Determining Performance of REIT (REIT): The Case of G-7 Economies

Abstract

This study investigates the determinants of REITs (REITs) in order to investigate the performance of investment trusts in real estate in G-7 countries. For this purpose, a sample of 31 listed REITs from the United States, United Kingdom, Germany, Italy, Canada, France, and Japan was selected for a period from 2012 to 2021. The study employs Net Asset Value (NAV) as a proxy for REIT performance and considers various other factors as determinants, including net income, dividend yield, leverage, interest rates, inflation, foreign exchange rates, and size. The study applies a fixed effect with Driscoll and Kraay's standard error approach and results revealed a significant and positive influence of dividend yield, net income, foreign exchange rates, and size upon the net value of REITs. This concludes that these factors boost the performance of REITs. Conversely, this study discloses that both leverage, as well as interest rates, are significantly reducing the performance of REITs. The findings of this study provide valuable insights for investors and portfolio managers, aiding in the expansion of their understanding of the influential factors that impact the performance of REITs. By considering these factors, stakeholders can make more informed investment decisions in the REIT market.