SEBI Revokes Strata's SM REIT Status and Issues Investor Warning. The company surrendered its registration following legal action against promoters and regulatory violations.
Real Estate Company Surrenders Registration: The Securities and Exchange Board of India (SEBI), India's market regulator, issued a significant announcement on Tuesday, cautioning investors regarding Strata, a real estate company founded by Sudarshan Lodha and Priyanka Rathour. Known as a commercial real estate platform, Strata had previously registered as a Small and Medium REIT (SM REIT) but has voluntarily surrendered its registration with SEBI.
This decision follows legal proceedings and discussions. This article outlines SEBI's statement and advises investors on appropriate action.
Why was Strata's SM REIT Status Revoked?
Strata obtained SEBI approval as an SM REIT in January 2025, planning to launch six schemes in fiscal year 2025-26. However, these plans were not realized, leading to Strata's surrender of its SM REIT approval.
SEBI clarified that Strata will no longer be considered a SEBI-regulated entity. This means it cannot represent itself as an SM REIT. SEBI warned investors that Strata no longer holds any legal or regulated status and should not be considered for investment as previously understood.
Legal Action Against Strata's Promoters
This action follows ongoing legal proceedings against Strata's promoters. SEBI held detailed discussions with the company's promoters, independent directors, compliance officer, and trustee. Subsequently, Strata returned its SM REIT registration certificate to SEBI. Investors are advised to exercise caution regarding any future investments related to Strata.
Strata's ₹2,000 Crore AUM
Strata managed assets under management (AUM) exceeding ₹2,000 crore. While the minimum investment under the SM REIT was ₹10 lakh, SEBI's decision closes this investment avenue for the company.
New SM REIT Regulations
SM REIT regulations, implemented in 2024, aimed to regulate fractional ownership platforms and ensure investor protection. SEBI's new rules allow smaller property projects into REITs, previously limited to large commercial properties with high minimum investment thresholds.
Current regulations permit only residential and commercial properties valued at ₹50 crore or more to be included in SM REITs. This change offers investors increased opportunities and security.
What Should Investors Do?
Considering investment in Strata or similar REITs? SEBI's decision necessitates careful consideration of the following:
1. Understand the Regulations Before Investing – New SM REIT rules allow smaller property projects, presenting opportunities but requiring careful evaluation.
2. Heed SEBI Warnings – SEBI warnings should be taken seriously. Strata's registration withdrawal necessitates avoidance of such investments.
3. Focus on Larger Companies – For REIT investments, prioritize large, SEBI-regulated companies to safeguard investments.
