The Securities and Exchange Commission (SEC) has amended the rules governing real estate investment trusts (REITs), expanding the scope of REIT-able income-generating assets and allowing the use of established investment structures, including unlisted special purpose vehicles (SPVs) and incorporated joint ventures (JVs).

The SEC said the amended rules provide both issuers and investors with more opportunities to participate in the capital market through investments in real properties.

“We wanted to start the year strong, which is why we spared no effort to make this REIT memorandum circular (MC) our first issuance of 2026,” SEC Chairperson Francis Lim said.

He noted that, “This signals the Commission’s priorities for the year and underscores our continuing commitment to deepen the capital market while protecting the interests of the investing public and ensuring sound governance across possible REIT structures.”

“By establishing a more robust framework for the REIT market, we are broadening opportunities for participation in real estate investment, helping more Filipinos benefit from long-term wealth creation,” Lim added.

The Commission on Thursday, Jan. 8, issued SEC MC No. 1, series of 2026, which provides for revisions to SEC MC 1, series of 2020, otherwise known as the revised implementing rules and regulations (IRR) of Republic Act (RA) No. 9856, or the REIT Act of 2009.

Most significant among the amendments is inclusion of infrastructure projects among REIT-able assets, whether government- or privately initiated, as well as doubling the sponsor’s reinvestment period for REIT share sale proceeds.

Under the MC, the SEC allows a REIT to directly or indirectly own income-generating real estate. Indirect ownership may be through a shareholding in an unlisted SPV that is duly constituted to primarily hold or own real estate.

This is provided that the SPV is wholly or partially owned by the REIT by at least two-thirds of its outstanding and voting capital stock, including through incorporated JVs.

The revised rules significantly clarified that income-generating real estate includes real properties with a regular income stream, or those with recurring and predictable cash inflows, thereby encompassing not just income derived from property lease or other similar arrangements, but also other passive income such as rentals, toll fees, user fees, ticket sales, parking fees, and storage fees.

This will cover toll roads, railways, airports and air navigation facilities, ports, information and communications technology (ICT) infrastructure, energy infrastructure assets, data centers, parking lots, buildings, malls, warehouses or storage facilities, immovable fixtures, machinery, facilities, and structures, and real rights over properties, including but not limited to usufruct, easements, and registered leases.

The Commission has also extended the reinvestment period for sponsors or promoters to two years, up from one year, from proceeds’ receipt date. This applies to proceeds realized from REIT share sales or the sale of any of their income-generating real estate to the REIT.

The reinvestment framework provides greater flexibility for enterprises in planning their growth and financing strategies.

Reinvestment may take the form of equity investment, loan extension, debt instrument purchase, or loan or debt instrument repayment in relation to any real estate or infrastructure projects in the country.

Meanwhile, in keeping with the law’s dividend distribution requirements, should a REIT invest through an unlisted SPV or an incorporated JV, that entity must also distribute at least 90 percent of its distributable income to the REIT and other shareholders, if any, before the REIT declares its own dividends.

Failure to do so shall be deemed a violation of the REIT’s own dividend distribution obligation, safeguarding the mandatory 90-percent payout rule for the investing public.

The revised guidelines also refine the definition of a REIT’s public shareholders to ensure genuine ownership democratization and strengthen corporate governance.

In line with the Securities Regulation Code (SRC), the term “public shareholder” refers to any investor other than those specifically excluded for having a vested interest or significant influence over the REIT.

This excludes the sponsor or promoter, their related corporations, and the directors, principal officers, or principal stockholders of both the REIT and its sponsor or promoter.

Under the new rules, “substantial influence” is a key disqualifier for public status and is deemed to exist when a person holds, directly or indirectly, 10 percent or more of the REIT’s total issued and outstanding shares.

Further, the definition excludes any person who, despite holding less than 10 percent of the REIT’s total issued and outstanding shares, may still exert influence over the company’s management or operations, such as when shares are held by immediate family members of a director, principal officer, or principal stockholder sharing the same household.