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The Securities and Exchange Board of India (SEBI) has cautioned investors about Strata SM Reit, a new-age investment platform that aimed to launch multiple real estate investment schemes. Strata, backed by Sudarshan Lodha and Priyanka Rathore, surrendered its SM Reit registration after legal troubles and discussions with SEBI. The regulator clarified that Strata can no longer present itself as a registered intermediary. This comes as the regulator tries to tighten rules around fractional ownership of real estate to protect investors. While Strata denies wrongdoing, SEBI's action highlights the need for caution when investing through untested digital real estate platforms.
India's market regulator SEBI has warned investors against using Strata SM Reit, a platform launched to manage fractional real estate investments. The platform, backed by founders Sudarshan Lodha and Priyanka Rathore, had aimed to bring six real estate investment products under the newly introduced SM Reit framework. However, due to unresolved legal issues and regulatory concerns, Strata has now surrendered its registration as an SM Reit intermediary. Advertisement
SEBI clarified that Strata SM Reit cannot represent itself as a SEBI-registered platform going forward. The decision comes amid legal proceedings involving one of the promoters, relating to an industrial and warehousing project in Tamil Nadu. A court in Chennai recently rejected a plea for anticipatory bail after allegations of creating a fake email and impersonating a SEBI official surfaced. The company has denied wrongdoing, calling its license surrender a 'voluntary move' to avoid prolonged litigation.
Strata had planned to operate under the Special Mechanism Reit (SM Reit) norms introduced by SEBI in 2024. These rules allow for regulated fractional ownership of real estate, aiming to make property investment more accessible while reducing risk through oversight. The minimum investment ticket for SM Reit schemes is INR 10 lakh, making it attractive for high-net-worth individuals seeking diversification in real estate without buying an entire property.
With over INR 2,000 crore of assets under management, Strata has been a prominent name in the fractional real estate space. However, the SEBI advisory puts a spotlight on the challenges of regulating new digital-first investment models. While the platform continues to operate under its other business arms, it cannot pursue new schemes under the SM Reit category unless fresh registration is obtained.
This episode underscores a wider trend: as technology changes how people invest in real estate, regulatory clarity and investor education become crucial. SEBI's move serves as a reminder that not all modern property platforms are free from risk, especially those still navigating legal and compliance issues. For now, investors are urged to be cautious and verify regulatory registrations before engaging with such ventures.
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