SEBI warns investors as Strata gives up SM REIT licence

IANS May 14, 2025 388 views

The Securities and Exchange Board of India (SEBI) has issued a warning to investors concerning Strata after the company surrendered its SM REIT license due to legal concerns. Strata, founded by Sudarshan Lodha and Priyanka Rathore, voluntarily gave up its registration as an SM REIT after discussions with SEBI amid legal disputes. Currently, no schemes have been launched under the SM REIT framework by Strata, although they originally planned for six. Strata intends to apply for a new license once ongoing litigation is resolved, ensuring that existing investments remain unaffected.

"“This communication is being issued in the interest of investors advising them to exercise caution while dealing with the entity,” - SEBI statement
SEBI warns investors as Strata gives up SM REIT licence
Mumbai, May 14: The Securities and Exchange Board of India (Sebi) has issued a warning to investors regarding Strata, a commercial real estate platform founded by Sudarshan Lodha and Priyanka Rathore, after the company surrendered its licence as a small and medium real estate investment trust (SM REIT) due to a legal controversy.

Key Points

1

SEBI alerts investors about Strata’s surrendered license

2

Legal issues with a Tamil Nadu real estate firm involved

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Strata planned to launch six schemes this year

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Strata aims to reapply for a license after litigation clears

“Pursuant to certain news reports and review of certain legal proceedings against the promoter of SM REIT, SEBI engaged with Strata SM REIT, its independent director, compliance and other officers and the trustee. After the engagement and discussions, Strata SM REIT has surrendered its certificate of registration as an SM REIT and will not hold out or represent itself as a SEBI-regulated intermediary,” SEBI said in a statement.

“This communication is being issued in the interest of investors advising them to exercise caution while dealing with the entity,” SEBI said.

Strata had registered as a Small and Medium Real Estate Investment Trust (SM REIT), a new framework introduced by Sebi for fractional ownership platforms to offer real estate investment products. However, following certain concerns and discussions with Sebi, Strata has surrendered its registration.

Strata received Sebi approval in January and had planned to launch six schemes during the current financial year. So far, it has not yet launched any SM REIT schemes nor migrated any pre-existing fractional real estate entities to the SM REIT framework, the SEBI statement added.

The legal dispute involving SM REIT arose with a Tamil Nadu-based real estate firm engaged in acquiring and developing land for industrial and warehousing projects.

According to the anticipatory bail order of the Madras High Court, a case was filed against Lodha for allegedly seeking information by impersonating as a SEBI official and creating a fake email ID under her name.

However, Lodha’s counsels denied the allegations and argued that as the complainant did not succeed in arbitration and other civil proceedings, it filed a ‘false complaint’ in order to ‘arm-twist and give a criminal colour to the dispute.’

“In light of the ongoing matter, we have voluntarily surrendered our SM Reit licence without admitting or denying any wrongdoing, as a measure of abundant caution. Upon conclusion of the current litigation, we intend to apply for a fresh licence at a future date. This matter does not affect the existing investments with Everstrat,” Strata said in a statement on Wednesday.

Reader Comments

R
Rahul K.
SEBI is doing the right thing by being proactive. Investors need protection from such controversies. But I hope this doesn't discourage other startups from entering the REIT space - India needs more investment options for middle-class investors. 🇮🇳
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Priya M.
Very concerning! I was actually considering investing in Strata's upcoming schemes. This shows how important it is to research the promoters' background before putting money. SEBI's warning came just in time for retail investors like me.
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Amit S.
The real estate sector in India needs more transparency. Whether the allegations are true or not, such incidents damage investor confidence. SEBI should conduct stricter background checks before granting licenses in the first place.
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Sneha R.
This is why I only invest in traditional mutual funds. These new investment products sound exciting but come with too much risk. Better safe than sorry when it comes to hard-earned money! 💸
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Vikram J.
The promoters claim it's a false complaint, but surrendering the license doesn't look good. In business, reputation is everything. They should focus on clearing their name before thinking about reapplying.
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Neha T.
As someone working in fintech, I appreciate SEBI's balanced approach here. They engaged with all parties before taking action. The SM REIT framework is new and needs such oversight to mature properly. Hope this case becomes a learning experience for the industry.

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Tags:
SEBI Strata SM REIT Investment warning Sudarshan Lodha Priyanka Rathore Legal issues