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CS Professional · Strategic Management and Corporate Finance · Real Estate Investment Trusts

Under the SEBI (Real Estate Investment Trusts) Regulations, 2014, which of the following correctly describes the structural relationship among the parties to a REIT?

The trustee holds the REIT's assets in trust for unit holders, and the manager runs the investments and operations of the REIT. The sponsor only sets up the trust. This separation of ownership and management is the core structure of a REIT under SEBI regulations.

  1. AThe trustee holds the REIT assets in trust for unit holders, while the manager manages the assets and investments of the REITCorrect
  2. BThe sponsor directly holds the REIT assets and the trustee manages day-to-day operations
  3. CThe manager is the registered holder of the REIT assets and the sponsor acts as the trustee
  4. DUnit holders manage the REIT assets through a board elected by them

Explanation

A REIT is set up as a trust. The trustee holds the assets for the benefit of unit holders and the manager handles the investment and operational management. The sponsor sets up the REIT but does not hold the assets directly. Options holding the sponsor or manager as the asset holder reverse these roles.

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