#4910-0934-2100v3Corporate Finance and SecuritiesGroupPhilippine SEC Revises its Rules onPhilippine Real Estate InvestmentTrustsMarch 13, 2026By James Grandolfo, Paul Pery, Cesareo Singzon and JuloLim.
Philippines SEC Revises its Rules on Philippine Real Estate Investment Trusts 1Philippine SEC Revises its Rules on Philippine Real Estate InvestmentTrustsExecutive SummaryOn January 8, 2026, the Securities and Exchange Commission of the Philippines (“Philippine SEC”) introduced revisions tothe country’s 2020 REIT Rules1 (the “2026 Revisions”).2 The 2026 Revisions among others, expand the range of qualifyingasset classes, enhance disclosure requirements and strengthen governance safeguards, which aim to attract both domesticand foreign investment while safeguarding the interests of the investing public. Key highlights of the 2026 Revisions arediscussed below.Wider Range of Qualifying AssetsThe 2026 Revisions expand the scope of REIT-eligible assets, mainly comprising “Infrastructure Projects” and “Incomegenerating Real Estate”. Under the 2020 REIT Rules, “Infrastructure Projects” largely tracked the list set out in thePhilippines’ Build-Operate-Transfer Law and its IRR,3 covering projects such as roads, highways, airports, railways, ports,flood control, irrigation, water supply, sewerage, power facilities and telecommunications. The 2026 Revisions broadenedthis list to expressly include bridges, solid waste management systems, shore protection, national and school buildings,hospital buildings and the civil-works components of information technology projects. Qualifying activities have also beenexpanded to cover demolition, repair, restoration and maintenance-in addition to construction, improvement andrehabilitation, clarifying that projects may be initiated by the government or the private sector.4At the same time, “Income-generating Real Estate” now covers property held indirectly through unlisted special purposevehicles (“SPVs”) or incorporated joint ventures (“JVs”). The phrase “regular stream of income” as it applies to a particularasset, has also been clarified to mean recurring and predictable cash inflows from a wide range of assets, including tollroads, railways, airports, ICT and energy infrastructure, data centers, parking facilities, malls, warehouses, immovablefixtures and real rights. Conversely, properties held primarily for sale or disposition - sometimes referred to as inventorytype assets - are expressly excluded.5 Taken together, these changes expand the types of REITs that sponsors may bringto market, while reinforcing the legislation’s focus on providing the public with exposure to stable, passive income. Thechanges also keep the Philippines in step with other jurisdictions that have long allowed an expansive list of qualifying REITassets.Holding Structures: SPVs and Joint VenturesThe 2020 REIT Rules allowed a REIT to invest in real estate directly or through a domestic SPV constituted to hold or ownreal estate.6 The 2026 Revisions build on this by expressly recognizing incorporated JVs as a permitted holding structurealongside unlisted SPVs. Where a REIT invests through an unlisted SPV or incorporated JV, it must hold at least two-thirdsof the outstanding and voting capital stock, and the SPV or JV must have only one class of voting shares. These conditionsembed a clear control requirement and prevent multi-class voting structures that could decouple economic and votinginterests in the underlying vehicle. This affords greater flexibility for sponsors and their advisers to structure REIT vehiclesand supports co-investment and partnership arrangements, without compromising investor protection.71 SEC Memorandum Circular No. 1, Series of 2020; Available at https://documents.pse.com.ph/wp-content/uploads/sites/15/2021/03/2020MCNo01_1.pdf(last accessed March 6, 2026).2 SEC Memorandum Circular No. 1, Series of 2026; Available at https://www.sec.gov.ph/mc-2026/sec-mc-no-01-series-of-2026/#gsc.tab=0 (last accessedMarch 6, 2026).3 Republic Act No. 6957, as amended by R.A. No. 7718.4 SEC MC No.1, S.2026, Sec.1.5 Id.6 SEC MC No.1, S.2020, Rule 5, Sec.1.1(c).7 SEC MC No.1, S.2026, Sec.7.
Philippines SEC Revises its Rules on Philippine Real Estate Investment Trusts 2Enhanced Disclosure RequirementsUnder the 2020 REIT Rules, the REIT Plan’s required disclosures on real estate operating information primarily listedtraditional real property-related metrics such as operating date, occupancy rate, number and mix of tenants, principal leaseprovisions, average annual rent per square meter and lease expiries for the next three years.The 2026 Revisions significantly enhance the REIT Plan disclosure regime and make it more principles-based, while at thesame time introducing specific disclosures aimed at filling erstwhile disclosure gaps. The 2026 Revisions: (i) expand realestate operating disclosures from a closed list to an open-ended, materiality-based requirement, (ii) add a requirement todisclose all material transactions or agreements entered into not in the ordinary course of business, (iii) extend disclosureof the nature and extent of interests to not only directors but also officers and principal stockholders, and (iv) require thatinformation on academic and professional qualifications and experience be clearly presented for the REIT's directors andprincipal officers, not just the Property Manager. The net asset value (“NAV”) and NAV per share pro-forma requirement isalso qualified with “as may be applicable,” and where investment is via an unlisted SPV or JV, the Fund Manager mustsubmit (and attach to the REIT Plan and annual reports) a certification that such structure does not increase the tax burdenon REIT investors compared to direct ownership.89The other disclosure-related changes collectively promote greater transparency, comparability and investor protection,including additional disclosure requirements on material non-ordinary course transactions and fees on the platform and/orSPV or JV levels of the REIT.Mandatory Dividend Distribution at the SPV and JV LevelUnder the 2020 REIT Rules, while the REIT itself was subject to a 90% distributable income payout requirement, there wasno corresponding mandate at the SPV level, meaning cash could potentially be retained below the REIT. The 2026Revisions close this gap. Where a REIT invests through an unlisted SPV or incorporated JV, the constitutive documents ofthat vehicle must now mandate the distribution of at least 90% of its distributable income to the REIT or other shareholders,and such distribution must occur prior to the REIT’s own dividend declaration. Any failure of the SPV or JV to make therequired distributions will be treated as a violation of the REIT’s own dividend distribution obligation.10 This effectively “looksthrough” the SPV or JV for purposes of assessing compliance with the statutory payout rule and ensures that value is nottrapped at an intermediate level in the structure.Tax Efficiency: Deductibility of SPV and JV DividendsUnder the 2020 REIT Rules, “Taxable Net Income” was computed as gross income less allowable deductions, lessdividends distributed by the REIT to its own shareholders, a formula designed for single-layer vehicles that did not addressdividends received from underlying SPVs.11 The 2026 Revisions retain the general formula but expand it so that dividendsactually distributed to and received by the REIT from its unlisted SPVs or JVs are also deducted in computing Taxable NetIncome. The emphasis on dividends “actually distributed to and received by” the REIT is a meaningful qualifier since onlydividends that have in fact been upstreamed to the REIT qualify for the deduction.12 This refinement should help mitigatethe risk of economic double taxation within multi-tier REIT structures, better aligning the tax base with net income, supportingthe use of compliant SPV or JV structures and contributing to the overall tax efficiency and attractiveness of PhilippineREITs.Other Key Changes1. Enhanced Reinvestment Requirement. Under the 2020 REIT Rules, sponsors were required to reinvest theproceeds from the sale or transfer of real estate or other assets to a REIT within one year. The 2026 Revisionsextend this period to two years and clarify that reinvestment may take the form of investment in equity,extension of loans, purchase of debt instruments, or repayment of loans or debt instruments, in relation to any8 SEC MC No.1, S.2026, Sec.8.9 See also SEC MC No.1, S.2026, Sec.2, which introduces safeguards against duplicate management fees.10 SEC MC No.1, S.2026, Sec.3. 11 See SEC MC No.1, S.2020, Rule 3(yy). 12 SEC MC No.1, S.2026, Sec.1.
Philippines SEC Revises its Rules on Philippine Real Estate Investment Trusts 3real estate or infrastructure project in the Philippines.13 This extension should ease execution and timingpressures on sponsors in identifying, structuring and closing suitable reinvestment opportunities, includingmore complex or large-scale projects.2. New “Related Party Transaction” Definition. Under the 2020 REIT Rules, related party transactions(“RPTs”) were governed primarily through procedural safeguards, disclosure, board and committee approvalsand independent fairness assessments, without containing a concise, stand-alone definition of whatsubstantive dealings would be regarded as a RPT, leaving some scope for interpretive gaps at the margins.14The 2026 Revisions address this by defining “Related Party Transaction” as any transfer of resources, servicesor obligations between the REIT and a Related Party, regardless of whether a price is charged.15 This broad,catch-all definition reduces ambiguity, helps ensure that all relevant dealings are captured by the existingapproval and fairness safeguards, promoting more consistent compliance across the REIT sector.3. Sharper “Public Shareholder” Test. The 2020 REIT Rules defined “Public Shareholder” as any shareholderother than Sponsors, Promoters, related parties and other specifically excluded non-public persons, so long assuch shareholder formed part of the free float used to meet the minimum public ownership requirement.16 The2026 Revisions tighten this definition by explicitly excluding any person who has “substantial influence” overREIT management or operations, with substantial influence deemed to exist at a 10% or higher direct or indirectshareholding. Persons holding less than 10% may also be excluded where they can exert influence, forinstance, where shares are held by a director, principal officer or principal stockholder’s immediate familymember sharing the same household.17 By incorporating both quantitative (10% threshold) and qualitative(actual influence, including family or household relationships) indicators, these changes narrow the pool ofinvestors that can count as “public” and help ensure that the minimum public ownership threshold reflectsgenuinely dispersed, non-controlling shareholders.4. Safeguards Against Duplicate Management Fees. The 2026 Revisions require the REIT Plan and the Fundor Property Management Agreements to explicitly prohibit Fund or Property Managers from charging the REITand any unlisted SPV or incorporated JV the same fees for the same services. This prohibition must now bebuilt directly into the governing documents of the SPV or JV.18 This should minimize fee leakage and ensurethat investors are not economically penalized through multiple layers of identical fees on the same underlyingassets or activities. It also sharpens the oversight role of boards, independent directors and RPT committees,which can now more readily identify and challenge management fee structures that might breach the nodouble-charging rule.5. Strengthened Fund Manager Reporting. Two changes to Fund Manager reporting obligations round out therevisions. First, the deadline for submitting the three-year investment plan is clarified: it must be submitted onor before December 31 of each year. Second, where a REIT invests through an unlisted SPV or JV, the FundManager must certify that such structure does not result in a greater tax burden to REIT investors comparedto direct asset ownership, with this certification attached to the REIT Plan and annual reports.19 These changesmake the Fund Manager explicitly accountable for assessing and attesting to the tax impact of structuralchoices, enhancing transparency and providing regulators and investors with clearer assurance that portfoliostructuring is aligned with investor-protection and tax-efficiency objectives.Looking AheadThe 2026 Revisions reinforce the original policy objectives of the REIT Act while updating the regime to reflect the growingsophistication of Philippine real estate and infrastructure platforms. By broadening the scope of eligible assets, clarifyingthe treatment and control of SPVs and JVs, tightening public float, RPT, fee and dividend rules and embedding tax-neutrality13 SEC MC No.1, S.2026, Sec.5. 14 See SEC MC No.1, S.2020, Rule 5, Sec.9, which provides that any contract, or amendment thereto, between the REIT and related parties must complywith minimum safeguards such as full disclosure, board and independent director approval, approval by the REIT’s RPT Committee, a fairness opinion,and consistency with the Philippine SEC rules on material RPTs for publicly listed companies. 15 SEC MC No.1, S.2026, Sec.1. 16 SEC MC No.1, S.2020, Rule 3(ii). 17 SEC MC No.1, S.2026, Sec.1. 18 SEC MC No.1, S.2026, Sec.6. 19 SEC MC No.1, S.2026, Sec.8.
Philippines SEC Revises its Rules on Philippine Real Estate Investment Trusts 4safeguards, the revisions seek to balance flexibility for sponsors and fund managers with stronger protections for publicinvestors.The scale of the opportunity, and the ground the Philippines has yet to cover, is underscored by a comparison with moreestablished REIT markets. As of July 31, 2025, Japan’s REIT market comprised 57 listed vehicles with a combined marketcapitalization of US$109 billion, Singapore's REIT market comprised 46 listed vehicles with a combined market capitalizationof US$71.4 billion, and India’s REIT (“I-REIT”) and Infrastructure Investment Trusts (“InvIT”) market comprised 21 listedvehicles (five I-REITs and 17 InvITs) with a combined market capitalization of US$33.2 billion. Even China, which onlyintroduced its REIT regime in 2021, one year after the Philippines, already had 66 listed vehicles with a combined marketcapitalization of approximately US$27.7 billion. By contrast, as of July 31, 2025, the Philippine REIT market, which saw itsinaugural listing only in 2020, comprised only eight listed REITs with a combined market capitalization of US$4.6 billion.20The 2026 Revisions seek to close that gap by expanding the universe of qualifying assets, accommodating more flexibleholding structures and strengthening governance and transparency standards, thereby creating a more competitive platformfor attracting both domestic and foreign capital into Philippine real estate and infrastructure. Notably, the 2026 Revisionsalso position the Philippines to capitalize on some of the fastest-growing asset classes in the global REIT universe. Datacenter REITs, in particular, have emerged as a major growth segment driven by the rapid expansion of cloud computing,artificial intelligence workloads and digital infrastructure demand across the Asia-Pacific region. Singapore REITs with datacenter exposure had a combined market capitalization of approximately US$18 billion as of February 14, 2025.21 Moreover,global data center capacity is projected to grow at 15 percent per year between 2023 and 2027.22 By expresslyencompassing data centers, ICT infrastructure and energy infrastructure within the definition of income-generating realestate, and by introducing tailored, materiality-based disclosure standards suited to non-traditional asset classes, the 2026Revisions lay the regulatory groundwork for Philippine REITs to participate in this structural growth trend and compete moreeffectively with regional peers for investor capital.If effectively implemented, these changes should support continued REIT listings and asset injections in the Philippines,promote deeper and more transparent capital markets and enhance the long-term attractiveness of REITs as a vehicle forfunding real estate and infrastructure development.Milbank has one of the strongest Corporate Finance and Securities practices in Asia, having represented clients in a widerange of leading capital markets transactions for more than four decades. Our Asia team is part of an extensive global groupthat includes more than 80 lawyers located in Singapore, Hong Kong, Tokyo, Seoul, New York, Los Angeles, Washington,DC, London, Frankfurt, Munich and São Paulo. Milbank regularly represents the key parties in public offerings and privatetransactions, including issuers, underwriters, placement agents, dealer managers, institutional and individual investors,selling shareholders and those providing credit support through guarantees, surety bonds and letters of credit, amongothers. Milbank would be pleased to discuss your objectives, timelines and jurisdictional scope and shape an executionplan tailored to the specific transaction involved.20 Knight Frank India, India’s InvIT Market Poised for 3.5x Surge to USD 258 Bn by 2030, Emerging as Global Infrastructure Investment Magnet (August19, 2025), available at https://www.aprea.asia/wp-content/uploads/2025/08/Indias-InvIT-Market-Poised-for-3.5x-Surge-to-USD-258-Bn-by-2030-Emerging-as-Global-Infrastructure-Investment-Magnet-Knight-Frank-India.pdf (last accessed March 3, 2026). 21 Combined market capitalization calculated by aggregating the market capitalizations of REITs in Singapore with data center exposure as reported bySGX and Bloomberg as of February 14, 2025. See SGX Research & Education, REIT Watch: Data Centre S-REITs Report Growth in Latest Results(Feb. 17, 2025), available at https://www.sgx.com/research-education/market-updates/20250217-reit-watch-data-centre-s-reits-report-growth-latest. 22 Singapore Exchange Limited, REIT Watch - Data Centre S-REITs Report Growth in Latest Results, SGX Market Updates, February 17, 2025. Availableat: https://www.sgx.com/research-education/market-updates/20250217-reit-watch-data-centre-s-reits-report-growth-latest (lastaccessed March 12, 2026).#4910-0934-2100v3ContactsJames Grandolfo,Partner+852 2971 [email protected] Pery,Partner+852 2971 [email protected] Singzon,Associate+852 2971 [email protected] Lim,Associate+852 2971 [email protected] Alert was authored by James Grandolfo, Paul Pery, Cesareo Singzon and Julo Lim with input from the Milbank Asiaand global office.Please feel free to discuss any aspects of this Client Alert with your regular Milbank contacts or any member of our CorporateFinance and Securities group.This Client Alert is a source of general information for clients and friends of Milbank LLP. Its content should not be construedas legal advice, and readers should not act upon the information in this Client Alert without consulting counsel.© 2026 Milbank LLPAll rights reserved. Attorney Advertising. Prior results do not guarantee a similar outcome.
Philippines SEC Revises its Rules on Philippine Real Estate Investment Trusts 1
