AN EVALUATION OF THE PERFORMANCE AND ACCEPTABILITY OF REIT IN NIGERIA

Olusegun Olaopin Olanrele, Rosli Said and Md Nasir Daud

AfRES from African Real Estate Society (AfRES)

Abstract: PURPOSE: The study investigates the performance and acceptability of Real Estate Investment Trusts (REITs) in NigeriaDESIGN/METHODOLOGY: The study adopted index computation and risk adjusted return (ICRAR) analysis using weekly stock returns. Market weighted capitalization approach is used to develop REIT and property stocks indexes over the period 20082014. A correlation analysis of the returns was done to assess the diversification benefits of N-REIT to the market.FINDINGS: N-REIT underperformed the market in term of both average return and risk adjusted return but have a superior performance over the property company. With a low insignificant negative correlation N-REIT signals a marginal diversification advantage.RESEARCH LIMITATIONS/IMPLICATIONS: The sample of REITs in this study is small. There are three (3) REITs in Nigeria but only two REITs in established before 2013 were selected. This research as a potential pioneer study of Nigeria REIT did not consider a mixed asset portfolio effect or benefitPRACTICAL IMPLICATIONS:The study provides an insight into the characteristics of the Nigeria REIT which will be of interest and practical usefulness to market players. Previous studies focused on UPDC, the only listed property company in Nigeria. Therefore, investors will be guided on decision making with regard to real estate securities because of the clear evidence of the outperformance of REIT compared to the property company.ORIGINALITY/VALUE OF WORK: This paper is the first empirical studies that investigates Nigeria REIT performance on the basis of risk adjusted analysis. It contributes to the body of knowledge by adding Nigeria market into the global REIT performance analysis. The computation of indices for N-REIT in this study was to provide comparison with market index, there has been no such index in Nigeria market publicly prior to this study.

Keywords: Nigeria REIT; REIT acceptability; Reit Performance; Risk adjusted returns; Stock market (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2015-09-01
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