordinary resolution needs more votes in favour than against. A special resolution needs votes in favour of at least twice the votes against. In both cases, interested related parties and their associates are left out of the count.

Can the sponsor vote on a related-party transaction?

No. A related party and its associates cannot vote on a matter in which they are interested. Their votes are left out when the result is computed.

Are these figures fixed forever?

No. SEBI amends the REIT Regulations from time to time. Learn the logic of each rule and check the figures against the current text before your exam.