The Securities and Exchange Board of India (SEBI) on Monday allowed Infrastructure Investment Trusts (InvITs) and Real Estate investment Trusts (REITs) to raise capital by issuing debt securities.

The move could help attract investors to the capital-starved property sector.

In addition to allowing bond issuances, SEBI also introduced the concept of strategic investor for REITs, similar to InvITs.

After its board meeting on Monday, SEBI said it had decided to have further consultation on a proposal to allow REITs to invest at least 50 per cent of the equity share capital or interest in the underlying holding company and special purpose vehicle.

Similarly, consultations will also be held on a proposal to allow holding companies to invest at least 50 per cent of the equity share capital or interest in the underlying SPVs.

InvITs and REITs are vehicles that allow investors to take exposure to an income-generating infrastructure project or real estate property.

Before Monday’s meeting, raising capital was only allowed via launch of equity-oriented REITs and InvITs, which offer indicative yields, not fixed yields. Debt-oriented REITs and InvITS offer fixed returns to investors.

Market experts say REITs were a failure since they were introduced in 2014 due to certain strict structure-related norms.

No real estate company has launched a REIT so far. Only two InvITs have gone public so far, which prompted the regulatory body to relax norms with regard to its structure. IRB InvIT Fund and Indiagrid Trust are the two ITs listed on the stock exchanges.

“Allowing REITs and InvITs to raise funds through debt securities is expected to broaden the fund raising market and eventually boost investor returns,” said Bhairav Dalal, Partner for Real Estate Tax, PwC. “The proposal to permit a single-asset REIT should enable single-asset owners (of large value) to explore this product,” Dalal added.

“Further, allowing REITs to lend to Hold Cos/SPVs should result in efficient fund-flow management. Through these proposals, the SEBI has reiterated its intention to adopt a consultative approach in refining regulations to make REITs and InvITs successful platforms in India,” Dalal said.

Besides this, SEBI also apprised its board about the action taken against 331 suspected shell companies in August.

SEBI had asked stock exchanges to bar suspected shell companies from trading, but has since had to reverse its orders against many of them.

SEBI also held discussions on fast-tracking cases that are pending investigation and surveillance measures. SEBI chairman Ajay Tyagi had recently expressed concern over the backlog of cases pending for more than two years.