The Securities and Exchange Board of India (Sebi) has warned investors about Strata, a commercial real estate platform founded by Sudarshan Lodha and Priyanka Rathore.

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

Strata received Sebi approval in January and planned to launch six schemes in fiscal year 26. So far, it has not launched any SM REIT schemes or converted any existing fractional real estate entities to the SM REIT framework.

"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 or SM REIT," according to the market regulator.

Sebi clarified that the decision was made following legal proceedings against the promoters of Strata SM REIT. The regulator had discussions with the company's independent director, compliance officers, and trustee. Strata subsequently surrendered its registration.

Strata currently manages more than Rs 2,000 crore in assets under management (AUM). The minimum investment for SM REITs is Rs 10 lakh. The SM REIT norms were implemented in 2024 to regulate fractional ownership platforms, reduce risk, and improve investor protection.

Under the new framework, both residential and commercial properties worth at least Rs 50 crore can be included in SM REITs. Previously, only large-scale commercial properties were eligible for REITs, which required significantly larger minimum investments. The new structure also requires sponsors to have a vested interest (known as'skin in the game') and establishes rules for leverage.