Valuation of real estates assets and declaration of net asset valueRead more
The real estate assets held by a real estate mutual fund scheme shall be valued -
at cost price on the date of acquisition; and
at fair price on every ninetieth day from the day of its purchase in accordance with the norms specified in Schedule IXB.
The asset management company, its directors, the trustees and the real estate valuer shall ensure that the valuation of assets held by a real estate mutual fund scheme are done in good faith, in accordance with the norms specified in Schedule IX B and that the accounts of the scheme are prepared in accordance with accounting principles specified in Schedule XI.
The net asset value of every real estate mutual fund scheme shall be calculated and declared at the close of each business day on the basis of the most current valuation of the real estate assets held by the scheme and accrued income thereon, if any.Duties of asset management company
Without prejudice to the provisions of regulation 21, the asset management company of a mutual fund having real estate mutual fund schemes shall appoint suitable number of qualified key personnel with relevant experience, before undertaking investment management of real estate assets of a real estate mutual fund scheme.
The asset management company may appoint advisors to advise it on acquisitions or proposed acquisitions of real estate assets.
The asset management company shall exercise due care while appointing real estate valuers for valuing the real estate assets held by the real estate mutual fund scheme and shall ensure that there is no conflict of interest.
The asset management company shall lay down an adequate system of internal controls and risk management.
The asset management company shall put in place systems to ensure that all financial transactions are done through banking channels and exclude transactions in cash or unaccounted transactions.
The asset management company shall exercise due diligence in maintenance of the assets of a real estate mutual fund scheme and shall ensure that there is no avoidable deterioration in their value.
The asset management company shall ensure that the real estate assets held by a real estate mutual fund scheme are adequately insured against impair, damage or destruction.
The asset management company shall ensure that the cost of maintenance and insurance of real estate assets is within reasonable limits and that no funds of the scheme are utilized towards development of such assets.
The asset management company shall ensure that a real estate valuer certifies compliance with sub-regulation (8) on an annual basis.
The asset management company shall ensure that no real estate valuer continues with valuation of particular real estate asset for more than two years and that no such valuer values the same asset for a period of at least three years thereafter.
The asset management company shall record in writing, the details of its decision making process in buying or selling real estate assets together with the justifications for such decisions and forward the same periodically to trustees.
The asset management company shall ensure that investment of funds of the real estate mutual fund scheme is not made contrary to provisions of this chapter and the trust deed.Usage of real estate assets of a real estate mutual fund scheme
The asset management company may let out or lease out the real estate assets held by the real estate mutual fund scheme if the term of such lease or letting does not extend beyond the period of maturity of the scheme.
Where real estate assets are let out or leased out, the asset management company shall diligently collect the rents or other income in a timely manner.
Real estate assets held by a real estate mutual fund scheme may be let out to the sponsor, asset management company or any of their associates, at market price or otherwise on commercial terms:
Provided that not more than 25% of the total rental income of the scheme shall be derived from assets so let out.Duties of trustees
The trustees shall ensure that the asset management company has the necessary expertise, internal control systems and risk management mechanism to invest in and manage investments in real estate assets on a continuous basis.
The trustees shall monitor whether due diligence is exercised by the asset management company in managing the investments.
The trustees shall review the market price of the units during the year and shall recommend proportionate buy back of units from unit holders, if the units are traded at steep discount to the net asset value.
The magnitude of discount which shall amount to steep discount referred to in sub-regulation (3) shall be disclosed in the offer document.
The trustees shall ensure that only permissible investments are made by the asset management company.
The trustees shall ensure that all financial transactions of the real estate mutual fund scheme are made only through banking channels and that systems exist to exclude transactions in cash and unaccounted transactions.
The trustees shall lay down the criteria for empanelment of real estate brokers.
The trustees shall lay down the broad procedure to be followed by the assert management company while transacting in real estate assets.
The trustees shall require the asset management company to set up such systems and submit such reports to trustees, as may be necessary for them to effectively monitor the performance and functioning of the real estate mutual fund schemes.
The trustees shall include a confirmation on compliance with subregulation (9) in their half yearly reports made to the Board.For more details on real estate mutual fund guidelines, please visit www.sebi.gov.in
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- 9 years agoare the terms REMF and REITs used interchangeably in the Indian context? I am aware that in the US they are not.CommentQuote0FlagReport