On 8 January 2026, the Securities and Exchange Commission (“SEC”) issued Memorandum Circular No. 1, Series of 2026 (“MC No. 1”), revising key provisions of the Implementing Rules and Regulations (“IRR”) of the Real Estate Investment Trust (REIT) Act of 2009 (“RA 9856”). The amendments broaden the scope of allowable REIT assets, modernize investment structures, and strengthen investor protection measures.
The SEC notes that the update aims to deepen the Philippine capital markets, align the REIT framework with regional practices, and expand opportunities for both issuers and investors.
- Key amendments under MC No. 1 (Series of 2026)
a. Expanded Definition of Income‑Generating Real Estate
The circular substantially broadens what qualifies as “income‑generating real estate,” enabling REITs to invest directly or indirectly in assets that exhibit steady, predictable cash flows, including:
- Toll roads, railways, airports, and air navigation facilities
- Seaports
- Data centers and ICT infrastructure
- Energy infrastructure assets
- Malls, warehouses, storage facilities, buildings, and parking lots
- Real rights such as usufructs, easements, and registered leases
Excluded assets include those held primarily for sale, such as inventory properties or assets generating income mainly through disposition.
b. Recognition of SPVs and Joint Ventures as Permissible Holding Structures
- Unlisted special purpose vehicles (“SPVs”); and/or
- Incorporated joint ventures (“JVs”)
provided that the REIT owns at least two‑thirds (2/3) of the SPV’s or JV’s outstanding and voting capital.
This aligns local practice with global REIT markets and offers sponsors greater flexibility in structuring asset acquisitions.
c. Extended Reinvestment Period
The reinvestment period for sponsors is extended to two (2) years, from the previous one-year requirement.
Reinvestments may include:
- Equity infusions
- Loan extensions or acquisition of debt instruments
- Repayment of loans or debt incurred for real estate or infrastructure projects in the Philippines
This extension provides issuers more time to responsibly deploy capital raised from REIT offerings.
d. Reinforced Dividend Distribution Rules
If a REIT invests through an SPV and/or JV, the intermediary entity must distribute at least 90% of its distributable income to the REIT before the REIT declares dividends to its own shareholders.
Non‑compliance is deemed a violation of the REIT’s statutory dividend obligation, safeguarding investor returns.
e. Updated Definition of “Public Shareholders”
The SEC refined the definition of public shareholders to ensure genuine investor participation. Excluded from “public” classification are those with substantial influence, which is defined as:
- Holding at least 10% or more of the REIT’s total issued shares; or
- Exercising influence despite holding less than 10%, such as immediate family members of key officers living in the same household.
This amendment strengthens governance by preventing concentrated influence within REIT structures.
2. Market Impact
Market analysts anticipate that the expanded asset classes and relaxed structural requirements may boost REIT listings, particularly from sectors like tollways, utilities, data infrastructure, and logistics.
The broadened framework is expected to support new REIT IPOs, increased foreign and domestic investor participation, and greater mobilization of capital toward infrastructure and commercial property development.
3. Conclusion
SEC Memorandum Circular No. 1, Series of 2026 reflects a decisive shift toward modernizing the Philippine REIT ecosystem, enabling diversified asset classes, expanded investment structures, and stronger investor safeguards. By aligning with global standards and removing structural barriers, the amendments reinforce the Philippines’ objective to further develop a vibrant capital market and support long‑term wealth creation for Filipino investors.