REITs in the Philippines: how they work

A REIT (real estate investment trust) is a company listed on the Philippine Stock Exchange (PSE) that owns income-earning real estate, such as offices and malls that earn rent. The law requires it to pay out at least 90% of its distributable income as dividends every year (RA 9856, the REIT Act, Sec. 7). You invest by buying its shares on the PSE through a broker the PSE has made eligible to trade REITs.

What REITs own and how they earn

The REIT Act defines a REIT as a stock corporation set up “principally for the purpose of owning income-generating real estate assets” (Sec. 3(cc)). Philippine REITs own buildings such as office towers, malls, hotels, warehouses and other property that tenants rent. The SEC’s revised rules also count property that earns income from toll fees, user fees or similar charges, such as toll roads, data centers and energy infrastructure (SEC Memorandum Circular 1, series of 2026, Sec. 1). The rent or fees, less the costs of running the property and the REIT, are the income from which dividends are paid.

A REIT is set up by a sponsor, such as a property developer, that transfers property to the REIT in exchange for its shares. Because the public must own at least one-third (below), the sponsor can keep up to two-thirds.

The REIT Act rules

• Dividends. A REIT must distribute at least 90% of its distributable income as dividends each year, no later than the last day of the fifth month after its fiscal year ends (RA 9856, Sec. 7).
• Public ownership. A listed REIT must have at least 1,000 public shareholders, each owning at least 50 shares, who together own at least one-third of it (Sec. 8.1). The SEC’s revised rules keep the one-third minimum (SEC Memorandum Circular 1, series of 2026).
• The sponsor’s proceeds. When a sponsor sells property to a REIT, the SEC’s revised rules give it two years to reinvest the money in real estate or infrastructure projects in the Philippines, which can include equity, loans or repaying loans (SEC Memorandum Circular 1, series of 2026). The earlier rule was one year.
• Subsidiaries. Under the revised rules, an unlisted property-holding company that the REIT owns at least two-thirds of must distribute at least 90% of its distributable income to the REIT and its other shareholders.

How to buy

REIT shares are bought and sold on the PSE through a stockbroker, a PSE trading participant that the PSE has made eligible to trade REITs. The PSE’s REIT page lists the eligible brokers. You open an account with one, fund it, and place an order. When you sell shares on the exchange, a stock transaction tax of one-tenth of 1% of the selling price applies from 1 July 2025 (NIRC Sec. 127(A) as amended by RA 12214).

Risks

• Share prices fall as well as rise. You can sell for less than you paid.
• Interest rates. When interest rates rise, REIT shares often fall, because bonds and deposits pay more by comparison.
• Few buildings, one sponsor. A REIT may own only a few buildings, sometimes in one area, and rely on one sponsor. Vacancies, a big tenant leaving, or a problem with the sponsor hit the whole REIT.
• Dividends can change. The 90% rule sets the share of income paid out, not the amount. If income falls, so do the dividends.
• Taxes and costs reduce what you keep (below).

Tax on REIT dividends

Dividends from a REIT are subject to a 10% final tax (RA 9856, Sec. 14). The REIT Act also gave overseas Filipino investors a seven-year exemption counted from its 2011 tax regulations (BIR Revenue Regulations 13-2011); a summary of those rules, as amended in 2020, posted on the PSE’s website, says the exemption “has already expired”, so do not count on it. Check the current treatment of your own dividends with the BIR or your broker.

See dividend stocks.

For other sources of regular income, see passive income in the Philippines.

For all the ways to save and invest, see the investing guide.

This page explains how REITs work. It does not recommend any REIT, and past dividends do not predict future ones.