The Philippine Real Estate Investment Trust (REIT) market has grown rapidly since the debut of AREIT Inc. in 2020. With eight REITs now listed, this investment vehicle—mandated to distribute at least 90% of its annual income as dividends—has become a cornerstone for investors seeking stable, income-generating assets. However, a significant portion of the current REIT roster is concentrated in commercial, office, and mall properties. This is about to change.
The SEC Steps In to Define “REIT-able”
To spur further listings and diversify the market, the Securities and Exchange Commission (SEC) is moving to officially define and expand the list of eligible “income-generating assets” that can be held by a REIT.
As SEC Chairman Francis Lim noted, the commission plans to “enumerate them in order to minimize issues.” This is a crucial clarification, as the current law broadly defines “Income-generating real estate” to include properties held for generating income like rentals, toll fees, and user’s fees. By explicitly listing assets, the SEC is opening the door for a wave of non-traditional REITs.
Diversification is the Name of the Game
While the initial success of office and commercial REITs has been excellent, a market concentration in a single sector, even one as strong as real estate, poses risks. Investors need different asset classes to hedge against sector-specific downturns, such as the volatility seen in the office segment following the shift to remote work.
philreitinvestor.com 