Calcutta, Feb. 25: SBI Mutual Fund is planning to float a special purpose vehicle for real estate investment management.

The fund house is looking to set up a real estate investment trust (REIT) after the Securities and Exchange Board of India (Sebi) came up with a draft guideline to allow REITs in the country early this month.

“We are very positive on REITs and are considering to launch one when Sebi announces the final guidelines. We’ll have to set up a special purpose vehicle to undertake real estate investment management business according to the draft guidelines. In fact, we are working on that,” said Sanjay Sinha, chief investment officer at SBI Asset Management Company, which manages the investments of SBI Mutual Fund.

An REIT is a collective investment like a mutual fund that puts the investors’ money in different schemes. The only difference is that an REIT can invest only in real estate and the units can be traded on stock exchanges like equities.

Thus, an investor in an REIT scheme invests in real estate without owning the property physically.

An REIT scheme, unlike a real estate mutual fund, has two income plans — one is a steady flow of dividend (rental income) and the other is capital appreciation in the value of the property.

“At present, we are focusing more on REIT than a real estate mutual fund. The market regulator has also not come up with final guidelines for real estate mutual fund schemes,” Sinha said.