The Securities and Exchange Commission (SEC) is currently developing rules and regulations to develop the Real Estate Investment Trusts (REITs) industry to create a strong link between the capital market and the real-estate sector, according to Director General, Adu Anane Antwi. He told the B&FT SEC seeks to promote REITs as an instrument for real-estate investment to help solve the housing deficit in the country. Ghana has a housing gap of one million units that keeps increasing every day, according to the Ministry of Water Resources, Works and Housing. While the provision of housing has expanded over the years, most developers have gone up-market and there is a large deficit in low-cost housing requirements. “We need to develop the REITs so that there can be a link between the capital markets which will be providing these funds through these trusts, and there would be subsequent investment of these funds in real-estate,” he said. A Real Estate Investment Trust is a company that owns -- and typically operates -- income-producing real-estate or real-estate-related assets. REITs provide a way for individual investors to earn a share of the income produced through commercial real-estate ownership, without actually having to go out and buy commercial real-estate. The income-producing real-estate assets owned by a REIT may include office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans. The Securities Industry Law at present allows mutual funds to invest only 10% of their net income value in real-estate. “There is a restriction on how much a unit trust can invest in real-estate. The draft or new law seeks to remove that restriction,” Mr. Anane Antwi said. He said the operation of REITs should be different from other mutual or unit trusts. “The real-estate trust has so many things to do which may be different from the normal unit trust, and the new guidelines will seek to ensure that.” The new rules will determine how properties are valued, the frequency of property valuations, how to price the properties, and the kind of people who will be in charge of the REITs. “Since the REITs deal in property, which cannot be valued daily like other unit trusts, the new regulations will stipulate how the property will be valued,” Mr. Anane Antwi said. REITs have been in limited existence in Ghana since 1994. HFC Bank, which has been at the forefront of mortgage financing in the country, established the first one in August of that year. HFC has used various collective investment schemes and corporate bonds to finance its mortgage-lending activities. Collective investment schemes, of which REIT’s are a part, are regulated by the SEC.