Philippine REITs for Foreign Investors in 2026: The Complete Guide to SEC Memorandum Circular No. 1 and Strategic Property Investment

For foreign investors seeking recurring, dividend-based returns from Philippine income-generating real estate without acquiring direct land ownership — a constitutional prohibition that remains in force in 2026 — the Real Estate Investment Trust (REIT) structure has become the most sophisticated and legally resilient vehicle available. The Philippines' REIT market, though younger than its regional counterparts in Singapore and Thailand, has matured substantially. And the January 2026 issuance of SEC Memorandum Circular No. 1, Series of 2026 — effective January 25, 2026 — marks a watershed moment that fundamentally reshapes the landscape for foreign participation.

This article is written for foreign investors, whether individuals or corporate entities, who are evaluating Philippine REIT investment in 2026. It is also written for foreign sponsors and promoters who may be considering contributing income-generating real estate assets to a newly formed REIT corporation. Every legal citation has been verified against official SEC, BIR, and PSE sources. Where the law remains unclear or where practical ambiguities exist, this article says so explicitly.

1. The Legal Framework: Republic Act No. 9856 and the 2026 SEC Revisions

The REIT Act of 2009 (Republic Act No. 9856)

The foundational statute governing Philippine REITs is Republic Act No. 9856, the Real Estate Investment Trust Act of 2009, signed into law on December 11, 2009. RA 9856 established the legal framework authorizing the creation of REIT corporations in the Philippines, defining the tax treatment of REIT dividends, and prescribing the minimum public ownership requirements, mandatory distribution rules, and the regulatory authority of the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE).

Under RA 9856, a REIT is defined as a corporation established primarily for the purpose of acquiring and owning real estate assets — not for development and sale — that produces recurring, income-generating cash flows. The REIT corporation must be listed on the PSE and must distribute at least 90% of its annual distributable income as dividends to shareholders. This mandatory distribution rule is the structural feature that makes REITs tax-efficient investment vehicles: the corporation pays minimal corporate income tax, and the income flows through to shareholders as dividends, taxed at the shareholder level.

The Implementing Rules and Regulations (IRR) of RA 9856 have been amended several times. The most significant amendment before 2026 was the 2021 revision that increased the minimum public ownership requirement from 30% to one-third (33.33%) of outstanding common stock. But the January 2026 amendments under SEC Memorandum Circular No. 1, Series of 2026, represent the most sweeping overhaul of the REIT IRR since the law's enactment.

SEC Memorandum Circular No. 1, Series of 2026: Key Changes Effective January 25, 2026

SEC Memorandum Circular No. 1, Series of 2026, was issued on January 8, 2026, and took effect on January 25, 2026. It introduces five categories of significant amendments:

Expanded definition of income-generating real estate — now explicitly including infrastructure assets (toll roads, airports, data centers, energy infrastructure), logistics properties (warehouses, cold storage, parking facilities), and assets held through unlisted special purpose vehicles (SPVs) or incorporated joint ventures.
Extended sponsor reinvestment period — from one year to two years for proceeds from the sale or transfer of real estate assets to a REIT.
Enhanced disclosure and governance requirements — more detailed REIT Plan disclosures, clearer definitions of public shareholders (10% or more ownership creates a presumption of substantial influence), and strict rules against duplicate management fees.
Look-through distribution rule — if a REIT earns distributable income 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 its own shareholders.
Clarified foreign ownership rules — explicit confirmation that a 100% foreign-owned REIT corporation is permissible if its portfolio consists exclusively of leasehold rights (long-term leases from Filipino landowners) or buildings without underlying land ownership.

For foreign investors, the most practically significant change is the clarification on foreign ownership — and the expansion of qualifying asset classes to include infrastructure assets, which opens entirely new categories of investment that were previously ineligible under the REIT structure.

2. Foreign Ownership Rules: The 60/40 Rule, Leasehold Structures, and the HARBOR Registry

The Constitutional Constraint on Foreign Land Ownership

The 1987 Philippine Constitution, Article XII, Section 7, provides: "No private land shall be transferred or conveyed except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens." This is the foundational provision that establishes the 60/40 Filipino ownership rule — a corporation holding land in the Philippines must be at least 60% Filipino-owned.

Foreign nationals cannot own private land in the Philippines directly. This restriction is absolute and has not changed in 2026. It applies to all forms of freehold land ownership — whether through direct purchase, donation, inheritance (though RA 9045 allows foreign nationals to inherit land, they must dispose of it within five years), or corporate acquisition.

For REIT corporations that intend to own land (freehold), this constitutional constraint means the REIT must be at least 60% Filipino-owned. Foreign investors can hold up to 40% of such a REIT corporation. For REIT corporations that hold only leasehold rights — long-term leases of 50 years or more from Filipino landowners, as governed by Republic Act No. 12252 (the amended Investors' Lease Act) — the foreign ownership restriction does not apply, and the REIT can be 100% foreign-owned.

100% Foreign-Owned REIT Structures: Leasehold-Only Portfolios

The 2026 SEC amendments explicitly confirm what practitioners had understood since the REIT Act's passage: a REIT corporation can be 100% foreign-owned if it does not own freehold land and its portfolio consists exclusively of:

Leasehold rights — long-term leases from Filipino landowners for terms of up to 50 years per lease, renewable under RA 12252 (the amended Investors' Lease Act allows leases of up to 50 years for qualified investors, renewable once for 25 years)
Buildings, structures, and improvements without ownership of the underlying land

This is a significant structuring option for foreign investors who want to establish or sponsor a Philippine REIT while maintaining full control and avoiding the dilution inherent in seeking Filipino co-investors to reach the 60% threshold. The tradeoff is that the REIT cannot own freehold land, which limits the types of income-generating assets it can hold — and leasehold structures carry their own risks, including the risk of lease non-renewal or adverse lease terms.

Under the 2026 amendments, assets qualifying for REIT inclusion now explicitly include real rights over properties — including usufruct, easements, and registered leases. This provides a clearer legal basis for leasehold REIT structures than previous iterations of the IRR.

The HARBOR Beneficial Ownership Registry: New Reporting Obligations for Foreign Investors

For foreign investors holding interests in Philippine REIT corporations, the SEC's new HARBOR (Hierarchical and Applicable Relations and Beneficial Ownership Registry) platform — operational since January 30, 2026, under SEC Memorandum Circular No. 15, Series of 2025 — introduces mandatory beneficial ownership reporting that applies directly to REIT shareholders.

Under the HARBOR rules, any natural person who directly or indirectly owns at least 20% of the voting rights, voting shares, or capital of a REIT corporation must be disclosed as a beneficial owner. This includes foreign nationals. The required disclosures include full legal name, nationality, date of birth, residential address, TIN or passport number, PEP status, nature of control, ownership percentage, and the date beneficial ownership was acquired.

For foreign investors who hold REIT shares through intermediary entities — such as a foreign holding company or a personal investment vehicle — the HARBOR rules require tracing through multiple corporate layers to identify the ultimate natural person beneficial owner. If no natural person meets the 20% threshold, the natural persons composing the Board of Directors or senior managing officials may be considered beneficial owners, provided the corporation demonstrates it has exhausted other means of identification.

Changes in beneficial ownership must be reported through an amended declaration within seven calendar days of the change. Failure to comply carries fines scaled to retained earnings for stock corporations, and a finding of false declaration may result in fines of up to PHP 2,000,000 and potential corporate dissolution.

3. Qualifying Assets Under the 2026 Amendments: What a REIT Can Now Hold

The Expanded Definition of Income-Generating Real Estate

The 2026 amendments substantially broaden what qualifies as income-generating real estate for REIT purposes. The prior IRR definition was relatively narrow — limited to rental properties, office buildings, commercial malls, and similar traditional real estate. The 2026 circular explicitly expands the definition to include:

Infrastructure-related assets — toll roads, railways, airports and air navigation facilities, ICT infrastructure, energy infrastructure assets, and data centers
Logistics and industrial properties — warehouses, cold storage facilities, distribution centers, parking lots and parking structures
Traditional commercial real estate — office buildings, retail malls, hotels and resorts, industrial buildings, residential rental properties
Indirect ownership through SPVs and joint ventures — REITs can hold income-generating assets through unlisted SPVs or incorporated joint ventures, provided the REIT holds at least two-thirds (2/3) of the outstanding and voting capital stock of such entities

The inclusion of infrastructure assets is the most transformative change for foreign investors. Toll roads, airports, data centers, and energy infrastructure are capital-intensive, long-duration assets that produce highly predictable cash flows — exactly the profile that makes them attractive for REIT structures in developed markets. Philippine infrastructure REITs could attract significant foreign capital, particularly from sovereign wealth funds, infrastructure funds, and institutional investors seeking stable, long-duration returns.

The look-through distribution rule — requiring SPVs and joint ventures to distribute at least 90% of their distributable income to the REIT — ensures that income is not trapped at the subsidiary level and that the tax efficiency of the REIT structure is preserved even when assets are held indirectly.

Excluded Assets: Properties Held Primarily for Sale

The 2026 circular confirms that properties primarily held for sale — inventory real estate, developments intended for sale to end-users, land-banking for future development — are excluded from the definition of qualifying income-generating real estate. A REIT cannot hold property for development and sale; it must hold income-generating assets that produce recurring cash flows through rental, service, or similar arrangements.

Three-Year Track Record Requirement

At least 75% of a REIT's deposited property must be invested in income-generating real estate with a track record of generating rental income for at least three years. This requirement has been part of the REIT IRR since its original issuance and remains in effect under the 2026 amendments. For foreign investors evaluating an existing REIT for investment, this means newly constructed properties without a three-year rental history are not eligible REIT assets unless they are held alongside a qualifying asset base that meets the 75% threshold.

4. The Investment Process: How Foreign Investors Buy Philippine REIT Shares

Step 1: Understand Your Position as a Foreign Investor in Philippine REITs

As an individual foreign investor, you can freely invest in listed Philippine REIT shares on the PSE without specific foreign ownership limits. The REIT corporation itself bears the responsibility for complying with the 60/40 Filipino ownership rule if it holds freehold land. You, as an individual shareholder, are not constrained by the rule — but you cannot use your REIT investment to indirectly acquire freehold land in your own name.

For foreign corporate investors — including foreign-incorporated holding companies, funds, or institutional investors — the same principles apply. A foreign corporation can purchase REIT shares freely, subject to the REIT corporation's own Filipino ownership compliance obligations.

Step 2: Open a PSE-Accredited Brokerage Account

To purchase REIT shares on the PSE, a foreign investor must open a brokerage account with a PSE-accredited stockbroker. The PSE publishes a list of accredited brokers on its official website. Many Philippine universal banks (such as BDO, BPI, Metrobank, RCBC) have affiliated securities brokerage subsidiaries that offer trading accounts. Online brokers are also available for foreign residents who prefer digital platforms.

Required documentation for foreign investors typically includes:

Valid passport (primary identification)
Proof of address (utility bill, bank statement, or equivalent in the investor's home country)
Customer Account Information Form (CAIF)
Specimen signature card
Tax Identification Number (TIN) — either a Philippine TIN (obtainable from the BIR) or, for reporting purposes in certain treaty situations, the foreign jurisdiction's tax identification number
For corporate investors: Certificate of Incorporation, Board Resolution authorizing the investment, and corporate secretary's certificate

Some brokers may require an initial cash deposit. Minimum investment amounts can be as low as PHP 5,000 to PHP 10,000 depending on the REIT's share price and PSE board lot rules, making REIT investing accessible even for smaller portfolio allocations.

Step 3: Create a Name-on-Central Depository (NoCD) Account

The SEC mandates that REIT shares be held in a Name-on-Central Depository (NoCD) facility — meaning the shares are registered in the investor's specific name, not in the broker's name. The NoCD system is administered by the Philippine Depository and Trust Corporation (PDTC), which serves as the central depository for scrip-less shares traded on the PSE. Your chosen broker will guide you through authorizing the creation of your NoCD account as part of the account opening process.

NoCD registration means your REIT shares are identifiable as yours — you receive dividends directly, and you can transfer or sell them without the broker acting as an intermediary in ownership terms. For foreign investors, this is an important transparency feature, particularly given the HARBOR beneficial ownership reporting obligations that apply at the REIT corporate level.

Step 4: Fund the Account and Place a Buy Order

Foreign investors typically fund their brokerage accounts via international wire transfer to a peso-denominated account designated by the broker for inward remittances. Under Bangko Sentral ng Pilipinas (BSP) regulations, inward remittances for stock market investments are generally freely convertible and repatriable, meaning you can move funds in and out without BSP approval, subject to standard documentation requirements.

Once your account is funded, you can research available REITs listed on the PSE and place a buy order through the broker's trading platform. REIT shares trade like any other PSE-listed security, and the minimum investment is determined by the share price multiplied by the board lot. REIT prices fluctuate based on Net Asset Value (NAV) per share, dividend yield expectations, and broader market conditions.

Step 5: Receive Dividends and Monitor the Investment

REITs distribute at least 90% of their annual distributable income as dividends — typically semi-annually or quarterly, depending on the REIT's dividend policy. Dividends are paid directly to your NoCD-registered account and can be reinvested through a Dividend Reinvestment Plan (DRIP) if the REIT offers one, or withdrawn and repatriated to your home country.

For foreign investors, dividend taxation depends on your jurisdiction and whether a tax treaty exists between your country and the Philippines. The standard Philippine withholding tax on dividends paid to non-resident foreign corporations is 25% under the Tax Code, but this may be reduced under an applicable tax treaty. Foreign investors should consult Philippine tax counsel to determine the applicable treaty rate and the process for claiming treaty benefits, which typically requires a Certificate of Residency from their home tax authority and beneficial ownership certification.

5. Tax Treatment of REIT Investments for Foreign Investors

Dividend Withholding Tax

Dividends paid by a Philippine REIT to a non-resident foreign corporation are subject to a final withholding tax (FWT) of 25% under Section 24(b) of the National Internal Revenue Code (NIRC), as amended. This is a final tax — the foreign corporation does not declare the dividend income in a Philippine tax return, and no credit is available in the Philippines for taxes paid on the same income in another jurisdiction (unless a specific tax treaty provides otherwise).

If a tax treaty applies between the Philippines and the foreign investor's country of residence, the treaty rate — commonly 10% to 15% for dividends — may be applied instead of the 25% statutory rate. To access treaty rates, the foreign investor must:

Obtain a Certificate of Residence from the tax authority of its home country
Demonstrate beneficial ownership of the REIT shares (i.e., that the recipient is the actual beneficial owner and not a conduit)
Submit the appropriate Treaty Relief Application to the BIR's International Tax Affairs Division, typically through the withholding agent (the REIT or its dividend disbursing agent)

Capital Gains on Sale of REIT Shares

Capital gains from the sale of REIT shares on the PSE by a non-resident foreign corporation are generally not subject to Philippine capital gains tax if the shares are sold on the PSE. The PSE is a registered exchange, and transactions on the exchange are exempt from the 6% capital gains tax under Section 24(c) of the NIRC. However, if REIT shares are sold in an off-exchange transaction (a private sale not on the PSE), the gain may be subject to capital gains tax at the regular corporate income tax rate.

For individual foreign investors, the tax treatment of gains on the sale of REIT shares depends on whether the individual is engaged in business in the Philippines or is a mere investor. Gains from the sale of capital assets by non-residents who are not engaged in business in the Philippines are generally not subject to Philippine tax, though this is an area where individual advice from Philippine tax counsel is essential.

BIR Form 1709 and Transfer Pricing Considerations

For foreign corporate investors with related-party transactions with their Philippine REIT investments exceeding PHP 3 million annually — such as management fees, lease payments between a REIT and a foreign sponsor, or intercompany loans — BIR Form No. 1709 (Related Party Transactions form) must be filed with the annual income tax return. The BIR's Transfer Pricing Audit Unit has intensified scrutiny of intercompany arrangements in recent years, and REIT structures are not immune from this scrutiny.

Foreign investors who are also sponsors contributing assets to a REIT should ensure that any asset transfer pricing, management fee arrangements, and lease terms with the REIT are arm's length and properly documented. The BIR's transfer pricing regulations under Revenue Memorandum Order No. 8-2020 and the NIRC's general anti-avoidance provisions apply to REIT structures.

6. Practical Scenarios for Foreign Investors

Scenario A: Foreign Individual Investor — Purchasing Listed REIT Shares

A foreign national resident in Singapore wants to invest PHP 2,000,000 (approximately USD 35,000) in a Philippine REIT to generate peso-denominated dividend income. He has no intention of owning land in the Philippines and wants a liquid, PSE-traded investment.

He opens a brokerage account with a Philippine bank's securities subsidiary, funds it via international wire transfer, and purchases shares in a retail mall REIT listed on the PSE. As a foreign individual investor, he faces no ownership restrictions. Dividends are subject to 25% withholding tax (or a reduced treaty rate if Singapore-Philippines tax treaty applies), and any capital gains on the sale of his shares on the PSE are exempt from Philippine capital gains tax. His shares are held in his NoCD name, he receives dividends directly, and he can repatriate proceeds without restriction under BSP regulations.

Scenario B: Foreign Corporate Sponsor — Contributing Assets to a New REIT

A foreign multinational owns a portfolio of warehouse and logistics properties in the Philippines, all held under Filipino-incorporated subsidiaries. The multinational decides to contribute these assets to a newly formed REIT corporation that will be listed on the PSE, enabling it to monetize the assets while retaining a significant equity stake.

Because the REIT will own freehold land (the warehouse properties), it must comply with the 60/40 Filipino ownership rule. The multinational cannot hold more than 40% of the REIT corporation. It must find Filipino co-investors to hold the remaining 60%. Alternatively, if the multinational wants to maintain full control, it could structure the REIT to hold only leasehold rights — leasing the properties from the Filipino landowners under long-term leases — in which case the REIT can be 100% foreign-owned. However, this limits the REIT to leasehold assets only and raises lease renewal risk.

As a sponsor, the multinational is subject to the two-year reinvestment requirement under the 2026 amendments: proceeds from the sale of assets to the REIT must be reinvested in Philippine real estate or infrastructure projects within two years. If the multinational fails to reinvest, it may face additional tax consequences. The REIT must comply with HARBOR beneficial ownership reporting, disclosing the multinational's ultimate beneficial owners to the SEC.

Scenario C: Foreign Infrastructure Fund — Investing in an Infrastructure REIT

A foreign infrastructure fund based in London wants to invest in a Philippine REIT whose portfolio includes toll road assets. Under the 2026 amendments, toll roads explicitly qualify as income-generating real estate for REIT purposes.

The fund purchases shares in an existing infrastructure REIT listed on the PSE through a PSE-accredited broker. As a foreign institutional investor, it faces no ownership restrictions on its shareholdings. The REIT corporation ensures the toll road assets are held through a structure that complies with the 60/40 rule if freehold land is involved, and the fund receives dividends subject to 25% withholding tax. If the fund qualifies under the UK-Philippines tax treaty, it can claim a reduced withholding rate by filing the appropriate Treaty Relief Application with the BIR. The fund's beneficial ownership interest in the REIT — tracing through its fund structure to identify the ultimate natural persons or institutional beneficial owners — must be disclosed under HARBOR if it meets the 20% threshold.

7. The Full Compliance Checklist for Foreign REIT Investors and Sponsors

For Foreign Investors Buying Listed REIT Shares

Open a brokerage account with a PSE-accredited broker
Provide valid passport, proof of address, CAIF, and specimen signature
Obtain or confirm a TIN (Philippine or foreign jurisdiction equivalent)
Create a NoCD account for scrip-less share ownership
Fund the account via international wire transfer (BSP freely convertible and repatriable remittance)
Research available REITs and evaluate dividend yield, NAV per share, and portfolio quality
Place buy orders through the broker's trading platform
Monitor dividends and tax withholding on dividend income
Assess eligibility for treaty-reduced withholding tax rates and file Treaty Relief Applications where applicable
Report beneficial ownership interests if the 20% voting threshold is met through HARBOR
Report any change in beneficial ownership within seven calendar days via amended HARBOR declaration

For Foreign Sponsors Contributing Assets to a REIT

Determine whether the REIT will hold freehold land or leasehold rights only
If freehold: structure the REIT to comply with the 60/40 Filipino ownership rule; find Filipino co-investors for the required 60%
If leasehold only: confirm the REIT can be 100% foreign-owned under the 2026 SEC amendments
Ensure all asset transfers are at arm's length and properly valued for transfer pricing compliance
Confirm the assets meet the three-year rental income track record requirement for at least 75% of the deposited property
Comply with the two-year reinvestment requirement for proceeds from asset sales to the REIT
Prepare detailed REIT Plan disclosures as required under the 2026 amendments
Register all beneficial owners (natural persons with 20%+ voting interest) on HARBOR
Ensure management fee arrangements do not exceed 1% of NAV and are not duplicated at the SPV level
Confirm the REIT distributes at least 90% of distributable income annually (and that any SPV or joint venture holding REIT assets does the same)
Obtain all required PSE and SEC approvals for listing and public ownership compliance

For Foreign Investors with Related-Party Transactions with REITs

Assess whether related-party transactions with the REIT exceed PHP 3 million annually
If yes, file BIR Form No. 1709 with the annual income tax return
Ensure all intercompany arrangements (management fees, leases, loans) are arm's length and documented
Prepare transfer pricing documentation as required under BIR transfer pricing regulations
Monitor for changes in related-party transaction volumes that trigger BIR Form 1709 obligations

8. Conclusion: Why 2026 Is the Pivotal Year for Foreign REIT Investment in the Philippines

The January 2026 amendments under SEC Memorandum Circular No. 1, Series of 2026, have meaningfully expanded the investment thesis for Philippine REITs — particularly for foreign investors. The inclusion of infrastructure assets as qualifying REIT property opens an entirely new asset class that aligns with the Philippines' substantial infrastructure development pipeline. The extended sponsor reinvestment period, the look-through distribution rule, and the clarified foreign ownership rules all contribute to a more coherent and internationally competitive regulatory framework.

For foreign investors, the key strategic considerations in 2026 are:

Leasehold structures — for foreign sponsors who want 100% ownership, the leasehold-only REIT structure is now explicitly validated, though it requires accepting the limitations of leasehold asset ownership
Infrastructure REITs — the new qualifying asset categories create genuine opportunities for foreign infrastructure funds to access Philippine infrastructure cash flows through a listed, liquid vehicle
HARBOR compliance — the new beneficial ownership reporting regime is not optional, and foreign investors who cross the 20% threshold must file and update their declarations promptly
Treaty optimization — foreign corporate investors from treaty jurisdictions should proactively assess their dividend withholding tax rates and file Treaty Relief Applications where applicable

The Philippine REIT market in 2026 is more sophisticated, more transparent, and more accessible to foreign capital than at any prior point in its history. Foreign investors who understand the structural constraints — particularly the 60/40 rule and the constitutional land ownership prohibition — and who navigate the compliance requirements systematically will find REIT investment in the Philippines to be a resilient, income-generating component of a broader Philippine investment strategy.

This article is for general informational purposes only and does not constitute legal advice. Foreign investors considering Philippine REIT investment should consult qualified Philippine legal counsel to address their specific circumstances, particularly with respect to tax treaty optimization, HARBOR beneficial ownership compliance, and transfer pricing obligations.