SEBI Warns Investors as Strata SM REIT Surrenders Registration

SEBI Cautions Investors as Strata SM REIT Surrenders Registration Amid Legal Concerns

The Securities and Exchange Board of India (SEBI) has formally cautioned investors against engaging with Strata Small and Medium Real Estate Investment Trust (SM REIT), following the entity’s voluntary surrender of its registration as a SEBI-regulated intermediary. The development comes in the wake of legal proceedings involving the promoter of Strata SM REIT, which prompted SEBI to initiate a comprehensive review. In its official release, the regulator noted that it had engaged in detailed discussions with the company, including its independent director, compliance officers, and trustee, before the registration was surrendered.

Highlights:

• SEBI issues investor caution against Strata SM REIT

• Registration surrendered following legal review of promoter’s affairs

• Discussions held with company management and trustee before action

SEBI Confirms Strata Will No Longer Function as Regulated SM REIT

In a public notice, SEBI clarified that Strata SM REIT has relinquished its certificate of registration and is no longer authorized to operate or present itself as a SEBI-recognized SM REIT. The market regulator emphasized that the communication is issued in the larger interest of protecting investor interests, advising all stakeholders to exercise due diligence and caution in any ongoing or future engagements with the entity. This effectively disqualifies Strata from representing itself under the regulated real estate investment trust (REIT) framework henceforth.

Highlights:

• Strata SM REIT no longer recognized as SEBI-regulated entity

• Company prohibited from representing itself as registered SM REIT

• SEBI urges investor caution in dealing with the entity going forward

Strata Had SEBI Approval but Did Not Launch Any SM REIT Schemes

Strata had secured SEBI’s approval to register as an SM REIT in January 2025 under the newly introduced framework that governs fractional ownership in real estate. The framework was designed to bring oversight to a growing number of real estate investment platforms targeting smaller investors. Although the company had ambitious plans to launch six distinct schemes in the financial year 2025–26, none of these were rolled out. Moreover, Strata did not transition any of its existing real estate investment offerings into the SM REIT structure before surrendering its registration.

Highlights:

• Strata received SEBI SM REIT registration approval in January 2025

• No schemes were launched under the SM REIT structure

• Planned six scheme launches for FY26, none materialized

Strata’s ₹2,000 Crore AUM Remains Outside SM REIT Framework

Despite being one of the prominent players in the fractional real estate space, managing assets worth over ₹2,000 crore, Strata’s existing operations remained outside the purview of the SEBI SM REIT framework. As per the 2024 SEBI guidelines, investments in SM REITs require a minimum commitment of ₹10 lakh, aimed at safeguarding retail investors through enhanced oversight and eligibility norms. Strata’s decision to surrender its registration now isolates its AUM from the governance and protections afforded under the SM REIT structure.

Highlights:

• Strata manages over ₹2,000 crore in assets

• None of the assets fall under the SEBI-regulated SM REIT framework

• 2024 rules mandate ₹10 lakh minimum investment in SM REITs