A Flexible, Greater REIT Market is Finally Here
On January 6, 2026, the Securities and Exchange Commission (SEC) recently released amendments to the Real Estate Investment Trust (REIT) rules, making it a potential game-changer for businesses in the Philippines to unlock better capital, diversify their assets, and expand faster.
With broader eligible assets, better rules on indirect ownership, and a longer reinvestment window, REITs are no longer just for office infrastructure and malls. They now form part of a strategic financing tool for capital-intensive projects and digital assets.
Indeed, if your company owns profit-generating assets or is planning to build one, you should be looking for this.
First, what is a REIT, and what’s it for?
A Real Estate Investment Trust (REIT) is a listed company on the stock exchange that owns or does financing for income-generating real estate and infrastructure assets. Instead of just keeping assets on the balance sheet, businesses can transfer them to REITs, raise capital from potential investors in the public market, and simultaneously earn income from long-term lease contracts or operating agreements.
In the Philippines, REITs enjoy tax incentives under the R.A. 9856, or the Real Estate Investment Trust Act, given that they must be compliant with key provisions, such as:
- Investment is mainly in income-generating real estate properties or infrastructure
- Annual Distribution of at least 90% of distributable income as Dividends to shareholders
- Maintenance of the required public ownership (40% for the first two years and 67% by the end of the third year and thereafter), and meeting governance standards
For the part of property developers, telecommunications, conglomerates, and infrastructure businesses, REITs are usually used for:
- Recycling capital or selling mature assets to finance new projects
- Improve cash flow without the involvement of heavy borrowing and interest expense
- Separation of asset ownership from operations for risk management.
That’s why it’s crucial for the REIT rules to be amended, paving the way for real estate businesses to raise capital, and the expansion of the market can spearhead better infrastructure, providing more opportunities for economic growth in the country.
What Exactly Changed Under the 2026 SEC Amendments?
Under SEC Memorandum Circular No. 1, Series of 2026, amending the previous Implementing Rules and Regulations of the REIT Act, REITs can now hold assets directly or indirectly through unlisted Special Purpose Vehicles (SPVs) or incorporated Joint Ventures (JVs), provided that the REIT owns at least two-thirds (2/3) of the voting shares.
More importantly, the SEC expanded its definition of income-generating real estate, covering:
- Airports, ports, railways, and toll roads
- Telecom towers, broadband fiber, and data centers
- Energy and ICT infrastructure
- Warehouses, logistics hubs, and parking facilities
- Assets earning from leases, tolls, user fees, ticket sales, and storage fees
Thus, this means that industries such as telecommunications, energy, logistics, and infrastructure developers can now legally structure their assets into REIT platforms — thereby gaining access to long-term funding from capital markets and scaling their businesses.
Why This Matters for Business Owners and Conglomerates
Smarter Capital Recycling that Supports Growth
Along with the expanded definition of income-generating real estate, the amendments also extend the reinvestment period for REIT sponsors to two years (from one year). This gives companies more flexibility to strategically redeploy capital, rather than rushing into new projects just to meet compliance timelines.
Also, reinvestment may now be done in the form of:
- Equity investments
- Loans
- Debt purchases
- Project-related repayments in real estate or infrastructure
Particularly, this results in more breathing room for expansion planning, improved cash flow management, and better capital efficiency for sponsors or investors.
Furthermore, with clearer asset eligibility and ownership structures, the pathway to forming and listing REITs becomes more practical for a wider range of industries. This is expected to lead to:
- More companies are qualifying for REIT formation
- Increased REIT Initial Public Offering (IPO) activities as interest rates stabilize
- Conglomerates and telcos are monetizing mature assets while retaining operational control
For capital-intensive businesses, this transforms REITs into a long-term funding and growth strategy, not just a tax-advantaged compliance structure.
But Compliance Just Became More Technical
Given the expanded eligibility, it also comes with stricter governance and dividend compliance rules:
- SPVs or JVs covered by the rule must distribute at least 90% of distributable income, as deemed mandated in their constitutive documents, prior to the REIT’s dividend declaration.
- Public shareholders are now strictly defined to exclude any person who has significant influence over the REIT and who directly or indirectly owns at least 10% of the outstanding shares. Further, it also does not allow directors, principal officers, or stockholders’ immediate family members.
- Where required under SEC rules, the Fund Manager must certify, in the REIT Plan and annual reports, that the use of an unlisted SPV or JV does not result in a higher tax burden to REIT investors than if the real estate assets were held directly.
Any form of breach can affect the REIT’s dividend eligibility, tax incentives, and ultimately, the regulatory standing with the SEC. Indeed, failure to properly structure can lead to millions in lost incentives and penalties.
What Businesses Should Do Next
Without a doubt, the amended rules for REITs are beneficial for capital-intensive companies, providing greater flexibility and openness for the creation of wealth among Filipinos.
So, whether your company is holding stabilized income-generating assets, planning infrastructure or digital expansion, and considering REITs, joint ventures, or capital market funding, this is the right time to review:
- Asset eligibility under the new SEC rules
- Ownership and SPV structures
- Dividend flow and reinvestment compliance
- Tax efficiency and regulatory exposure
Here at Babylon2k, we help businesses evaluate, structure, and stay compliant with complex SEC, tax, and corporate regulations, so you can focus on growth while avoiding costly regulatory missteps.
Before packaging assets or raising capital, ensure your structure is legally sound and tax-efficient. Schedule a consultation with us, and gain the confidence you need to successfully engage in REIT.
