SEC seeks comments on REIT rules to include power, infra, telco sectors

THE Securities and Exchange Commission (SEC) has released a draft memorandum circular proposing updates to the real estate investment trust (REIT) rules to broaden the definition of income-generating assets, extend sponsors’ reinvestment deadlines, and strengthen disclosure and governance requirements.

The draft circular, released on Nov. 18, is open for public comments until Dec. 3.

It aims to clarify and expand the types of assets considered income-generating to include sectors such as power, infrastructure, and telecommunications, potentially allowing more companies beyond traditional real estate to register REITs.

Under the current REIT Act, income-generating assets are primarily limited to real estate properties held for rental or lease, such as buildings, malls, offices, and warehouses, excluding broader infrastructure or utility assets.

In his earlier statements, SEC Chairperson Francisco Ed. Lim said the enumeration of asset types aims “to avoid confusion and disputes over what constitutes an income-generating property.”

The draft also proposes extending the reinvestment period for proceeds from REIT share or asset sales to two years.

A REIT is a stock corporation established to own income-generating real estate assets, and under current rules, proceeds from asset sales must be reinvested within a year.

The proposed amendments would further enhance transparency requirements by mandating detailed disclosures on leases, related-party transactions, and fees, the commission said.

It also intends to strengthen public ownership regulations and introduce joint-venture provisions requiring REITs to maintain operational control and safeguard investors’ profit rights.

The commission previously announced its plan for the amended REIT rules and other reforms to take effect in January next year. — Alexandria Grace C. Magno