INSIDER VIEW | PPPs and REITs: Unlocking value from public assets

Public-Private Partnerships (PPPs) and Real Estate Investment Trusts (REITs) stand as two transformative mechanisms in Philippine law and policy. Each has independently proven effective in mobilizing capital, improving service delivery, and expanding opportunities for both government and private stakeholders.

When strategically combined, PPPs and REITs have the potential to unlock enormous value from underutilized public assets. 

PPPs provide the framework for collaboration between the public and private sectors to design, finance, build, and operate critical projects. REITs, in turn, offer a capital-market platform to recycle assets, democratize ownership, and ensure long-term financial sustainability. 

Together, they accelerate development, deepen financial markets, and allow citizens themselves to co-own and benefit from infrastructure growth.

Atty. Alberto Agra

"This synergy is more than financial innovation—it is a pathway toward inclusive, transparent, and sustainable nation-building."

PPPs: Partnering for development

The PPP Code of the Philippines empowers national government agencies (NGAs), local government units (LGUs), state universities and colleges (SUCs), and government-owned or -controlled corporations (GOCCs) to partner with the private sector. 

PPP projects span transport, water, energy, health, education, housing, government buildings, and even mixed-use complexes. Implementing Agencies may enter into Build-Operate-Transfer, Build-Lease-Transfer, joint ventures, and lease arrangements. 

Purely commercial projects —such as malls, hotels, sports facilities, and parking complexes —may fall outside the scope of the PPP Code but can still be pursued under specific guidelines or ordinances. 

The defining feature of PPPs is effective risk allocation, coupled with the private sector’s ability to mobilize capital and expertise to address public funding gaps.

REITs: Unlocking capital market potential

The REIT Act of 2009 created a legal structure for income-generating real estate assets to be listed on the stock exchange. A REIT is a stock corporation that owns, manages, or finances such properties, allowing both institutional and retail investors to participate by buying shares.

REITs provide liquidity for developers and sponsors, while ensuring transparency, inclusivity, and accessibility of real estate investment. They are commonly used for commercial centers, office towers, logistics hubs, and infrastructure-linked facilities.

More importantly, REITs recycle capital, freeing up resources for further expansion and development.

The Synergy: PPP–REIT integration

The convergence of PPPs and REITs creates a powerful development cycle. Consider a transport terminal, hospital, or dormitory complex built through a PPP. Once operational and revenue-generating, the private partner may “spin off” the asset into a REIT.

The government continues to earn lease payments, concession fees, or revenue shares. The private partner secures new capital through the REIT listing, fueling more projects. Ordinary investors, through the REIT, co-own and benefit from infrastructure previously accessible only to large corporations. 

This cycle ensures not only project delivery (via PPP) but also long-term sustainability and inclusivity (via REIT).

Applications across government institutions

• Bureau of Corrections (BuCor): With vast landholdings such as the New Bilibid Prison reservation, BuCor can enter PPPs for agro-industrial estates, commercial hubs, or institutional facilities. Once income-generating, these developments can be securitized through REITs, ensuring steady long-term revenue streams.
  
  
• Department of National Defense (DND) and Armed Forces of the Philippines (AFP): The AFP Modernization Act authorizes leasing or development of military reservations not essential for security. Fort Bonifacio’s transformation into Bonifacio Global City is proof of concept. PPPs can modernize camps or redevelop idle parcels, with commercial components later injected into REITs, subject to safeguards to protect defense functions.
  
  
• Local Government Units (LGUs): Empowered under the Local Government Code and the PPP Code, LGUs can pursue PPPs for markets, transport terminals, water supply systems, and mixed-use projects. While LGUs themselves cannot act as REIT sponsors, private partners can securitize PPP assets, giving LGUs stable rentals or revenue shares while citizens gain investment opportunities.
  
  
• State Universities and Colleges (SUCs): Institutions such as the University of the Philippines may pursue PPPs for dormitories, research parks, and commercial complexes. A precedent is the U.P. Town Center, developed under a long-term lease arrangement for commercial use. Once income-generating, such projects may be listed in REITs by the private sector, with proceeds reinvested into academic and educational programs as required by law.

Opportunities

• Maximizing idle lands: Transform idle public land into productive assets under PPPs, then securitize through REITs for long-term value.
• Capital recycling: Provide an exit strategy for PPP investors while financing new projects through REIT proceeds.
• Inclusive growth: Enable ordinary citizens to invest in and benefit from infrastructure development.

Conclusion

The Philippines stands at the cusp of a new frontier in infrastructure and real estate finance. By synergizing PPPs and REITs, government agencies and institutions can unlock the hidden value of public assets.  

PPPs ensure delivery and operation of projects, while REITs extend their financial longevity and broaden citizen participation. This synergy is more than financial innovation—it is a pathway toward inclusive, transparent, and sustainable nation-building, where development is not only built for the people but also co-owned by them.