SEC Issues New Rules on REITs: What Businesses, Sponsors, and Investors Need to Know in 2026

Yasser Aureada
Jan 12
3 min read

The Securities and Exchange Commission (SEC) has issued SEC Memorandum Circular No. 1, Series of 2026, introducing significant amendments to the Implementing Rules and Regulations (IRR) of the Real Estate Investment Trust (REIT) Act of 2009. These changes are intended to modernize the Philippine REIT framework, align it with regional standards, and strengthen investor protection.

For REIT sponsors, fund managers, property owners, and investors, these updates carry important legal, tax, and compliance implications.

Below is a practical summary of the key changes—and what they mean for you.

1. Broader Definition of Income-Generating Real Estate

The SEC clarified what qualifies as “income-generating real estate.” Aside from traditional rental properties, the definition now explicitly includes:

Infrastructure-related assets such as toll roads, airports, ports, data centers, and energy infrastructure
Warehouses, malls, parking facilities, and logistics hubs
Assets held through unlisted special purpose vehicles (SPVs) or incorporated joint ventures, provided the REIT owns at least two-thirds (2/3) of the outstanding and voting capital stock

However, properties held primarily for sale (such as inventory real estate) remain excluded.

Why this matters:This opens the door for more infrastructure-backed REITs while ensuring that only assets producing recurring and predictable cash flows qualify.

2. Clearer Rules on Related Parties and Transactions

The Circular expands and clarifies the definition of:

Public Shareholders
Related Parties
Related Party Transactions

Persons with 10% or more ownership, or those who exercise substantial influence over REIT operations, are now clearly classified as related parties—even if ownership is indirect or held through family members.

Why this matters:This strengthens governance and transparency, reducing the risk of undisclosed conflicts of interest—an area closely scrutinized by regulators and investors.

3. Enhanced Disclosure Requirements in REIT Plans

REIT Plans and prospectuses must now include more detailed disclosures, such as:

Lease profiles, occupancy rates, and rental trends
All material transactions not in the ordinary course of business
Compensation, fees, and shareholdings of sponsors, directors, fund managers, and property managers
Pro-forma financial statements showing Net Asset Value (NAV) before and after listing

Why this matters:Greater disclosure improves investor confidence and increases the compliance burden on sponsors and advisors—particularly CPAs, auditors, and legal counsel.

4. Strict Rules on Fees and No Double-Charging

The SEC emphasized that fund manager and property manager fees must:

Be clearly stated and fully disclosed
Not exceed 1% of the REIT’s Net Asset Value
Not be duplicated at the SPV or joint venture level for the same services

Why this matters:This prevents fee layering that could erode investor returns and exposes non-compliant REITs to regulatory sanctions.

5. Mandatory Dividend Distribution and Look-Through Rule

REITs are still required to distribute at least 90% of distributable income annually.

Importantly, when income is earned through an unlisted SPV or joint venture, that entity must also distribute at least 90% of its distributable income to the REIT, before the REIT declares dividends to shareholders.

Why this matters:This ensures that income does not get “trapped” at the subsidiary level and maintains the tax-efficient structure of REITs.

6. Reinvestment Must Be Made in the Philippines

Sponsors and promoters contributing income-generating assets to a REIT are now required to reinvest proceeds within the Philippines, including:

Equity investments
Loans or extensions of credit
Debt instruments related to real estate or infrastructure projects

Reinvestment must generally be completed within one (1) to two (2) years from receipt of proceeds.

Why this matters:This reinforces the policy goal of using REITs as a tool for domestic capital market development.

7. Expanded Reporting Obligations

Fund Managers must now submit:

A three-year investment strategy annually (on or before December 31)
Quarterly performance reports covering funds, properties, and benchmarks
A certification confirming that SPV or joint venture structures do not result in higher tax burdens compared to direct ownership (if applicable)

Why this matters:Compliance failures may lead to penalties, delayed approvals, or adverse tax consequences.

How Our Firm Can Help

The new SEC rules increase both opportunities and compliance risks for REIT stakeholders. Our CPA-law firm assists clients with:

REIT structuring and tax efficiency reviews
SEC compliance and disclosure preparation
Review of fund management and property management agreements
Dividend planning and tax compliance
Advisory for REIT sponsors, fund managers, and investors

Need guidance on how these rules affect your REIT or planned listing?Contact us today for a consultation.