The Securities and Exchange Commission (SEC) has released proposed changes to the rules governing real estate investment trusts (REITs), aiming to widen the types of real estate assets that can generate income for REIT portfolios and give companies more flexibility in how they operate.
Under the draft amendments to SEC Memorandum Circular No. 1, Series of 2020, the SEC plans to broaden the definition of “income-generating real estate.” This would allow REITs to own assets indirectly through wholly owned special purpose vehicles and include properties that produce steady, predictable income. Eligible assets could range from malls and office buildings to warehouses, parking lots, ICT and energy infrastructure, and real rights such as usufruct and long-term leases.
The proposal would also extend the deadline for reinvesting REIT listing proceeds to two years, instead of the current one-year requirement. Reinvestments could include equity stakes, loans, or debt repayments tied to real estate or infrastructure projects in the Philippines.
In addition, the SEC wants to relax minimum public ownership rules. REITs may be allowed a temporary drop in public float when issuing new shares to sponsors in exchange for income-generating properties, provided they secure SEC and Philippine Stock Exchange approval, disclose the breach, and submit a plan to restore compliance.
SEC Chairman Francis E. Lim said the reforms aim to keep the REIT framework “robust and responsive,” helping the real estate sector attract more capital and support economic growth.
The SEC is accepting public comments on the proposed amendments until December 3.
